Apple just reported the most profitable quarter in the history of capitalism, netting $18 billion over the last three months.
Now Washington is going to want to take a bite.
The Beltway machine — the politicians, the lobbyists and even the industry press — have been trying to teach Apple a lesson over recent years: If you’re a successful business, you have to start paying tribute to the political class. As Sen. Orrin Hatch, R-Utah, once put it, “If you want to get involved in business, you should get involved in politics.”
Apple has responded to these entreaties, “getting more involved.” But these gaudy profits only heighten the price of the protection money Washington demands.
Sen. Carl Levin, D-Mich., dragged Apple executives before an investigative committee in 2013, for supposedly not paying enough in taxes. Nobody was charging tax evasion or anything like that. It was just that Apple was expertly navigating our arcane corporate tax code.
Where Apple’s stinginess really stung lawmakers was on K Street and the campaign trail. Apple had the gall to spend only $2 million on lobbying in 2012. Worst of all, the company didn’t even have its own political action committee.
The political-industry press had been warning Apple about this for years. In 2010, Politico cautioned the tech giant that “its low-wattage approach in Washington is becoming more glaring to policymakers.” In 2012, Politico revisited the theme and quoted a revolving-door lobbyist scolding Apple, “There have been other tech companies who chose not to engage in Washington, and for the most part that strategy did not benefit them.”
This was a clear reference to Microsoft. Hatch was referring to Microsoft in his comments from 2000, to a crowd from the tech industry, about how playing politics is required once you start making money.
So Capitol Hill roughed up Microsoft and took a snapshot. The K Street-Congress axis occasionally holds up the pic of Gates’ bloodied nose as a warning to others who don’t want to pay protection money.
Apple averaged about $1.4 million a year from 2007 through 2010. Then the Politico pieces came pouring in, Tim Cook began to take over from Steve Jobs, and the lobbying tab climbed to around $2 million in 2011 and 2012. Then in 2013, Levin had his hearings, and lobbying jumped 71 percent to $3.4 million Apple’s 2014 numbers just came in last week, and the tab was $4.1 million. That’s $7.5 million in the past two years.
And this skyrocketing lobbying spending over the past three years has occurred while the rest of the economy has reported slightly falling lobbying expenditures each of the past four years.
With its personnel changes, you can see Apple getting more intimate with Washington. In September 2013, longtime top lobbyist Cathy Novelli left Apple to join the Obama State Department. Apple replaced Novelli with Amber Cottle, hired from the very nexus of the K Street-Capitol Hill revolving door: the office of former Sen. Max Baucus, D-Mont., then-chairman of the tax-writing Finance Committee.
Apple’s other big Beltway get was hiring President Obama’s EPA Director Lisa Jackson to be corporate “vice president of Environmental Initiatives.”
New CEO Cook is a much more frequent visitor with the White House than his predecessor, visitor logs suggest. Late Apple CEO Steve Jobs doesn’t show up once in the visitor logs. Jobs famously dined with Obama in 2011 at the Silicon Valley home of venture capitalist John Doerr, but he didn’t seek audiences with politicians.
In contrast, Cook has visited the White House on at least four occasions since becoming CEO, according to visitor logs. This includes meetings with Obama, First Lady Michelle Obama (he was her guest at the State of the Union address), and with top economic advisor Gene Sperling.
The lobbying spending and Cook’s relative fondness for D.C. suggest that Apple got the message, and is playing ball.
On the other hand, Apple still lags way behind its industry cohorts in lobbying spending — Microsoft spent twice as much as Apple, and Google spent twice as much as Microsoft. Apple is larger than those two companies.
And — imagine the gall — Apple still lacks a political action committee.
Microsoft learned its lesson in the 1990s. Wal-Mart got its Washington education last decade. Apple is slowly getting there — but Washington may look at these new profit figures and say “faster, please.”
Timothy P. Carney, The Washington Examiner’s senior political columnist, can be contacted at [email protected]. His column appears Sunday and Wednesday on washingtonexaminer.com.
