Strong-arm Apple and tax China bigly: a guide to Trump’s possible tech policies

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Silicon Valley has enjoyed its relationship with Obama, but how will companies such as Google, Apple and Facebook fare under a Trump administration?

Americas technology industry has enjoyed a close relationship with President Obamas administration since he was elected in 2008 a fact that will not be lost on president-elect Donald Trump, who pitched his own ideas about technology policy while campaigning.

The technology sector is responsible for 6% of the nations economy and nearly $1tn in GDP for 2014 alone, according to the trade body the Internet Association. Trump needs to engage but what policies is he likely to formulate?

Eric Schmidt, executive chairman of Googles parent company Alphabet, said last week that the industry is in for a big change. [Republicans] have a traditional set of doctrinal issues which are now being challenged by the new president and I dont think we know [how that will play out]. The top five most valued companies in America today are Apple, Google, Amazon, Facebook and Microsoft. If the all-R team is very focused on big business, theres five big businesses right there.

Trumps technology team?

The first big indicator of his position on technology came from the appointment of PayPal billionaire Peter Thiel to his transition team. In Democrat-heavy California and Silicon Valley, Thiel was an anomaly in his support for Trump, even ploughing another $1.25m to the campaign shortly after Trump boasted about sexually assaulting women.

Trumps likely appointment of Jeffrey Eisenach as head of the regulator the Federal Communications Commission (FCC) is another clear indicator. Eisenach, who served on transition teams for both Ronald Reagan in 1980 and George W Bush in 2000, is a vocal proponent of scaling back the powers of the FCC. He is also expected to push for reversal of the hard-fought 2015 net neutrality rules, which stops internet providers prioritizing more profitable or preferred services.

Entrepreneur
Entrepreneur Peter Thiel, now on Trumps transition team, leaves a meeting at Trump Tower. Photograph: Eduardo Munoz/Reuters

Apple and big tech (but mostly Apple)

The Cupertino-based company is a favourite target of Trump. In February 2016 he argued that the company should be forced to help the FBI hack into an iPhone used by the San Bernardino killer.

First of all, Apple ought to give the security number [pin number] for that phone, OK?, he said at a rally in South Carolina on 19 February. What I think you ought to do is boycott Apple until such time as they give the security number. How do you like it? I just thought of that. Boycott Apple.

Trump also picked out Apple as an example of an American company that had moved its manufacturing overseas. Were going to get Apple to build their damn computers and things in this country instead of in other countries, he said in Virginia on 18 January.

Trump did not acknowledge that building Apples computers, tablets and smartphones in the US may actually increase the cost of the end-products. An analysis by the MIT Technology Review estimated that the price of an iPhone 6S Plus would rise by between $30 to $100 per unit, depending how much of the manufacturing Apple was required to do in the US. Much of the extra cost would come from having to ship components into the country, rather than a difference in labor costs.

It was Google that came under fire when he spoke in Wisconsin on 28 September, for supposedly suppressing bad news about opponent Hillary Clinton. A new post-debate poll that just came out, the Google poll, has us leading Hillary Clinton by two points nationwide and thats despite the fact that Google search engine was suppressing the bad news about Hillary Clinton, he said. The claim was based on a viral video that claimed to show how Googles search tool did not autocomplete the term Hillary body count, but which was later debunked.

China

While Hillary Clinton was the main villain in the Trump campaign narrative, China came a close second, with Trump often questioning the US relationship with its second biggest trading partner. China is the manufacturing engine that drives the technology and consumer electronics sectors, with advanced technology products accounting for $103bn of all US imports from China in 2016 so far.

Donald
Donald Trump on Apple: Were going to get them to build their damn computers and things in this country. Photograph: Yui Mok/PA

If China does not stop its illegal activities, including its theft of American trade secrets, I will use every lawful presidential power to remedy trade disputes, including the application of tariffs, he told a crowd in Pennsylvania on 28 June. President Reagan deployed similar trade measures when motorcycle and semiconductor imports threatened US industry. His tariff on Japanese motorcycles was 45% and his tariff to shield Americas semiconductor industry was 100%.

President Obamas administration attempted trade tariffs on China, in 2009 applying 25-35% on tire imports. The initiative eventually failed because other low-cost trading partners filled the gap. China has already warned that it would respond aggressively to any attempt at levy high tariffs on Chinese goods coming into the US.

Some insiders think that tariffs may have positive effects, if Trumps administration was able to enforce them. Robert Atkinson, founder and president of the Information Technology and Innovation Foundation think tank, says the US is suffering from huge Chinese government subsidies to its domestic technology companies.

Chinese government subsidies of up to $160bn are helping Chinese companies build up their semiconductor industry by buying up American and European semiconductor companies at huge premiums to market prices. [China] has ramped up its efforts to do indigenous innovation with a set of policies and practices that are hurting US firms and US jobs. It has continued unabated and grown, said Atkinson, who also co-chairs a White House policy group on China.

Immigration

Technology companies have been lobbying for decades to increase the number of H1B visas, which allow skilled workers to work temporarily in the US, but have been met with stiff opposition. The Forward.us coalition, which includes Facebooks CEO Mark Zuckerberg and Microsoft co-founder Bill Gates, wanted to make the 2016 election a referendum on immigration reform, explaining how they battle for a small number of global technology specialists. With Trump, that mission seems likely to get harder.

Eric
Eric Schmidt, executive chairman of Alphabet, has said the industry is in for a big change. Photograph: Christopher Lane/Christopher Lane (commissioned)

The H-1B program is neither high-skilled nor immigration: these are temporary foreign workers, imported from abroad, for the explicit purpose of substituting for American workers at lower pay, Trump said in a statement on 3 March. I remain totally committed to eliminating rampant, widespread H-1B abuse and ending outrageous practices … I will end forever the use of the H-1B as a cheap labor program, and institute an absolute requirement to hire American workers first for every visa and immigration program. No exceptions.

Schmidt expressed hope that Trump might be convinced by technology companies once he takes office. What do each and every one of those companies need? High-value, high-quality, high levels of education immigration. Every one of them is powered completely by those policies, which have been stuck for 20 years, he said. We bring these incredibly intelligent people into our country, we have the best educational system by far at the college and graduate school level, we kick them out after we give them these incredibly expensive degrees which we help subsidize and then they go an create competitors to our companies.

Corporate tax reform

Apple is dealing with a complex problem in Ireland, where the European Commission is seeking recovery of illegal state aid for alleged unpaid taxes of up to 13bn, plus interest. It is standard for global businesses to exploit loopholes that allow them to register profits in countries with lower corporate tax rates, though that means the profits (and taxes that go with them) dont come back to the US. The US government has already said it would like that tax revenue back, and Donald Trump says he has ways of making it happen.

Under my contract, if a company wants to fire their workers, move to Mexico or other countries, and ship their products back into the US, we will put a 35% tariff on those products, he said in Ohio on 27 October. As part of our plan to bring back American jobs, we will lower taxes on our businesses from 35% down to 15%.

Trump is more likely to cut corporate tax to between 20 to 25%, Atkinson says.

Terrorism

The radicalisation of people online, and its relationship to terrorist attacks, became a campaign issue for Trump.

Were losing a lot of people because of the internet and we have to do something. We have to go see Bill Gates and a lot of different people that really understand whats happening. We have to talk to them. Maybe in certain areas closing that internet up in some way, Trump said on 7 December in South Carolina. Somebody will say oh, freedom of speech, freedom of speech. These are foolish people. We have a lot of foolish people. Weve got to do something with the internet because they are recruiting by the thousands.

Microsofts chief legal officer Brad Smith re-asserted the need for government and the tech sector to collaborate, balancing privacy with public safety.

Weve not only advocated for clearer and more modern US laws, but have filed lawsuits four times in the past three years against the current administration, standing up for what we believe are the vital rights of people both here and abroad, he wrote after the election. As weve won the cases weve brought, weve been reminded of one of this countrys greatest strengths, its strong Constitution, independent judiciary, and the overarching rule of law.

Data privacy and surveillance

Trump brought up cybersecurity many times, often referring to it as cyber, very much emphasizing his priority of increasing the security of government systems.

To enhance the defense of the other agencies of government, including our law enforcement agencies, we will put together a team of the best military, civilian and private sector cybersecurity experts to comprehensively review all of our cybersecurity systems and technology, he promised on 3 October, speaking to veterans in Virginia. This will include the various methods of internal monitoring, attack and penetration, investigation of suspected hackers or rogue employees, and identity protection for government employees.

Read more: https://www.theguardian.com/technology/2016/nov/17/trump-tech-policy-industry-leaders-apple-china-tax