2 Flashpoints in Obama’s Relationship With Silicon Valley

US President Barack Obama speaks at the White House Summit on Cybersecurity and Consumer Protection at Stanford University in Palo Alto on February 13, 2015. (Photo by Nicholas Kamm/AFP/Getty Images)

US President Barack Obama speaks at the White House Summit on Cybersecurity and Consumer Protection at Stanford University in Palo Alto on February 13, 2015. (Photo by Nicholas Kamm/AFP/Getty Images)

It seemed like an unending love fest. President Obama and Silicon Valley were made for each other.

In some respects, Obama owes his presidency to Silicon Valley. Whether it was the use of social media during his first campaign or big data during his second campaign, technology has always played an outsized role in both of Obama’s victories. They say politics is all about public impressions, and the home to Apple, Google, and Facebook helped create a magnificent one for Obama.

Obama reciprocated the favor by pushing the Valley’s socially inclusive agenda at the national level and promoting use of online consumer technology products, such as social media networks and online petitions, to connect with him.

Under Obama’s watch, the government, a famously technology-averse institution, became tech-friendly and pathways between the previously insular Valley and densely bureaucratic Washington, D.C. cleared. The nation’s first chief technology officer was appointed to contribute to policy discussions about technology and its effects. More recently, in a sign of the growing importance of Big Data, DJ Patil, a popular Valley entrepreneur, became the country’s first Chief Data Officer.

Things seemed to be going well, until they went bad.

Privacy kerfuffles related to the Snowden revelations and immigrant visa problems have emerged as thorny issues in the President’s relationship with the Valley. The Snowden revelations resulted in Valley firms being lumped with the NSA and its efforts to create a surveillance state. Problems with immigrant visas for highly qualified workers further plunged the relationship to new lows.

The power dynamic in President Obama’s recent visit to Silicon Valley was clear. In his panel address, Tim Cook, Apple’s chief executive officer, pointedly referred to the resulting “dire consequences” to society of sacrificing privacy. With their global reach and technical prowess, Valley firms have graduated from being commercial entities to becoming a vital arsenal in the United States commercial and defense interests.

The recent cyber-attacks against major multinational firms proved the growing importance of technology in world affairs. It is not often that an entire industry is called upon to help out a country. But, that was the purpose of President Obama’s recent visit to Silicon Valley. He sought to create a working partnership between tech titans and the government agencies to combat cyber terrorism.

Before he does that, however, President Obama should iron out the wrinkles in his relationship with the Valley. Here’s the backstory behind two main flashpoints in Obama’s bond with Silicon Valley.

A supporter holds a sign at a small rally in support of National Security Administration (NSA) whistleblower Edward Snowden in Manhattan's Union Square on June 10, 2013 in New York City. About 15 supporters attended the rally a day after Snowden's identity was revealed in the leak of the existence of NSA data mining operations. (Photo by Mario Tama/Getty Images)

A supporter holds a sign at a small rally in support of National Security Administration (NSA) whistleblower Edward Snowden in Manhattan’s Union Square on June 10, 2013 in New York City. About 15 supporters attended the rally a day after Snowden’s identity was revealed in the leak of the existence of NSA data mining operations. (Photo by Mario Tama/Getty Images)

1. The privacy issue

Perhaps no other issue has caused as much friction between D.C. and Silicon Valley as l’affaire Snowden. It damaged reputations and cost a pretty packet. The Valley’s self-cultivated image of a talented and free market haven suffered as the Snowden documents implied complicity between Valley firms and major sites and social networks. Edward Snowden, who is also a hacker, called out Valley darlings such as Dropbox — a startup that’s valued at more than $10 billion — for its compromised privacy practices recently.

In a predominantly free market, which prizes itself on its libertarian values, the idea of a surveillance state provokes disgust and betrayal. At least, that’s what the leaders of Silicon Valley will have you believe. There’s more nuance to this simplistic worldview, however.

Facebook, Twitter, and Google are the most well-known companies from the numerous businesses in Silicon Valley’s gold-paved information highway that bankroll free services with advertising. The concept seems ingenuous until you consider the double-edged sword of privacy. The survival of these sites depends on user data. In other words, the sites themselves function as quasi-surveillance states, installing ad engines and other tracking code to gather troves of data about their users to ensure better ad targeting.

Google is the largest such behemoth and brought in $16.1 billion from digital advertising in its last quarter. Facebook is not far behind and is, in fact, growing its mobile advertising business at a phenomenal pace. Mobile advertising is increasingly touted as the future of advertising and comes with a twist: Advertisers are not only able to track your online jaunts but they can, if you have forgotten to disable the feature, also track your offline peregrinations.

Technology giant Apple is a notable exception to this business model, as it does not sell personal user data to advertisers. But, the Cupertino-based company does gather valuable data about your credit cards and, with Apple Pay, possibly your shopping history. It’s no wonder that the company is locked in a protracted battle with the government over its encryption practices.

In his negotiations with Silicon Valley, President Obama has walked a fine line between commercial considerations and national security interests. Clearly, it hasn’t been enough, as tech firms have devised tactics to bypass NSA surveillance.

But, it is not hard to guess where President Obama’s sympathies are clear. During an interview with technology website Re/code, he said,”I have become more sympathetic to law enforcement because I know the kind of pressure they are under. It’s not as black and white as it is portrayed (in mainstream media).”

 U.S. President Barack Obama's speech on immigration is played on a computer screen during a watch party held by an immigrant rights group on January 29, 2013 in the Queens borough of New York City. Obama called for immigration reform and a 'pathway to citizenship' for the nation's 11 million undocumented immigrants. (Photo by Mario Tama/Getty Images)

U.S. President Barack Obama’s speech on immigration is played on a computer screen during a watch party held by an immigrant rights group on January 29, 2013 in the Queens borough of New York City. Obama called for immigration reform and a ‘pathway to citizenship’ for the nation’s 11 million undocumented immigrants. (Photo by Mario Tama/Getty Images)

2. The immigration issue

Immigrant visas have long been a festering problem for Silicon Valley. To convert its ideas into reality, Silicon Valley needs access to foreign talent for reasons of economy and innovation. There are two things that need to occur to make this happen.

First, Congress needs to approve an increase on the cap for H1B visas, the work visa for foreign workers. This is important because it lowers development costs for tech firms and enables greater profits and helps tech firms retain foreign talented workers in a job market where such workers are highly prized. This is because foreign tech workers require an expensive sponsorship from a hiring organization and, thus, cannot transfer jobs at will.

In a world where geographical boundaries have been erased by technology, the Valley ecosystem needs access to smart foreign-born entrepreneurs, who can develop new products for the U.S. and their home markets. This will multiply the Valley’s reach and ecosystem from beyond the boundaries of California.

Over the years, Silicon Valley has made numerous efforts to push its agenda through technology, but have failed to change D.C. thinking. Instead, tech firms have joined the revolving door of corporate lobbyists in the nation’s capital. What’s more, it has some of the largest spenders there, influencing legislation and policy thinking about technology issues. But, the results have been commensurate with its efforts.

The Obama administration has dragged its feet on Silicon Valley’s proposals (which has an easier chance of passing through Congress since it pertains to high-skilled workers) by bundling it with general immigration reform (which is the more difficult stretch because it is concerned with low-skilled and illegal immigrant workers).

The reasons are clear. Enabling an easy immigration path to high-skilled entrepreneurs and denying the same to illegal or low-skilled immigrants risks alienating a key core constituency — illegal immigrants and labor — for Democrats.

The problem is further exacerbated when you consider that the chances of a comprehensive immigration reform being passed in the current Congress are slim. But, the president’s latest initiatives have received a cautious welcome from entrepreneurs. Whether they pass the Senate test remains to be seen.

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