Trump vs. Tech: It’s Going to Get Rockier

President-elect Donald Trump met with selected tech leaders on Wednesday. Warm words were said, smiles were exchanged, and hatchets were—perhaps—buried. But will Wednesday’s thaw in the Trump-tech tiff be lasting—or merely a pleasant photo op? It’s hard to know for sure, but there are three surprises to expect in the Trump-tech relationship going forward.

First, the Trump-tech relationship will probably get rockier. The president-elect has already tossed aside his populist campaign rhetoric and made up with large swaths of the business community: Big industrial CEOs, Wall Street titans, and trade association powers all have been included in the nascent Trump administration and transition. Many in tech think that Wednesday’s meeting was the start of a new relationship with Team Trump. But while reports say that the meeting was pleasant enough, tech industry hopes for a repeat of the kind of close relationship it had with the Obama administration are likely not to be realized, and not just because tech leaders (with very few exceptions) were so strongly on Team Hillary Clinton. The likely tech-Trump riff has more substantive roots.

Tech is heavily concentrated in a few places—California, New York, and Massachusetts—that went overwhelmingly for Clinton, and are outside of the president-elect’s central geographic focus. Silicon Valley’s failure to make huge investments in—or focus job creation efforts on—our heartland means that tech’s interests are outside of President-elect Trump’s core economic agenda: job creation in the lagging middle America states. If you are a business leader who can find a way to add 1,000 industrial jobs in Ohio, you are going to get a meeting in Donald Trump’s Oval Office. But if you have the next great app that will create 1,000 engineering and design jobs in San Francisco—not so much.

Moreover, while the president-elect is already engaging industrial companies on the difficult issues of outsourcing, job loss, and trade policy, the big job killer in the next few years (particularly in states, like Ohio, Michigan, Wisconsin, and Pennsylvania) may be technology—not trade. Automation could knock out service jobs in the next few years as dramatically as trade knocked out manufacturing jobs decades ago. Autonomous trucks delivering goods to market (as Uber recently demonstrated); automated grocery stores and checkout-free retailing (like the new Amazon (AMZN) Go); and robots in fast-food restaurants could be highly visible job destroyers among constituencies and in regions of the country of special interest to the president. That is bound to create friction between tech leaders and the president.

When you add to the mix a greater emphasis on security in a Trump administration as the “security vs. privacy” debate rages—a debate that even created tension between tech and the very tech-friendly Obama administration—you have a formula for the relationship with tech potentially getting worse, not better, as the Trump years unfold.

Second, nonetheless, tech is likely to get the immigration changes it wants. Put this is the category of profoundly ironic: Of all the things on the tech industry wish list, immigration relief may be the one it is most likely to get under President Trump. The irony is obvious: If one thing seems clear from the 2016 election, it’s that the bipartisan Comprehensive Immigration Reform bill that has been working its way through Congress for the past decade is dead. Indeed, at first blush, the idea that any liberalization of immigration rules could pass the incoming Congress and be signed by the incoming president seems far-fetched. But that superficial analysis may be wrong.

Donald Trump’s signature promise in the 2016 campaign was to build a wall on the southern border. How high the wall will be, whether it is a wall (or a fence), how extensive it will be: President-elect Trump has left all of that open for negotiation. But in the end, he must build something—and that means he will need Congress to pass some sort of immigration bill to authorize and pay for it. (No, Mexico is not going to foot the bill.) You can also count on the fact that not a single House Democrat will vote for the Trump immigration plan, which means he will need virtually every single House Republican (and a few Senate Democrats) to lend their support.

Tech will use the slim margins that such a necessity creates to have its most devoted allies on the Hill insist on “high-skilled immigration reform”—some increase in H1B visas, some greater ability for foreign STEM students to remain in the U.S. after graduation, some visas for entrepreneurs to come here—as the cost of passing this must-have bill for the new president. While tech’s willingness to cut its preferred immigration changes loose from Comprehensive Immigration Reform will anger its former allies, it seems likely that tech will bail on its coalition partners to get this deal with the Trump administration.


Third, that big tech deal may finally happen. No, I’m not talking about AT&T (T)-Time Warner (TWC). It’s hard to know if the president will stand by his campaign trail denouncement of the deal, or let regulators do their work on it. The tech deal I’m talking about here is the one killed by the Obama administration before it could even be made: the Sprint-T-Mobile (TMUS) merger. Back in 2014, the Obama-appointed FCC chair and Obama antitrust officials sent strong signals to potential merger partners Sprint (S) and T-Mobile: Don’t even think about it. Team Obama was dead set against collapsing America’s four wireless carriers down to three.

But government-relations-savvy Masayoshi Son (the principal owner of Sprint, and the driving force behind the potential merger) was at Trump’s side a few days ago to boast that his SoftBank investment arm would be investing $50 billion in the U.S. to create tens of thousands of jobs. (Okay, it was actually an announcement he made in October, merely repeated, but still, it was a good moment for Trump.) It seems likely that Son had one thing in mind as he stood with Trump: getting that Sprint-T-Mobile merger back on track. And it just may be.

Once the smiles and handshakes of the Trump Tower meeting on Wednesday are long forgotten, the real challenge for tech in Washington will unfold. Unlike the largely stable, mutual-admiration relationship that tech enjoyed with the Obama White House, the years ahead will be filled with surprises and unexpected twists, as the full impact of the changes in power, politics, and regional influence under President Trump are fully felt.

Ronald Klain is the Executive Vice President of Revolution LLC, a Washington, DC based venture capital firm. He previously served in the Obama White House and as a senior advisor to the Clinton campaign. The views expressed here are solely his own.

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