February 28, 2013

Google’s Dishonorable Donation

By CREW Staff

Don't be evil?Last year, as the Federal Trade Commission (FTC) was deep into a major antitrust investigation into Google, the company quietly made a $25,000 contribution to a non-profit group in honor of FTC Chairman Jon Leibowitz, the man overseeing the investigation.  Google donated the money to Common Sense Media, a non-profit that advocates for children and families on technology and media issues, on October 1. 

Google publicly disclosed the donation in a required lobbying contribution report filed January 30, 2013, nearly a month after the FTC closed its investigation into Google without bringing a complaint.  The FTC’s decision was widely viewed as a major victory for the company.  The donation appears to have escaped public notice. The October donation was the first time Google honored Chairman Leibowitz with a charitable contribution, according to disclosure records maintained by the Secretary of the Senate that date back to 2008.

When the FTC launched its investigation in June 2011, news reports described it as a potentially serious problem for the search giant.  Google ramped up its influence machine in a clear attempt to avert a court case.  Lobbying disclosure records show the company’s lobbying spending jumped nearly 88 percent between 2010 and 2011, from roughly $5.2 million to $9.7 million, apparently after the company realized it might be the target of an antitrust investigation.  Lobbying spending again increased more than 70 percent between 2011 and 2012, rising to nearly $16.5 million, an amount that made the company one of the biggest spenders on K Street.  Multiple news stories catalogued Google’s hiring of Washington insiders to make its case.  The company drafted both former FTC lawyers and former Rep. Susan Molinari (R-NY), a veteran lobbyist who took over Google’s Washington office in February 2012.

Google also increased its charitable contributions in honor of lawmakers and regulators over the years, a lesser-known way of influencing decisionmakers.  Companies are required to disclose such contributions, but they typically draw little attention.  In 2010, the company reported donating $120,000 in “honorary expenses.”  In 2012, Google doled out nearly $300,000 — an increase of almost 150 percent.  The $25,000 contribution honoring Chairman Leibowitz was the fourth largest honorary donation Google made in 2012, following two $60,000 donations to the Congressional Hispanic Caucus Institute and a $50,000 donation to Public Knowledge in honor of Rep. Darrell Issa (R-CA), chair of the House Oversight and Government Reform Committee.

A Common Interest

In addition to the antitrust investigation, Google had other business in front of the FTC at the time of the donation.  The agency was devising new rules regarding kids’ online privacy, an issue on which Google was actively lobbying. When the FTC issued its new rules in December 2012, they were portrayed as a victory for companies such as Apple, Facebook, and Google because they said app purveyors weren’t responsible for policing the apps they distribute.  

Common Sense Media, meanwhile, had spoken in favor of tighter regulations.  “The industry definitely did the best it could to lobby to water down the FTC’s proposed updates,” Common Sense Media founder and CEO James Steyer told the Los Angeles Times.  Nonetheless, Mr. Steyer ultimately supported the rules released by the FTC.  In a press release, he praised Chairman Leibowitz “for standing with parents and making these vital updates to the COPPA [Children’s Online Privacy Protection Act] rules” while arguing that the rule changes “effectively balance growing privacy concerns and the paramount rights of children and families with the tech industry’s need to innovate.”

Searching For Influence

What honor did Google’s $25,000 donation in honor of Chairman Leibowitz buy?  It isn’t clear from disclosure reports.  Companies are required to disclose a range of contributions in honor of government officials, including, for instance, payments for an event to honor or recognize them and payments for meetings, retreats, conferences, and other events held by them or in their names.  Common Sense Media did honor Chairman Leibowitz in April 2012 as a “champion for kids” for “his leadership in protecting kids’ online and mobile privacy.”  Google is not listed in the organization’s press release about the event as one of the “leading sponsors,” but the company is listed on Common Sense Media’s website as a supporter of the group.  In addition, in February 2013, after Chairman Leibowitz announced he was departing the FTC, Politico reported that his chief of staff, Joni Lupovitz, would be joining Common Sense Media as vice president for policy.   

In late October, just weeks after Google’s contribution in his honor, Chairman Leibowitz said on Bloomberg Government’s “Capitol Gains” show that the FTC was open to settling with Google.  He also praised the company.  “We meet with parties always and we try to come to the right resolution, and I believe we will do that and we will do it in a bipartisan manner in a way that protects American consumers and allows businesses — including Google which has done terrific things for consumers — to thrive,” he said.  In January 2013, after the FTC settled with Google, Chairman Leibowitz told Politico that Google’s lobbying offensive was not a deciding factor in the commission’s decision.  “We deal with companies this big all the time; we deal with lobbying this big all the time;... it just doesn’t make a whiff of difference.”

Google certainly isn’t the first company to make strategic charitable contributions aimed at increasing its leverage in Washington.  For instance, while AT&T was seeking federal approval of its $39 billion bid for T-Mobile USA in 2011, CREW’s research found the company had donated $1.24 million to charities favored by key lawmakers between 2008 and 2010.  AT&T also directed contributions to non-profits that then publicly supported the proposed merger, sparking an outcry.  In a 2010 investigation, the New York Times identified dozens of charities with connections to lawmakers from both parties that regularly accepted donations from businesses interested in influencing them.  A spokesperson for Duke Energy acknowledged to the Times that the company participated in lawmakers’ charitable events with an eye towards pushing their agendas, saying it was part of their “overall effort to work with policy makers.”

Corporate donations to non-profits in honor of government leaders are more about currying favor and advancing business interests than about supporting worthy charities.  Google’s well-timed $25,000 donation in honor of Chairman Leibowitz is a drop in the bucket when compared to the hundreds of millions the Internet titan stood to lose had the antitrust inquiry continued.

UPDATE (3/1/13): In a statement posted on the FTC’s official Twitter account, commission spokesman Peter Kaplan said that Chairman Leibowitz “had no idea Google was 1 of many corporate donors until he read” Bloomberg’s article on Google’s donation to Common Sense Media.

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