WORKING THE WASHINGTON WEB

By Caren Turner
Published in AlleyCat News, March 2000

So, you've mastered the WWW (World Wide Web). You're a leader in the "new economy." But have you forgotten the WW? Have you even begun to master the WW (Washington Web)?

The Microsoft antitrust decision may radically change the way the .com industry views its relationship with the government. Moreover, Microsoft's relatively recent commencement of lobbying efforts should serve as a "heads up" to the rest of the industry. The .com industry can't go on believing that cyberspace is outside the jurisdiction of Uncle Sam.

Microsoft began its lobbying efforts approximately five years ago, allegedly at the behest of Representative Billy Tauzin (R-LA), current chair of the House Subcommittee on Telecommunications, Trade and Consumer Protection. As Microsoft spokesman Rick Miller noted, "We came into the game late. We should have been active in D.C. earlier, but we were still among the first."

Who is in Washington Now?

According to Federal Election Commission (FEC) data compiled by the Center for Responsive Politics (CRP), as of November 1, 1999, the companies shown in the table on page 84 are the top computer-industry contributors in soft money, Political Action Committees (PACs) and individual contributions.

Washington spending increases are dramatic. As noted by the CRP, in the first nine months of 1999, Microsoft spent nearly six times more than it did during the same period in 1998. As technology issues have increasingly popped up on the congressional radar screen, dozens of new companies have joined the clamor.

Why Are Events in Washington Important to E-Commerce?

The impact of a carefully orchestrated lobbying campaign cannot be overemphasized. According to a recent Wall Street Journal article (11/1/99), Microsoft blames the entire antitrust suit on the lobbying efforts of its competitors: America Online, Oracle, Sun Microsystems and IBM.

Taxation of Internet sales loomed large in Congress this year until eBay and other e-retailers were able to defeat it. Given that Internet sales totaled approximately $51 billion last year and are estimated to exceed $1 trillion in the next few years, legislators such as Senator Fritz Hollings (D-SC) believe it's time to collect sales tax. They believe that Congress should "end the subsidization of e-commerce."

On the opposite side of the taxation issue is Senator John McCain (R-AZ), whose bill, the Internet Tax Freedom Act, which passed in Congress this year, placed a three-year moratorium on taxation of e-commerce. The issue is sure to resurface in the coming years.

Congressional insiders note that Oracle successfully led the charge in limiting the industry's liability for Y2K problems. Others, too numerous to name, worked hard to pass legislation to prevent cybersquatting on Internet domain names; protect children from potentially harmful e-marketing and data collection; extend tax breaks for industry research and development; and raise the H-1B visa cap to alleviate a shortage of highly skilled domestic workers.

These issues will all have an impact on the bottom line of Internet companies.

What Can We Expect in the Year 2000?

With the Internet growing at an exponential rate, so is Congress' attention to issues affecting e-commerce. There are currently over 100 bills pending that will have an impact on e-commerce. Which ones will pass is somewhat speculative. However, many in Washington predict we will see heated activity in the following areas:

Encryption: According to Microsoft's Miller, draft regulations regarding encryption/export controls are in the works. Microsoft is hopeful that the regulations will remedy the problem of outdated export controls. According to Microsoft, current encryption requirements prevent the software industry from providing the strong security and privacy protections their customers demand.

Privacy: At present, there are no federal regulations concerning usage of personal information collected from the Internet. Representative Rick Boucher (D-VA) and Bob Goodlatte (R-VA) are concerned about the usage of "cookies". They believe Congress must legislate privacy guarantees. Their legislation requires Web sites to inform visitors of data collection. It also allows visitors to exit the site without any data collection. The Federal Trade Commission (FTC) would enforce this measure.

Likewise, Representative Bruce Vento (D-MN) notes that "there is every indication that this fundamental right [to privacy] is eroding and at risk." He is concerned that information collected from Internet activity will be used to deny jobs and health or life insurance coverage.

To avoid congressional legislation of privacy issues, the industry has begun to self-regulate through groups such as TrustE; however, as noted by the staff of Representative Vento, "Congress has a real hesitation to do anything to regulate the Internet because it's so fast-growing. But if self-regulation doesn't work, we'll get involved with it."

Patents: Some companies are urging passage of legislation to require publication of patent applications within 18 months after filing. "Publication will reduce wasteful duplication in research and development, promote faster utilization of new technologies and deter abuse by providing notice of overly broad claims," states the Microsoft Policy Fact Sheet.

Copyright: Congress is currently considering increasing statutory damages and sentencing guidelines to deter software counterfeiting and piracy.

Broadband/Access Issue: The Internet Freedom and Broadband Deployment Act of 1999, H.R. 2420, currently has approximately 150 cosponsors. It would allow the Regional Bell Operating Companies (RBOCs) to offer high-speed Internet access. Current cable operators would arguably remain in place, thereby creating "vibrant competition" according to Representative Tauzin.

Digital Signatures: Several bills in both the House and Senate would regulate the usage of digital signatures.

Why is it Important for the .com Industry to Get Involved in Government Relations?

First of all, some Internet companies are already in Congress trying to change the laws to their advantage. Other companies should also get involved in the development of legislation or be prepared to confront a law that might hurt their bottom line.

Second, working with members of Congress is a faster, less expensive and more efficient way to deal with a troublesome law than litigating it. With over 2,000 bills introduced each session of Congress, companies are constantly trying to rewrite the law to their advantage.

Third, legislators need to hear from the industry in order to successfully and effectively draft legislation. Without industry input, legislators are writing laws in an information vacuum, which can only lead to poorly written laws that cause the entire industry to suffer.

Finally, as noted by Microsoft spokesman Miller, "D.C. and the industry are at a crossroads. There's a need for both sides to get involved and try to understand each other."

It's time for the WWW and WW to talk.

Caren Turner, J.D., has been a Washington, D.C., lobbyist for 20 years. Her firm, Turner GPA, which provides government-relations expertise, is in the process of launching an online lobbying service. She can be reached at czturner@lobbylinx.com.