Swampetition Notes: Yelp-Backed Draft Order Gets One Star Reviews

As the tech press uncovered this week, a proposed executive order to investigate political bias among major technology firms, first published to Business Insider, was in fact being shopped to White House officials by local search provider Yelp.  Today, the site Newsmax characterized the draft order as “a fraud – cooked up by an industry competitor in a bid to hobble the Internet giant [Google]”. In an article titled “Claims of Trump Executive Order on Google, Facebook Pure Fiction,” Newsmax reported that Google competitors had

brazenly delivered it to the White House, which quickly rebuffed the offer.  White House senior staff were aghast this company had actually written an executive order and when they could not get any interest from the administration, leaked it to Bloomberg claiming it was awaiting President Trump’s signature.

If indeed the leak of the draft order was a last-ditch effort to secure White House backing, it backfired.  The idea met widespread criticism across the political spectrum earlier this week, and the Administration distanced itself from Yelp’s proposals, with one lawyer telling the Washington Post it was “entirely insane.”

The N.Y. Times’ article on Wednesday connected Yelp’s strategy targeting Google with efforts by Oracle and News Corp to quietly funnel “significant resources into funding third-party coalitions and public relations firms to place ads and to lobby lawmakers”, noting particularly Oracle’s contribution to the Campaign for Accountability, a group which Fortune reports “refuses to say who pays for its activities.”

Manipulating regulators into attacking one’s competition, or “swampetition,” is a strategy with adherents in Washington, Brussels, and beyond, although it is rarely front page news.  Hamstringing competitors in the political swamp instead of beating them in the market is often deployed by legacy industries against disruptive upstarts, but as this instance shows, it can also be used by small firms to cripple larger opponents.  As a result, leading businesses are common targets of swamp warfare.

Yelp’s prominent role in recent negative coverage of the blowback against the proposal illustrates that this strategy is not without danger to its practitioners.  Ironically, Yelp is that rare example that has been more successful in the marketplace than as a swampetitor, having realized 10-fold revenue growth since initially complaining about Google to the Federal Trade Commission.  Thus far, its swampetition strategy has not achieved the same return on investment.