Big tech companies look to an unlikely savior: The Republican Party
As big tech companies navigate an increasingly hostile Washington, D.C., they are relying on an unlikely savior: The Republican Party.
Companies like Facebook and Google — where employees have long been known to support progressive causes and candidates, are pointing to conservative senators including the GOP’s Senate Majority Leader Mitch McConnell, and Senate Antitrust Subcommittee Chair Mike Lee, as their last best hope amid investigations that threaten the future of big tech, according to people at the tech firms and Wall Street executives with direct knowledge of the matter.
While both Republicans and Democrats — including Democratic presidential contender Elizabeth Warren and President Donald Trump — have criticized tech titans on issues including privacy and bias, Senate Republicans and Trump’s Department of Justice don’t appear to be ready to call for a break-up of the major tech firms on antitrust issues, people at the big tech companies told FOX Business. A contingent of state Attorneys General, a majority of which are Democrats, Rep. David Cicilline, the chairman of the Democrat-controlled House Antitrust Subcommittee, and as nearly every Democrat running for their party’s 2020 nomination, favor a massive reordering of the technology business. That restructuring includes, but is not limited to, the breakup of the biggest and most profitable firms like search powerhouse Google and social media behemoth Facebook.
Any potential breakup of big tech would likely crush the stock prices of these companies given their structure and the hefty revenues they pull in from raking in user data.
But Republicans appear, at least for now, dead set against putting a stake through the heart of big tech. That’s despite Silicon Valley’s long-held reputation as a bastion of progressive politics. A spokesman for Sen. Lee told FOX Business exclusively he has no plans to lead an effort that would break up tech.
“We are concerned about privacy, data misuse and bias, but that doesn’t fall under the antitrust law. Big isn’t necessarily bad,” Lee said. “It matters, but it’s not the only element. Senator Lee looks at the facts and the law and whether a company engages in anti-competitive behavior.”
The Republican positions on Big Tech is now being used by Google — may be the biggest target in the crackdown along with social-media titan Facebook — to assuage fears that the probe will erase tens of billions of dollars in market value from stocks that have been Wall Street’s best performers, people with knowledge of the matter tell FOX Business. Specifically, tech companies are telling investors not to bank on worse case scenarios that would involve breaking up the likes of Google and Facebook given the position of Lee and senior members of the GOP controlled Senate, these people say.
Spokesmen for Google, Facebook and the Justice Department had no comment.
“One of the things the tech companies are pointing out is that Congress is too slow-moving to make any immediate change … and McConnell and Lee aren’t going to take antitrust action against tech,” one tech insider with direct knowledge of the matter told FOX Business.
Tech companies are also spreading the word that they have other political factors in their favor as investors try and navigate how much the multiple inquiries and possible new regulations could affect profits and stock prices of what had been some of the world’s most profitable companies. At least until the 2020 election, the politically divided House and the Senate are unlikely to accomplish anything of substance, the tech companies argue.
Unless the Democrats sweep the House and Senate and the presidency in 2020, which appears unlikely, gridlock will continue for some time. That means serious regulation that would crimp profits or a breakup of any of the tech titans won’t happen for the foreseeable future, they say.
Tech company officials also note that in previous investigations, like the 2012 Federal Trade Commission probe into Google, agencies conceded there had been no antitrust violations.
Still, it remains unclear how big tech’s embrace of the GOP will be taken by the rank-and-file tech employee. Certainly, companies like Amazon and Google have been wise to spread their corporate PAC contributions to both sides of the aisle in Congress. Apple CEO Tim Cook and President Trump enjoy a warm relationship, and Trump recently praised Cook for calling him directly on major issues. Billionaire investor Peter Thiel, the co-founder of Paypal and a Facebook board member, is both one of Silicon Valley’s top investors and a supporter of President Trump.
But employees of the companies have been and continue to overwhelmingly donate to Democrat candidates while pushing progressive causes. In 2017 Google went so far as to fire James Damore, then an engineer, for circulating an internal memo that criticized the company’s progressive policies.
Moreover, some Wall Street executives are less sanguine about the future of big tech in the current regulatory climate. Financial insiders tell FOX Business they believe Google, Facebook, and others are underestimating both the scale of the regulatory crackdown and the disdain regulators of both parties have for them. If Democrats control Congress and the presidency after the 2020 election, the likelihood that Google and Facebook being broken up grows significantly.
And while the GOP may be less inclined to break up big tech, Republicans and President Trump, of course, have eagerly joined the chorus of tech critics that have amassed around the powerful industry in recent years amid public fears that companies are misusing private data, and other issues. The Trump Justice Department and Federal Trade Commission have launched extensive probes into issues involving the tech giants including possible antitrust violations.
Many GOP state attorneys general have joined the likes of New York’s Letitia James in the state probe of industry abuses. Antitrust is far from the only consideration on the agenda. Broadly speaking, regulators are examining four areas of alleged tech misbehavior: privacy, antitrust, tax avoidance, and national security.
“The intent of many regulators is to break up big tech — not to release value but to be as punitive as possible,” said Charles Myers, chairman of Signum Global Advisors.
Myers, who has been monitoring the impact of the regulation on the stocks of big tech companies, said that regulators believe that the AT&T breakup is what allowed tech to become successful, so there might be a similar effect if tech is broken up today.
“Thus far, Google has been able to escape a fair bit of criticism because they’re good at PR, but that will change when lawmakers and users alike realize Google has allowed Gmail to be accessed by third parties even possibly foreign governments.”
That said, big tech companies are spinning a more positive message to investors amid the regulatory firestorm. They point to the differences between the GOP and the Democrats in their approach to regulation and enforcement of antitrust laws. The Democrats including various 2020 presidential candidates, have called for the wholesale breakup of Google, Facebook, and maybe others like Amazon, and Apple, while the GOP Congress and even the White House has focused more on forcing these companies to eliminate what is viewed as liberal bias in Google’s search and Facebook’s news feeds.
Makan Delrahim, the Justice Department’s antitrust chief, has said that he doesn’t view tech’s massive size and reach — these are some of the world’s biggest companies that impact lives of nearly every American — as a reason to simply break them up.
“A company — just because they’ve been successful and have gotten big — do not violate the antitrust laws,” Delharim told FOX Business in April. “It’s only when they’ve engaged in certain conduct. It’s important for us to pay attention to it and make certain they don’t harm competition.”