Stunned tech sec­tor pon­ders its fu­ture un­der Trump

The Myanmar Times - - International Business -

AF­TER dis­be­lief, anger and grief, the US tech sec­tor is look­ing to come to grips with the pres­i­dency of a man de­scribed by many of its lead­ing lights as a “dis­as­ter” for in­no­va­tion.

The ma­jor US tech­nol­ogy com­pa­nies, al­most uni­formly op­posed to Don­ald Trump’s can­di­dacy, saw huge stock de­clines in the wake of Novem­ber 8, but most have now re­bounded to near their pre-elec­tion lev­els.

Some ob­servers are say­ing it makes lit­tle dif­fer­ence who is in the White House, and others ar­gue Mr Trump is un­likely to carry out the prom­ises – and threats – he made dur­ing a bit­ter cam­paign.

Mr Trump sent shiv­ers through Sil­i­con Val­ley dur­ing his elec­tion bid by pledg­ing to squeeze trade from China, clamp down on im­mi­gra­tion which is crit­i­cal to many tech firms, and even give on­line gi­ant Ama­zon “a huge an­titrust prob­lem” if he were elected.

Close to 150 tech icons – in­clud­ing founders of Ap­ple, Wikipedia and Red­dit – penned an open let­ter in July warn­ing the Repub­li­can would be a “dis­as­ter for in­no­va­tion”.

Gene Munster, an­a­lyst on the tech sec­tor at Piper Jaf­fray, said the ini­tial beat­ing in tech shares had cre­ated a “rare op­por­tu­nity to buy the fear”.

But in a re­search note last week Mr Munster ar­gued that “the tech in­dus­try is in more con­trol of its own des­tiny than Don­ald Trump and will work through these prob­lems”.

The an­a­lyst said an an­titrust probe of Ama­zon was un­likely, nor does he ex­pect ma­jor changes on skilled im­mi­gra­tion un­der Trump.

Any tar­iffs on elec­tron­ics or com­po­nents could po­ten­tially im­pact firms like Ap­ple, but would be spread equally over man­u­fac­tur­ers be­cause they all rely on im­ports.

In the mean­time, any neg­a­tive im­pact could be off­set by Mr Trump’s pledge to lower taxes on cap­i­tal repa­tri­ated from over­seas, which could be a boon for Ap­ple, Google and others and en­cour­age in­vest­ment in the US, an­a­lysts noted.

The tech sec­tor holds the lion’s share of an es­ti­mated US$2.5 tril­lion held by US firms over­seas.

“There could be a lot of money that is repa­tri­ated by tech com­pa­nies,” said Bob O’Don­nell, an­a­lyst and con­sul­tant at Tech­nal­y­sis Re­search.

“If they could use it for job cre­ation, that could be in­ter­est­ing.”

More broadly, Mr O’Don­nell said the tech sec­tor may get “a fresh look at the kinds of ser­vices and tech­nolo­gies that peo­ple want to in­vest in” un­der Mr Trump.

For ex­am­ple, a ma­jor push on in­fra­struc­ture in­vest­ment “could be a big op­por­tu­nity” to in­te­grate “smart” tech­nol­ogy for ser­vices such as trans­porta­tion.

While tech lead­ers “did a lot of soul search­ing” af­ter the elec­tion, Mr O’Don­nell said “they are smart buszi­ness­peo­ple and they re­alise they have to work in this new en­vi­ron­ment.”

Although Mr Trump has said lit­tle about his agenda for the sec­tor, Mr O’Don­nell noted that “tech is a huge part of the econ­omy and you can’t ig­nore it; but things that might be viewed as spe­cial priv­i­leges might be taken away”.

Some are con­cerned that a Repub­li­can ad­min­is­tra­tion may seek to roll back so-called “net neu­tral­ity” that pro­hibits broad­band firms from play­ing favourites, which could mean dif­fi­cul­ties for on­line video op­er­a­tors like Net­flix and Ama­zon.

Many tech lead­ers have had to take a new tack af­ter an emo­tional cam­paign that fea­tured ugly rhetoric on both sides.

Ap­ple chief ex­ec­u­tive Tim Cook said in a memo to staff that the com­pany’s “North Star hasn’t changed” and that “the only way to move for­ward is to move for­ward to­gether with the new lead­er­ship”.

Face­book founder Mark Zucker­berg brushed off the vote by telling a tech con­fer­ence that “most progress is made by pri­vate cit­i­zens”, and that “it would not be right to say [the elec­tion of Mr Trump] changes the fun­da­men­tal arc of tech­nol­ogy or progress over time”. Others were less diplo­matic. Box founder Aaron Le­vie tweeted af­ter the elec­tion, “You know those times where we watch other coun­tries and are like ‘oh man you guys are crazy’. Shit that’s us now.”

Char­lie O’Don­nell at the in­vest­ment firm Brook­lyn Bridge Ven­tures said it’s not time to panic.

“If you felt good about what you were do­ing at your com­pany yes­ter­day, you should feel good about it to­day,” he said in a blog. But he also said the elec­tion of­fers a les­son that “we need to start car­ing about a much wider tent of peo­ple than we have been”. –

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