The Exchange

The Web Goes to Washington: What to Expect From The Internet Association

The Exchange

A collection of Internet firms — rumored to include heavyweights like Google (GOOG), Facebook (FB), Amazon (AMZN) and eBay (EBAY) — are reportedly coming together to create a new Web industry trade group called The Internet Association that will keep tabs on the sector's political and regulatory concerns in Washington. That's right: the Internet is getting its own lobbyists.

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Set to start work in September, the group has tapped Michael Beckerman, the former deputy staff director of the U.S. House Energy and Commerce Committee, as its first president, although details about its exact plans and membership are still sketchy at this point.

"The Internet isn't just Silicon Valley anymore," Beckerman said in a statement following his announcement as president. "The Internet has moved to Main Street. Our top priority is to ensure that elected leaders in Washington understand the profound impacts of the Internet and Internet companies on jobs, economic growth and freedom."

But We Probably Won't Even Notice

The development likely won't move the needle too much for the average Internet user, but that isn't to say a Web-focused lobbying body won't have a profound impact on our virtual lives. As the Internet becomes more integral to our work and leisure time, issues like data security, privacy and communications standards will become increasingly political and the subject of much debate on Capitol Hill. Like it or not, lobbyists are just part of the process.

"Will this have a direct impact on the consumer? No," says Alan Webber, managing partner of the Altimeter Group. "But will it influence their experiences online? Oh, yeah."

Fact is, many of the big Internet players have been active in Washington for some time. Google already has a large presence in the nation's capital, as do Facebook and others, and the companies themselves have been working on regulatory issues and shaping policy on their own for years. The change now, Webber says, is that the industry is coming together to address shared concerns like digital security, visa requirements for overseas engineers, online sales taxes and revenue repatriation on a larger, more organized scale.

In the words of one analyst, the Internet has finally "grown up."

"These companies already swing some fairly big-sized bats here in D.C.," Webber says, "and they have some of the best lobbyists on K Street. That being said, they've never really come together and said, 'this is an issue for all of us,' like what you see from the pharmaceutical companies and the automakers. Honestly, I'm surprised it took this long."

In addition to the obvious key players, Webber expects to see Internet start-ups and even some venture-capital firms getting involved at some point, as regulatory issues will likely have a direct impact on their businesses and investments as well.

Plenty at Stake

Part of the reason that this is happening now, many feel, is the sheer size of the modern Internet and the real-world dollars that now rely on its success. Google and eBay aren't fledgling start-ups anymore. They are now multibillion-dollar global corporations that are facing many of the same regulatory hurdles that GM, Wells Fargo and Procter & Gamble did in their early days.

"Suffice it to say, if the reports of the companies involved are correct, that we're looking at close to half a trillion in market value here," says Colin Gillis, senior technology analyst and director of research at BGC Financial. "These guys have an incentive to have some cohesion in their efforts. I think the real story behind this is that the industry has grown up enough that it needs to have some cohesive voices."

Going forward, Gillis believes that data privacy and targeting are going to be big issues for the industry, and he expects that trend may well play a role in how the Web titans focus their lobbying efforts.

"We're about to have another whole wave of identification and privacy issues," he says. "Like when Google glasses come out and you're being tagged and identified without even knowing it. And Facebook. Why did they buy Face.com? It wasn't for the domain name."

New Faces in the Crowd

Interestingly enough, Beckerman's selection as president came as more of a surprise to many than the formation of the group itself, despite his long resume in Washington.

"You know, I pinged a lot of my lobbyist friends after the announcement came out and nobody seems to know him," Webber says. "He was never a big player."

New to the scene or not, Beckerman and his backers now have the attention of millions of Internet users and their moves over the next few months could shape the Internet for years to come.

What do you think? Does the formation of an Internet lobbying group worry you or do you think it's just part of the industry's growing process? Do you care one way or the other? Let us know in the comments below.

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