How the US elections could alter the trajectory of Silicon Valley

Tech giants split over which candidate would best serve their interests

As the US presidential election gathers pace, Silicon Valley looks on anxiously to see what effect more than 100 million American votes will make to the technology industry.

But with President Obama and his Republican challenger Mitt Romney nearing the end of their campaigns with little said about technology, some Silicon Valley veterans are wondering whether either candidate knows much about the sector.

"Here in the Valley, most of us think politicians do not really understand what we do. They come here, do fundraisers and go back to Washington," renowned industry veteran Jean-Louis Gassée told Computing.

Gassée built up HP in Europe before joining Apple in 1981 and was eventually appointed as Steve Jobs' successor as head of Macintosh development.

But while Gassée suggests many in Silicon Valley do not believe the result of the election really matters, other technology chiefs and vendors have pledged money and support for one of the candidates.

According to transparency advocate and research firm Center for Responsive Politics, Obama's top enterprise contributors are Microsoft and Google, who have both contributed more than $700,000 (£438,211) each. Meanwhile, none of Romney's top five contributors is a technology vendor.

It is worth noting that major corporations themselves do not donate but rather donations are made by organisations' political actions committees, their individual members or employees or owners, and those individuals' immediate families.

Meanwhile, tech executives who are supporting President Obama in a "Tech for Obama (T4O)" campaign have appeared in a series of YouTube videos stating why they are lending their support to the incumbent.

"He's had an open ear and spoken a lot with tech entrepreneurs and created venues where we can talk about the things to keep the country competitive," CEO and co-founder of Dropbox, Drew Houston, said in one of the videos.

In another video, LinkedIn founder Reid Hoffman states: "I support Obama because I've personally seen how much he cares about innovation and how much he cares about constructing the future that we all want to have."

Yahoo chief Marissa Mayer is also reported to be a supporter of the current President as is Salesforce.com CEO Marc Benioff, while Romney's supporters include HP CEO Meg Whitman and Cisco's John Chambers.

"The reason why tech executives are backing Obama is because of immigration, education, having a pro-tech view of the CTO and CIO roles in government, for wanting to invest in R&D and for frankly just understanding how technology works," claims Ovum analyst Carter Lusher.

He adds that personal interests could be a big reason why some Silicon Valley chiefs are backing Romney.

"For example, Whitman used to work for Romney [on his national finance team in 2008], so I wonder if it's just loyalty there because of the past relationship. Clearly several execs are disappointed with the idea that the Obama administration would raise the taxes of the wealthy – something Romney claims he won't, so it may be in their personal interests," says Lusher.

How the US elections could alter the trajectory of Silicon Valley

Tech giants split over which candidate would best serve their interests

Although neither candidate has spoken about the tech industry per se, other issues which can affect the industry have been discussed in depth.

Start-ups

Many differences between the policies of each candidate could affect start-ups more than the established vendors.

Lusher states that the The Patient Protection and Affordable Care Act (PPACA), which is part of Obama's healthcare policy, is pro tech start-ups as it permits people who currently have a job and insurance that want to leave their company and start a new technology company, to buy insurance.

But Republicans are said to want to repeal the PPACA, which could then perhaps decrease the number of people who want to launch a technology company as they are concerned about healthcare coverage.

Immigration

Obama's initiative of a start-up visa will grant residency to entrepreneurs who come to the US but if Romney becomes President, his camp is very much dedicated to closing down much of immigration.

This includes the H1B visas, which allow technology companies to bring in overseas skilled labour to fill vacancies, a problem that Dropbox founder Houston also mentions.

"My co-founder is a first generation American and his parents emigrated from Iran, so it's not entirely clear if his parents were coming in these days what would happen to them. This country needs engineers, people who study maths and science, we need all of these people because they are key to engineering innovation," Houston says.

Education

Romney states that he wants to cut federal spending but increase spending on the defence department, and Lusher believes that to ensure that balance is restored, cuts would be made to the education sector.

Over the last few years an IT skills shortage has already been seen as a serious concern and a lack of education to develop the skills of students would make matters worse.

"What is going to happen is technology companies will not get the right people as the US can't educate them, and it would not be able to bring them in due to immigration. So companies will build R&D labs in the UK and the EU so that they have access to the smart people," Lusher says.

Impact on the UK

As Romney wants to reduce regulation in the US, it may impact the UK by putting more responsibility on EU laws.

Lusher claims that the proposed privacy legislations that are being debated in Brussels would become prevalent in the US as it may not make sense to have two different products to comply with US and EU policies.

Elco Jol, business development manager at UK tech start-up Epicurely, claimed that the transition of being a small company to a mature company is easier in the financial landscape of the US, but Lusher thinks this would no longer be true if Romney were to take over.

"As Romney's administration would restrict immigration, those entrepreneurs in the EU would think they can't get into the US so they have to make it work where they are. It won't be easier in the US because the hurdle will be much higher – this in turn could have an effect on the European economy," he said.