A Look at Lobbying in the Wake of Sopa/PIPA
Last week, we devoted lots of digital ink highlighting the unprecedented online activism that derailed both the Stop Online Piracy Act (SOPA) in the House and the Protect Intellectual Property Act (PIPA) in the Senate. This week we look at the flip side of citizen engagement: lobbying.
A total of 145 companies and organizations lobbied the House of Representatives for and against SOPA, while 157 groups lobbied for and against its sister bill in the Senate, according to the Center for Responsive Politics.
Politico reported this week that the lobbying industry’s (known by many as “K Street”) boom days have come and gone. A bad economy and rigid stalemates on Capitol Hill took its toll on big firms for the second year in a row, with seven out of the 10 biggest lobbying groups reporting flat or negative revenues in 2011, a significant contrast with the double-digit growth many of the same firms experienced in the mid-2000s, according to recently filed federal lobbying reports. (See also US lobbying spending drops after 11 years of gains)
And the stagnant revenues aren’t expected to pick up in the coming year with the economy still slow and an even bigger change afoot in the industry. Fights are no longer just about which side has the most — or best — lobbyists. The new world of Washington influence is more diverse: Traditional access lobbying is waged alongside campaigns that use media, grass-roots activism and the Internet — activity often not reported in federal lobbying filings.
We learned this week that AT&T begun shedding lobbyists in the wake of its failed merger with T-Mobile. AT&T ramped up its lobbying spending in 2011 as it tried to win regulatory approval for the $39 billion deal. That effort failed in December, when a series of setbacks forced AT&T to drop the merger and swallow a one-time, $4 billion severance payment to T-Mobile. A number of lobby firms earned big paydays working on AT&T’s behalf.
At least four lobby firms that lobbied on the merger have filed termination reports this month indicating they no longer work for the phone company, according to lobbying disclosure records.
- Holland & Knight earned $120,000 lobbying for AT&T during 2011, according to records, before the contract was canceled earlier this month. Former Rep. Jim Davis (D-VA) was among the lobbyists on the account.
- Capitol Hill Strategies took in $140,000 last year lobbying for AT&T, but the firm’s agreement with the company has ended, according to Senate records. Consequently, Chuck Brain, president of the firm and a former senior Clinton White House aide, is no longer lobbying for the company.
- Capitol City Group earned $180,00 in lobbying fees during 2011 from the company, but that contract was up last month.
- And JC Watts Companies’ contract with AT&T has been terminated after earning $200,000 in lobbying fees from the company last year. Steve Pruitt, a Democratic lobbyist and a former House Budget Committee staff director, was working on the account.
A fifth firm, Patton Boggs, also filed a termination report for its lobbying contract with AT&T this month. But the firm did not report any lobbying activity on behalf of the company over the past year, while its affiliate, the Breaux Lott Leadership Group, is still under contract with AT&T, earning $480,000 in lobbying fees from the company in 2011, according to records.
But don’t cry over, um, spilled lobbying dollars. Politico also reported that lobbying spending by the nation’s most prominent political influencers largely rebounded during last year’s fourth quarter, in part reflecting aggressive special interest campaigns concerning health, trade, employment, energy, telecom and technology issues. Google, Verizon, Comcast, Time Warner Cable and CTIA-The Wireless Association were among the companies that posted larger lobbying numbers than they did during both the preceding quarter and the same period one year before. Facebook also reported markedly increased federal lobbying investments.
In all, 17 of the nation’s top 50 biggest-spending lobbying entities, as calculated by the Center for Responsive Politics based on third-quarter federal lobbying spending, exceeded their fourth-quarter 2010 and third-quarter 2011 output. Another 24 entities saw their spending in last year’s fourth quarter jump compared with one of the two periods. And more than three-fifths of these top 50 entities spent more for all of 2011 than they did in 2010.
Lobbying By the Numbers
The tech as a whole is still vastly outspent in terms of lobbying and campaign donations by such competitors as the cable, telephone and entertainment industries. Although tech's lobbying outlays are growing.
The largest proponents of SOPA and PIPA came primarily from the commerce and media industries. Comcast was by far the biggest lobbyist, spending upwards of $5 million on the issue. Visa and MasterCard spent several hundred thousand dollars, as did National Amusements, AT&T News Corp. and Time Warner, CNNMoney's parent company. The cable, motion picture and recording industry lobbies also spent heavily in support of the bills.
- In 2011, the Chamber of Commerce, a SOPA/PIPA supporter, spent $46 million on lobbying, the most in DC. And the Chamber dropped an unparalleled $14.2 million on all its lobbying efforts in the fourth quarter,
- Motion Picture Association of America and the Recording Industry Association of America, spent $850,000 and $1.1 million in the last months of 2011, respectively, and
- AT&T spent $20.2 million on lobbying in 2011.
In opposition to the bills, Google was the largest lobbyist, spending about $4 million. Also opposing the bills were eBay, Yahoo, Amazon and the Web's domain registry, the Internet Corporation for Assigned Names and Numbers.
- In 2011, Google spent $9.68 million on lobbying, up from $1.52 million four years earlier and $5.2 million in 2010. Opposition to the Stop Online Piracy Act ranked highly among the dozens of issues and bills Google listed in its most recent report.
- Google's US lobbying bill more than tripled to $3.76 million in the fourth quarter. The amount that Google spent making its political points from October through December is by far the company's highest lobbying tab for any three-month period since Google's Washington office opened in 2005. The total compared with a lobbying budget of $1.24 million during the final three months of 2010 and $2.38 million in the third quarter of 2011.
- Google has hired at least 13 lobbying and communications firms—with ties to both Republicans and Democrats—since May 2011, when the Federal Trade Commission ramped up its antitrust probe of the Internet giant. (The firms: Akin, Gump; Bingham; Capitol Legislative Strategies; Chesapeake Group; Crossroads Strategies; Gephardt Group; Holland & Knight; Normandy Group; Prime Policy; The First Group; The Madison Group; and the Raben Group.)
- In 2011, Facebook, which had a one-man operation in Washington as recently as 2007, set a new lobbying record for itself, spending $1.35 million. In 2010, by contrast, Facebook spent less than $400,000. And Facebook's fourth-quarter spending for last year was $440,000, up from $130,000 during the same period in 2010.
Don't Forget Political Contributions, Too
Of course, political contributions also play a role in the relationships between policymakers and companies.
- According to Maplight, a nonpartisan group that analyzes money's role in politics, current senators have received $14.4 million over the past six years from entertainment interest groups supporting the online piracy bills, seven times the $2 million they got from Internet groups opposing the legislation.
- In 2008, employees of Google and Microsoft Corp. were No. 4 and No. 5, respectively, as sources of campaign donations for then-Sen Obama's presidential campaign, giving a combined total of about $1.7 million, according to the nonpartisan Center for Responsive Politics.
- Time Warner, the top media company, trailed behind, with its employees ranking as the No. 8 source of donations to the Obama campaign that year.
- Through September 2011, Microsoft employees ranked as the top supporters of the president's re-election campaign, and Google employees were No. 5. Time Warner employees had slipped to No. 10.
- Google's political action committee is only six years old, but it has grown steadily, from just $31,000 in donations during the 2006 election cycle to $336,000 in 2010, according to the Center for Responsive Politics. The company's PAC splits its donations almost equally between Democratic and Republican candidates.
[Note: Concerning SOPA/PIPA, Free Press is urging lawmakers to put their money where their mouths are. The group is asking the top recipients of the Motion Picture Association of America’s (MPAA) campaign cash to give the money back. We're hoping this will send a message to MPAA and all other corporate lobbyists that our nation's laws are not for sale.]
In part, lobbying buys firms access to policymakers and their staff. MPAA, for example, often held private movie screenings of soon-to-be-released titles for Capitol Hill staffers at the studios' plush theater just a few blocks from the White House. As the anti-piracy bills were developed, tech lobbyists and industry groups found that it was difficult to highlight major problems and issues with key lawmakers because the entertainment industry had such a tight grip on the House and Senate Judiciary committees.
Tech lobbyists had to cast a much wider net to policymakers outside the Judiciary committees, which may have caught the opposition off guard. That required extensive shoe leather lobbying to weaken some of the congressional support for the bills, which signaled within committees that the support wasn’t as strong as it should be. They were able to warn some congressional leaders of an impending disaster — that “this is a big freight train,” said one tech lobbyist.
The tech industry won access, too. Google’s Eric Schmidt and a Facebook representative were among those given the chance to make their case to White House Chief of Staff William Daley in December, helping to prompt the recent White House statement nodding to Google's concerns about excessive regulation of the Internet.
The Web's Growing Muscle
On January 24, the Wall Street Journal published a piece by Amy Schatz, Erica Orden, and Geoffrey Fowler celebrating Google’s rising influence with DC policymakers. With Google taking the lead, they write, the Internet industry is building a strong traditional lobbying force in Washington. And, to complement that inside game, websites' millions of users have become a powerful outside weight on Congress.
"There is no question that the influence of the Internet community is at its apex," says Leslie Harris, chief executive of the Washington-based nonprofit Center for Democracy and Technology, which is backed in part by tech companies including Google and Facebook. "I believe that something profound happened," she says of last week's revolt against bills in the House and Senate aimed at combating foreign pirate sites. "It was not just the tech companies—it was the users."
It is this “outside game,” the Wall Street Journal authors conclude, that traditional media and entertainment owners can’t match. Motion Picture Association of America Chairman Chris Dodd blamed the movie industry's problems in part on technology companies' ability to lobby the public directly. As a result, Dodd argued, "now you've got to lower the level of emotionalism about this issue that's blown up in ways that we haven't seen before."
The Web protest over piracy legislation illustrates the potential power of Google's public platform. On average, 153 million Americans visited a Google-branded page per month in 2011, according to Nielsen. When Google joined Wikipedia and thousands of other websites to protest Congress's proposed antipiracy legislation last week, support for the measures dropped and the bills were put on indefinite hold.
But the stop SOPA campaign is noteworthy because it was not directed by a grand design launched by the large companies, but came from the bottom up, from small companies and independent Internet activists. They started a wildfire of opposition with companies such as Google and Facebook adding their voice as the movement reached a crescendo.
The result was powerful, said Rep Anna Eshoo (D-CA) who represents Palo Alto, because members of Congress react far more quickly when real people are writing and calling their offices in large numbers rather than what appears to be "astroturf" campaigns that seem to be driven by large companies spending money to gin up support.
"Anyone can go hire an outfit to blast out 10,000 robocalls," Eshoo said. "But this was something you can't buy. It's a textbook classic for everyone to appreciate, the power of the Internet and its users."
In the SOPA/PIPA debate, the entertainment industry and other old guard business interests had put in play their usually reliable tactics to rally support for the bills. There were e-mail campaigns, television and print ads in important states, a Times Square billboard, and uncounted phone calls and visits to congressional offices in Washington and around the country. That included about 20 trips to the Capitol by leaders of the National Songwriters Association International, often accompanied by songwriters who performed their hits for lawmakers and their staffs. Such campaigns are often music to the ears of lawmakers. This time, however, it was smothered by an online outpouring against the legislation.
"This does serve as a watershed moment," said Jennifer Stromer-Galley, a communications professor at the State University of New York at Albany who studies how political groups use high technology. "Certain channels for communication that people routinely use have the power to get their users to become political activists on their behalf."
“There’s a new kind of lobbying,” said Ron Conway, a prominent investor in the Silicon Valley. “It’s from the grass roots. It’s as pure as lobbying can get — individual to individual.”
What Does the Future Hold?
The outcome of the SOPA/PIPA debate is a new day for tech, some declared, demonstrating the industry's clout on Capitol Hill and pointing toward a strategy that would allow tech greater influence. But it will remain the exception for a simple reason: On most issues, tech remains a house divided against itself. What we saw last week was that rare instance in which tech spoke with a unified voice, and as a result was able to galvanize a grass-roots outpouring that Capitol Hill simply could not ignore.
In the end, the outcome showed the lobbying world is changing, said Kathy Garmezy, an official with the Directors Guild of America, which supports the bills. "Of course you say to yourself, 'What can you change?'" she said. "I don't think we've come to conclusions or closure."
Tech activists and observers are wondering whether Silicon Valley needs to play by the old lobbying rules at all. Maybe it can just rile the masses using the Internet if the issue is important enough.
Or maybe it doesn’t have to — doing it once may have been enough to boost the industry’s political clout, said Eugene Volokh, a professor of law at UCLA. “Google knows if it has to do it again, it has worked once,” he said. “And legislators know that Google knows that. And Google knows that legislators know that it can do it. That kind of knowledge changes the power dynamic in some issues even if Google never speaks out in the same way again.”
TechNet, one of the industry's largest political associations, will now be looking at ways it can replicate the SOPA campaign that melded grass-roots support leveraged by the very tools created by the tech industry.
Harris of the Center for Democracy and Technology cautioned that the activists leading the revolt may not always be in lock step with the views of large Internet companies. "It still remains to be seen whether you can organize users for something and not just against something," she says.
“The lesson here is not that the tech industry has millions of people blindly doing what it suggests,” said Eli Pariser, former executive director of MoveOn. “I don’t think Google will be able to count on all the people who took action on SOPA not to challenge Google when it does something that feels counter to the ethos of the Internet.”
Media executives are cautious about reintroducing any antipiracy legislation this year after last week's debacle, but when they do they say it will require a larger lobbying push, from grass-roots operations to rapid-response teams. "People are looking at what Google spent on lobbying and wondering, 'Can we match that?'" a media executive says. "It has to be a big spend."
Writing in Slate, Matthew Yglesias highlighted some possible lessons from the SOPA/PIPA debate:
- Lobbying isn't all about money: Hollywood badly outspent Silicon Valley on this issue and still lost. This is completely typical. There's no evidence that better-funded groups systematically win policy fights.
- But money matters a lot: That said, it's extraordinarily difficult to get on the agenda if you don't have some money to spend. The fact that Silicon Valley firms like Google now have Washington offices and are clearly capable of offering both campaign contributions and the "legislative subsidy" of policy analysis to people who champion their causes was critical to getting opposition off the ground.
- In America, always bet on change not happening: To pass something, you need to run the table -- committees, two different houses of congress, the president -- while to block something you only need one stopping point.
- Polarization is an illusion of agenda-control: The parties are polarized in part because the leadership deliberately promotes a polarizing agenda. Leaders deliberately put issues that unite their caucuses on the agenda. When happenstance causes the agenda to be dominated by something outside the main structure of partisanship, the polarization dynamic breaks down.
- Public engagement matters: Members of Congress, just like regular people, only have deep commitments to a few priorities. When they suddenly learn that they've misjudged how many of their constituents care about something and which side they're on, they're happy to change positions.
But creating such genuine grass-roots fervor can be a tricky exercise. And it's not a strategy that Rep Eshoo expects to be deployed very often, particularly by larger companies that might see it as too risky to try to turn their users into a grass-roots army that might be hard to keep in line. "You have to pick and choose your battles," Rep Eshoo said. "And I think the larger companies become, the more cautious they become. The small guys, they're scrappy." So, a cautionary message amid the euphoria. It's only by believing that this moment means more than it does in terms of tech's political reach that we will turn today's euphoria into tomorrow's disappointment.
“The political industry itself is under massive disruption,” wrote David Binetti, a tech entrepreneur and founder of Votizen, a political engagement site, in a recent post on TechCrunch. “This is just the beginning.”
One example may be EngineAdvocacy, recently formed to create an environment where technological innovation and entrepreneurship thrive by educating, collaborating, and involving startups in shaping policy. The group has charted out a dozen issues it will keep an eye on.