Mr. Silicon Valley Goes to Washington

This is part of IEEE Spectrum's special report on the battle for the future of the social Web.

Google and Facebook, both growing huge worldwide businesses, both dependent on the Internet—particularly broadband—for their growth, both headquartered in Silicon Valley, could easily be assumed to have similar political interests. Indeed, both of these companies and their top executives funnel the bulk of their political contributions to Democratic candidates, though they also hedge their bets by spreading dollars across the aisle, too. Yet when it comes to specific issues, Google and Facebook have different agendas.

Stronger Rules on Internet Privacy?

Google and Facebook both say they believe in allowing people to control their privacy. But actions speak louder than words:

• In 2008, Google joined with Microsoft to push for stricter privacy regulations on behalf of consumers, including telling consumers exactly what information companies are collecting about them. Consumers, the two corporate behemoths argued, should also be able to control how that information is used, and those who collect it should be required to store it securely.

• In 2010, Facebook CEO Mark Zuckerberg traveled to Washington to discuss legislation introduced in the House of Representatives that would regulate how online services collect personal data and how they use that to advertise. Zuckerberg argued that while data collected about consumers or users need to be protected, information that is intended to be shared with others falls under a different category. Effectively, he sought to exempt Facebook from new privacy controls, allowing Facebook to automatically share with advertisers some personal data intended for users’ friends.

A Neutral Net or Not?

The U.S. Congress and a number of governments in Europe are embroiled in battles over Net neutrality—that is, whether to allow some Internet service providers and wireless providers to restrict data flow or whether to continue "free" flow of traffic on the Internet. On this issue, Google has joined with Verizon Communications to propose Federal Communications Commission regulations that would require the wired Web to remain neutral but open up wireless networks for greater control and premiums on Internet use. Facebook opposes these regulations, siding with Twitter in favor of Net neutrality on both wired and wireless networks.

In the Lobby

Google has become a heavy hitter in technology lobbying. Its Washington, D.C., office has about 50 staff members, all of them engaged in lobbying or related activities. According to the Senate Office of Public Records, of corporations in the "Computer/Internet" industry that do lobbying, Google, with expenditures of US $5.16 million, ranked third on the 2010 list of big spenders, after Microsoft and Hewlett-Packard.

Facebook is a relative newcomer to Capitol Hill; the company started putting people in Washington on its staff payroll in 2008; it expects this year to have eight full-time lobbyists there, recently moving to an office that could support a few dozen more employees. Facebook spent only about $350 000 on lobbying in 2010.

Schmidt’s Next Move

As of late May, former Google CEO Eric Schmidt was reportedly being considered for U.S. Secretary of Commerce to replace Gary Locke, who has been nominated to become the ambassador to China. Schmidt has support from both Democrats and Republicans. Supporters of the high-tech industry tout this as a positive because it would bring someone into the role who understands the importance of technology in the growth of the U.S. economy. Before any announcement or confirmation is made, however, some on the Hill could express concern over an outsider from Silicon Valley taking the reins at Commerce.

Follow the Money

Google executives have been throwing money at a wide variety of U.S. political candidates; added together, however, their contributions skew Democratic. They founded a political action committee called Google NetPAC with a handful of founders and executives, each typically contributing $5000 annually. NetPAC seems to be focusing donations on candidates who have an important influence on technology-related legislation by virtue of either their committee appointments or their home states.

Facebook’s executives also tilt Democratic. Facebook’s former chief privacy officer, Chris Kelly, ran unsuccessfully for the Democratic nomination for California attorney general last year. Facebook officers have typically been much less eager to whip out their checkbooks at election time; however, this could change after the planned Facebook IPO.

The table below offers a snapshot of major recent contributions.

Click on the image for a larger view.

Courtroom Capers

Like most high-profile companies in a highly competitive industry, Facebook and Google are engaged in multiple lawsuits at any given time. Unlike more traditional companies, however, the two Web giants often find themselves in legal tussles over the extent to which their groundbreaking practices also break the law. Here’s a sampling:

The Defendant: Facebook

• 2004: ConnectU. Tyler and Cameron Winklevoss sued Mark Zuckerberg for stealing their idea, in a case made famous by the movie The Social Network . The twins won $65 million in a 2008 settlement. As of 2010, they were attempting to adjust the settlement to $466 million, given Facebook’s increased value.

• 2007: Lane v. Facebook Inc. Sean Lane bought his wife a diamond ring as a surprise. Facebook, using a just-introduced feature it called Beacon, broadcast that purchase to Lane’s social network without his knowledge. Lane sued Facebook and its partner companies (Blockbuster, Zappos, Overstock, STA Travel, Hotwire and GameFly) in a class action and won. The settlement totaled $9.5 million, with $15 000 going to Lane and much of the rest of the money going to create a privacy foundation, with Facebook granted a controversial seat on the board of the foundation.

• 2010: Paul Ceglia. Paul Ceglia, a business owner in New York, claims he paid Mark Zuckerberg $1000 in 2003 to build TheFacebook in exchange for a 50 percent interest in the business, plus another 34 percent he supposedly acquired in 2004—a total of 84 percent of the company and its profits to date. Facebook calls Ceglia’s lawsuit "completely frivolous."

The Defendant: Google

• 2005: Google Books. The Authors Guild and others sued Google for wide-scale copyright infringement on published works and won a settlement in 2008 of $125 million, establishing the Book Rights Registry, which provides authors and publishers with funds through the sales and advertising of their books. In March of this year, a federal judge threw out the settlement as anticompetitive and unfair to some authors; it’s unclear what will happen next.

• 2010: Graphic Artists Guild. Last year the Graphic Artists Guild, the American Society of Media Photographers, the Picture Archive Council of America, the North American Nature Photography Association, the Professional Photographers of America and others filed a suit against Google over the issue of copyrighted images scanned as part of Google Books.

• 2010: Buzz Kill. Google recently settled a class action suit by some of its users, who contended that Google Buzz was taking information from their Gmail accounts without their consent and making that information publicly available. The settlement sets aside $8.5 million to fund organizations focused on Internet privacy policy or privacy education, as well as to cover lawyers’ fees and other expenses. Google agreed to change its privacy control settings and the way it collects information and to be more up front about what it collects.

• 2010: Oracle over Java. Oracle Corp. (now owner of Sun Microsystems, creators of Java) sued Google for allegedly infringing on Oracle’s copyrights and patents when it built the Android operating system.

• 2011: VoiceOne. In February, VoiceOne sued Google for supposedly stealing voice over IP trade secrets, unfair competition, unjust enrichment, and breach of contract. At issue: Google’s 2007 termination of a contract with VoiceOne for "Click to Call" services, which allowed users to click on an advertisement and make a call to the advertiser. VoiceOne suggests Google used confidential information gained through their agreement in a later partnership with Skype to provide similar services.

This is part of IEEE Spectrum's special report on the battle for the future of the social Web.