Tech companies turn to lobbyists after NSA fallout

Correction: An earlier version of this story incorrectly described Michael Beckerman as the Internet Association’s executive director. Beckerman is the group’s president and chief executive. This version has been corrected.

October 27, 2013

In the months following revelations that the National Security Agency accessed troves of data through several major U.S. Internet providers, Brazil’s president has declared Web-based data about Brazilian clients should only be stored on servers in Brazil.

The leader of German software giant SAP has used the leak as an opportunity to tout his company’s secure servers. And members of the European Parliament are pushing for stricter privacy laws, including a provision that would require users to be notified that their data could become subject to foreign government surveillance if it is transferred from a server in Europe to a server in the United States.

All that could mean bad news for U.S. cloud services providers when competing for lucrative contracts providing cloud services for foreign governments. The U.S. cloud computing industry stands to lose up to $35 billion over the next three years if foreign customers decide it is too risky to store data with U.S. companies, according to an August report by the Information Technology and Innovation Foundation.

Technology lobbyists are scrambling to make sure that doesn’t happen, but are still hammering out a consensus on how to tackle the problem. They know it will have to include approaching a group that tech companies have not historically been chummy with: trade negotiators.

And it comes at a time when business and government leaders must rethink the way the Internet as a commodity is treated in international trade as U.S. trade officials broker two major agreements — the Transatlantic Trade and Investment Partnership, between the United States and European Union, and the Trans-Pacific Partnership, between the United States and 11 nations in Asia, South America, Australia and New Zealand.

“There’s a renewed effort in the tech world to figure out how to educate [the U.S. Trade Representative] and the Commerce Department and others who engage in trade talks with Europe and foreign countries to be on the lookout for foreign competitors trying to use the NSA issue as an excuse not to use U.S. products and services,” said Josh Ackil, a tech lobbyist at Franklin Square Group, whose clients include Apple, Google and Salesforce.

The concern comes as tech giants, including Apple and Facebook, have stepped up lobbying efforts in the past three months, according to lobbying records filed with the Senate.

Apple spent 32 percent more on lobbying during the third quarter of the year compared to the second, going from $870,000 to $1.15 million. During the same period, Facebook’s lobbying spending jumped 28 percent, from $1.3 million to nearly $1.7 million.

While the U.S. auto and content industries have long worked with trade officials to protect their products and intellectual property abroad, the technology community is just now playing catchup to get trade negotiators up to speed, according to some tech lobbyists — in part because cloud computing and cross-border data flow are relatively new issues that have not been explicitly addressed in previous trade deals.

“You don’t think of the Internet as a great American export, but it is,” said Michael Beckerman, president and chief executive of the Internet Association, a trade group that represents 22 Internet companies including Google, Yahoo and Amazon. “Why is exporting the Internet any different than exporting American cars? It should have the same priority. This is a growing sector of our economy in commerce, trade, and job creation.

“As our trade negotiators discuss deals with the EU and other countries, we encourage them to promote policies in current and future trade deals that enable digital trade,” Beckerman said.“We want and need to be part of the conversation and look forward to our continued work on trade policy.”

Catherine Ho covers law and lobbying for Capital Business, which she joined in 2011. She was previously a reporter at the Daily Journal in Los Angeles, covering LA civil courts and labor and employment law.
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