It’s strange that Donald Trump, who ran on a populist platform to make America great by turbocharging the economy, is widely feared by the one industry that’s already done all the work for him: Technology.
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While the broad market has rallied since election day – the Dow and S&P 500 are up 3% and 2%, respectively – shares of tech heavyweights, including Apple, Alphabet, Amazon and Facebook have all shown marked declines. And Netflix is down more than 8%.
That’s no coincidence. During what certainly seemed like the longest and most tumultuous campaign ever, Trump took aim at some of the biggest names in tech. Now that he’s won the White House, the question is, should Silicon Valley fear President Trump?
It remains to be seen just how much of his combative rhetoric was Trump playing to his base of disaffected working class Americans. But when the dust settles and words turn to actions, I suspect the tech industry will have far less to fear from the nation’s 45th president than they imagine.
Take Apple, for example. Trump’s harshest rebuke of Tim Cook was over the CEO’s steadfast refusal to develop a backdoor that would unlock an iPhone linked to the San Bernardino terrorist attack.
Cook felt that compromising Apple’s encryption algorithms would open a Pandora’s box that hackers and criminals would exploit, threatening the security of his customers. While I believe that’s true, Trump was hardly alone in his opposition to Cook. Nearly everyone in Washington thought Apple should help the FBI crack the phone. President Obama was cozy with the tech elite, but that was his Justice Department at work.
As for reports that Trump would “force” or “make” Apple manufacture devices in the U.S., that was a complete media fabrication. What he actually said in a campaign speech at Liberty University in Virginia was, “We’re going to get Apple to build” their computers and devices here, adding, “free trade is good but we have to be smart about it.”
He did talk about using the threat of import tax to entice Ford to abandon manufacturing in Mexico, but savvy negotiators will recognize that as part of a “carrot and stick” tactic. The carrot would likely be corporate tax reform and the one-time repatriation of offshore capital as an incentive to bring manufacturing jobs back to the U.S. Makes sense to me.
China recently threatened to curb sales of iPhones, as well as American-made cars and planes, if Trump makes good on his campaign threat to slap a huge tariff on Chinese imports if Beijing doesn’t stop manipulating its currency. Again, that was just Trump and China putting each other on notice – always the stick before the carrot. Actually, neither country wants a trade war.
As for net neutrality, which Trump called an “attack on the internet” and a “top down power grab” by the Obama Administration, I believe he’s absolutely right, except that the American public was mostly duped by Netflix CEO Reed Hastings, and the act was carried out by the Federal Communications Commission. Obama, Netflix and the FCC: I’d say that is an unholy alliance, if there ever was one.
Another comment that got a lot of attention was Trump’s well-intentioned but misguided statement about shutting down the internet so terrorists couldn’t use it as a recruiting tool. Once he’s in office, I’m sure there will be plenty of advisors to help him understand how the Web really works.
Trump has also accused Amazon CEO Jeff Bezos of using his ownership of the Washington Post as a means to keep the federal government off his back on possible antitrust and tax issues.
While Amazon does seemingly have monopoly power, like Walmart, it captures market share by undercutting the competition. That may be anticompetitive, but consumers aren’t harmed. I’m sure a federal antitrust case can be made, but winning is another matter entirely. As for sales tax avoidance, that’s a state issue, not a federal one.
Ironically, I think Trump’s attack on Bezos was just a way to keep the Washington Post off his back after Bob Woodward’s revelation that the left-leaning newspaper had assigned an army of 20 reporters to investigate and write about “every phase of [Trump’s] life.” We’ll have to see how President Trump handles the media, going forward.
The one thing that has tech CEOs most upset, however, is Trump’s incendiary rhetoric on immigration policy that challenges Silicon Valley’s diversity and inclusion meme. Also, the tech industry depends on the H1B visa program, not to mention the fact that many tech leaders, entrepreneurs and employees are foreign born.
The funny thing is, they’re all here legally, so Trump has no beef with that. His plan is to control the border, fix our broken immigration system, and make sure that American citizens are treated fairly. All long overdue measures. If he gets it done, kudos are deserved, even even if it does rub the PC crowd the wrong way.
Personally, I think the hysteria among tech elites is a gross overreaction. Much of this will likely turn out to be a tempest in a teapot. Soon enough, everyone will realize they’re all on the same team. Look at the bright side: We’ll finally have a President who loves social media.