Facebook Joins Tech Firms’ Move to Old-School Politics

Posted September 28, 2011 at 3:48pm

New media companies may be at technology’s cutting edge, but they are resorting to age-old tactics when it comes to influencing politics. This week, Facebook announced that it is creating a political action committee much like those run by its competitors, building on the growing Washington lobbying and influence presence of the “next-tech” sector.

Facebook spokesman Andrew Noyes described the newly incorporated FB PAC as a way for employees “to make their voice heard in the political process by supporting candidates who share our goals of promoting the value of innovation to our economy while giving people the power to share and make the world more open and connected.”

It is also a way for the company to reward lawmakers who side with the company in policy battles, a tit-for-tat strategy long employed by companies and moneyed interests of the old economy. Center for Responsive Politics Executive Director Sheila Krumholz said sustained contributions “may be the open door you need in a fevered legislative battle.”

“They view it as a small cost of doing business, one that might come in handy in a pinch,” she said. “It’s a long-term strategy.”

With the incorporation of FB PAC on Monday, Facebook stands to be an influential player in the 2012 elections. The corporate PAC may be a natural next step for the company that recently stepped up its lobbying and hired several D.C. veterans to manage its policy agenda, but technology companies haven’t always been eager to adopt traditional lobbying practices.

“I think we saw a pattern with a lot of these startups from the West Coast. … Government was not necessarily something they wanted to think about a lot,” said Lawrence Noble, who practices political law at Skadden, Arps, Slate, Meagher & Flom.

Google and Microsoft were dragged into politics when they had to defend their practices in antitrust and privacy hearings.

Google didn’t create its PAC until 2006, eight years after it first started, and Microsoft was around for decades before creating one in the early 1990s. Those companies have been playing more offense since: During the 2010 election cycle, Google’s PAC gave $336,000 to federal candidates while the Microsoft PAC donated $2.2 million.

Facebook has moved faster to catch up. The website that launched in 2004 hired its first lobbyist three years later. This year, the company spent $550,000 lobbying the federal government, up from $351,000 last year, according to disclosure forms.

“Facebook is facing a lot of issues, and a number of them will be taken up in Congress. They clearly want to be in there,” Noble said.

Its initial rollout wasn’t without its bumps. Facebook had to backtrack after it secretly hired a public relations firm, Burson-Marsteller, to plant stories critical of Google’s data practices. The smear campaign backfired when it was revealed that Facebook was behind the efforts.

Facebook appears to have shifted to a more traditional strategy since, building up a staff in D.C. to handle inquiries about the privacy issues inherent in its business model, which relies on users sharing data that can be used to target advertising. That has raised concerns in a way that the model of competitor Twitter has not, because Twitter’s default setting is to make every post public. Twitter has yet to begin lobbying, though it recently made its first policy hire, Federal Communications Commission veteran Colin Crowell.

Both Facebook and Twitter are hubs for online political advertising, which could also help them in their advocacy efforts. Broadcasters have long enjoyed political clout because politicians air ads on their stations and are hesitant to undermine them.

In addition to hiring its own lobbyists, Facebook has worked with Elmendorf and Ryan; Fierce, Isakowitz & Blalock; and TeleMedia Policy Corp. to lobby the government on issues including consumer privacy and patent reform. The company has also pressed lawmakers on electricity and water issues in Oregon, where Facebook has built a massive data center that requires significant backup power.

Facebook’s efforts still pale in comparison to those of rival Google, which spent $3.5 million this year and more than $5 million last year on lobbying. But that could change as politicians pay closer attention to the social media sector, where Facebook is dominant.

As companies such as Facebook become a bigger part of America’s economy, lawmakers and regulators are taking a careful look at their practices. The Department of Commerce has been investigating how to protect consumer privacy online. The Federal Trade Commission’s proposal that companies not track certain data online could reshape Facebook’s behavioral advertising practices.

Last week, Google Chairman Eric Schmidt appeared before a Senate panel to defend his company’s search practices. In the past, Facebook has helped stoke concerns about how Google handles data. But Facebook, which also controls vast amounts of consumer data, could soon be sitting in the hot seat in Google’s place.

“The more successful Facebook is about becoming a social hub, the more likely they are to draw scrutiny that they are misusing their outside influence,” said Justin Brookman, director of consumer privacy at the Center for Democracy and Technology, a nonprofit advocacy group that favors an open Internet. The group receives some funding from Facebook.

“A lot of this [lobbying] is proportionate to growth and influence,” Brookman said. “It’s more of a necessity when you’re the 900-pound gorilla.”