Subject: Facebook Seeking Friends In Beltway - WSJ.com
From: "Eric Schwerin" <[email-masked]>
To: "Alexander Snyder-Mackler" <[email-masked]>, "Hunter Biden" <[email-masked]>, "Beau" <[email-masked]>
Date: Wed, 20 Apr 2011 08:32:17 -0400

http://professional.wsj.com/article/SB10001424052748703789104576273242590724876.html?mod=WSJAsia_hpp_LEFTTopStories&mg=reno-wsj

By ELIZABETH WILLIAMSON, AMY SCHATZ and GEOFFREY A. FOWLER

President Barack Obama will travel to Facebook Inc.'s Silicon Valley headquarters Wednesday to hold a "town hall" meeting on the economy with users of the social-networking site.

But Facebook is still trying to find a path to Washington, where the company has only a fledgling lobbying operation, even though it finds its privacy policies under increasing scrutiny and is trying to navigate a politically sensitive expansion into China.

In seven years, Facebook has risen from a tiny start-up to an Internet power with a potential market value estimated at more than $50 billion. Now an online forum with more than 600 million users, Facebook faces growing pressure from lawmakers and regulators concerned about the way it uses personal information shared by its users.

Bloomberg News
Mark Zuckerberg, founder of Facebook, which has done limited lobbying.

At the same time, the company is confronting questions about how it will handle its role as a global public square for dissidents if it enters China and other countries with little tolerance for dissent. In an interview with The Wall Street Journal about its approach abroad, Facebook officials in Washington suggested the company might be willing to play by China's rules—a stance that could raise hackles in Congress.

Until lately, Facebook has spent very little money in Washington, even by Silicon Valley's frugal standards. The company's outlays on lobbying totaled $351,000 last year, federal records show. That's a fraction of the amount spent by other technology giants, including Google Inc.'s $5.2 million and Microsoft Corp.'s $6.9 million.

Facebook's new Washington office, designed to look like a hacker's lair, with walls of faux construction rubble, is a work in progress.

People familiar with the company's plans said talks to hire former Obama press secretary Robert Gibbs to guide the company's communications strategy, including with Washington, have fallen apart in the wake of a leak to the media that made a deal for him to join the company sound imminent. Facebook declined to comment.

Meanwhile, Facebook is talking with potential Chinese partners about entering the huge China market, where the government has been cracking down on dissidents. That crackdown has come in response to the uprisings shaking authoritarian Middle Eastern regimes, movements that have used U.S.-based social-media sites like Facebook and Twitter as organizing tools.

"Maybe we will block content in some countries, but not others," Adam Conner, a Facebook lobbyist, told the Journal. "We are occasionally held in uncomfortable positions because now we're allowing too much, maybe, free speech in countries that haven't experienced it before," he said.

Face-to-Face

Points of contention between Facebook and Washington:

INTERNET FREEDOMS: Sen. Richard Durbin of Illinois, the Senate's second-ranking Democrat, has pressed Facebook on doing more to protect the human rights and free speech of users and to join the Global Network Initiative. In March 2010, Facebook and some other tech companies declined to participate in a hearing about global Internet freedoms.

PRIVACY: The FTC is investigating Facebook's privacy controls, which the company changed in April and May of 2010. Rep. Joe Barton, Republican of Texas and Rep. Edward Markey, Democrat of Massachusetts, have also probed Facebook about privacy practices, particularly on user information shared with third-party apps and websites.

MARKET TRADING: The SEC has been examining disclosure rules for privately held firms including Facebook, which have been actively traded on secondary markets. In April, the SEC suggested that when Goldman Sachs structured an investment for its clients in Facebook, it didn't need to take the extra step of forbidding U.S. investors from joining.

"Right now we're studying and learning about China but have made no decisions about if, or how, we will approach it," said Debbie Frost, Facebook's director of international communications.

Facebook's plans may not sit well with congressional leaders already incensed with the company for sidestepping congressional inquiries on its China plans. Last spring, Sen. Dick Durbin, the Illinois Democrat who heads the Senate Judiciary Committee's panel on human rights, rebuked Facebook for refusing to appear at a Capitol Hill hearing on "global Internet freedom."

The company hasn't joined the Global Network Initiative, a group that includes information-technology companies like Google and Microsoft and human-rights groups that have agreed to common principles of conduct in nations such as China, which restrict speech and expression.

Neither Facebook nor its founder, Mark Zuckerberg, have said much publicly about Facebook's role as a tool for pro-democracy activists in Tunisia or Egypt. In Tunisia, where Facebook took technical steps to counter government efforts to steal users' Facebook passwords, the company said its efforts were driven by a safety and security breach—not politics.

"We've witnessed brave people of all ages coming together to effect a profound change in their country. Certainly, technology was a vital tool in their efforts but we believe their bravery and determination mattered most," Ms. Frost said.

Steering clear of association with human-rights issues could help Facebook woo officials in China, where the government is sensitive to the Internet's potential for fomenting dissent. But it would also attract criticism. "Blocking content in some countries—but not others—would deeply damage Facebook's brand and raise troubling questions about its commitment to human rights and Internet freedom," said Sen. Tom Coburn of Oklahoma, the top-ranking Republican on the Senate's human- rights panel.

Online privacy is an equally pressing policy issue for Facebook's Washington office. Sen. John McCain, an Arizona Republican, and Sen. John Kerry, a Massachusetts Democrat, recently co-sponsored legislation that would establish a consumer privacy bill of rights. House lawmakers, meanwhile, have introduced privacy legislation that would require more disclosure to consumers but rely on industry self-regulation.

In mid-January, Facebook came under fire after it opened up a new feature allowing external websites and applications to gain access to users' addresses and phone numbers, with their permission.

Two weeks later, the company received a pointed letter from Rep. Joe Barton, a Texas Republican, and Rep. Edward Markey, a Massachusetts Democrat, demanding an explanation of how the plan fit into the company's privacy policies.

White House spokeswoman Jennifer Psaki said the president will answer online questions from Facebook users Wednesday. He won't deliver prepared remarks addressing China or privacy issues with Facebook's leadership. "Facebook, with more than a half a billion users, is a great opportunity for the president to speak directly to the American people," she said.

In the past six months, Facebook has hired two outside lobbying firms and four new Washington staff members, bringing its staff head count to 10 at its D.C. office. Only two of those staffers are registered lobbyists, and they lack ties to the congressional committees that will lead the privacy debate.

People familiar with Facebook's Washington plans said it is looking to hire more people with deeper congressional experience and bring on more seasoned communications and public-relations hands.

Write to Elizabeth Williamson at [email-masked], Amy Schatz at [email-masked] and Geoffrey A. Fowler at [email-masked]

Eric D. Schwerin
Rosemont Seneca Partners, LLC
1010 Wisconsin Ave., NW
Suite 705
Washington, DC 20007
(202) 333-1880
[email-masked]
P Consider the environment before printing this email.