Tech Sector Hopeful, Wary About Trump Administration

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By Michaela Ross

Tech industry groups are looking for ways they can help shape policy in President-elect Donald Trump’s administration.

Trump did not lay out a detailed tech policy agenda in the run-up to the Nov. 8 election. Trade groups such as BSA | The Software Alliance, which represents companies such as IBM Corp. and Microsoft Corp., as well as tech advocacy groups such as the Information Technology & Innovation Foundation (ITIF) and TechFreedom, struck an optimistic note Nov. 9, saying they hope that means they can help mold Trump’s tech priorities.

“There will be a lot of issues the Trump administration will have to confront and deal with, and we hope to play a constructive role in helping them think through those issues,” Robert Atkinson, ITIF's founder and president, told Bloomberg BNA.

Trump’s stance against heavy regulation, his hard-line approach to trade enforcement and his plan to lower tax rates for U.S. corporations and for overseas earnings could also greatly benefit the tech industry, the groups said. But some leaders are wary the Trump administration will be hesitant to support tech interests, given the rocky relationship between Trump and the sector during Trump’s campaign.

Individuals and organizations in the internet industry alone donated less than $50,000 to Trump, compared to nearly $5.6 million to Democratic nominee Hillary Clinton’s campaign, according to the nonpartisan Center for Responsive Politics, an organization that tracks money's effects on U.S. politics. In a July letter, more than 140 business leaders, researchers and inventors listed reasons a Trump presidency would be a “disaster” for innovation.

Silver Linings

Now, the tech sector is looking for silver linings.

Trump’s call for a broad revamp of federal regulations and a temporary moratorium on new agency regulations could open gates for faster innovation, some tech groups said. Emerging tech fields such as self-driving cars, artificial intelligence, 3-D printing and financial technology, or fintech, have repeatedly warned against premature regulation-stifling innovation.

Trump should freeze or tweak the U.S. Department of Labor’s recently passed overtime rule, which would extend overtime pay to over 4 million workers next year, because it threatens tech startups that may not have the budget to comply, said Gary Shapiro, president and chief executive officer of the Consumer Technology Association.

Trump’s plans to overhaul the U.S. tax code may also benefit tech and pharmaceutical industries more than any other, as both have kept significant profits in other countries they operate in that have lower tax rates, Atkinson told Bloomberg BNA. Trump has called for a reduction of the federal corporate tax rate from 35 percent to 15 percent and to tax profits made overseas at 10 percent to encourage companies to repatriate those earnings.

“Even if we made progress half way on those, that would significantly help many tech companies that are in global markets,” Atkinson told Bloomberg BNA.

Atkinson also said Trump’s hard-line rhetoric about trade enforcement could greatly benefit tech companies. Countries like China, Brazil and Russia use patent litigation, exclusion from the markets, internet censorship and discriminatory antitrust regulation against U.S. companies while providing massive subsidies to local competition, Atkinson said.

“There’s not a single technology company in the U.S. that’s global that hasn’t been hurt by China,” Atkinson told Bloomberg BNA. “Obama hasn’t done as much as he could or should, and Trump will do a lot more.”

Congress, Agencies

With the lack of a formal tech policy agenda from the Trump campaign, some tech groups are looking toward the Republican National Committee’s platform, introduced in July, as guidance to find bipartisan agreement on issues.

Other groups said they’ll focus on Congress, where Republicans, such as Reps. Darrell Issa (R-Calif.), Patrick McHenry (R-N.C.), and Sen. Charles Grassley (R-Iowa), have shown interest in advancing industry needs.

“A lot of the issues that are important to the software industry tend to be issues that are bipartisan,” Aaron Cooper, vice president of for global policy at BSA | The Software Alliance, told Bloomberg BNA.

Others said Trump’s public lack of tech interest means the issues the sector faces will simply be delegated to experts at federal agencies, such as the Federal Communications Commission and the Federal Trade Commission, to govern.

“We can hope that given his lack of experience he will rely on third parties that understand and care about issues to craft a pro-startup agenda,” Evan Engstrom, executive director at Engine, an advocacy group for tech startups, told Bloomberg BNA.

Immigration, Trade

The tech sector is unsure it will be able to find a Trump ally in its push for cross-border data flows. Global tech companies want to be able to transfer business and customer data and transactions digitally across borders, which also enables technologies such as artificial intelligence, cloud computing and connected devices creating the internet of things, or IoT. But some economies, like the EU, have moved to limit this as a means to favor locally-owned companies as well as protect consumer privacy and cyber breach vulnerability.

The Trans-Pacific Partnership, or TPP, trade agreement between the U.S. and 11 Pacific countries has data provisions, but Trump has stanchly opposed the plan.

The Trump campaign did not immediately respond to an emailed request for comment.

Some tech groups said they hope the digital provisions of the trade agreement are bipartisan enough to be preserved, while others looked to other agreements like the Trade in Services Agreement, or TiSA, as another option with stronger language that also protected data flows.

Tech leaders also said they’re hopeful they can convince Trump of the benefits of highly-skilled immigrants to innovation. The sector has long called for an increase on the cap of H-1B worker visas and the creation of a start-up visa, which countries like Canada and the U.K. have implemented for entrepreneurs to launch businesses and create jobs within their borders.

“There is bipartisan support for highly-skilled workers,” Shapiro said. “We’d want to separate highly-skilled versus other immigrant issues.”

Trump has flip-flopped throughout his campaign on his stance on H-1B visas. He has said he would toss out Obama’s executive orders on immigration, which included a pathway for foreign entrepreneurs to come to the U.S.

Rocky Post-Obama Path

The coming weeks will see more detailed transition plans coming from Trump's team. Tech groups will have their eyes on who is appointed to Trump's new agency review teams and policy working groups, as well as nominations for agency leadership positions.

In any case, the tech sector could be in for a rougher period than they enjoyed under President Barack Obama. Trump’s call for a boycott of Apple Inc. during its fight with the FBI over encryption earlier this year and his barbs at Alphabet Inc.'s Google and Facebook Inc. are a stark contrast to Obama’s close relationship to the industry.

“Obama had a lot of tech love in both directions, that greased the skids,” Atkinson told Bloomberg BNA. “You don’t have that aura of good feeling, there could be some bumps in the road.”

To contact the reporter on this story: Michaela Ross in Washington at mross@bna.com

To contact the editor responsible for this story: Keith Perine at kperine@bna.com

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