Qualcomm Outspent Broadcom About 100 to 1 in Washington Lobbying

Share on Facebook Tweet Snapchat Share Reddit Comment
Qualcomm Outspent Broadcom About 100 to 1 in Washington Lobbying

Well before Qualcomm confronted a hostile takeover bid from Broadcom, the San Diego-based chipmaker laid the groundwork for support in Washington by outspending its rival by nearly 100 to 1.

Qualcomm spent $8.3 million (roughly Rs. 54 crores) in 2017, while Broadcom spent $85,000 (roughly Rs. 55 lakh), according to federal lobbying disclosures. Qualcomm disclosed spending on issues including immigration, international trade, taxes and antitrust, among others, showing how it amassed clout in Washington. It's unclear how much of Qualcomm's money paid for lobbying against Broadcom's bid.

Qualcomm spent about $2 million (roughly Rs. 13 crores) a quarter, according to the disclosures, increasing slightly in the fourth quarter. Broadcom's unwanted advances started in November. Qualcomm's widespread lobbying operation marked a sharp contrast with the effort made by Singapore-based Broadcom, which instead sought to curry favour with President Donald Trump and offered to move its headquarters to the US. That was in exchange for winning approval for its purchase of Brocade Communications Systems, a substantially smaller deal.

Sen. John Cornyn of Texas is sponsoring a bill to expand the authority of a national security panel to further restrict foreign investments viewed as threats. In February, he wrote to Treasury Secretary Steven Mnuchin saying Broadcom's bid to win control of Qualcomm's board at a March shareholders meeting should be examined by the Committee on Foreign Investment in the US, according to a copy of the letter obtained by Bloomberg.

Treasury chairs the secretive CFIUS panel, which reviews acquisitions of American firms by foreign investors for national security concerns. Six House Republicans sent another letter to Mnuchin March 1, also citing national security risks raised by the deal. Cornyn's office continued to pressure Treasury, noting that his bill, which has bipartisan and full administration support, would put the Broadcom deal under CFIUS jurisdiction without question, according to a person familiar with the matter.

Cornyn has been concerned about the national security implications of foreign investment, with China his primary focus, for some time. FEC records show that neither Qualcomm's employees nor its PAC have been big donors to Cornyn. He's received $12,000 in campaign contributions from them since 2007, a small fraction of the $26.3 million he raised over the same period.

The second-most powerful Senate Republican and six House Republicans came to Qualcomm's defence in the nick of time. The pressure campaign set an unprecedented chain of events into motion, prompting a CFIUS order last week to postpone Qualcomm's shareholder vote and culminating with President Donald Trump's executive order blocking the deal Monday.

Broadcom and Qualcomm declined to comment on their lobbying around the deal.

Just months earlier, Trump had feted Broadcom Chief Executive Officer Hock Tan at the White House, calling his company "a really great, great company" in announcing Broadcom's decision to move its headquarters from Singapore to the US.

As CFIUS moved to delay Qualcomm's shareholder vote, Broadcom sped up its plan to move its headquarters to April from May. That would make Broadcom a US company and sidestep CFIUS's authority. It proved to be too little, too late. Just hours after Tan met with US officials at the Pentagon Monday seeking to salvage the deal, Trump issued the order blocking it.

Broadcom's access to the president may have led it to underestimate what was needed to win the approval process. When CFIUS came after it, Broadcom launched a last-ditch legal and public relations campaign to try to win support for the deal. Late last week, the company signed S-3 Group, a Republican-allied public affairs and lobbying firm, to help bolster its case, according to a person familiar with the matter.

Broadcom was already working with its own roster of Washington insiders on the deal, including CFIUS expert Ted Kassinger of O'Melveny & Meyers, a former deputy secretary and senior adviser at the Commerce Department. Broadcom had also enlisted communications firms CLS Strategies and Beacon Global Strategies.

Qualcomm, which has been a top-100 lobbying spender in every quarter since the end of 2014, had 19 more lobbyists at the end of last year than the year before, including three former members of Congress, according to a Bloomberg Government analysis. Qualcomm also spent more than Apple, Walmart and Philip Morris International last year.

Broadcom spent most of its $85,000 last year on a Republican strategist based south of Austin, Texas, who was the company's only active lobbyist in the fourth quarter after Broadcom hired him in October. Three more lobbyists at another firm did less than $5,000 worth of lobbying work on intellectual property disputes earlier in the year, according to the disclosures. Before that, the company hadn't disclosed any federal lobbying since mid-2014.

While Broadcom's Tan has won plaudits from investors for his thriftiness, this time it may have cost him his prize as Washington turned against him. The failure to anticipate and navigate the city's changing political currents tripped up Broadcom, just as it was on the cusp of winning the takeover battle. Its nominees for Qualcomm's board were ahead in proxy voting before CFIUS halted that process and Monday's White House order removed them from the nomination slate.

Lobbying strength won't solve all of Qualcomm's problems. The chipmaker is facing an antitrust investigation by the US Federal Trade Commission, which is looking into whether it illegally used its strength in mobile phone chips to charge hefty licensing fees. That action mirrors similar moves around the world by other governments that have cost Qualcomm more than $4 billion in fines.

© 2018 Bloomberg LP


For the latest tech news and reviews, follow Gadgets 360 on Twitter, Facebook, and Google News. For the latest videos on gadgets and tech, subscribe to our YouTube channel.

Honor 7X Android Oreo-Based EMUI 8.0 Beta Update Starts Rolling Out

Related Stories




© Copyright Red Pixels Ventures Limited 2020. All rights reserved.
Listen to the latest songs, only on JioSaavn.com