The Facebook Inc. logo is displayed on an Apple Inc. iPhone against the backdrop of the Twitter Inc. banner image from Cambridge Analytica’s verified twitter page, displayed on a computer screen in this arranged photograph in London, U.K. (Photographer: Luke MacGregor/Bloomberg)

Facebook Sets Lobbying Record Amid Cambridge Analytica Fallout

(Bloomberg) -- Facebook Inc. set a company record for lobbying spending in the second quarter, the period during which Chief Executive Officer Mark Zuckerberg testified before Congress and the social media giant faced ongoing fallout from the Cambridge Analytica scandal.

The company spent almost $3.7 million on influencing federal policy from April to June, according to filings released Friday. That’s an increase of more than $1 million from a year earlier, and up slightly from $3.3 million in the first quarter, when the company set its previous high. Facebook lobbied on data security and privacy, as well as issues including trade, immigration of highly-skilled workers and an online election-ad disclosure bill, the filings show.

Technology companies are under pressure from policy makers and the public over growing concern about privacy. Zuckerberg testified for two days before Congress in April after the revelation that the British political consultancy Cambridge Analytica had obtained the data of as many as 87 million Facebook users without their consent.

While Zuckerberg performed better than many expected, and several lawmakers received criticism for ill-informed questions that let him answer in generalities, the hearings made clear that key representatives and senators on both sides of the aisle might be willing to regulate tech companies.

Soon after the hearings, Facebook also named a new head of U.S. public policy, former Federal Communications Commission Chairman Kevin Martin, a Republican.

ZTE Record

Its woes still weren’t over: In June, Facebook faced a renewed round of scorn on Capitol Hill after it disclosed that it had data-sharing partnerships with four Chinese consumer-device makers, including Huawei Technologies Co.

The Chinese smartphone giant spent $50,000 as it pushed back against a proposed ban by the FCC and found itself caught by the Trump administration’s increasing pressure on China over trade and national security.

Another Chinese firm, ZTE, also spent a company record of almost $1.4 million, according to filings, more than five times its previous record of $260,000 as it contended with U.S. moves that had choked off the company’s revenue and pushed it to suspend major operations.

President Donald Trump tweeted in May that he and Chinese leader Xi Jinping were working together to give the No. 2 Chinese telecom equipment maker “a way to get back into business, fast.” The shock announcement came just weeks after the U.S. cut off ZTE from its American suppliers for violating the terms of a 2017 sanctions settlement related to trading with Iran and North Korea.

This month, after the end of the quarter reflected in the filings, ZTE inked an agreement that allows it to resume doing business with U.S. suppliers. Despite the company’s concessions, a bipartisan group of American lawmakers raised extensive concerns about the company, but were said Friday to be giving up their fight.

AT&T Spending

Spending by other tech companies wasn’t as robust as Facebook’s increase compared to a year earlier. Alphabet Inc.’s Google spent more than $5.8 million, down slightly from the second quarter of 2017, and Microsoft Corp. spent $2.6 million, up from $2.1 million.

In telecom lobbying, AT&T Inc. spent nearly $4.6 million, up from almost $4.2 million. In June, a judge cleared the company to take over Time Warner Inc. in an $85 billion deal that would help the mobile-phone giant evolve into a media powerhouse. The Justice Department is appealing that decision.

The head of the company’s vaunted and well-staffed Washington office, Robert Quinn, was forced out in May after it emerged that the company had paid Trump’s onetime personal lawyer and fixer, Michael Cohen, $50,000 per month in 2017 for advice on issues, including the administration’s approach to antitrust enforcement, as it sought approval for the deal, which Trump had criticized. Depending on the circumstances, consulting fees don’t necessarily qualify as lobbying expenditures.

Separately, major industry groups such as the Business Roundtable, the U.S. Chamber of Commerce, the National Retail Federation and the Consumer Technology Association spent millions as Trump’s pursuit of tariffs and other trade fights frustrated seasoned Washington hands who saw their conventional tactics failing to change the president’s mind.

The chamber, which is routinely Washington’s top lobbying spender, paid nearly $15.2 million, up more than 30 percent from the same period a year earlier. The roundtable, whose members are top American chief executives, spent about $5.8 million, up from approximately $3.2 million in the second quarter of 2017. The retail group spent almost $1.5 million, although that figure is down more than 70 percent from last year, when the group was leading a successful charge against a proposed import tax. The technology group also spent almost $1.5 million.

Trade Lobbying

The administration is pursuing several trade actions simultaneously, including renegotiating the North American Free Trade Agreement, imposing tariffs on China in response to allegations of intellectual property theft and slapping duties on steel and aluminum imports in the name of protecting national security -- even on goods from Canada, the European Union and other allies. Trump is also threatening duties on auto imports.

The administration enacted duties of 25 percent on $34 billion in Chinese imports July 6 and has identified $16 billion in other goods targeted for tariffs to reach $50 billion. After China retaliated with matching retaliatory duties on soybeans and other American products, the administration identified $200 billion in additional imports to get a 10 percent duty, and the president said Friday he is "ready to go" with tariffs on $500 billion of Chinese imports.

Business groups including the chamber and NRF have been waging lobbying campaigns to persuade the administration not to proceed with tariffs. While the groups support action to improve trade, they say tariffs are the wrong approach and amounts to a tax on consumers that draws punishing retaliation and hurts the U.S. economy.

All four groups disclosed lobbying on trade, including on China and Nafta, in addition to other issues reflecting the breadth of their membership and policy priorities.

Lobbyists, including officials from those business groups, say they’re pursuing the usual approaches including meeting with congressional and agency officials, but Trump has shown he’s willing to ignore Congress and even his own staff to make trade decisions. That’s left lobbyists trying to air commercials on Fox News when they think Trump might be watching and other ways to reach him directly.

©2018 Bloomberg L.P.