Big Tech split leads to the demise of the Internet Society

Rising tensions between Microsoft, Amazon, Alphabet, Meta and Apple are behind the death of the Internet Association (IA), the nine-year-old lobby group that was the voice of Big Tech in Washington, according to industry insiders and observers.

The Washington-based group, which has called itself the “unifying” voice of the internet industry, will be shutting down at the end of the year after Microsoft and Uber, among others, withdrew their financial support, leaving an insurmountable funding gap.

“Our industry has experienced massive growth and change,” the company said in a statement, adding that its shutdown is “in line with this development.”

Observers said the shutdown is a sign of increasingly different policy goals for its members from major tech companies, with Microsoft in particular looking to distance itself from its Silicon Valley peers.

“Microsoft realized it didn’t want to be tied to the networks of Google, Facebook and Amazon,” said Barry Lane, executive director of the Open Markets Institute, an antitrust campaign group. “It’s really simple.”

A number of smaller tech companies have also been frustrated that their priorities are at odds with the agenda of the big tech companies.

“This institution could have saved itself years ago by firing everyone with a market capitalization of more than $500 billion,” chirp Luther Lowe, Head of Public Policy at Yelp. Yelp left the association in 2019. “I made this proposal to leadership a few years ago, but it was dropped, so we quit.”

A person familiar with Microsoft’s decision-making process said the company no longer sees value for money in its involvement with IA. Membership entitlements are calculated by company size on the basis of revenue.

An earlier report from Politico indicated that the largest shareholders, including Microsoft, were paying between $800,000 and $1 million annually. Microsoft declined to comment.

Despite being the second most valuable US technology group, Microsoft has managed to sidestep the latest antitrust focus in Congress. Unlike the CEOs of Facebook, Google, Apple and Amazon, Microsoft’s Satya Nadella was excluded from a successful congressional hearing in July 2020 that saw others summoned for lengthy questioning.

Microsoft has also not been the focus of any action announced by President Joe Biden’s revitalized Federal Trade Commission.

The company, which came under prolonged antitrust scrutiny in the early 2000s that brought it to the brink of collapse, now boasts a more collaborative approach with regulators. An internal memo written by Microsoft CEO Brad Smith and sent to employees in June outlined the company’s strategy.

“There will be many days when some in the tech sector will complain loudly about the dangers of regulation,” read the memo the company released with the Financial Times. There are real risks, and they need a fair hearing. But as a company, we will continue to focus more on adapting to regulation rather than fighting it.”

Lin said Microsoft was keen to distance itself from its competitors because they “had this problem. They don’t want to read their emails, and they don’t want to have to follow through with discovery.”

Microsoft lagged behind Amazon and Google in spending pressure in 2021, according to OpenSecrets, a database based on Senate records.

Amazon was the most active, spending $15.3 million in the first three quarters of the year, versus $9 million at Google and $7.8 million at Microsoft. The figures do not include contributions to trade groups such as the Internet Society.

Meanwhile, other major tech companies have a “firm interest” in engaging Microsoft in the antitrust discussion, said Dan Ives, an analyst at Wedbush. “If Microsoft stays the same on antitrust issues, Amazon and Google will be at a distinct disadvantage especially on the M&A front in 2022,” he said.

A person familiar with the high-level discussions at Amazon said Andy Gacy, the company’s new CEO, is frustrated that regulators haven’t looked closely at his rival.

“Andy Gacy is obsessed with Microsoft,” said the person. His internal imperative was ‘They should go after Microsoft because they’re still doing bad things.’

Amazon disputed the characterization of Gacy’s point of view. But a spokesperson said the company felt Microsoft “should be under scrutiny like any other company”.

In Europe, an Amazon-backed trade group for the cloud computing maker has repeatedly targeted Microsoft, describing what it sees as non-competitive licensing contracts surrounding “enterprise software,” such as the Microsoft Office suite.

Cloud infrastructure providers in Europe have said the upcoming digital markets law, proposed by the European Union, would be a “historic failure” if it failed to cover software providers.

“Legacy software providers should be recognized as gatekeepers, and these practices are prohibited so European companies do not have to take expensive and time-consuming legal action to confront clearly anti-competitive practices,” the group said in a statement at the time.

Meanwhile, a study, jointly commissioned by Google and published by the Computer and Communications Industry Association in September, announced that 85 percent of productivity software used by US government agencies was from Microsoft.

Tim Banting, author of the report, cautioned: “The research report identifies a number of consequences of excessive US government reliance on a single vendor, including higher costs for taxpayers, less innovation from the private sector and, importantly, greater risks to the US government. regarding cyberattacks and future national security incidents.

Google declined to comment on lobbying tactics.