Taming Tech Giants Requires Fixing the Revolving Door
BY CARLOTTA ALFONSI
Public opinion of big tech is at an all-time low. Just a few years ago, many viewed Silicon Valley as holding the promise to a better world, whereas today its largest companies generate levels of public distrust usually reserved for investment banks. This is good news for those hoping to see public policy in the United States catch up with the FAANGs (Facebook, Apple, Amazon, Netflix, and Google). But despite the more favorable political climate, these companies still stand a good chance of having regulation their way.
From Washington to Brussels, in less than a decade tech giants have grown from lobbying novices into political forces to be reckoned with. In 2012, Amazon ranked as the 221st-largest spender on US federal lobbying. Last year, it catapulted to 18th place, not far behind Google’s parent company Alphabet, which came in eighth., While 2018 was the year that the “techlash” brought overdue scrutiny to big tech, these companies had been gearing up for this moment by scaling up their policy-influencing operations.
What is most alarming about this trend is that the tech sector has experienced a surge in the “revolving door” phenomenon, the two-way movement of professionals between the private and public sectors. Last year, the industry grouping that includes big tech ranked as the third-largest employer (after the health care and financial sectors) of lobbyists that had previously worked in government. Google alone has hired 197 former US officials since 2005. Likewise, many have taken up public office after working in Silicon Valley. Through this process, big tech has cultivated a network of influential advocates both inside and outside of government. There is danger that this political access and influence will undercut current initiatives in Congress to regulate new technologies. For instance, tech giants are attempting to overturn the State of California’s Consumer Privacy Act by pushing Congress to enact a superseding federal policy, one based on the proposals of any one of the industry associations they fund.
While closing the revolving door between government and Silicon Valley may seem like the obvious solution, this would be the wrong response. First, legislators’ poor performance during Mark Zuckerberg’s 2018 congressional testimony demonstrated the real need for Congress to have an adequate level of understanding regarding the tech sector and its products. Talent flows from tech to government could have a positive effect to this end. Second, the other problem at hand concerns mitigating the influence of hundreds of former officials and tech professionals that have already made the transition.
Rather than closing the revolving door, efforts should concentrate on implementing mechanisms to prevent it from becoming a tool for undue influence. This could be achieved by establishing more formal platforms for stakeholders to educate lawmakers and provide independent evidence for policy. Other approaches should be aimed at limiting the effects of political connections in lobbying by former officials.
The United States appears poised to finally follow in Europe’s footsteps by introducing a comprehensive data protection law comparable to the General Data Protection Regulation (GDPR). Congress is waking up to the need for regulation of other important issues, ranging from competition to applications of artificial intelligence. Without strategic actions to contain big tech’s influence, efforts to bring a degree of regulation to this industry risk meeting the fates of gun control and greenhouse gas emissions policies.
The Revolving Doors of Silicon Valley
Between 2011 and 2016 alone, the number of Washington lobbyists employed by internet companies nearly tripled. Their ranks have expanded in tandem with tech giants’ fall from political grace, which culminated with The New York Times’s revelations of how Facebook sought to cover up its mishandling of users’ data. Many of these newly recruited lobbyists come from the very institutions they aim to influence. According to data by the Center for Responsive Politics (CRP) for 2017–2018, 93 out of 113 hired and in-house Alphabet lobbyists previously worked in government. The figures are similar across its competitors (76 out of 114 for Amazon and 42 out of 50 for Facebook) and traditional US lobbying heavyweights like AT&T and Northrop Grumman.
Yet these numbers still do not show the full picture. Industry groups bankrolled by big tech, such as the Internet Association and the Information Technology Industry Council, also employ well-connected lobbyists. CRP’s data only capture registered lobbyists, thereby missing other politically connected employees who often hold executive or board positions. For example, Facebook COO Sheryl Sandberg was chief of staff to the secretary of the Treasury during the Clinton administration. Former Vice President Al Gore and former Secretary of State Condoleezza Rice serve on the boards of Apple and Dropbox, respectively. Financial data suggest that connections matter in this capacity too: stock prices respond positively to appointments of politically connected board members.
These are not the only big names that come up on tech giants’ payrolls—they have excelled in hiring from the highest levels of government and politics. Last year, former UK deputy prime minister Nick Clegg became the latest high-ranking recruit when he joined Facebook as vice president for global affairs and communications. Amazon hired President Obama’s former press secretary in 2015, and Uber hired Obama’s campaign manager. The list goes on.
Importantly, the revolving door also spins from Silicon Valley to Washington, DC. The Obama administration recruited dozens of former Google employees to serve in the White House and at agencies like the Federal Trade Commission (FTC) and the Federal Communications Commission (FCC). Leaders from the tech sector also held White House advisory roles on policy matters they had stakes in: former Google chairman Eric Schmidt sat on three US government advisory boards.
Problem and Opportunity
To craft smart regulations, the government should source the expertise of those who know the technology, whether by hiring them or engaging them from outside. But being reliant on industry-friendly voices can mean these regulations fall short of serving the public interest.
As technology policy moves up on Congress’ agenda, those going through the revolving door in either direction will play a greater role in shaping the rules of the digital economy. Writing these new rules is possibly one of the most difficult tasks present-day policy makers face, and it means that more expert voices inside the halls of government are something to be welcomed. Moreover, Congress shut down the independent Office of Technology Assessment (OTA) in 1995 as part of a federal budget cut process and has resisted attempts to revive it. The White House is no better prepared given that, until January, the post of director of the Office of Science and Technology Policy was vacant.
Without formal means to gather independent evidence that is critical for developing effective policy, there is an opportunity for the private-to-public revolving door to compensate some of the dearth in public-sector technical expertise by injecting specialized talent into government. But more transparent vetting is needed to ensure that those who join intend to act in the public interest.
Instead, government currently relies heavily on external advice and know-how for its policies. This is a problem because it provides industry the opportunity to exercise undue influence over the policies and regulations of which it is the subject. The revolving door is only one of several ways that Silicon Valley can influence policy, but it is an important entryway for one-sided information that could form the basis of public policy. The surge in big tech hires of former officials affords a handful of powerful companies the unfair advantage of raising their views above those of their users, who are often no more tech savvy than their elected representatives. With the abolition of independent agencies like the OTA, “Congress . . . is left to rely on the very organized interests that have direct stakes in policy outcomes.”
There is little doubt that the market for well-connected former officials is centered on their potential for influence as lobbyists. Research has found that lobbyists’ connections, not their knowledge of institutions, are what earns them higher financial rewards. The trust and goodwill that characterize interactions between former colleagues and friends help engender affinity, shape perceptions, and frame issues. The authority and respect some former officials command can generate legitimacy for the views they advocate. Policy makers are also more likely to seek out information from people already in their networks, making it easier for those who moved from public office to industry lobbying to become involved in policies they have stakes in.
Fixing Cooling-Off Periods
Given the scale of the revolving-door phenomenon in tech alone, it seems clear that “cooling-off” periods only go so far. But further restricting post-public employment can have detrimental effects without necessarily solving the problem.
Transitioning from public service to lobbying does not, per se, make anyone a bad person. It is no mystery why someone would want to work on interesting policy questions for some of the most successful businesses in the world (and, until recently, the most admired). Some individuals may be intent on capitalizing on their personal connections and use their office as a platform to seek more remunerative employment. But this is not the driving motive for everyone who moves to the private sector.
When politicians are voted out of office or a transition in government displaces staffers, they still need to find work. Working on policy for a non-government entity is often the most accessible next job and one for which they are best qualified. It should be acceptable so long as there is no conflict of interest. Additionally, limiting post-public employment and earning opportunities may have the unintended consequence of governments being less able to attract the best talent.
Current policies that seek to limit conflicts of interest focus on individuals, forbidding former government officials from accepting certain jobs temporarily (or, in some cases, permanently). A better way to address the problem would be to shift responsibility for compliance onto private employers that hire former officials. Rules should forbid these private employers from requiring (or allowing) their lobbyists to communicate with former colleagues if those colleagues are active in the areas of interest to the private employers. Such a measure should hold companies, rather than the individual, liable for any breaches by their revolving-door employees. Private firms could receive stiff fines in order to reduce incentives for non-compliance. This measure would reduce the potential for the exercise of undue influence through political connections while allowing former officials to move to the private sector solely based on their expertise and policy knowledge.
Revolving doors, if managed correctly, can be constructive in mitigating the public sector’s expertise gap for tech policy. A solution to the problem of one-sided information from big tech’s lobbyists—and Washington’s reliance on it—would be to create formal channels for the transfer of knowledge and ideas that are more transparent and inclusive. This would not remove behind-the-scenes lobbying, but it would dilute it with more objective and openly contestable evidence.
One approach would be to institute independent, expert-led panels on specific policy topics, similar to the one providing recommendations on digital competition to the British government. This panel comprises leading academics from relevant fields, who are issuing policy guidance on regulation of competition in the digital economy based on independent assessments and engagement with stakeholders.
Another way is to formalize forums that bring together different factions to policy debates and encourage them to find common ground. The Partnership for AI is one such non-governmental initiative that convenes stakeholders on socially important aspects of artificial intelligence technologies. Replicating this format across other tech-related issue areas could improve the flow of information and advice to policy makers.
Increased transparency in lobbying and policy development would compensate for the relative lack of independent information sources, but it is ultimately no substitute for increasing tech literacy in the public sector. Revolving doors from industry to government help meet this goal by supplying a pipeline of qualified analysts and advisors. However, drawing on the expertise of those who work in Silicon Valley need not result in government agencies abdicating their responsibility to protect the public’s interests. The views that matter most are those of the people in charge. The Obama-appointed FCC chairman who passed net-neutrality rules came from the private sector, just like his Trump-appointed successor who repealed them. It was each administration’s political agenda and choice of appointees, not their professional backgrounds, that shaped policy.
Ultimately, the revolving door is just one of many tools that big tech companies use in order to wield their immense power. Increasing tech literacy in government and restricting the flow of biased information through political connections will produce more effective policies for the digital age. But if tech giants’ surging lobbying spending and campaign donations are any indication, similar interventions and reforms to curb their political influence will also be needed in those areas. Whether policy initiatives on data protection and artificial intelligence are watered down in favor of more self-regulation, or whether the techlash results in less-than-optimal policies because of poor tech literacy, will depend on more than the role of Silicon Valley’s revolvers.
Carlotta Alfonsi is an alum of the John F. Kennedy School of Government at Harvard University and a research assistant looking at China’s geopolitical and economic presence in Europe for the Mossavar-Rahmani Center for Business and Government. She is contributing to the OECD’s research on influence in public policy and has previously worked in international public affairs.
Edited by: Ryan Pierannunzi
Photo by: Pisqels
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