Tech turns to K Street in antitrust fight

New scrutiny from regulators and Congress over the tech industry’s antitrust issues is putting Silicon Valley’s K Street support to the test.

Tech giants such as Amazon, Google, Facebook and Apple have been beefing up their lobbying teams, bringing in both in-house talent and outside firms. 

The threat of an antitrust crackdown on tech companies is sparking a new flurry of activity. For lobbying firms there is a rush to snap up potentially lucrative contracts, but also pressure to deliver as the tech industry faces one of its toughest battles.

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“Antitrust investigations are fact-intensive by their nature and these are complicated, fast-moving markets. It’s no surprise that the big tech companies are staffing up with people to help answer inquiries from antitrust enforcers,” said Nuala O’Connor, president and CEO of the Center for Democracy and Technology.

Tech companies are no strangers to K Street and have been boosting their lobbying spending in recent years, attracting some of the top talent in Washington. Tech companies have faced a host of legislative and regulatory questions in recent years, including over data privacy scandals, workforce diversity, encryption, net neutrality and trade. But for Silicon Valley, the prospect of federal regulators looking into their market power could shake up their business models and drastically change their companies. 

Both the Federal Trade Commission (FTC) and Department of Justice (DOJ) are weighing probes into the industry’s biggest players, and Congress has opened its own investigation into whether to rewrite the nation’s antitrust laws for the new economy.

The increased scrutiny also comes with the industry finding few allies in Washington.

Critics, including President Trump and 2020 contender Sen. Elizabeth Warren (D-Mass.), have even floated breaking up the companies to level the playing field.

Enlisting help from the influence world will be critical to helping fight off that threat, K Street watchers told The Hill.

“Washington likes to control anything that’s important, and today that includes online platforms,” Carl Szabo, vice president and general counsel at NetChoice, a trade association of e-commerce businesses, said.

“Silicon Valley has woken up to this reality and is hiring accordingly. This is the normal path of any business as it grows.”

The antitrust fight could be a gold mine for lobbying firms as tech companies beef up their Washington presence. But there are also high stakes for those firms and executives at trade associations, who must now deliver and help the industry fight off the threat.

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That pressure is being highlighted by Google, a unit of Alphabet Inc., which is undertaking a major overhaul of its government affairs operation. The company has fired outside firms, shaken up its policy team and seen the departure of two senior officials in Washington as it rethinks its lobbying efforts, The Wall Street Journal reported Wednesday.

Google spent more than $21.7 million on lobbying expenditures in 2018. So far in 2019, it has spent $3.5 million amid the reshuffle. The six outside firms Google dropped accounted for $20 million of its annual lobbying bill, according to the Journal.

Like Google, other tech companies have also been throwing large sums at K Street.

Amazon has spent more than Google so far this year, with just under $4 million on lobbying. That figure puts it on pace to surpass the $14.4 million it spent on lobbying in 2018.

Amazon’s ramped-up K Street operation comes as it also makes plans to place its second headquarters in the Washington, D.C., area. The company has increased its lobbying expenditures every year since 2008, when it spent $1.3 million on lobbying.

McGuireWoods LLP is its top law and lobbying firm, receiving $90,000 from the online retailer so far this year. Its second top lobbying firm is Ballard Partners, which is the firm of Brian Ballard, a top fundraiser for Trump.

Facebook is third among the industry’s four giants this year, with $3.4 million spent on lobbying expenditures so far in 2019 and on target to at least match the $12.6 million spent for 2018. Lobbying and law firm Steptoe & Johnson has a $130,000 contract with the company.

Of the big four tech players, Apple has the smallest lobbying footprint. It has spent more than $1.9 million on lobbying so far in 2019 and has four firms on retainer. In 2018, it spent more than $6.6 million, down from the more than $7.1 million spent in 2017.

The companies have also snapped up a number of prominent lobbyists, including at Facebook, which hired Catlin O’Neill, who was chief of staff to Speaker Nancy Pelosi (D-Calif.) before leaving in 2013.

The tech industry’s lobbying forces will have to move quickly.

According to reports, the DOJ and FTC have reportedly reached an agreement on how to divide up oversight, with the DOJ focusing on Apple and Google and the FTC setting its sights on Facebook and Amazon.

And on Tuesday, the House Judiciary Committee held the first hearing in its antitrust probe, hearing from publishers who say that companies like Google and Facebook have cornered the market in digital ads.

“It is incumbent on Congress to understand the sources of this problem and address it urgently,” said House Judiciary Committee Chairman Jerrold Nadler (D-N.Y.). “Congress also has a constitutional duty to ensure markets are structured in a way that is compatible with our democratic values.”