The Koch brothers and the Republican Party go to war — with each other

Jon Ward
·Chief National Correspondent

Illustration: Tom Cocotos for Yahoo News

The Republican National Committee’s data arm last year called it a “historic” occasion when it struck a deal to share voter information with the Koch brothers’ rapidly expanding political empire.

It was an uneasy détente between the party committee, which views itself as the rightful standard-bearer for the GOP, and the behemoth funded by Charles and David Koch, which is free of the campaign finance restrictions that bind the RNC and plans to spend almost $900 million in the 2016 election cycle to elect a Republican to the White House.

Party leaders, including the current chief digital officer for the RNC, hailed the deal as an important step forward in the GOP’s attempt to modernize itself.

But after the fall midterm elections, the deal was allowed to expire without being renewed. Since then, relations between the two sides have soured, turning into what one Republican operative described as “all-out war.” Interviews with more than three dozen people, including top decision-makers in both camps, have revealed that the Kochs’ i360 platform for managing voter contacts — which is viewed by many as a superior, easier-to-use interface than what’s on offer from the RNC — is becoming increasingly popular among Republican campaigns.

The RNC is now openly arguing, however, that the Kochs’ political operation is trying to control the Republican Party’s master voter file, and to gain influence over — some even say control of — the GOP.

“I think it’s very dangerous and wrong to allow a group of very strong, well-financed individuals who have no accountability to anyone to have control over who gets access to the data when, why and how,” said Katie Walsh, the RNC’s chief of staff.

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The fight between the RNC’s chairman and the political operatives affiliated with Charles and David Koch over who controls the rich treasury of data on likely Republican voters has raised fundamental questions about what role the party’s central committee — even under the best management — can hope to play in the age of super-PACs. And it raises an even more fundamental question of how you define a political party.

Super-PACs emerged as a major new force in the wake of the Supreme Court’s Citizens United ruling in 2010. They now populate a political landscape that has been radically changed, leaving political parties weaker than they have ever been.

Presiding over the RNC in this new era has been Reince Priebus, who by all accounts has had a successful run as chairman since 2011. He brought the committee out of debt and has been a prolific fundraiser. He has worked hard to reform the party primary calendar to prevent a protracted fight similar to the 2012 primary that exhausts the eventual nominee. He has exerted control over the presidential primary debates, taking a hard line against moderators from media outlets who are perceived to be biased against Republicans, though he is experiencing pushback over his attempts to limit the number of participants in debates. And he has infused the building with young, digital-savvy staffers and elevated the importance of data, analytics and new technologies inside the committee.

Priebus believes the RNC is the proper custodian of the Republican Party’s master file on the nation’s electorate, which is used as a starting point for campaigns, who then use that information to build lists — called voter universes — of the people in a state or district that they want to target for both turnout and persuasion. Volunteers and donors are also targeted for recruitment using such lists.

The core issue, from Priebus’ point of view, is one of loyalty and allegiance. The RNC is a permanent entity, committed to the Republican Party without question. The Koch network is too independent from the party to be trusted with possession of the GOP’s most valuable core assets. If the Kochs — whose political history is steeped more in libertarianism than it is in any loyalty to the Republican Party — decided next week to use their database to benefit only their massive multinational corporation, they could do so.

The RNC, Walsh said, “has one job: to elect Republicans.”

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The Kochs’ political arm, Freedom Partners, which oversees i360, views the issue as one of capability. Koch aides — several of whom used to work at the RNC — want to win elections, and in their view the RNC has inherent challenges to helping the party win. Party committee fundraising is severely limited by federal election law, while building, maintaining and enriching a database is expensive.

Michael Palmer, president of i360, emphasized in an email that his firm is a “private company that provides data, technology and analytical services to dozens of candidates, campaigns and other organizations that promote free market principles.”

“Our clients own their own data and are free to share it as they see fit. We believe that a robust marketplace of political technology and data is a healthy way to advance past the single monopoly model that has failed the Republican Party in recent presidential elections,” Palmer said.

Some in the Republican Party agree with Priebus’ point of view, believing the issue of allegiance to be fundamental. Others in the GOP, even some in highly consequential positions, think Priebus and the RNC are crying wolf. Senate Majority Leader Mitch McConnell (R-Ky.) and House Speaker John Boehner (R-Ohio) have been reluctant to conclude that i360 represents a threat to the party.

And the problem for the RNC is that while it has political data going back roughly two decades, you need more than just data in order to be the data hub for a political party. And that is where the RNC has fallen short. Its data is good, and it has continued to enrich it and even to help campaigns and key battleground states build sophisticated voter universes through the work last year of a company called TargetPoint. But campaigns need to use data, not just have it on the shelf.

“You can have all the data in the world, but if you can’t use it to go engage people, it’s not worth that much,” said Mike Moschella, vice president at NationBuilder, a nonpartisan company that specializes in building “communications systems” to talk to volunteers and voters through email, social media and targeted advertising.

This is where companies like i360, as well as companies like NationBuilder, have gained an edge. In 2013 the RNC promised to build a next-level system called Beacon. But so far Beacon is being used by only a small handful of state parties, Walsh said. About 40 state parties are still using the RNC dashboard that Beacon was built to replace, GOP Data Center, which was designed a few years ago by a company called FLS Connect. The most common complaint from those who do not like Data Center is that it is not easy for the average volunteer or field staffer to use.

The RNC now acknowledges that it was slow to respond to the rise of i360.

“There was a time when the party itself had not made the investments it needed to make and had rested on its laurels,” said one source who had firsthand knowledge of the RNC’s data operation.

RNC chief strategist Sean Spicer and Walsh also said the RNC was not competitive enough with i360 over the past few years in giving campaigns and state parties tools to use the data. For as long as anyone could remember, the RNC had dispensed voter information to campaigns and state parties like a pharmacy, upon request. In modern campaigns, however, operatives want to manipulate the data themselves.

“People were calling to get access to data and were being told just call us and we’ll send you a CD-ROM,” Spicer said.

The source with firsthand knowledge of the RNC’s operations said that “the Koch world groups saw an opportunity where they were filling a vacuum.”

After the 2012 election, i360 and others gained market share in Republican politics because the RNC spent much of 2013 deliberating over what it planned to do, and state parties and campaigns who wanted to start recruiting volunteers and building a universe of target voters needed a system to work with immediately. In addition, i360 was developed with user experience in mind; it built up an enriched voter file as time went on and its client list grew, providing more inputs. Like some of the most successful tech companies, from Facebook to Snapchat, it built an audience first and then expanded its offerings.

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During the 2014 election, a number of Senate campaigns used i360; i360 said it was 11 campaigns in all. This cycle the group says eight Senate campaigns are using its programs, including those of two of the most vulnerable Republican Senators up for reelection in 2016: Rob Portman (Ohio) and Kelly Ayotte (N.H.). It’s not clear, however, how many of those campaigns used i360 for most or all of their voter contact.

Among the GOP presidential primary candidates, Sen. Rand Paul (R-Ky.) and Sen. Lindsey Graham (R-S.C.) are using i360 data services exclusively, while former Florida Gov. Jeb Bush and Sen. Marco Rubio (R-Fla.) are building their own voter files. Former RNC chief technology officer Andy Barkett is a key player in the Bush operation, and his performance will be closely watched, since he was charged with building Beacon at the RNC. Barkett has told contemporaries that he was undermined at the RNC by FLS Connect and other private companies who didn’t want to lose business from the RNC.

The RNC has signed data-sharing agreements with most of the 2016 candidates or likely candidates. And the RNC — as it did in 2014 — is trying to discourage campaigns and state parties from signing up with i360, according to numerous conversations with people who have knowledge of such conversations. This was a tactic that irritated many people in 2014. But Walsh, the new chief of staff, appears to be setting a different tone that admits past shortcomings and focuses on the philosophical argument that the GOP’s data should be housed at a party committee, not at a private business empire.

The RNC is now confronting the Kochs more openly than before, by having Walsh speak on the record for this article and by making other key players available for interviews. Their decision to take their dispute with i360 public shows the level of alarm inside the RNC at the growing clout of the Koch political empire. They have concluded that the Koch political machine wants to replace them and to essentially become a shadow party.

“It’s pretty clear that they don’t want to work with the party but want to supplant it,” the source close to the RNC said.

Adding to the rivalry, in January i360 poached the RNC’s chief digital officer, Chuck DeFeo, who had played a senior role within the party committee’s digital operation in 2013 and 2014. DeFeo’s departure was a surprise to the RNC, and his decision to work for a direct rival was not well-received in the fourth-floor suite of offices that house the committee’s top decision-makers. There was talk of having him escorted by security from the building, though that did not materialize.

Palmer, the head of i360, said that his organization simply wants to be helpful to the Republican Party at large. “We have repeatedly expressed a willingness in working with the RNC, and we will continue to work with any organizations interested in advancing free markets and a free society,” he said.

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But Spicer said that i360 is trying to marginalize DataTrust — the RNC’s private sector arm — by offering to share information only with the RNC and not DataTrust. In other words, i360 wants to change the terms of the agreement from last fall, rather than resign the original. Cutting DataTrust out of the picture would possibly cement i360 as the main platform provider to operatives in the field doing voter contact.

As long as i360 and the RNC worked together, both entities would receive the same data from operatives and volunteers in the field knocking on doors and making calls. But if i360 achieved dominance as the user platform of choice for Republican operatives, and if its relationship with the RNC ever went south and data-sharing ended, the Kochs would continue to get the bulk of ongoing fresh data collection, while the RNC would have to scramble and might find itself well behind i360.

The fear at the RNC is that this would give a private business empire the master voter file in Republican politics, and the party’s main committee would be reduced to that of playing a bit role.

The RNC is currently telling state parties and campaigns that it is updating GOP Data Center to make it more user-friendly. Walsh said this would be ready in three to four weeks.

However, critics of DataTrust, the RNC’s data arm, say that it is in serious financial trouble, and multiple sources — from Koch world to a major party committee to a source intimate with Republican congressional leadership — said that Priebus asked McConnell and Boehner to have their campaign committees give $1 million each to DataTrust to help with paying off debt. Both leaders were unreceptive, these sources said, believing a soft-money committee should be able to raise that kind of money from a few donors rather than having money from the committees — which is raised in much smaller amounts and harder to come by — transferred.

A source close to the Republican congressional leadership said that DataTrust “has barely existed for the last two cycles” because of its inability to raise money.

In mid-April, the RNC transferred $1.5 million to DataTrust. RNC and DataTrust officials characterized this transfer as routine business and denied that DataTrust has had any fundraising or debt problems.

McConnell and Boehner, according to the congressional source, do not share Priebus’ concern that the Koch brothers could own the GOP’s master voter file in any way that held the party hostage.

It would not be “as difficult as it sounds” for the GOP to reassemble its own file and its own voter contact apps if the partnership with i360 dissolved for some reason, the source said, adding, “Everybody needs to take a deep breath on this thing.”

Walsh, the RNC chief of staff, had a different version of events. She said there was a meeting held last year where DataTrust president John DeStefano updated a room full of Republicans on the latest business plan for his organization and that one idea discussed was to have the National Republican Senatorial Committee and the National Republican Congressional Committee contract directly with DataTrust as a show of support for the organization.

“One of top bullet points was, ‘i360 is gaining market share and how do we publicly show that the federal party committees are behind the DataTrust model?’” Walsh said. “It was not, ‘We’re out of money.’”

Prior to 2010, the NRSC and NRCC had contributed $1 million each to the RNC for data infrastructure costs, and Walsh said that prior model was interpreted by some to be what DeStefano and others were proposing. But, she said, “there was no dollar amount” mentioned.

“By no means did that imply a $1 million contribution,” Walsh said.

The result of all this infighting is that for the moment, Republican campaigns and even state parties are Balkanized between different approaches on which database to use and how to use it.

The Kochs’ i360 is the superior user platform with a rapidly growing adoption rate among campaigns, while the RNC’s data is available to all who want it and is the de facto database for RNC field personnel who are placed in key states. DataTrust has an exclusive agreement to swap data with the RNC and has a client relationship with outside groups such as American Crossroads and the American Action Network.

Even some state parties have chosen to use i360 instead of, or in addition to, the RNC’s system in their elections.

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“We used i360 a lot. We didn’t really get into the DataTrust issue,” said Joe Cluster, executive director of the Maryland Republican Party, which helped get Gov. Larry Hogan elected in a deep blue state last fall. “Maryland wasn’t one of the states [the RNC was] prioritizing for getting that data up to speed.”

“Every time I sent [the RNC] a voter file, it took them three weeks to upload,” Cluster said. “They weren’t updating our data as quick as other people.”

In Florida, another key battleground state, the state party is using NationBuilder for some of its needs and is also getting some predictive models from i360.

But Florida is one of the clearest examples that there is a belief among some in Republican politics that the data they glean in the field should go back to the Republican National Committee. They are going out of their way to make sure that any information they collect using NationBuilder goes back to DataTrust. And while they are using some of the i360 information, they are intentionally not using the Koch brothers’ tools for voter outreach, because they want to use the RNC’s Data Center.

Florida’s choices are driven in large part by a belief that the RNC is the more appropriate repository for political data than the Kochs, according to a source with knowledge of the state party’s thinking.

Other state parties are using the RNC’s voter file but have built their own dashboards to use instead of FLS Connect’s Data Center, the clearest indication that for those who have the money, time and expertise, the RNC’s user interface of choice has not been as good as some would like it to be.

The Michigan Republican Party last cycle spent between $500,000 and $1 million to build its own dashboard. Ohio’s GOP hired a close friend of Gov. John Kasich, venture capitalist Mark Kvamme, to build a system for them. Both systems bypassed the FLS Connect product and accessed the RNC’s file at DataTrust directly.

One Republican data operative who worked in Florida during the 2012 election said that because FLS Connect’s Data Center is “not a good user interface, [the RNC doesn’t] get enough credit.”

“They have really good data. And they’re making it really easy for people who know what to do with it to get at it,” he said.

The challenge for most state parties and campaigns is that they don’t have the money or the expertise to build their own dashboard systems with which to access the RNC’s data.

The relevance of these questions to who wins and loses elections is often debated. In a wave midterm election like 2014, it may be insignificant. But in a presidential election, when the presidency can be decided in one or two swing states, or in a closely contested Senate or congressional race, a superior data and technology operation can be an important advantage.

Many Republicans believe that having a presidential nominee will solve most of the problems with infighting over data and bring coherence and cohesion. In 2008, President Obama insisted that Democrats get onboard with a company called NGP VAN and use their Votebuilder system — which is built on top of the master voter file housed at the Democratic National Committee — to interact with voters, building a more concerted system of inputs into one voter file.

But it could be that the GOP may not get on the same page until there is an incumbent Republican president who has the time and money before a reelection campaign to insist that the party row in the same direction.

Correction: An earlier version of this story reported that the National Rifle Association is a client of DataTrust. It is a client of i360. Yahoo News regrets the error.