Chinese e-commerce megalith Ali Baba Group set a record for the world’s largest initial public offering in late 2014, raising a mind-blowing $25 billion.
Since then, the company has stepped up its Washington presence. In 2015, for instance, it spent $410,000 on federal lobbying — but that increased to $640,000 in just the first three-quarters of 2016. (Fourth-quarter reports aren’t due until Jan. 20.) Not only that, but Ali Baba used at least 14 lobbyists in 2016, compared with three in each of the two prior years.
The company doesn’t have a PAC, and no employees made any political contributions in the 2014 election cycle or before. Suddenly, the donations began: About $25,000 was given in the 2016 cycle.
Which got us wondering: Is this a pattern? Do privately-held tech companies shell out more money for political expenditures once their shares are being sold on the open market, hoping to magnify their wealth and clout?
An OpenSecrets Blog analysis of LinkedIn, Zynga, Workday, Twitter, and Facebook’s political spending and lobbying since their initial public offerings (IPOs) found that it can be a mixed bag — but for the most part, since going public these companies have steadily ramped up the amounts of money they put toward political causes.
LinkedIn, the self-described “world’s largest professional network,” went public on May 18, 2011.
But the company best known for deluges of “I’d like to add you to my professional network on LinkedIn” has gradually decreased its political spending since 2012. The money that LinkedIn gave directly to candidates came entirely from individuals — LinkedIn doesn’t have a PAC — and was overwhelmingly left-leaning. Almost $276,000 of LinkedIn’s $280,848 given to candidates went to Democrats. That’s more than 99%.
On the other hand, LinkedIn more than doubled its lobbying spending from 2012 to 2014, and the uptick has continued, although at a slower pace, since then. In 2015, the company spent a record $200,000, its highest total thus far; 2016 looked to be about on par with that, as LinkedIn spent $150,000 lobbying in the first three quarters of the year.
Among our group of five, LinkedIn distinguished itself for the contrarian way in which its employees gave out their campaign contributions — we’d give it our Most Disruptive award. The company was the only one on this list to give more to non-incumbents ($129,686) than to incumbents ($52,896) from 2015-2016.
Zynga
Zynga, the creator of the agricultural revolution that is FarmVille, went public on Dec. 15, 2011.
Zynga started its political spending strong, but that fell sharply during the 2014 cycle — likely because there’s no bucking the bottom line: In June 2013, the organization laid off 18 percent of its employees and closed three of its offices after share prices fell off a cliff the year before. Like LinkedIn, all of Zynga’s contributions to candidates were from individuals rather than a PAC — so with fewer employees came less money given to politicians. Contributions increased slightly in the 2016 cycle, but the company’s stock fell another 10 percent in December due to developments in an insider trading suit against Zynga executives.
Lobbying expenses by the company followed a slightly different trajectory and wound up at 0, or close to it. From 2012 to 2013, Zynga bumped up its lobbying spending by 66.7 percent. In 2015 and 2016, in a total turnabout, Zynga did not meet the $5,000 lobbying reporting threshold.
Zynga wins our 2016 prize for being the Most Partisan member of our group. Every single contribution of more than $200 that employees made to candidates in the 2016 cycle — totaling almost $33,000 — went to Democrats. The logo’s red, but the money isn’t.
Workday
Workday went public on Oct. 12, 2012. You might recognize it as the platform you used to apply for that job or enter your timesheet. You also might not.
Workday refrained from lobbying, at least at the federal level, until 2015. That year and in 2016 it worked on three bills. One of those, the Protecting Cyber Networks Act, is supposed to improve communication between companies and the government about cybersecurity threats. Perhaps more relevant than ever, the bill passed the House in April 2015 but will have to be reintroduced in the new Congress. Lobbying expenditures took the elevator from the ground floor in 2014 to $30,000 in the first nine months of 2016.
As for contributions, the company appears to have discovered the joy of giving. In the 2014 cycle, Workday workers — no PAC action here, either — gave $8,865 to candidates. In the 2016 cycle, they gave over $117,000, which went (you guessed it) mostly to Democrats.
We’d say Workday wins the 2016 award for Most Changed for its 1,221 percent increase in individual contributions in one two-year cycle.
Twitter, the preferred communication channel of the president-elect, went public on Nov. 7, 2013.
The company differs from those we’ve covered so far in that it has a PAC. And it’s a PAC that behaves very differently from its employees: More than half of the $16,500 it gave to candidates in the 2016 cycle went to Republicans — $9,500. Company employees, on the other hand, gave almost 97 percent of their $167,634 in donations to Democrats.
Twitter’s contributions to candidates, as the graph shows, increased sharply from the 2014 cycle to the one that has just ended — from a touch over $41,000 to almost $600,000.
Likewise there was dramatic growth in the little blue bird’s lobbying outlays. Remember, the company went public at the end of 2013. But it was spending $400,000 on lobbying by 2015 and then over $500,000 in just the first nine months of 2016.
And in that vein, Twitter wins the 2016 award for Most Welcoming! In 2014 the company had two lobbyists, and by 2016 it had hired 14 more for a total of 16.That’s the largest percentage increase in our little group — proving that there’s room for everyone on Twitter (and its payroll).
There’s no way around it: Facebook, which had its IPO on May 18, 2012, is a powerhouse among the tech companies that went public in recent years.
It contributed a whopping $3.1 million in the 2016 cycle, ranking it at 137 of the 18,403 organizations we track.
And its lobbying spending has soared as well — though it was already at $3.85 million the year the company went public. Facebook spent a total of $9.85 million in 2015, and nearly $7 million from January through September 2016.
To fully appreciate those numbers, let’s put them in perspective. First, contributions:
Facebook’s giving was more than three times greater than LinkedIn’s, and over 25 times greater than Workday’s.
The breakdown in Facebook spending was similar to that of Twitter: Employees and their families, for the most part, gave to team blue: $732,850 to Democrats as opposed to a little over $76,000 to Republicans. The PAC, however, was not on the same page. It gave almost 56 percent of its $524,500 in contributions to Republicans.
By any other measure — like size — the Facebook and Twitter PACs bear little similarity to each other: Facebook’s gave away more than 30 times as much as Twitter’s in the 2016 cycle.
Next up, lobbying:
In the shadow of Facebook, Twitter’s cool half-million in lobbying spending starts to look a lot like Zynga’s $0.
Broadly, it’s fair to say that relatively young tech companies, with a few exceptions, have been ramping up their political spending since their IPOs.
And that should not be surprising, some observers say.
“Once you’ve gone public, you can start to have concerns about shareholder suits and the obligations of profitability,” said campaign finance lawyer Dan Petalas. “Overall, I think large companies understand the importance and value of spending money on the people who are deciding what the regulatory environment in which they operate is going to look like.”
Similarly, Lloyd Mayer, a professor at the Notre Dame Law School, explained via email that companies could increase their political spending to preemptively hedge their bets with lawmakers.
“Even if a company is not seeking to gain any advantages through favorable legislation or other government action, it would be unwise for it to ignore the possibility of unfavorable government action,” he wrote.
Mayer referred to United States v. Microsoft Corp., an antitrust case initiated against the company in 1998. He stated that Microsoft “initially avoided lobbying and other political spending only to be surprised by negative attention from lawmakers and having to scramble to develop an effective response.”
And so, tech companies that issued IPOs between 2011 and 2013 win our 2016 award for…Public Service! Because once they went public, they never looked back.