• COMMENTARY: Google More Powerful Than The Federal Government

    In the past few days, Google announced that in approximately two months Google will prohibit advertising for online lenders who offer loans with an interest rate exceeding 36% and loans with repayment terms of less than 60 days. This is unprecedented and dangerous.

    Google is planning to ban certain financial products because they don’t like these products and they are politically unpopular.  It is also possible that they have a competitive reason for this announcement.

    The federal government tried to use the vast power of the Justice Department and the Federal Deposit Insurance Corporation to attack financial resources for industries that they oppose politically, yet they failed.  Looks like Google is more powerful than the Obama Administration and the Department of Justice, because they just announced an action that the feds could not implement through a plan called Operation Choke Point.

    As reported by Breitbart on January 8, 2014 Operation Choke Point was created by the federal government to cut off credit resources to gun dealers, online lenders and other disfavored legal products:

    According to the Wall Street Journal, the federal initiative now known as ‘Operation Choke Point’ is an outgrowth of the President’s Financial Fraud Task Force, established by President Obama by Executive Order in 2009. It also appears to have been kicked off in secret by the Department of Justice, FDIC, and the CFPB in early 2013 without the requisite statutory authority. Officials at the Department of Justice have withheld information about the program from Congress, though they have eagerly shared details with federal financial institution examiners authorized to supervise and discipline the nation’s banks and related financial institutions.

    Insiders on Capitol Hill are stunned that Google has more juice than the federal government to ban ads for targeted legal businesses on the Internet.  Considering that Google has a near monopoly on search engines, cutting of ads will do more than the federal government could have done had they been successful with Operation Choke Point.

    Conservatives have been battling this unconstitutional program since the day it was discovered. Rep. Darrel Issa (R-California) put together a deep dive on the program – The Department of Justice’s “Operation Choke Point”:  Illegally Choking Off Legitimate Businesses?   Rep. Jason Chaffetz has also conducted oversight into Operation Choke Point while Rep. Blaine Leutkemeyer (R-Missouri) has pushed legislation to curb the program.


    In the Senate, Sens. Ted Cruz (R-Texas) and Mike Lee (R-Utah) introduced Senate companion legilation to the Leutkemeyer bill that would stop the federal government from attacking legal business ventures like online lenders, and gun sellers. Sens. Rand Paul (R-Kentucky), Dean Heller (R-Nevada), David Vitter (R-Louisiana), Mike Crapo (R-Idaho), John Cornyn (R-Texas) and Roy Blunt (R-Missouri) have joined in this fight and cosponsored the Cruz-Lee bill.

    Senator Lee had a hearing in the Senate Judiciary Antitrust Committee and argued “there are also allegations that Google has achieved and sought to maintain its dominance in search by imposing exclusivity restrictions in dealings with advertising partners, perhaps in an effort toblock competing search tools.  This includes a broad network of exclusive search syndication deals with websites like AOL and eBay, exclusive arrangements for Google’s search box to appear on browsers like Mozilla Firefox and Safari, and agreements that Google be theexclusive default search provider on the iPhone and many Android models.”

    The idea that this might be happening all over again is evidenced by the fact that Google is in the business of short term lending with the company LendUp.  The Federal Trade Commission (FTC) is already looking into Google for abuse and this may be another area that they need to investigate. Politico reported that “Senior antitrust officials at the FTC have discussed the matter in recent months with representatives of a major U.S. company that objects to Google’s practices, according to sources with the company.”  If Google is using market dominance to whipe out competitors, then they are wading into dangerous waters.

    Congress should keep a close eye on this situation as it develops

    Cloakroom Confidential

    Cloakroom Confidential was a longtime Capitol Hill staffer and insider who has contacts in the House and Senate at the highest levels.

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