Does It Really Make Sense For Silicon Valley Companies To Make Friends In DC?

from the politics-is-a-dangerous-game dept

The common wisdom around Silicon Valley for the last twenty years or so, has been that companies here need to be much more active in Washington DC, and really should be more active on the lobbying front. The classic example of a tech company that didn't pay much attention to lobbying was Microsoft. And, more recently, it was joked about how Google was late to the game, and not very good at it when it started (I remember the stories of Sergey Brin showing up in DC in silver mesh sneakers and a t-shirt and finding it hard to get meetings with Congressional reps). Yet, with reports that Facebook is trying to buck this trend with a strong DC presence (including possibly hiring former Obama press secretary Robert Gibbs), DCer Adam Thierer makes the case that tech companies "normalizing relations" with DC is a bad, bad idea, because when you get into the lobbying game, inevitably, you become focused on using politics to limit others, rather than on your own ability to innovate.

It's the same basic argument that Andy Kessler discussed in his recent guest post (and in his new book, Eat People) concerning the difference between entrepreneurs who create value... and those who use politics to lock up value.
In an essay I penned for the Cato Institute last November entitled The Sad State of Cyber-Politics,” I reiterated arguments made a decade earlier by two brilliant men: Cypress Semiconductor CEO T. J. Rodgers and the late great Milton Friedman. Rodgers penned a prescient manifesto for Cato in 2000 with the provocative title: “Why Silicon Valley Should Not Normalize Relations with Washington, D.C.” in which he argued that, “The political scene in Washington is antithetical to the core values that drive our success in the international marketplace and risks converting entrepreneurs into statist businessmen.” A year earlier, Friedman penned another Cato essay called “The Business Community’s Suicidal Impulse” in which he lamented the persistent propensity of companies to persecute one’s competitors using regulation or the threat thereof. What both men stressed was that coming to Washington has a tendency to change a company’s focus and disposition, and not for the better — if you believe in real capitalism, that is, and not the abominable crony capitalism fostered by Washington.
As Adam notes, the companies like Facebook seeking greater attention in DC certainly aren't doing so with the explicit purpose of trying to limit others and seeking regulatory capture of some sort. For the most part, as he says, they're in "cover your butt" mode. But, once you get established, there certainly is a temptation to make use of that situation to limit innovation, limit competition, and push for policies that simply benefit a single company.

To be honest, I'd always gone with the conventional wisdom, that building up better relationships with folks in DC was a good idea. But Adam (and the others he links to) make a good point that's worth considering as well. Perhaps I'm too idealistic in that I believed that perhaps more people explaining and demonstrating how innovation really works, would get the message through to politicians. Instead, it seems there may really be a risk that the opposite happens: and how DC politics works is the message that gets through to tech companies. And that may not be a good thing.

Filed Under: government, innovation, lobbying, politics, regulations, silicon valley, washington dc
Companies: facebook, google, microsoft

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  1. identicon
    John Doe, 1 Apr 2011 @ 5:23am

    Why not?

    The industry is being quite two-faced here. They worry about using politics to be anti-competitive, yet they don't mind using the courts to enforce anti-competitive copyright & patents. Lobbying DC is just the next logical step.

    It would be nice if they could all lobby together to create a better understanding of technology, the internet, etc but that might be too much to hope for.

    reply to this | link to this | view in thread ]

  2. identicon
    tm, 1 Apr 2011 @ 5:48am

    GE paid 0% tax on its billions in profit. If you have enough lobbyists you can be a crony capitalist too.

    reply to this | link to this | view in thread ]

  3. identicon
    Alatar, 1 Apr 2011 @ 5:55am

    Why not rebalance the game?

    Why leave that field to entertainment industry lobbyists whose only aim is to limit technology as much as possible?

    IT ans Silicon Valley people are innovative, and they are against software patents (and maybe against any patents). Why not havec such lobbyists in DC, facing the "but...piracy" idiots?

    reply to this | link to this | view in thread ]

  4. icon
    Chris in Utah (profile), 1 Apr 2011 @ 5:59am

    I agree with the sentiment Mike. At some point the real power of lending a ear is to have both open. Though I do hesitate on the idealistic nature of it.

    It goes back to everybodys roots; if you keep looking up for answers your perspective is stuck there. The problem is the very people that can help you solve the issue are standing next to you doing the same dam thing.

    "Tend the oak if you want to live under it" --the Saga of Egil Skellagrimsson

    reply to this | link to this | view in thread ]

  5. icon
    Jay (profile), 1 Apr 2011 @ 6:06am

    Who else has been changed?

    Look at Rapidshare and their position in the digital cyberlocker market place.

    Look at Google and how much they've compromised their position.

    Look also at Microsoft and what they do.

    I recall that Victoria Espinel went to Silicon Valley and asked them what do they want and the most vocal answer was "to have DC leave us alone"

    The problem with lobbying in general is that money is being used to influence people to a certain position.

    This all leads to Lessig's discussion of just that very fact. The entire process corrupts everything in its path and seems to be nothing more than regulatory capture.

    reply to this | link to this | view in thread ]

  6. icon
    bkedersha (profile), 1 Apr 2011 @ 6:06am

    DC Lobbying

    Government loves to regulate, and you better have someone there looking out for you. If you do not have someone representing you on the Hill and in the Executive branch, laws me get passed that will SCREW you hard!

    reply to this | link to this | view in thread ]

  7. icon
    Chris in Utah (profile), 1 Apr 2011 @ 6:08am

    Re: DC Lobbying

    Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.
    Ronald Reagan

    reply to this | link to this | view in thread ]

  8. identicon
    Liz, 1 Apr 2011 @ 6:15am

    Film companies moved to California to escape artificial limits placed on their trade. Will new innovators in tech have to leave the planet to do the same thing?

    reply to this | link to this | view in thread ]

  9. identicon
    Anonymous Coward, 1 Apr 2011 @ 6:23am


    No we can create our own world/universe inside cyberspace.

    reply to this | link to this | view in thread ]

  10. identicon
    Anonymous Coward, 1 Apr 2011 @ 6:25am

    I think that the tech companies have the makings of better lobbying power, Microsoft did get to pass ridiculous copyrights laws that no other schmuck was able too, how?

    And most tech companies except maybe for a few of them like Microsoft are largely aligned for now with the public interests so for now if the game needs to be played let them trash the entertainment industry in their own silly game.

    When the tech industry start passing compulsory licensing for the entertainment industry to follow then I want to see them squeak.

    reply to this | link to this | view in thread ]

  11. identicon
    Anonymous Coward, 1 Apr 2011 @ 7:00am

    One has to wonder when the craziness of one industry will end, the entertainement industry has being doing this for over 40 years now without a shred of evidence that things got better, instead they just made things worst.

    Couple this with a replication of IFPI’s Hong Kong successes in other countries around the world and music piracy will almost certainly become a thing of the past, probably in a matter of a few years.

    Of course, there’s always the possibility that some new newfangled device will come along to stir things up, but rest assured, the music industry are no fools. They won’t be fighting this war in another 30 years.

    The law will see to that.

    Source: No Fools: 300 Feds Wipe Out 50% Of US Music Piracy Overnight
    By enigmax on 1/April/2011

    Yep, they are no fools, that is why they are vilified everywhere now and have lost control of everything LoL

    reply to this | link to this | view in thread ]

  12. icon
    Josh in CharlotteNC (profile), 1 Apr 2011 @ 7:15am

    Re: Why not rebalance the game?

    The simple answer is that today's entrepreneurs can easily turn into tomorrow's entrenched monopolies.

    Recorded music was at one point a entrepreneurial disruptive technology. The movie industry moved out west to get away from patent law.

    Imagine if Microsoft had started heavy lobbying in the 80s - would the anti-trust case in the late 90s have happened?

    Instead of "rebalancing the game" by encouraging more money to be used to buy politicians, how about we start killing off the old entrenched interests that are using money in this way. Replace them with companies who use their money to compete and make their products better instead of buying politicians.

    reply to this | link to this | view in thread ]

  13. identicon
    Snidely, 1 Apr 2011 @ 7:28am

    Mr. Utopia

    While I agree with Mike's idea, in reality the Silicon valley firms need to be in DC. Much like patent stockpiling, if you're not involved you're going to get screwed. DC isn't going away and all you need is one jackass to lobby for a small change and poof, you're out of business. I see Mike's argument the same way I see America's view on freedom in other countries, "we're all for it, unless oil is involved."

    reply to this | link to this | view in thread ]

  14. icon
    Thomas (profile), 1 Apr 2011 @ 7:53am

    don't they/.

    already pay lots of money in "campaign contributions"??

    reply to this | link to this | view in thread ]

  15. identicon
    Anonymous Coward, 1 Apr 2011 @ 7:57am

    I have noted in my 30+ years of law practice dealing with up-and-comers that the path to statism generally comprises three steps:

    1. They form an HR Department that begins to infiltrate the company with persons who do not have the vision, drive and cultural bent of those who invested their time and effort at the outset to make it successful.

    2. They go IPO, followed by the inevitable "going public", at which time MBAs start to rule the day and short-term income/profits take primacy over R&D investment and continuing product improvement.

    3. Then they traipse over to DC, whereupon a professional group of lobbyists who live and breathe DC begin to exert inordinate influence over the company's long range plan.

    In the final analysis, the companies move from an entrepreneurship mentality to that of a financial institution.

    I have seen exceptions, but they tend to be in the minority.

    reply to this | link to this | view in thread ]

  16. icon
    Suzanne Lainson (profile), 1 Apr 2011 @ 7:58am

    Lobbying, Politics, and the Kochs

    Are we making a distinction between lobbying and becoming involved in the political process?

    I am hoping Silicon Valley does get involved politics. I'd like a perspective other than that coming from the groups supported by the Kochs. I'm not sure I'd like to see the Tea Party become the dominant political force in the US.

    Here's an example of something that has the support of members of VC community: The Startup Visa. How many other groups are going to bat in support of opening up immigration?

    Another area that comes to mind is clean tech. Do we want policy influenced by the oil and coal industries without input from clean tech entrepreneurs?

    I'm all for getting corporate money entirely out of the political process, but until that happens, I'm not sure I want policy set and voters influenced by one side without input from anyone else.

    reply to this | link to this | view in thread ]

  17. identicon
    Anonymous Coward, 1 Apr 2011 @ 8:10am

    The real problem today is that the economic landscape it the USA is set up for crony capitalism.

    reply to this | link to this | view in thread ]

  18. identicon
    Anonymous Coward, 1 Apr 2011 @ 8:14am

    My friend pointed out that for years industries like Movies and Music tried to stay away from Government because of control. He figures there involvement now will backfire eventually. I tend to agree, eventually the master will want something in return you can't see now.

    I understand why they lobby. What I don't get is if we are supposed to have a representative government of the people why so few are represented in government. And usually the people come last in that equation.

    reply to this | link to this | view in thread ]

  19. icon
    Suzanne Lainson (profile), 1 Apr 2011 @ 8:42am

    Some good research showing the link between money and policy

    reply to this | link to this | view in thread ]

  20. icon
    Chris in Utah (profile), 1 Apr 2011 @ 9:32am


    missed the part where were all looking up didn't ya?

    reply to this | link to this | view in thread ]

  21. icon
    anymouse (profile), 1 Apr 2011 @ 9:52am

    Re: I've patented that... Pay up or I'll sue....

    I've patented, trademarked, and copyrighted the process/concept of moving into space in order to avoid the ridiculous artificial limits placed on business by an overzealous government.

    Also included in my copyrighted patent/trademark documents are: moving to a different universe, dimension, quantum universe/dimension, galaxies linked by artificial wormholes, black holes, and any other 'unregulated' places not yet discovered or not currently technologically possible (moving into the digital world, aka TRON will be covered by this when it becomes technologically possible).

    Please be aware that for anyone considering this type of move, I will be happy to provide a 'license' to allow the move, for the amount of $1 billion dollars for a 10 year renewable license.

    /sarcasm off

    reply to this | link to this | view in thread ]

  22. identicon
    Anonymous Coward, 1 Apr 2011 @ 11:07am

    Are you certain Thierer wasn't doing an April Fools Day post?

    Not engaging in Washington is unilateral disarmament. Yes, you might not like nukes, but when [Hollywood/telecom monopolies/Microsoft - take your pick] is pointing them at you, you ignore them at your peril.

    To say, "someday we might do something bad this these nukes" does nothing to prevent others from doing something bad to you with *theirs.*

    This is what we call a Prisoner's Dilemma. Thierer's proposed move is the one with the lowest payout for him, and the highest payout for his adversary. Easy to suggest when you don't have shareholders.

    reply to this | link to this | view in thread ]

  23. icon
    Atkray (profile), 1 Apr 2011 @ 2:00pm

    I see where this is headed....

    1: The Tech companies get cozy with Washington.

    2: The Tech companies provide shiny computers and stacks of cash to key people.

    3: The Tech companies use software (not the false Samsung rootkit) on these computers to monitor their newly purchased politicians.

    4: PROFIT!!

    reply to this | link to this | view in thread ]

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