Nov 5, 2018

Trump's Big Tech contradictions

President Trump told "Axios on HBO" his administration is looking seriously at antitrust investigations of Google, Facebook and Amazon. In the next breath, he argued they are great companies that he wants to help.

Why it matters: Trump's inconsistent approach toward Silicon Valley has had the world's most powerful technology companies on edge — and that's exactly where he wants them. But his wavering stance makes it difficult to set national priorities around serious tech issues, such as consumer privacy, data security and competition.

What he's saying: The following excerpts from the interview with "Axios on HBO" illustrate Trump's cognitive dissonance on this topic.

  • Monopoly power of Google, Facebook and Amazon:
"I leave it to others, but I do have a lot of people talking about monopoly when they mention those three in particular."
We are looking at [antitrust] very seriously ... Look, that doesn't mean we're doing it, but we're certainly looking and I think most people surmise that, I would imagine."
  • The EU's aggressive regulatory approach:
"The European Union takes a lot of money out of our companies and I actually went to my people and said 'you know, if they're gonna do it we should be the one doing it, not them.' These are our companies...and they're great companies.
"I'm not looking to hurt these companies, I'm looking to help them. As far as antitrust is concerned, we'll have to take a look at that but I want them to do well. I want Amazon to do well. I want Google to do well. I want Facebook — I want all of 'em to do [well] — these are great companies."

Reality check: Several of Trump's statements during the interview underscore some misunderstandings regarding existing tech policy.

  • EU taxes: He said the EU "taxes our companies terribly."
    • Fact check: European countries have different tax structures, which is why some U.S. companies choose to house profits in countries with lower tax rates.
    • Earlier this year, the European Commission proposed a digital services tax that would apply a 3% tax on revenues of tech companies operating within EU borders. That proposal, as well as similar proposals announced by other countries, has not yet been finalized.
  • Obama era: When asked if he's considered breaking the companies up, he responded: "In fact a lot of people thought that it was gonna happen and then I guess the previous administration stopped it from happening."
    • Fact check: The Obama Administration approved acquisitions by these companies (with conditions, in some cases) that some say have helped to solidify their dominance, such as Facebook's acquisition of WhatsApp.
    • After a nearly two-year investigation, the Federal Trade Commission determined Google had not violated antitrust laws in how it arranged search results. But there was no investigation focused on breaking up any of the companies.
    • Under Obama, regulators did take action when the firms violated consumer protection laws, such as when Google settled with the Justice Department over illicit drug ads and when Facebook settled with the FTC for making information public after telling users it would be kept private.
  • Amazon taxes: Trump said, "We just want a fair playing field, you gotta have a fair playing field. Now all of a sudden the tax is happening with respect to Amazon — you know they had the advantage of no tax and the Supreme Court just ruled and that's a big difference."
    • Fact check: The Supreme Court in June ruled that states could collect sales tax from e-commerce retailers who had previously not been forced to pay local sales tax. Amazon was already collecting state sales tax on products it sells directly, but many smaller online vendors were not.
    • Amazon does pay taxes, although it’s been criticized by progressives like Sen. Bernie Sanders for not paying its fair share of federal income taxes.

Between the lines: Trump wants the companies to "do well" — but on his terms. He may not have much power to directly force policy action.

  • Oversight falls to the FTC and antitrust arm of the DOJ, which are expected to operate independently of the president.
  • He could urge Congress to pass a law that would target tech companies, but sweeping legislation would be difficult, especially if Democrats retake the House.
  • The president could sign an executive order to push policy, but that could be legally challenged if opponents feel the order isn’t within the president’s jurisdiction.

The bottom line: A number of issues — from consumer data scandals to election manipulation — have created a more skeptical view of Silicon Valley on both sides of the aisle. There’s still room for the Trump administration to clip Big Tech's wings.

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