SINGAPORE: Increasingly, Big Tech is throwing more money at improving its relations with politicians and government officials in the US.
These include the five American tech giants – Amazon, Apple, Facebook, Google and Microsoft – who are spending big money on advocacy and hiring people in front-facing public policy, government relations and public relations roles.
Facebook, for example, has brought in Joel Kaplan, former deputy chief of staff to George W Bush, who is now its vice-president of global public policy. Facebook’s former general counsel, Ted Ullyot, was also a key aide to Bush.
Apple has hired Lisa Jackson, Barack Obama’s former Environmental Protection Agency administrator, to be its vice president of environment, policy and social initiatives. Apple also has former US vice president Al Gore on its board of directors.
Obama’s former press secretary James Carney is senior vice-president of global corporate affairs at Amazon.
Microsoft had hired Hillary Clinton’s chief strategist for her 2008 presidential campaign, Mark Penn, as its corporate vice-president for strategic and special projects.
Google too had its share of former policy-makers on their staff list – Caroline Atkinson, who had served as Obama’s deputy national security adviser for international economics, was its head of global policy, while its former vice-president for public policy Susan Molinari was a three-term member of the US House of Representatives.
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And it is not just in the US that tech companies have signed on former bureaucrats. Nick Clegg, the former British deputy prime minister, is now Facebook’s vice-president for global affairs and communications.
Last week, news broke that Canadian Prime Minister Justin Trudeau’s executive director of communications and planning Kate Purchase has resigned to work as a senior director in Microsoft CEO Satya Nadella’s office on communications.
Looks like increasingly, Silicon Valley is swapping some of its jeans-clad aloof techies for politically-savvy, grey-suited bureaucrats.
If that is not enough, the Big Five have reportedly spent more than half a billion from 2005 to 2018 on advocacy and government relations in a bid to get their voices heard in the formulation of legislation.
And this spending isn’t slowing down, with Google leading the way.
Reports indicate that, at more than US$64 million, the Big Five spent more money in 2018 on engaging governments than before.
Out of this, Google has poured in US$21.2 million, 38 per cent more than two years ago and the most in corporate America.
Facebook saw record spending at US$12.6 million, while Amazon and Microsoft also invested more in 2018 at US$14 million and US$9.52 million respectively. Apple spent U$6.62 million.
There are compelling reasons why big tech companies are hiring former policy wonks and spending all this money in gaining more traction on Capitol Hill.
BIG GOVERNMENT BUSINESS
First, an obvious reason to cosy up to governments is the lure of lucrative contracts.
The advent of artificial intelligence along with new emerging risks such as cyber threats and a developing tech race between the US and China means that many governments are spending big on technology products and services to stay updated.
In the US, the Trump administration budgeted US$95.7 billion for federal IT in 2018, up from US$90 billion in 2016 with the bulk of the spending going to the defence department.
Microsoft, for instance, won a 10-year project worth US$7.6 billion to migrate the US defence department’s office IT systems to its Microsoft 365 office solutions system.
The company also secured a US$10 billion deal for the JEDI project from the defence department.
Clinching government business can be a function of personal relationships with key government leaders. These could end up as deal-breakers.
The JEDI project – which is a contract to host data of US’ military missions on a cloud platform – reflects this.
During the tender process, it was widely reported and expected that Amazon, which had won many other earlier projects from the US government including in defence and national security, would be awarded the contract.
Still, other tech companies like IBM and Oracle hoped that the project would be shared between a few companies. They cried foul saying that the contract specifications were made to suit one vendor - Amazon Web Services (AWS).
A TRUMP CARD
Enter US President Donald Trump, who in July publicly stated he had received complaints about the bidding process and wanted the Pentagon to re-examine the bid. “I will be asking them to take a look at it very closely to see what's going on because I have had very few things where there's been such complaining,” Trump said.
Amazon has now accused Trump of unfairly interfering with the selection process.
Amazon filed an appeal in the federal court in September arguing that it lost the bid to Microsoft as “the result of improper pressure from Trump, who launched repeated public and behind-the-scenes attacks to steer the JEDI contract away from AWS to harm his perceived political enemy”.
Amazon CEO Jeff Bezos also owns the Washington Post, which is at the heart of his public spat with the President, who has often referred to the newspaper as “fake news” whenever unfavourable stories are published about him.
Amazon knows it has much more to lose than this contract. The AWS, the world’s biggest cloud platform, is Amazon’s largest revenue generator and has already earned US$25 billion in sales in 2019.
Thus, the US$10 billion in 10 years it could earn from the JEDI contract is substantial but not crucial to its bottom-line.
At stake is future government contracts as other agencies could follow the Pentagon’s lead and look to balance Amazon’s market dominance in awarding their own projects in the future.
It also gives its competitor, Microsoft, which controls 17 per cent of the cloud market, a bigger runway for future market expansion.
With such massive sums of government money at stake, it’s not surprising that tech companies are having to work hard to ensure politicians and officials are kept on their side.
Second, Big Tech firms are also increasingly finding out that their relationships with governments are negatively affecting the overall perception of their companies, staff morale and organisational culture in the US.
In an annual ranking released by jobs site Glassdoor recently, Google and Facebook saw a downturn in their status as a desirable place to work in the US.
Both companies, which had consistently ranked among the top in the Best Places to Work For list, now find themselves outside the top 10, despite climbing to the top of these same rankings in many parts of Asia.
Among US employees, Google ranked 11th in 2020 whereas Facebook slid to 23rd spot. This is significant considering that both companies had, in various years, been ranked first.
According to anonymous reviews and ratings written by employees on the Glassdoor site, staff at some of these companies are frustrated that their employers run into trouble with the law and lack the leadership to manage these situations effectively.
“Several high-level execs seem to have a pretty weak ethical compass. Increasing number of ethical scandals, antitrust fines etc.,” one software engineer working at Google in the US for three years said of his employer.
TROUBLE IN THE VALLEY
Third, as they grow bigger and more powerful, the Silicon Valley giants are getting more attention from regulators and are subjects of federal and state antitrust investigations in the US.
In the US, Big Tech bashing has become commonplace among politicians, especially in the run up to the 2020 presidential elections. Democratic hopefuls Elizabeth Warren and Bernie Sanders have called for the dismantling of these Big Tech companies.
The “techlash” has also seen governments come down hard on these companies for how they collect, store and manage data.
Already coping with a newly-implemented regulatory framework in Europe, the General Data Protection Regulation (GDPR), they are now facing a complicated data protection system in the US where some states are legislating their own privacy acts in the absence of federal oversight.
This increasing regulatory oversight is also true for Big Tech outside of the US.
Australia too, for instance, has introduced new legislation of data privacy and ownership.
Governments are also exploring how they can get a slice of the Big Tech pie as countries such as Indonesia roll out taxes on digital services.
It appears that the honeymoon period for Big Tech is now over as far as government scrutiny and regulatory oversight go. They have now become a key component of the mainstream political agenda in the US and other parts of the world.
They now have to delicately walk a fine line of staying below the radar as far as government scrutiny is concerned while still chasing after those lucrative public sector projects.
The need for such guile means that the money being spent on advocacy and government relations is likely just the beginning.