If Google Can Successfully Lobby the FTC on Antitrust, Just Think What They Think They Can Do To Us

“You asked me if I am in the Meth Business or the Money Business. It’s neither. I am in the Empire Business.” – Walter White – See more at: http://www.top-ten.tv/usa-tv-series/top-ten-best-quotes-from-breaking-bad/#sthash.4sE4yQ5b.dpuf
“You asked me if I am in the Meth Business or the Money Business. It’s neither. I am in the Empire Business.” – Walter White – See more at: http://www.top-ten.tv/usa-tv-series/top-ten-best-quotes-from-breaking-bad/#sthash.4sE4yQ5b.dpuf

You asked me if I am in the meth business or the money business.  It’s neither.  I am in the empire business.

Walter White, Breaking Bad

Right after Jeff Bezos bought the Washington Post last year, Timothy B. Lee joined the Dot Com version of the venerable paper to write a blog called The Switch.  Almost immediately, Mr. Lee got into hot water with the Columbia Journalism Review for failing to disclose conflicts of interest in a blog post promoting the views of Google as expressed by Jerry Brito of the Google-funded Cato Institute.

The Columbia Journalism Review immediately posted a story on Mr. Lee that called attention to a few major holes in Mr. Lee’s “story”, holes that Mr. Lee could have himself caught had he engaged in a practice called “fact checking”, well-known to the pre-Bezos Washington Post.

In its front page story from the Sunday edition, the Washington Post redeemed itself from Mr. Lee’s Google+ Hangout (aka the ash heap of history).  Yes, while the Post‘s feature story, “Google, once disdainful of lobbying, now a master of Washington influence” by Tom Hamburger and Matea Gold, restores faith that the Post wishes to distinguish itself once again with hard hitting reporting on the latest attack on the Republic if not democracy itself. The Cato Institute–a bastion of democracy, just ask them–seems to have sucked down the Koolaid and asked for more.  According to the Post:

Cato was not always in sync with Google’s policy agenda. In previous years, the think tank’s bloggers and scholars had been sharply critical of the company’s support for government rules limiting the ways providers such as Comcast and Verizon could charge for Internet services….[But] like many institutions in Washington, Cato has since found common ground with Google.

And the think tank has benefited from the company’s investments, receiving $480,000 worth of in-kind “ad words” from Google last year, according to people familiar with the donation.

And the thing about the “in-kind” donations of Adwords to Cato or, oh, say a political campaign–Bitcoin is easier to trace.

While one must pity the young journalists who work on The Switch with Mr. Lee and hope that they have not been metastasized themselves, the Post seems to have made an editorial decision to redeem itself after Mr. Lee got such an early start on tarnishing its reputation.  So we can all breathe a little easier–until Bezos fires the current editors and puts the like of Mr. Lee in charge.  The over under is 24 months in–you know–Internet time.

But in order to fully grasp the implications for artists of the Post‘s story of Google’s massive influence peddling, a quick review of some highlights from the recent past is in order.  And where better to begin than with the nasty case of Google drugs–the closest that Google has come to completely unraveling.

The Old News, or Walter White Goes to Washington

Yes, Google is a lot more like the Breaking Bad story line than you might think.  It’s no news that Google got a wake up call after it was investigated for selling ads for illegal drugs and had to pay $500,000,000 of the stockholders’ money to keep its executive team (then including Sheryl Sandberg) from being indicted for violating the Controlled Substances Act.  The largest fine in U.S. corporate history, it was still cheap at the price for the magnitude of the crime Google had gleefully committed based on the available evidence and to which the company admitted in its nonprosecution agreement.  (See Wired, How a Career Con Man Led a Federal Sting that Cost Google $500 Million.)

This case was a very near miss, and resulted in a substantial grand jury investigation during which Google produced over 4,000,000 documents–which themselves became an issue in one of the many shareholder suits over how Google was able to use corporate cash to pay a fine more properly paid by their executives in their individual capacity.  Particularly since those executives were accused of crimes that were outside the scope of their authority.  (But since Google is actually run as a closely held organization by the voting power of the executives most prominently accused of crimes, perhaps the easier explanation is that a large part of Google is a racketeer influenced corrupt organization.  You know–RICO.)

This large cash payment was paid shortly before the SOPA burnout.  I have always viewed SOPA in the larger historical context of the drug payment.  Ask yourself–who do you think is running the sites that Google sold advertising for that got it into the sights of the Food & Drug Administration, the Bush Department of Justice, the Internal Revenue Service and the Federal Bureau of Investigation?  Probably the same people that Interpol investigates in its Operation Pangea.  These are not misguided college kids selling Ambien hits from their mom’s medicine cabinet.

But in the course of the shareholder suit, something happened that confirmed what many believed, but that foreshadowed the extent of the disclosures in the Washington Post.  The Wall Street Journal raised a question based on a statement made by Google’s lawyer Boris Feldman in open court (“Did DOJ Apologize to Google for US Attorney’s Comments?”):

“The U.S. attorney in Rhode Island went off the reservation and gave a long interview about all the evidence [a reference to the 4,000,000 documents that Google produced in the grand jury proceeding] and why it was he was so excited about the case,” lawyer Boris Feldman told the judge at a Delaware state court. “It ended up being so far off the reservation that the Justice Department apologized to Google for it and muzzled him.”

Given what the Post tells us about Google’s cozy relationship with law enforcement agencies, it is entirely believable that the Justice Department would have apologized to Google for one of the US Attorneys having the brass to actually prosecute Google for anything that ended up in any kind of meaningful punishment for Google.  However, the Wall Street Journal reports that the Justice Department (i.e., “main Justice” in Washington) denied apologizing:

Maybe the Justice Department apologized on his behalf? “We did not apologize,” a department spokeswoman said.

And the reaction from Rhode Island (which kept about half of the $500,000,000 to offset law enforcement costs in the state)?

“The U.S. attorney has never issued apologies to anyone in this matter,” a spokesman said. “As far as the suggestion that the U.S. attorney has been ‘muzzled,’ I can only point to the fact that we recently held a widely attended press conference” at which he answered media questions about the case.

For its part, Google declined to comment, saying: “Google does not comment on its discussions with regulators.”

I bet they don’t.  Google didn’t comment on the Washington Post story, either.

Google would have you believe that its interest in Washington came out of fighting against censorship for user rights.  That’s bullshit.  How did Google gloss over its unprecedented $500,000,000 fine for really nasty stuff?  Through political connections, of course.  And if you’ve read the Post story, all of this will sound very familiar to you.

Manipulating the People’s House

Google’s nonprosecution agreement was signed by Google on August 17, 2011.  Given the magnitude of this case and the fine involved, it’s likely that by December 2010 Google had a pretty good idea that they were going to buy their way out of a criminal trial, and perhaps jail time for their senior executives. Before a U.S. Attorney can bring an indictment, particularly against a company that is as well-connected as Google, the U.S. Attorney must send a memo justifying the indictment up the chain to at least the Deputy Attorney General, or more likely in this case, Attorney General Eric Holder (who succeeded Jamie Gorelick in the Clinton Justice Department–Gorelick being the former Deputy Attorney General who has represented Google particularly in Google’s negotiations with Mississippi Attorney General Jim Hood.)

Attorney General Eric Holder presided over a December 14, 2010 meeting at the White House requested by Google during the DOJ’s drug investigation into Google’s bad acts.  What, if anything, did this meeting have to do with the prosecution of Google?  Did the Attorney General find it appropriate to make this statement while at the same time prosecuting Google, a participant in the very White House meeting at which he was speaking?

[W]e successfully prosecuted a defendant who was selling fake cancer medications to patients in the United States, Canada, the United Kingdom, Belgium, and the Netherlands. The drugs – which he marketed as a rare, experimental treatment – were manufactured in Canada, but advertised and sold globally over the Internet. With assistance from Canadian and German authorities, this individual was apprehended and extradited to the United States. He is now behind bars and has been sentenced to almost three years in prison.

Given that at the time of the White House meeting (December 14, 2010), Google executives were no doubt close to being criminally prosecuted themselves, don’t you think that news of Google’s prosecution would have been relevant and surprising to participants in the White House meeting?  Particularly since the Attorney General of the United States was giving a speech about the very crimes of which Google was accused, a speech made at a meeting held under the auspices of the President of the United States concerning the very subject of that prosecution?

When the Google plea bargain was announced a few months after the December White House meeting (reported in the Wall Street Journal on May 13, 2011), would it not have been reasonable for the public to be at least a little surprised if not shocked by the Attorney General’s comments or lack thereof?

As CNET reported on May 19, 2011 (six months after the White House meeting at which General Holder spoke):

No one may have been more surprised than Victoria A. Espinel, the U.S. intellectual-property enforcement coordinator. Just six months earlier, Espinel, who’s leading the Obama administration’s efforts to thwart rogue pharmacies, commended Google’s help in the battle at [the December 14] White House meeting.

The December White House meeting was also the occasion to announce the formation of the Center for Safe Internet Pharmacies.  Again, according to CNET:

There are plenty of others surprised by the news. At that same December meeting at the White House, Google was joined by Microsoft, Yahoo, Go Daddy, and a few other companies in announcing the creation of a nonprofit organization called the Center for Safe Internet Pharmacies. The purpose of the group is to share information about illegitimate online pharmacies in order to root them out and shut them down.

“It was a surprise to me because I didn’t know the investigation was going on and because a half a billion dollars is a big number, even for Google,” said Christine Jones, general counsel, executive vice president, and corporate secretary at Go Daddy, the giant domain registration and Web hosting company that spearheaded the Center for Safe Internet Pharmacies effort.

The formation of the Center for Safe Internet Pharmacies is one of Google’s customary defenses to why the company isn’t simply running a RICO-predicate criminal enterprise–and it is a type of ruse that Google uses repeatedly as described in the Post‘s reporting.

As recently as April 19, 2013, John Burchett, one of the legion of revolving door types in Google’s Washington DC in-house lobby shop, cited Google’s participation in the Center for Safe Internet Pharmacies in response to Mississippi Attorney General Jim Hood’s inquiry into Google’s compliance with the DOJ plea deal.  (See page 13, AG Hood Exhibits.  Burchett joined Google in 2007 (“Google: As Cool as it Seems and More“) just before Eric Schmidt received a prophetic letter from Joseph A. Califano, Jr. warning that Google was inducing the sale of drugs to kids.  Burchett is a board member of Andean Health and Development and is the former Chief of Staff for Michigan Governor Jennifer Granholm.  Governor Granhom was an Obama campaign debate surrogate you will recall from many, many appearances on Sunday shows during the 2012 presidential campaign.  Before joining the staff of Harvard Law School classmate Granholm, Burchett “worked as a business consultant to governments across the country” including Detroit’s Little Caesar’s.)

Very Googlely.

Getting into the Center for Safe Internet Pharmacies industry group apparently was–and continues to be–a very important strategic move for Google.  (Or what good Catholics will recognize as an “indulgence” for their sins.)

It also must have been important to Google that their motives for joining the group be concealed and not tainted by the fact that Google–at the very time they were being deceptively portrayed in the People’s House as one of the good guys–was either being criminally prosecuted by the US Government at the time, or was then currently negotiating a way to pay a $500,000,000 fine with the stockholders’ money and be handed a get out of jail free card by the US Government.

Imagine if instead of having this political plum handed to them on a silver platter inside the People’s House (albeit in the dark and without the knowledge of all–well, nearly all–the participants in the White House meeting) the press instead was all about why Google was allowed to join the group without at least disclosing its own felony prosecution for the very crimes at issue in the meeting.

Now remember–Google’s response to brand sponsored piracy driven by search is to form up with the Internet Advertising Bureau to develop “best practices”.  Best practices that are even more complex and whack a mole than the DMCA notice and shakedown.  And Google has done the same for human trafficking and many other areas of vulnerability for them.

Make no mistake–like Walter White, Google is in the empire business.

The New New Thing and Why This Matters for Artists and the Music Business

Given that Google is both ripping us off through search, jamming us on essentially unauditable royalties on compulsory and direct licenses, and outspending the music, movie, book and probably broadcasters on lobbying money soft and hard, it’s important to understand the kind of people we are dealing with when we are forced to deal with Google.  It’s also important to realize that the people who we think are in our corner may well be taking the king’s shilling–for shilling for the King of the Internet.  Let’s take another look at Timothy Lee’s debut at WaPo (remembering that Lee himself worked for Google until 2010 and gets his own section in the Google shill list.)

Timothy B. Lee debuted his WashingtonPost.com blog with a story that was pure Google–“Hollywood” (whoever that is) brought its piracy problems on itself.  While that may have been true in 1999, it’s really just unadulterated bunk today.  This ridiculous post did not go unnoticed by the Columbia Journalism Review (A Piracy Defense Walks the Plank by Ryan Chittum):

There are many problems with Timothy B. Lee’s Washington Post blog post on Hollywood’s supposed culpability for the theft of its own movies, beginning with the morally unserious jujitsu deployed in arguing that Hollywood is culpable for the theft of its own movies.

The Mercatus- and Cato-connected editor of the Washington Post tech blog that aims “to be indispensable to telecom lobbyists and IT professionals alike, while also being compelling and provocative to the average iPhone-toting commuter” also had a major correction that undermines the entire premise of the piece and reveals its one-sided reporting….

Lee based his argument on bad data from PiracyData.org, which was co-founded by a couple of researchers at the Koch [yes, that Koch]-funded anti-government think tank the Mercatus Center to document whether “people turn to piracy when the movies they want to watch are not available legally.”

Left unmentioned: That Lee himself contributed a chapter to a Mercatus book with the researchers (at least one of whom is his friend) called “Copyright Unbalanced: From Incentive to Excess.” That would have been worth disclosing in the post. Readers would have had more reason to be skeptical….

So what about those additional comments from the MPAA Lee refers to in his correction? This is how his rewritten post now ends (emphasis mine):

But [MPAA comms director Kate] Bedingfield counters that films get heavily pirated even when they’re made available in online formats. “The Walking Dead was pirated 500,000 times within 16 hours despite the fact that it is available to stream for free for the next 27 days on AMC’s website and distributed in 125 countries around the world the day after it aired,” she says. “Our industry is working hard to bring content to audiences when they want it, where they want it, but content theft is a complex problem that requires comprehensive, voluntary solutions from all stakeholders involved.”

Finally, Bedingfield points out that the Mercatus Center counts Google among its funders.


The Washington Post now seems to have taken Mr. Chittum’s critique to heart, and provides us with some hard hitting journalism in contrast to whatever it was that Mr. Lee wrote.

In May 2012, the law school at George Mason University hosted a forum billed as a “vibrant discussion” about Internet search competition. Many of the major players in the field were there — regulators from the Federal Trade Commission, federal and state prosecutors, top congressional staffers.

What the guests had not been told was that the day-long academic conference was in large part the work of Google, which maneuvered behind the scenes with GMU’s Law & Economics Center to put on the event. At the time, the company was under FTC investigation over concerns about the dominance of its famed search engine, a case that threatened Google’s core business.

In the weeks leading up to the GMU event, Google executives suggested potential speakers and guests, sending the center’s staff a detailed spreadsheet listing members of Congress, FTC commissioners, and senior officials with the Justice Department and state attorney general’s offices.

Google’s practices are not, of course, limited to using political influence to stop legal processes against them at the regulatory level.  This business of sponsoring conferences through intermediaries should be quite familiar to everyone in the music business.  Think of all the places that Google or one of its surrogates (or, like the Nashville-based astroturf group “Creator Freedom”, a surrogate of a surrogate) shows up as a sponsor of a music industry event.  Most recently, we had a sudden and out of character appearance by Google General Counsel Kent Walker (and nonprosecution agreement signer) scheduled for the Entertainment Law Initiative luncheon during Grammy Week, replaced by an executive from YouTube, the well known Google affiliate and curator of ad supported music video ripping software, rape videos, steroid reseller testimonials and sex tourist home movies.

Then there was the rather odd participation of Google in the World Creators Summit, and of course the Future of Music Policy Summit where Google went from a major named sponsor in 2012 to sponsoring a dinner in 2013.  The sponsors for the 2012 summit were New America Foundation (of which Google’s Eric Schmidt is a director), the Open Technology Institute (which shares a website with the New America Foundation), Google itself, Public Knowledge (which is funded in part by Google as Google acknowledged on the now famous Google shill list) and the Consumer Electronics Association (of which Google is a member).  There are other sponsors, like Pandora, for example, but one is struck by just how many Google connections there were to the main conference event.

Those connections were largely gone by 2013 except that Google hosted part of the FMC “honors” dinner:

google FMC

But Google may find that a bunch of disgruntled musicians are not going to bend over and take it–YouTube executives were booed at MIDEM and are generally having a rough time this year.  That’s nothing compared to the reception YouTube will get once artists realize that Google’s participation at any music conference is part of a colossal shell game of influence peddling.

Ask yourself how many times you’ve seen Google surrogates listed on panels or trying to tell you that the sky is rising?  If it’s any consolation, the Washington Post has confirmed it’s not just us.  Although, the Post didn’t focus on the fact that it’s not just the United States, either.

Google’s influence peddling is global.

More in Part 2.