Battle Royale: Trump vs. Tech

The relationship that President Donald J. Trump and his administration has had with the tech industry can be described as tenuous at best, and has recently devolved into feelings of contempt on both sides.  Industry leaders such as Apple, Alphabet, Microsoft, Amazon, and Facebook have all joined in protest agains the current administration, which is quite notable given their status as the five most valuable companies in the world today.  It is typically unusual for companies, never mind entire industries, to take such a strong stance against the POTUS. So why is tech revolting?

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Some say that the aggressive stance taken by these tech giants is primarily for good press.  This argument holds true in some respects, especially given the need of tech firms to attract and retain millennial users, who largely disapprove of Trump.  However, while the need for good press is certainly real for these companies, I believe that their opposition to Trump runs much deeper.  In reality, the policies of the Trump administration run counteractive to the financial interests of the tech industry.

First and foremost, the Trump administration’s immigration policies stand to directly hinder the hiring processes of tech companies, and therefore negatively impact their bottom lines in a very real sense.  This is especially harmful given the incredible importance of a diverse and talented staff in Silicon Valley.  To quote a legal brief jointly filed by 97 tech companies in response to Trump’s executive order banning immigration from seven (now six) muslim majority countries:

The Order makes it more difficult and expensive for U.S. companies to recruit, hire, and retain some of the world’s best employees. It disrupts ongoing business operations. And it threatens companies’ ability to attract talent, business, and investment to the United States.

While the muslim ban has received the most press, there are several other immigration policies that could hurt tech profits just as much, if not more.  For example, Trump recently announced that there would be a temporary ban on expedited applications for H-1B visas.  These visas are a major hiring tool for tech companies given the relative shortage of American math and science graduates, as well as the money saved by hiring talented foreign workers instead.  Perhaps more concerning than this order itself is the potential for future limits on H-1B visas, especially given this quote from Trump’s campaign from last year.

The H-1B program is neither high-skilled nor immigration: these are temporary foreign workers, imported from abroad, for the explicit purpose of substituting for American workers at lower pay…I will end forever the use of the H-1B as a cheap labor program, and institute an absolute requirement to hire American workers for every visa and immigration program. No exceptions.

While this President has been known for making fiery rhetoric and then backing down in policy, he is also known as being completely unpredictable.  If the administration were to take such action on the H-1B visa program, the potentially wide-reaching impacts of these policies could massacre tech profits in years to come. For more on Trump and H-1B Visas, see this informative video.

While Trump’s immigration policies have the most significant implications for tech companies, there are several other points of contention forming between Silicon Valley and Washington. For example, there has been some unease about the idea of Net Neutrality, which is the concept that the internet should be free and open to all of its users.  Without Net Neutrality, a “pay to play” system could be implemented in which internet providers could discriminate online content based on whether or not the content providers pay to be in the so-called “fast lane”.  Those who pay more get better online access than those who don’t, therefore destroying the freedom of the open internet as we know it.

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This concept has widespread implications across the digital business sector.  The free and open internet is the reason why online startups can potentially grow into tech giants.  All the tech leaders of today would not have been able to succeed without Net Neutrality, as they would have been crushed by larger companies paying for premium internet exposure.  In that vein, the tech leaders of tomorrow may not be able to succeed if Net Neutrality is not protected by the government. While President Trump’s position on the matter is unclear, he has indirectly taken a position against Net Neutrality by nominating Ajir Pai to lead the FCC.  Pai is now working to fight a bipartisan set of rules protecting Net Neutrality that passed in 2015.

Finally, President Trump’s aggressive stance in favor of protectionist trade policies have many tech leaders worried as well, specifically regarding potential access to China.  The Chinese market is regarded as among tech leaders as an untapped goldmine of profits.  The immense amount of people in the region has led several big name firms like Netflix and Facebook to try and gain market share in China, but none have been able to succeed as of yet, leaving the opportunity open for anyone who can crack the code.  However, if President Trump acts on his rhetoric and follows through with anti-China trade policies, the opportunity for American tech companies to crack the Chinese market may be over, and a world of potential profits may be lost.

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Fundamentally, the conflict between Trump and the tech industry is due to a difference in world views.  The position of the Trump administration is to protect America first and to prioritize American needs over the needs of the world.  The tech industry on the other hand, is built on breaking down barriers and creating global opportunities.  It’s a battle of isolation vs. globalization. Regardless of which ideology you personally agree with, it is important to recognize that this set of conflicting philosophies is the source of the conflict between Trump and tech.

4 comments

  1. Nice post, I think you hit on a really good connection between the administration and the problems that might face the tech industry because of it. One thing that really stands out to me is how excited the Trump administration was to tweet about their meeting with tech leaders during the post-election transition. While I’m obviously not sure what was discussed, it seemed as though both sides thought the meeting was productive and had hopes for a good future working together to continue the growth of the industry. However, as you’ve pointed out, it seems as though these talking points haven’t been followed with actual action and the administration’s actual actions are clearly angering the tech industry. Definitely will be an interesting dynamic to watch as the year goes on.

  2. Nice post. I actually wonder if some of the protectionist policies will backfire, especially in tech. If the workers can’t come here, there’s more incentive for the companies to then go global, leaving Silicon Valley behind as a key tech hub, or at least lessening its importance.

  3. Great post! I really appreciated the more objective stance on how Trump’s policies are directly affecting different aspects of the tech world; while I’ve definitely seen many reasons for tech companies to resist Trump as a PR move/possible reflection of their own values, it was helpful to see concrete reasons why tech companies would be opposed to Trump in terms of business. Similar to Terence, I was fairly surprised to see that both sides left the white house/tech meeting with pretty positive attitudes, and I wonder how much of these anti-tech policies the tech side was aware of at the time of the meeting. I also find it interesting that Trump, who is seemingly pro-business, is indirectly supporting an anti-net neutrality policy, which really hurts a burgeoning section of America’s businesses (tech/startups). Though the policy would help companies like Amazon and Netflix now that they have the capital to pay for the “fast lane,” it seems like most tech giants are still lobbying in favor of net neutrality. It’ll be really interesting to watch how the FCC will choose to handle the issue and how their relationship with major tech companies will play into that.

  4. Interesting post! I think the tech industry is at great risk if their business models must adapt too significantly in response to some of the things you mentioned. We may see companies leave the country, or it could leave the door open for international competitors to get a foot in the door. Net neutrality in particular is going to be a huge issue for a company like netflix with products that require so much bandwidth.

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