David Espinoza appeared unhappy when Arizona joined scores of states investigating Google last year. The Phoenix-based owner of a shoe-and-leather store wrote in a local newspaper he was “amazed and a little dumbfounded” by regulators’ campaign to “change how digital platforms operate.”
“The current system is working for small businesses, and as the old saying goes: if it ain’t broke, don’t fix it,” he wrote.
But Espinoza’s words, published in September by the Arizona Capitol Times, weren’t entirely his own. They were written on his behalf by an advocacy group that’s backed by Google and other tech behemoths, reflecting Silicon Valley’s stealthy new attempts to shape and weaponize public perception in response to heightened antitrust scrutiny.
Under the withering microscope of government watchdogs, tech companies including Amazon, Facebook and Google have funded a bevy of political groups that have helped push positive polling and engaged in other fingerprint-free tactics designed to deter regulators who seek to break up or penalize the industry. The approach reflects the growing threats they now face from the Justice Department and the country’s top attorneys general, who have been investigating them on antitrust grounds.
The Connected Commerce Council, for example, is a Washington-based nonprofit that bills itself as a voice for small businesses. But it counts Amazon, Facebook and Google as “partners,” and in recent months the group known as 3C has put its muscle to work arguing that Silicon Valley giants do not threaten competition, stifle smaller rivals and harm consumers in the process.
Espinoza, a boot-maker by profession, said he was approached by 3C last year after he participated in a Google seminar meant to help small businesses better use digital tools. The advocacy group then wrote the opinion piece largely on his behalf, which appeared online just days after state attorneys general announced their antitrust probe of the company. The opinion piece did not indicate that 3C largely penned it.
Espinoza said he still supported Google, whose technology, including its ad tools now under government investigation, have helped his company reach new customers across the country. But he also said he didn’t know about Google’s relationship with 3C, a group of which he is a member, before being contacted by The Post this week.
“I’m not surprised,” Espinoza said. Google is “a big company … and they have the finances to extend themselves as much as they can.”
Jake Ward, the president of 3C, said his organization represents thousands of small businesses, not Silicon Valley’s largest players. The organization often seeks to encourage corporate founders to share their views publicly, he added.
“It is our responsibility, on behalf of our small business members, to protect the existing model and promote the market, which is working exceedingly well,” Ward said, later adding: “We are not, and will not work for, Big Tech.”
Amazon and Facebook declined to comment.
Julie Tarallo McAlister, a spokeswoman for Google, said in a statement that the company supports “a range of organizations like the Connected Commerce Council that are working to help small businesses grow and prosper online.”
Silicon Valley tech giants — and companies across a range of industries — often back a wide array of advocacy groups to boost their political fortunes. They aren’t required to disclose how much they spend on these organizations and exactly how involved they are in their day-to-day decisions, but ethics watchdogs say their participation alone is important.
“It is an example of industry spending money and exerting influence, but doing it in a way that is meant to give the impression that it is not coming from industry,” said Noah Bookbinder, the executive director of Citizens for Responsibility and Ethics in Washington, a watchdog group.
Bookbinder added: “They wouldn’t be members if they didn’t agree with the thrust of what these organizations are pushing for.”
The tech industry’s attempts to shore up its public image in recent months reflects the seriousness of the U.S. government’s new antitrust scrutiny. After years of threats, state and federal leaders have embarked on the kind of inquiries that could result in dramatic changes to the way Amazon, Facebook and Google operate, including punishments that could break apart those companies.
With Amazon, regulators are concerned that the e-commerce giant improperly gleans data from third-party sellers in an attempt to give its own products and services an advantage. In looking at Facebook, government officials have probed complaints it has gobbled up its digital rivals, leaving few viable competitors in social networking. And watchdogs have probed Google’s search, advertising and smartphone businesses to determine whether they’ve stifled competition, following in the footsteps of European regulators who have already penalized the company.
All three tech companies deny they have violated state and federal antitrust rules. Still, Justice Department officials are expected to file a lawsuit against Google alleging it violated federal competition laws as soon as this month. Nearly every state’s attorney general, meanwhile, could follow with their own complaint in July, The Post previously reported. The antitrust lawsuits come roughly seven years after U.S. officials first probed Google for violating competition law but ultimately decided against bringing a case in court.
With legal action imminent — and President Donald Trump recently taking fresh, aggressive aim at Silicon Valley — the industry’s largest companies have shelled out sizable sums to lobby in Washington. Amazon, Facebook and Google have spent more than $11 million combined over the first three months of 2020 to influence federal action on a range of issues, including antitrust, according to ethics disclosures filed with Congress. The amount is slightly higher than the same period in 2019.
But those figures do not reflect the hard-to-track sums spent by the industry to shape public opinion beyond the Beltway. Many in the tech industry privately say they’ve adopted such tactics because they face an onslaught of criticism from a wide array of new opposition groups, such as the Campaign for Accountability, a nonprofit that has produced research critical of tech companies including Amazon and Google.
The group does not list its current backers, and it declined to detail them fully Tuesday. In the past it has courted Google’s critics, including Oracle, though the campaign maintains it is not taking corporate contributions.
Facebook, for example, already has invested in a forthcoming advocacy group known as American Edge. The organization shares a similar structure to organizations such as the National Rifle Association, which blitzes airwaves with ads and doesn’t have to disclose its donors.
The new tech group has sought to enlist support from other tech companies including Amazon and Google, according to two people familiar with the effort who spoke on the condition of anonymity to discuss private deliberations. It is not clear whether either company intends to join. The Post first reported last month on the group’s imminent plans for launch.
The tech industry also has sought to funnel dollars to a wide array of conservative groups in recent years, hoping to earn more favor among Republicans in power at the White House and in Congress. That includes the National Taxpayers Union, a right-leaning outfit that typically targets government spending it sees as wasteful.
Last month, the NTU tapped a firm that previously polled for Trump’s 2016 presidential campaign to gauge voter sentiment about Big Tech. They focused their efforts on Arizona, Texas and other states that are actively investigating Google and other companies, and their findings concluded that voters would rather see their attorneys general focusing on other issues, including the opioid epidemic.
The survey explicitly asked if states should punish companies including Amazon and Google, which publicly have acknowledged their past financial support of the NTU. Pete Sepp, the president of the organization, declined to discuss the NTU’s donors or the exact reasons it commissioned the poll, though he stressed that he and his organization have worked on competition-related issues for decades.
“We have a huge historical footprint in the antitrust issue space that transcends any tech firm and goes well before their founding,” he said.
Such research — seeking to channel public sentiment — is a battle-tested tactic in antitrust probes, former regulators say. It’s meant to “press upon public officials, and indirectly upon agencies, that [companies] enjoy broad public support for what they’re doing,” said William Kovacic, a top professor at George Washington University’s law school who previously served on the Federal Trade Commission. “To tamper with them in a significant way is to anger the broader public.”
Two years ago, the Connected Commerce Council launched as a voice for small businesses, and Ward, its leader, has grown the organization into an operation that represents more than 10,000 entrepreneurs. The group provides technical support, helping owners and employees use tech tools to place ads, manage their checkbooks and reach new customers online, he said.
The goal was to connect these smaller operators to larger companies, according to Ward, who found that “policy and politics collided pretty quickly on what I was trying to do.” In the end, he has found himself defending Amazon, Facebook and Google because it’s better for the startups 3C represents, he said.
By September 2018, 3C members had sounded off in support of major tech companies during a regulatory proceeding at the Federal Trade Commission. 3C also helped produce opinion pieces, including the one published by Espinoza in 2019. Ward said the work is critical because regulators and readers otherwise never would hear from small businesses.
In more recent months, 3C has amped up its letter-writing campaigns, dispatching missives targeting Texas and other states now investigating large technology companies. Its letter to Texas Gov. Greg Abbott in May, signed by 200 members, even said the state should not penalize Big Tech amid the coronavirus crisis.
“During a pandemic, when many storefronts are shuttered and businesses that are still running are operating entirely online, it is the wrong time to demand changes in digital technology operations and business models,” they said.
In doing so, however, Ward has stressed his organization’s independence. “We don’t lobby on their behalf,” he said. “And we’re not advocates for their larger positions.”