On Facebook “Normalizing Relations” with Washington

by on March 29, 2011 · 5 comments

The New York Times reports that, “Facebook is hoping to do something better and faster than any other technology start-up-turned-Internet superpower. Befriend Washington. Facebook has layered its executive, legal, policy and communications ranks with high-powered politicos from both parties, beefing up its firepower for future battles in Washington and beyond.”  The article goes on to cite a variety of recent hires by Facebook, its new DC office, and its increased political giving.

This isn’t at all surprising and, in one sense, it’s almost impossible to argue with the logic of Facebook deciding to beef up its lobbying presence inside the Beltway. In fact, later in the Times story we hear the same two traditional arguments trotted out for why Facebook must do so: (1) Because everyone’s doing it! and (2) You don’t want be Microsoft, do you?   But I’m not so sure whether “normalizing relations” with Washington is such a good idea for Facebook or other major tech companies, and I’m certainly not persuaded by the logic of those two common refrains regarding why every tech company must rush to Washington.

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.

But few in the high-tech world have listened to this logic, especially when the whole rest of the world was falling all over themselves to open a Washington, DC office first in an effort to cover their butts from regulatory encroachments and then later to figure out how the wield the hammer of Big Government to their corporate advantage. I documented numerous examples of the latter in my Cato essay.

I’m not saying that the folks at Facebook are going to be looking to screw over their competitors right away. In fact, I can’t currently think of any examples of how they might.  The company is still firmly in that “cover your butt” period that is common when a hot new digital innovator first comes to DC.  And I certainly can’t blame them for wanting to push back against many misguided forms of Internet regulation, such as free speech controls or heavy-handed privacy regulation.  But I fear there will come a day when they fall in line with many other high-tech companies and trade associations and seek to turn the regulatory state to their advantage.  Only time will tell. And I certainly hope I am wrong.

Regardless, as the folks at Facebook and other high-tech firms ponder their future inside the Beltway, let me ask them to return to the two premises for “normalizing relations” that I cited above and explain why they are not exactly true:

Premise #1: Everyone’s doing it!  Most are, but not all. How active are Apple and Sony to name just two companies without a major DC presence?  Most days of the week, Steve Jobs seems to be giving DC a big middle finger. I’m the last guy in the world you’ll ever hear giving Apple much credit since I hate their products, but Jobs is about the closest thing you’ll find to an Ayn Rand character in Silicon Valley these days.  He seems to do exactly what he wants to build innovative products for consumers and, in the process, ignore all his critics, especially those in Washington. Of course, not everybody can be Steve Jobs in this regard, but I can’t help but wonder: Why don’t more of them try? What if high-tech entrepreneurs just told Washington to buzz off?

Premise #2: You don’t want be Microsoft, do you? The Times article says, “legal analysts say Facebook is hoping to avoid mistakes made by predecessors like Microsoft. And they say the company is becoming politically savvy earlier in its life than Google, whose connections were firmly established once Eric E. Schmidt, the chief executive, advised the Obama presidential campaign and the administration.”

I’ve never really bought into this argument. I think it’s pretty far-fetched to claim, as so many people in this field do, that if Microsoft would have just had a small army of lobbyists here on the ground back in the early 1990s that none of their antitrust problems would have popped up. And regarding Google coming to Washington in the hope of winning friends, well, how’s that working out for them?!  As I noted in my Cato essay:

Everybody — and I do mean everybody — wants Google dead, right now. Google currently serves as the Great Satan in this drama — taking over the role Microsoft filled a decade ago — as just about everyone views it with a combination of envy and enmity.

Indeed, no one could be happier about Facebook coming to town at this moment than Google!  They get to hand the “Great Satan” baton off to Facebook and wish them the best!  Of course, Google’s problems with Washington aren’t done by a long-shot, but I’m quite sure they’re relieved to see Facebook getting grilled more at hearings and events around town these days.

Anyway, in all seriousness, I’ll say the same thing to the fine folks in the Facebook DC office — several of whom I know well — that I’ve said to countless other tech companies here in the Beltway through the years: Stay true to the same principles that made your company so great to begin with.  It wasn’t Washington that built Facebook, or Google, or Microsoft, or any other high-tech innovators; it was entrepreneurial capitalism that did.  Free minds and free markets made the high-tech sector what it is today, not handouts and special favors from Washington. Stick to real capitalism; avoid the crony variety.

  • Jardinero1

    I think because Zuckerburg faced so many legal challenges during the rapid growth phase of Facebook, he has decided that the best defense is a strong offense.

  • http://twitter.com/VinceKuraitis Vince Kuraitis

    “Real capitalism” cannot possibly exclude cronyism. FB is smart, and other than the costs of lobbying, I see little downside to staying cozy in the Beltway.

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  • http://www.facebook.com/catherine.fitzpatrick Catherine Ann Fitzpatrick

    I think it’s interesting that you see the “normalizing relations with Washington” as really about seeking a better regulatory environment or besting competitors through winning regulatory wars.

    But…these platforms aren’t regulated by Washington. And Washington appears extremely weak in being able to regulate them. While Google seemed to want “Net Neutrality” for a time, once the judiciary branch properly checked and balanced overreach from the FCC, it backed off and regrouped with Verizon. It’s not clear there’s a concerted and unified position on “Net Neutrality” among these different services.

    What I think is more likely is that like the Gov 2.0 lobbyists, and various “progressives” with lobbying organizations serving as a stalking horse for Silicon Valley like the Sunlight Foundation, is not so much to influence regulations of the Internet, but to use the fact that everything is becoming digitalized and wired to take over government itself. Facebook’s Zuckerberg and other leaders already see themselves as a kind of city-state or country, and claim they “have” 600 million people. If they can infiltrate the executive branch, especially key agencies like the FCC and FTC and White House Office on Science & Technology and such, they can not only control pots of money but control policy without having to even lobby Congress. These geeks have open scorn of representative government. When the Gov 2.0 people call themselves “the goverati” and openly invoke the illuminati, they’re partly in jest, but partly in fact hoping to take over. Facebook is organizing a town hall with Obama to launch his re-election campaign. Why isn’t this town hall run by a real-life mayor in an actual city, instead of an executive of a social media company? because…those are the people who really control the “town hall” of our time. And we did not elect them.

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