Consumer Watchdog Asks NY Joint Commission on Public Ethics to Remove Google's Chairman Eric Schmidt from State's Smart Schools Commission for Conflict of Interest
SANTA MONICA, Calif., May 12 -- Consumer Watchdog issued the following news release:
Consumer Watchdog today filed a formal complaint asking the New York Joint Commission On Public Ethics to remove Google Executive Chairman Eric Schmidt from the state's Smart Schools Commission because of conflicts of interest that violate the state's Public Officials Law.
"Schmidt's Commission participation raises the appearance of impropriety, compromises the integrity of the Commission, and provides Schmidt and Google the perfect vehicle for Google to pursue state funds, improve Google's reputation and position in the education market, and to do what is best for Google, instead of what is best for New York," the nonprofit, nonpartisan public interest group said in its formal complaint.
"This is not the fox guarding the chicken coop, but rather the fox building the coop," said John M. Simpson, Consumer Watchdog's Privacy Project director. "The chickens in this case are children whose privacy Google has shown a consistent disrespect for, making Schmidt a doubly distressful choice for the Commission."
Read Consumer Watchdog's formal Complaint here: http://www.consumerwatchdog.org/resources/joint_commission_complaint.pdf
Consumer Watchdog's complaint charged that Gov. Andrew Cuomo's appointment of Schmidt to the three-person panel that will advise how to spend a $2 billion bond issue to bring technology to the state's schools already violates three provisions of the Public Officials Law because it:
-- Creates the impression that Schmidt can improperly influence decisions of the Commission.
-- Raises suspicion among the public.
-- Places Schmidt in an official position where he will not be able to exercise independent judgment in carrying out his duties.
"Additionally, if allowed to serve on the Commission, Schmidt will inevitably violate two more provisions of Section 74 because his role will make it impossible to (a) avoid using confidential information he acquires as a Commission member for personal benefit; and (b) refrain from taking official actions in which Google has at least some financial interest," Consumer Watchdog's complaint said.
Schmidt was appointed to the Commission on April 17 with Geoffrey Canada, President and CEO of Harlem Children's Zone and Constance Evelyn, Superintendent of the Auburn School District in Cayuga County. The bond act is scheduled to be on the ballot in November. When the Joint Commission finds a knowing violation of the Public Officials Law, it may order suspension or removal from office or a civil fine of not more than $10,000.
"This is not the case of an industry participant advising on general policy initiatives; instead, it involves Schmidt, the Executive Chairman of Google, advising on how to spend $2 billion on educational technology that Google offers in New York," the complaint said. "Schmidt and Google want to grow substantially Google's education business in New York and elsewhere. Schmidt's fiduciary duty to the private corporate interests of Google raises serious questions about his ability to act in the bests interests of New York instead of the best interests of Google."
The complaint also noted that Google and Schmidt have an interest in limiting privacy protection for individuals and students, which is in conflict with New York's student protection policy.
"Indeed, under Schmidt's leadership Google has been repeatedly sanctioned or charged with privacy violations," the complaint said. It cited a $17 million multistate privacy settlement over Google's unlawful online tracking of consumers and a $7 million multistate privacy settlement over Google's unlawful collection of data from wireless networks nationwide as examples. In addition the complaint pointed to a record $22.5 million fine with the Federal Trade Commission.
The complaint noted that Schmidt's serving on the Smart Schools Commission would not be the first time Schmidt and Google have ignored a clear conflict of interest to gain a business advantage. "In August 2009, amid an investigation by the Federal Trade Commission'sBureau of Competition, Schmidt was forced to resign his position on Apple's Board of Directors due the conflict of interest inherent in serving on a direct competitor's Board," the Consumer Watchdog complaint said.
The complaint noted that Schmidt controls 5.5 percent of Google's stock, worth more than $5 billion, was paid $19.3 million in 2013 and received a $100 million bonus in February. "Schmidt has more to gain from his interest in Google than from his participation on the Commission," the complaint said.
Last month Consumer Watchdog sent a letter to Gov. Cuomo saying he should remove Schmidt from the Commission immediately given Google's disregard for students' privacy and the potential for self-dealing.
Read copy of the letter here: http://www.consumerwatchdog.org/resources/ltrcuomojcjs.pdf
Gary Reback, an attorney with Carr & Ferrel, in Menlo Park, CA., assisted Consumer Watchdog in preparing its formal complaint to the FTC.
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