Excerpt from voices.washingtonpost.com/posttech

For Apple, it may be time to rethink approach to Washington

With Apple's expanding influence prompting greater scrutiny from federal regulators, chief executive Steve Jobs might have to consider beefing up his company's low-key lobbying presence on Capitol Hill.
With Apple's expanding influence prompting greater scrutiny from federal regulators, chief executive Steve Jobs might have to consider beefing up his company's low-key lobbying presence on Capitol Hill. (Tony Avelar)
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Cecilia Kang
Saturday, October 23, 2010

It seemed only natural for President Obama to meet with Apple chief executive Steve Jobs during his Silicon Valley visit Thursday. After all, Obama has held dozens of similar meetings with corporate chieftains over the past two years and Jobs runs the nation's most valuable tech company.

For the notoriously private Jobs, however, the nearly hour-long get-together at the Westin hotel in San Francisco marked a significant departure. Unlike his main rivals in Silicon Valley, including Google chief executive Eric Schmidt, Jobs has expressed little interest in the affairs of Washington - except when government regulations mess with his business, particularly patents, trade and taxes.

It's unclear who called the meeting. "It's a meeting that the president was interested in having," said White House press secretary Robert Gibbs. Apple didn't respond to a request for comment.

But Thursday's sit-down highlights a growing tension for the company, a once-forgotten relic that has transformed the music, publishing, mobile phone and television industries over the past 10 years with must-have mobile devices. Apple's expanding influence in the marketplace and its soaring market value, which hit $280 billion as of Friday, have garnered it closer scrutiny from regulators and lawmakers.

Apple's lobbying staff in Washington remains small and low-key. Analysts say that the company risks following in the footsteps of other high-tech firms that ignored political pressure until they were hit with antitrust investigations and regulatory complaints. That wait-and-see approach caught up with Microsoft and Google, which have faced Justice Department and Federal Trade Commission probes into whether they are acting fairly as they enter new lines of business.

Apple recently settled Justice Department allegations that it used anti-poaching agreements with other firms to keep wages down. The Federal Trade Commission has also investigated a complaint by Adobe that Apple's lock on its applications store harmed Adobe when it rejected the Flash applications for the iPad.

Apple is "now at the vortex of some key issues at the FCC and FTC that they will need to move forward on," said Stifel Nicolaus analyst Rebecca Arbogast.

Microsoft and Google have since beefed up their lobbying operations and hired dozens of top policy minds from Capitol Hill and the Federal Communications Commission. The Obama administration has reached out in turn, by cultivating close ties to many high-tech executives, including Schmidt, who serves as an economic adviser.

Indeed, during Obama's visit to California this week, he spoke at a Democratic Party fundraiser hosted at the Palo Alto home of Marissa Mayer, Google's vice president of search products.

By comparison, Apple doesn't put itself in front of the biggest policy and legal debates for the high-tech industry, but it allows the Business Software Alliance trade group to speak on its behalf on privacy and counterfeiting issues. The company dropped out of the Chamber of Commerce last year in protest of the chamber's opposition to climate change legislation.

Despite its No. 2 position in U.S. smartphone sales, Apple was hardly involved in debates at the FCC over net-neutrality rules and the exclusive-handset contracts prevalent in the wireless industry - such as the one the company holds with AT&T to carry its iPhone.

Apple has four lobbyists in Washington, and its office is led by Catherine Novelli, a former assistant U.S. trade representative. The company spent $340,000 in the past quarter lobbying on legislation that included patent reform, removal of electronic waste and how companies can collect location data about cellphone users. By contrast, Google spent four times that amount in the third quarter; Microsoft spent about five times as much.

Now, with Apple sitting on $51 billion in cash that it wants to burn on acquisitions and a staunch defense of its control over software and Internet applications on the iTunes store, observers say the company will face even more scrutiny from federal regulators.

"One of the advantages Apple has enjoyed in terms of antitrust scrutiny is that it has remained a small yet successful and profitable player in market," said Andy Gavil, a professor of antitrust law at Howard University. "It has received more attention recently because of the popularity of the iTunes store and the iPhone."


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