In April 2007, the Economist wrote several articles about Google. In one, the writer asserted that Google has assumed a position of a US financial institution. Put differently, the article suggested that Google is a safe keeper of valuable customer information and, may ultimately, be forced to make changes as a result of their priviledged position.

Just one important point: US financial institutions are highly regulated enterprises because they receive a protection from the federal government should a bank ever face financial struggles that could cause systemic risk. I’m sure there are some that would argue that the federal government would intervene to protect any entity that might pose a threat to our finacial markets, but, for the time being, the law is explicit only when it comes to depository institutions that hold consumer money.

I think the management team at Google would flip if they found themselves subjected to government intervention in the absence of a paralell legal framework.

Obviously, the writers general point is well taken. If history is any guide, the government will watch closely to ensure that Google does not use its might to prevent competition or, perhaps, compromise people’s privacy. But, the latter is a more difficult proposition than the former since our antitrust laws have seen more time than the privacy statutes which govern Google.

Net-net: the writer thinks the federal government is watching and its in Google’s best interest to take it seriously.