Tech firms go on a legislative offensive
Published: 28 Mar 2006 16:20 BST
In 1997, Microsoft was so disdainful of federal bureaucrats that it created a Web site specifically to keep regulators at bay.
At the time, future chief executive Steve Ballmer quipped "to heck with Janet Reno", and a press release by co-founder Bill Gates accused the government of "trying to slow Microsoft down".
Since then, however, the company's approach toward Washington has evolved from confrontation to cooperation: At $46m over seven years, Microsoft by far outspends any other technology company on lobbyists. And Gates' incendiary press release has since vanished from Microsoft's Web site.
What a difference a decade makes. In the last few years, technology firms have not just opened lobbying shops, but they've also begun to use their growing political muscle for offence. Instead of merely fending off new regulations and taxes, many companies have begun to join in the classic Washington game of pushing for them — as long as someone else is the target.
A ZDNet UK sister site CNET News.com analysis shows that spending on lobbyists by large information technology firms has more than doubled between 1998 and 2004, the period for which complete records are available. During those years, the total amount of influence purchasing by 37 prominent computer and Internet firms on registered lobbyists totalled $227.5m (£130.3m), according to federal disclosure records. The total rises to $430.1m if it includes the work of lobbyists hired by telecommunications companies such as Verizon and AT&T.
The trend is a major shift in strategy for technology companies. Where the industry once assailed Beltway bureaucrats for their interference, it now routinely hires lobbyists — causing some to speculate that technology firms may have become a little too cosy with Washington for their own good.
"Business just goes there, plays a sucker's game and finds itself being treated with disdain," said Fred Smith, president of the Competetitive Enterprise Institute, who has written extensively on relationships between businesses and politicians. "The way you get businesses continually coming to you and begging favours from you is to constantly rejig the rules. Chaos is a great way to extract money."
The influence-buying practices of all industries have fallen under increasing scrutiny in recent months because of a federal investigation centring on lobbyist Jack Abramoff, who pleaded guilty in January to fraud, tax evasion and conspiracy to bribe public officials. His plea agreement says an unnamed aide identified only as "Staffer A" received illegal bribes for "stopping legislation regarding Internet gambling".
No technology companies have been publicly accused in any of the recent lobbying scandals, and their spending from 1998 to 2004 was still far behind that of counterparts in other industries, such as Boeing ($57.6m); General Electric ($94.1m); and Northrop Grumman ($62.2m). But lobbying among tech companies is clearly on the rise, and the numbers disclosed in federal records actually underestimate total spending.
Faux 'grassroots' campaigns
Under the 1995 Lobbying Disclosure Act, it's legal for companies to lobby through membership in coalitions or by funding faux "grassroots" campaigns. And many industry representatives who act as lobbyists are not registered as such: Neither chief executive Mitch Bainwol nor president Cary Sherman of the Recording Industry Association of America were listed in a government database of lobbyists in 2005.
Growth in lobbyist spending was inevitable because "we have been in a period in which it's widely recognised that the technology sector is potentially subject to regulations," said Roger Cochetti, group director of US public policy for the Computing Technology Industry Association, which counts board members from Ingram Micro, Symantec, Lenovo and Xerox. "And in this environment, most major technology companies support a government relations programme of their own."
Spending by political-action committees (PACs) affiliated with technology and telecommunications companies also has risen. During the...
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