Understanding the new Tech Right

There are many reasons some tech companies and figures are now supporting Trump.

Art by GPT-4

Two years ago, sitting in a bar in the Mission district of San Francisco, a startup founder I know told me that he thought the tech industry was shifting toward supporting Trump. A couple of months later, some other founder friends told me the same. Now it might seem like their prophecies are coming true. Elon Musk, who said in March that he had no plans to donate to any political campaign, has now committed to giving $45 million a month to a pro-Trump super PAC. Venture capitalists Marc Andreessen and Ben Horowitz also announced that they’re donating to Trump, as did sometime tech investor Bill Ackman. The news is now filled with a flurry of stories about how the tech industry is turning to the right.

These stories exaggerate enormously. There have always been some tech figures on the political right — think of Peter Thiel and Palmer Luckey in 2016. Overall, the list of high-profile tech businesspeople declaring for Trump so far is pretty small:

When you have to mention Cameron and Tyler Winklevoss separately on your list, it’s not that impressive of a list. And surveys still show that the tech industry as a whole leans strongly Democratic and dislikes Trump quite a bit. Most tech people are highly educated, and educated Americans are usually Democrats. If most of your friends in tech are Trump supporters, chances are very high that it’s a selection effect.

There was always going to be some significant minority of the tech industry that leaned to the political right — I suspect they’re just more open about it now. America is heavily polarized by education, which means that most of the educated people that tech figures hang out with — especially in the Bay Area — are going to get very mad at them if they put on a MAGA hat. But as unrest slowly fades in America, that social opprobrium will be less vitriolic — people will frown and roll their eyes and invite you to fewer cocktail parties, but they won’t run you out of town or blackball your VC firm like they might have done in 2017.

On top of that, the fact that Trump is now heavily favored to win the election means there’s now an incentive for businesspeople to attach themselves to Trump, whatever their true beliefs. If you know who the next President is going to be, supporting him is probably a good business move — if you’re a gambler, you want to bet on the strong horse. Yes that’s cynical, but most super-rich people didn’t get where they are today by being ideological crusaders.

Having said all that, though, I do think there are a number of forces pushing the tech industry to the political right. And I think that Democrats should be clear-eyed about what these are, because if they don’t make some adjustments, they could steadily lose more and more support from the industry over the next decade.

Basically, I see seven main factors pushing tech to the right:

1. Taxes and regulation

2. Antitrust

3. Crypto

4. Negative polarization and the “techlash”

5. DEI and leftist activism

6. The bitter aftertaste of the “cancel culture” era

7. Ethnic issues

Individually, none of these might be decisive, but together they actually add up to a lot. I’m going to talk a bit about what I think the impact Trump’s policies will be for the tech industry, but first I want to go through this list.

Factor 1: Taxes and regulation

It may surprise you to hear this, but tech people are businesspeople. They make money by selling goods and services through the capitalist system. The lower taxes are on corporations, the more money people in tech can make. And the more that regulation takes a light touch, the fewer impediments there are to tech business models.

Remember that I often try to understand the 2020s by looking back to the 1970s. In his book Reaganland, Rick Perlstein writes about how businesses shifted to the right in the late 1970s:

Wary of escalating environmental and consumer protection regulations, corporations — “boardroom Jacobins” in Perlstein’s lexicon — amped up their lobbying efforts to promote the GOP’s calls for deregulation and lower taxes.

Education polarization means this shift is a bit more difficult to pull off in the 2020s, but the pressure is exactly the same. Trump cut corporate taxes in the 2010s, and he has said he wants to do so again. Biden, meanwhile, has proposed a tax on unrealized capital gains that would hit the startup sector very hard if enacted. And Trump’s appointees generally take a much lighter regulatory touch than Biden’s.

In 2019 or 2021, with tech valuations riding high, taxes and regulation might not have seemed very important for Silicon Valley businesses — they’d make money no matter what. But a tech bust in 2022 has put a lot more pressure on both Big Tech and “Little Tech” alike. There are fewer winner-take-all markets out there than the VCs of the 2010s had hoped, and even the markets that do tend toward natural monopolies in the short term — web search, social media, and e-commerce — are very vulnerable to disruption from AI and other new developments.

All of that basically became apparent in 2022. In the new, more challenging business environment, taxes and regulation loom larger, just as they did in the 1970s for many other U.S. industries. Basically, tech is becoming a mature industry, and for mature industries, tax and regulatory policies matter more.

AI, of course, has been the one big bright spot in the tech universe since 2022. But Democrats have been quick to try to regulate the new technology. Biden issued an executive order on AI safety that includes various reporting requirements — these requirements are cumbersome and annoying, and their usefulness in actually increasing AI safety is dubious. In California, Scott Wiener has championed a bill that goes further, imposing criminal penalties on the people who run AI companies if their models are judged to have caused some kind of large-scale harm. This bill also has obvious costs and dubious benefits.

On top of that, many progressives worry that AI could be racist, that it could replace human jobs, and so on — all worries that portend more regulatory efforts in the future. In other words, the progressive turn in the Democratic party threatens the one industry in which an increasingly pressured tech industry has placed most of its hopes.

Yes, that’s going to result in some “boardroom Jacobins”.

Factor 2: Antitrust

I might have bundled this together with regulation in general, but I think it’s different enough where it deserves its own section. Over the past decade, Democrats and progressives have increasingly embraced the cause of antitrust. While economists emphasized the dangers of monopoly power for growth, prices, and wages, the progressive scholars who led the charge instead tended to emphasize political power — basically, they wanted to go after big companies because they thought big companies were gaining too much control over politics and needed to be cut down to size. The most prominent intellectual proponent of the shift, Lina Khan, is now the head of Biden’s Federal Trade Commission.

These new antitrust crusaders don’t focus exclusively on Big Tech, but they have made it their most important and prominent target. Between Khan’s FTC and the Justice Department, the Biden administration has brought antitrust cases against Amazon, Google, Meta, and Apple. It’s now reportedly planning actions against Nvidia, Microsoft, and OpenAI. Basically, any big tech company is now automatically a target for progressive antitrust.

I suspect that this has resulted in some quiet Trump support within big tech companies. They can’t say it too loud, because that might invite even more antitrust attention while Biden is still in office. But I bet they’re thinking it.

Meanwhile, the champions of “Little Tech”, like Andreessen Horowitz, are more free to speak up. You might wonder why Little Tech might be worried about antitrust, when one of the main purposes of antitrust is to weaken incumbent players so upstarts can have more of a chance. In fact, there are two reasons.

First of all, Big Tech represents the upside potential for most startups. Every startup’s pitch deck has at least one page where they explain how they could potentially be the next Facebook, Amazon, or Google. In the age of Khan-style antitrust, that means the success case for any startup is now “you get sued by the government”.

Second, VCs invest in lots of companies that are solid successes but which don’t turn into giants. These companies could go public, but increased regulatory requirements like Sarbanes-Oxley and Regulation FD, as well as the increased ease of raising money in private markets, have discouraged IPOs somewhat. An easier path to medium-level success is to simply get acquired by a Big Tech company. Antitrust makes that a lot harder.

So antitrust isn’t just threatening incumbent tech companies — it’s also limiting the upside for the upstarts. That’s a powerful economic incentive to support Trump.

Factor 3: Crypto

This factor is often overlooked, but several friends in the tech industry have mentioned it to me, and Mark Cuban has been saying it pretty loudly. Biden’s administration — especially Gary Gensler of the SEC — has been generally very hostile to the adoption of cryptocurrency. This poses a direct threat to the personal wealth of many people in the tech industry, and to the business success of some VC firms.

Crypto has very few use cases, and it doesn’t yield a payment stream — in other words, it has very little fundamental value. Like gold, its value is based primarily on a widespread popular belief that crypto will be economically useful in the future. The value of Bitcoin and other cryptocurrencies thus depends crucially on adoption — the more people who buy into the crypto-verse, the higher the prices of Bitcoin, Ether, and other cryptocurrencies will go.

This makes crypto — and especially Bitcoin — function like a special-interest group. If you own a bunch of Bitcoin, how rich you are in the future will depend on whether the government encourages or discourages institutional investors to buy Bitcoin. In other words, Trump is very good for crypto owners, while Biden is bad.

And people in the tech industry tend to own a lot more crypto than other people. Crypto is a technology (albeit not a very technically impressive one), and tech people are early adopters; thus, tons of people in Silicon Valley are sitting on millions in Bitcoin and/or Ether. Using government policy to encourage Bitcoin adoption is therefore a way to directly put millions of dollars directly into the pockets of a whole lot of people in tech. That’s a powerful financial incentive! On top of that, some big VC firms — notably Andreessen Horowitz, and also Sequoia — invested heavily in “web3” crypto-related startups, and could benefit from looser regulation.

Factor 4: Negative polarization and the “techlash”

The economic incentives I outlined above would, by themselves, be enough to push tech somewhat to the right. But I wouldn’t count out the importance of sociocultural issues as well.

One of the most important is simply negative polarization. Until the mid-2010s, liberals and progressives generally felt warmly toward the tech industry. That started to change in the 2010s, as media coverage of tech turned more negative:

Source: ITIF

A big turning point came in 2016, when many progressives blamed Facebook for Trump’s victory over Hillary Clinton. Here’s a famous graph showing the tone of the New York Times’ coverage of Facebook:

Source: Vox

Overall, tech companies remained broadly popular. In fact, the modest deterioration in tech’s public image was more prominent among Republicans, who believed that social media censored their political views.

At the same time, however, dislike and distrust of “tech” as a culture became standard in progressive culture — and especially in progressive media — as the 2010s went on. This was the so-called “techlash”. Part of this was because people in traditional media felt that their livelihoods were under threat because of competition from social media. Part of it was just the eternal disdain that educated professionals tend to have for their richer, more entrepreneurial peers. And part of it was just because Americans in the 2010s were looking for someone to get mad at, and the tech industry was one convenient target.

Politics, fundamentally, is about teams. If someone attacks you again and again, you will start to view them as your political opponent, and you will tend to align yourselves with whoever opposes the people who are attacking you. This is called “negative polarization” — some also call it “criticism capture” — and it’s one of the most powerful forces in politics. Progressives bashed “tech” for many years, so they shouldn’t be surprised if some tech figures decide to bash back.

Friends of mine in the progressive media tend to sneer at this idea, deriding tech figures who complain about media coverage for caring more about their “hurt fee-fees” than about matters of substance. But negative coverage is a leading indicator of adversarial policymaking. The “techlash” probably contributed to the vigor with which Lina Khan and the new antitrust movement have preferentially gone after tech companies. So it was probably reasonable for tech people to worry that the “techlash” would lead to real negative consequences.

Factor 5: DEI and leftist activism in the tech sector

American industry in general is experiencing a backlash against DEI initiatives. The DEI push of the 2010s, which intensified after the protests of 2020, was handled in an incredibly clumsy, ineffective, tone-deaf manner. Diversity training sessions that labeled every positive work skill as “white supremacy”, explicit racial discrimination, and mandatory ideological conformity in the form of “DEI statements” produced a very predictable backlash across the breadth of American society.

Tech companies were particularly exposed to DEI pressure. Part of this comes from the fact that they were located in California and employed a very high percent of educated people. But a deep reason comes from Gary Becker’s discrimination theory. Because companies like Google had more monopoly power from their network effects, they had a big profit cushion that could be used to support any sort of discretionary social initiatives that the executives wanted.

This is why Google is known as an especially activist company on social issues — it basically sits back and prints money from its monopoly over search advertising, while many of its employees work on whatever other things they or their bosses feel will benefit the world. So the DEI push focused especially hard on those network-effect companies, because they knew that’s where the money was. This is why Google released the “woke AI” that insisted on drawing pictures of Black Nazi soldiers.

Tech companies also became a hotbed of leftist activism. A walkout by employees in 2018 caused Google to cancel some defense contracts, and to shy away from working with the DoD in the future. And just this year, Google had to fire dozens of workers for taking over its offices in protest over Google’s contracts with Israel. This gives you a taste of what life was like inside big tech companies in recent years.

After 2022, though, this kind of culture has become harder to justify. The maturing of the consumer internet industry, together with competition from AI upstarts, is putting pressure on tech company profits — or threatening to. As Becker would predict, the potential loss of that profit cushion is making companies take a dimmer view of DEI, activism, and other things not directly related to the bottom line:

Microsoft laid off an internal team focused on diversity, equity, and inclusion…The email says the team was eliminated because of "changing business needs" as of July 1. It's unclear how many employees were affected…[M]any tech companies have appeared to retreat somewhat from diversity efforts. Zoom laid off a DEI-focused team earlier this year, Bloomberg reported. Google and Meta also cut DEI programs last year[.]

Some companies are going further, proudly endorsing purely meritocratic hiring policies, with Scale AI founder Alexandr Wang coining the term “Merit, Excellence, and Intelligence”. Meanwhile, ESG, the push for investors to force companies to take a stand on social issues, has quietly evaporated.

The winnowing of DEI doesn’t automatically drive tech figures to the political right — if you can just fire the DEI team, you don’t need a Republican in the White House to help you. But the Biden Administration’s staunch support for DEI raises the possibility that canceling these programs in the name of the bottom line might eventually incur political costs if Democrats stay in power for a long time.

Factor 6: The bitter aftertaste of the Cancel Culture era

The “cancel culture” era was really more about technology than culture. The open and public nature of social media, combined with the internet’s “long memory”, allowed critics to band together and attack people in a way that had previously been very difficult. Standards of social ostracism that were developed for small villages were applied to strangers across vast distances, with the aid of often anonymous hordes of other strangers. This had some positive consequences, but also had many negative ones.

The #MeToo movement — the wave of public accusations of sexual harassment, sexual assault, and sexism in the 2010s — appears to have significantly decreased sexual harassment in the American workplace. But it also involved a number of dubious or even false accusations. The brunt of the movement fell on the entertainment industry, where men had been allowed to get away with some pretty exploitative behavior for a very long time. But some of it fell on the tech industry.

Consider the example of Joe Lonsdale. In February of 2015, Emily Bazelon of the New York Times wrote an article about a sexual assault accusation against venture capitalist Joe Lonsdale by his ex-girlfriend. Although Bazelon’s article did criticize the policies that universities put in place to investigate and punish sexual assault case, and raised doubts about the veracity of the accusation, she also used it as an occasion to criticize “Stanford’s open door to Silicon Valley”, and to decry what she saw as sexism in the tech industry:

Men hold 60 to 70 percent of the jobs at major tech firms, and almost half of tech companies have no female executives at all. Even more than in older, button-down industries, sexual-power dynamics can affect who advances.

Nine months later, Bazelon issued an update when Stanford University reversed its decision on the case. She declared that Stanford had come around to her own position on the case, declared Lonsdale’s relationship with his ex-girlfriend to be “not gross”, and revealed that her own earlier article had been influential in getting the university to reverse its ruling:

Stanford’s finding against Lonsdale started my reporting…During my months of reporting, I talked to people who knew Clougherty and Lonsdale, some of whom spent time with them together, and as I did, I came to understand the story as more multifaceted and complex than I had initially thought. The narrative shifted in my head: Not from black to white, exactly, but to some ambiguous in-between…

Stanford seems, belatedly, to have come to a similar conclusion. On Tuesday, the university reversed its finding of sexual misconduct and harassment, lifting the campus ban it had imposed on Lonsdale…It’s a bad idea for mentors to date students. But if they’re both of age, it’s not gross…

Stanford cited “new evidence” in clearing Lonsdale. When I asked what this new evidence was, a spokeswoman pointed me to my own article.

On one hand, Bazelon handled this episode better than most other reporters would have. Her criticisms of the university’s policies were trenchant, and she raised doubts about the accusation that ended up being instrumental in clearing Lonsdale. On the other hand, she never seemed to reevaluate her conclusion that the episode pointed to a glaring problem of sexism in the tech industry. And although Lonsdale’s career wasn’t destroyed — he’s still a successful venture capitalist — the public airing of his private life, in the service of an unfair accusation, was undoubtedly a terrible thing to have to go through.

That era almost certainly left a bitter aftertaste in the mouth of many people in the tech industry. If some people in tech evolved to be more conservative after the 2010s, this is probably a reason why.

Factor 7: Ethnic issues

Bill Ackman’s support for Trump, after many years of being a Democratic donor, is due to the Palestine protests. Ackman, who is Jewish, watched in horror as the Palestine movement mainstreamed antisemitism on American campuses. After the presidents of several top universities refused to say that antisemitism violated their official policies, Ackman went on a crusade against the presidents, helping to push two of them to ultimately step down.

The Biden administration has not supported the Palestine protest movement — in fact, the movement made Biden one of its chief targets, calling him “Genocide Joe”. But it’s clear that in the lower ranks of the administration — especially among the staffer class that wields a large amount of power in the shadows — there is deep sympathy for the Palestine movement despite the antisemitism. That, along with Trump’s unreserved support for Israel, is almost certainly what pushed Ackman to the GOP.

The tech industry has a disproportionate number of Jewish people in it. Although many Jews support the Palestine movement despite the antisemitism in its ranks, others do not, and those who don’t will be pushed toward the GOP. Antisemitism is actually more common on the right than on the left, but the visibility of the Palestine protests, and their greater salience in highly educated circles like the tech industry, probably made them more salient to some Jewish people.

But even more of the tech industry is Asian. Although Asians are technically People of Color in the American racial schema, when it comes to the tech industry, progressives typically group them with White people. A steady drumbeat of articles in the 2010s decried the fact that tech was too “white and Asian”. Despite often facing challenges getting promoted, Asians are almost never treated as a minority worthy of support in the DEI system. This is why it’s perhaps no surprise that Alexandr Wang, the Scale AI founder who coined the term “Merit, Excellent, and Intelligence” as an alternative to DEI, is himself Asian.

But perhaps even more importantly, Asian people in the tech industry tend to live in the Bay Area, where a wave of violent hate crimes against Asian people has caused widespread fear. Though some blamed the wave on Trump’s Covid-era rhetoric about the “China virus”, it quickly became clear that the only practical way to counter the wave of hate crimes was a major increase in policing. And progressives, especially in Northern California, strongly oppose increases in policing. For this reason, many Asian people in the Bay Area have been shifting toward the political center, and toward a tough-on-crime approach.

This November, most Asian and Jewish people will still pull the lever for the Democrats. Both groups are minorities, and rightly wary of the antisemitism of the hard right. And both groups tend to be highly educated, and educated Americans strongly tend to vote Democratic. But some Asians and Jews will flip to the GOP, because of their newfound sense of insecurity within the progressive movement, and their feeling of having been collectively kicked out of the progressive ethnic coalition. This shift will be noticeable within the tech industry, simply because both groups are highly represented in that industry.

Trump’s immigration and Taiwan policies could hurt the tech industry

Given this long list of factors, perhaps we should be surprised that more tech people aren’t shifting to the GOP. But it’s also the case that some of Trump’s own policies will be directly antithetical to the interests of tech — most importantly, on immigration.

The tech industry relies crucially on skilled immigration, for workers, for investment capital, but most especially for entrepreneurship:

In the technology sector, immigration’s effect on innovation is…pronounced…NBER researchers found that around 34 percent of engineering and technology companies were founded by immigrants between 1995 and 2005—and 52 percent of Silicon Valley startups. In addition, immigrants have founded or acted as key managers of 55 percent of Silicon Valley’s startups valued above $1 billion. Immigrants are also essential in academic research of critical technologies. Immigrants make up a large majority of graduate students in artificial intelligence (AI)-related fields such as computer science and electrical engineering.

Trump says he supports skilled immigration, and in fact he probably does. But most of his supporters do not — they feel that immigrants are diluting American culture, voting for Democrats, etc. And their antipathy is often directed not just at the impoverished asylum-seekers flooding the southern border, but at skilled immigrants from Asia, the Middle East, and Africa as well. Here’s just a little taste, from the platform formerly known as Twitter:

In his first term, despite Trump’s occasional rhetoric in favor of skilled immigration, Trump’s appointees consistently made it harder for skilled immigrants to come to the U.S. and work here. They gummed up the process for visa and green card applicants, and made it harder for foreign students to work while getting their degrees. Visas didn’t actually fall, because there was such a backlog of applicants, but there was a drop in international student enrollment.

A repeat of that era would pose a marginal danger to the tech industry, but not a mortal one. As long as Trump doesn’t roll out a more significant crackdown on skilled immigration than he did the first time, or scare away lots of immigrant entrepreneurs, tech can likely weather the damage with relative ease. But if you’re looking for reasons why more tech people haven’t flipped to the GOP, this is one.

As for Trump’s other policies, there’s not much to scare tech. Trump wants lower interest rates — that’s risky because it could cause higher inflation, but it would also pump up tech company valuations and make fundraising much easier. Trump wants tariffs, but most tech companies are either in software or in hardware design — which doesn’t rely much on imported intermediate goods. Apple devices and other hardware products would get more expensive, so there would be a negative effect, but probably not a huge one, since other countries’ interest rates would weaken and partially cancel out the tariffs.

In fact, the main Trump policy that should scare the heck out of tech would be giving China a green light to take Taiwan. In recent interviews, Trump has talked about abandoning the island to Chinese invasion. If that happened, it cut the U.S. tech industry off from most of its supply of computer chips. In an age when AI is the main force powering growth in the tech sector, that would be a heavy blow, since AI requires huge and growing numbers of TSMC chips to continue advancing.

So tech people should be scared of Trump abandoning Taiwan. But given that this issue hasn’t received much national media attention yet, and Trump still has a lingering reputation as a China hawk, I’m not sure tech people are paying attention to this yet.

Democrats need to wake up to the danger of losing the tech industry

So far, the public movement of tech figures into the Trump camp is a trickle rather than a flood. But the reasons for it are structural, not random, and there are a lot of them. Democrats have been able to take the support of the tech industry for granted over the past couple of decades, but no longer. If they don’t perceive the problem and act, they could lose tech, just as they lost the support of many old-line industries in the 1970s and 1980s.

Based on the list of factors above my suggestions to Democrats include:

1. Be smarter about tech regulation, and back off of the “AI safety” stuff.

2. Shift the focus of antitrust to be more equitable across industries — don’t just go after Big Tech. And ditch the idea of using antitrust to curb companies’ political power — instead, rely on economic justifications for promoting healthy competition and the rise of innovative new companies.

3. Understand that crypto is an interest group now.

4. Say nice things about the tech industry, and if possible about specific tech companies.

5. Ditch all the silly parts of DEI (which right now is a lot of it), and refocus the effort on helping companies to integrate diverse workforces without discrimination.

6. Get tough on crime, and be loud about it.

Some of these are things the Dems should do anyway, in order to appeal to the broader electorate, or simply because they make good economic sense. But Dems need to start worrying specifically about tech, and about the possibility that the industry’s rightward shift could become more than just a few high-profile defectors. It’s good to get in front of these trends before they become severe.

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