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Google Protests News Corp., Microsoft Ties in Texas Probe

David McLaughlin, Ben Brody and Mark Bergen

(Bloomberg) -- Google says its confidential business information is at risk in the nationwide antitrust probe of the company because the Texas attorney general’s office, which is leading the investigation, hired two consultants that have worked for Google adversaries.

Parent company Alphabet Inc. went to court Thursday to restrict Texas’s ability to disclose sensitive information to consultants who have worked for competitors and other companies such as News Corp. and Microsoft Corp. that have complained about Google to regulators.

Google specifically cited the hiring of Cristina Caffarra, an economist with consulting firm Charles River Associates who has worked for Google adversaries News Corp., Microsoft, and Russia’s Yandex NV, according to the court filing in Texas.

Caffarra is providing Texas Attorney General Ken Paxton’s office with “expert examinations, observations, opinions, consultations, analyses, reports, testimony, and other services,” according to a contract released by the state. She is working for free, according to her contract.

The arrangement, Google said in court papers, “creates a significant risk that Google’s confidential business information could be inappropriately disclosed to and used by its adversaries.”

“We’ve provided millions of pages of documents in response to regulatory inquiries, and we’re committed to cooperating,” Google said in a statement. “But this is an extraordinarily irregular arrangement and it’s only fair to have assurances that our confidential business information won’t be shared with competitors or vocal complainants.”

A spokesman for the attorney general said the office has been engaged in “good-faith” negotiations with Google to protect the company’s sensitive business information.

“While these negotiations were ongoing, Google, without any notice, made a lengthy court filing challenging our right to employ many of the most knowledgeable in this complex field,” Marc Rylander, the Texas AG’s spokesman, said in an email. “Google is not entitled to choose the states’ expert or run the states’ investigation.”

The fight over the consultants comes after Paxton’s office issued a civil investigative demand to Google in September seeking detailed information about the company’s advertising business.

Google said in court papers it’s not seeking to bar disclosure of business information to any Texas consultant who has worked for a rival or complaining company, only those who are currently employed by them. Consultants who are likely to work for Google competitors should not be able to work for them during the states’ investigation and one year afterward, Google said.

The company is also unhappy with Paxton’s hiring of Eugene Burrus, a former assistant general counsel at Microsoft who is now an adviser at McKinsey & Co. Microsoft was a longtime foe of Google and advocated in the U.S. and Europe for antitrust action against the company. Burrus also represented clients in antitrust cases against Google, the company said. His maximum fee is $75,000, according to his contract.

“Absent appropriate limitations, Mr. Burrus likely will attempt to use his experience on this investigation, including his access to confidential Google information, to market himself to prospective clients with interests adverse to Google,” the company said.

Caffarra, News Corp. and Microsoft declined to comment. Burrus didn’t immediately respond to a message sent to him on LinkedIn.

Google is asking the Texas court for a protective order including advance notice of third parties accessing its confidential information and limits to Texas’s ability to disclose company information to competitors and consultants.

The company was due to begin delivering documents to Texas in early November, according to a person familiar with the matter. The request, which will go to a judge, could delay that, said the person, who asked not to be named discussing sensitive matter.

Google may offer to start handing over documents as long as Paxton’s office doesn’t share the material with third parties until the matter is resolved, the person added.

(Updates with comments from Texas AG’s spokesman in the seventh paragraph.)

--With assistance from Gerry Smith.

To contact the reporters on this story: David McLaughlin in Washington at dmclaughlin9@bloomberg.net;Ben Brody in Washington, D.C. at btenerellabr@bloomberg.net;Mark Bergen in San Francisco at mbergen10@bloomberg.net

To contact the editors responsible for this story: Sara Forden at sforden@bloomberg.net, Mark Niquette, Andrew Pollack

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