In bid for TikTok, Microsoft flexes its power in Washington

In bid for TikTok, Microsoft flexes its power in Washington
The software giant was once a cautionary tale of an arrogant tech company caught off guard by government scrutiny. But under the leadership of Nadella and Smith, it’s built one among the foremost potent forces within the nation’s capital.

Microsoft’s quiet pursuit to shop for TikTok suddenly appeared dead a month ago, when President Donald Trump said he wanted to ban the favored social media app for national security reasons. So Brad Smith, the tech giant’s president, visited work.

He called twenty-four lawmakers, telling them that TikTok would be safe in Microsoft’s hands. Within 48 hours, he had what he needed.

Trump saw a tweet by Sen. Lindsey Graham, an in depth ally of the president and one among the people Smith talked to, calling a Microsoft deal a “win-win.” Soon, Satya Nadella, Microsoft’s chief executive, was on the phone with Trump and got his blessing to proceed with acquisition talks.

It was another win for Microsoft’s quietly effective Washington influence operation.

The software giant was once a cautionary tale of an arrogant tech company caught off guard by government scrutiny. But under the leadership of Nadella and Smith, it’s built one among the foremost potent forces within the nation’s capital, one that would provides it a plus over the several potential bidders for TikTok if the corporate continues to pursue a deal.

It secured a coveted Pentagon contract widely expected to be awarded to Amazon. it’s largely avoided antitrust scrutiny by Congress and federal regulators albeit it’s valued at quite $1.7 trillion, quite Google and Facebook, which are under investigation. And while it’s disagreed publicly with the Trump administration on several issues, like immigration, it’s one among the few Big Tech companies Trump and other politicians don’t regularly denigrate.

The company does so despite spending less on lobbying than many of its peers. Last year, Microsoft spent $10.3 million on federal lobbying, several million but Amazon, Facebook or Google, consistent with the middle for Responsive Politics. It currently has 100 in-house and out of doors federal lobbyists registered to figure on its behalf.

People who have worked with Microsoft and people on the receiving end of its lobbying said it’s particularly adept at employing a focused, long-game approach, building relationships with lawmakers and other Washington insiders over noncontroversial issues, like when Melania Trump visited Microsoft’s headquarters to debate her Be Best campaign against online bullying. Its relationship with Graham extends back a few years , with Microsoft supporting his push to ban forced arbitration in harassment claims and Graham backing a law granting enforcement access to data that Microsoft had championed.

It also relies on a staff of policy experts instead of well-known public figures, contrasting with the approach taken by a number of its peers. Amazon’s top policy executive is Jay Carney, a former White House press secretary; and Susan Molinari, a Republican former congresswoman from ny , ran Google’s federal lobbying for years.

“They learned their lesson,” said Jeff Hauser, director of the Revolving Door Project, a progressive group that tracks tech’s influence. “I think they now see themselves as best served by having a permanent, discreet presence within the halls of power.”

Bill Gates, Microsoft’s co-founder, proudly eschewed Washington whilst his company grew into an enormous and he became the world’s richest man. the corporate didn’t hire an in-house lobbyist until 1995, 20 years after its founding, when it faced an antitrust inquiry from the Department of Justice . The lobbyist, Jack Krumholtz, was a one-man shop, often making calls on his car phone between meetings, giving him the name “Jack within the Jeep.”

The lobbying effort grew quickly, but it didn’t hold the pressures cornered . Microsoft was sued by the govt and pummeled publicly . In 2002, a federal judge approved a five-year decree with the Department of Justice that was extended twice.

By 2009, with its antitrust fights behind it and President Barack Obama taking office, Microsoft revamped its approach. It enlisted Fred Humphries, who had worked for Richard Gephardt, the previous House legislator , to run its Washington operations.

He pushed to open an enormous policy office on K Street, quite doubling the space for an equivalent number of employees. One night it’d host a fundraiser for Sen. Ted Cruz; on another, a panel for a tech industry association.

But Microsoft’s polite veneer was sometimes overshadowed by fights it picked with competitors, like its aggressive campaign against Google led by Democratic pollster Mark Penn. It dumped opposition research with journalists and lawmakers and ran alarmist ads on TV saying consumers were “Scroogled” by the search company.

Publicly, Microsoft looked petty. It also got few results. In 2013, regulators decided to not bring antitrust charges against Google after a high-profile investigation.

In 2014, Nadella took over the reins as Microsoft’s chief executive. The son of an idealist official in India’s first generation after colonial rule, Nadella didn’t see government as something to be gamed and insisted on a more “principled” approach, Smith said.

Soon, the company’s Washington office got word that it had been time to form nice. Scroogled was done. Penn left the corporate a year later.

Instead, the corporate methodically identified policies to pursue then slowly ground through the interconnected power of lobbyists, regulators and lawmakers to form them happen. In 2015, Smith, then the overall counsel, was also named Microsoft’s president, bolstering his role because the company’s chief statesman.

In 2017, Microsoft chose to push expanding broadband access in rural areas as a signature issue. The feel-good policy has business implications, because better connectivity means more cloud computing. It came with another key benefit: It had bipartisan appeal.

“One of the good things about the broadband issue is, we do get to figure with everybody,” Smith said.

Microsoft proposed using wireless frequencies that exist within the “white space” on unused broadcast channels. Television stations balked, saying the change would force broadcasters off the air.

Microsoft was undaunted. While initially adversarial, in early 2018 its lobbyists met with TV stations’ representatives at the National Association of Broadcasters’ Dupont Circle headquarters, hoping to seek out some footing . Smith took the company’s argument to regulators. In December 2018, he visited multiple members of the Federal Communications Commission.

Many executives arrive for his or her meetings at the agency at the last possible minute, hoping to avoid attention. Smith instead showed up early and hung out during a lounge schmoozing agency staff, consistent with two people that remembered the visit. They spoke on the condition of anonymity because they weren’t authorized to talk publicly about the visit.

Microsoft and therefore the broadcasters reached an accord on several key points in 2019, and therefore the FCC has sought discuss a number of Microsoft’s proposals, making it possible it could turn them into reality within the coming months.

“Overall, within the end, i feel we need to a productive process,” said Patrick McFadden, deputy general counsel at the National Association of Broadcasters.

Despite its more subdued approach, the corporate still sometimes attacks competitors. Early within the race for a $10 billion Pentagon cloud computing contract, Microsoft joined a coalition including Oracle to oppose a technological approach widely seen as favoring Amazon. Microsoft later dropped out of the Oracle alliance, but the influence campaign helped slow the contracting process, a delay that gave Microsoft longer to enhance its technology. Microsoft eventually won the contract, though the work is paused as a part of Amazon’s lawsuit challenging the award.

“I’m not here to mention that we’re candidates for a few quite sainthood,” Smith said. “We will get up and combat battles.”

In July, Smith met with members of the House antitrust committee before testimony from the chief executives of Amazon, Google, Facebook and Apple. Smith said he had spent most of his time telling them about Microsoft’s own experience facing antitrust scrutiny 20 years earlier. But he concedes he spent “probably 10% of my time” with the committee saying the issues Microsoft had within the ’90s most closely resemble the way app stores today control how developers can reach customers, putting Apple especially in its crosshairs.

In mid-August, Smith got tested for COVID-19 before flying by private jet to Washington for meetings at the White House and on Capitol Hill , trying to elucidate how Microsoft could address the safety concerns associated with TikTok’s data collection.

If the company’s bid is successful, Microsoft will face issues, like misinformation, that it’s long avoided because of its specialise in enterprise instead of consumer products.

“I think it’ll require the proper quite ambition,” Smith said, “but also an appreciation that if these problems were easy to unravel , others already would have done so.”

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