Is Silicon Valley souring on Barack Obama? Recent days have seen Eric Schmidt, CEO of Google, who, along with founders Sergey Brin and Larry Page, lent prominent support to Obama's 2008 presidential campaign, decry the aggressive regulatory bent the White House has taken.
"So we get hauled in front of the Congress for developing a product that's free, that serves a billion people. OK? I mean, I don't know how to say it any clearer," Schmidt told the Washington Post's editorial board after his Sept. 29 testimony before the Senate Judiciary Antitrust Subcommittee. "It's not like we raised prices. We could lower prices from free to . . . lower than free? You see what I'm saying?"
Now, by way of Huffington Post, comes a report that the late Steve Jobs, another highly visible Obama supporter, argued heatedly with the president about the White House policy agenda during a one-on-one meeting last year. According to Walter Isaacson's soon-to-be-published biography of Apple's founder and former CEO, Jobs warned Obama that he wouldn't win re-election if he continued imposing excessive regulation and operating costs on American businesses.
"You're headed for a one-term presidency," he told Obama at the start of their meeting, insisting that the administration needed to be more business-friendly. As an example, Jobs described the ease with which companies can build factories in China compared to the United States, where "regulations and unnecessary costs" make it difficult for them.
Jobs also criticized America's education system, saying it was "crippled by union work rules," noted Isaacson. "Until the teachers' unions were broken, there was almost no hope for education reform." Jobs proposed allowing principals to hire and fire teachers based on merit, that schools stay open until 6 p.m. and that they be open 11 months a year.
Perhaps because they were based in California, or because they are younger, Silicon Valley technology entrepreneurs have generally leaned philosophically liberal, supporting bigger government, more public spending, and more aggressive regulations, even though some free market analysts wondered why, because clearly risked blowback from many of the policies that might result.
Perhaps, like Google, they never thought themselves equivalent to older, more established companies that were marked by both politically and culturally conservative and consequently more risk averse. Certainly the media reinforced this differentiation, AT&T, IBM, Microsoft were the "bad" guys bent on preserving the status quo, so the narrative went; Google, Apple, Facebook, because they shattered so many business models, were the cool, good guys. But there is dangerous vanity in connecting your moral compass to your business models. When it comes to regulation, it doesn't matter how you see yourself, but how the government sees you. While Schmidt is justifiably angry about the interrogation he got on Capitol Hill, between the lines, one cannot help but read a pained "how-could-they-do-this-to-us!"
I prefer to be magnanimous, however, and point to a quote from Winston Churchill that begins, "If you're not a liberal at twenty you have no heart..." (Google this phrase if you don't know the rest). Suffice to say, Silicon Valley is growing up, and, as Schmidt realized, once you invite government in, they will take up residence.
But it's not until deep down in the Post interview that Schmidt talks about his epiphany in a pointed anecdote. and just as telling is how long ago he began to suspect that when business flatters itself by courting political power, it doesn't end well.
Silicon Valley's involvement with Washington dates from one event, which was John Scully--who was the CEO of Apple--had dinner with President Clinton and Vice President Gore in 1993. And we're all going, like, what's going on? Why would we have dinner with the president? And from that point on, people started to think it might be fun to hang out with these people.
So what happened was that there was something called the Clipper chip, which was the attempt by the government to enforce encryption on a particular communications aspect. And this was 1994. And it was the first time I know of that the Valley organized around a stupid technological thing that was going to be forced on us. This really had not occurred before. The chief proponent of the Clipper chip was Al Gore. So this is our first contact with Al Gore. All of us spent a lot of time and we eventually defeated it, but I think for many people that was sort of a wake-up call that the government could actually pass a law that was stupid, that would actually do something wrong and wouldn't work.