Tech Wields Its Political Clout

By Caron Carlson  |  Posted 2005-05-09

Tech Wields Its Political Clout

Until this month, Lezlee Westine answered directly to President Bushs top adviser, Karl Rove, but as of next week, she will answer to CEOs Craig Barrett, of Intel Corp.; John Chambers, of Cisco System Inc.; Stratton Sclavo, of VeriSign Inc.; and 14 other IT luminaries.

The newest face of the IT industry here, Westine is leaving her job as director of public liaison and deputy assistant to Bush to become CEO of TechNet, a political network of CEOs. She will open the first Washington office for the association, which, until now, has operated out of its base in Palo Alto, Calif.

TechNets growing presence here and its placement of a well-connected administration insider at its helm mirror a larger trend in the industry. Having once shunned politicking—in keeping with a West Coast, independent, free-spirited image—IT is fast becoming one of the countrys highest-profile groups seeking to influence Capitol Hill, the White House and federal agencies.

"I think it reflects a maturing and an evolving of the industry and a realization that we are now very established," said Westine, who worked at TechNet from 1997 until she joined the White House in 2001. "So much of the decision-making is happening here."

But as its power grows, the IT lobby increasingly looks out for its parochial interests—often at the expense of users, experts say. Policies on issues ranging from spam to security to patent law to stock options are being influenced by companies such as Microsoft Corp., Intel and IBM in ways that protect innovation but often eschew consumer protections, they say.

TechNet is not alone in turning to Bush administration insiders to lead the lobbying charge.

This spring, the Washington-based Information Technology Association of America hired Stephanie Childs, a former Department of Commerce adviser, to lobby on tax policies. The Cyber Security Industry Alliance, in Arlington, Va., joined the crowded field of IT lobbying a year ago with Paul Kurtz, former special assistant to President Bush, at its helm. Ed Ingle, former deputy assistant to the president and deputy Cabinet secretary, joined Microsofts in-house lobbying team in 2003.

Also in 2003, the Washington-based Computer Systems Policy Project, another CEO-level trade group, hired Bruce Mehlman, former assistant secretary for technology policy at the Commerce Department.

With Republicans retaining control of the White House and Congress, Beltway observers say that hiring administration insiders is the most pragmatic way to get things done. The organizations, however, generally insist that the insider is simply the most qualified candidate for the job.

"My policy of hiring is to hire the best person available. It had nothing to do with the fact that she worked for the Bush administration," said ITAA President Harris Miller about hiring Childs. "Ive found that hiring the best person is preferable to hiring the person who is the most connected. Were here for the long term."

For an industry that had no discernible presence here as recently as a decade ago, IT grew with record speed into one of the 10 biggest lobbying spenders in town. The amount of money the industry pays to affect public policy and government decisions now rivals that of the oil and gas business and the telephone companies.

Click here to read about the growing number of cyber-security companies joining the lobbying ranks.

The spending is led by Microsoft, which blazed the trail to Washington when it set up a one-man lobby shop to assist in the battle against the antitrust lawsuit brought by the Clinton administration in the mid-1990s. By last year, the Redmond, Wash., software maker was paying no fewer than 17 outside organizations—mostly Washington law firms—to lobby beside 14 in-house lobbyists on about 60 issues.

In the last five years, Microsoft reported spending approximately $39 million on direct lobbying at the federal level, according to documents filed with the Senate Office of Public Records. The sum does not include money spent routinely to influence lawmakers through media campaigns, advertising in Washington newspapers, grass-roots initiatives, membership in trade associations and other lobbying activities, all of which add up to millions of dollars.

The other major industry players have escalated their spending at a comparable pace. Intels lobbying grew steadily from just over $1 million in 1998 to approximately $6 million last year, counting 14 in-house lobbyists and six outside firms. In the last five years, Intel reported spending approximately $28 million, IBM reported spending $28.4 million and Oracle Corp. reported spending $11.4 million.

It is not unusual for young industries beginning to mature to head for this city once they achieve a size and prevalence that catches the eye of policy-makers, but the pace at which ITs spending here has grown is exceptional. "The high-tech industry in general increased its political involvement faster than any other industry," said Steve Weiss, spokesperson at the Center for Responsive Politics here. "The speed with which they did it—and the pure increase in the amount of money spent—is something we have never seen before."

Next page: IT continues to produce more trade groups.

Page Two

Companies also spend millions of dollars yearly in fees to belong to industry associations that lobby for them. While several industries, including telecommunications, have witnessed a recent reduction in the number of these groups, IT continues to produce more trade groups, and large companies sometimes belong to dozens at a time.

For example, Intel, based in Santa Clara, Calif., belongs to the Business Software Alliance, Computer Systems Policy Project, Information Technology Industry Council, TechNet, Information Technology Association of America, SemiConductor Industry Association and an array of broader business interest groups, including the American Electronics Association, National Association of Manufacturers and the U.S. Chamber of Commerce.

The companies contacted for this story would not disclose the number of trade associations they belong to or the amount they spend on annual membership, but, in 2003, those associations alone spent $28.6 million on lobbying.

Lobbying resources buy access to lawmakers and other public officials, something the industry seeks more of each year as the governments interest in technology grows. Computers and the Internet present an expanding list of constituent concerns, including spam, spyware and ID theft. On these technology-specific issues, most industry lobbying aims to forestall laws or regulations that could burden the industry and its fast pace of innovation.

"As policy-makers become more interested in what we do, theres always the danger that they will do something harmful to innovation or to the growth of the industry," ITAAs Miller said. "The mind-set still is that the government which governs best governs least."

User advocates do not always agree, however, particularly on network security matters. In the last Congress, outlawing spam was high on the agenda, and user advocates urged lawmakers to enact an opt-in provision for commercial e-mail. The industry opposed the opt-in approach and lobbied to prevent stringent regulation. In the end, Congress passed the CAN-SPAM Act in late 2003 with broad industry support, but users receive more spam today than ever before.

"It is clear that a spam bill would not have passed without the technology industry saying, Yes, this is the right thing to do," said Kenneth DeGraff, policy advocate at Consumers Union here. "They unfortunately pushed for a weak bill that has not served consumers. They won, but they didnt solve the problem."

In a similar vein, legislative initiatives to require tighter network security measures have brought strong opposition from the industry, raising questions among some security advocates about the merit of the expanding IT lobby.

"I think that this money could be better spent on improving their products than on trying to persuade Congress not to legislate [requirements] to improve their products," said Alan Paller, director of research at The SANS Institute, in Bethesda, Md.

As pre-emptive lobbying continues to grow, so do lobbying efforts that aim to reap the benefits of government action, and, in this case, it isnt always the government that governs least that governs best. Increasingly, the independent, free-spirited IT industry is turning to Washington for help in myriad forms, including favorable trade laws, limits to class action lawsuits, intellectual property protection and exemptions from visa caps.

The large number of associations speaking on behalf of IT sometimes confuses policy-makers, according to some who represent the industry but asked to be anonymous so as not to offend their colleagues. On the recent issue of stock-option accounting, however, the industry presented a united front.

"Stock options really go to the heart of what Silicon Valley is all about," said Jennifer Greeson, an Intel spokesperson in Washington. "Its about individual ownership in the company and the ability to reward employees based on company performance and the idea that you can have a piece of the pie."

The longer an industry has lobbyists in Washington, the wider, more diverse its policy interests become. IBM, which came to Washington in the early 1960s when it was facing antitrust challenges, has maintained a relatively steady lobbying budget since 1998 of $5 million to $7 million. The number of issues IBM lobbies on continues growing, and, last year, its 26 in-house lobbyists addressed many Capitol Hill issues. IBM declined to comment for this story, instead referring to its filed reports.

"At the end of the day, its still a tiny percentage of the budget," ITAAs Miller said about the industrys lobbying. "IBM is an $85 billion company. I dont think their government relations office is even a rounding error. Its a lot bigger than it used to be, but its pretty small chump change."

The Software & Information Industry Associations antecedent, the Software Publishers Association, opened shop in the mid-1980s to lobby only for an amendment to the software rental laws, said SIIA President Ken Wasch. "We told [Congress], Give us this, and youll never hear from us again," Wasch said with a laugh because today the organization lobbies on dozens of issues from trade and taxation to spam and privacy. "Look, weve just matured. If youre the pharmaceutical industry or the automotive industry, you lobby on every issue. Weve become like every other mainstream industry."

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