http://www.washingtonpost.com/blogs/post-tech/post/obama-zuckerberg/2011/04/20/AFQd7YDE_blog.html

04/20/2011

Obama, Zuckerberg meeting highlights importance of Silicon Valley

By Cecilia Kang

PALO ALTO, Calif. -- President Obama and 26-year-old Facebook chief Mark Zuckerberg, a billionaire college dropout, may seem like an unlikely duo.

But when the two took the stage together Wednesday to talk about the nation's poor fiscal health and plans to cure it, the pairing highlighted the increasing interdependence between the president and Silicon Valley.

Obama was introduced to much of the nation through Facebook and Google's YouTube, companies he says are bright spots in the economy. They produce the kinds of jobs that he believes will maintain the nation's economic edge in the future.

"The administration recognizes that companies like Facebook and so many other tech companies are at the forefront of job creation and hold the key to economic recovery," said Ray Ramsey, president of Silicon Valley trade group TechNet. "The administration also understands they can't take the Valley's support for granted and their actions are showing this."

To understand the importance of high-tech firms and Obama's association with them, it's only necessary to look at the tech-heavy Nasdaq stock index, which on Wednesday hit its highest level since last October.

Meanwhile, Facebook needs to have good relations with Washington regulators and lawmakers. It is under increased scrutiny by federal officials over how its social networking business -- where information is the currency for business online -- could curtail the privacy of consumers.

As it tries to expand globally -- particularly in China -- Facebook's ambitions may also rub against a U.S. diplomatic agenda that aims to bring to the rest of the world an ethos that opposes censorship and endorses online activism.

(Washington Post Co. Chairman and Chief Executive Donald E. Graham sits on Facebook's board of directors, and the newspaper and many Post staffers use Facebook for marketing purposes.)

Facebook has promoted Obama's visit as a major honor, a validation of the firm's influence as a communications platform. The White House has boasted that the audience it will reach through Facebook's live video broadcast is comprised largely of middle class, typically younger Americans who would be harder to approach through traditional media.

Even increased government scrutiny of Facebook and other Bay Area firms such as Twitter and Google is unlikely to dampen the mood surrounding Obama's visit here. He'll attend three San Francisco fundraisers to tap into deep pockets of Democratic donors in the Bay Area.

They like his promise to bring mobile high-speed Internet connections to all Americans, and they tend to support him because of their individual political leanings, tech lobbyists and political strategists say. And they want to have more exposure to the president whose administration says Internet privacy rules are needed.

"There has been tremendous support for Obama and in part that's because he understands the Internet and appointed people who have technology expertise. But policy-wise, business leaders approach those policies like libertarians," said Markham Erickson, a tech lobbyist and partner at Holch & Erickson in Washington. "There has been a view among tech companies that you can invent or design around what Washington does."

Some tech lobbyists say privately that they are disappointed that Silicon Valley firms find themselves on the defensive with the Federal Trade Commission on the privacy question. Meanwhile, they believe the bottom-line issues where they want government help, such as patent reform and tax repatriation, aren't being addressed fast enough.

"There is some disappointment on bottom-line tech policies," said one tech lobbyist who spoke on the condition of anonymity because he was not authorized to do so by his tech clients. "The stuff he's accomplished on tech policy so far won't directly impact these Internet firms today and maybe not for years."

Facebook, just seven years old, is responding to the increased government focus on its company by expanding its lobbying operations. Still small by K Street standards, the company's Dupont Circle office grew from one person three years ago to 10 today, and it has hired outside lawyers as consultants. A source familiar with the company's thinking said it has plans to grow even more.

There are a number of former high-level White House officials on Facebook's staff: former Obama White House economic adviser Marne Levine heads its policy shop and former Bush administration aide Cathie Martin is also on its policy team.

Facebook wants to enter China and it is facing criticism for its approach to Internet policy abroad. Google and Twitter have actively protested government regimes that require censorship and worked with State Department officials to help dissidents protest and organize against repressive regimes such as in Iran and Egypt. But Facebook has a more nuanced approach, saying it abides by the policies of local governments.

Zuckerberg, who wasn't personally engaged in Obama's 2008 campaign like Facebook co-founder Chris Hughes, joins his business contemporaries relatively late. He and Apple CEO Steve Jobs only began to interact more closely with Obama in the past year. In February, both were part of an exclusive presidential dinner with a handful of CEOs, hosted by Kleiner Perkins partner John Doerr.

Obama, meanwhile, has nurtured strong high-tech relationships throughout his tenure. Facebook's chief operating officer, Sheryl Sandberg, joined Zuckerberg and the president at the town hall. She sits on Obama's council of economic advisors. AOL founder Steve Case heads his Startup America initiative to help small business growth. Eric Schmidt of Google, Cisco CEO John Chambers, and Intel CEO Paul Otellini regularly attend meetings at the White House as economic advisers.

Those leaders bring expertise and money to economic initiatives. Intel, Microsoft and IBM have donated hundreds of millions of dollars to science education programs. They also widen Obama's campaign network with big donations and lucrative events.

He will attend an exclusive fundraising dinner at the home of Marc Benioff, chief executive of Salesforce.com, a cloud computing company that provides business software applications on-demand. That firm on Wednesday saw its stock rise 8 percent.