IP: Wired News on the Politics of Netscape

[David Farber <farber () cis upenn edu>]

From: "--Todd Lappin-->" <telstar () wired com>






> From Wired Nnews: http://www.wired.com/news/news/business/story/6190.html


Political Player Isn't Yet a Political Power


by Ashley Craddock


5:10am  21.Aug.97.PDT In the heart of the digital universe,
one thing seems clear: Although Netscape's once
skyrocketing fortunes may be in turnaround, and its
sometime stellar public profile is in the early stages of
eclipse, CEO Jim Barksdale, the corporate guru who raised
Netscape from squirrelly start-up to industry leader, is
still striving to position the company as a heavy hitter. And
he's doing it by working the smoky corridors of DC politics.


Consider the evidence: Since Netscape's founding in 1994,
Barksdale has dabbled in antitrust law, poked and prodded
the Clinton administration about immigration policies, and
toyed with tort reform. He's testified before Congress about
the long-term folly of using export policy to choke the
development of robust encryption technologies - and, by
extension, the most booming sector of the nation's economy.
And this summer, pairing with venture capitalist and
Silicon Valley good ol' boy extraordinaire John Doerr,
Barksdale did something heretofore unthinkable: From the
center of the politics-wary world of high tech, he launched
the Technology Network, the industry's first formal stab at
creating a political organization to advance info-tech goals
on Capitol Hill.


But no matter how maverick Barksdale's political acumen
looks from the Valley, the view from the Hill is more
mundane: He's simply the CEO of a vulnerable start-up
scrambling to protect his corner of the volatile info-tech
boom. "What gave anyone the idea that Netscape is a big
political player?" asks one well-known Washington
Internet activist who doesn't wish to be identified. "Don't get
me wrong, Netscape has played an invaluable role in the
fight for stronger encryption, but on all the other big
Internet issues, they've been pretty much invisible."


Even in Technology Network's Palo Alto, California, offices,
where several dyed-in-the-wool politicos have parked
their stars, Barksdale's political aura seems to pale beside
co-chair Doerr's notoriously intense wattage. "We still
think the Gore and Doerr thing is a joke," says TechNet
Republican consultant Dan Schnur, citing a recent New
Yorker profile of the nominally Republican Kleiner,
Perkins, Caufield & Byers partner. "But let's just say I
wish we had someone like Doerr pushing our side of the
agenda."


Isolated victories


Barksdale, who arrived at Netscape after stints at Federal
Express and McCaw Communications, carried to the Valley a
more intimate knowledge of the necessary intersection
between politics and business than many of the Valley's
homegrown execs.


"Jim is far more seasoned than people like [Intuit's] Scott
Cook, [Sun Microsystem's] Scott McNealy, and [Marimba's]
Kim Polese," says Peter Harter, Netscape's public policy
counsel. "At Fed Ex, he worked with labor unions and the
trucking industry. He worked the FBI and the National
Security Agency on issues about shipping packages. And at
McCaw, he had to deal with the Federal Communications
Commission. He knows the way Washington works, and
people in Washington know he knows it."


Since arriving at Netscape, Barksdale has used that
experience to his company's benefit. He has won at least
three significant individual battles in the looming Internet
policy war. After several key pilgrimmages to DC, he
obtained major concessions on the export of encryption
embedded in Netscape Navigator, the browser that made his
company's name and fortune. He influenced the free-market
tilt of the Clinton administration's white paper on
electronic commerce. And, in negotiations on the budget bill
earlier this summer, Barksdale pushed for tax credits on
research and development and software exports.


But those were isolated victories, and Netscape and the rest
of the software industry have still barely cracked
mainstream Washington's consciousness. The Congressional
Internet Caucus has little real clout. And while
administration officials note that the president's yen to
improve his historical rank offers favor-seekers a perfect
opportunity for political leverage, Silicon Valley seems
strangely unprepared to act.


The reason, says Oliver Smoot, executive vice president of
the Information Technology Industry Council, is simple:
Nobody in the Valley, including Netscape, wants to pay to
play. Indeed, while technology executives account for 26 of
Forbes' list of the 400 richest in America, only five show
up on Mother Jones' list of the nation's 400 top political
contributors. "In terms of its contribution to the national
economy, the software industry is beginning to have very
high visibility here," says Smoot. "But compared to a lot of
less profitable industries, it doesn't really carry much of a
punch."


And for all Barksdale's nipping and tucking, Netscape, like
its counterparts, seems content to hurl only a few strategic
pitches a year. Indeed, as far as Washington presence, the
company falls far short of the low-water mark set by an
industry known for stashing its lobbyists in sunless
backroom offices. Netscape employs only one full-time
lobbyist, who doesn't even have a DC base. Since his arrival
at Netscape fresh from a stint at an Ohio nonprofit, Peter
Harter has peddled the company's somewhat meager
influence from his Palo Alto office.


Political Lobbyist
Head Count
- - - - - - - - - - - - - - - - - - - - - -
Netscape
                      1
Microsoft
                      6
Intel
                      12
IBM
                      24
- - - - - - - - - - - - - - - - - - - - - -




Of necessity, Harter is pragmatic about his position in the
lobbyists' galaxy. "Say we identify five issues that are very
important," he says. "As a small company, we may only
have resources for three, so we'll look at what's ripe for
resolution and focus on that." In the two years Harter has
been working for Netscape, his main focus has been
relaxing export controls on encrypted software so the
company can expand overseas sales. Now, he says,
priorities are shifting. Believing that the administration is
about to hand down regulations Netscape can live with,
Harter has shrunk his cryptography budget and is now
turning his attention toward copyright and privacy
concerns.


Underdog seeks an upper hand


As much as anything, Netscape's public-policy initiatives
all stem from the need to protect and bolster an
increasingly fragile bottom line. "Netscape is the underdog,
so Barksdale is focused on ensuring that it's able to remain
competitive," says the Internet activist, who worked with
Netscape in the fight against online content regulations
imposed by the since-eviscerated Communications Decency
Act. "If that lines up with sound public policy, great. But
that's not really what's driving any of the company's
politics. In fact, as far as the CDA, Netscape's only
significant action was to make sure that Internet access
providers, i.e. browser-makers like Netscape, were
exempted by the original bill."


By signing on as co-chair of TechNet, however, Barksdale is
explicitly leveraging Netscape's reputation as a catalyst for
the Internet-driven new economy. Born out of a successful
1996 fight against California's Proposition 211, an
initiative that would have lowered the barrier to
shareholder lawsuits, TechNet was founded in July to
endorse candidates, raise money, and lobby state and DC
politicians. Since its founding, the nonpartisan
Valley-based group - whose members include Polese, Cook,
and McNealy - has wined and dined Jack Kemp, Al Gore,
Senator Tom Daschle, and William Bennett, among others.


In spite of Netscape's leadership role, there remain
uncertainties about what the organization will do to advance
the goals nearest and dearest to the company's heart. No key
Internet issues - not access fees for service, not bandwidth,
not free speech, not domain names, not even encryption -
have so far lit the nascent group's radar screen. And, says
Harter, they probably won't. For one thing, TechNet hopes
to represent the biotech industry as well as software and
hardware companies. For another, "All TechNet's member
companies have different agendas when it comes to
encryption," says Harter. "It's a divisive issue that TechNet
probably doesn't need to touch."


So far, TechNet's overall strategy - fighting for passage of a
bill that would standardize regulations on state-level
securities litigation, and lobbying for education reform -
has worked like a charm. "People in Washington are
fascinated by Silicon Valley's magic," says Mark Gitenstein,
a lobbyist who worked on the 1995 Federal Securities
Litigation Reform Act and is now TechNet's DC consultant on
the issue. "TechNet's creation represents the industry's
first real acknowledgement that no important sector in our
economy can avoid government regulation. And god knows,
this is an important sector."


Why does the economic powerhouse info-tech industry
insist on playing wiffle-ball politics? Essentially, while
the nascent industry is bursting with cash, it's also
bursting with competition. "The rebirth of Silicon Valley
three years ago is different than anything that came
before," says Jim Bidzos, CEO of RSA Data Security, the
Valley's leading cryptography software firm. "You see tons
of companies making tons of money, and you see tons of
companies disappearing. It's all any CEO can do to keep up.
And Washington is so far behind, it's hard to care what's
going on except when some wrongheaded government
initiative becomes a direct political threat."


Other observers believe that Silicon Valley magic-makers
like Barksdale may wield more influence in DC than several
pots of gold. "If these groups stick to the high ground on
developing the Internet as a public resource, they may be
able to exert a lot of power without a ton of money," says
Marc Rotenberg of the Electronic Information Privacy
Center. "Right now, the industry that TechNet represents is
a policymaker's darling. They can ride that a long way."




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