Extortion (13 page)

Now, with the antipiracy fight in Washington, big firms such as Google were in play. Knowing the right people in power gives key Washington players a new sense of worth. The Permanent Political Class has always had such players. Attach yourself to someone with power and make your move at the right time and you too can become a player. Vice President Joe Biden was the point man for the administration, so his aides and former aides were suddenly players. Many became hired guns on both sides.

Leading the charge for the MPAA was Michael O’Leary, recently hired as vice president and counsel for the organization.
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O’Leary had served as a counsel to Biden when he was on the Senate Judiciary Committee.
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On the other side, Google, which was leading the opposition to the bill, made its own move. In early 2011, the technology giant hired an attorney named Katherine Oyama to be its policy counsel in Washington. Oyama came to Google from the White House, where she had served as the vice counsel to Vice President Biden.
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The battle pitted key Obama pillars of support against one another: Stephen Spielberg and Jeffrey Katzenberg versus Marissa Mayer—first at Google, then CEO of Yahoo—and Eric Schmidt of Google. Some of the media interpreted this as a problem, but they missed the point entirely. For the Permanent Political Class, this battle wasn’t a problem, it was an opportunity. As at least the
Hollywood Reporter
recognized, “This is a great issue over which politicians can raise funds from donors on both sides.”
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The number of companies with skin in the game was staggering. As
Politico
rightly observed, it was “a huge payday for lobbyists”: 145 different companies lobbied for or against the bill in the House, and 157 for or against in the Senate.
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The stakes were high. For entertainment firms, this was “either make it or break it,” said Bill Allison of the Sunlight Foundation. “It’s not surprising that they’re spending more to push these bills.”
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Cable giant Comcast alone hired nineteen different lobbying firms to fight for them. The National Cable and Telecommunications Association, in addition to its own army of in-house lobbyists, hired nine outside lobbying firms. Disney, TimeWarner, News Corporation, and others also hired their own well-connected firms.

Opponents like Google, Yahoo, and Microsoft armed themselves as well. In the fourth quarter of 2011, when the fight reached its zenith, the two sides together spent a whopping $104.6 million lobbying. In all, more than nine hundred lobbyists were paid big money.
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It was a boon for the lobbying industry, which had been having a tough year.
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Those who had family members in office or were well connected did especially well. Former senator Gordon Smith represented the National Association of Broadcasters. He was a cousin to no less than three sitting U.S. senators: Mike Lee of Utah, Mark Udall of Colorado, and Tom Udall of New Mexico, a cosponsor of the bill. Senator Mark Pryor’s brother, who lobbied for Microsoft, faced him from the other side. Senator Pryor conveniently sits on the powerful Commerce Committee.
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Dave Lugar, son of Indiana Republican senator Dick Lugar, also picked up Google as a high-paying client. (Senator Lugar was keeping quiet as to whether he supported or opposed the bill.) Dave Lugar pocketed $140,000 from Google in 2011.
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He also helped his father raise funds. On December 13, he sent out a letter urging clients to attend a fund-raiser for the senator to the tune of $5,000 per person.
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Ex-politicians and their family members also had a nice payday. Google lapped up such ex-politicians as former majority leader Dick Gephardt and former congresswoman Susan Molinari, who would become the director of its Washington, D.C., office.
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Molinari has had several interesting jobs since leaving Congress. At one point she was an anchor for
CBS News Saturday Morning
.
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Along with her lobbying partner Rita Lewis (a former Tom Daschle aide), she also had helped to land a $4.6 billion appropriation for Hurricane Katrina relief for the state of Louisiana.
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Her other clients have included the government of Panama. Her husband, former congressman Bill Paxon, is also a lobbyist.
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Comcast paid former congressman William Gray and his son Justin’s boutique lobbying firm $440,000 throughout 2011.
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Ex-congressman Vic Fazio represented AT&T.
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A “government relations firm” named Madison Group netted a cool $140,000 from Google during 2011.
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Michael Brown, the son of the late commerce secretary Ron Brown, worked on the Google account at Madison.
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The firm Dutko Grayling landed a $320,000 lobbying contract from Google.
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One of the managing principals at the firm is the brother of former Bush White House chief of staff Andy Card.
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Some powerful and well-connected lobbying firms even managed to walk both sides of the street—by representing both those for and against the bill. Super-lobbyist Tony Podesta, whose brother was White House chief of staff under President Clinton, was extremely well connected on both ends of Pennsylvania Avenue. A native of Chicago, Podesta was partners with Republican strategist Dan Mattoon.
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When Dennis Hastert was Speaker of the House, Podesta and Mattoon had hired the Speaker’s son to work for them.

Podesta was a frequent guest in the Obama White House.
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Google paid his firm $350,000. Astonishingly, the National Association of Broadcasters also paid Podesta’s firm $320,000.
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The two clients had polar opposite views on the antipiracy bills. Google also hired firms like the FIRST Group, which featured recent chiefs of staffs of both Republican and Democratic senators.
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Who says there is no bipartisanship in Washington?

Some congressional staffers smelled the cash and jumped into the money scrum after the ball was in play. Two of the Republican congressional staffers who helped write SOPA in the House and PIPA in the Senate quit their jobs—in order to become lobbyists for the MPAA and the National Music Publishers Association. One worked for House Judiciary Committee chairman Lamar Smith, and the other as a senior Republican aide on the Senate Judiciary Committee.
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The Obama campaign was hardly the only group extorting for campaign dollars. Congresswoman Debbie Wasserman Schultz was the Democratic whip in the House and head of the Democratic National Committee. When the Internet piracy bill passed the Senate, her fund-raisers put out the word that it was time to cough up cash. She had yet to take an official position on the bill. In less than a week—from April 27 to May 2—an extraordinary wave of donations rolled in. A total of $63,500 flowed from the PACs of AT&T, Verizon, TimeWarner, Cox Enterprises, the Communication Workers of America, the Entertainment Software Industry Association, Microsoft, Disney, Viacom, Clear Channel Communications, Sony Pictures, the Directors Guild of America, the National Football League, Yahoo, and GoDaddy.
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During those same few days, checks also arrived for her leadership PAC from the chairman of 20
th Century Fox, Microsoft, and executives from film companies like Fox Films, as well as from lobbyists at firms representing eBay, TimeWarner, the National Cable and Telecommunications Association, Google, and others. It was an extraordinary concentration of checks from parties that had a lot to win or lose from antipiracy legislation.

Congressman Lamar Smith, then-chairman of the House Judiciary Committee, continued his fund-raising as his staff was drafting the House bill.
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Smith’s former chief of staff, Joe Gibson, had gone into the lobbying business by forming the Gibson Group. He was working for broadcast giant Clear Channel, which supported the bill.
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On March 25, he received twelve checks from company executives for more than $18,000.
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“If you are a member of the Judiciary Committee, year after year after year, the content industry has been at your fund-raisers over and over,” complained Computer and Communications Industry Association president Ed Black.
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But despite grumbling, firms such as Google, GoDaddy, and Microsoft paid up.
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Smith also raked in donations through his Longhorn PAC, soliciting and receiving contributions from broadcasters, software groups, the recording industry, and lobbying firms involved on both sides of the antipiracy fight as the bill was being drafted.
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In November, after hearings were held on the bill, Smith delayed moving it to the House floor. “Congress benefits from keeping us all in suspense,” said Gabriella Schneider of the Sunlight Foundation. “Those special interests who have a stake in it are . . . contributing directly to campaigns and this gives them more time to do it.”
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Lobbyists were expected to hold fund-raisers for senators and representatives if they wanted movement on the bill. Lobbyists hired by the MPAA organized a fund-raiser for Senator Orrin Hatch, who sat on the Senate Judiciary Committee and was a cosponsor of the Senate bill.
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Some politicians played coy by not taking a clear stand on the bill. House Oversight Committee member Ed Towns of New York lined up fund-raisers from both sides.
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A lobbyist from the Podesta Group, which represented Google, TimeWarner, and the National Association of Broadcasters, hosted one, along with lobbyists representing Verizon, AT&T, Microsoft, and Comcast.
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In early December 2011, Hollywood executives came to Washington for another meeting with Biden to discuss a full-court press to support the bill. Jim Gianopulos of Fox, Barry Meyer of Warner Brothers, and Sony’s Michael Lynton, along with entertainment industry union bosses, met behind closed doors with the vice president.
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From Silicon Valley’s perspective, this all looked like Armageddon. Piling on, Secretary of State Hillary Clinton wrote a letter to a cosponsor of SOPA to lend her support to the idea of aggressively dealing with online piracy saying the “the rule of law is essential to both Internet freedom and protection of intellectual property rights.”
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But for his part, President Obama played it cool, in perfect double-milker fashion. He told the media he would “probably” sign the bill.
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As
Mother Jones
reported, “The White House gave no indications that Obama had any problem with the legislation.”
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Yet Obama’s position on the bill was out of character with his general attitude to the high-tech industry. Obama’s stance on online piracy was particularly striking given what everyone regarded as his “deep ties to high tech.”
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And Silicon Valley had been “Obama’s core . . . fundraising base.”
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He dined regularly with high-tech titans at the White House and in Silicon Valley.
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Eric Schmidt of Google was an informal economic adviser of sorts.
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Obama rarely spoke of the antipiracy bill publicly, whether in Hollywood or in Silicon Valley. Might his hints at support have been false?

Silicon Valley had been an early and eager backer of Obama in 2008, pouring money and expertise into his election.
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But by 2011 there was considerable evidence that high tech was cooling to him. “I don’t think they feel the love [for Obama],” said Gary Shapiro, head of the Consumer Electronics Association. “There’s great disillusionment.”
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Rob Endere, a Silicon Valley tech veteran and Obama backer, told
Politico
on February 2011, “There has been growing disappointment with the President.”
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In the first half of 2011, Silicon Valley had tipped in a paltry $1.7 million in campaign donations for Obama’s reelection.
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Throughout the fall of 2011, the Obama administration continued to signal its support for antipiracy legislation, while it showed up for fund-raisers in high-tech communities. In late September, the president held a fund-raiser outside of Seattle at the 14,000-square-foot house of former Microsoft executive Jon Shirley. With a price tag of $35,800 per couple, the event drew fifty couples who showed up for a chance to question the president.
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Then it was on to Silicon Valley for a visit to the home of Symantec CEO John Thompson and Facebook chief operating officer Sheryl Sandberg. The invitation read that this was an opportunity to “join President Obama in Silicon Valley.” In a stately tent in the front yard of Sandberg’s luxurious home, the price tag was again $35,800 per person. Lady Gaga performed, but as a paying guest.
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For Silicon Valley execs concerned about antipiracy legislation, the high admission fee was a small price to pay.