Google, AT&T and the DOJ: How to Avoid History's Mistakes

Part Two of 'Why Google Voice Reminds Me of AT&T'

By Published on .

Judy Shapiro
Judy Shapiro
Can you spell DOJ?

Many of you will remember the July 7 DigitalNext post, "Why Google Voice Reminds Me of AT&T," where I broadly outlined how Google, like AT&T before it, can be undone by its ambition to dominate a key "infrastructure" sector, like the web. I contended in the article that, much like AT&T's quest to dominate information systems, Google's quest to dominate web services can divert precious resources from core businesses, leaving it weaker, not stronger.

The article generated, uh, considerable conversation; some polite, some not -- but most were incredulous that I could even dare to make such a comparison.

Now, a mere three weeks later, Wired's Fred Vogelstein chivalrously comes to my defense (however unwittingly on his part) with his article, "Keyword: Monopoly... Why is Obama's Top Antitrust Cop Gunning for Google." In it, he explores the Department of Justice's newly launched anti-trust investigation of Google (see where this is going?).

The article explains why the DOJ is going after Google now:

"Recently, Google's size and ambitions have begun to obscure its halo. Advertisers watch nervously as the company's share of the search-advertising market have jumped to 75% from 50% ...Google's largest problem isn't what the company is today; its what is plans to become. Google aims to create a world in which web services replace desktop software."

Does this not sound familiar? The government gets nervous whenever one, very large, commercial enterprise wants to dominate any key infrastructure, whether it is software, information or the web. It was why AT&T and Microsoft were targeted in their day and it explains the DOJ timing now.

This investigation is yet another element demonstrating the parallel between the two companies. Sadly, the DOJ investigation changed everything for AT&T and it is likely to fundamentally change how Google does business, even if a case is not brought for years. You see, once the government had a "virtual" seat at the AT&T table, the lawyers started running the show. It slowed us down, blunted much of our competitive bite and even restricted which technologies we considered. It simply took the life out of AT&T. Google seems prone to face similar constraints.

At this point, I hope most of you can at least understand why I continue to see a pattern repeating itself. The real question becomes what's in store for Google? What can Google do better and/or differently than either Microsoft or AT&T when they were at this critical crossroads? Maybe nothing, I don't know. Yet that does not seem to sit well given Google's well-earned reputation for its genius. So for a moment, using history as our guide, let's consider some of their choices.

In the face of a potential anti-trust suit, Google can follow Microsoft's path and fight to keep itself whole. It can use the argument that "consumers can go to any number of competitors with a better mousetrap." But that approach is not without peril: Bill Gates' now infamous court testimony resulted in Microsoft losing a decade's worth of goodwill. And the irony of following in Microsoft's legal footsteps is rich, given Google's corporate culture of being as much anti-Microsoft as it is "for" anything.

Google has another option -- one that celebrates what Google does most brilliantly: innovate with new business models to create sustainable, profitable and ethically oriented corporate growth. It is an option that follows the contours of AT&T's footsteps (read on before you all descend into an epileptic shouting fit) but avoids its failures.

Here's what I mean: AT&T eventually broke itself up into seven companies (the seven Baby Bells of which three are still around) after a lengthy and costly battle that left AT&T very much weakened in the process. Maybe, just maybe, Google takes the first, brave step to focus on getting smaller and better -- not necessarily bigger. Google can consider innovative ways to spin off smaller, more sustainable businesses via a consortium or community of like-minded companies.

This community of companies model was first tried successfully by the Bell Labs New Venture Group in the late 1990s. It operated with a structure that let connected businesses share basic, scalable overhead services like HR or marketing, but they remained relatively small to allow for innovation and ideas to flow freely. I was there that time and I can attest to the fact that with this model, we were able to more quickly assess and launch new technologies with successful outcomes.

While getting "smaller" may echo back to the AT&T "breakup," that's where the similarities can end. AT&T never really embraced the notion that smaller companies could be stronger and more profitable. Perhaps Google, by staying true to its very DNA to "be a force for good" on the internet, can free us from outmoded business models where bigger is automatically assumed to be better. Google can keep its cool by being a new role model for a well balanced company that's big enough to stay strong and innovative but not too big that it drowns in its own grandeur and bureaucracy.

It has not been done yet. In this respect Google reminds me of no one. And maybe this is what saves them.

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Judy Shapiro is senior VP at Paltalk and has held senior marketing positions at Comodo, Computer Associates, Lucent Technologies, AT&T and Bell Labs. Her blog, Trench Wars, provides insights on how to create business value on the internet.

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