Apple Steps Up Lobbying in Washington Amid Push Into Health Apps

CES 2015

A LifeProof Fre waterproof case for the Apple Inc. iPhone 6 case is submerged in water and ice during the 2015 Consumer Electronics Show (CES) in Las Vegas, Nevada, U.S., on Wednesday, Jan. 7, 2015.

Photographer: Patrick T. Fallon/Bloomberg

Tim Cook recently traveled to an unfamiliar destination for an Apple Inc. chief executive officer: The U.S. Capitol.

During the trip last month, Cook posed for a photo with Senator Orrin Hatch, the Utah Republican taking over the Senate Finance Committee this year. It was one of the meetings Cook had while in town, which also included a stop at Apple’s store in the Georgetown area.

Apple, which has come under increasing scrutiny as the world’s most valuable company, is becoming more of a regular around Washington. While co-founder Steve Jobs shunned the nation’s capital, Apple lobbied the White House, Congress and 13 departments and agencies from the Food and Drug Administration to the Federal Trade Commission in 2014 through the third quarter, according to OpenSecrets.org. In 2009, Apple lobbied only Congress and six agencies.

It’s all part of a broader push by Cook, who took the reins in 2011, to make the Cupertino, California-based company more open while laying the groundwork for new products that naturally attract more government scrutiny. That includes Apple Watch, the smartwatch arriving in stores this year, which has applications that track user health data.

“They’ve learned what others before them have learned -- that Washington can have a great effect on their business,” said Larry Noble, senior counsel at the Campaign Legal Center, a Washington-based non-profit that scrutinizes money in politics.

Kristin Huguet, a spokeswoman at Apple, declined to comment for this story.

Microsoft, Google

Apple’s spending in Washington remains small compared with other technology companies. Microsoft Corp., which faced an antitrust trial in the late 1990s, spent $6 million last year through the third quarter in Washington, according to OpenSecrets.org, a website that tracks spending. Google Inc. is the biggest technology spender after grappling with its own antitrust scrutiny, with $13.7 million in U.S. lobbying costs in 2014 through the end of September. In that same period, Apple spent $2.9 million.

Apple’s expenditures on Washington lobbying last year were on pace to top 2013’s record $3.4 million, which was already twice as much as what the company spent five years ago, according to OpenSecrets.org.

Staffing Up

As the company’s Washington spending has risen, Apple has staffed up in the capital. Cook last year hired Amber Cottle, former chief of staff for the Senate Finance Committee, to head Apple’s lobbying office. She replaced Catherine Novelli, who joined the State Department.

In 2013, Cook hired Lisa Jackson, former head of the U.S. Environmental Protection Agency, to oversee the company’s environmental initiatives. While Apple had been making efforts in that area under Jobs, it wasn’t vocal about what it was doing.

“We understand that we need to talk about it,” Jackson said this month during an appearance at the Commonwealth Club in San Francisco. “We need to say to people, ‘Stop saying it can’t be done, here it is.’”

Apple also added law firm Wilmer Cutler Pickering Hale and Dorr LLP to its growing list of outside lobbying firms in October, according to a Senate filing. WilmerHale, which represented Apple in its patent fight with Samsung Electronics Co., was hired to lobby on issues of competition, intellectual property and technology, according to the filing. The firm joins five others listed as lobbying for Apple this year, totaling 23 people, according to OpenSecrets.

Legal Setbacks

The increased activity follows several setbacks for Apple in Washington. The U.S. Justice Department won a case against Apple in 2013, in which the department sued the company for conspiring with publishers to fix e-book prices. The FTC last year accused Apple of unfairly billing parents for charges that they never consented to that were incurred by kids using apps, with the company agreeing to refund a minimum of $32.5 million to consumers to settle the complaint.

Cook himself testified for nearly two hours before Congress in May 2013 over Apple’s use of offshore tax shelters, using the occasion to call for a simplified U.S. tax code.

“We have never had a large presence in this town,” he told senators, before they peppered him with questions about the company’s tax strategies that had left billions of dollars overseas.

Product Window

Apple’s increasing activities in Washington now offer a window into some of the company’s plans. In December 2013, four Apple vice presidents -- including Jeff Williams, of operations, and Bud Tribble, of software technology -- met with FDA Commissioner Margaret Hamburg and her staff about mobile medical applications. FDA officials told the Apple executives that they regulate based on the intended use of a device.

A glucometer, which measures glucose levels, may be unregulated if used to measure blood sugar to promote better nutrition. Yet if it’s marketed for diabetics it’ll likely be regulated, Apple executives were told, according to an FDA memorandum of the meeting that Bloomberg News obtained through a Freedom of Information Act request.

“It’s not unusual for a company that’s a device company to go meet with FDA and I think Apple is becoming a device company,” Jeffrey Gibbs, a lawyer at the Washington-based firm Hyman, Phelps & McNamara, said in an interview. “The FDA doesn’t want to be surprised, especially if you’re a very prominent company like Apple.”

Jennifer Haliski, a spokeswoman for the FDA, declined to comment on the meeting.

Privacy Talk

Last fall, Apple executives also met with at least two FTC commissioners and Chairwoman Edith Ramirez to demonstrate the Apple Watch and Health app, according to people familiar with the matter.

Among the issues discussed was how Apple’s products collect and use consumer health data, the people said. The company expressed a commitment to protecting consumer data and explained that under its terms of service, data collected by the watch and health apps can’t be shared with third-party data brokers, one of the people said. Cottle, Tribble and Apple’s director of privacy, Jane Horvath, met with agency officials on Sept. 17, according to visitor logs.

Apple officials rarely visited the FTC in recent years, unlike those from companies such as Facebook Inc., which had more frequent meetings, according to a former agency official.

Justin Cole, a spokesman at the FTC, said the agency regularly meets with a range of industry representatives and consumer advocates to “help deepen agency understanding on a wide spectrum of issues.”

The proactive approach may be working. Ramirez, in an October speech, praised Apple for touting “as a selling point that they don’t share certain data from connected devices.” She added that “steps like this are, I believe, critical to fostering consumer trust. And they are good business too.”

Kate’s Pictures

Apple is trying to be more proactive to quell concerns. After the company unveiled Apple Watch and a digital payment system called Apple Pay in September, Senator Claire McCaskill, a Democrat from Missouri, and now-retired senator Jay Rockefeller, a Democrat from West Virginia, sent a letter to Cook seeking more information about how Apple would keep users’ data safe. It was one of several inquiries that the company got at the time, following nude pictures of celebrities such as model Kate Upton being released online that were stolen from Apple’s iCloud accounts.

“The recent data security incidents that have affected major corporations, including Apple, demonstrate the need for such federal legislation,” the senators’ letter said.

Proactive Briefings

Apple sent executives to brief staff members of the House Energy and Commerce Committee, which is led by Fred Upton, Kate’s uncle, in September about its new products and included a discussion about Apple’s smartwatch, mobile payment system and health care initiatives, according to a person familiar with the briefing.

Upton’s committee didn’t respond last week to a request for comment.

“The big question is: Is Apple finally getting it?” said Chris Jones, founder of CapitolWorks, a lobbyist recruiting firm. “Yes, they are. They’re understanding there needs to be a proactive outreach on Capitol Hill and a proactive outreach to the administration.”

Before it's here, it's on the Bloomberg Terminal. LEARN MORE