I’ve knocked around Washington long enough to know that when somebody starts being really nice to you in a public hearing, your attack plan should go to DefCon 1 immediately–check your six and hold onto your wallet. I always think that the smartest guys in the room already know these things, but maybe not.
During Eric Schmidt’s Senate antitrust subcommittee hearing yesterday both Schmidt and Google outside lawyer Susan Creighton made mistakes, but two of particular note. Anyone who has experienced the Google culture first hand would probably agree that among the many groups of people Googler’s think themselves superior to, Texans and comedians must be on the list if not in the top 5.
Did Schmidt Take the 5th?
You can feel pretty confident that it would not be Googley for Eric Schmidt to actually invoke his right to protection from self-incrimination under the advice of counsel. And you can also feel pretty confident that Google would have tried and failed to reach an agreement with subcommittee staff to keep out any questions about the $500 million criminal penalties for promoting the sale of illegal drugs that happened while Schmidt was in charge. (Although judging by the way that Schmidt threw Marissa Meyer under the bus, “being in charge” means something very different to him than to me. Or to most people who have “been in charge”.)
So it’s hard to believe that Google lawyers had not prepared Schmidt for the question–and bear in mind that this was the one area of questioning all day that could have had some immediate criminal law downside for Schmidt, so it is the one line of questioning that probably scared him to death because it was a punishment he couldn’t buy his way out of.
This erudite reporting from the Huffington Post sums it up: “SCHMIDT SAYS HE KNEW ABOUT GOOGLE STEERING FOLKS TO ILLEGAL CANADIAN DRUG SITES – News was actually made at today’s hearing. Ten gallon hat tip to Big John Cornyn, who asked Eric Schmidt about the $500 million settlement Google reached with the Justice Department over illegally advertising Canadian prescription drugs to Americans…. ‘Was it the result of oversight or inadvertence or were there some employees in the company that were doing this without your knowledge or…’ asked Cornyn (R-Texas). ‘Certainly not without my knowledge. Again, I have been advised — unfortunately, I’m not allowed to go into any of the details and I apologize, Senator, except to say that we’re very regretful and it was clearly a mistake’ [Schmidt said].”
This quotation actually came late in the exchange, but includes the money line “Certainly not without my knowledge.” So did Schmidt mean what he said–that any actions by employes of the company were certainly taken with his knowledge? Or did he mean to say such actions certainly were not taken with his knowledge (given that the fine resulted from seven different sting operations, it seems like that would be a lie of the best kind, a provable lie).
In any event, Schmidt began his answers by saying he had very clear advice of counsel that Google’s nonprosecution agreement with the Department of Justice prohibited Schmidt from discussing the case so Cornyn would have to go to the Department of Justice for his answer. This produced an audible gasp from the audience and whispering of “that’s not true” floated up through the committee room.
Senator Cornyn asked Schmidt where that prohibition was found, was it in the nonprosecution agreement. Schmidt said yes. Cornyn then asked Schmidt if rather than not being able to discuss the agreement, wasn’t it the case that Google could not deny any of Google’s many admissions of bad behavior in the plea agreement–as Cornyn was told by his counsel. Which, of course, is spot on–that’s exactly what it says. Not only was there no confidentiality agreement, the $500 million forfeiture and nonprosecution agreement was actually announced to the public at a press conference. A rather bizarre press conference on very short notice to the press, but a press conference nontheless.
Schmidt said that he would confer with counsel–the only time he did so, I believe–and then said that he’d been advised not to answer any questions about the nonprosecution agreement.
What Senator Cornyn didn’t say about the nonprosecution agreement was what happens if Google did deny any of the assertions. The agreement is revoked, the government keeps the $500 million and they are then free to indict Google and Google executives–such as Eric Schmidt. Because none of the Google employees acted without Schmidt’s knowledge–I guess.
So I think Schmidt actually refused to answer the question on the advice of counsel. Now why would anyone do that?
But before we leave this topic, imagine what would have happened if Senator Cornyn had not done his homework? What would have happened if he didn’t know that nonprosecution agreement backwards and forwards? The world would think that Google could not be questioned about the agreement. Not because Google chose not to talk about it because it was a horrendous crime, but because well, shucks, you’ll have to talk to DOJ about that we are prohibited from talking about it.
Let’s score that exchange Trinity 1, Princeton 0.
Google’s Blame Bing Strategy Crumbles with Senator Franken
If you’ve ever wondered what it’s like to deal with senior partners in big law firms, you got a pretty good idea of it from Google’s outside litigation counsel, Susan Creighton. And a special subset of those are the partners who have done some big government prosecution job and who go to private practice to defend the same kinds of people they were prosecuting. Any moral qualms? As Henry Turner was told by his soon-to-be-former law partner Bruce, “It pays for this lunch.”
Creighton is well-respected otherwise but was probably not the right person for a panel of Senators who had that sneaking suspicion that someone’s scalp was there for the taking and maybe it was hers. She also invoked the “Skippy” strategy a bit too often for Senator Franken–meaning that she tried to excuse Google’s behavior by spreading the blame around to Bing and Yahoo!, and sometimes just Microsoft.
In fact, the theme that ran though the entire day was that somehow all Google had to do was prove they were different than Microsoft and they won–the Blame Bing strategy. I don’t want to give unsolicited advice, particularly not to people who probably don’t like me much, but I predict that this approach is very, very narrow, typical of the kind of group think that sets into the hot house atmosphere of Silicon Valley law firms with all that inbreeding, and I predict will contribute significantly to a serious rough patch with the government.
Among all the other differences between Google at its competitors, the biggest one has to be that none of them sold illegal drugs and had seven successful sting operations run on them proving they sold illegal drugs.
But as I always say, you can’t call yourself a CEO of a Fortune 100 company if you’ve never taken the 5th. So now Schmidt has gained admission to that club. I guess.
But if “Blame Bing” is the best they came up with, then this is going to be an interesting ride.
Fasten your seat belts, boys.