Lawyers, lobbyists wage search engine wars

Marketplace Staff May 3, 2006

KAI RYSSDAL: This is one of those people-familiar-with-the-situation stories. Seems Microsoft might be thinking about buying a stake in Yahoo. We saw that in the Wall Street Journal this morning. Whether or not it actually happens, it’s a pretty good example of how small the world of big high-tech companies is.

They don’t always play nice, though. Microsoft is trying to get ahead in the search engine business by leaving Google out of its new browser. Commentator Robert Reich says Google is fighting back, but not necessarily fighting fair.

ROBERT REICH: Google is playing politics. MSN handles about 10% of Internet searches in the US compared to Google’s 50 percent. As long as users prefer Google, they’ll type it into their browser or make Google their homepage regardless of what Microsoft does. Google is big enough to protect itself just by telling consumers how they can get to it. I mean, we’re not talking about a little start-up company here. Google’s first-quarter revenues were $2.25 billion. It’s part of the Standard & Poor’s 500 stock index.

That Google is complaining about Microsoft’s browser to antitrust officials in Washington and Europe shows how important politics has become to the competitive strategies of big high-tech firms. They’re paying armies of Washington lawyers and lobbyists to try to outmaneuver each other on the playing fields of regulation and litigation.

Google increased its spending on outside lawyers and lobbyists by more than a half-million dollars last year, and is investing like mad in political advisers, consultants and government-affairs professionals on K Street and in Brussels. Microsoft is well-represented in these hot spots, too, as is Yahoo. But Microsoft has already been bruised by American antitrust and is now in trouble with European antitrust authorities. So Google probably figures a little saber-rattling in Washington and Brussels is a cheap way to reduce Microsoft’s natural aggressiveness.

But Google better be careful when it raises the specter of antitrust. Its own strategy of adding all sorts of software features to its free Web-based service is just as likely to discourage new startup software companies as Microsoft’s practice of bundling software features into its Windows operating system. Regardless of how many lobbyists and lawyers it hires, as Google becomes the dominant operating system of the Internet it could find itself in the same antitrust hot water as Microsoft — whose Windows is the dominant operating system of personal computing.

RYSSDAL: Robert Reich was secretary of labor for President Clinton. He’s now professor of public policy at the University of California Berkeley.

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