The Washington PostDemocracy Dies in Darkness

How Chuck Schumer became Silicon Alley’s closest ally

( <a href="">sdmc / Flickr</a> )

Most Americans might remember it as the time Google blacked out its home page. But for Sen. Charles E. Schumer (D-N.Y.), the Internet's largest protest took a more personal turn. On a frigid day in January 2012, Internet activists stormed his Manhattan offices.

Like Google, the demonstrators contended that a pair of controversial bills then barreling toward approval in Congress would stifle online speech and access to information. They urged Schumer to drop his support for the legislation, known in the House and Senate by their respective acronyms, SOPA and PIPA.

The activists were losing the battle ahead of a crucial Senate vote. But as the protests grew, key lawmakers began changing their minds. Within 48 hours, Schumer and other co-sponsors abandoned PIPA.

The protests signaled the Internet's growing political clout. This constituency was vocal, well-connected and a powerful base of potential support — particularly in New York City, the scene of a fast-rising tech boom.

"Google is one of our fastest-growing employers," Schumer said in a recent interview.

Behind Google, such companies as AOL, eBay and LinkedIn are hiring up a storm in New York, says executive search firm Cook Associates. So are Yelp, Pandora and Etsy, the online craft store. WeWork, which offers shared working space for start-ups in 12 locations around New York, is one of the city's biggest landlords, Schumer said.

Economic studies show the tech industry grew twice as fast in New York over the past decade as it did in Silicon Valley. Spurring that rise are tax credits that allow start-ups to operate tax-free for 10 years. Today, more than 327,000 people work in New York tech, advertising and media, industry data shows, reflecting a 23 percent increase from 2006. The financial services workforce in New York shrank by 3 percent in the same period.

A force behind all this growth is Schumer, who meets with tech business leaders three to four times a year and has become a quiet but reliable Washington ally to the industry. A Senate veteran with a reputation for brokering deals, Schumer courts start-ups even as he grapples with broader concerns such as health care and the federal budget. His relationship with Silicon Valley dates to the 1990s, when he began making trips out West to meet Yahoo and Oracle executives.

These days, his focus has shifted to homegrown ventures. "One day, I'd love to see us rival Silicon Valley," Schumer said. "We're probably where Silicon Valley was 20 years ago."

Tech, it seems, lights up most every area of his work. This year, he called on the Federal Aviation Administration to fast-track its rules for commercial drones. He urged Apple and other companies to develop strict policies to protect sensitive consumer health data — an area that is largely ungoverned by federal privacy law. In July, he pressed the nation's telecom regulators to write aggressive rules to make sure that broadband providers couldn't unfairly discriminate against Web sites. And he continued to act as a leading negotiator on immigration, a high-profile issue for tech companies that want to hire more skilled foreign

All the tech talk is no accident, Schumer said. "For all the years I've been a senator and congressman, jobs in New York has been a key thing for me," he said. "With financial services having its trouble, what is going to be the future of New York in terms of young people getting good jobs? Clearly, tech is our future."

New York isn't just a hotbed of start-ups. It's also a place where many of the country's largest tech businesses try out new services. Just last week, Amazon started testing same-day bike delivery in New York in a bid to shave hours off shipping times.

Some tech-oriented companies have run up against New York institutions. As in other cities, Uber, the the app-based alternative car service, has battled the taxi industry in New York. Aereo, an online video service, made headlines this summer when the Supreme Court, ruling in a case that originated in New York, said the company's system of redistributing network content over the Internet violated copyright law. And in May, the Web-based room-sharing company Airbnb resolved a months-long dispute with New York state's attorney general, agreeing to hand over data about its hosts in the city.

What's happened in New York in recent years mirrors the way California's tech industry has shaken up the national economy. Both areas have seen the rapid growth of culturally and economically powerful businesses that are shaping how people around the country shop, learn, play and create.

Industry leaders in both states stand to benefit — or to be harmed — by what happens inside the Beltway. The difference is that many people in Silicon Valley want as little to do with Washington as possible. Top executives there heap praise on partisan gridlock, because it's their idea of how the political system ought to work or because it advances the relative economic importance of the Bay Area.

New York's tech scene, by virtue of physical proximity and long ties to the D.C. elite, has little of that disdain for policymaking. The online craft store Etsy, for example, sought meetings with Schumer's staff to argue for stronger regulation of Internet service providers. And officials from New York-based tech venture-capital firms, such as Union Square Ventures, have been known to testify before Congress. The result, industry observers say, is a tech community that engages with tech policy more broadly and deeply than Silicon Valley does.

"We're much earlier in our life cycle, and it's a different kind of tech scene," inspired less by engineers and coders than writers and designers, said Andrew McLaughlin, a partner at the start-up incubator Betaworks. (Betaworks nurtured some of the Web's biggest properties, including Digg, Bitly and Instapaper.) "New York companies are just much more instinctively engaged in tech [policy] issues."

Broad-based backing from tech officials bolstered Schumer's credibility this year in a key debate over patents. The Senate had been working on legislation that would make it harder for patent holders to file frivolous infringement lawsuits meant to shake down tech companies for settlement money. Schumer wanted to make it easier for the federal patent office to invalidate patents held by "patent trolls," limiting their power to sue.

That effort stalled, but he became the linchpin of efforts to draft a compromise patent reform proposal with Sen. John Cornyn (R-Tex.). Key to that process was Schumer's seniority — he's the third-ranking Democrat in the Senate — and a reputation for pragmatism.

"If you look at the legislation he's worked on around patents, they've been fairly targeted changes he's trying to make," said Fred Wilson, a partner at the venture-capital firm Union Square Ventures that has invested in Kickstarter, Tumblr and Twitter. "He listens to the various constituencies and figures out how to get something done that will work for one constituency but not harm another."

When the patent legislation fell apart unexpectedly at the eleventh hour, tech leaders were furious — but not at Schumer.

"When Chuck Schumer can call companies and people and say, 'This is honestly the best deal I can get,' they trust him," said Julie Samuels, the executive director of Engine Advocacy, a nonprofit group for start-ups.

Schumer vowed to give patent legislation another try in the new Congress. "We're going to get this done next year, Cornyn and I, no matter who controls the Senate," he said.

Schumer and the tech industry haven't seen eye-to-eye on everything. In February, the senator defended the National Security Agency's digital-surveillance programs, saying he was "to the right" of Sen. Rand Paul (R-Ky.), an outspoken NSA critic, on the issue. Tech companies have vigorously protested the government's collection of vast amounts of data for intelligence purposes. Schumer has pressed for increased transparency, but he joins many of his Senate colleagues in speaking up for the NSA and opposing leniency for former intelligence contractor Edward Snowden.

Schumer has proved more of a hawk on commercial privacy. Many tech companies are vague about how they collect, store and use — or sell — consumer data, a practice the senator has said could lead to a "privacy nightmare" for Americans.

In August, he pressured the maker of the popular Fitbit activity tracker to strengthen its privacy policy, and the company did so. He has blasted efforts by some retailers to monitor consumers by tracking their smartphones as "egregious, beyond the pale." And he said companies ought to do a better job of informing their customers about how personal information is being used.

"They can't be informed on page 36, paragraph 4 of a 100-page document nobody reads," Schumer said.

Increased scrutiny of start-ups could rub industry executives the wrong way, especially in Washington-wary parts of California. Their disengagement from the political process won't help, said Heather Richman, a longtime Schumer aide who is now a defense consultant based in Silicon Valley.

"The Valley needs to understand how privacy and security are becoming one and the same," she said, "and some companies are going to have to make some difficult decisions."

In some cases, Schumer has had to tread delicately because of family connections to the industry. Schumer's daughter Alison is employed by Facebook. And a brother, Robert, is among the lawyers who worked on Comcast's $45 billion merger proposal with New York-based Time Warner Cable, the second-largest cable company in the country. Schumer had made statements in support of the merger. When he became aware of his brother's involvement, he recused himself from any role in its review.

Schumer's political savvy is not lost on industry officials close to the legislative process. Chip Pickering, a former Republican congressman from Mississippi, now leads an association of telecom and Internet companies including Amazon, Netflix, T-Mobile and Twitter.

"He's what I'd call a market leader," Pickering said. "He sees a political market — and all that comes with it — and wants to get in front of it."