GINGRICH REVOLUTION
The second annual PFF conference that summer of 1995 showed how high the scrappy little think tank’s standing had vaulted in Gingrich’s Washington. The conference had left muggy Atlanta for the mountain air of Aspen, summertime playground of the powerful and rich. The halls overflowed with corporate lobbyists hoping to gauge what the Speaker might be thinking about the next big tech issue on the docket: The Telecom Revolution—An American Opportunity. So ran the title of that year’s conference and its accompanying white paper, taking advantage of the fact that the telecom bill that the White House had brought to the Hill at the start of 1994 hadn’t gone anywhere, shelved by recalcitrant Democrats who didn’t like the idea of letting broadband Internet companies operate on a more open playing field. Now that the old lions had been knocked off their committee-chair pedestals, Gingrich planned to go much, much further. “We should be driving for as little regulation as possible,” he declared. The FCC would turn into a dinky office in the White House. The many-layered governmental bodies controlling the rules of the Internet would go away.
Inspiration for Gingrich’s approach, he said, came from his understanding of the computer hardware and software industries, a field of entrepreneurial dreams made possible because they developed free from burdensome federal regulation. Silicon Valley happened because Washington “got out of the way,” Gingrich later explained matter-of-factly to Wired reporter John Heilemann. “I think it’s pretty clear we’re at a point where we ought to just liberate the market and let the technologies sort themselves out.” A favorite proof point for Gingrich was the thirteen years and millions of dollars the U.S. government spent trying to prove IBM was a monopoly; all for naught, as the technology world sorted out the winners and losers on its own.8
The PFF conference vibe echoed Gingrich’s “get out of the way” sentiment. Silicon Valley had been grumbling about the bureaucracy ever since Dave Packard’s anti–Great Society jeremiads at the Palo Alto Rotary Club in the 1960s, and the Vietnam-era Homebrewers had taken the dyspeptic antigovernment rhetoric to an even higher plane. Yet the talk by tech emissaries in Aspen was more sharply pitched than it had been in a while. The federal government was “irretrievably clueless,” said John Perry Barlow. The Internet would break all the rules of politics, of commerce, of everything. In the online marketplace, predicted Esther Dyson, “only the good stuff will survive.”9
Silicon Valley’s free-market wing was thrilled by the changeover in Washington. The founding generation of venture capitalists and chipmakers remained unwaveringly Republican, and some of the new stars were as well. “The U.S. has got to get back to privatization,” said Scott McNealy, “to move the economy back into the private hands.” Plus, McNealy smiled, he liked Gingrich’s style, which “makes me look like a diplomat.”10
The Silicon Valley’s techno-liberals weren’t any more enamored of government than the right-wing deregulators were, but they despaired at how corporate the entire business had become. A crisis developed within the EFF, which even before the Gingrich revolution was relying on hefty corporate donations from the likes of AT&T and IBM as well as Microsoft and Apple. “I’ve written them off,” said Cypherpunk co-founder Timothy May of the EFF. “They don’t represent my interests.” Even those who weren’t troubled by the corporate money were frustrated. They’d signed up to change the world, not attend endless meetings with Deputy Assistant Secretaries in the Commerce Department.11
By September 1995, the iconoclastic Speaker was getting all kinds of good high-tech press—Barlow interviewed him for the inaugural issue of John F. Kennedy Jr.’s glossy monthly George—and the Vice President’s White House staff were fuming. Gingrich was unperturbed. “The model Gore is trying to build is a futurist vision of the welfare state. He’s repainting the den; I want to build a whole new house. My project, frankly, is to replace his world.”12
THE DECENCY PATROL
Meanwhile, Senator James Exon looked at this new online landscape, and all he saw was smut. The Nebraska Democrat had grown alarmed by the tales he’d heard of the pornography and criminality that filled the Internet’s dark corners, from X-rated websites to the online copy of the “mayhem manual” that domestic terrorist Timothy McVeigh had used to blow up the federal building in Oklahoma City in the spring of 1995.
Indeed, Exon was right: porn was the early Internet’s biggest growth industry, “one of the largest recreational applications of users of computer networks,” reported one widely-read survey. BBSs and Usenet groups—the information superhighway of the 1980s that had grown like a weed as online access expanded in the early 1990s—were now saturated with pornography, as more bandwidth allowed users to download and share images and videos with ease. Worst of all, it was all unregulated, right where children could stumble across it at any time. The White House might be trumpeting the need for an information superhighway, but American parents hesitated to buy home Internet service because their kids “could get bombarded with X-rated porn, and I wouldn’t have any idea,” as one Chicago-area mother put it.13
As public anxiety rose about the real and perceived dangers of online content, others joined Exon’s chorus. The Christian Coalition, Washington’s most powerful Religious Right lobbying group, had made “Internet decency” a major plank of its 1995 platform. Other religious conservatives on Capitol Hill pushed hard for a clampdown on online content.
As Congress continued its debates on telecommunications reform that summer, Exon proposed a rider: a “Communications Decency Act” that would impose severe fines, even jail time, for creators of online material deemed “obscene, lewd, lascivious, filthy, or indecent.” With this Victorian phrasing, the pipe-smoking Senator ignited a political firestorm. The CDA was censorship with the broadest brush, his critics howled, putting bureaucrats in charge of making subjective judgments about online content, and squelching free speech in the process. Washington already had been consumed with questions about keeping media G-rated for children; Al Gore’s wife, Tipper, had led a successful push to put warning labels on pop music with explicit lyrics, and the final telecommunications bill rated television shows and placed a “V-chip” in cable boxes to allow parents to regulate what their children saw. Exon’s proposal, however, was far tougher, and to the horror of tech companies and free-speech advocates, it passed the Senate with a thundering bipartisan majority of 86 to 14.
On nearly every other issue, Newt Gingrich lined up on the side of the Religious Right, but here he was firmly with the defenders of cyber-liberties. “I don’t think it’s a serious way to discuss a serious issue,” the Speaker declared. He promoted another bill, the “Internet Freedom and Family Empowerment Act” (a made-for-1995 title if there ever was one). The measure reflected what the tech community wanted to see: responsibility would lie with industry, not government, to develop content standards and filtering software. Even these earnest promises of self-regulation weren’t enough. Washington had veered right, family values were riding high, and an election year was right around the corner.
Instead of Gingrich’s counter-proposal, Exon’s more stringent, interventionist CDA remained as a rider on the final version of the Telecommunications Act that passed Congress with overwhelming support and landed on Bill Clinton’s desk in early 1996. Too many other things of importance were in the telecom bill for Clinton to say no. On the day it went into effect, Internet companies registered their cyber-protest by taking tens of thousands of screens dark. And almost immediately, the CDA was in court with a challenge to its constitutionality that was supported by everyone from the ACLU to Microsoft. By summer, its most restrictive provisions had been thrown out. But one thing stayed in: a provision, placed in the depths of the CDA as it was being hashed out in conference committee, that no Internet provider or platform would be considered the publisher or speaker of any information placed on its site by a third party.14
Because of this, the CDA ultimately had an immense impac
t—but not in the way that Senator Exon or the Christian Coalition ever imagined. By freeing Web platforms from liability for content on their sites uploaded by third parties, the Supreme Court ruling not only was a major victory for the tech companies of the dot-com era, but it was a massive win for the giant social media platforms yet to come.
By 1997, cyberspace had become the glorious next frontier proclaimed by the EFF and by the Magna Carta. More than fifty million Americans were online. Search engines were buzzing, sites proliferated, and surfing the Internet had become a daily ritual. With the technologies for secure credit card transactions now in place, e-commerce was taking off at last. Millions were pointing and clicking and buying, moving billions’ worth of product through cyberspace. And for all Exon’s efforts, nothing had stopped the rising tide of dirty content. Porn remained the Internet’s biggest revenue producer of all.15
CHANGING OF THE GUARD
Amid this flurry came a somber milestone: the death of David Packard in 1996, at the age of 83. He had continued to live in the ranch house he and Lucile built in Los Altos Hills in 1957, an old-school contrast to the flash and pop of the Valley’s fully-vested swagger. Leaders from the business and political worlds filled Stanford’s Memorial Church to capacity on the last Friday in March, paying effusive tribute to a man who had done so much and influenced so many. A quietly grieving Bill Hewlett sat in the front row after arriving in a wheelchair. The printed program featured a photograph of Packard riding a tractor, simply captioned “Dave Packard, 1912–1996. Rancher, Etc.”16
The death of the low-key titan coincided with changes in the Republican Party that Packard had supported so faithfully throughout his career. In the sharply partisan age of Clinton and Gingrich, the distinctive strain of liberal Republicanism practiced by Northern Californian politicians like Pete McCloskey and Ed Zschau was harder to find in Washington.
Silicon Valley Republicans bucked the tide a little longer than most. Ed Zschau had returned to industry after his 1986 Senate defeat, but he remained deeply engaged in spotting and promoting the next generation of political talent. Additional help came from real estate mogul Tom Ford, the man who had built the venture-capital corridor along Sand Hill Road, who founded the Lincoln Club, a fundraising organization for moderate GOP candidates. One of those promoted by Zschau and Ford was Tom Campbell, a former economics professor elected to Congress in 1988. Another was Becky Morgan, a Palo Alto school board member who served three terms in the State Senate.
Yet both Campbell and Morgan became increasingly rare breeds in a world of California politics that swung more liberal as national politics became more conservative. Campbell ran for U.S. Senate in 1992 and lost the primary, and the winner of the general election in the fall was Barbara Boxer, a Democrat from the liberal stronghold of Marin County. The next year, a term-limited Morgan returned home to lead a regional economic development group, Joint Venture Silicon Valley. By 1996, the most visible—and most closely tech-allied—local politicians were now Democrats. In a telling sign of how much things had changed, Ed Zschau joined an exploratory effort to form a third national party.17
Meanwhile, the roar of the high-tech Democrats got louder. Three weeks before Packard’s Stanford memorial service, on March 9, Air Force One flew the President and Vice President to the East Bay town of Concord for “NetDay,” a one-day push to wire California’s public schools to the Internet. Thousands of Silicon Valley engineers spilled out of their offices and into classrooms to unroll coaxial cable and install routers. White House press staff ushered photographers into a high school library to capture a khaki-clad Clinton up a ladder, gamely threading wire through the ceiling tiles. The event had been the brainchild of Sun Microsystems chief scientist John Gage—he who had coined the phrase “the network is the computer”—and it was a high-octane kickoff for another program affixing the Clinton White House to the Internet-era Valley’s shooting star.
The first year of Republican control on Capitol Hill had been a bruising one for the White House’s agenda, particularly when it came to domestic social programs. Health care reform was dead. Another signature issue, welfare reform, had been pushed sharply to the right. Telecommunications reform had devolved into a squabble among carriers who wanted to hold on to local monopolies, chipping away at the grand hopes that deregulation would bring prices down and drive Internet access up. Clinton was looking toward reelection, and Gore was quietly laying the groundwork for a run in 2000. Both needed an issue that would appeal to core Democratic constituencies as well as have swing-voter appeal.
With the 1996 election less than a year away, the promise to wire every school in America hit just the right note. Who could object to kids and teachers getting access to the wonderful world of the Web? The government would provide subsidies and a bully pulpit; the private sector would bring the infrastructure and the computers and a discounted “e-rate” on telecommunications services. Educational technology, or “ed tech,” was the perfect blend of Great Society and New Economy. It was something, the policy staff told Clinton and Gore, that could become “a defining issue for you and for the nation—now, through the State of the Union address, the 1996 campaign and the second Clinton-Gore term.”18
“Every single child must have access to a computer, must understand it, must have access to good software and good teachers and, yes, to the Internet,” Clinton told the NetDay crowd, “so that every person will have the opportunity to make the most of his or her own life.” With unintentional irony, the program kicked off in a post–Proposition 13 California, a prime example of what happened when public education was starved for general revenue: since 1978, property tax caps had made per-student school spending plummet, leaving school buildings crumbling, teachers underpaid, and little money for anything beyond the basics. Bringing schools up to par required Herculean amounts of parental fundraising, creating a disconcerting contrast between affluent districts where parents had time and money, and poor districts where they didn’t.
Enlisting private-sector money and sweat equity, the presidential “electronic barn-raising” of NetDay was the mother of all PTA fundraisers. The whole thing spoke volumes about how much these leaders were hanging their hopes on Silicon Valley technology as the cure for the inequities in education—and for the greater divides of an increasingly fractious nation. Computers in classrooms were the Democrats’ moon shot and Great Society, updated for an age when government did less and information technology did more. “Technology,” proclaimed the president that day in Concord, “is going to liberate Americans and bring them together, not hold them back.”19
THE LITIGATOR
John Doerr applauded the sentiment, but he had other things on his mind that spring. The soaring performance of young and profitless dot-com companies was forging new economic rules of the game, and making VCs like him very, very rich. But the hot market had opened the floodgates in another direction: lawsuits from shareholders who’d taken a bath when a stock suddenly dipped. California-based companies were particularly vulnerable, as state law had a relatively low bar for bringing such suits. In the vast majority of these cases, the alleged wrongs wouldn’t hold up to close scrutiny—people ran risks when they played the stock market, after all—but companies often settled to save the cost and hassle of going to court.
The king of California shareholder lawsuits was Bill Lerach. Scotch-swilling, foul-mouthed, and blisteringly effective, the San Diego litigator had filed hundreds of these actions, and they had made him a very rich man. Getting “Lerached” had become one of the Valley’s great headaches even before the Internet boom, and it only got worse once the dot-com hits started coming. The suits seemed especially outrageous due to the roller-coaster nature of the 1990s market, but companies would settle 90 percent of the time just to get Lerach out of their hair. As they thought of the curly-haired trial lawyer luxuriating in his clifftop La Jolla estate, Valley executives were reminded of yet another reason to hate Souther
n California. Wired summed up Silicon Valley’s sentiments in the title it affixed to a 1996 profile of Lerach: “Bloodsucking Scumbag.”20
Bill Lerach also happened to be an extremely generous donor to Democratic politicians. Trial lawyers like him gave early and often, and along with their checks came exhortations to preserve the right of shareholders to sue. Class-action suits were a matter of the people versus the powerful, the lawyers would argue. Many other core Democratic constituencies—labor unions, consumer rights groups—agreed. This was about justice for the little guy: the small investor, the injured victim, the wronged consumer. Wasn’t this what the Democrats were supposed to be about? Unsurprisingly, when legislation came up to make it far more difficult to bring personal-injury lawsuits—as it did on Capitol Hill in the spring of 1995—votes broke down along party lines. The Republicans were on the side of the public companies. The Democrats, by and large, were on the side of plaintiffs and their lawyers.
Of the many headaches that the Gingrich revolution had created for the Clinton White House, this was one of the most politically fraught. Two important allies were on different sides of the issue. One (tech) came with the keys to the future economy. The other (the trial lawyers) came with buckets of campaign cash. As the president agonized, the titans of tech checked out the view from the other side, meeting with Republican lawmakers and reconsidering their somewhat recent conversion to the Democratic cause. Despite the personal entreaties of his Valley loyalists, Clinton vetoed the lawsuit bill. Congress promptly overrode him. It was a win for tech, a loss for Clinton, and an ugly crack in the White House love affair with Silicon Valley. Larry Ellison was so fed up that he initially refused to endorse Clinton’s reelection, and wrote a big check to Republican challenger Bob Dole.21
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