Out With ALEC, In With Corporations Writing Their Own Laws

As the corporate bill mill wanes in influence, large businesses are taking matters into their own hands.

Out With ALEC, In With Corporations Writing Their Own Laws
Jeff Bezos, CEO of Amazon, arrives for a meeting with President-elect Donald Trump at Trump Tower, December 14, 2016 in New York City.

The American Prospect is a nonprofit, independent magazine
covering public policy and politics. Sludge is re-publishing this article.

It’s long been understood that corporate encroachment into the legislative process is a central feature of American politics. There are plenty of colorful examples of outsize corporate influence dictating the terms, stakes, and language of bills, from Citigroup lobbyists authoring a House bill to secure taxpayer bailouts for risky trades to former Verizon lawyer Ajit Pai rewriting net neutrality laws as head of the FCC. The concept of regulatory capture—when a government agency tasked with regulating an industry actually advances its interests—was coined in the 1970s, and the phenomenon long predates the terminology.

The most recent poster child for this legislative hostage-taking has been the American Legislative Exchange Council (ALEC), a conservative nonprofit that gathers state legislators, corporations, think tanks, and lobbyists to spoon-feed legislators pre-written model bills, which are then implemented, largely at the state level. ALEC has been called a “corporate bill mill,” helping secure favorable state legislation for everyone from Koch Industries to the NRA.

The group has long been a source of consternation and an object of criticism for activists, with its closed-door meetings and cloak-and-dagger approach that has prevented any exhaustive assessment of just how many pro-corporate bills it’s been able to shepherd into law. A 2013 Brookings Institution report found that ALEC model bills are introduced in our state legislatures word for word at a significant rate, have better odds of being enacted into law than most legislation, and are most often linked to controversial social and economic issues. Beyond that, we still don’t know that much about it.

In recent years, however, owing in large part to activist pressure, the world’s largest corporations have begun to abandon ALEC en masse. Alphabet (parent company to Google), Microsoft, Johnson & Johnson, Berkshire Hathaway, and Amazon have all severed ties. Oil giants Exxon, Shell, and BP have also abandoned the organization. Despite public pressure, Koch Industries remains one of the few major entities to refuse to withdraw. At last count, some 115 corporations and 19 nonprofits—a total of 134 private-sector entities—have publicly announced that they cut ties with ALEC. According to the Climate Investigation Center, those departing companies have a combined market cap of some $7 trillion.

That’s the good news. The bad, predictable news is that ALEC’s waning influence and toxic reputation (though its income stream remains considerable) hasn’t meant that corporations are now being shut out of the legislative process. Instead, some of the country’s largest corporations have transitioned into a new era where they’re simply writing their own laws in-house, submitting them directly to governments for implementation.

That’s been Amazon’s new tactic on the increasingly divisive issue of facial recognition. While certain local governments, like San Francisco and Somerville, Massachusetts, have proactively moved to ban the technology, Amazon, which severed ties with ALEC in 2012 as part of a whirlwind PR campaign, has now taken it upon itself to produce draft legislation for the federal government, to settle the debate over how best to manage the technology. Amazon’s facial recognition technology, called Rekognition, is one of the company’s flagship products, and, because of the myriad issues it’s created in terms of constitutional privacy violations and racial bias, one of its most controversial. While police departments and security firms can use the technology in the service of surveillance and interrogation, companies like Amazon can also use it for things like price discrimination, reading facial expressions for cues on enthusiasm and desire, and setting prices based on that perceived likelihood to buy.

CEO Jeff Bezos himself announced Amazon’s turn to drafting its own regulatory laws, in comments made last week at the company’s annual Alexa gadget event in Seattle. “Our public policy team is actually working on facial recognition regulations; it makes a lot of sense to regulate that,” Bezos said. The company will mock up what it thinks the terms of its own regulation should look like, and then forward that on to federal legislators for adoption.

Bezos declined to specify what that legislation would look like, but the likely plan builds off a February blog post from the company regarding Amazon Rekognition. In it, the company insists that every instance where Rekognition proved to be biased or discriminatory was easily explained by user error: “the service was not used properly.” The post goes on to spell out a number of largely nonspecific “guidelines as legislation.”

In the past, this function would’ve been performed by groups like ALEC, with lobbyists taking instruction from a corporate client like Amazon to a closed-door meeting with politicians and other flacks and hammering out model legislation. Amazon is now doing that directly. “I haven’t heard of too many examples of corporations writing their own model bills [in house],” David Armiak, research director of the Center for Media and Democracy, which has done extensive work on ALEC, told me. “But we haven’t seen a company of Amazon’s size in a very long time, if ever.”

Amazon isn’t the only company engaged in what not long ago would’ve been basic governmental activities. For example, in the wake of the recent series of mass shootings involving assault rifles, there was growing public demand to see those military-style weapons outlawed—86 percent of Democrats and even 70 percent of Republicans support an assault weapons ban. Beto O’Rourke announced his support for a buyback program to that effect.

But with a gridlocked Congress helmed by Mitch McConnell, and his Senate majority both ideologically and materially invested in preventing gun control legislation of any kind, it wasn’t the government that moved to legislate or regulate these weapons, it was the manufacturer. In late September, Colt, one of the country’s largest gun companies, announced it would no longer be producing the AR-15 rifle for the consumer market. Granted, this was due to depressed sales, but the regulation had shifted from democratically elected lawmakers to private corporate boardrooms. And if Colt sees a need, they will surely restart the AR-15 factories.

A similar thing happened a day later, when Walmart announced it would no longer sell e-cigarettes, citing a rash of hospitalizations. Normally, such a product ban would be something determined by government—in the case of e-cigarettes, that might fall to the FDA, which recently admitted it acted too slowly on e-cigarettes, some days after Walmart’s announcement. But the twin forces of an ineffective, deregulation-driven Republican Congress and a consolidated corporate class with ascendant power have seen the decision-making process relocated from the halls of Congress to the boardroom.

On its face, none of those actions are necessarily bad. Any move to reduce the supply of guns in the United States is a victory worth celebrating, and addressing the public-health risks posed by the wildly under-regulated e-cigarette market is important. Bezos is correct when he says “it makes a lot of sense to regulate” facial recognition software. But all of these decisions have broad social impacts, and there are risks when they’re made by people without commensurate public accountability. Corporate-driven regulation is done in the interest of the corporation, without public input despite its public impact. That means that it can be changed, or withdrawn, at the whim of an unhappy shareholder or a bad quarter for the bottom line.

One of the central features of the Trump administration has been its push for deregulation—the president famously pledged to repeal two laws for every new one, and has outpaced that vow considerably. Inherent in that is the notion that corporations are sufficiently capable of regulating themselves. But in an age of extreme consolidation of corporate power, where companies like Amazon have begun to emulate government entities themselves, their emboldened willingness to assume governmental functions will grow with them, jeopardizing the viability of democratic rule.


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