Why Silicon Valley May Warm to Trump
The technology industry has resisted him, but a Trump presidency is compatible with its business goals.
A memorable image from Barack Obama’s 2008 presidential campaign showed the future president, reclined on a couch. His chief campaign strategist David Axelrod appears in the foreground, and “Change we can believe in” signs rest casually in the back. In then-Senator Obama’s left hand, he holds a sheet of paper. In his right, a BlackBerry.
Obama was famously attached to the device. (Back in 2008, the iPhone was a year old, and the BlackBerry was hardly outmoded or uncool.) Just after the election, The New York Times reported that recordkeeping requirements might force Obama to relinquish his beloved device. Eventually, a compromise allowed him to “keep his cherished gadget.”
It was an early sign that Obama would be the “first high-tech president,” as he has sometimes been called. 47 years old when elected to the office, Obama falls in the space between the Boomers and Gen X, allowing him to chameleon into either group as needed. He was addicted to his handheld like everyone else. Once installed, Obama created the first U.S. Chief Technology Officer, endorsed the modernization of federal government services online, and, of course, became the first social-media president, @POTUS.
In 2016, by contrast, both Hillary Clinton, 69, and Donald Trump, 70, appear to know about as much about information technology as stereotypes would expect of folks of that age. Trump famously minced words about “the cyber.” And neither Trump nor Clinton appear to know how to use a computer.
In retrospect, Obama wasn’t the first high-tech president just because he had a personal relationship with technology. He was also the president who oversaw Silicon Valley’s reincarnation, from industrial accessory of the PC and E-commerce era to information sovereign in the age of iPhone and Facebook. The Obama administration mostly supported the tech sector, implicitly or explicitly, and for worse as much as better.
Now that Trump is heading to the White House, things are likely to change. And Silicon Valley is worried. In July, a hundred tech-industry business leaders condemned Trump publicly, largely on social justice grounds. After his election, fear of a Trump presidency sent the tech industry into a tailspin. A prominent investor called for California to secede from the union. But once the dust clears, Trump might prove eminently compatible with Silicon Valley’s ongoing project. And if that’s the case, the technology industry’s mask of affable, harmless progressivism is about to be pulled off forever.
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In May 1998, the U.S. Department of Justice opened an anti-trust trial against Microsoft. It had been watching the company since the late 1980s, and with increasing scrutiny in the early 1990s. Microsoft’s DOS and Windows operating systems had helped the company reach a near-monopoly in the PC marketplace. In a 1994 settlement with the DOJ, Microsoft agreed not to bundle other Microsoft products with Windows. The 1998 trial centered on Internet Explorer, which Microsoft had started bundling with the OS. At issue was whether the web browser was a product or merely a feature—the latter was allowed under the terms of the 1994 settlement.
In 2000, the court determined that Microsoft had violated the Sherman Antitrust Act. It called for the breakup of the company. On appeal, the DOJ agreed to far less severe remedy, amounting to concessions in the way the company bundled software and provided access to APIs. Disdain for Microsoft among the judiciary and the states who had joined the lawsuit was evident throughout the trial and appeal. The company was seen as a bully in the market and a brat in the courtroom.
At the time, some criticized the DOJ, but mostly on the details. Few thought that antitrust litigation was an inappropriate intervention in the information technology industry. Indeed, it was a boon to the industry. Bill Clinton was perfectly happy to take credit for the technology boom that helped rescue the economy from the recession that preceded his presidency. In the new economy brought about by the web, incumbents like Microsoft represented resistance rather than opportunity. The brush had to be cleared.
It wasn’t the only way the Clinton administration helped the tech industry. Other Clinton policies of the mid-1990s were profoundly libertarian—among them, the transformation of the internet into a duty-free zone. In the ’90s, Silicon Valley was largely concerned with spreading the infrastructure of the internet via routers, switches, servers, and software; or in transforming traditional bricks-and-mortar businesses into online ones. E-commerce ruled the day, and an extended tax holiday offered online consumers a massive incentive to move their purchases online. This, along with other efforts to narrow the digital divide by broadening access to computers and the internet, made Clinton a strong advocate of Silicon Valley. At this time, the government’s primary concerns about the internet amounted to protecting children from predators and undesirable content.
George W. Bush oversaw the dot-com crash and the 9/11 terror attacks, not to mention the war on terror that followed them. Technology policy under the second Bush administration mostly ignored Silicon Valley, apart from matters of privacy and surveillance, and supporting the extension of the Clinton-Gore internet tax ban.
During Obama’s administration, Silicon Valley entered a new era. The internet’s infrastructure was largely rolled-out by 2008, and the transformation of traditional business into e-business was essentially complete. The federal government proved an exception. To the extent that it had any of its core services online, they were faulty, unwieldy, technologically obsolete hulks of code built by massive contractors. Obama sought to change that.
E-commerce sales tax collection policies tightened somewhat as states found ways to make collection easier. But at the federal level, with the exception of some matters of data access and security, Obama continued the government’s laissez-faire attitude toward Silicon Valley. He signed a bill making permanent the 1998 Internet Tax Freedom Act, which prohibits federal, state, or local taxation of internet access. His administration also created resources or supported policies friendly to the business of technology. Those included support for network neutrality and the “open internet,” a term borrowed from Californian Ideology rhetoric—the merger of hippie idealism with entrepreneurial yuppiedom. And as his second term came to a close this year, Obama realized his self-described status as “nerd” in a stint as guest editor for Wired magazine, the unofficial rag-of-record for Silicon Valley.
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In that issue, MIT Media Lab director and dotcom-era entrepreneur Joi Ito interviewed Obama about artificial intelligence. After an extensive discussion of security, Obama switched gears. “One thing that we haven’t talked about too much,” he admitted, “is we really have to think through the economic implications [of AI]. Because most people aren’t spending a lot of time right now worrying about singularity—they are worrying about ‘Well, is my job going to be replaced by a machine?’”
But for many of the citizens who voted for Donald Trump, the employment crisis isn’t part of some hypothetical future, nor does it require activation by the highfalutin gizmos of technology companies. It’s here today. For those citizens, Obama’s solution to the matter in the Wired interview seems vague and unsatisfying: “redesigning the social compact,” a process he predicts will take place “over the next 10 or 20 years.”
In truth, the social compact had already broken down considerably on Obama’s watch. For example, Obama’s support of STEM industries and education, meant to put more Americans in those jobs in the first place, doesn’t square with the apparent lack of STEM jobs—including those requiring computer science training.
The jobs themselves are also unevenly distributed. Engineers at Facebook, Google, or Uber make good money, but the information economy sustains fewer high-wage jobs than big business did in the industrial era. The business models of tech companies often support or even require the precarious employment of low-wage or flex-workers to drive the hired cars and deliver the kale salads and farm the #content these businesses require. And tech businesses rely on highly-leveraged, mostly young, mostly male entrepreneurs to create lithe startups. On top of it all, the primary purpose of those startups is not to produce products and services, nor even to employ software engineers and marketing managers, but to serve as speculative financial instruments subject to possible acquisition by larger technology companies. Technology has largely become a specialized form of finance.
On this front, the Obama administration would never have thought to pursue remedies against the current generation of technology companies similar to those undertaken in the Clinton years against Microsoft. European regulators have made efforts to censure Google, but their American counterparts have not addressed the company’s majority share of search, not to mention its massive holdings of data about user information and behavior, online and off. Likewise, Facebook’s increasing market share for news discovery risks making that company a monopoly media aggregator, but Mark Zuckerberg’s firm has been left alone as well. Given the role of the main social network and principal search firm in assisting the dissemination of fake news that appears to have bolstered support for Trump, perhaps that’s an oversight the Democrats already regret.
Now it might be too late. It’s hard to imagine that a Trump DOJ would seek antitrust intervention against Facebook or Google, nor that a Trump administration would invite greater oversight of the tech industry writ large. Overall, Trump’s policy positions favor big business through reductions in corporate taxation and regulation. Trump has opposed H-1B visas, those often used by tech companies to employ high-skill foreign workers, but he has also supported high-skill immigration by other, undescribed means. He has endorsed higher education cost reform through lower tuition rates for greater future employability, which would privilege STEM degrees, but he has also expressed doubts about a U.S. worker shortage in the first place. His interest in American trade-policy reform is focused on the traditional manufacturing sector, an area that affects companies like Apple, but not the technology sector overall. When all is said and done, Trump’s technology policy amounts to tightening information security, particularly as a defense against Chinese (but not Russian!) hacking. The rest remains a mystery.
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One possibility: Trump’s impact on Silicon Valley might emerge from new pressures and incentives to reinvest in the tangible world. Trump, a builder of real properties like buildings and golf courses, not intellectual ones like apps and APIs, has promised to reinvest in American manufacturing and infrastructure—factories, airports, bridges, and of course border walls.
There’s good reason to scratch one’s head at these promises. For one part, globalization has changed manufacturing and construction for good; it’s not just a matter of spinning up the steel plants again. For another part, advocating stimulus through infrastructure investment sounds ironically similar to Obama’s post-recession American Recovery and Reinvestment Act.
But maybe everyone—even Trump himself—is taking the term “infrastructure” too literally. And for a clue about what that idea might mean for the tech industry under a Trump presidency, there is no better source than Trump’s biggest Silicon Valley supporter, Peter Thiel.
The cofounder of PayPal and Palantir and an early investor in Facebook, Thiel is a staunch libertarian whose endorsement of Trump has confused many inside and outside his industry. But the truth is, Thiel has no appetite for the weak posturing of his Silicon Valley colleagues. Thiel sees his tech brethren as “builders,” even if they don’t build bridges and airports.
In particular, he has no patience for empty promises of “disruption” as an excuse to create meaningless, lifestyle products and services for other technology professionals. In his bestselling book Zero to One: Notes on Startups, or How to Build the Future, Thiel argues that innovation—even disruptive innovation—is an incrementalist approach ultimately doomed to failure. Instead, says Thiel, companies should strive to create something from nothing—to go from “zero to one.” In particular, Thiel contends that monopoly should be the goal of successful companies. To soften the blow, he calls it “creative monopoly”—monopolies that create new social benefit as much as they do new wealth.
But that social benefit isn’t progressive social liberalism. Instead, it’s technological progress, no matter the cost. Thiel never admits it, but the consequence of monopoly, “creative” or not, is aggression. Bullying. And here we also find a surprising alignment between Trump, Thiel, and the true nature of Silicon Valley businesses, after all the user-friendly, change-the-world gloss is buffed away. Trump’s vision isn’t comprised of his vague promises to the electorate, but the fact that he alone can bring it about, and that he will. And to bring it about—whatever that means—requires clearing a path through the bramble. This position is very similar to Thiel’s: to continue accelerating the rate of innovative growth at all costs. If this sounds like a stance that almost anyone in Silicon Valley could be heard advocating, that’s because it is. So much for Thiel as fringe-thinker.
Some wonder how the openly-gay Thiel can square his personal identity with Trump’s rampant bigotry. The answer is simple and obvious, but it requires taking Thiel’s ideas at their word. Identity is just not terribly important for Thiel. In fact, it’s a distraction. Ideologues though they may be, Thiel and Trump see themselves as the only true collectivists among a horde of irrational individualists. As he summarized in his address to the Republican National Convention, “fake culture wars only distract us from our economic decline.”
That’s an easy position for a billionaire white man to take, but it’s also an unusually honest position in Silicon Valley, where everyone is assumed to embrace progressive social liberalism. Nobody seems to notice the fact that this apparent social liberalism doesn’t jibe with the business of technology itself, where sexism, ageism, and racism are rampant, and all in the name of “meritocracy.”
Likewise, Thiel and Trump’s mutual support on immigration reform—Thiel has been rumored to be the top pick of the President-elect for U.S. Trade Representative—is pragmatic. For Thiel, it is most important that developed countries maintain their dominance in growth and innovation, rather than allowing the dilution of that dominance, and in so doing opening the door to economic collapse. Thiel’s concern for the displaced factory workers in the American heartland is grounded in tactics, not in empathy. Look at all those local resources squandered.
When it comes to the future of Silicon Valley in the era of Trump, if a collaboration will emerge it will do so under the shingle of infrastructure. What drives daily life is what drives business and culture alike. And technology is drunk on the power of infrastructure, but weak on the capacity to implement it beyond symbolic exchange on computers. Even Google couldn’t figure out how to install fiber in America’s neighborhoods effectively.
Trump’s experience as a builder appeals to Peter Thiel not because either one has produced successful, equitable, or even desirable outcomes from the vantage point of society. Rather, the fact that they have demonstrated the capacity to exert their will upon the world is what’s most important. And on this front, Silicon Valley can’t claim that it hasn’t had such a goal in mind from the beginning. Libertarians have always been obsessed with builders—just think of the novels of Ayn Rand, with their great industrialists—but jealous that their efforts never quite left the quiet, smelly ghetto of the basement. All technology really wants is to turn the gears that drive the world.
For years now, the computer business has been chipping away at that goal. Its wares now regulate how people figure out how to find information, and how to get places. It have replaced the old desires of shopping and travel booking and tax preparation with new obsessions invented inside apps and over streaming services. It is pushing its way into cars and trucks and homes, vacuuming up information to feed into other operations. The one thing that’s been missing is control and influence over the physical world itself.
In Donald Trump, Silicon Valley may have found the figure for whom it always dreamed even if it refused to admit that dream: its proverbial John Galt, the hero who would clear the bureaucratic brush and allow pure innovation to seep like lava—burning down the old, ossified world and forming the ground for the new.