A recent explosion of federal lobbying activities by high-tech companies could undermine the industry’s traditional independence from Washington and kill innovation in the digital economy, according to a new study from a free market think tank.
The Washington-based Mercatus Center released a report on Monday exposing a sharp increase in the amount of money computer and internet companies spend wooing politicians and regulators.
Google was far and away the biggest spender, paying well over $16 million last year to federal lobbyists. In 2005 the search engine empire spent a paltry $1 million on similar services.
At $8 million dollars per year, Microsoft was the second-most generous contributor to Washington lobbyists. A tech giant for decades, Microsoft actually saw a slight decline in lobbyist payouts between 2005 and today.
Hewlett-Packard came in third, spending just under $8 million last year versus less than $1 million in 2005.
And relative newcomer Facebook’s contributions grew exponentially, increasing from negligible levels in 2010 to $4 million last year.
Overall, computer and Internet companies spent over $130 million currying favor with Uncle Sam in 2012.
Unlike many American industries, the high-tech sector has typically kept Washington at arm’s length. The report frets that the strange new relationship between Silicon Valley and the Beltway “could sap the entrepreneurial spirit and competition in this innovative sector.”
“Lobbying is frequently used as a sword against competitors or to gain regulatory advantages impossible to attain in the market,” the report continues. “Because lobbying creates an arms race among competitors, increased presence in DC is typically a bad sign for competition and consumers.”
Many digital entrepreneurs claim they have no choice in the matter. “If we don’t learn to ‘play the game’ the way the big boys do in Washington and other seats of government around the world, we and our ideas will be steamrolled,” said Lauren Weinstein, an Internet-freedom activist quoted in the report.
The Mercatus Center advocates what is called “voluntary corporate disengagement,” where companies refuse to play the Washington game and instead focus primarily on creating superior products.
The think tank points to Apple and Sony, two hugely successful corporations that have so far bucked the trends of political involvement. But Mercatus also warns that without structural changes at the federal and state level, “it would be naive to expect many firms to voluntarily reject cronyism opportunities when they are available to them.”
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