comments

Silicon Valley flexes muscle in Washington

@CNNMoneyTech May 9, 2011: 2:15 AM ET

WASHINGTON (CNNMoney) -- Silicon Valley has become a force to be reckoned with on Capitol Hill, spending more than $100 million on lobbying and tens of millions on campaign contributions.

Internet and computer companies spent $30 million on lobbying in the first three months of 2011, according to an analysis by the Center for Responsive Politics. And that's on top of a whopping $121 million in 2010, putting that sector among the biggest spenders.

Additionally, computer and Internet political action committees spent $5.8 million in campaign contributions during the 2010 congressional elections.

While many U.S. companies took a breather from lobbying so strongly in the first few months of 2011, tech sector lobbying remained strong and ticked upward at most top companies.

One big reason for the bump in lobbying is the tight competition among these companies, said Ray Bjorklund, senior vice president at Deltek Inc.'s FedSources, a Washington-market research firm.

With more competition in all the different technology sectors, Bjorklund said that new rules -- such as preventing firms from sharing of consumer's private information -- can really affect the bottom lines of these companies.

"It's become more critical for these tech companies to have a presence here in Washington, so they can get to decision-makers and those people who are drafting these bills," Bjorklund said.

Companies that have spent more on lobbying this year include Amazon (AMZN, Fortune 500), Apple (AAPL, Fortune 500), Cisco (CSCO, Fortune 500), Expedia, Facebook, Google (GOOG, Fortune 500), Intuit, SAP, Yahoo (YHOO, Fortune 500), Texas Instruments and Verisign, according to Senate records.

And what does their money buy? Access and friends. Consider:

Facebook's $600 million virtual economy

* Last month, President Obama held a Facebook town hall standing beside Facebook CEO Mark Zuckerberg and chief operating officer Sheryl Sandberg, who was chief of staff to Lawrence Summers when he was Treasury Secretary in the Clinton administration.

* In January, Obama declared the United States a nation "of Google and Facebook" in his State of the Union address. And in February, Obama sat between the leaders of Apple and Facebook at a private party in Woodside, Calif. Google and Apple face several different regulatory investigations.

* Next week, Google and Apple leaders will be in familiar territory when they face a Senate subcommittee inquiry investigating reports that Apple's iPhone and iPad and Google's Android smartphones track users' locations.

Google and, to a lesser extent, Apple are among campaign contributors to several Democratic lawmakers on the panel, including Sen. Barbara Boxer of California and Sen. Charles Schumer of New York, as well as Judiciary Committtee chairman Sen. Patrick Leahy of Vermont.

New record spending

The Silicon Valley powerhouses in Washington are those that opened up lobbying shops years ago, such as Microsoft (MSFT, Fortune 500), Hewlett Packard and IBM -- each of which spent more than $1 million in the first few months of 2011 and more than $5 million on lobbying in 2010. They all have hired dozens of outside lobbyists to supplement in-house corporate lobbyists.

Yet, in the first few months of 2011, Google and Facebook dropped the most each company has ever spent on lobbying in a quarter.

Google spent $1.48 million in lobbying and has bulked up its team in Washington, which now has 9 in-house lobbyists and 30 outside lobbyists, according to records. The company also spent $918,134 overall on campaigns during the 2010 elections, according to the Center for Responsive Politics.

"Over the past few years, the Internet has become a bigger part of our life, so naturally it's become a bigger part of the focus in Washington D.C.," said Google spokesman Dan Martin.

Facebook spent $230,000, up drastically from the $41,000 spent during the same period last year. Facebook has three in-house lobbyists and 15 outside lobbyists, according to Senate records.

"This increase represents a continuation of our efforts to explain how our service works, as well as the important actions we take to protect people who use our service and promote the value of innovation to our economy," said Facebook spokesman Andrew Noyes.

Apple's spending remained flat compared to last year at $560,000. The iPhone and Mac maker has five in-house lobbyists and 18 extra lobbyists.

Google, Facebook and Apple all reported pressing lawmakers and federal regulators about issues including consumer privacy, online advertising, cyber security and censorship and tax policy, records state.

Pablo Spiller, a business and technology professor at the University of California at Berkeley, said that as tech companies grow and face more regulatory and anti-trust challenges, they realize that they can't just unveil a new gadget or application and rake in the millions the way they once did.

"These companies, for a long time, didn't think in terms of Washington," said Spiller. "It's only been in the last few years that they realized there's this world beyond Silicon Valley." To top of page

CNNMoney Sponsors
Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.