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Delayed Quote. Delayed Nasdaq - 06/18 04:00:00 pm
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Alphabet : Google, Facing More Scrutiny, Overhauls Lobbying and Public Affairs Operations

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06/12/2019 | 05:45am EDT

By Brody Mullins and Ted Mann

WASHINGTON -- Google has fired about a half-dozen of its largest lobbying firms as part of a major overhaul of its global government affairs and policy operations amid the prospect of greater government scrutiny of its businesses.

In the past few months, the company has shaken up its roster of lobbying firms, restructured its Washington policy team and lost two senior officials who helped build its influence operation into one of the largest in the nation's capital, according to people familiar with Google's Washington strategy. The firms Google has dumped make up about half of the company's more than $20 million annual lobbying bill.

People familiar with the matter say the revamp is part of a continuing modernization of the influence operation Google built over the last 15 years, but it comes as Google faces a number of government investigations into its affairs. The Wall Street Journal reported recently that the Justice Department is gearing up to conduct an antitrust investigation into the tech giant. Congress and states attorneys general are also reviewing Google's practices, while on the campaign trail, some Democratic presidential candidates are calling for the company to be broken up.

Amid the increased scrutiny, Google, a unit of Alphabet Inc., is shuffling its ranks of lobbyists and other Washington consultants, according to people familiar with the matter. Among the lobbyists no longer working for the company are Charlie Black, a longtime Republican strategist, and firms that have relationships with senior Republicans and Democrats on Capitol Hill, including Off Hill Strategies LLC, which has ties to fiscally conservative Republicans.

People familiar with Google's restructuring say the operation that evolved as the one-time startup expanded had become outmoded after years of rapid global growth. The company overhauled its policy team to better reflect the global reach of its commercial ambitions and handle potential entanglements with regulators and lawmakers across regions and markets, these people said.

The moves are seen as part of a shake-up by Google's new head of policy and government relations, Karan Bhatia, a former senior trade representative in the administration of President George W. Bush and later a top executive at General Electric Co.

Mr. Bhatia was brought in last summer to serve as Google's vice president of policy and government relations. Over the past year, he has been reassessing Google's influence shop, which has grown to one of the biggest in the corporate world. Late last year, Susan Molinari, a former Republican congresswoman, said she would step down as the head of Google's Washington operations. The company hasn't yet named a replacement.

Mr. Bhatia shook up Google's policy department earlier this year by asking some employees to reapply for their own jobs.

One executive leaving Google amid the shake-up is Adam Kovacevich, who ran the firm's public-policy division. Mr. Kovacevich was a central player in Google's efforts to shape perceptions and rules in ways that have been favorable to the business of the search and advertising giant.

Most prominently, Mr. Kovacevich led the company's campaign to head off a high-profile 2012 Federal Trade Commission investigation into whether the company used anticompetitive tactics. He also helped launch a host of advocacy groups to promote public-policy matters that benefited Google.

In 2006, the year before Mr. Kovacevich joined Google, the company spent $800,000 on lobbying and had four lobbying firms on retainer. In 2018, Google had 100 lobbyists, employed nearly 30 firms, and spent $21.7 million to lobby Washington, making it the largest spender on lobbying among U.S. corporations, according to public lobbying filings compiled by the nonpartisan Center for Responsive Politics.

The company spent millions more on donations to think tanks, political entities, universities and other third-party groups that churned out papers, generated data and hosted policy conferences that Google used to help shape the debate on issues such as privacy, net neutrality and self-driving cars.

Meanwhile, Google employees helped the company become one of the largest sources of campaign donations to the Democratic Party and its candidates, including Hillary Clinton and Barack Obama, according to the Center for Responsive Politics. In the 2018 congressional elections, Google's employee-funded PAC donated $1.9 million to political candidates in both parties, the group's figures show.

Donations from employees made Google a top source of campaign money for both of Mr. Obama's presidential campaigns, and the company's employees ranked as the leading source of money for Mrs. Clinton's 2016 presidential bid. Employees of the company donated a total of $1.6 million to Mrs. Clinton's campaign, the center found.

When Mr. Obama took office, Google and its Washington lobbying team scored a string of victories. Most significantly, Mr. Obama's FTC, which is technically an independent agency, declined to pursue an antitrust case against Google in 2013 after a lengthy investigation.

Google also won favorable net-neutrality rules from the Federal Communications Commission, headed off federal privacy regulations in Congress and secured a friendly ruling on self-driving vehicles from highway-safety regulators, among other matters.

But in the past few years, Google has run into headwinds from both Republicans and Democrats, while its public image took a beating over privacy concerns and what critics say is its failure to police content on its platform, particularly as it related to the 2016 election.

The new structure has regional leaders covering the U.S. and Canada, Asia and the Pacific, Europe, and countries the company views as its emerging markets.

The new arrangement also includes policy teams that will continue to lobby governments on critical areas for the company, including privacy and handling controversial content on its platforms.

Write to Brody Mullins at brody.mullins@wsj.com and Ted Mann at ted.mann@wsj.com

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