The Chamber of Commerce supports a bill that Google says would 'impose new liabilities.' Google mulls divorcing Chamber

Google is considering ditching the U.S. Chamber of Commerce out of frustration with its support for legislation that would force Internet companies to police websites that peddle pirated movies and fake Viagra.

The rumblings of a defection — a potentially serious blow to one of Washington’s most powerful lobbies — come weeks after Yahoo left the Chamber in October, largely over its support of Sen. Patrick Leahy’s (D-Vt.) online piracy bill, the PROTECT IP Act.


A source close to Google said the company is “frustrated” about paying dues to an organization promoting legislation that would “impose new liabilities” on Google. A second source close to the company confirmed that thinking.

The Consumer Electronics Association, one of the country’s largest trade groups, is also weighing whether to part ways with the Chamber over its aggressive campaign for the Senate bill and its companion introduced in the House last week, the Stop Online Piracy Act, a tech industry source said.

The bills would require search engines and online ad companies to clamp down on websites that illegally peddle copyrighted movies, fake pharmaceuticals and other counterfeit products if served with a court order by the Justice Department.

CEA and some top Google executives have publicly argued that the bills would threaten innovation and encourage censorship of protected speech on the Web.

CEA and Google declined to comment for this story. The Chamber said it does not comment on membership matters.

Many in the tech industry believe the Chamber is doing the bidding of Hollywood and other deep-pocketed members of the content industry. The Chamber believes the IP bills are needed to stop rogue sites from profiting off the content its members spend millions making.

In testimony before Congress, entertainment companies have vilified Google as a facilitator of online piracy.

The Chamber has blasted a series of blog posts touting both pieces of legislation and orchestrated fly-in trips to D.C. for its content and pharmaceutical industry members — including Eli Lilly, NBCUniversal and Rosetta Stone — to canvass the Hill. It also created a website dedicated to its campaign against rogue sites, FightOnlineTheft.com.

That aggressive push, a tech industry source said, was largely what prompted Yahoo to quietly cut ties with the Chamber last month. A Yahoo spokeswoman did not comment on the business lobby’s support for the bills, but told POLITICO at the time that it “has memberships with numerous trade associations and belongs to a number of organizations that promote a free and fair marketplace which enable Yahoo! to innovate on behalf of our more than 700 million users.”

“As our membership renewal time neared and we reviewed our membership, we decided not to renew,” the Yahoo spokeswoman said.

Online piracy isn’t the first policy issue that has put the Chamber in hot water with its members. Utility companies including Exelon, Pacific Gas and Electric Co. and PNM Resources, as well as Apple, left the business lobby in 2009 to protest its stance on global warming.

Several CEA member companies are upset over the Chamber’s support of the two IP bills and have called on the trade association to reconsider its membership, a tech industry source said.

In particular, CEA members are up in arms over so-called private right of action provisions in the bills that would allow trademark and copyrights holders to seek court orders requiring ad networks and payment processors to cut off business with an allegedly infringing site.

CEA members believe it would trigger a flood of costly lawsuits — which runs counter to the Chamber’s huge push for tort reform and opposition to private right of action measures in previous legislation.

“They’re really out of left field,” an industry source said of the Chamber’s support for the private right of action measures.

Google has not taken a formal company position on the pending legislation, but some of the search giant’s high-level executives have made their opinions known.

Google’s Chief Internet Evangelist Vint Cerf, known as one of the Internet’s founding architects, said this week the bills “won’t solve the problem” of online piracy and will likely disrupt the architecture of the Web.

And earlier this year, Google Executive Chairman Eric Schmidt and Public Policy Director Bob Boorstin both sounded alarm over parts of Sen. Patrick Leahy’s (D-Vt.) PROTECT IP Act earlier this year.

Boorstin even went so far as to say that PROTECT IP “would put the U.S. government in the very position we criticize repressive regimes for doing — all in the name of copyright.”

Unlike a version of the IP bill Leahy introduced last session, PROTECT IP forces search engines like Google and Yahoo to block access to copyright infringing websites.

Smith’s bill, on the other hand, would require search engines to stop serving up a “direct hypertext link” to the site if served with a court order.

But Google’s cash cow is online advertising — a service that’s targeted in the legislation.

While both bills would let rights holders seek a court order that would force ad networks to stop serving an alleged illicit site, tech interests say Smith’s version goes a step farther by allowing IP owners to make that request to the ad network first. If the ad network doesn’t comply, then the rights holder can seek the court order.

NetCoalition, which represents Google and Yahoo, has argued that the provision raises due process concerns. They say it would allow rights holders to strong arm ad networks without a judge weighing in first.

This article first appeared on POLITICO Pro at 5:27 a.m. on November 4, 2011.