Microsoft, Pals Try Ringing Google's Bell

TheStreet.com

NEW YORK (TheStreet) -- As a technology reporter for 30 years, the Bell companies have been my primary source of frustration.

The reason for frustration is that they're utilities. They live in a world of regulation, not investment. They don't put $1 out until they have convinced government to guarantee them $2 will come back. When your business model is based on regulation you can't take risks. There are too many stakeholders.

In the Internet age we've seen what that leads to. Google , whose networks are not regulated, and which gets no government subsidy, has built IP networks that are superior in every way to what the utilities have.

Not just the Bell utilities like Verizon and AT&T , but the cable utilities like Comcast and Time Warner Cable . They've proven this in Kansas City, and they're going to prove it as well in Austin, Texas.

Almost two decades ago Microsoft fought the law, and the law won. Microsoft eventually got the government off its back, but along the way it got saddled with lawyers, flacks and naysayers who took its eye off the competitive ball. Micro-management kills your ability to change quickly, and it's clear Microsoft no longer can.

So Microsoft is becoming a utility, campaigning through government on both sides of the Atlantic to do to Google what it did to itself. It complains that Google is a monopoly that is embracing and extending itself into content and devices, what Microsoft was charged with doing last century. It also claims that open source is predatory.

Of course, you don't fight a lobbying war in the open. It's not Microsoft vs. Google, Microsoft insists. Instead, the company has helped build an umbrella group called Fairsearch with 16 other companies. Originally this was just a few travel outfits, like Expedia and Kayak .

Microsoft's entry to the group sent it into overdrive, going after Google across a broad front. When Oracle and Nokia joined last year, the lobbying went into orbit.

According to a Google blog site called Googlecompetition Fairsearch is run by the Glover Park Group, a Washington lobbyist with almost 50 "leaders", including former Clinton operatives and Ketchum's former digital director.

Glover Park is fighting a new kind of lobbying war, one which combines digital Astroturf with experienced insiders. It's a refinement on what Sam Simon of Issue Dynamics first did for the Bell companies, detailed here by Newnetworks.

So far they have Google on the run. They're on the run most in Europe, because Google's market share is higher there, and European law focuses on competition, not just harm to consumers. Google has offered a host of technical changes to its search algorithms, detailed here at Gigaom from a report in the Financial Times.

But a political war is not about getting agreement. Fairsearch members tell Bloomberg the deal isn't good enough and they've opened up a second front, claiming that by giving away its open-source Android operating system Google is doing just what Microsoft did with Internet Explorer back in the day.

What Fairsearch is trying to do is use politics to build a global regulatory scheme around Google's operations that require lots of people to manage, that will bring lots of lawyers into Google whose job it will be to stifle innovation, to bring it down to Microsoft's level.

Time will tell whether they succeed. But they're off to a good start. Opensecrets.org says Google spent almost $20 million on lobbying last year, twice what Microsoft spent directly. And every dollar spent on lawyers and lobbying is a dollar that's not spent serving customers.

At the time of publication, the author was long GOOG.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

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