Silicon Valley: From Innovation Hub to Political Battleground
Silicon Valley, traditionally a hub for dissent and innovation, has recently become one of the most closely watched areas in the run-up to the American presidential election. Historically, it has been a stronghold of the Democratic Party. In 2008, when Obama was elected president from the Democratic Party, his biggest financial support came from Silicon Valley. However, with the upcoming presidential elections in November, conservative voices are rising from the leaders of Silicon Valley. Many venture capitalists are lining up to declare their support for Republican candidate Donald Trump. So, has Silicon Valley changed over the years, or has American politics shifted?
Each individual in Silicon Valley has their unique reasons for supporting Trump. For instance, Peter Thiel, co-founder of PayPal and one of Facebook’s first investors, has been a Republican for a long time. Even J.D. Vance, whom Trump recently announced as his vice-presidential candidate, once worked for Thiel. Meanwhile, Marc Andreessen, inventor of the first web browser Netscape, and his partner Ben Horowitz, who own one of Silicon Valley’s largest funds, have different motivations. They believe Trump, unlike the Democrats, will not adopt a strict stance on crypto asset regulation. Due to a stalled congressional process, the US has yet to pass regulations on crypto assets. However, during Biden’s term, SEC Chairman Gary Gensler has sued many exchanges, causing significant trouble. Andreessen and Horowitz have reportedly invested $8 billion in crypto assets and related businesses.
Elon Musk has multiple reasons, some of which are personal. Musk is particularly disturbed by the California Democrats’ liberal approaches to children’s gender identities. (I discussed this debate in my article “The Creative Class Eats Itself in the US” on November 3.) One of Musk’s 11 children is transgender and no longer speaks with him. Musk also believes Trump will be more lenient in regulating artificial intelligence. It is even rumored that some members of Trump’s team have already prepared presidential decrees to provide substantial budgets to the private sector for developing AI projects against China if they come to power. Musk’s companies could be among the primary beneficiaries of these publicly funded projects.
The main point of agreement among these pro-Trump venture capitalists is the belief that Trump will replace Lina Khan, head of the Federal Trade Commission, with a more lenient figure. Lina Khan has been applying antitrust laws in the US again after many years, targeting large digital companies. Her clearest action has been to prevent these giant companies from acquiring small startups. This has made it difficult for many startup investors to exit because, in the past, they could sell their shares to Facebook or Google and cash out instead of taking the long-term route of going public. Venture capitalists in Silicon Valley want this path reopened.
Of course, there are still Democrats in Silicon Valley, such as Reid Hoffman, the founder of LinkedIn and an early investor in companies like OpenAI, which developed ChatGPT. Hoffman argues for a stable democracy, which has made America the cradle of innovation worldwide. He believes that if democracy survives, everyone will profit. He advises against focusing on short-term interests. Trump does not prioritize this. Trump tries to run the state like a startup rather than a state, experimenting with whatever comes to mind and stepping back if it doesn’t work. For example, he attempted to ban TikTok at the end of his presidency. Now, he is one of the biggest supporters of TikTok, which Congress is considering banning.
American tech investors, once pioneers of innovation, have now become representatives of the establishment. They say, “Let’s get work from the government, but don’t let the government interfere in our business.” It should not be overlooked that neither the right nor the left is what it used to be. The person who wants to increase public support for the private sector and raise protectionist barriers further is Republican candidate Donald Trump. The party that most restricts freedom of expression in the name of “political correctness” and gets caught up in bureaucratic paradigms is the Democratic Party. The lines are blurred. It’s unclear who is challenging whom or who represents the establishment. Undoubtedly, some tech investors may support Trump just because they see him as the “winning candidate.” We’ll see if Democratic President Joe Biden’s withdrawal from the race will change this situation. It is a good tradition for business leaders to declare their support for political candidates openly. Hopefully, the US will uphold this tradition.
This article is a translated version of “Silikon Vadisi’nde at izi it izine karıştı” which was initially published in Economic Daily (Nasıl Bir Ekonomi Gazetesi) on July 26, 2024.
