WASHINGTON — Apple is famous for its veil of secrecy around the new iPads and iPhones. But Sen. John Rockefeller and others in Congress wonder whether the company has more than technological innovations to hide (Sony Vaio VGN-FZ battery) .
When Apple didn't participate in an April hearing on children's online privacy, theWest Virginia Democrat who chairs the Senate Commerce, Science and Transportation Committee, gave voice to his suspicions (Sony VGP-BPS8 battery) .
"When people don't show up when we ask them to ... all it does is increases our interest in what they're doing and why they didn't show up," Rockefeller said of Apple and Google, which both declined to testify. "It was a stupid mistake for them not to show up, and I say shame on them (SONY VGP-BPS8 battery) ."
While Apple's success has earned rock-star status in Silicon Valley, its low-wattage approach in Washington is becoming more glaring to policymakers. Despite its increasing influence over consumers' use of technology — most recently with the iPad and iPhone 4 — Apple has kept a particularly low profile inside the Beltway (Sony Vaio VGN-FZ battery) .
"It's unfortunate because they are a major player in this area, and we are going to continue to have a long, in-depth conversation," on these topics, said Sen. Mark Pryor (D-Ark.), who presided over theprivacy hearing, referring to Apple's empty seat at the witness table (Sony VGP-BPL9 battery) .
Like Microsoft and Google before it, Apple is getting attention from regulators as it grows and starts to compete more directly with other technology heavyweights (Sony VGP-BPL11 battery) .
This week, Google complained about Apple's new rules limiting application developers' ability to share iPad and iPhone user data with third parties. Google said the new rules restricting advertisers from Apple's popular platform are anti-competitive (Sony VGP-BPL15 battery) .
This follows other objections to Apple's exclusion of Adobe's software from the iPhone. The Justice Department and Federal Trade Commission are looking into the complaints (SONY VAIO VGN-FZ4000 Battery) .
Last fall, the Federal Communications Commission demanded to know why Apple rejected the Google Voice application from the iPhone App Store. The FCC is also investigating whether exclusive arrangements between wireless carriers and cellphone manufacturers — such as the one involving AT&T and the iPhone — are anti-competitive (ASUS Eee PC 1000HE Battery) .
And on Thursday, the FBI launched an investigation of a security breach that revealed information about some 100,000 iPad users, including those working on Capitol Hill and in the White House (Dell Inspiron 6400 battery) .
"As Apple continues getting success in new areas, the more they'll be a lightning rod for attention," said Rebecca Arbogast, managing director of analyst firm Stifel Nicolaus. "So far, these are all issues Apple's been able to ignore (Toshiba PA3399U-2BAS Battery) ."
It's not that Apple doesn't pay attention to Capitol Hill. Four respected lobbyists make up its Washington office, led by Catherine Novelli, former assistant U.S. trade representative and partner at Mayer, Brown, Rowe & Maw (IBM ThinkPad T40 Battery) .
Apple is active in several industry trade groups — including TechNet, Business Software Alliance and Information Technology Industry Council — but goes out of its way to stay under the radar. The company would not comment for this story (Sony VGN-FZ460E battery) .
It is one of the few major technology companies not to have a political action committee. While CEO Steve Jobssupported the presidential campaigns of Bill Clinton and Al Gore, he hasn't been especially active in political fundraising or races. Gore now sits on Apple's board of directors (Dell Inspiron 6000 battery) .
Compared with other tech giants, Apple's lobbying expenditures are small. In 2009, Apple spent only $1.5 million to lobby the federal government, less than Amazon, Yahoo and IBM. In 2009, Google, for example, spent $4 million, Microsoft $7 million and AT&T $15 million (Dell Inspiron E1505 Battery) .
In the first quarter of this year, Apple spent $560,000 on lobbying, according to disclosure reports. During the same period, Google spent $1.4 million and Microsoft spent $1.7 million (Fujitsu Lifebook S6120 battery) .
"They've been very focused on their own innovation, and they don't have a history of coming to town to get their competitors regulated," said Jonathan Zuck, president of the Association for Competitive Technology. "But they're expanding into so many areas that they're going to find themselves in other companies' cross hairs, so they probably should be ready to play defense (Apple M9848LL/A battery) ."
Microsoft learned that lesson when the government accused the software giant of abusing monopoly powers in 1998. Google beefed up its presence three years ago to lobby for open-access wireless rules. Both companies have become major lobbying powers on the Hill and in the administration. Microsoft, Google and other companies, such as Intel and Yahoo, regularly bring executives to town (Apple A1281 battery) .
Apple's guarded approach in Washington reflects the company's secretive corporate culture. Despite being one of the most closely watched tech companies by both Wall Street and gadget geeks, the company rarely deals with the press and seems content not to be a D.C. player (HP PAVILION DV3 Battery) .
"They don't have the arrogance of Google, nor does Steve Jobs think he's in the Obama cabinet like Eric Schmidtdoes," one tech industry lobbyist said (HP PAVILION DV2 Battery) .
To handle discussions on the Hill, Apple hired Franklin Square Group, a technology-focused lobbying firm started by Josh Ackil, former White House aide in the Clinton administration and tech adviser to former SenateDemocratic Leader Tom Daschle. Paul Margie of Wiltshire & Grannis does much of the company's work at the FCC. Apple has visited the FCC only four times in the past three years, according to agency records (HP PAVILION DV9700 Battery) .
Apple may be forced to change that strategy as it pushes into new markets. In December, it acquired Quattro Wireless, the third-largest mobile advertising network, to launch its own mobile ad service. Its entry into that field played a significant role in the FTC's decision to approve Google's purchase of AdMob last month (ACER Aspire 3000 Battery) .
But the FTC also hinted at Apple's potential to lead the mobile ad market: "Apple not only has extensive relationships with application developers and users but also is able to offer targeted ads ... by leveraging proprietary user data gleaned from users of Apple devices (ACER Travelmate 2300 Battery) ."
Just as it shaped the way consumers buy digital music with iTunes, Apple is poised to change how millions of people consume all types of media with the iPad. But its tight control over developer license agreements could raise eyebrows, especially if it tries to prevent developers from writing applications for competitors such as Google's Android or Research In Motion's BlackBerry (ACER Aspire 3020 Battery) .
Despite Silicon Valley's reluctance to get involved in Washington debates, Apple, during the early 1980s, was one of the first technology companies to establish an office in the D.C. area — in Reston (HP PAVILION DV3000 Battery) .
Its initial goal was to sell Macintosh computers to the government, but most agencies were already using IBM systems. Apple then worked with the FCC on establishing standards for digital TV and setting aside airwaves for wireless computers. Education, intellectual property and trade issues were top priorities for the company, said James Burger, now a partner at Dow Lohnes, who ran Apple's government affairs shop (HP PAVILION DV2000 Battery) .
In the company's biggest push for visibility, the D.C. representatives arranged for Apple's then-CEO, John Sculley, to sit next to first lady Hillary Clinton during President Bill Clinton's first State of the Union address in 1993. Apple also led companies, including Oracle and AOL, to a major 1995 lobbying victory over the accounting industry that put restrictions on securities class action lawsuits (Sony VGP-BPS3 battery) .
"Apple was actually very forward thinking in its approach to Washington, and it wanted to understand how being here could benefit the company or at least prevent the government from doing harm," Burger said. "But the problem was that the chasm between Washington and Silicon Valley was even wider than it is today. ... It was often a struggle to pull together the tech industry on legislative and regulatory issues impacting innovation (Sony VGP-BPS2 battery) ."
Apple closed its Washington office in 1996. It opened a new office, this time downtown, three years later. It hired Josh Tenuta, a lobbyist for the American Electronics Association, and Joseph Fortson, a former staffer to Rep.Joe Barton (R-Texas). Along with Novelli, Lisa Errion works on international trade issues (IBM THINKPAD R50 Battery) .
The company's quiet, targeted strategy has paid off, say tech industry lobbyists, according to whom Apple easily gets meetings with lawmakers and the administration. Some expect Apple to increase its Washington presence in the coming years, especially as top lawmakers plan to rewrite telecommunications laws (Dell INSPIRON 1525Battery).
"In my mind, Apple's great success continues to come from the brilliance of their products," said Bruce Mehlman, partner at tech-lobbying firm Mehlman Vogel Castagnetti. "As long as you're pumping out iPhones, you'll have lots of friends (ASUS A3000 Battery) ."
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