Tech’s Frightful Five and Their Allies Come to Brussels

Tech’s Frightful Five and their Allies Come to Brussels by David L. Cohen

Over the past 100 years corporate America has become quite sophisticated in how it lobbies the US Federal and State government and regulators.   While the messages being promoted may differ, lobbying for corporate interests as diverse as tobacco, sugar (and here), firearms, the environment, fossil fuels, health insurance (and here), financial regulation, and many other fields has become a major business in Washington and around the country.  Indeed, some have argued that the sheer scale of corporate lobbying has allowed it to conquer democracy in America.

It is no surprise, then that Tech’s Frightful Five (Apple, Alphabet/Google, Amazon, Facebook and Microsoft) have become masters of the lobbying game in America.

Recently released records show that Google led a $64 million effort, along with Apple, Amazon, Facebook, and Microsoft to shape U.S. regulations and stave off government scrutiny in 2018.  In 2017, Apple spent some $2.2 million just lobbying the Trump administration.   By way of contrast, in 2018 lobbying across all their US lobbying endeavors by other companies in in the US political and regulatory crosshairs include: Nokia at $820,000; InterDigital at $1.37M;   Qualcomm at $8M; Exxon at $11.5M; Purdue Pharma (makers of OxyContin) at $1.12M; Pfizer at $11.36M; GM at $7.7M; Verizon at $12M; and Monsanto at $4.6M.

In broad outline, corporate lobbying follows a similar pattern.  In addition to direct lobbying by individual companies, companies with common interests create special interest groups that devote all their efforts to pushing for a narrow set of issues for to their corporate paymasters.  Sophisticated groups know to present themselves as representatives of a broad array of corporate Americans; not just big companies, but, preferably, mostly small mom and pop entrepreneurs.  Additionally, more sophisticated corporate interests do not rely on a single special interest lobbying group but will fund multiple such groups that have similar if not overlapping remits.  The most sophisticated corporate interests do not just rely on lobbyists, but create an entire network of academics, think tanks, university chairs and programs, and public intellectuals to push for their positions.  This approach to lobbying is extremely effective and utilized all across the political spectrum from left to right.

Google, especially, has been quite proficient in getting its views on the radar of legislators and regulators.  Whether it is spending tens of millions of dollars on think tanks that support its views, funding research and academics to support less restrictive copyright and intellectual property rules (the Google Transparency Project has a nifty interactive chart of what it calls Google Academics Inc.), installing a Fifth Column at the US Patent Office which purposefully worked to kill patents inconvenience to Google and others, being the money behind the Electronic Frontier Foundation’s Jihad against software patents or FRAND royalty restrictionists, orstuffing government panels with sympathetic academics (this article provides fascinating details on speakers’ at Federal Trade Commission fora deep links to Google).  Indeed, according to one recent count, Google has sponsored over 329 academic papers on topics of interest to it, like antitrust (with over 113 papers and studies).  Moreover, Google brooks no dissent – and will do what they can to silence critics.

Apple and Intel have not been too shabby either – it managed to have one of its trial lawyers from its go-to firm for SEP litigation co-author a “working paper” that makes ridiculous claims about the total SEP royalty stack which somehow got picked up and swallowed whole-cloth by EC Commissioner Vestager – despite significant contrary evidence – and likely caused significant damage.  Indeed, Apple is quite good with soft power, seemingly getting the Federal Trade Commission to advance Apple’s case against Qualcomm over vigorous dissent is a prominent example.   Indeed, the protégé of the FTC’s expert and frequent co-author has argued that that FRAND “basically means a low price”.  Apple is also not above the dramatic announcement designed to elicit sympathy, recently announcing it was closing two stores in the Eastern District of Texas to avoid “patent trolls.”   This, according to a recent study, in a year where the percentage new patent filings in EDTX fell from 21% to 14% and overall new patent filings fell for the third year in a row to a low not seen since 2011. Apple is also bulking up its D.C. lobbying hiring. Rumor also has it that Lore Unti, longtime USPTO IP-Antitrust attorney, is leaving to join Apple’s DC advocacy brigade – which if true is extremely interesting.

As tech’s Frightful Five have become more sophisticated in their lobbying they have been trying to increase its effectiveness by hiding behind advocacy groups.  The groups may already exist, or they may be created behind the scenes. In any event, the groups present themselves as representing a wide range of stakeholders.   Some of the organizations include the App Association, IP2Innovate, The App Developers Alliance, Fair Standards Alliance, Computer & Communications Industry Association and Information Technology Industry Council.  Some might even argue that after the dispute over the IEEE’s IPR policy, it also has become a front for the Frightful Five’s collusive behavior as it related to SEP licensing.

Thus:

With all these lobbying activities it is no surprise that some have mused that Google and big tech killed patents.  Likely sensing a change away from a SEP-restrictionist approach toward a view positive toward global SEP licensing, the  Silicon Valley gang of Apple, Cisco, Google, and Microsoft have doubled down on their lobbying efforts.

Having honed their methods in the US, Google and Apple are now turning their sights toward Europe.  Indeed, in the recent debate of Article 13 of the European copyright law, Google spent over 31 million Euros in lobbying – in addition to successfully mobilizing YouTube creators against the reform by claiming it would put their livelihoods at stake (an interesting strategy considering Google seems to be doing exactly that on its own). In the meantime, its lobbying activities continue to grow.  It has invested heavily in European academic institutions to develop an influential network of friendly academics to think tanks, universities and professors that write research supporting its business interests spanning the length and breadth of Europe.  Some examples include:

Not to be outdone, Apple has stepped up its efforts in Europe, and was actively looking for lobbyists including one on intellectual property and standards (though it appears the job has now been filled).

While it remains to be seen what kind of damage Tech’s Frightful Five will do to European innovation and its IP ecosystem, hopefully they will not cause the same damage to innovation and IP they did in the US.  Indeed, it has been argued that a quality patent system counter-intuitively (to economists at least) promotes industrial collaboration.  Hopefully, European politicians will not be swayed by companies interested in the monopolist’s strategy of “embrace, extend, extinguish” and instead defend open technology standards and strong IP rights.

David L. Cohen

David L. Cohen, Esq.

David L. Cohen, P.C. – Kidon IP
123 West 93rd Street
New York, NY 10025
dlc@davidlcohenpc.com 
(914) 357-5196

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