Watchdog says it took no money from rivals

The chairman of the Federal Trade Commission and a top FTC staffer traded emails in 2010 about whether Facebook and other tech companies were secretly funding a nonprofit group pushing hard for regulators to investigate Google Inc.

The messages, revealed in internal emails recently obtained by The Washington Times through the Freedom of Information Act, were exchanged as the FTC was being asked by the California-based group Consumer Watchdog to investigate Google's "Street View" mapping project. The project came under scrutiny after Google said it had mistakenly harvested personal data from homeowners' unsecured wireless networks.

The FTC correspondence centered on a May 18, 2010, report by the Wall Street Journal, "FTC Likely to Examine Google's Wireless Gaffe," which noted how Consumer Watchdog called on the FTC to launch a probe. The article prompted Cecelia Prewett, director of the FTC's public affairs office, to send an email to colleagues asking, "Who's feeding him?"

Robert Davis, then an attorney adviser with the FTC who is now in private practice, responded, "Could it be Google feeding him here? Might they want to say that the FTC is looking at this so the Europeans should wait and see (and maybe calm down)? Just another diabolical press theory."

Ms. Prewett, in a subsequent email, added, "[It's] also Microsoft and Yahoo which probably funds the consumer group making the complaint."

Hours later, FTC Chairman Jon Leibowitz responded, "and maybe Facebook — one of the folks who works for them sent it to me."

An official with Consumer Watchdog, which has been a frequent and sharp critic of Google, said despite the speculation, the organization does not receive funding from the search engine's competitors — Microsoft, Yahoo or Facebook.

"I don't know why they would have speculated about that," said John M. Simpson, privacy director for Consumer Watchdog. "They could have just called and asked."

He said the group had an opportunity to take funding from a Google competitor but decided against it.

The organization's funding, he said, comes from a mix of fundraising and grant sources, including from the Rose Foundation. That's the same organization to which a Google official wrote in 2009 complaining about Consumer Watchdog, though later apologized for the letter.

A spokeswoman for Google declined to comment Tuesday.

FTC spokeswoman Claudia B. Farrell said the email exchange represented nothing more than "staff speculation," not any insider knowledge about the watchdog group's funding sources. She declined to comment further.

Former FTC Chairman William Kovacic said it's not unheard of for industry special interests to fund nonprofit groups in an attempt to influence federal regulators. He said companies spend lots of time in Washington "trying to interest public agencies in giving your rivals a hard time."

At the same time, he said, that sort of information can be valuable to federal regulators seeking to develop investigative leads.

"A question you always have to ask yourself is, 'Where did that come from?' " he said.

There's no doubt that tech companies have beefed up their presence in Washington in recent years. Last year, Facebook spent more than $1.2 million lobbying lawmakers and federal agencies, including the FTC, on privacy, data storage and other issues.

Google spent nearly $10 million lobbying last year, nearly twice as much as the previous year, relying on in-house lobbyists as well as the Podesta Group and Normandy Group, records show. Microsoft spent more than $7 million in lobbying fees.

The FTC ended its probe of Google's "Street View" mapping service after the company said it would improve privacy practices. But the Federal Communications Commission (FCC) launched its own investigation into whether the project ran afoul of federal privacy laws.

The FCC investigation didn't say Google broke the law, but the inquiry raised fresh questions about how much the company knew about the harvesting of unsecured wireless data, including emails and search engine history.

Among the emails the FTC released to The Times was a message from an FCC enforcement official in October 2010 asking an FTC official "what you all are doing (or not doing)" on the "Google 'Spy-Fi' matter"?

On Tuesday, Rep. Edward J. Markey, Massachusetts Democrat, called for Congress to hold hearings after the FCC fined Google $25,000 for obstructing its investigation. Google has denied trying to block the probe.

While the FTC eventually dropped its "Street View" investigation, the commission recently hired an outside attorney to lead a separate antitrust investigation of Google.