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No, Eric Schmidt, Google Doesn't Get It (And They Aren't Alone)

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ERIC SCHMIDT
AP
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There were heaps of irony, and not a little schadenfreude, when Google Executive Chairman Eric Schmidt got himself a bi-partisan grilling before the Senate Antitrust Subcommittee, just two days before the Federal Communications Commission (FCC) formally released its rules governing an Open Internet.

The connection, of course, is that in the summer of 2010, Schmidt and then-Verizon Chairman Ivan Seidenberg came up with a grand compromise for an Open Internet that that just happened to exclude wireless communications. Our feckless FCC then adopted that outline because, after all, Google had been for an Open Internet, Verizon had been opposed to it, and they agreed on this. No matter that the deal gave away the fastest growing means of access and, coincidentally, the first access to the Internet for many people of color. And AT&T piled on, with their chief lobbyist logging lots of time at the FCC as the Open Internet rules were in their final stages.

So it was amusing to some to see Schmidt, under attack for his company's alleged dominance of the search market, take refuge from the slings and arrows aimed at him by saying, "The Open Internet is the ultimate playing field." It would have been delicious had some staffer slipped his/her senatorial boss a question which read: "Does that apply to wireless also?" and we could have seen where Schmidt would have to say it was OK for Google to dominate search in the wireless environment.

His defense was, "We get it," as in "We're not Microsoft." But the deeper question is whether Google and the tech sector get Washington at all, even after all this time. The answer is obvious. At any hearing, witnesses want to be able to count on sympathetic questioners to counter the expected attacks. But Google friends were few on the committee, and senators could attack the company with impunity from the left and the right. So much for those "Google runs Washington" memes that pop up in the right wing literature from time to time. Google's friends on the Antitrust Subcommittee were few and far between. Republicans and the supposedly friendly Democrats all took turns taking their shots.

The hearing could have gone better for Google, but not without a lot of groundwork first. Writing in the New York Times, Nels Olson of Korn/Ferry (and a Washington veteran) neatly summarized two corporate views of the world: "American chief executives fall into two camps: those who relish opportunities to engage with Washington and those who engage only when threatened with a subpoena."

That's where the telephone industry has it all over the tech sector, which still has not learned its lesson. A company would never want to see a headline like this: "Google's top execs refuse to testify at Senate hearing." And yet Google saw weeks of those as it dealt clumsily with Congress, a group of people who can make life difficult for any company. Could a better working relationship with Washington have helped? Probably. It may not cancel out a hearing, but it could soften it. And some of the relationship had to be with principals, not with staff.

The D.C. version of moguls, i.e. senators, members of Congress and top regulators, want to deal with people they consider equals, and they consider CEOs as equals. That's why it has always helped to have CEOs willing to spend time in Washington, at a minimum to pave the way for more continued access by other high-ranking corporate officials below the head person. In Olson's dichotomy, the telephone industry is in the first category.

It is highly unlikely you would ever see a headline like the one applied to Google when a phone executive is asked to come to D.C. Their answer, usually, is, when would you like me to come? In the story, the CEO who most closely fits the first description is Seidenberg, who made many a visit to Washington, whether for a formal appearance or not.

Here's Seidenberg's money quote: "I've focused on Washington because it's essential to the long-term health of Verizon, but also because I want to help develop solutions to the nation's pressing problems." Of course, the solutions will generally help Verizon, but that's to be expected as enlightened self-interest is the biggest motivator in Washington.

The story doesn't mention it, but Seidenberg was for a little more than two years the head of the Washington office of Nynex, one of Verizon's predecessor companies right after the Bell companies were created by the breakup of the old AT&T. One of his first hires was Barbara Morris Lent, a fine lobbyist who also happened to be married to then-Rep. Norman Lent, the top Republican on the House Energy and Commerce Committee.

Seidenberg also retained responsibilities for external relations for a few years after leaving D.C. and starting the climb up the corporate ladder that would eventually land him in the top spot atop Verizon, the ultimate combination of Nynex, Bell Atlantic, GTE and the Verizon Wireless joint venture. He knew how important it was to maintain good relations with the political power centers.

There will be lots of issue affecting the tech sector coming around over the next couple of years. A panicked, last-minute visit from a CEO who finally realizes his/her Washington people (if they have any -- understaffed D.C. offices of huge tech companies are another sin) have been sounding a warning won't cut it. CEOs have to establish relationships and there is no time like the present to start. The other guys have a big, big head start over you.

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