Amazon’s Jeff Bezos Can’t Beat Washington, So He’s Joining It: The Influence Game

In the final days of 2017, President Donald Trump attacked Amazon, tweeting that the U.S. Postal Service should charge the world's largest online retailer "MUCH MORE!" for delivering packages.

It capped a year of criticism from Trump about Amazon's market power, impact on jobs and ties to the Washington Post, which Chief Executive Officer Jeff Bezos owns. While that Twitter barrage grabbed headlines, behind the scenes, the e-commerce giant was furiously expanding lobbying efforts that have quickly made it one of the most-influential companies in Washington, according to data compiled by Bloomberg News.

In the past five years, Amazon increased lobbying spending by more than 400 percent, a rate of change that far exceeds rivals’. It lobbied more government agencies than any other tech company, pressed its case on as many issues as Google, and outspent everyone in the industry except for the search giant, the data show.

"They quietly went from Chihuahua to Great Dane in just a few years," said Bruce Mehlman, a former top technology policy official under President George W. Bush.

Amazon.com Inc. has good reasons to amplify its presence in Washington. Big tech's long honeymoon of public goodwill is over and the company feels the painful transition as much as competitors like Google parent Alphabet Inc. and Facebook Inc. Amazon is fighting to be seen as a job creator, not a job killer, and is often blamed when traditional retail outlets close.

"They are getting smacked right and left with questions about whether they are undermining sectors, harming local business opportunities, actually undercutting innovation, destroying jobs and harming democracy," said Gene Kimmelman, president of the policy group Public Knowledge.

To counter that impression, Amazon is making both public and private moves. In public, Bezos meets with lawmakers and attended President Trump's awkward summit with technology CEOs at Trump Tower in late 2016. Before Trump’s inauguration, the Amazon founder also pledged to hire 100,000 workers over the next 18 months, paying homage to Trump's push to get companies to employ more Americans. Gone is the feisty combativeness on display during the presidential election, when Bezos offered on Twitter to give candidate Trump a free ride off the planet with the hashtag #SendDonaldToSpace.

Behind the scenes, Amazon has increased its lobbying of lawmakers and government agencies, which can keep a crackdown at bay. Last year, for example, for the first time in nearly two decades, Amazon lobbied the Justice Department, which has broad criminal and civil enforcement powers spanning antitrust, national security and corporate wrongdoing.

What makes Amazon different from its tech brethren is the company’s insatiable quest to sell everything from advertising to entertainment, groceries, computing power and soon, maybe even health care. That forces it to wrestle with a growing list of issues, including transportation, shipping, aviation, taxes, immigration and antitrust. Last year, it lobbied on 24 general issues (each of which could include dozens of laws or regulations), up from eight in 2012. Entities lobbied, such as the Senate and NASA, jumped from eight in 2012 to 39 in 2017. Microsoft Corp., which survived a prolonged antitrust case in the 1990s, lobbied on 18 issues and engaged with 29 government agencies last year.

Amazon has fought for favorable rules regarding online sales taxes since 2000. But its rise as a Washington powerhouse really began amid a flurry of activity in 2013. That fall, Bezos acquired the Washington Post for $250 million from its longtime owners, the Graham family, and two months later,  unveiled Prime Air, a nascent project to speed deliveries using drones. At the time, the Federal Aviation Administration required unmanned aircraft to be flown within the line of sight of operators. Amazon argued the rules were designed for hobbyists, not commercial operators.

The government took about three years to allow commercial flights, and with rare exceptions it limited operations to short distances and ordered that drones stay away from people (not ideal for airborne deliveries to homes). Rather than give up, the company re-doubled its efforts to influence rule-making and policymakers.

Amazon also set about expanding its physical presence in the capital. In 2014, the company traded its old Washington offices in a small townhouse near a highway exit with spotty Wi-Fi for a modern office building on the same street as lobbying powerhouses like the National Association of Realtors. The new digs, home to Amazon policy staff and other employees, have polished cement floors and an exhibit showcasing the company's growth from niche bookseller to titan of online commerce.

From its comfortable new perch, Amazon rapidly expanded its lobbying efforts. It started lobbying the White House in 2014, according to federal disclosures, and has every year since.

In 2015, it hired former Obama White House Press Secretary Jay Carney as senior vice president of corporate affairs. He now oversees the Washington policy office, which has almost doubled its number of registered lobbyists to 27 from two years ago. That roster does not include outside lobbyists like former Senator John Breaux, a Democrat, and his Republican partner, onetime Senate Majority Leader Trent Lott.

“As one of the biggest job creators in the country, we’ve expanded our team in Washington, D.C., to ensure we are able to cover the growing range of topics that are important to policymakers, our employees, and our customers,” Brian Huseman, Amazon's vice president of public policy, said in a statement.

Winning friends in Washington has become a necessity for Amazon as it moves into more territory overseen by federal agencies. It's delivering groceries to food-stamp recipients in a trial run by the Agriculture Department. It handles hundreds of billions of dollars in transactions and lends money to small businesses selling goods on its site, requiring the company work with financial regulators. It lobbies for postal reform and infrastructure spending to get orders to customers more quickly.

Amazon's cloud-computing business may have the most at stake. In 2013, it won a multi-year CIA contract, and is in the running for a decade-long Defense Department cloud contract potentially worth billions more. The Pentagon awarded a separate $950 million cloud contract to an Amazon affiliate earlier this month.

The government seems pleased with these arrangements so far. The CIA's John Edwards delivered a 13-minute testimonial in June to thousands of people at an Amazon-sponsored event at Washington’s convention center, saying partnering with Amazon Web Services is “the most innovative thing we’ve ever done.” In 2016, Bezos was appointed to the Defense Innovation Advisory Board, which aims to keep the Pentagon atop new technologies. He hosted Defense Secretary James Mattis at Amazon’s Seattle headquarters in August, posting pictures of the visit on Twitter.

Amazon began lobbying the Defense Department in 2016 and did so again last year, according to federal disclosures. It has lobbied other federal agencies on issues related to cloud computing for at least six years, trying to change the way government buys and uses tech services.

Amazon's most-recent effort focuses on music. It's supporting the Music Modernization Act, which would change the way artists and license holders get paid when people buy or stream digital music. Steve Boom, vice president of Amazon Music, worked the halls of Congress on the bill at the end of January. Amazon also hosted a meeting in a congressional office building where the sponsor of the legislation, Georgia Republican Representative Doug Collins, thanked the company for its months of work, a person familiar with the event said.

With its announcement of 20 finalists from around the U.S. for its much-anticipated second headquarters, Amazon is more than ever the company to meet in Washington. The winner gets $5 billion in investment over 15 years and up to 50,000 jobs, making Amazon a welcome guest for lawmakers in those states – regardless of what issue the company wants to discuss. And Washington, Virginia and Maryland are all contenders.

Along with his company’s lobbying presence, Bezos has increased his personal visibility in Washington. In the fall of 2016, he bought the 27,000-square-foot former textile museum for an East Coast pied-à-terre. It's in the same tony Washington neighborhood where the Obamas, Jared Kushner and Ivanka Trump live. He’s planning salon-style dinners at the house with DC power-players and celebrities in the tradition of former Washington Post publisher Katharine Graham, according to a recent New York Times profile.

“I don’t doubt that he loves journalism and thinks that ‘Democracy Dies in the Dark,’” Scott Galloway, a professor at New York University, said, paraphrasing the newspaper’s new motto. “But boy, it’s convenient to have the Post and a home in Washington. These are incredibly powerful prophylactics."

The Post has been critical of Trump, helping stoke the bruising Twitter war between the two men. Trump, first as a candidate and then as the president, has attacked Bezos for funding fake news, killing jobs and free-riding on the Postal Service.

After Trump's Dec. 29 postal tweet, Amazon policy staff in Washington and Seattle huddled on conference calls to assess the damage, according to a person who described how the situation unfolded. They thought about explaining how postal rates are set, and noted that Trump hadn't filled key positions responsible for changing the rates. They weighed their relations with the Postal Service, which were good – Amazon's account was giving the service much-needed revenue.

With media coverage pushing back on Trump's position, they did what is often the difficult, but prudent thing to do in Washington: They kept quiet.