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Tech Industry Still Lags in Political Clout
The technology industry finally gets it. Washington D.C. is no longer a place companies can afford to ignore.
Within the past two years, numerous technology firms like Yahoo! and Cisco Systems have opened D.C. offices. Industry giants like Microsoft, Intel and AOL have suddenly added staff to focus on Congress. And the industry formed a bipartisan lobbying group, Technology Network (TechNet), to funnel money to candidates.
By some estimates, there are now about 90 trade groups, alliances, lobbying and PR firms in downtown Washington that specialize in high-tech policy. But as new kids on the block, they have yet to sort out a power base that gives the industry as a whole a clout on the Hill equal to traditional groups such as the telecommunications, trucking or healthcare industries.
"In terms of the economic power they have, the [tech industry] should have more political power than they do," said John Flaherty, chief of staff to Rep. Anna Eshoo D-CA, and formerly with Podesta.com, a lobbying firm focused on tech issues in D.C.
So far high-tech companies have established a presence in D.C. by forming ad-hoc groups pushing single issues like encryption or database copyright protection, a strategy that fragments the tech industry in the eyes of many in Congress. That’s left many members scratching their heads on exactly whom they should consult when confronted with a technology policy issue.
For example, Sen. Patrick Leahy D-VT says he usually picks up the phone or e-mails AOL’s Steve Case or Intel's Andrew Grove directly when he has a question about technology. He doesn’t bother with the ad-hoc groups or trade associations. "[The industry] is fractured... a lot of times I’ll just deal with individuals at companies rather than the trade groups... some in the industry don’t have the foggiest how Congress works," said Leahy, a ranking member of the Senate Judiciary Committee and Internet Caucus co-chair. Other CEOs Leahy talks to include Jerry Yang, co-founder of Yahoo!, Jim Barksdale, president and CEO of Netscape, and Jerry Berman, president of the Center for Democracy and Technology.
The proliferation of ad-hoc groups is in part due to the youth of the technology industry, and in part to the rapidly changing nature of the industry itself. Marketing relationships may form between Internet companies one day and then dissolve six months later, because a merger or a new line of business appears on the landscape. In the past three months alone, Yahoo! bought Geocities, At Home bought Excite and America Online purchased Netscape. And now there is talk among tech analysts that these portal companies may try to buy a newspaper chain or a TV network. "In this industry, relationships are of the moment and that... is confusing to many members on the Hill," said Jonah Seiger, principal and co-founder of mindshare Internet Campaigns LLC.
Right now, technology lobbying on the Hill is dominated by established industries like telecommunications, cable and broadcast, who have long-standing relationships with members of Congress and the White House. They have been drawn into the Internet arena as its importance grew as a medium, but these companies necessarily have an interest in lobbying to protect their base industries first.
The high-tech industry needs to establish a voice of its own separate from telecom, cable and broadcast, said Rep. Rick Boucher D-VA, a member of the powerful House Commerce Committee and Internet Caucus co-founder. The only way to do that, he believes, is to open a Washington office, and then hire a person or a lobbying firm who knows people in leadership positions in Congress and the White House. Once the Washington representative has formed and maintains relationships, then the industry needs to bring in the company executives to town to hammer home the importance of an issue, he said.
"A company has got to have an institutional presence here... because that presence is critical to advancing or defeating policy through the legislative process, Boucher said. "There has to be someone here on a full-time basis, attending to that business and educating members. Each company has a unique role that should be considered as we develop policy."
Working through a trade association just isn't enough because consensus on issues is elusive and changing as the industry changes. Boucher said his own personal experience is that in trying to build a coalition on the Hill in support of an issue, he had to go to specific companies rather than the trade associations because it took too long to get their support.
"The trade associations are effective on the positions where they can get broad consensus... but often they will be at odds on issues... they can’t speak for every company on every issue. I know this from personal experience... I had great difficulty getting trade associations to take a position, they had to sample their members and poll them and reach consensus. It was easier to get the individual company’s endorsements," Boucher said.
Hiring staff in D.C. that understand the Hill isn’t enough to establish clout however, according to both Republican and Democratic staff members. The industry also needs to do a better job of participating in the political process through fundraising. TechNet has started the ball rolling with bringing members to Silicon Valley to meet with CEOs and help them understand the business and by establishing a way for companies to give money to candidates.
"When you are the new kid on the block, it's harder for people to hear your issue and understand it and take it into account when making a decision," said a House Republican leadership source. "But I think what makes people sit up and take notice is the possibility of hitting political gold... the perception is, these guys are so darn rich, maybe we should listen and try to understand them and care about them -– but it would help if they had someone here and not 3,000 miles away."
Whether members of Congress will ever have one industry organization to turn to for advice on tech policy is an open question. Because the industry is competitive, diversified and ever-changing, Boucher and many others expect a continuation of ad-hoc groups to pop up in support of one specific issue and then disappear, as either the issue is resolved or a new challenge arises.
"I can’t imagine, we’ll ever get one tent... one centralized organization, because of the entrepreneurial nature of the industry," said Phil Bond, vice president of government relations for the Information Technology Industry Council, which represents many computer hardware companies.
As the industry matures, there may be some acceleration in consolidation as some of the trade groups have already decided to combine. In January, the Software Publishers Association merged with the Information Industry Association and the Direct Marketing Association acquired the Association for Interactive Media. Others have suggested that perhaps within a couple years, one or two large umbrella organizations could develop that would articulate broader issues for the industry, like Internet taxation, education policy, keeping the nation’s Internet system secure and federal research and development policy. In time, those groups could help provide a sharper vision for the industry.
"We have not as a group articulated our position as crisply as we’d like... we have to do a better job of prioritizing things so that people understand where an issue like tax credits fits in versus an issue like how you treat stock options," said Cisco Systems CEO John Chambers.
Members on the Hill say they look most often to the Business Software Alliance, the Information Technology Industry Council, the Software & Information Industry Association, the Computer & Communications Industry Association and the Information Technology Association of America to answer questions about technology issues. Companies that are seen as increasingly politically savvy include, America Online, Microsoft, Intel, Cisco and Hewlett-Packard and the one ad-hoc group that was consistently named as effective is Americans for Computer Privacy, which lobbies on loosening encryption export controls.
 | - by Bara Vaida |
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