Silicon Valley, Not Wall Street, is the New Political Power House in D.C.

It used to be banks, but now it is tech giants that dominate the US lobbying industry. Can money buy them what they want: less competition, less tax … and more data?

The scholar Barry Lynn worked at the New America Foundation, a Washington thinktank, for 15 years studying the growing power of technology companies like Google and Facebook. For 14 of them, everything was, he says, “great”.

This week, he was fired. Why? He believes it’s because Google, one of the thinktank’s biggest funders, was unhappy with the direction of his research, which was increasingly calling for tech giants including Google, Facebook and Amazon to be regulated as monopolies.

Leaked emails suggest the foundation was concerned that Lynn’s criticism could jeopardise future funding. In one of them, the organisation’s president, Anne-Marie Slaughter, wrote: “We are in the process of trying to expand our relationship with Google on some absolutely key points … just think about how you are imperiling funding for others.”

Slaughter denies that Lynn was fired for his criticism of Google. It’s a difficult story to swallow, given that Google’s parent company, Alphabet, along with its executive chairman Eric Schmidt, have donated $21m to New America since 1999. Schmidt even chaired the thinktank for years and its main conference room is called the “Eric Schmidt Ideas Lab”.

Funding thinktanks is just one of the ways that America’s most powerful industries exert their influence over policymakers. Much of the work takes place a quarter of a mile from the White House, in a lesser-known political power base: Washington’s K Street corridor, the epicenter of the lobbying industry.

In addition to thinktanks, K Street is packed with slick corporate representatives, hired guns, and advocacy groups. The lobbyists spend their days swarming over members of Congress to ensure their private interests are reflected in legislation and regulation.

While the big banks and pharma giants have flexed their economic muscle in the country’s capital for decades, there’s one relative newcomer that has leapfrogged them all: Silicon Valley. Over the last 10 years, America’s five largest tech firms have flooded Washington with lobbying money to the point where they now outspend Wall Street two to one.

Google, Facebook, Microsoft, Apple and Amazon spent $49m on Washington lobbying last year, and there is a well-oiled revolving door of Silicon Valley executives to and from senior government positions.

Tech companies weren’t always so cozy with Capitol Hill. During its 1990s heyday, Microsoft accumulated enormous wealth and market share. Despite being one of the world’s largest companies, the PC software pioneer mostly kept away from Washington, spending just $2m on lobbying in 1997.

However, the company’s size and anticompetitive business practices attracted the scrutiny of regulators in Clinton’s administration, whipped up by the lobbying of disgruntled competitors including Sun Microsystems, IBM and a company called Novell. The following year, the Department of Justice sued Microsoft, accusing it of using a Windows operating system monopoly to push its Internet Explorer browser to the disadvantage of rivals.

After years of legal wrangling, Microsoft was forced to make it easier for competitors to integrate their software with windows. The lengthy lawsuit left Microsoft with deep battle scars, and a more cautious, less aggressive approach to business. Under these conditions, rivals like Apple and Google were able to thrive.

The landmark action taught Silicon Valley’s tech titans a painful lesson: play the political game or Washington will make your life difficult.

That made a particularly profound impact on Eric Schmidt, who as CEO of Novell and former CEO of Sun Microsystems had a front-row seat to Microsoft’s public neutering. He clung on to the cautionary tale when he was hired as CEO of Google in 2001. Under his leadership, Google vastly increased its investment in lobbying to make friends and influence policymakers in Capitol Hill.

The company spent just $80,000 on lobbying in 2003. Today, its parent company, Alphabet, spends more on lobbying than any other corporation – $9.5m in the first half of 2017 alone and $15.4m the previous year. In 2013, the company signed a lease on a 55,000-square-foot office, roughly the same size as the White House, less than a mile away from the Capitol Building.

And it’s not just Google. Facebook, Amazon, Apple and Microsoft – which was hamstrung by its lacklustre early efforts to court policymakers – have been pouring money into Washington.

“They are overwhelming Washington with money and lobbyists on both sides of the aisle,” said Robert McChesney, communications professor at the University of Illinois. “The Silicon Valley billionaires and CEOs are libertarian, low-tax deregulation buddies of the Koch brothers when it comes to talking to Republicans, and dope-smoking, gay rights activist hipsters when they mix with the Democrats.”

The tech giants aren’t spending this money just to get invited to the best parties in Washington – they’re doing this to protect their oligopolies. Their main areas of concern include the threat of looming action over anti-competitive practices, anything that might lead to higher taxation, net neutrality and privacy.

Such concerns have led Schmidt, who was heavily involved in the Obama campaign, to bend the knee to Donald Trump, despite saying in January that the president would do “evil things”. By June, he had changed his tune, crediting Trump’s administration with fostering a “huge explosion of new opportunities”.

“Politics is just a transaction to these people,” said Jonathan Taplin, author of the recently published Move Fast Break Things: How Facebook, Google, and Amazon Cornered Culture and Undermined Democracy.

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The Guardian