Trump and Silicon Valley: strategic alliance?

Trump and Silicon Valley: strategic alliance?
Trump and Silicon Valley: strategic alliance?

Despite the criminal conviction against him, the main players in the high-tech world of Silicon Valley and the financial circles of Wall Street are leading a turn in favor of Donald Trump’s candidacy and a growing rejection of Joe Biden and the administration. democrat. This change benefits the financing of the former president’s presidential campaign.

The shift responds to two fundamental reasons. The first is the consensus on the need to facilitate the mergers and acquisitions process on Wall Street, today strongly limited by a multiplicity of bureaucratic regulations. The second is the agreement on the urgency of a drastic deregulation of the high-tech industry to promote its development and guarantee freedom of expression on Internet networks. This last claim vindicates a right incorporated in the first amendment of the US constitution, allegedly violated by the prohibitions imposed on Trump and his supporters following the assault on the Capitol on January 6, 2021 and raised as a flag by Elon Musk in X (former Twitter) just after acquiring the company.

These two trends have a structural cause: the current estimate of the product cycle in artificial intelligence (AI) is around two years. From then on the equipment becomes obsolete and needs to be replaced. The four largest high-tech companies (Amazon, Microsoft, Meta/Facebook and Google) invested more than US$200 billion annually in equipment in the last four years and this demand for new investments tends to grow. Regulations hinder this investment process in continuous growth.

Stephen Schwzarman, head of Blackstone, the main investment fund on Wall Street, a traditional supporter of Democrats, decided to support Donald Trump this year. To justify this, he argued that he shares “the concern of most Americans that economic policy, immigration and current foreign policy are taking the country in the wrong direction.”

The same thing happened with Bill Ackman, head of Pershing Square Capital Management (Wall Street’s third hedge fund), who now supports Trump. Ackman is a partner of Elon Musk at X (ex-Twitter) and his support for Trump became public after the unprecedented ruling of the New York court that convicted the former president of committing 34 crimes.

This trend on Wall Street is due to the fact that the former president proposes starting a drastic cycle of economic deregulation and, above all, the investment process, ending the Democratic interventionism of the Federal Trade Commission (FTC), which is the state agency. “antitrust,” as well as launching a new tax cut, just as he did in his first term.

The paradigmatic case is Musk, who has become the champion of the complete deregulation of the technological revolution of artificial intelligence. Musk supported Biden in 2020, Barack Obama in 2008 and 2012, and Hillary Clinton in 2016. But now, through

Musk focuses starkly on the cognitive and physical limitations resulting from Biden’s high age, and he does so in unequivocal terms: “Biden is obviously unaware of what is happening around him. The president is nothing more than a tragic front for a political machine of extreme left that controls the White House.

“Financial Times” highlights that in 2020 there were 28 Biden donors for every Trump donor in Silicon Valley and the ratio climbed 3.9 to 1 in the San Francisco Bay area, while in 2024 there are 2.6 Biden donors for every support to Trump and in the “Bay Area” (San Francisco Bay) the ratio has fallen from 3.3 to 1, with a trend that accelerates as November approaches.

This turnaround in the political position of technology companies is not a bolt of lightning in the middle of a starry night. It crowns a long process in which the Democratic administrations expressed in different ways their aversion to the disproportionate expansion of the gigantic conglomerates and paid attention to the preventions caused by their uninterrupted and overwhelming expansion. The last three expressions of this position targeted none other than Google, Apple and Meta (formerly Facebook) and gave rise to successive legal presentations that are ongoing in US courts.

In the “United States v. Google” case, the Department of Justice accused the company of abusing its dominant position in the Internet search market. The indictment points out that to achieve this “privileged position” the company pays more than $10 billion per year to various manufacturers, including Apple, to pre-install its Chrome search engine on its devices. Prosecutor Kenneth Dintzer stated that “this case is about the future of the Internet.”

This lawsuit against Google is the second monopoly lawsuit in the Internet era. The first was against Microsoft, the company founded by Bill Gates. In 1998, the computer giant was accused of agreeing with manufacturers so that computers would have Windows and its Internet Explorer browser preinstalled. On that occasion, the court initially condemned Microsoft to split into two companies, but a subsequent agreement with the Department of Justice established regulations that made that division unnecessary.

The illegality of monopolies was established in the United States in 1890 by the Sherman Act, designed to prevent market concentration in a single company. It was first applied in 1911 against Nelson Rockefeller’s Standard Oil, which was forced to split into 34 companies. Marcelo Scaglione, a renowned regulatory specialist, explains that “Data is the oil of the future. What is being discussed is who owns the data. Because all the development of the big technology companies was done based on the use of data from others. More so now with the advancement of artificial intelligence.”

The lawsuit filed by the Department of Justice and fifteen states against Apple, the company founded by Steve Jobs, which they accuse of monopolizing the smartphone market, falls within that same line of confrontation. The lawsuit, which four other states joined in recent days, maintains that Apple “undermines applications, products and services that would otherwise make users less dependent on the iPhone.”

At the same time, the FTC advanced an accusation against Meta (former Facebook) on the grounds that Mark Zuckerberg’s company tried to suppress competition by acquiring potential rivals, such as the messaging platform Whats App and the image-sharing application Instagram.

But the final straw occurred last May, when Meta was sued by the Department of Justice for using certain features on Instagram and Facebook to “attract teenagers and children to their platforms considered “addictive” or “harmful.” The indictment maintains that “Meta has taken advantage of powerful and unprecedented technologies to attract, engage and trap young people and adolescents for its own benefit.”

The corporate reaction determined the massive support for Trump and his deregulatory promises. In this way the American presidential election takes on a new dimension. The future of the high-tech industry is at stake at the time of the rise of artificial intelligence, erected at the axis of the Fourth Industrial Revolution led by the United States followed, more closely, by China.

 
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