These tech companies are spending millions on high-priced lobbyists

July 2, 2013

Two Silicon Valley companies, Google and Facebook, have dramatically boosted their lobbying in recent years. In just a decade, Google has gone from having no D.C. presence at all to spending more than $16 million last year. That was more than double any other tech company's spending that year. Facebook only arrived in D.C. in 2009, but by last year it had racked up a $4 million lobbying bill, placing it fifth behind Microsoft, HP, and the Entertainment Software Association.

Lobbying spending by tech companies (Mercatus Center, based on data from the Center for Responsive Politics)
Lobbying spending by tech companies (Mercatus Center, based on data from the Center for Responsive Politics)

This chart was compiled by the Mercatus Center's Adam Thierer and Brent Skorup using data supplied by the Center for Responsive Politics. In a new paper, they decry growing "cronyism" in the technology sector. "The danger of creeping cronyism in the high-tech field is that it will dull entrepreneurialism and competition in this highly innovative sector," they write.

Theirer and Skorup argue that skyrocketing lobbying spending proves the need for deregulation. "When policymakers dispense favors, they usually expect something in return," they argue. Only by eliminating the regulatory schemes that allow policymakers to dispense favors can government eliminate the incentive to get into the lobbying game, they believe.

But that may be easier said than done. Take spectrum policy, for example. Thierer and Skorup decry the "politicization of spectrum policy," and advocate the use of auctions to take the politics out of spectrum allocation decisions. In their view, giving spectrum to the highest bidder eliminates the potential for favoritism.

But others believe that the auction approach is itself a giveaway to the largest wireless companies. They predict that AT&T and Verizon will win most of these auctions, leading to a highly-concentrated wireless industry that's highly profitable for these two firms and bad for everyone else, including consumers. They believe the public would be better served by an "unlicensed" model where spectrum is shared by everyone who wants to use it. They argue that this approach, which is used for the popular WiFi standard, will lower barriers to entry and create a more vibrant, competitive wireless marketplace.

A principle like "don't give favors to special interest groups" doesn't tell us which of these approaches is better. Both strategies leave less room for favoritism than the sometimes arbitrary procedures the FCC has used in the past. But each approach to spectrum policy benefits some firms at the expense of others. And so Google, Microsoft, AT&T, and other firms are hiring lobbyists to help them advocate the approach that will benefit themselves the most.

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