Interesting article about AOL's clout:
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AOL Tries to Interface With Politics
By Dan Eggen and Craig Timberg
Washington Post Staff Writers
Sunday, March 14, 1999; Page C1
America Online Inc. spent its first 14 years largely aloof from the muck of public policy, too busy becoming the world's largest Internet provider to spend much time on governmental debates.
But now the Dulles-based company, a colossus of the New Economy, is starting to play politics.
The firm has landed tax breaks for itself, won new legal controls on junk e-mail and has become active in groups aimed at swaying the legislative debate and influencing political campaigns. As the company puts down deeper roots in Virginia soil, AOL representatives say they want to have a stronger voice in local matters that affect the company's work force and on larger issues that have an impact on its bottom line.
One of the firm's closest friends in these and other battles is Virginia's tech-happy Gov. James S. Gilmore III (R), whose growing friendship with AOL Chairman Steve Case is built on a shared faith in the potential of the Internet – and a fear that new taxes could threaten it.
"They are the big gorilla that's just starting to wake up," said Del. Kenneth R. Plum (D-Fairfax), chairman of the Virginia Democratic Party. "Suddenly they're a player, and we have to pay attention to them."
The company's new embrace of politics was clearly evident this year at the Virginia General Assembly in Richmond, where AOL hired its own lobbyist for the first time. The company helped shepherd a slate of successful bills that revamped the state's laws on the Internet and earned AOL $18 million in tax breaks on its newest computer center, which was unveiled last week in Prince William County.
At the same time, Case and other top AOL executives have assumed leadership roles in numerous business and technology groups in Richmond and Northern Virginia. The company also is getting involved in broader issues, such as taxes and sprawl, affecting the lives of its employees and communities where it does business.
"While we are obviously in a fiercely competitive business, in the last year we've been able to lift our heads up a bit," Case said in a recent speech to local technology executives. He said that the company wants to "play a larger role" in local affairs and that its officials are increasingly involved in organizations that will "strengthen the community and attract new investment to the region."
It's a remarkable turn of events for a firm more accustomed to thinking globally than acting locally. One of AOL's chief executives, human resources head Mark Stavish, even made a successful bid to be chairman of the Loudoun County Chamber of Commerce; his term begins in 2001.
"AOL has made a conscious decision over the past two years to see themselves as a Virginia company," said Douglas Koelemay, lobbyist for the Northern Virginia Technology Council, a trade group of 1,100 companies including AOL. "It's almost as though their senior executives have decided to put down roots and consider themselves Virginians."
AOL is simultaneously raising its profile on Capitol Hill. The company announced last month that it is forming CapNet, a political action committee, with other Washington area technology firms. The PAC will funnel campaign contributions to federal candidates who support policies favoring Internet companies. It also has organized Open Net, a group that wants the Federal Communications Commission to permit outside companies – such as AOL – to provide high-speed Internet services through cable television systems.
These and other moves are part of a concerted effort by AOL executives to become publicly involved in local and national affairs, according to company officials and others.
"There is a maturation going on, not just with AOL, but with other companies across the spectrum as the new age of e-commerce and communications comes into being," said James W. Hazel, the veteran Richmond lobbyist who was hired by AOL this year.
"AOL is getting involved as a Virginia business and as a major Internet provider not just for themselves, but as a leader of an entire segment that is leading the charge in the new economy."
The company's sheer heft gives it a prominent seat at the table. Written off for dead by some critics just a few years ago after customer demand overwhelmed its capacity, AOL now has 16 million subscribers and, as of Friday , a dizzying stock market value of almost $90 billion. The company, which bought rival CompuServe Inc. last year, is in the process of acquiring Netscape.
The company's growth has not gone unnoticed in Richmond, where both political parties eye AOL as a potential gusher of political cash. The company has given little to candidates so far, commanding attention mainly though its key role in Virginia's booming economy, but AOL executives said they won't be shy about stepping up contributions in the future.
"AOL itself is neither Democrat nor Republican," said George Vradenburg III, a former Hollywood lobbyist recently hired as AOL's senior vice president for global and strategic policy. "The company will be supportive of anyone with good ideas on Internet policy."
Gilmore and Case met for the first time last June, when the governor traveled to the AOL headquarters in Loudoun County to invite Case to join his Commission on Information Technology, a committee that will help chart Internet policy for Virginia.
Case obliged, but not before noting that Gilmore had already caught his eye with two early moves in his administration: He had appointed the state's first Secretary of Technology and had bucked most of his colleagues at the National Governors Association conference by opposing Internet taxation.
Government officials across the country are eager to get a bite of the new online marketplace, which generally isn't subject to local sales taxes. AOL and other Internet players say taxes could strangle growth.
That perspective is embraced by Gilmore, who is slated to chair a congressional advisory committee on the topic, and many other Virginia officials. They argue that taxing the Internet could do more harm than good for Virginia, which benefits from new income taxes and other revenue pouring into state coffers thanks to the growth of AOL and other Web-related firms.
"We have to be very cautious about what kind of policies we have," Gilmore said last week. "We ought to open up our minds and think fresh about exactly what is going to be appropriate tax policy for the 21st Century in light of new innovations like the Internet."
Such technology-related topics are clearly the nexus of AOL's political message. But the company is also wading into broader matters of state policy.
Case and other officials, for example, have joined with many Northern Virginia politicians in arguing that the state needs to give localities a portion of sales or income taxes to help them keep up with rapid growth. The company also is lending support to a group, that opposes giving localities more power to limit development.
AOL's blossoming interest in such local issues is directly related to its growing presence in Northern Virginia. The company just announced last week that it was nearly doubling its capital investment in the region, and plans to hire as many as 1,800 new workers in Loudoun and Prince William counties.
That means more employees who send children to local schools, drive on local highways and take an intimate interest in local affairs.
"We believe we'll be a stronger company if the ecosystem in which we live is rich and strong and diverse, and if the quality of life is good as well," Vradenburg said. "The health and well-being of Virginia is very much of interest for us."
[here's a quote which appeared with the story:]
"AOL itself is neither Democrat nor Republican."
– George Vradenburg III,
AOL senior vice president
© Copyright 1999 The Washington Post Company
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