Facebook in Washington: Baby steps of a giantBy May 17 2012 11:12 a.m.
Facebook, which has set off a frenzy of market speculation with its plans go public as early as Friday, isn't just raising its profile on Wall Street. As the social networking giant prepares for its initial stock offering, Sunlight decided to take a look at how Facebook is doing when it comes to political networking. Our finding: The company with the famously hoodied CEO is beginning to grow up, at least in the ways of Washington.
In the first quarter of this year, Facebook spent $650,000 lobbying Congress, according to a report filed with the Senate Office of Public Records, the most the company has ever recorded.
Facebook has not only grown as a lobbying presence, however. The company is also becoming a more active campaign financer. Since company employees first showed up on campaign finance records in 2006, they have given nearly $4.8 million to various campaigns, including a number of contributions to state candidates and campaigns, Influence Explorer shows. But that total includes $4 million that former Facebook executive Chris Kelly pumped into his unsuccessful 2010 race for California attorney general.
Although the company has grown considerably as a player since it first came on the political scene about four years ago, it's still a relative pipsqueak in the corridors of power. Facebook first registered a political action committee with the Federal Election Commission in late 2011. Since then the company has managed to raise $159,999, chump change in the post-Citizens United world of super PACS.
By comparison, the Motion Picture Association of America, on the opposite side of Facebook inthe SOPA/PIPA battle, has given a total of $2,252,615 to political candidates, according to Influence Explorer. That partly reflects MPAA's longer tenure as a political player. Influence Explorer has figures for the film industry trade group going back to 1998.
To see the motivations behind Facebook's higher political profile, look no further than this year's fierce fight over the stalled SOPA/PIPA legislation to combat online piracy. Facebook, like many online companies, opposed the legislation as potential censorship. The battle cost Facebook three of its lobbying firms. According to a report by Politico, the firms dropped Facebook -- an opponent of the legislation -- after other clients who are major content providers expressed their displeasure over what they saw as a conflict of interest. One of the lobbying shops, the Glover Park Group, dropped Facebook the same month it signed the firm up. Fierce, Isakowitz & Blalock and TeleMedia Policy Group were the other two companies that abruptly stopped representing Facebook. The only other firm that remained in Facebook's stable: Elmendorf Strategies, headed by Steve Elmendorf, a former top House Democratic leadership aide.
That, however, didn't seem to deter Facebook. During the following two months, it signed with two more lobbying firms, the venerable Steptoe & Johnson and a newer kid on the block, Stewart Strategies & Solutions, LLC. The company signed with Stewart Strategies days before the filings for the first quarter were released.
There is no denying that Facebook is starting to be taken seriously in Washington. The graphic above, generated by Sunlight Foundation's Capitol Words, tracks how mentions of the company have jumped in Congress since Facebook's founding in 2004. Of the nation's lawmakers, Sen. Carl Levin, D-Mich., is the one who has referenced and used the word "Facebook" the most.
Levin has been arguing against a tax loophole that Facebook's approaching IPO will create for the company. In the release of his Senate floor speech on the his website, the senator detailed how the company could legally avoid paying taxes for years, leaving the Facebook with an estimated $3 billion tax break.
According to Levin, the law permits Facebook to tell the public that the stock options were only six cents per share, which would appear in the company's books. However, at a later date they can file tax returns claiming that the prior options cost the company closer to what they actually end up selling for. Preliminary estimates have put the company price as high as almost $40 a share. The company can then take a tax deduction for the larger amount.
Despite Levin's protests, investors are eagerly awaiting Facebook's first trading date date. In response to the enthusiasm, Facebook announced that it will add an additional 84 million shares to its IPO, an increase of almost 25 percent, Reuters reported.
(This original post has been revised to reflect more accurate figures on political contributions by Facebook employees.)
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