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How Google, Facebook, and Former Outsiders Are Becoming Old School in Unexpected Ways


The revolving door between Washington, DC, and c-suite offices in the private sector now extends to the tech firms we once thought would change everything about corporate america.


Sometimes it seems that everybody in the world is in favor of democracy, just as long as it gives them the result they want.
Jack Lessenberry

Democracy on the Web works.

Back in the olden days of the 1990s, Microsoft (NASDAQ:MSFT) ruled the world. Most computer users had PCs that came pre-installed with Microsoft's familiar suite of products, including Windows and MS Office. Around the dawn of the dot-com boom, however, the United States District Court in DC decided that Microsoft was too ubiquitous, not to mention thuggish in its business practices, and a series of court battles began. The software giant lost momentum in the booming online space. Google (NASDAQ:GOOG), meanwhile, established itself as the Road Runner to Microsoft's Wile E. Coyote, continually outmaneuvering the software giant to establish online market dominance.

If you go online today, however, you'll be hard-pressed to avoid a new breed of omniscient players. You can't log into any number of apps without Facebook Connect (NASDAQ:FB). Similarly, in order to post videos, read your Web-based email, look at a map, or find something online, good luck avoiding Google. Apple's walled gates might run your music and mobile device. Yesterday's outliers are today's big boys. Microsoft may be a laggard in online market share, but the winner-take-all precedents it set are alive and well. Even the Federal Trade Commission (FTC) is seriously considering slapping an antitrust lawsuit on Google for manipulating search results to favor the company's own services.

Humble to Huge

Like many other tech companies before it, Google, Inc. was first headquartered inside of someone's garage. As the company grew, it cultivated a collegial work culture that included beer fridges, company ski trips, and lofty mottos like "Don't be evil." Employees were made to feel as though they weren't just cogs in a giant online machine. Instead, Googlers were convinced that they were changing the world.

Fast-forward 15 years. Today, Google looks more like a businessman in a suit than a geek in a garage. Grown-up Google has private jets, billion-dollar acquisitions, and fancy court battles, for example the recent allegations of illegally collecting user data with a fleet of Street View cars. This year, Google also doled out more than $14 million to government lobbying efforts, the third-biggest corporate lobbying spender behind General Electric (NYSE:GE) and Blue Cross/Blue Shield. Chevron (NYSE:CVX), by contrast, only spent about $7 million.

Protecting Margins in a Maturing Industry

Google's story reflects a larger trend in America's technology sector. Yesterday's fresh-faced start-ups have become today's corporate America. Internet-based companies are now following the lobbying footsteps set by established behemoths such as IBM (NYSE:IBM) and Microsoft. Facebook, Google, LinkedIn (NYSE:LNKD), Amazon (NASDAQ:AMZN) and others spend millions of dollars on lobbying efforts every year.

Just this year, a number of Internet-based players banded together to form the Internet Association, a lobbying organization that will advocate policies for its member companies. The online, advertising-based business model has matured, and companies are working hard to protect their bottom lines from intrusive legislation.
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No positions in stocks mentioned.

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