Thursday, May 28, 2009

Is Google the next Goldman Sachs?

GS is known for having the smartest brains and being the most successful in finance. They also produce many of the top officials in the federal government and have always enjoyed close ties to the authorities in Washington (surely a conspiracy theorists dream if ever there was one). With the other top investment banks closing, this tight integration is bound to continue and will likely increase.

In the tech industry, by contrast, there has been much less integration between Silicon Valley and Washington (yes, I know about Vannevar Bush and how close the ties were between the Route 128 giants and Washington). This isn't a function solely of distance, many top tech companies are located just a few miles away in VA's Internet Alley (think AOL for example) - more broadly it represents the way the networks are designed out west. I'm sure there are a few Microsoft alumni running around DC, but the integration at the top has never been as strong.

In fact, Microsoft, for much of its history had little presence in Washington. It was only with the antitrust cases that they set up their own public policy group. Google, though far younger, already has a policy shop in town. This is smart since there is increasing talk that they will be more heavily regulated. What I find interesting is that Google is already building close ties with Washington. Witness the recent appointments to various positions in the administration of people with ties to Google. I'm not suggesting the Obama administration will go easy on the search giant. On the contrary, it seems that despite close ties between Schmidt and Obama, the DoJ's antitrust division very quickly decided that Google deserved closer antitrust scrutiny.

But, like Goldman's, Google is known for having the smartest brains and being the best in its field. Given that it will be more difficult to hire "subject experts" from lobbying groups, will this make it more likely that government turns to successful firms like Google for its talent?

1 comment:

  1. I think you are partially correct, however, as the economy continues to recover -- see where the market is today -- google folks will go back to where real innovation occurs -- the private sector. Talk to you soon.

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