The tech industry might still be relatively young, but this year’s State of the Union Address doubled as an indicator of how mature it’s become since the early days of Silicon Valley.

“What we can do — what America does better than anyone — is spark the creativity and imagination of our people,” President Barack Obama said. “We are the nation that put cars in driveways and computers in offices; the nation of Edison and the Wright brothers; of Google and Facebook.”

For Google and Facebook, the president serving as their pitchman is indicative of their meteoric rise both outside and within Washington, D.C. And it marks how the political landscape has rapidly shifted for computer and Internet companies, with Washington nonentities of just a few years ago now ranking among the most prominent players in the capital.

In the past decade, turnover among the industry’s leading spenders has been extremely high — only a third of the companies ranked in the top 15 with lobbying expenditures in 1998 remained in the same spending bracket during 2010, a Center for Responsive Politics analysis of federal lobbying data indicates.

Top 2010 Spenders Top 1998 Spenders Microsoft IBM Hewlett-Packard Microsoft Google Inc. Electronic Data Systems Oracle America Texas Instruments Entertainment Software Association Oracle IBM Compaq Computer Intel Sun Microsystems Dell Intel UC Group Ltd. Computer Systems Policy Project Information Technology Industry Council Business Software Alliance SAP Aktiengesellschaft Netscape Communications Yahoo! Inc. Coalition for Encryption Reform Business Software Alliance Unisys Corp. Intuit Inc. Micron Technology Amazon.com Silicon Graphics

The differences between these periods are representative of massive changes within the industry. In 1998, hardware and software companies such as Sun Microsystems, Texas Instruments and Compaq were among the top lobbying spenders.

While several older companies still maintained their spots as major spenders in 2010 — Microsoft, IBM and Intel among them — relative newcomers, such as Google, now lead much of the industry’s lobbying growth while ensuring their places among the most powerful lobbying voices in Washington, D.C.

In 2010, the computer and Internet industry as a whole was the seventh biggest lobbying spender among all industries and special interest areas, investing more than $120 million on related expenditures, the Center for Responsive Politics finds.

The figure falls into line with the riches tech companies have spent on federal lobbying efforts during the past few years — since 2006, lobbying totals have fluctuated between $116 million and $124 million. Prior to 2000, the industry’s lobbying expenditures had not cracked the $50 million mark.

Overall, since 1998, the industry has spent more than $1 billion on lobbying expenditures. It’s just one of six industries to have done so — only the business association, electric utilities, insurance, oil and gas and pharmaceutical/health products industries spent as much during this same period.

Industry Lobby $ (1998-2010) Pharmaceuticals/Health Products $2,078,234,584 Insurance $1,498,524,667 Electric Utilities $1,417,826,083 Business Associations $1,173,849,805 Computers/Internet $1,140,561,417 Oil & Gas $1,074,459,293 Education $967,248,141 Misc Manufacturing & Distributing $943,986,188 Hospitals/Nursing Homes $899,844,843 Real Estate $861,487,871

The fluid state of federal technology policy draws many companies to Washington, D.C., says Lee Drutman, a senior fellow at the Progressive Policy Institute.

“It’s such a fast moving space and in which there’s a lot of uncertainty about what the rules surrounding various things like net neutrality are going to be that [technology] companies see a very productive role for themselves in the public policy debates,” Drutman told OpenSecrets Blog.

Among upstart companies, Amazon joins Google in expanding its political footprint as it likewise expands into new markets. Amazon’s Kindle e-book reader and platform, for example, has made the website into a major player outside of the online retail space — Kindle-formatted books currently outsell both their hardcover and paperback counterparts.

Likewise, expansion has played a major role within Google. Beyond the website’s core search business, it’s also made successful inroads into the tablet and mobile markets. Google’s Android smartphone operating system currently leads in mobile market share with 53 percent of the U.S. consumer market.

For Google, this diversity has contributed to its considerable presence among lawmakers. This year, the company has lobbied on issues ranging from patent reform and cloud computing to renewable energy. From 2007 to 2010, Google increased its lobbying expenditure spending by more than $1 million each year — in 2010, the company spent a record $5.1 million.

Google’s federal lobbying expenditures in 2002? Zero.

“Over the past few years, the Internet has become a bigger part of our lives and has also become bigger part of the debate in Washington,” Google said in an unsigned statement to OpenSecrets Blog. “We established a presence here because we felt like it was important to give our users a voice in Washington.”

Like Google, electronics manufacturer Cisco’s interests cover a wide swath of topics. The company — known for producing home and enterprise level networking products — has lobbied on issues such as telemedicine activities and high-skilled immigration provisions.

In 2010, the company spent around $2 million on lobbying expenditures — an increase of more than 59 percent between 2009 and 2010. Cisco’s year-to-year change in spending was the second largest jump among the top 15 industry spenders in 2010, trumped only by Hewlett-Packard’s 75 percent increase.

Jennifer Dunn, a spokesperson for Cisco’s government affairs division, credited this jump to staffing changes within the company’s lobbying efforts and expects for spending levels to stay consistent during 2011.

“Cisco advocates on a range of issues to spur competiveness, innovation and job creation — from increasing access to broadband, to patent and tax reform, and cybersecurity,” Dunn said in an e-mail to OpenSecrets Blog. “Given that the president has identified a number of these issues as priorities in his state of the union, we expect to retain our focus on these key areas.”

An HP spokesperson declined to comment.

Outside attention had a large effect on the lobbying spending of other industry members. In particular, video game companies and social networking site Facebook garnered their share of headlines for issues both inside and beyond the industry.

Thanks to titles such as “Madden NFL 11” and “Call of Duty: Black Ops,” the video games industry recorded robust sales in 2010, with consumers spending between $15.4 billion to $15.6 billion on console and mobile games content throughout 2010, according to the NPD Group, a research organization that provides market information to retailers and manufacturers.

This year, the industry is expected to grapple with the potential ramifications of a pending case in the U.S. Supreme Court: The dispute over a 2005 California state law that banned the sale of violent video games to children made its way to the court last November, and a decision is expected by this summer.

Both factors played a part in the industry’s lobbying trends. The Entertainment Software Association — an industry trade association that counts Microsoft, Sony and Nintendo among its members — spent more than $4.6 million on lobbying expenditures in 2009 and 2010, focusing on issues such as First Amendment protection and games content regulation.

By comparison, the Information Technology Industry Council — a tech industry trade group that includes Apple, eBay and HP — only spent around $2.5 million during 2010.

The political scrutiny that video games receive might be excessive compared to similar entertainment mediums, but the industry’s outreach efforts within Washington, D.C. may help its interests, said Michael Pachter, an industry analyst at Wedbush Securities.

“Those views might be strongly in favor or strongly opposed,” Pachter told OpenSecrets Blog. “But I think getting the debate, getting the dialogue in front of people, and then, you’re going to win over support in Congress.”

Facebook, the now omnipresent social networking site, didn’t hire its first D.C.-based representative until 2007, and it didn’t record a federal lobbying expenditure until 2009. This week, it hired its first non-in-house lobbyists.

Between the second and fourth quarters of 2009, Facebook spent $207,878 on federal lobbying efforts. Lobbying expenditures during the first two quarters of 2010 never cracked $60,000, but its yearly total in 2010 — $351,390 — exceeded what it spent in 2009.

In Google’s second year of federal lobbying — 2004 — it spent $180,000.

Facebook’s lobbying efforts have primarily gone toward outreach among lawmakers, along with a focus on issues such as Internet privacy and net neutrality.

Facebook credits its relatively low quarterly lobbying overhead to a small staff. But increases in governmental briefings and requests for information led to Facebook increasing its spending during the last two quarters of 2010.

This additional spending is also attributable to the company’s larger efforts within Washington, D.C., said Andrew Noyes, Facebook’s manager of public policy communications.

“In the fourth quarter, we worked to help policymakers interact with constituents on Facebook, explain the steps we take to protect people who use our service, and promote the value of innovation to our economy,” Noyes said in an e-mail to OpenSecrets Blog.

With younger tech companies dominating the lobbying spotlight, many older industry members have had spending levels reduced or stagnate — companies such as IBM, SAP Aktiengesellschaft, and Microsoft dropped their lobbying expenses by 8 percent to 26 percent between 2008 and 2010.

In Microsoft’s case, spikes in lobbying spending coincided with outside scrutiny — the company fended off several antitrust inquiries throughout the early 2000s. However, Drutman argues that outside factors — instead of age — play a much large role in lobbying expenditures, citing similar companies whose spending levels have stayed consistent.

“Either the revenue drops, the issues that they really care about are not on the political agenda, or they have some sort of change in management, which is much more skeptical of doing lobbying,” Drutman said. “I would say those are the most common reasons why a company would decrease its lobbying.”

Center for Responsive Politics lobbying researcher Matthias Jaime contributed to this report.



For permission to reprint for commercial uses, such as textbooks, contact the Center: Feel free to distribute or cite this material, but please credit the Center for Responsive Politics.For permission to reprint for commercial uses, such as textbooks, contact the Center: [email protected]

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