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The Web's Growing Muscle

Tech Industry Rises in Washington by Combining Cash, User Clout

By AMY SCHATZ
<http://online.wsj.com/search/term.html?KEYWORDS=AMY+SCHATZ&bylinesearch=tru
e> , GEOFFREY A. FOWLER
<http://online.wsj.com/search/term.html?KEYWORDS=GEOFFREY+A.+FOWLER&bylinese
arch=true> and ERICA ORDEN
<http://online.wsj.com/search/term.html?KEYWORDS=ERICA+ORDEN&bylinesearch=tr
ue>

Google <http://online.wsj.com/public/quotes/main.html?type=djn&symbol=GOOG>
Inc. held a holiday bash in December on a rooftop overlooking the Capitol,
where congressional staffers and other Washington denizens nibbled on
minipizzas and received a gift of red Google mittens.

The party wasn't very different from those held by other Washington
powerhouses during the holidays. But, as lawmakers soon learned, Internet
companies can also wield a tool the others usually can't. Last week, Web
users flooded Congress with messages of protest against antipiracy
legislation, forcing backers to abandon their bills almost as quickly as
they could say "Wikipedia blackout."

The Internet industry has found a rare sweet spot in Washington. With Google
in the lead, the companies have begun building a strong traditional lobbying
force in Washington. And, to complement that inside game, websites' millions
of users have become a powerful outside weight on Congress.

What's more, in a rare Washington double play, the concerns of Internet
companies have found a sympathetic ear both in the Democratic White House
and among Republican presidential candidates who otherwise can't agree with
Barack Obama on anything.

"There is no question that the influence of the Internet community is at its
apex," says Leslie Harris, chief executive of the Washington-based nonprofit
Center for Democracy and Technology, which is backed in part by tech
companies including Google and Facebook Inc.

"I believe that something profound happened," she says of last week's revolt
against bills in the House and Senate aimed at combating foreign pirate
sites. "It was not just the tech companies-it was the users."

It isn't that traditional media and entertainment companies have abandoned
the field in Washington. According to the Center for Responsive Politics,
television companies, Hollywood, and the recording industry spent more than
$91 million on lobbying efforts through the 2011 third quarter.

But they now realize their outside game doesn't match their inside muscle.

"Where's the [film industry's] Facebook campaign?" producer and director
Adam Lipsius asked in an interview at the Sundance Film Festival in Park
City, Utah. "Why aren't they taking every movie out of the theaters on some
Friday or Saturday and saying, 'This is the future'?"

At Sundance, Weinstein Co.'s Bob Weinstein got a first-hand taste of the
challenge facing the studios when a technician fixing a television set in
his hotel room recommended the film "Apollo 18." Mr. Weinstein, whose
company distributed the film, says he was thrilled-until the man added that
he had downloaded a free copy and could do the same for Mr. Weinstein within
20 minutes.

"That's my movie!" Mr. Weinstein says he exclaimed. "You're arrested!"

Description: [NETDC]

Speaking at a panel discussion at the festival Monday morning, Motion
Picture Association of America Chairman Chris Dodd blamed the movie
industry's problems in part on technology companies' ability to lobby the
public directly. As a result, Mr. Dodd argued, "now you've got to lower the
level of emotionalism about this issue that's blown up in ways that we
haven't seen before."

The MPAA has devoted years to fighting piracy in Washington, often holding
private movie screenings of soon-to-be-released titles for Capitol Hill
staffers at the studios' plush theater just a few blocks from the White
House. Until a few years ago, Internet companies couldn't dream of having
that kind of inside access.

Last year, though, Google spent $9.68 million on lobbying, up from $1.52
million four years earlier. Facebook, which had a one-man operation in
Washington as recently as 2007, set a new lobbying record for itself,
spending $1.35 million.

According to public records, Google has hired at least 13 lobbying and
communications firms-with ties to both Republicans and Democrats-since May
2011, when the Federal Trade Commission ramped up its antitrust probe of the
Internet giant.

Much of Google's spending on lobbying is aimed at fending off antitrust
allegations, but it has also given the company a major voice on piracy
issues. The company's executive chairman, Eric Schmidt
<http://topics.wsj.com/person/s/eric-schmidt/177> , and a Facebook
representative were among those given the chance to make their case to White
House Chief of Staff William Daley in December, helping to prompt the recent
White House statement nodding to Google's concerns about excessive
regulation of the Internet.

Silicon Valley has also developed into a major source of political
contributions for President Obama and other lawmakers, rivaling traditional
media companies. In 2008, employees of Google and Microsoft
<http://online.wsj.com/public/quotes/main.html?type=djn&symbol=msft> Corp.
were No. 4 and No. 5, respectively, as sources of campaign donations for Mr.
Obama's presidential campaign, giving a combined total of about $1.7
million, according to the nonpartisan Center for Responsive Politics. Time
Warner <http://online.wsj.com/public/quotes/main.html?type=djn&symbol=twx>
Inc., the top media company, trailed behind, with its employees ranking as
the No. 8 source of donations to the Obama campaign that year.

Through September 2011, Microsoft employees ranked as the top supporters of
the president's re-election campaign, and Google employees were No. 5. Time
Warner employees had slipped to No. 10.

Google's political action committee is only six years old, but it has grown
steadily, from just $31,000 in donations during the 2006 election cycle to
$336,000 in 2010, according to the Center for Responsive Politics. The
company's PAC splits its donations almost equally between Democratic and
Republican candidates.

What ultimately pushed the Internet cause over the top in the piracy battle
was supporting fire from nonprofit groups like the foundation behind
Wikipedia, which says it didn't coordinate with Google or other companies.

"People really don't like Congress. They think Congress is bought. They
think they own the Internet, and they don't want Congress to mess with it,"
says Gary Shapiro, president of the Consumer Electronics Association, a
frequent combatant against the movie studios and an opponent of the piracy
legislation.

Ms. Harris of the Center for Democracy and Technology cautioned that the
activists leading the revolt may not always be in lock step with the views
of large Internet companies. "It still remains to be seen whether you can
organize users for something and not just against something," she says.

That nonprofit Wikipedia found itself on the same side of the issue as
Google and other big tech companies was coincidence, adds Geoff Brigham,
general counsel for Wikimedia Foundation Inc. "We are doing the bidding for
open and free knowledge," he says. "To the extent that the interests are
shared with other companies, so be it. But that is not our strategy."

Media executives are cautious about reintroducing any antipiracy legislation
this year after last week's debacle, but when they do they say it will
require a larger lobbying push, from grass-roots operations to
rapid-response teams.

"People are looking at what Google spent on lobbying and wondering, 'Can we
match that?'" a media executive says. "It has to be a big spend."

-Christopher S. Stewart and Amir Efrati contributed to this article.

Write to Amy Schatz at Amy.Schatz@wsj.com, Geoffrey A. Fowler at
geoffrey.fowler@wsj.com and Erica Orden at erica.orden@wsj.com