Tech Firms May be Facing Buyers Remorse

Did tech firms take the wrong hedge in the 2016 elections? In an eye-opening analysis, Thomas Edsall reported in the NY Times that the PACs for Microsoft, Facebook, Google and Amazon collectively gave $2.1 million Republican Congressional candidates, as opposed to $1.5 million to Democrats. This was the first time that these firms had given more money to Republicans then Democrats (though Microsoft’s PAC first favored GOP candidates in the 2012 cycle). The PACs do not contribute to Presidential candidates, and it may be that like so many others the tech firms felt that Hillary was a shoo-in and decided to hedge their bets. If so, it was a bad bet.

For one thing, despite the “charmfest” that Sheryl Sandberg, Larry Page, and Jeff Bezos attended with Trump, the new President is much more comfortable with old-style empire builders. In fact, he had previously met with SoftBank CEO Masayoshi Son who deftly played Trump by recycling an investment plan that had been announced back in October; presumably the photo op is going to pay dividends in the form of re-consideration of SoftBank’s attempt to merge with T-Mobile which had been shut down by Obama regulators. Back in August, news reports indicated that Son was looking forward to a new FCC chairman.

Son may now get the receptive chairman he was hoping for, with the announcement that Ajit Pai, a Republican FCC Commissioner (appointed by Obama) will become chairman in the wake of Tom Wheeler’s resignation. Not only is this bad for telco consolidation, but even worse, Pai has been an extremely shrill opponent of the FCC’s approach to fashioning net neutrality rules. Effectively the FCC took the very reasonable approach of regulating internet service as if it were a utility. This was important as earlier attempts dating back to the Bush administration were rejected by the courts as exceeding the FCC’s authority. This time, the DC Court of Appeals ruled in favor. Rather than engaging on the merits, Pai focused on the line that the whole approach was a fix from the Obama White House. He encouraged telcos to appeal to the Supreme Court, and is now believed to be working on plans to undermine or trash the rules. In a December speech to the Free State Foundation (yes, its as bad as it sounds), Pai gleefully spoke of needing to “fire up the weed whacker” to go after regulations.

None of this can come as good news to the tech firms, who have been battling telcos for years, and for whom the key tenets of net neutrality — no blocking, throttling or “fast lanes” — are critical. Pai, on the other hand, has said that Google and Facebook are competitors to telcos, and has gone after Netflix specifically. As a confirmed commissioner, Pai can ascend to the chairmanship without Senate approval, but if he were to continue as chair would need to be confirmed in 2017, by a safely Republican Senate, thanks in part to donations from the tech PACs.

Originally published at on January 25, 2017.

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