What the U.S. Elections Mean For Silicon Valley
San FranciscoSilicon Valley's tech boom and hiring frenzy of engineers and developers have helped rents soar.
We’re now in the home stretch of what has been the mother of all elections. Passions are high — to put it mildly — especially with respect to the U.S. presidential race, but also for the Senate and House contests. Partisans on all sides are battling furiously, predicting dire consequences if their preferred candidates do not win. Silicon Valley is no exception to this.
In courting Silicon Valley votes and campaign contributions, candidates from across the spectrum have made their arguments as to why electing them to office would be helpful — or even essential — to the tech sector. Way back in the early days of the campaign, Jeb Bush made a highly publicized trip to San Francisco to make his case as a pro-tech candidate, memorably hailing an Uber to a meeting at Thumbtack. Hillary Clinton rolled out an extensive technology policy agenda last summer in her effort to claim the mantle of the pro-innovation candidate. And Donald Trump’s transition team held a confab a couple of weeks ago with representatives of the tech sector, seeking input to help shape the candidate’s platform.
Between the candidates’ frequent appeals to Silicon Valley, and the Valley’s even-more-impassioned-than-usual engagement in the current election, it might seem that who wins the White House and Congress on November 8 will have a major impact on how the big tech policy issues shake out. But instead, consider:
First: Many of the highest-profile tech policy issues of the day are predominantly or exclusively state, local, or international issues, not federal.
Just this Friday, we got another reminder that most of the big tech policy issues are playing out at the state level when Governor Cuomo signed legislation against short-term rentals in New York. These attempts to rein in home-sharing — laws that impose registration requirements on homeowners, limits on frequency of home rentals, and other restrictions — are also playing out at the local level in San Francisco and Anaheim, among other cities. Similarly, the headline-grabbing battles between companies like Uber and Lyft and taxi regulators are entirely local affairs in the purview of city and local transportation authorities in the U.S. and abroad, where officials are wrestling with how to apply legacy rules and licensing requirements to popular ride-sharing services.
At least for now, the 1099/W-2 worker issues (worker classification, benefits) that gig economy companies face are mostly being decided by state governments and courts. Regulation of fintech companies is being debated and developed at all levels of government, but state and international regulators are at least as active as their Washington counterparts. And issues like Digital Single Market, Privacy Shield, and data localization are top-of-mind tech concerns from the international arena. By definition, the president and Congress will have little if any effect on these issues.
Second: Of the tech policy issues that do have a strong federal component, many are non-partisan or defy traditional partisan lines.
In the non-partisan category: the questions of how the U.S. Federal Aviation Agency (FAA) should regulate drones, or how the U.S. Department of Transportation (DOT) and National Highway Traffic Safety Administration (NHTSA) should treat autonomous vehicles, are not issues that spark divisions along Republican-Democrat lines. Generally speaking, members of both parties want to see these technologies develop quickly, but with appropriate rules to ensure safety and privacy. Members may have technical differences about where those lines should be drawn, but those do not necessarily track party affiliation. This perhaps explains why the past year has seen Washington produce rules or guidelines in both of these high-profile sectors.
Also falling into the largely nonpartisan camp are debates over federal regulation of fintech. There are plenty of Democrats and Republicans who are excited about the great potential of bitcoin, blockchain technology, marketplace lending, and other fintech innovations. Plenty from both parties focus instead on what they see as the risks, and prefer a stronger regulatory hand. Procurement reform — making it easier for tech startups to sell their products to the government, and ensuring that government can benefit from the work of innovative companies — is another important tech policy issue with bipartisan interest and support.
Why is this? On the Republican side, being pro-business has long been a core element of the party’s philosophy: low taxes, minimal regulation, and deregulation. Meanwhile, over the past several years, Democrats have been reaching out aggressively to Silicon Valley. President Obama has made it a priority to bring tech veterans into the White House and the administration. And plenty of Obama administration alumni have made their way out to work in Silicon Valley companies. The result of this confluence is a welcome measure of bipartisanship on many of the tech sector’s key policy priorities.
And while many headline tech policy issues are nonpartisan in nature, others confound party lines. The best example here is the issue that has driven probably the greatest intensity in Silicon Valley over the past couple of years: the encryption and backdoor debate. The highest-profile backdoor proponents are a Democrat-Republican pair (U.S. Senators Dianne Feinstein and Richard Burr). Same goes for the leading advocates of strong encryption (Senators Ron Wyden and Rand Paul).
For all tech policy issues that are nonpartisan or bipartisan in nature, from drones and other autonomous vehicles to “mixed” issues like encryption, the questions of which party occupies the White House and which party controls Congress are far from determinative.
Third: For the federal tech policy issues that are partisan or controversial — where you’d think the election outcome would make a big difference — there’s a low likelihood of any legislative action in the next few years.
Regardless of how the election turns out, the Senate will remain closely divided for the foreseeable future. Whichever party ends up winning the Senate will not have a filibuster-proof majority, and thus the minority party will be able to fight back against proposed legislation — including tech-related bills — that it opposes. So it’s hard to imagine, for example, any grand bargain emerging anytime soon from Congress on gig economy issues, notwithstanding prominent calls for reform.
What about immigration reform or trade (like the Trans Pacific Partnership/TPP), you ask? While those absolutely are top-of-mind issues in Silicon Valley, and while there are strong differences between the parties, they are not really technology policy issues. The outcome of the immigration and trade debates will have broad impact across virtually all sectors of the economy — including, but by no means limited to, the tech sector.
This is not to say that the election outcome will have no effect on tech policy issues. But rather, to be precise: The tech policy issues for which the November 8 results will matter most are issues that (a) are primarily federal rather than state, local, or international; (b) are partisan/controversial; and (c) can be carried out by agency action rather than legislation.
Two classic examples from the past eight years are net neutrality and the ICANN transition, where it really did matter who was running the FCC and Department of Commerce, respectively — and thus, who was in the Oval Office making those appointments. We’ve also seen that federal agencies can hinder tech companies’ development, through aggressive enforcement of their regulations; think about the Consumer Financial Protection Bureau (CFPB)’s influence on fintech, or the Federal Trade Commission (FTC) on privacy. This is where the outcome of the election will have its most noticeable impact on tech policy — in determining who gets to appoint agency heads, and whether agencies will be more laissez-faire or aggressive toward tech startups.
Of course, agency action — whether rulemaking or enforcement — will be met with court challenges, as we’ve seen with both net neutrality and ICANN. Thus, increasingly the D.C. Circuit and other federal courts, ultimately including the Supreme Court, is where many important tech policy questions will be finally decided. Because the President gets to nominate and appoint judges (unfettered by the threat of filibuster, for lower court judges, since 2013), this is one indirect but important way in which the outcome of the presidential race will affect tech policy in the medium to long term.
By all means, those in tech, no less than their fellow citizens, should stay fired up about the federal elections, go to the mat for their candidates, and vent on Twitter and Facebook, all the way through election night. But not because it matters bigly to tech policy. The set of technology policy issues that will be significantly affected by the November 8 outcome is modest. Regardless who wins what, much of the action on the big tech policy issues of the day will continue to occur outside Washington. And meanwhile, in Washington, tech policy may turn out to be one of the rare areas for bipartisan cooperation in the wake of this divisive campaign.
Ted Ullyot is a partner at Andreessen Horowitz where he leads the Policy and Regulatory Affairs team. He was previously general counsel at Facebook and served in the White House as a deputy assistant to President George W. Bush. Andreessen Horowitz is an investor in Airbnb, Lyft, fintech, autonomous vehicles, and other companies in sectors affected by tech policy.