Ethics Group Warns Trump About Silicon Valley Influence, Cronyism

google-buildingNational Legal and Policy Center (NLPC), today sent a letter to President-elect Donald Trump responding to Silicon Valley’s recent suggestions that President-elect Trump “engage” Silicon Valley’s tech elite for key government posts, while preserving many of the digital initiatives started by the Obama Administration.

Trump is holding a meeting with tech leaders next week. With the exception of billionaire Facebook board member and Trump supporter Peter Theil, it is unclear whether representatives of Facebook, Google, Twitter and other tech giants will be there.

In its letter, NLPC slams Silicon Valley’s recommendations as a sure way to undercut Trump’s commitment to “drain the swamp” of corporate lobbyists and DC powerbroker influence, while undermining his commitment to restoring American jobs and the economy.

The letter states that Silicon Valley initiatives like the Office of Science and Technology Policy, 18F and the U.S. Digital Service, which were created or expanded under Obama’s leadership, should be eliminated or completely overhauled. Incompetence and wasteful taxpayer spending, repeated ethical violations, and outright cronyism defined the programs, which enjoyed major support from the tech industry under Obama.

“The reality is that tech lobbyists, led by Google, virtually took over the White House’s economic and innovation policy from President Obama’s very first days in office, turning it into Silicon Valley’s captive lobbying shop”, said NLPC President Peter Flaherty. Google’s lobbyists visited the White House more than 427 times in the past 8 years. Almost 260 people moved between Google and the government during President Obama’s tenure, 53 of whom either left the White House to work for Google or vice versa.

“In a monumental insult to taxpayers, America’s tech elites used their White House perch to feather their nests and push for policies that benefit them at the expense of the American worker,” Flaherty continued. “No other companies or interests in America have ever enjoyed the virtually unrestricted access and influence President Obama granted Silicon Valley elites.”

NLPC letter also points out that Silicon Valley has done relatively little to create jobs compared to other sectors of the economy and has consistently exhibited a disregard for the American worker through its love affair with H-1B visas and automation. “Silicon Valley has reliably pushed for initiatives that privatize economic gain across a small sliver of tech industry elites, while socializing the losses across American society,” Flaherty concluded.

Full text of the NLPC letter:

National Legal and Policy Center is writing in response to the November 30, 2016 letter you received from Silicon Valley tech giants like Google, Facebook, and Twitter urging your incoming administration to engage the tech industry by tapping into its expertise for key government posts.

We have grave concerns about many of the self-serving suggestions in that letter. We believe that much of what they propose would undermine your commitment to “drain the swamp” of corporate lobbyists and DC powerbroker influence as well as undermine your commitment to restoring American jobs and the economy.

In particular, we believe that Silicon Valley’s proposal to staff your incoming Administration with even more Silicon Valley “experts” while retaining the White House Office of Science and Technology Policy is exactly the wrong prescription. It risks a repeat of the disastrous relationship between the Obama Administration and Silicon Valley — a relationship defined by incompetence and wasteful spending, unethical behavior, potential lobbying ban and revolving door violations, and outright cronyism.

Consequently, we strongly encourage your Administration to disband wasteful Silicon Valley-led initiatives such as the General Services Administration’s 18F program[1] and the White House U.S. Digital Service,[2] while either greatly reducing the size and influence of the Office of Science and Technology Policy or eliminating the office altogether.

National Legal and Policy Center also take serious issue with Silicon Valley’s contention that pursuing its recommendations would in any meaningful way help to fulfill your commitment to American infrastructure investment and job creation. We believe this for two important reasons: 1) Silicon Valley’s contribution to U.S. job creation continues to be disappointing; and 2) Silicon Valley’s love affair with robotics, automation and artificial intelligence, as well as its liberal use of H-1B visas to hire foreign workers. The second view reflects indifference to the American worker and total disregard for the health of the American economy.

Case study: The Office of Science and Technology Policy – Silicon Valley’s Executive Branch “Lobbying Shop”

Silicon Valley’s November 30 letter requests that your Administration retain the Office of Science and Technology Policy (OSTP), an office that was greatly expanded under President Obama, to serve as a “critical point of coordination for public-private partnerships on research and technology issues.”

We strongly disagree. In reality, OSTP served as little more than a central access point for Silicon Valley lobbyists, and particularly Google, to press their pet policy issues at the highest levels of the federal government. In fact, no company better exemplified Silicon Valley’s toxic lobbying influence, ethical lapses, and corporate cronyism under the Obama Administration than Google. Several examples underscore how Mountain View exercised its influence with OSTP for its own benefit:

  • Only one year after Andrew McLaughlin, Google’s head of global public policy joined the Obama Administration as OSTP’s deputy chief technology officer, he was sanctioned for using his personal Gmail account to covertly communicate with his former employer concerning White House positions on tech policy issues. The breaches violated both the Federal Records Act and the President’s own Ethics Pledge signed by McLaughlin upon his employment in the Obama Administration.[3] McLaughlin resigned in 2010 in apparent response to our request that he do so.
  • At least three other former Google employees who joined OSTP may have violated ethics rules as well, according to White House visitor logs. CTO Megan Smith, OSTP Deputy General Counsel Alex Macgillivray, and CTO Advisor Nicole Wong attended at least 12 meetings with Google executives within one year of their transition from Google to government.[4] The meetings appear to be a clear violation of President Obama’s executive order banning government appointees from participating in matters involving former employees or clients.
  • Despite a longstanding White House convention to avoid weighing in on law enforcement matters, Google used its OSTP connections to lobby the White House on the Federal Trade Commission’s (FTC) antitrust investigation on numerous occasions. During the FTC’s investigation, OSTP Internet advisor R. David Edelman communicated with Matthew Bye, Google’s legal counsel on the FTC antitrust matters, on at least two occasions. Edelman also emailed Google’s top lobbyist Johanna Shelton in advance of the FTC settlement announcement in January 2013 requesting Google materials about the FTC settlement.[5] The FTC’s surprising settlement of the Google charges amid persistent evidence of White House influence raised even more questions after the Wall Street Journal revealed in 2015 that the FTC’s own staff investigators had recommended suing Google for anticompetitive practices.[6]
  • During President Obama’s two terms in office, Google was granted virtually unrestricted and unprecedented access to senior White House officials, visiting the White House on more than 427 occasions.[7] A staggering 251 individuals moved through the Google and government “revolving door” during President Obama’s two terms, including more than 53 revolving door moves between the White House and Google.[8]

The evidence is abundantly clear: Silicon Valley lobbyists, led by Google, virtually took over OSTP from President Obama’s first days, turning the OSTP into the tech industry’s captive lobbying shop within the White House. No other companies or interests in America enjoyed the virtually unrestricted access granted Silicon Valley elites.

Rather than retaining an executive office that provides inordinate benefits to Silicon Valley elites, we suggest totally reorganizing OSTP to focus on job creation and infrastructure investment that benefits all Americans or eliminating the Office altogether.

18F: A cautionary tale of Silicon Valley’s disastrous “partnership” with the federal government

We likewise take issue with Silicon Valley’s suggestion that your administration keep many of the agencies and tech programs created during the Obama Administration while adding additional “tech voices at the highest levels of government.” The General Services Administration’s (GSA) 18F program provides a cautionary tale of Silicon Valley’s disastrous partnership with the federal government.

GSA’s 18F was created in 2014 along with its sister agency, the U.S. Digital Service (USDS), in response to the botched rollout of the website. Originally staffed with private-sector employees, many on temporary leave from Silicon Valley companies, the group was tasked with simplifying the government’s myriad digital services.

Megan Smith, the current White House CTO and herself a former Google executive, characterized the new digital initiatives in 2015 as an opportunity for Silicon Valley experts to serve “tours of duty” in the federal government. “You don’t have to come for your whole life… come as a reserve, come for two weeks, come for months, come for two years and come in and out of government just like our colleagues in other fields are doing,” Smith remarked.[9]

In October of 2016, GSA’s inspector general released a scathing report about 18F, concluding that its employees, many culled from Silicon Valley giants for temporary assignments in the federal government, exhibited a smug and dismissive attitude towards federal contracting procedures that was “emblematic of the digital services movement across government”.[10] Among the GSA auditors findings:

  • 18F acted like a private sector startup by spending money it didn’t have and hiring at a rate only seen from emerging tech companies despite underperforming revenues. The organization’s staffing levels increased by more than 500% in less than two years, growing from 33 employees in April of 2014 to over 200 full time employees by March of 2016.[11]
  • 18F racked up cumulative net losses of more than $31 million from its founding in 2014.[12] It was plagued by grossly inaccurate financial projections and routinely overestimated its revenue projections. Internal discussions uncovered by GSA’s IG suggested the group had a reckless disregard for the organization’s losses, even quoting 18F’s Director of Operations remarking at one point, “To be frank, there are some of us that don’t give a rip about the losses.”[13]
  • 18F staff spent the majority of their time (52%) on non-billable activities, even boasting, “Non-billable work is the cultural lifeblood of 18F”.[14] Among the non-billable projects, 18F spent almost 14,000 hours (estimated at $2.34 million) promoting their projects through blog posts, websites and social media. It spent another 727 hours (valued at more than $140,000) developing the 18F logo.[15]
  • Other non-reimbursable 18F “projects” included 1413 hours developing “flash cards” to define 18F’s development approach and vocabulary (valued at an estimated $235,950);[16] the creation of a Coffeemate “bot” which paired 18F staff for coffee Meetups;[17] and the creation of another “bot” for use in 18F interoffice communications that policed users’ texts for masculine pronouns like “guys” and prompted them to replace the pronouns with gender neutral options, like “team.”[18]

In addition to the waste and incompetence displayed by Silicon Valley experts assigned to federal digital services initiatives, Silicon Valley’s involvement in federal contracting initiatives like 18F and the USDS presents the potential for blatant conflict-of-interest issues as well.

A 2016 analysis by the Google Transparency Project found that more than 18 staffers of 18F and the USDS came from Google.[19] In fact, the USDS was founded by former Google employees to provide “triage” for the government’s disastrous rollout of

The intimate involvement of Silicon Valley “experts” in the procurement and development of federal digital services as well as the fact that these organizations were designed for “limited tours of duty” presents an unprecedented opportunity for tech giants to feather their own nests at the expense of the taxpayer. Many of these tech executives no doubt will return to their Silicon Valley jobs in the future with inside knowledge and relationships that will prove invaluable in securing future large IT contracts in a non-competitive fashion.

Consequently, National Legal and Policy Center urges your incoming administration to put the taxpayer first by immediately eliminating both the U.S. Digital Service and 18F.

The myth of Silicon Valley job creation and investment

Silicon Valley’s November 30 letter also presumptuously offered your administration advice and recommendations on the types of people it would like to see for positions at the Federal Communications Commission (FCC), Federal Trade Commission (FTC), National Economic Council (NEC), National Security Council (NSC) and other federal agencies. They apparently felt justified in doing so given their representation that they are a “trillion dollar economic driver”.

Given your commitment to real American job creation and investment, we urge you to take their rosy economic representations with a healthy dose of skepticism: There is a fundamental difference between wealth creation (in which Silicon Valley has undoubtedly exceled) and the job creation and investment that benefit all Americans. The reality is that Silicon Valley’s record on the latter has been sorely lacking.

In fact, an October Wall Street Journal story noted that much of the discontent driving support for your 2016 campaign stemmed from the dashed employment promises of the so-called “tech revolution” which promised larger economic gains for Americans, but instead has widened the division between the haves and the have-nots.[20]

To understand just how wide the chasm is between Silicon Valley wealth creation vs. actual job creation and investment in America’s future we urge you to consider the following:

  • The 40 Silicon Valley company members of the Internet Association, a trade association representing tech giants such as Google, Amazon, Facebook and Netflix, employ less than half a million people globally,[21] one-third as many employees as Walmart employs just in the United States (1.5 million).[22]
  • Silicon Valley’s rush towards automation and robotics further threatens American jobs and prosperity. Tesla’s founder Elon Musk casually remarked recently that eventually computers, intelligent machines, and robots would comprise the majority of the workforce of the future and that those of us out of work will simply have to get by with a basic income provided by the government.[23] Musk did not explain how the government would afford to pay that basic income given Silicon Valley executives’ propensity to stash billions of dollars in offshore accounts rather than invest those funds in infrastructure or worker retraining programs.[24]
  • Silicon Valley’s love affair with the H-1B visa program further erodes American prosperity. The Economic Policy Institute reported in 2013 that the annual inflows of guest workers amounted to one-third to one-half the number of all new IT job holders. Despite the tech industry’s contention that there are simply not enough STEM graduates to meet demand, the same study reported that for every two students graduating with a STEM degree, only one is hired into a STEM-related job. In computer and information science and in engineering, U.S. colleges graduate 50 percent more students than are hired into those fields each year.[25] The uncomfortable reality is that H-1B visa holders are cheaper to employ: The same EPI study showed that more than 80 percent of H-1B visa holders are approved to be hired at wages below those paid to American workers. [26]

To be sure, many Silicon Valley companies are good corporate citizens. Many others are new startups that have been extraordinarily successful and are contributing greatly to the American economy. But as Om Malik recently wrote in The New Yorker, “Silicon Valley’s biggest failing is not poor marketing of its products, or follow-through on promises, but, rather, the distinct lack of empathy for those whose lives are disturbed by its technological wizardry…If you are Amazon, you have to acknowledge that you are slowly corroding the retail sector, which employs many people in this country.”[27]

Given that job creation and economic investment in America’s future are a top priority for your administration, we implore you not to make the same mistake as your predecessor: Wealth creation alone does not necessarily translate to job creation.

Public policy recommendations offered by Silicon Valley should be carefully scrutinized to ensure that they lead to the job creation and infrastructure investment necessary to Make America Great Again. Silicon Valley enrichment programs that we’ve witnessed for the past eight years further privatize the gains among a small group of tech industry elites while socializing the losses across American society. Until Silicon Valley demonstrates a real interest in offering solutions that create economic opportunity for all Americans, we urge you to take their self-serving recommendations with a grain of salt. END LETTER












[11] Ibid at 10, Page 11

[12] Ibid at 10, Page 20

[13] Ibid at 10, Page 11

[14] Ibid at 10, Page 13

[15] Ibid at 10, Page 14

[16] Ibid at 10, Page 14

[17] Ibid at 10, Page 15

[18] Ibid at 9, Page 15



[21] Data gathered from sources including corporate websites, Wikipedia, and news sources.