February 14, 2020

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Silicon Valley is losing allies

San Francisco When Michael Bloomberg appeared in front of tech billionaires in San Francisco in mid-January, their world was fine for dinner for a long time. Finally there was another presidential candidate who paid tribute to the founders and risk investors. Who preached in his short speech in a gallery in the hip SoMa district of the optimistic pragmatism that the inhabitants of the Tech Valley breathe in and out. Who, as the founder of the media company and data service provider Bloomberg and former New York Mayor, no longer has to convince anyone of his doer qualities.

The audience around Salesforce founder Marc Benioff, Linkedin founder Reid Hoffman and startup investor Ron Conway was delighted. Jason Calacanis, a former Uber investor and avid Twitter user, swapped his profile picture on the social network after the appearance for the Bloomberg campaign logo.

The multi-billionaire joked that he was the first to appear in front of this exclusive group and didn't want a cent from them. Bloomberg funds his campaign from his personal wealth.

Presidential candidates asking for donations are the least of the problems for the Silicon Valley elite. Elizabeth Warren and Bernie Sanders, the promising party left in the race for the nomination, are also not accepting money from the California tech elite – it would jeopardize their credibility. Rather, they are campaigning against the influence of wealthy large donors. Google, Facebook and the other large corporations from the west coast threaten to smash them.

Bloomberg or Sanders – for Silicon Valley, the Democratic area code is more than anyone before: In the past, the technology industry could rely on the eventual candidate to perhaps increase their income tax but share their liberal values and would leave her business alone.

There are hardly any unrestrained tech enthusiasts among the Democrats. The coolness factor in the industry has given way to a mainstream of exploitation and surveillance capitalism. Except for Bloomberg, there was only ex-start-up founder Andrew Yang, who just gave up in the fight for the nomination.

It looks better for Pete Buttigieg. At first glance, the smart, former small town mayor, who has just won the area code in Iowa, looks like an ally of the valley. Buttigieg already knew Mark Zuckerberg in Harvard, his Facebook profile was the 287th ever.

Nobody wants to be a naive friend of the tech industry

The 37-year-old was recommended by Zuckerberg to two former high-ranking Facebook employees who are now working in his campaign team. A fundraising event in a wine cellar in Palo Alto, at which former McKinsey consultant entangled Netflix founder Reed Hastings or the wife of Google founder Sergej Brin, criticized Buttigieg.

But even Buttigieg wants to restrict the industry. He wants to strengthen the US competition authority FTC, whose reluctance has made the rise of trillion-dollar companies like Alphabet or Apple possible. So far, US antitrust law has practically only recognized competition violations if a monopolist increases prices and the consumer is directly monetarily harmed.

Pete Buttigieg

At first glance, the former small town mayor looks like an ally of the valley – but even he wants to restrict the group.

(Photo: AP)

The wind is already turning: this week the FTC announced that it would review all acquisitions by the five major tech groups since 2010. FTC boss Makan Delrahim is quoted in a portrait of the "Hollywood Reporter" that he expects at least one criminal case against a manager or a company in Silicon Valley in the coming months for violations of competition.

Buttigieg is fully on this line. Antitrust law "was not created for some of these technology companies that do not charge any prices," said the candidate early in his campaign. Your product is free – or at least apparently free. From what we know about how these companies use our data, nothing is really free. ”

Buttigieg's criticism of the digital giant may or may not be tactic. But at least his rhetoric is a sign that even a moderate democrat cannot afford to be a naive friend of the tech industry.

For them, the withdrawal of love from politics is completely unfamiliar: “Without the support of politics, Silicon Valley would not exist. Even if the people there like to attribute the success exclusively to themselves, ”says Margaret O'Mara. The historian from the University of Washington at Seattle wrote a book last year about the history of the most successful valley in the world.

Semiconductor manufacturers like Intel or Fairchild, which gave the Valley its name in the 1960s, benefited from the demand for chips for space travel or the military. O’Mara believes that today's generation of IT giants have also benefited greatly from the public sector. Stanford University, where Google founders Larry Page and Sergej Brin developed the first algorithms for their search engine, is heavily dependent on public research contracts – often Darpa, the U.S. military's research agency. "After all, that's the only thing there is enough money for in this country," says O'Mara.

The boom in self-driving cars that Google, Uber and startups like Argo and Aurora fight out also goes back to the legendary “Great Darpa Challenge” in 2004.

The Valley is a Democratic stronghold

"The bosses of the big tech companies were used to hearing in Washington," says the historian. And get what you want. The valley's venture capitalists successfully lobbied for lower capital gains taxes; ex-governor of California, Ronald Reagan, saw the second generation of Valley entrepreneurs around Apple founder Steve Jobs as a prime example of American entrepreneurship. Santa Clara County, the Silicon Valley district, is now a Democratic stronghold – but in the 1980s, chip designers and software developers chose Republican Reagan.

That changed with Bill Clinton. Under the young, liberal president and his deputy Al Gore, an early promoter of the Internet, the commitment to open world markets, qualified immigration and lax competition control became common property of both parties. This helped the industry to produce a number of global IT giants within a few decades. The valley has become more and more liberal over the years. Actually, the IT industry captains could not care who was president.

This consensus per tech industry has broken. If things go badly, the valley on the Pacific coast now faces four more years of cool headwinds.

Because Donald Trump is already anything but a candidate. The trade war with China smashes Apple's delicately chiseled trade routes. Justice Minister William Barr is messing with Facebook to prevent the planned encryption of all messages on the company's social networks – Barr fears that the FBI and the police will find it harder to monitor criminals and terrorists on the networks.

Trump even has a personal intimacy with Amazon boss and Washington Post owner Jeff Bezos: "Jeff Bozo", Jeff Blödmann, Trump calls one of the most successful entrepreneurs in the country in his tweets. The decades-long love affair between Valley and Washington has ended suddenly. A choice between Trump and Bernie Sanders or Elizabeth Warren would put even the greatest optimists between San Francisco and San Jose to the test.

Loss of trust between progressive left and politics

The Valley companies cannot even rely on the mutual blockade of the ideological parties in Congress. When it comes to the regulation of social networks, for example, many Republicans and Democrats suddenly agree: on “Section 230” of the “Communications Decency Act”.

Behind the bureaucratic name is the business basis of open platforms like Facebook, Instagram or YouTube. "230" releases her from liability for any posting on her pages. In the event of a deletion without replacement, Google and Facebook would probably have to hire tens of thousands of new moderators or only release the publication of contributions after a review.

A consensus between the parties is conceivable: the influential Republican Lindsey Graham brought in the “earn it” act, which wants to abolish “230” for platforms if they encrypt messages, together with a democrat. Bernie Sanders and Joe Biden even spoke out in favor of completely abolishing the rule.

Biden's position is remarkable: four years ago he was vice president of Barack Obama, the last openly tech-friendly president. "Obama raised donations in Silicon Valley, used Facebook for his campaign, and was the first president to appoint a US CTO," said O'Mara. Tempi passati.

The tech industry has also criticized itself: Biden, who Zuckerberg calls a "real problem", was annoyed by a lie-filled election campaign from the Trump camp, which Facebook did not want to delete from his page. The dispute is symptomatic of the relationship between Democrats and tech companies: the manipulation of the 2016 presidential election, for which the questionable polling firm Cambridge Analytica abused Facebook, has deeply shaken confidence between the progressive left and industry.

Suddenly, one topic after another breaks into the election campaign: the threatening market power of the tech companies. Your data rage, disregard for privacy. The bad dealings of Amazon with its suppliers or Uber and Lyft with their drivers. "Suddenly it becomes clear to many that Silicon Valley is an industrial zone like many others in the world," says O'Mara. The seductive dream that the tech industry is more interested in improving the world than in margins has burst.

Hope for Mike Bloomberg

Nevertheless, it is not to be expected that the top managers of large tech companies will openly revolt against a left-wing democrat, that they even support Trump. Open Trump supporters such as Facebook investor Peter Thiel or Oracle founder Larry Ellison, who recently organized a fundraiser for the president, are rare.

That will hardly change in the election campaign. The top managers in Silicon Valley should fear the revenge of their own employees even more than the revenge of a possible democratic election winner. According to an analysis by the news portal Vox, Sanders has collected more donations from employees at Google, Apple, Amazon, Facebook and Twitter than any other candidate.

So the top managers and investors have almost only hope for Mike Bloomberg – and vice versa, only hope for California: The 77-year-old largely ignored the first area code in the farming state of Iowa last week and toured, while his competitors on the results of the chaotic Election waited again through the sunshine state. The Democrats there are voting on March 3 – “Super Tuesday” – with 13 other countries.

So far, his message has not caught on, in surveys the New Yorker is ranked 5th in the largest state in the United States, far behind Sanders. If the New Yorker loses in California, his election campaign is likely to come to an end. And dark times could dawn for the state's tech corporations and billionaires.

More: All against big tech – antitrust watchers, data protection officers, EU commissioners: The sheer number of critics is making the tech trips of 2020 difficult. You advocate self-regulation.

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