'Populist mobs' vs. the Kochs: Tech probes split the GOP

Washington's growing antitrust war against Silicon Valley is opening a rift among Republicans — with the Koch family’s vast political operation and other small-government groups emerging as the tech industry’s key allies on the issue.

The split is starkest between free-market conservatives who view the mushrooming antitrust investigations of Google, Facebook and Amazon as government intrusions into private enterprise, and GOP lawmakers and regulators who believe the companies themselves now pose a threat to market competition, privacy and free speech. That latter group has found a rare piece of common ground with Democrats, who are broadly and increasingly calling for tougher Silicon Valley regulations.

The most visible sign of the divide came last month when Americans for Prosperity, the political organization founded by conservative mega-donors Charles and the late David Koch, launched a Facebook ad campaign targeting nine Republican and Democratic state attorneys general who are leading antitrust investigations of Google and Facebook. The ads direct voters to submit form letters urging the AGs to avoid creating a "political spectacle" and arguing that "punishing companies for size or success would mean risking the jobs of countless Americans."

The advocacy group also ran digital ads in March urging members of the Senate Judiciary Committee to “oppose any effort to use antitrust laws to break up America’s innovative tech companies.” The targets of those ads included freshman Sens. Josh Hawley (R-Mo.) and Marsha Blackburn (R-Tenn.), both of whom the Koch organization supported in last year’s election.

“It’s been troubling to see a sort of coming together of populist mobs on the left and the right," said Jesse Blumenthal, who leads the tech policy portfolio for the Koch umbrella network Stand Together. "Our views haven’t changed based on the politics of the moment."

But the Koch network does not see itself as Silicon Valley's cheerleader either, he added.

"Our role is not to defend these companies," Blumenthal said. "Our role is to monitor and critique, in this case, what we see as a potentially illegitimate use of government power. If Google or Facebook or any other company has violated the antitrust laws then they should be investigated.”

Still, the Koch network's hesitancy to join calls for a tech crackdown is putting it increasingly out of step with a chunk of today's GOP. Republicans have long been associated with more cautious antitrust enforcement, suspicious of the notion that the government should effectively choose winners and losers in the marketplace. But those views have become unmoored as animus toward the tech industry grows, observers say.

“You can no longer say Republicans are the party of limited government intervention when it comes to antitrust," said one veteran Washington antitrust attorney, who requested anonymity to speak freely.

"It will portend a more active Republican antitrust regime than we've seen in the past," the lawyer continued. "If we have a bipartisan consensus that we really ought to look at these companies and police them closely on competition issues, I think that makes a difference. It’s a very different world than five years ago or 10 years ago."

Those bipartisan endeavors to regulate the nation's big tech companies have already shown signs of extending beyond antitrust, creating a headache for internet companies as they fend off, for instance, talks of amending laws that protect them from lawsuits over user-generated content.

"People will be more open to looking at ways to more aggressively regulate tech and the industry should be worried about that," said Zach Graves, head of policy for the conservative group Lincoln Networks. "Over the long run, it could shape the type of views of the next rounds of elected representatives."

Republicans leading the antitrust probes maintain that they are the ones standing up for unfettered private enterprise, positioning themselves as defenders of smaller players who could be crowded out of the market by the industry's heavyweights.

"I support free markets, which is why this investigation is so important," GOP Missouri Attorney General Eric Schmitt said at a September news conference announcing a joint investigation of Google's search and digital advertising businesses by 48 states, D.C. and Puerto Rico. "So that we absolutely ensure that even the biggest of big tech companies are accountable and even the biggest of the big tech companies are subject to the rule of law.”

The week before, a smaller contingent of state AGs announced they would be investigating Facebook on antitrust grounds. Meanwhile, in Washington, the Federal Trade Commission has asked Facebook to fork over information related to its business practices, the company disclosed in July, and the Justice Department made a similar demand of Google in recent weeks amid a broad review of anticompetitive behavior in tech.

The Koch network shelled out $400 million on political and policy fights in 2017 and 2018, according to previously reported figures outlined by the network, and at its peak rivaled the Republican Party itself in its power and influence. That presents a deep-pocketed foe for groups that want to see tech firms held to greater account. AFP declined to say how much it spent on the antitrust ads, though Facebook's advertising database indicates it was less than $100 per ad. A spokesperson for the organization said the group opted not to expand the ad campaign because it "served its intended purpose."

“The Koch network is led by people who would like to be running the economy," said Stacy Mitchell, co-director of the Institute for Local Self-Reliance, a nonpartisan group that fights market concentration. "There are many members of Congress who turn to them for campaign financing and they finance many of the organizations on the right, so because they’re the source of so much money they are hugely influential."

But some progressives pushing for greater scrutiny of the tech industry's market power say that influence may no longer be enough.

“People aren't afraid of them anymore" said Matt Stoller, a fellow at the Open Markets Institute. "It’s not that they don’t have power, they do have power. They don't carry the same level of fear."

Tech companies and the libertarian Kochs have shown an affinity before, including in their support for low taxes and opposition to trade and immigration barriers. Two years ago, Apple CEO Tim Cook joined Charles Koch in urging Congress to protect the rights of so-called Dreamers who were brought to the U.S. as children. But the Kochs’ importance as potential allies for the industry has grown with the roster of federal and state-level probes looking into the companies’ data practices, alleged anti-competitive behavior and oversight of online speech.

An AFP spokesman said antitrust is one of several policy issues the group plans to consider when deciding whether to back candidates in upcoming races and noted the organization will throw its support behind those who "stick their neck out" regardless of political party.

Conservative Republicans like Hawley and Texas Sen. Ted Cruz have cheered on the antitrust investigations, and Cruz even sided with liberal Sen. Elizabeth Warren (D-Mass.) in one of her recent run-ins with Facebook. And Hawley has questioned how fellow conservatives who have long advocated for freedom of choice and checks on authority don't take issue with the dominance of Silicon Valley's internet companies.

"I don't understand why those who call themselves libertarians are so enamored with this incredible concentration of power in the hands of a few," Hawley said in an interview with The Hill. "I thought the whole libertarian tradition was about standing up to power, it was about checking concentrated power on behalf of the people."

"And that's what needs to happen here," he said.

The split has, at times, become acrimonious. Americans for Prosperity, for instance, spent $2.1 million in ads helping to elect Hawley in 2018, as POLITICO previously reported. Now, employees within the Koch network are sniping with the senator on Twitter, including accusing him of lying about the Federal Trade Commission's handling of a 2012 staff report on Google's competition practices.

The industry’s most powerful critic in Washington, of course, is President Donald Trump, who has joined congressional Republicans in accusing companies like Facebook, Twitter and Google of muting conservative points of view. Blackburn pointed to the bias allegations earlier this year when she set up a Senate tech task force, which is looking at issues including antitrust, data privacy and content moderation.

Free-market advocates argue that the Trump administration and state enforcers are out to score political points rather than pursue genuine legal violations.

"It comes down to the question of: Do you see government as the solution to a perceived problem? Or do you believe that the market is in the best position?" said Carl Szabo, vice president and general counsel of NetChoice, a right-leaning industry trade group whose members include Google and Facebook.

"It is one thing to say you believe in the free market, it’s another thing to actually do what you say," he said.

Google and Facebook declined to comment on the Republican split. Both companies have rejected the notion that they illegally suppress rivals or function as monopolies in their respective markets, arguing that they face competition in their various lines of businesses, sometimes from one another.

The tech industry has also ramped up its search for friends in Washington. Facebook CEO Mark Zuckerberg made a rare trip to Capitol Hill last month for meetings with lawmakers on both sides of the aisle, including critics like Hawley, as well as an Oval Office sit-down with Trump and some of his advisers.

But while Trump and Facebook tweeted some kind words after the Zuckerberg meeting, the Republican suspicion of Silicon Valley, and its largely liberal executives and employee base, appears unlikely to die down any time soon. That's true even though companies like Google, Facebook and Amazon have long staffed their Washington offices with people who have ties to Republican politics.

Zuckerberg, for example, was accompanied during his D.C. trip by Facebook global public policy chief Joel Kaplan, a former George W. Bush administration official who last year made a show of support for Supreme Court Justice Brett Kavanaugh during his contentious confirmation hearing. Last week, Google global policy leader Karan Bhatia — another Bush White House veteran — tapped Mark Isakowitz, the chief of staff to Ohio Republican Sen. Rob Portman, as the head of the search giant’s D.C. policy operation.

Despite those connections, there may simply be fewer Republicans willing to come to the industry's aide as Congress makes tech industry competition a greater focus.

"Their principled allies, people who actually care about these things because of some commitment to how antitrust law should work, don’t really matter anymore," said Berin Szóka, the president of libertarian group TechFreedom. "There are very few people now who, in a hearing, will stand up and remind everyone what the free-market position is."

Article originally published on POLITICO Magazine