Google Sought To Hide Political Dealmaking

A blog entry by Michael Kanellos at ZDNet links to and expands upon an article in the Charlotte Observer. Last year Google was apparently throwing its weight around in North Carolina, seeking tax breaks from state and local legislators. When the company didn't get what it wanted pressure was brought to bear on legislative aides, journalists, and politicians. The search giant was especially touchy about keeping the negotiations secret: "Executives didn't want anybody even to mention the company's name for fear that competitors could learn of its plans. Most involved with the negotiations were required to sign nondisclosure agreements ... That posed challenges for elected officials, charged with conducting the public's business in the open. As the tax measure wended its way through the legislature, some lawmakers began linking it to Google." The results of this deal are extremely lucrative for both sides. Google brought some $600 million in investment and as many as 200 jobs to the state, and legislation enacted with Google's help is projected to save the company some $89 million in taxes over 30 years.

Um

Can we just all agree that Google is about as evil as the average corporation now? Or do some of you still believe that Google really is above the rest morally?

Re:Um

Yeah, the shine's definitely gone off Google, eh? at the rate google (and yahoo) are swallowing up other sites there's going to be some major monopolising going on.

I think searching the web is one of the few bastions where closed source still rules, and it surprises me that no-one's really made an open source search engine. I'm aware that there are things like Nutch [apache.org] and ht:dig out there but their scope is completely different (site-wide searching primarily).

So - why don't we have an open source search engine? Pagerank [ams.org] is fairly easy to implement, and would serve as a good starting point for improvement. Writing apps to rank and sort web pages strikes me as the type of problem that a lot of smart people would find a lot of fun.

I know that it requires a crap load of infrastructure, but if Wikipedia can handle it. Besides, you can index one hell of a lot of pages with the standard few GB of bandwidth a month on cheap-ish hosting plans.

So - why not?

Tall poppy syndrome

"Writing apps to rank and sort web pages strikes me as the type of problem that a lot of smart people would find a lot of fun."

Your at least a decade too late, the ship has sailed and it's called google.

"Yeah, the shine's definitely gone off Google, eh? at the rate google (and yahoo) are swallowing up other sites there's going to be some major monopolising going on."

Playing one state of against another is just the regular kind of "evil" found in all big-bussiness, big-bussiness don't pay tax bills like ordinary folk, they negotiate thier tax bill (global corporatization on a smaller scale). Google are paying tax and staying in the US. The politicians did thier job by attracting a large corporate to thier turf and getting gauranteed revenue for 30yrs plus all the spin-off effects on the economy, what more do you want?

Attacking google for this behaviour is like kicking the cat after a bad day, if you want to attack "evil" there are plenty of targets, corporations that lay the planet to waste and supply waring tribes with modern weapons. They destroy lives and feed from the public trough rather than create meaningfull employment and a nice pot of tax money. OTOH: "Kick the cat" often enough and it will scratch your eyes out while your sleeping.

Evil is as evil does - Gump.
The state where I live (not part of the US) built a power plant specifically for an Aluminium smelter, gaurenteed cheap dirty (and drit cheap) electricity for 30yrs or so. They also built a massive sewer to take the waste from a large paper mill and dump it in the ocean and called it a "green project" to rehabilitate the river the mill had already killed. The mill threatened to move overseas/interstate if it had to spend money and went so far as to infiltrate "enemy" community groups in order to discredit them. The crap these places spew and the fairy tale propoganda they use to justify it, is IMHO "evil", but try telling that to anyone who's livelyhood depends on it. Try telling the guy at the nuclear missle plant or the biological warfare lab that his work is "evil" and he will claim he is "preseving freedom" or some such rationalization, to him the thought of not planning for nuclear war is "evil".

I get kind of sick of the "we caught google being evil" shit that accompanies so many articles, it's not like they are claiming they have God on their side or that anyone else is "evil". Here in Australia we have some odd expressions, the one that fits google on slashdot is Tall poppy syndrome [wikipedia.org].

Disclaimer: "you" - not picking on "you" personally, just the general sociopathic pendantry that surround google's brilliantly provocative slogan.

Re:Tall poppy syndrome

Yes but google's motto it "don't be evil". Maybe they should change that to "don't be quite as evil as the other guys". But I guess that doesn't have quite the same ring to it.

Re:Tall poppy syndrome

"The politicians did thier job by attracting a large corporate to thier turf and getting gauranteed revenue for 30yrs plus all the spin-off effects on the economy, what more do you want?"

How about public accountability in a republican form of government?

"Attacking google for this behaviour is like kicking the cat after a bad day, "

The cat doesn't do much more than follow sunlight around the house, occasionally taking a break to eat. The cat isn't involved in perpetuation a corrupt mechanism and rob the people of access to their own government.

"The state where I live (not part of the US) built a power plant specifically for an Aluminium smelter, gaurenteed cheap dirty (and drit cheap) electricity for 30yrs or so."

Your failure to properly maintain your own government doesn't make it right for others to follow suit.

Re:Um

You don't see it for the same reason that you don't see open-source drug design, car design, plane design, bridge-building, etc.

The beauty of software is that it takes no capital to develop it, and it is easy for thousands of people who have never met to collaborate. It also takes no capital to test. And it can be generally implemented on small scales as large as big ones.

Wikipedia started off as a site nobody ever heard of. Wiki itself started as an extension to the blog concept. I can run my own wikipedia in my living room if I want to - as long as I keep it quiet and don't have the whole world knocking on my door.

A search engine is useless unless it has indexed a substantial portion of the entire internet. You'd need GBs of data just to know if your algorithm is working. So, it is fundamentally a different problem. Even if you built up the database it is hard for people to collborate on it since they need access to all the data to test new algorithms. Wikipedia scales much better - you don't need to have the whole encyclopedia to test out a new interface model, and the back-end is all commodity software like mysql/apache/etc (that software does require more infrastructure to test - but it is somebody else's project and they could test large table performance in mysql just by having tables full of random data).

The same issues apply to other types of community-based projects. You want cheap drugs, and think open-source is the answer? Well, now you need a bunch of people with chemistry degrees and about $100k minimum worth of equipment in their basement. And even if by some miracle they come up with something how do you test it? Typically you have to pay volunteers to take your pills, and pay doctors to be bothered with handing them out. Oh, you also need to go out and inspect your doctors so that they don't just falsify reports and collect their checks without bothering with actual test subjects (it happens all the time - it would happen more if doctors didn't know that pharma companies would catch them and turn them over to the FDA - this is a punishable crime). That is one of the biggest areas of expense in pharma R&D. Similar issues apply to anything that involves physical reality - like engineering/etc. You can model a new plane on a computer, but at some point you need to build a test model and you can't do that without serious cash. Groups like the planetary society are always drawing up models for interstellar spacecraft, but there is no way to know if they'd work without testing...

Open source software is a wonderful development and in time I think it will transform the ENTIRE industry - just give it a generation. However, until we have star trek style replicators many industries will not be able to benefit from a similar model...

Re:Um

> I'm sure Bill Gates was young, hungry,
> honest, and loved at one point,

In fact, for many years Microsoft was seen in the same light as Google is today: as a savior from the iron-fisted "data processing overlords". It wasn't until the 1992-1994 timeframe that information professionals started thinking that Microsoft might have other designs. Now Microsoft is viewed as the iron-fisted overlord, and Google the savior...

I think The Who have a song about this.

sPh

Re:Open Source Search

Can we run a search engine backend over P2P/bittorrent? There is no shortage of hardware if its distributed. At least, the SPAM-bot networks don't seem to have a problem getting enough bandwidth. :)

Re:Um

Can we just all agree that Google is about as evil as the average corporation now? Or do some of you still believe that Google really is above the rest morally?

Not until they don't change their slogan! It'll be too confusing otherwise.

The simple answer: IPO

"Do no evil" is a nice motto for an individual or a privately owned company, but a publicly traded corporation is different. When you have stock traded in the market you have to maximize profits. One often thinks of "capitalists" as some faceless evil, greedy person, but in fact the capitalist is anyone who has money invested.

When you make any sort of investment, like buying insurance or a retirement plan, you don't ask how evil the corporations are. All you want is the biggest return for the lowest price, which means the portfolios that will make your investment will be composed of stock from the companies with biggest profit.

Re:The simple answer: IPO

When you make any sort of investment, like buying insurance or a retirement plan, you don't ask how evil the corporations are. All you want is the biggest return for the lowest price, which means the portfolios that will make your investment will be composed of stock from the companies with biggest profit.

With all due respect, sir, you speak for yourself. I *do* check the behaviour and ethical standards of the companies I purchase from or invest in. Yes, sometimes this means lesser profit. So what?

Re:Um

This is a normal business practice. Every company checks localities for tax breaks before committing to a major investment.

Here, in the American southeast, jobs are very important. An investment of six hundred million dollars and two hundred jobs is a fair trade for the tax break requested. And I doubt Google will have many minimum wage jobs at their new location.

This is the same treatment given to everyone from bakeries to automobile manufacturers. All will receive tax breaks for new plants and jobs. The only question is how much.

Re:Um

The tax break isn't even that much of a loss of income for the government. If Google are employing 200 people, it works out at $15,000 per new employee. Somewhere between 30-50% of everything earned in the US eventually flows through the government in taxes (income taxes, property taxes, sales taxes, etc), so if Google is paying somewhere between thirty to fifty thousand to each new employee then the government is breaking even or making a net profit.

Of course, some of this goes to the federal government, rather than the state, but I would imagine that they are betting that Google will expand over the next thirty years, employing more people and thus generating even more tax revenue.

This is ignoring, of course, the tax that will be paid by those people employed in construction of the new Google facilities, and any other taxes that Google will pay. I would be very surprised if the state government didn't make a significant profit out of this deal. It sounds like it's good for both parties. The only question really is why Google felt the need to keep it secret.

You ar either kidding or u work for a G competitor

What Google did here was to say that they did not want their competition to find out the deal. Once they do, they will want it as good or better. In fact, it is in the state's best interest to not tell either. That way, they can encourage somebody like yahoo to come in, but with less incentives. The evil comes in when you use your weight against them. For example, if Google was to say to NC that if you do not give us a good deal, we will rate other states above yours (or even to imply it). That is how MS (and to a degree yahoo) has operated. That is what evil is. But a simple negotiation is not evil.

As to operating in a backroom approach, well, that goes on ALL the time. Nearly every company does that with states when they are seeking to come to the state. In fact, I would not be surprised if NC approached Google first, and they kept it quiet. Now, if the deal is kept quiet after the fact, or is not released prior to the congressional vote, that becomes an issue. But the article does not say (or even imply) that.

Re:Um

Yeah because a 600M investment for a less than 3M tax break (per year, which 30 years from now will be worthless...) is *SUCH* a bad deal for NC!

200 jobs at 50k per job and 15% tax rate (Sate only...) gives 1,500,000 back to NC per year anyway bringing the net 'loss' to the state of 1.5M a year, decreasing over time as salaries go up.

It's not unusual for large corps to get 1:1 tax breakes. ie if you build a 500M car plant, you get 500M or more in tax breaks.

If this is google being evil, they sure suck at it!

JON

Re:Um

Google has been slipping for a long time. They've been supporting domain squatting [google.com] forever.

It's sad, really.

Re:Um

States have expenses too. Maybe not armies, but roads, schools, employees and so forth. Some of these expenses hopefully benefit the public. They have to be paid by taxes, and if Google doesn't pay these 3 millions a year, rest assured that someone else will, most probably taxpayers in one form or another.

Nothing Evil there

"The results of this deal are extremely lucrative for both sides. Google brought some $600 million in investment and as many as 200 jobs to the state, and legislation enacted with Google's help is projected to save the company some $89 million in taxes over 30 years."
Lets see, NC gets $600 Million investment that could have gone elsewhere, 200 odd new jobs (and tax revenue from employee's) that also could have gone elsewhere and it just cost them $89 million tax revenue over 30 years, tax revenue that they would probably not have got if they had not done the deal.

Sounds like NC got the better end of the deal by a long margin

The secrecy and nondisclosure agreements are pretty standard, for reasons that are obvious if you give it two minutes worth of consideration

Uhh So?

This is just standard buisness practice. States compete to attract large companies with jobs and those large companies do their best to cut good deals for them.

There is nothing even slightly unethical about this. One might argue that such a system is undesierable as it gives large companies an advantage over small companies, and their is some truth to that, but on the other hand large companies may have requirements that aren't easily dealt with in non-negotiated ways.

So I certainly see an argument for the federal government outlawing states from making deals with companies to attract them (some sorts of tax breaks are already forbidden) google certainaly didn't do anything immoral by using the same system that everyone else does. I mean that's like arguing your a bad person for taking advantage of Bush's tax breaks just because you voted against them.

Carlotte?

As a resident of "Carlotte", North Carolina my entire 25 years on this Earth, I gotta let you in on a secret; we named it Charlotte. What is this "Carlotte" you speak of? ;p

States do this all the time

A lot of companies do this. Look at some of the recently opened car plants (as oposed to the closed ones). They all negotiated sweetheart deals with the state and local governments.

The real scandal here is that they can do this at all. Why should corporations be allowed to negotiate taxes? Can individuals do that? "Hello, state! I am thinking of moving to your state and being productively employed! And some of the money I make will be spent in the local economy! Promise! I will do so if you cut me some slack on property taxes and state income taxes!"

You'd get laughed at. Scale? so what, could 200 independent single individuals do the same? Nope. But a corporation can.

The same with those land seizures. XYZ corp wants to put in an import*mart or golf course, the local government seizes some poor guys land, forces him to move or close his business, so the bigger corp can put their crap there. Nuts. Does the opposite ever happen? "Hiya state! I want you to seize this local golf course/stripmall/sports stadium for me. I will bulldoze out all the lamer energy hog neon sign enhanced buildings and ugly crap in the way, and then plow it up at my expense with my tractor and make free community gardens, saving local consumers millions a year with the grocery bill". Go ahead, try to do something like that, see what happens.

It is not "getting to the point", it is well past the point that governments exist to cater to large corporations for the most part. "Hiya largest government! I have a problem" You see, I have been in the entertainment redistribution business for generations. It was costly to do this, every copy cost a lot of money to reproduce and distribute, but we did it and made a lot of profit. Unfortunately recent technological advances have made this sort of business almost completely obsolete, which threatens our bottom line. It is now technically possible to do what we did in the past 100 to 1000 times cheaper, and get the product to the consumer. But we are so used to making so much net profit a "unit" for our products that we can't allow this dangerous replicator technology out there without severe restrictions on the consumers, else we would lose our traditional profit structure, and we certainly couldn't charge the 2 cents a unit that would be possible now..it's UnAmerican! So please pass laws that force our business model to stay in place in perpetuity. Oh, and we need to extend the limits on this "IP" stuff as well, after all, even with the tech restrictions, we want todo this forever! We'll get back to you once that time limit approaches again, and we'll extend it even further! Thanks! Oh ya, here's some completely unrelated huge bags of cash, just an amazing coincidence that we are handing this to you, really, no strings attached!"

Re:Just be a little evil

Just had to try it, 6.03M results for both links.

Re:Beatup

Sigh...do my fellow Americans understand basic civics anymore?

In a democracy, legislatures do not draft laws under non-disclosure agreements. The proper operation of a democracy hinges on transparency. There is a strong possibility here that Google was asking the legislators to violate the open meeting or sunshine laws of their own state, which guarantee that government business is done in the open. This is why some legislators refused to sign the NDAs.

That's where the evil is.

Re:Beatup

They evil is with the Nondisclosure Agreement!

The people should be able to judge how their government is acting. The fact that google is asking this is not that weird that politicians on the other hand agree is the worst part. Lets hope (I know it wont) they will notice this the next elections.

Re:Beatup

That Google and NC worked through all the issues suggests... goodwill rather more than evil, wouldn't you agree?

No it suggests that Google and the NC legislators are evil.

If a bill is being drafted specifically for a company, then the public should know which bill it is and which company it is. If Google can't pursue the idea without those stipulations (and the fact they're requiring a special law makes me immediately say they shouldn't be pursuing the idea, I'd need to be convinced they should pursue it) then tough luck.

The fact that the NC legislators are willingly helping Google in covering up their actions in creating a law simply spreads the evil, it doesn't negate Google's evil.