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Eric Schmidt Has an Interest. Is It a Conflict?

THE NEW YORK TIMES BITS BLOG
http://bits.blogs.nytimes.com/2014/05/13/eric-schmidt-has-an-interest-is-it-a-conflict/

Gov. Andrew M. Cuomo of New York last month appointed a three-person commission to offer thoughts on the use of technology in schools.

The group, the governor’s office said in a statement, will be “charged with advising the state on how to best invest” the $2 billion the governor plans to raise in a “Smart Schools” bond issue in the fall.

Eric E. Schmidt, executive chairman of Google, is one of the three, but his appointment raised some eyebrows. Mr. Schmidt’s company has a commercial interest in seeing more Chromebook computers, which run Google’s Chrome web software, and the company’s productivity applications, Google Apps, being used in schools.

And Mr. Schmidt’s appointment struck Consumer Watchdog, a nonprofit advocacy group with a history of pursuing Google, mostly on privacy issues, as a conflict of interest. Last month, it sent a letter of protest to Mr. Cuomo’s office, and got no reply.

On Monday, the watchdog group, based in California, filed a complaint with the New York State Joint Commission on Public Ethics, saying that Mr. Schmidt has “serious, troubling and unlawful conflicts of interest” that should preclude him from serving on the commission.

The conflict is magnified, said John M. Simpson, privacy project director at Consumer Watchdog, because “Google is the only voice of technology at the table. If it was one of several technology representatives, it would be more acceptable.”

Google declined to comment.

The other two members of the Smart Schools advisory group are Geoffrey Canada, president of Harlem Children’s Zone, a nonprofit organization that manages three charter schools and other education programs in New York City; and Constance Evelyn, superintendent of the Auburn School District in Cayuga County in upstate New York.

A spokesman for Mr. Cuomo, Matt Wing, said the Consumer Watchdog complaint was based on a misunderstanding of the advisory commission’s role and a misreading of the state’s conflict-of-interest laws. The three-person group, Mr. Wing said, will provide “broad recommendations to help create 21st-century classrooms in our schools.” The commission, he added, is “purely advisory and will not be recommending specific products.”

Broad influence, Mr. Simpson said, can be as important as assembling a technology shopping list. For example, if Mr. Schmidt’s panel recommended a preference for open-source software, that would benefit Google, whose products use the open-source model, over suppliers of proprietary software like Apple and Microsoft, Mr. Simpson said.

But the advisory commission’s report, state officials said, is not expected to make that kind of detailed recommendation. Instead, general spending guidelines will be determined by an independent panel, which will include the state budget director and the state education commissioner, covering everything from new classrooms to digital devices. Then, the state’s 700 public school districts will decide what they want and make choices based on a competitive bidding process.

Mr. Schmidt’s participation on the commission, according to Gary Reback, a lawyer for Carr & Ferrell, who helped prepare the complaint, is a clear violation of the state’s conflict-of-interest rules. “This gives Schmidt the opportunity to insinuate his desires” into the state’s technology strategy for schools, he said. Mr. Reback is a Silicon Valley lawyer whose work helped get the federal antitrust case against Microsoft underway in the 1990s, and more recently has clashed with Google on antitrust issues.

The state’s conflict-of-interest rules for advisory commissions appointed by the governor state that members should not have “any interest, financial or otherwise, direct or indirect, or engage in any business or transaction or professional activity or incur any obligation of any nature, which is in substantial conflict with the proper discharge of his duties in the public interest.”

But state officials point to passages in the conflict-of-interest rules that take note, for example, of “the importance of public-spirited citizens from the private sector serving the government and the people of New York State.” Expertise is not a disqualification, they say, nor is a business interest. Anything that might directly affect a person’s business requires a commission member to declare the interest and be recused.

Mr. Wing of Mr. Cuomo’s office emphasized that Mr. Schmidt, given the high-level nature of the schools commission, will not be steering educational technology spending decisions. “Any representations to the contrary,” Mr. Wing said, “are simply wrong.”