A Trump Presidency and the Tech Industry

11 November 2016 by Jason Rumney
tech industry

This week many of us in the UK had an all-nighter to watch the results come in. As a US business owner but not being an American citizen, I was watching from my bedroom in London waiting to see the drama unfold thinking about what effect it will have on the tech industry.

President Obama, a self-proclaimed geek and Trekkie, was the most tech-focused president in modern history, committing billions of dollars to support initiatives to spur tech innovation, improve education and encourage exploration and discovery. Unlike Democratic rival Hillary Clinton, Donald Trump said very little about where he stands on most tech-related issues during the campaign -- though he did call for a boycott of Apple products over the company's stance on privacy in its fight with the FBI.

One thing is clear. Silicon Valley, in general, isn't excited about the next four years. In July, 150 tech leaders, including Apple co-founder Steve Wozniak, Reddit co-founder Alexis Ohanian, Wikipedia founder Jimmy Wales, and Vint Cerf, considered the "father of the Internet," wrote an open letter calling a Trump presidency "a disaster for innovation." Some in the industry, notably broadband service providers, criticized him for policies they believed stifled investment in infrastructure.

Just to add, the New York Times reported Thursday that “The outlook is "beyond grim" with a fear that the industry and world would suffer from this election”.


Since Trump, 70, didn't say all that much about tech during the campaign (he did call out "the cyber" when talking about cybersecurity concerns during one debate), industry watchers are left reading whatever tea leaves they can find until the president-elect reveals more-definitive policies.

Given that the tech industry provides 12% of all jobs, according to the US Bureau of Labor and Statistics, and Trump's message about improving America's economy and competitiveness, his technology policies will have a long-lasting impact.

"The onus is on him to convince us that what we have seen in the past, the erratic behavior that has been defining character of the campaign, is not what will lead policy and that we'll see a more pragmatic approach," said Evan Swarztrauber, communications director for the DC-based think tank TechFreedom.

Here's what little we do know about Trump's stand on some important tech issues.

Industry consolidation and broadband

Trump seems to have taken a populist view against mergers and acquisitions, which could spell trouble for big pending transactions, including AT&T's $85 billion takeover of entertainment giant Time Warner. When that deal was announced last month, Trump vowed to block the merger if he was elected."As an example of the power structure I'm fighting, AT&T is buying Time Warner and thus CNN, a deal we will not approve in my administration because it's too much concentration of power in the hands of too few," he said.

AT&T's executives still like their chances of getting the deal approved by the US. AT&T's chief financial officer, John J. Stephens, on Wednesday pointed to statements Trump made during his victory speech in New York on election night. Trump said he plans to make big investments in "infrastructure," without providing specifics.

"His policies and his discussions about infrastructure investment, economic development and American innovation all fit right in with AT&T's goals," Stephens said. "We've been the leading investor in this country for more than five years running, and our Time Warner transaction is all about innovation and economic development, consumer choice, and investment in infrastructure with regard to providing a great 5G mobile broadband experience."

Encryption, cybersecurity

The president-elect has made only vague statements about privacy and security and downplayed Russia's alleged hacking into the Democratic National Committee and Clinton's campaign email servers. Still, when the Justice Department tussled with Apple over unlocking the iPhone of the terrorist suspect in the San Bernardino shooting, he called for a boycott of Apple products.

What he has said about cybersecurity is that there should be a review of US cyber defenses by a "Cyber Review Team." He also told The New York Times in July that "certainly cyber has to be in our thought process, very strongly in our thought process...Inconceivable the power of cyber...you can make countries nonfunctioning with a strong use of cyber."

Science and STEM education

Experts who've looked at Trump's economic agenda suggest that deficits will explode, which will likely lead Congress to cut budgets to help offset spending on tax cuts. That could mean heavy cuts to funding for science programs and education, which runs counter to the tech industry's call for more tech-savvy workers in today's digital age.

What's more, Trump has publicly supported views that are not backed by the scientific community. He's repeated unfounded connections between vaccinations and autism and dismissed reports of climate change as a myth perpetuated by the Chinese to undermine the economy. He's tried to appeal to voters in coal country by supporting energy policies that encourage the use of more fossil fuels and downplayed investment in renewable energy, like solar.

H1 B visas and immigration

Immigration has been one of the hallmark issues of Trump's campaign, but most of his policies center around what he'd do to reduce illegal immigration. When it comes to legal immigration of skilled workers, Trump said he wants to increase pay for people holding H-1Bs as part of a plan to steer more work to Americans. That's because some consider H-1B visa holders a cheaper source of highly skilled labor for US companies.

"Raising the prevailing wage paid to H-1Bs will force companies to give...coveted entry-level jobs to the existing domestic pool of unemployed native and immigrant workers in the US, instead of flying in cheaper workers from overseas," his policy says.

Tax policy

The biggest boost to the tech industry could come from Trump's plans to lower corporate tax rates to encourage companies to invest their money in the US.

There's a good chance that money could be invested in the US, said Rob Atkinson, president of the Information Technology & Innovation Foundation (ITIF). In 2004, the US allowed American companies to bring in the profit they'd earned overseas in the hope they hire more workers. Most of the money went to executives and shareholders, instead.

Trump has also called for high import taxes on products, which could drive up prices for consumers on tech goods. In January, Trump said in a stump speech, "We're going to get Apple to build their damn computers and things in this country instead of in other countries."

Apple, which declined to comment on Trump's statements at the time, designs its products at its Silicon Valley headquarters but uses a Chinese contractor to build them. If Apple products were manufactured in the US, the price of an iPhone could rise to as much as $900 to offset worker wages versus the $650 cost of an iPhone today.

Curious to see what others think is going to happen as an outsider looking in?