- Big Tech faces a “danger scenario” with a Joe Biden win and a “blue sweep” in the upcoming elections, prominent venture capitalist Bradley Tusk warned on CNBC.
- “People assume Congress is so incompetent and so inept and Big Tech companies are so smart they will figure out how to stop them,” Tusk, who is also a political strategist, said.
- “I don’t know if that’s the correct assumption. You could certainly see left-leaning, anti-tech proposals have much more of an impact in Washington starting next year,” he said.
- But things look different for smaller companies and start-ups, he said, as new legislation would allow them to build products that won’t immediately be quashed by a larger rival.
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Investors may be missing the point that a Democratic sweep in November could mean increased regulation for the technology sector, political strategist and venture capitalist Bradley Tusk said on CNBC.
Big Tech faces real risks if Joe Biden wins the presidential election, and particularly so if Democrats take back control of the Senate, Tusk said in an interview on Monday.
Biden is leading President Donald Trump in polls by an average of 9.1 percentage points, according to FiveThirtyEight.
Raymond James has raised estimates for a Democratic sweep to 55% up from 50%, with a 65% chance of a Joe Biden victory, and lowered estimates of a “status quo” Trump win and divided Congress to 30% from 35%.
Tech giants rely heavily on future profits for their valuations. But shareholders in large-cap US tech companies could suffer heavy losses if regulators drop the hammer, according to Tusk, a former campaign manager for Michael Bloomberg.
“People assume Congress is so incompetent and so inept and Big Tech companies are so smart they will figure out how to stop them,” Tusk said.
“I don’t know if that’s the correct assumption. You could certainly see left-leaning anti-tech proposals have much more of an impact in Washington starting next year.”
In a letter to his venture firm’s clients, Tusk, who is known for protecting startups from political risk, wrote Biden is “clearly the candidate for Silicon Valley.” He suggested companies will embrace a stable environment compared to the disarray under Trump’s administration, and benefit from removal of immigration restrictions.
However, a major stumbling block is that a Justice Department run by Democrats could pressure larger tech companies, particularly Google, in antitrust matters. A Senate pivot to Democratic control would be the real “danger scenario,” he said.
Democratic Sen. Elizabeth Warren has been vocal about wanting to break up Facebook, Amazon, and Google, whose dominance she compares to that of the large oil companies. She also pledged to stop taking donations from tech executives when she was part of the presidential campaign. Sen. Bernie Sanders has also been keen on the removal of concentrated power from tech companies.
Tusk expects Democrats to pass internet-privacy laws similar to Europe’s General Data Protection Regulation and invalidate Section 230 of the Communications Decency Act, which safeguards certain platforms like Facebook and Twitter from liability for user posts, CNBC said.
But things look different for smaller companies and startups.
“For new tech companies, Congressional action could mean opportunity to compete, to innovate, to build products and services without immediately being squashed by one of the giants,” Tusk wrote. “So while a Democratic Senate is unquestionably bad for big tech, it’s not necessarily bad for tech overall.