Apple’s Quieter Side

iPhone Maker Keeps Subdued Presence in D.C.

Posted July 13, 2007 at 6:00pm

With the introduction of the iPhone last month, Apple Inc. renewed its place among the highest-profile companies in the world. Except on Capitol Hill.

The wildly popular maker of sleek personal technology products has long maintained a notably quiet presence inside the Beltway, shunning the traditional lobbying tools — consultants, political cash and lavish entertaining — that other companies use to sow goodwill here.

But as Apple continues to pile up record earnings and attract new interest from consumer groups and lawmakers, there are signs it is joining in the tech sector’s reluctant march into the influence game.

It is stepping up its spending on a still-tight roster of hired guns and expanding its in-house team. At the same time, however, it does not have a political action committee, and Steve Jobs, the company’s rock-star chief executive, remains leery of the Hill, turning down frequent invitations to testify.

True to form, Apple declined to comment for this article. But Congressional aides and tech lobbyists described the company as aware of the need to bulk up its political efforts.

A fresh reminder came last week. During a meeting of the House Energy and Commerce Subcommittee on Telecommunications and the Internet, since dubbed “the iPhone hearing,” the product received rare negative reviews from both sides of the aisle.

Subcommittee Chairman Ed Markey (D-Mass.) criticized the company’s exclusive deal with AT&T that requires consumers to sign up with the wireless provider to get service for the devices. Brandishing his new iPhone, Markey described it as a “Hotel California service. You can check out any time you like, but you can never leave. You’re stuck with your iPhone, and you can’t take it anywhere.”

On Friday, Free Press, a nonpartisan group advocating media reform, launched FreetheiPhone.org, a campaign to push freer access to wireless networks. Other advocacy groups are preparing similar efforts.

The campaigns are aimed at reforming telecommunications regulations and the wireless companies that benefit from them, more than they are at Apple. But aides and lobbyists said to the extent they could hurt sales of the new device, the company needs to take notice.

Apple’s ambivalence toward Washington, D.C., follows a familiar script. Until a decade ago, Microsoft regarded the federal government as irrelevant to its business plan. So it was caught flat-footed when the Justice Department slapped it with a massive antitrust suit. The company quickly ramped up a lobbying operation that now ranks as one of the most expensive and sophisticated in town.

Google, another tech giant, learned the same lesson more recently.

Last year, its still-nascent team here found itself outmatched against the entrenched lobbying forces of cable and phone companies over the issue of net neutrality. Within months of the start of the debate, Google executed a rapid turnaround, building a robust in-house team, hiring outside help and kicking off a political action committee.

In either case, a precipitating event forced technological innovators to recast their view of Washington — from a place where good ideas come to die to a more realistic understanding of the federal government as both a threat and potential ally.

“Until they get confronted with something like that, a lot of companies don’t rise to meet the challenge for having a real presence here,” said one House Democratic aide.

Those familiar with Apple’s operations in Washington said no similar cataclysm is looming for the company. Instead, as the company itself experiences eye-popping growth — its stock is up 62 percent this year — it is slowly building a political operation to match.

In the past three years, it has more than doubled its lobbying expenses — up to $1.1 million last year, according to Senate records. It retains Capitol Tax Partners, Jefferson Consulting Group and Mayer, Brown, Rowe & Maw, mostly for a mix of tax and trade work. It also is a member of the Information Technology Industry Council.

And what for years was a one- or two-man shop for the company also is growing. Last year, Joby Fortson left the staff of then-House Energy and Commerce Chairman Joe Barton (R-Texas) to join the team.

This year, the company added Cathy Novelli, a veteran of the Office of the U.S. Trade Representative. She came to the company from Mayer, Brown, but an injury kept her sidelined for most of the year. She started this month. Sources said they expect the team to further expand this year.

Though the company has no official account to disburse political cash, its employees have cut personal checks that should put Apple in good favor with the new Democratic majority.

Of the $113,256 total they doled out during the previous election cycle, 94 percent went to Democratic candidates, committees or affiliated groups, including $26,700 from Steve Jobs to the Democratic Congressional Campaign Committee, according to the nonpartisan Center for Responsive Politics.

“Their products are so popular and they’ve done such a good job of branding themselves that Members and staff have a very favorable impression of them,” said one Democratic leadership aide.

One obstacle for the company as it seeks to build that reputation on the Hill: All but three House offices have opted to outfit with PCs instead of Macs because Apple apparently does not offer a sufficient program for sorting constituent mail.