Facebook prepares to face down competition, in Washington

Lobbying It’s no secret that Facebook knows a lot about its users. Just how much can still startle, however, as is evident from perusing the database compiled by the web site Europe vs. Facebook (h/t Forbes). In Europe, every citizen in the EU has the right to access all the data a company has collected on him or her, and based on the personal Facebook dossiers provided to Europe vs. Facebook (PDF), the print outs can run to hundreds, even thousands of pages.

With last week’s announcements of the revamped news feed (now called the timeline) and the integration of Spotify and other media services into the Facebook platform, the social network will be collecting vast new quantities and categories of data on its users, more or less in real-time.

Given the heightened sensitivity to questions of data collection and privacy in Washington these days, it’s inevitable that Facebook will come under greater scrutiny, both from regulators and lawmakers. So it’s both timely and necessary for Facebook to be upping its game in Washington, through stepped up lobbying spending and the formation of its first political action committee to start spreading some money around.

It wouldn’t surprise me if there were another motivation at work, however. Facebook COO Sheryl Sandberg is an old Washington hand, having served as chief of staff at the Treasury Department under President Bill Clinton so she knows how the game is played here. Moreover, both Sandberg and public policy head Elliot Schrage come from Google, which has invested heavily in Washington and has learned to play a tough inside game.

One of the lessons they no doubt absorbed along the way is that, for technology companies these days, lobbying has become merely the continuation of competition by other means, to paraphrase Clausewitz. Microsoft, for instance, played no small part if siccing Congress on Google last week over antitrust concerns through its bankrolling of FairSearch.org, an “advocacy” group created by Google’s competitors to harass the search giant and keep it on the defensive with regulators and Congress. It also teamed up with the likes of AT&T and Verizon to gin up a classic Washington Astroturf (i.e. fake grassroots) campaign to shout down Google’s advocacy on behalf of net neutrality.

For its part, Google bankrolled opposition to Microsoft’s proposed search deal with Yahoo in 2008, which led to the deal’s collapse. Last year, it took the U.S. Department of the Interior to court to force it to reopen bidding on a $20 billion government email contract that Google said was unfairly awarded to Microsoft. On Wednesday, the government settled the case and the bidding was reopened.

As Facebook’s ambition expand beyond simple social networking, into areas like media distribution and targeted advertising, it will increasingly find itself bumping up against other tech giants that have already staked out those businesses.

Facebook already far outpaces Google in the amount and share of time people spend online with each, for instance, and at some point that gap is going to start being reflected in Facebook’s share of intention-based online advertising as well, currently the source of 96 percent of Google’s profits.

Relations between Facebook and Apple are already cool, and the more Facebook establishes itself as a media distribution and sharing platform, the frostier they’re likely to get.

Facebook is also becoming a major, non-console based gaming platform, which will eventually bring it into conflict with Microsoft.

All of that will put a big bright target on Facebook for its rivals and a lot of the incoming fire will likely originate from K Street. Privacy is Facebook’s most obvious vulnerability. But it wouldn’t surprise me to see its rivals start to cry foul over any Facebook deal-making that smacks of exclusivity, such as Spotfiy’s new Facebook ID login requirement.

In fairness, it’s not clear whether that requirement was Facebook’s idea or Spotify’s, or whether there’s anything exclusive about the deal. But as Google learned last week, the charge doesn’t have to stick to become a problem.

Apple hasn’t played a lot of offense in Washington up to now, but it has faced enough harassment both here and in Europe to know how the game is played should it choose to. Microsoft, as Google can tell you, has proven itself a ferocious player of the Washington game, particularly against competitors.

We’ll learn soon enough how well Facebook plays the game.