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What’s Good for Facebook…

Mark Zuckerberg's barely concealed political ambitions are an extension of his company's lobbying efforts.

Mark Zuckerberg in 2008. kris krüg / Flickr

Let’s dispense with this fiction that Mark Zuckerberg isn’t running for some kind office. He’s running for office.

There is, of course, his well-publicized, impeccably documented, and sumptuously photographed apple pie tour of all fifty states, which, as most people will tell you, is something all thirty-three-year-old billionaires suddenly decide to do with no ulterior motive. But even beyond that, we also know Zuckerberg engineered the company’s rules so that he could remain in control of Facebook even while serving in government indefinitely. The endgame here is not particularly hard to figure out.

But contrary to popular belief, if Zuckerberg is somehow elected president or takes another kind of government position in a few years time, this won’t be the first time he’ll be wielding influence over people’s lives through the halls of power. Zuckerberg has been doing so for years through Facebook’s extensive lobbying efforts.

The vast bulk of Facebook’s lobbying has been concentrated on what you might expect. These are issues that directly affect the company’s operations and its interaction with government, such as bills related to the government’s access to data on Facebook’s customers and consumer protection, cyber-bullying legislation, and topics like privacy, voice and facial recognition software, and government surveillance.

But Facebook has also on numerous occasions departed from this set of issues to lobby on a host of others, from corporate taxes to business regulations. Facebook’s lobbying history gives us a good indication of what kinds of things a President Zuckerberg — who, let’s not forget, will almost certainly decide not to divest from his company, thanks to Trump’s precedent — might do.

Keeping the Coffers Filled

Over the past six years, Facebook has hired multiple lobbying firms and spent tens of thousands of dollars lobbying Congress on issues it describes in its lobbying disclosures as “corporate tax policy,” “corporate tax issues,” “international tax policy,” and “corporate tax reform,” as well as the “effect of corporate tax deduction proposals on the tech sector.” The disclosures don’t get more specific than that, so unfortunately we don’t know for sure what exactly Facebook was pushing for when it comes to the subject of corporate tax. But it’s a safe bet it wasn’t for a higher tax bill.

Facebook, as is well-known, is a $500 billion company, and like most massive multinational corporations, it’s eager to keep its tax bill as low as humanly possible. For years it used the “Double Irish” method to dodge taxes in the US and other countries (until the Irish tax rule allowing it was phased out in 2015) while stashing half a billion pounds in the Cayman Islands, among other tax evasion methods.

In this way, the company racked up a comically small tax bill in the countries where it operates. In the UK, it paid a corporate tax bill in 2011 of £238,000 on £175 million worth of earnings, which was actually remarkably high. In other years it paid £4,327 and £3,169 — the latter being less than a London schoolteacher’s tax bill. In fact, if anything, it’s made money from the government, claiming an £11 million tax credit in 2015. And it’s a similar story in the US: using a bit of accounting wizardry, the company has often avoided paying tax altogether. It has allegedly worked to dishonestly lower its tax bill, and claimed hundreds of millions of dollars worth of tax refunds. It has resisted efforts by both the IRS and British tax authorities to reclaim back taxes.

So in all of Facebook’s tax lobbying efforts over the past six years, it’s safe to assume the effort has been to lower the tax burden for itself and companies like it — or at least keep things as they are.

The company has also lobbied on specific bills. Some were specifically about tax breaks, like the EXPIRE Act (extending dozens of expiring tax credits for individuals, businesses, and the renewable energy industry.) Or the American Research and Competitiveness Act, which would have made an R&D tax credit permanent. Or the Tax Increase Prevention Act, which extended a variety of tax breaks to cover the year 2014 (the bill ultimately passed).

Perhaps most significant was the lobbying Facebook did in 2013 on “tax issues including stock options; and CUT Loopholes Act.” The company spent a whopping $2.45 million in that year’s first quarter alone lobbying in part on this subject.

It’s not hard to see why. The company has long manipulated the tax rules around stock options to further drive down its already miniscule tax bill. The reason the company was able to avoid paying taxes on its US profits and claim a $429 million refund in 2012 was because it leveraged the tax deductibility of stock options exercised when the company went public, reducing its tax bill by $1 billion, according to Citizens for Tax Justice. The group estimated Facebook’s total tax reductions using this break at $3.2 billion.

Zuckerberg’s own compensation played a role in this. Like a number of other super-rich CEOs, Zuckerberg takes home a salary of $1, explaining: “I’ve made enough money. At this point, I’m just focused on making sure I do the most possible good with what I have.” But his actual motive was probably less altruistic: Zuckerberg made $3.3 billion by exercising his stock options, which he could use to pay off his personal tax bill. Facebook could then deduct that sum from its own tax bill.

The CUT Loopholes Act, which Facebook was lobbying on, was introduced to stop this very practice. Its sponsor, former Michigan senator Carl Levin, complained that by using the loophole, the company “may not pay any corporate income taxes on its profits for a generation.” Naturally, the bill attracted only one co-sponsor and went nowhere.

It’s a shame, because Facebook isn’t the only company to make use of the loophole: according to Citizens for Tax Justice, companies have used it skip out on an average of $13 billion of taxes a year. Facebook’s lobbying likely helped ensure they could keep doing so.

Smartest Guys in the Room

Facebook has also lobbied on bills related to scaling back regulations and “red tape.” One such bill was the AGREE Act, introduced by Marco Rubio, which tried to exclude certain businesses from Section 404(b) of the Sarbanes-Oxley Act.

That might seem like a pretty obscure hill to die on, but its relatively dull-sounding name obscures its importance. Sarbanes-Oxley was passed in the wake of the Enron scandal — where executives used dodgy accounting to hide the company’s increasingly gargantuan losses and bilk clueless investors — to protect investors from such rank dishonesty. The law’s Section 404(b) required companies to have a public accountant look over the company’s evaluation of its internal control over financial reporting and attest that it’s adequate, thus preventing future corporate fraud.

While seemingly innocuous, it had long been a target of conservatives, with David Addington — best known as the Dick Cheney legal adviser who helped institute a global torture regime and advance the idea of the president as lawless emperor — arguing at the Heritage Foundation that it should be repealed to “help create jobs.”

Facebook also lobbied on the Red Tape Reduction and Small Business Creation Act of 2012, which froze what its supporters called “economically significant regulations that harm the economy” as long as unemployment remained at 6 percent or above. The bill also permanently blocked administrations from issuing such regulations during a lame duck period, and other measures meant to slow the advance and effectiveness of regulations.

Given that the company has historically chafed against government regulations, it’s not exactly outlandish to think it would have supported such legislation. But such sweeping laws could have some widespread consequences: as the National Resources Defense Council pointed out in a post about the Red Tape Reduction and Small Business Job Creation Act, the bill would have blocked the EPA’s then-new pesticide regulations.

Let's Make a Deal

Free trade deals are another area where Facebook has spent its fair share of lobbying time and money. “Free trade agreements” and “trade promotion authority” were listed among the issues it lobbied on in the fourth quarter of 2015, when it spent nearly $2 million on lobbying.

This would likely have been directed at the Trans-Pacific Partnership (TPP), the unpopular and quite terrible “free trade” deal that was being pushed by Obama at the time and turned into a major election issue through 2016. The trade promotion authority, also known as fast-track authority, was a measure advanced by Obama that would have forced a simple up-or-down vote on the agreement, preventing it from being filibustered or amended, thus making it easier to pass.

After keeping mum on the issue for some time, the Internet Association — the trade group that counts Facebook, Google, and Amazon among its members — endorsed the TPP, shortly after this lobbying by Facebook took place. The agreement directly benefited these companies by giving data the legal protections of goods in international trade law. But more fundamentally, it also benefited them through provisions like the investor-state dispute settlements, which allow corporations to take governments to court over new regulations that impacted their bottom lines.

Facebook’s lobbying on the matter was probably driven by its direct interest in the particular provisions of the deal that benefited it. But, much as with other legislation it lobbied on, the TPP would have reverberated far beyond the internet, making medicines more expensive and harder to access for millions of people, insulating banks and other financial firms from regulation, and more.

Perhaps Facebook as a company, and Zuckerberg as an individual, have no firm views on those other issues. But corporate politics are about log-rolling: industries get their lobbying priorities passed by agreeing to support the priorities of other industries. And a President Zuckerberg, as the steward of the multibillion dollar company he founded, will have to consider that political reality whenever the business policy agenda is on the table.

What's Good for Facebook

Anyone heartened by Facebook and Zuckerberg’s past resistance to government attempts to pry into tech companies’ data should be cautious. Such resistance should be seen more in the context of the company’s aversion to government meddling than its concern for privacy; it’s not exactly respectful of its customers’ privacy when the government isn’t involved.

Outside that area, Facebook’s lobbying — of which this article is by no means an exhaustive account — offers a preview into the kind of vision a President or Governor Zuckerberg might bring to politics, and it’s a decidedly neoliberal one: lower tax burdens for corporations, lower regulatory hurdles, and trade deals that bring benefits for the wealthiest at the expense of the few.

And that’s the point. Facebook is a business — a particularly massive and powerful one, and one that its CEO will remain bonded to, both financially and emotionally, if and when he comes to power. Much as Facebook now lobbies in its own self-interest, it’s naive to believe that a President Zuckerberg won’t continue that trend upon ascending to office.

Zuckerberg’s political ambitions are an extension of the company’s lobbying efforts. And after all, as Zuckerberg likely tells himself as he practices eating toast like a regular Joe, what’s good for Facebook is good for the country.