February 5, 2020 / 10:07 PM / 14 days ago

Breakingviews - Google is a sitting duck for U.S. antitrust

An illuminated Google logo is seen inside an office building in Zurich September 5, 2018. REUTERS/Arnd WIegmann

SAN FRANCISCO (Reuters Breakingviews) - U.S. antitrust regulators are closing in on Google. They are ramping up their probe of the unit of parent company Alphabet, with regulators meeting this week to discuss how to strengthen cooperation. The company run by Sundar Pichai is at a disadvantage because it lacks a President Donald Trump ally like entrepreneur Peter Thiel, who is on Facebook’s board. With critics like Rupert Murdoch close to the White House, its hefty D.C. spending may not do its job.

Washington has turned up the heat on Silicon Valley, and no big tech company seems safe. Facebook, Amazon.com and Apple are all under scrutiny. On Tuesday, the Justice Department met with state attorneys general to coordinate their Google investigations. The Wall Street Journal reported on Wednesday that the DOJ is focusing on the search giant’s dominance in online ads. 

Trump’s public pressure on the DOJ throughout some recent deals, including AT&T’s purchase of Time Warner, has made executives conscious of making the right friends. Though Facebook is a public punching bag, in politically-charged Washington, Google has fewer private defenses. Thiel, a prominent Silicon Valley Trump supporter, has been acting as a middleman between the president and Facebook Chief Executive Mark Zuckerberg, who had dinner at the White House in October. Google doesn’t have any prominent Trump compadres on its board.

The company isn’t bothering to keep enemies closer either. Among its biggest detractors is Murdoch, executive chairman of News Corp, which publishes the Wall Street Journal and competes with Reuters. He has called for Google to be broken up. News Corp was also one of the publishers contacted by the DOJ in the Google probe, the newspaper’s report said. Oracle, whose boss Safra Catz is also close to Trump, has clashed with Google, too, and has been in touch with the DOJ.

Google has been making the usual Beltway plays to deflect the pressure. Though spending fell last year from a ramped up 2018, its two year aggregate of nearly $35 million is more than 15% higher than Facebook’s spending. In today’s Washington, that can’t make up for politically-connected friends and rivals.

Breakingviews

Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.


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