Oct 27, 2017

For big tech, a threat from the ground up

Illustration: Lazaro Gamio / Axios

For months, a threat to big tech has been building from the top, with numerous senators and congressmen proposing to regulate or give anti-trust scrutiny to Google, Facebook and Amazon. But now figures of both major parties say the unhappiness with the companies is also bubbling up from the bottom. The threat is dual, we are told: against the companies and the Washington establishment:

Why it matters: This bottom-up discontent is nascent, and polls show that big tech retains high public popularity. It is too early to say what shape the disgruntlement will assume, if and when it becomes more broadly visible.

But to the degree that it takes hold and grows, it suggests a potential replay of last November's rust belt exasperation with the status quo — when the establishment of both parties, in addition to corporate America, were blindsided by a shakeup to the U.S. political order.

What we're hearing:

From the Trump base, Steve Bannon is railing against the "Lords of Silicon Valley," and advocating the regulation of the big tech companies as public utilities. The appeal resonates with rank-and-file Republicans, who broadly believe that Facebook and Google "have it out for them," a Bannon ally tells Axios. "They feel Facebook is weaponized against conservatives."

  • A lagging indicator: Among ordinary conservatives, the issue is percolating, and, like the uprising against globalization last year, is not yet fully absorbed by elected officials. "It will be a political issue on the right whether it's two, four or six years from now," the Bannon ally said.
  • Bannon is stirring the pot: "Steve looks at Silicon Valley and says, 'Today, corporate power is centered there,'" the ally said. "He is saying that these are the guys running our lives, keeping our data, our content, and our communications." And let's not forget: during last year's election, Donald Trump said Amazon deserved anti-trust scrutiny.
  • The bottom line: For conservatives, "Silicon Valley is the new Wall Street," he said.

Among Democrats: Tom Perriello, a former congressman from Virginia, warns of a tech-fueled groundswell against the political establishment. Voters are unconvinced, he said, that the technological trends of automation and Amazonization — the shift of retail shopping online — will "benefit the many."

  • The lessons of globalization: "There is a deep belief that the elites of both parties blew it on globalization," Perriello said. "They underestimated the downside risk, and overestimated the upside gain. There is a feeling that the elites have never learned that lesson."
  • This is not a blue-red issue: At least in Virginia, the dual issues of automation and Amazonization resonate most fully with two groups — rural Trump supporters, and black urban Democrats. "These issues don't necessarily get raised unprompted," Perriello said of town halls he convenes. "But when you raise them, the whole room lights up."
  • Tech companies are on the line with Democrats, too:
  • A key issue is well-paying jobs: Ro Khanna, a Democratic congressman who represents a Silicon Valley district and has been a consistent critic of Amazon, said tech companies need to ensure that jobs go equally "to people in Youngstown and in Sunnyvale." The biggest challenge, he tells Axios, is "jobs of the future."
  • The bottom line: No one will challenge technological advance per se, but voters are vocal about the pace and shape of how it unfolds. "People just don't trust that the elites will get these downside concerns right," Perriello said.

The problem is starting to register in surveys: Tech companies enjoy high global trust, according to the 2017 Edelman Trust Barometer, a much-watched gauge of public sentiment conducted by Edelman, the public relations firm. Combined, 75% of the public in the U.S., China, Germany, Japan and the U.K. trust tech companies, Edelman said, making it the most trusted sector in business.

  • But Edelman raised a red flag: Since the financial crash, trust in the banking industry has risen by 11 points, and energy has gained by 9 points. But tech's trust level has remained flat. "The tech sector must continue to replenish its trust bank to maintain its historic leadership position," Edelman said.

Go deeper: The companies face a more immediate regulatory threat in Europe.

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