The Road to Earn the President’s Favor Proves Tricky For the Tech World

 /  March 4, 2017, 10:07 a.m.


In early December of 2016, Uber’s CEO Travis Kalanick agreed to join President Trump’s economic advisory council, despite his strong opposition to Trump during the election. On January 27, Trump signed an executive order banning refugees and immigrants from seven Muslim-majority countries from entering the US. Customs and Border Protection agents took to JFK International Airport to enforce the order. The next day, the New York Taxi Workers’ Alliance gathered at JFK to protest the Muslim ban. During their strike, Uber announced on Twitter that it had turned off surge pricing, a feature that increases ride costs proportionally with high demand. This act was immediately interpreted as Uber deliberately trying to profit from the strike. Uber users started deleting their accounts en masse and opting for Lyft, Uber’s ride-sharing competitor. On the day of the strike, Kalanick expressed his intention to work with Trump on the immigration order, raising further suspicion that Uber was colluding with the Trump administration. Pressured by his employees, who asked Kalanick to leave the council, and the #DeleteUber movement, Kalanick eventually confirmed his decision to exit Trump’s council on February 2, 2017.

The fallout over Uber and Kalanick’s exit from the economic advisory council signals a broader dilemma faced by US tech companies today. Should they collaborate with Trump and risk backlash from customers with anti-Trump sentiments or cut all forms of engagement with his administration?

Although Uber’s business and reputation suffered from accusations of pro-Trump ties, Kalanick is not alone in his desire to work with the Trump administration. Elon Musk, the CEO of SpaceX and Tesla, also agreed to join the same economic advisory council Kalanick was a part of. Three months before Kalanick cut his ties with Trump, tech giants such as Sheryl Sandberg of Facebook, Jeff Bezos of Amazon, Tim Cook of Apple, and Larry Page and Eric Schmidt of Alphabet, all of whom vigorously opposed Trump’s campaign during the election cycle, met with the president-elect prior to his January inauguration. Their desire to collaborate with Trump indicates that the tech world sees the advantages of working with the government to craft policies that it finds advantageous.

Tech interests have a long history in Washington. Tech firms promote their interests by lobbying Congress and supporting political candidates that align with their agendas. As of 2016, Alphabet was estimated to have spent the most among tech firms on tech lobbying—$11.85 million to be exact, exceeding Amazon ($8.6 million) and Facebook ($6.9 million). During the 2016 presidential election cycle, major tech players like Alphabet, Microsoft and Apple firmly stood behind Hillary Clinton.  

Why would these top executives work with Trump if they so ardently supported Hillary Clinton? With the election result already determined, tech executives aim to best take advantage of the existing system to influence policies that promote their business interests and the future of innovation. They see unique opportunities in directly engaging with Trump.

Trump’s exclusive meeting with tech leaders is not unprecedented. Obama also met with tech executives after his re-election in 2012 to discuss technical issues having to do with and national security concerns. However Trump is perceived as more sensitive to business issues than previous presidents. His unconventional way of engagement appeals to tech corporations. Trump reportedly told attendees at his summit that “In the world, there’s nobody like the people in this room. Anything we can do to help this go along, we’ll be there for you. You’ll call my people, you’ll call me. It doesn’t make any difference. We have no formal chain of command around here.” Although the statement raises concerns about Trump abusing executive power and breaching constitutional procedure, tech leaders might have seen the possibility of eliminating burdensome bureaucratic procedures through this kind of direct communication with the White House, which would allow them to cut back on expensive lobbying efforts.

Moreover, having the president’s ear is important since the Trump administration is particularly controversial and unpredictable in two main policy areas of concern to the tech world—taxation and immigration, as outlined by TechNet, a policy advocacy organization consisting of a network of Silicon Valley CEOs.

First, tech corporations want corporate tax reform, including tax deductions and exemptions. Trump’s promise to cut the corporate tax rate from 35 to 15 percent is particularly favorable for US tech corporations. Yet Trump’s desire to strictly tax multinational companies contradicts House Republicans’ plan to adopt a territorial tax system and may undermine tech corporations with global markets. Heavy taxation of multinational companies intends to bring jobs back to the US, whereas a territorial tax system drives jobs overseas to countries with low tax rates. It remains to be seen how effectively can Trump implement his tax plans in cooperation with Congress.

Second, tech companies want immigration reform to retain more high-skill and entrepreneurial foreign workers. In the past, tech lobbyists have focused on reforming the H1-B visa program, such as lifting visa qualifications and quotas and ensuring that foreign STEM students graduating from US universities can stay to meet the demand for high-skill workers and to create jobs. Trump’s recent Muslim ban triggered upheavals in the tech world, from Google employees staging protests against the ban, to Expedia and Amazon filing lawsuits against the executive order, to tech leaders such as Mark Zuckerberg publicly criticizing the ban as “un-American.” Trump’s determination to bring jobs back to the US and to deter terrorists directly affects immigration policy and makes negotiation with the president even more necessary for the tech world.  

Although tech corporations can promote their agendas most efficiently by vying for the president’s favor and pushing for legislation in Congress, working with the Trump administration is particularly tricky. Tech executives have to find the right balance in juggling relationships with the administration, their employees, and their customers, as Uber’s controversy has shown. Tech firms want to have the president’s ear to influence policies and promote their interests, but they do not want to be so close as to evoke objections and protests from customers and users who feel that their interests are threatened. In the next four years, the challenge for tech companies will be promoting their interests through Trump while simultaneously proving to the public that they are not aligned with Trump’s prejudice and political agenda.

The image featured in this article is licensed under Creative Commons. The original image can be found here.

Xiaohe Grace Gu


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