‘Betting’ on easing policy uncertainty Vice President Harris has high expectations
As the era of Joe Biden opened, big tech companies in the United States expressed their welcome. The US IT industry, who received tax benefits when President Donald Trump took office, cheered for Biden’s election, pledged to regulate ‘big tech’.
Foreign media and experts analyzed that ▲ ease of US-China trade dispute ▲ revitalization of overseas talent recruitment ▲ expectation of recovery of net neutrality had an effect.
According to foreign media such as CNBC on the 9th, global big tech companies such as Microsoft Chairman Bill Gates, CEO Jeff Bezos, Amazon CEO, and Sheryl Sandberg, Facebook Chief Operating Officer (COO), sent congratulatory messages to Biden’s election.
In this presidential election, Silicon Valley has been betting on Biden. According to the US media VOX, Silicon Valley gave Democrats a $191 million campaign funding. That’s nine times that of the Republican Party ($22 million). CNN also reported that GAFA (Google, Amazon, Facebook, and Apple) workers paid three times more money to Biden election camps than Trump.
Silicon Valley is analyzed to support the fact that the Biden administration’s policy uncertainty is less than that of Trump. In addition, during Trump’s tenure, the US-China conflict intensified, strengthening sanctions for global IT companies in China, and the difficulty in supplying foreign talent due to restrictions on the issuance of foreign work visas, which are also considered the strong background of Biden.
Candidate Joe Biden before the US presidential election
[Photo = Joe Biden Election Campus]
There is also high expectations for a net neutrality recovery. Network neutrality is the principle that Internet service providers (ISPs) treat all content equally and without discrimination, and it is prohibited to block or slow down Internet content. It has become a platform for US IT companies to grow as they do not have to pay additional costs according to traffic volume other than connection fees.
Net neutrality was enforced by the Federal Communications Commission (FCC) notice during the Obama administration, when Biden was vice president, but was abolished after the Trump administration was inaugurated as FCC chairman Ajit Pie took office. Accordingly, it is diagnosed that the FCC chairman appointed by Biden will seek to restore net neutrality as the first task.
Kim Hong-sik, researcher at Hana Financial Investment, said, ‘If President Biden appoints the FCC chairman, a majority (three) of the Democratic Party members will be able to change the principle of net neutrality. While necessary, network neutrality can have a negative impact on infrastructure investment, making it difficult to implement in reality.’
In addition, industry expectations are high for Vice President Kamala Harris, whose district is in Silicon Valley. CNN explained that ‘Silicon Valley appreciated Harris’ experience in dealing with technical issues.’
◆Big Tech, Sniper Appears ‘I’m Not Laughing’
Given that Biden is a ‘Big Tech sniper’, Silicon Valley can’t just laugh.
Biden replied in a press interview in the past that the discussion on dismantling Silicon Valley giant IT companies such as Facebook was’a problem that needs to be carefully reviewed.
Moreover, the US House of Representatives Judiciary Committee, which issued a report last month condemning GAFA’s antitrust behavior, could also tighten regulations on big tech companies, given that the Democratic Party is a majority party. The responsibility of
Internet companies is also expected to be strengthened. This is because Biden has insisted on the abolition of the “Communication Quality Act (CDA) Article 230,” which exempts online platforms from legal liability for posts posted by users. In addition, as he has supported California’s’AB5 (Assembly Bill 5)’ bill, which requires Uber and Lift to directly hire platform workers, the platform labor issue can also rise on the cutting board.
The biggest concern is taxes. Biden announced that it would raise the maximum corporate tax rate from 21% to 28%, and promote an increase in corporate income abroad. Global IT companies with a large portion of overseas sales are likely to experience an explosive increase in tax burden. Bank of America Global Research predicts that the corporate tax increase will reduce the profits of IT and telecommunication companies by more than 10%.
Lee Young-han, a researcher at Daishin Securities, also said, ‘IT, Internet and media industries will be most vulnerable to tax increase policies.’ These companies with a relatively high proportion of multinational companies are bound to be sensitive to the double increase in the income tax rate of their overseas subsidiaries. Analyzed.
◆ Big tech regulation depends on the Senate… ‘Blue Wave’ Tactile
Sensation is now the focus of Big Tech. This is because the possibility of regulation increases when the ‘Blue Wave’, in which the Democratic Party dominates the White House and the Senate and House, is achieved. Conversely, if Republicans take the Senate, it could put a brake on Biden’s vote.
According to the New York Times, as of the 7th (local time), Republicans and Democrats each won 48 seats. Two of the last four seats have no more than 50% of the votes, so they have to vote for the finals on January 5th next year. However, the Republican Party dominates in the remaining North Carolina and Alaska regions, and for now, 51 Republicans vs. 49 Democrats are predicted.
Seo Sang-young, a researcher at Kiwoom Securities, said, ‘If the Republican Party gains the upper hand in the Senate, it will not be easy to change the tax policy of the Biden government, such as a corporate tax hike.’ Large technology stocks such as Alphabet, Amazon, Apple, and Microsoft have soared.’
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