Silicon Valley increasing its lobbying in California’s Capitol

Reporting from SACRAMENTO —  When ride-hailing companies Uber and Lyft made their lobbying debut in Sacramento last year, they were playing defense — fending off efforts by the taxi industry and other interest groups demanding the upstarts be regulated.

It was their first significant fight in state government, and they responded forcefully, with an army of lobbyists and loads of money. Now, with another round of bills percolating, the new legislative session offers the chance to watch how these Internet-based firms, like generations of tech companies before them, evolve in their Capitol presence.

So far, there are signs the companies are becoming more sophisticated as they become targets for increased government scrutiny and intervention, including calls for protecting consumer privacy and public safety.

In addition to beating back threats, companies are cultivating relationships with lawmakers and, in the case of Airbnb — a service that enables users to rent out their homes to short-term travelers — working early to avoid a possible bruising legislative fight.

Despite its economic heft, the tech industry has a limited presence in Sacramento, particularly when compared with more established interests. Google, a relative newcomer in Sacramento, has spent $1.8 million on lobbyists here since 2004, the first year it waded into lobbying state government. Telecommunications giant AT&T, a major force in the Capitol, spent nearly $45 million on general lobbying in the same period.

Tech companies have not parlayed their astronomical market values into lavish campaign giving either. Facebook, worth an estimated $200 billion and one of the top tech contributors, gave about $200,000 to candidates and committees in the last election cycle — far behind such major donors as the California Realtors Assn., which poured nearly $10 million into last year’s elections.

New start-ups such as Lyft and Airbnb were even less active, limiting their giving to one or two candidates.

Dealing with politicians is not a natural fit for many of these companies, which tend to operate in a hyper-speed business environment.

“The typical product cycle is six months. The typical legislative session is two years.” said Carl Guardino, president of the Silicon Valley Leadership Group, one of the industry’s more established associations. “It’s a culture clash.”

Assemblyman Evan Low (D-Campbell) said many companies in his Silicon Valley district used to keep their distance from government, warily eyeing the public sector as a potential hindrance to growth.

He characterized their approach to political engagement as “leave us alone. Just let us innovate and do us no harm.”

The industry “would just show up at the door when there was a problem,” said John Doherty, the Sacramento-based vice president of state policy and politics for TechNet, a national trade group. “We need to bring people in before they start making decisions about us.”

Airbnb has embraced that more proactive tack, in part because several cities — including San Francisco and San Jose — have enacted local laws to regulate such businesses, including collecting taxes from the transactions, and there are calls for state regulation.

The company hired its first lobbyist in January and began negotiations with potential adversaries, such as the California Apartment Assn., which is concerned with liabilities that landlords may face when tenants rent out their homes.

“We’re here and willing to talk with anybody, to educate them about what we do,” said David Owen, Airbnb’s regional head of public policy. “We hear issues and concerns. Common ground is more easily found than folks think.”

Sen. Isadore Hall III (D-Compton) on Friday introduced a bill backed by the apartment association that would require companies like Airbnb to make more clear to their users that offering their homes as short-term and vacation rentals could be in violation of their lease.

Tech companies are increasingly making meet-and-greet overtures to lawmakers beyond the Capitol halls. Trade groups are hosting fundraisers and bestowing “legislator of the year” awards. Low has taken bipartisan groups of legislators to tour Yahoo and Google; Assembly Republicans planned their annual policy retreat around visits to companies like Yelp and Apple.

Assemblyman Mike Gatto, the chairman of a brand-new Assembly committee on privacy and consumer protection, said he’s seen an uptick in invitations to visit Silicon Valley companies.

“The creation of the committee really made it clear that the California Assembly is going to wrestle with these issues this year,” said Gatto, a Glendale Democrat. “There’s been a rush to get to know anyone that sits on that committee.”

Last year offered the first chance to see the new tech behemoths in action, when lawmakers took on a pair of bills regulating ride-hailing. Uber, which hired its first California lobbyist in early 2013, spent more than $470,000 on lobbying just in the third quarter of 2014, more than 2 1/2 times the amount it spent in the previous six quarters combined.

Among Uber, Lyft and the recently established Internet Assn., a trade group for Web firms, seven lobbying firms were hired to fight the two bills.

The flood-the-zone approach was effective. The companies defeated a measure to require stricter background checks for drivers, and tempered a successful bill — pushed by insurance companies and trial lawyers — mandating what levels of insurance their drivers must carry.

The companies staged rallies on Capitol grounds and tapped into their vast network of users to lobby against the bills, reminding lawmakers that the product was popular with their constituents.

They also threw some sharp elbows, particularly when Uber sent mailers in Assemblywoman Susan Bonilla’s district, accusing the Concord Democrat — and author of the insurance bill — of being anti-innovation. Critics said the tactics were heavy-handed, particularly for a Capitol newcomer.

“It was a bit of an immature approach,” said Assemblyman Adrin Nazarian (D-Sherman Oaks), who carried the taxi industry-sponsored background check bill. “It was like taking a sledgehammer to fix something that needs very delicate, precision-oriented tools.”

Nazarian plans to reintroduce his background check measure this year.

Mike Dorsey, a director of public policy for Uber, said the company is “committed to working with lawmakers to provide the best possible governing solution for this new technology.”

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