Google Finds Workaround For Lobbying Rules That Omit Big Bosses

NDTV

3 days ago

It was the end of 2018, and Google's leaders were tired of being Number One.
For the second year in a row, federal records showed the search giant had spent more than any other individual company on lobbying in Washington. Executives in Mountain View were sick of seeing that mentioned in the press.
Then Google apparently found a workaround.
A new analysis of federal lobbying data by the nonprofit Tech Transparency Project shows that Google and its parent company, Alphabet Inc. used an internal reorganization to exclude the value of lobbying by its senior executives from disclosures. The move helped keep Google off the top of the lobbying charts even as it maintained a robust network of advocates pushing its interests in the capital, during federal challenges to its dominance in search and advertising and the beginnings of artificial intelligence regulation.
Alphabet CEO Sundar Pichai arrives at the White House for a tech summit in 2018.
The findings, which were confirmed by a Bloomberg analysis of lobbying records, show that the effect of the accounting change was to lower the amount that Google reported spending to influence the federal government, likely by millions of dollars.
The reorganization "has allowed the company to shield a significant portion of its lobbying expenditures from public view," the Tech Transparency Project said in its report.
A Google spokesperson, Jose Castaneda, disputed the report and said the company has followed all relevant disclosure laws.
"These are inaccurate claims about a technical change that simply brought us in line with how many other companies report their lobbying activities," he said. "Our lobbying expenditures began decreasing in 2018, after we restructured our government affairs team and cut spending on consultants."
Internal Reshuffle
Starting in 2019, Google began cutting ties with some of its external lobbying firms, a move it acknowledged publicly as part of an overhaul of its Washington operations.
But the shuffling of external lobbying firms doesn't explain the whole of the decline in Google's reported lobbying expenses, which fell from more than $22 million in 2018 to $8.9 million in the Covid-disrupted year of 2020, and have subsequently remained well below pre-pandemic levels.
There's been another, quieter change: in early 2020, Google moved its in-house lobbyists into a new subsidiary, called Google Client Services LLC. It's that unit which now files spending disclosures for Google's lobbying activities.
The reorganization meant that the parent companies Google and Alphabet no longer directly employed any lobbyists - defined under federal disclosure law as people spending at least 20% of their time on influencing Congress or the executive branch.
Companies that file lobbying disclosure reports are supposed to also account for the time that other senior executives - those who don't meet the 20% threshold - devote to lobbying, according to legal experts and the compliance guide for the Lobbying Disclosure Act published by Congressional leaders. That generally involves prorating their annual compensation to account for the days they spend influencing the government.
But since Google moved lobbyists into the Google Client Services subsidiary, the parent company no longer meets the threshold for filing disclosures under the Lobbying Disclosure Act, according to the TTP analysis. That means Google no longer reports the lobbying expenses of high-ranking managers who aren't part of the Client Services unit - like Chief Executive Officer Sundar Pichai and chief legal officer Kent Walker - to the public, as it once did.
As a result, in 2020 Google dropped out of the top 20 in corporate lobbying expenses for the first time in nearly a decade, the TTP analysis found.
While Google's reported annual spending has since edged back up again, it hasn't come close to the No.1 slot in the company lobbying rankings that it used to occupy. For the past five years, that position has alternated between two other tech giants: Meta Platforms Inc. and Amazon.com Inc.
Antitrust Challenge
There's been plenty going in in Washington over the period that was crucial for Google's business. For one thing, the company - like many peers - is betting heavily on AI, a field where decisions in the US capital will shape the commercial landscape.
Google has also been under assault from antitrust authorities over its dominance in search and digital advertising. The company has maintained in those lawsuits that its success is down to consumer choice and superior innovation, rather than a result of its power to shape laws and regulations. Publicity around its lobbying spending has the potential to undercut such arguments and alienate regulators.
When executives are as highly paid as many in Silicon Valley, the prorated amounts can add up to millions - even for just a few days' worth of lobbying. Google reported total compensation for Pichai of more than $225 million in 2022, thanks to grants of stock. His total compensation was $10.7 million in 2024. Walker's total compensation was more than $30 million last year, the company reported.
Some say the new structure Google is employing flouts the spirit of the federal disclosure law - if not the letter itself.
"This is just too cute by half," said William Luneburg, a professor emeritus at the University of Pittsburgh School of Law, and the co-editor of the manual for lobbying compliance published by the American Bar Association.
"On the face of it, it's wrong," he said. "They have to report all of their expenses, which would include the time of officers and directors and other employees that spend their time engaging in lobbying activity."
"We always comply with disclosure laws and any suggestion of improper reporting is false," said Castaneda, the Google spokesperson.
TTP said it examined lobbying disclosures of several other companies that filed reports via a similar subsidiary model, but didn't find any that had used the structure to remove executive lobbying from their disclosures.