Pay to Play
A KEY thing to understand about Donald Trump is that he’s a career criminal. From his early days as a mob-familiar real estate developer in New York to his 34 felony convictions for bank fraud, it’s the only M.O. he’s ever really known. One of the few times he tried to run a real business, with shareholders and financial regulators — his Atlantic City casinos — he failed spectacularly, marking the first time in the history of gambling the house lost.
There’s no reason to think he’ll change is stripes now.
There was plenty of penny-ante grifting during his first stint as president, from overcharging the Secret Service to rent golf carts at his resorts so they could follow him around on the links, to jacking up the price of membership at his Palm Beach speakeasy, Mar-a-Lago. There were even a few big-dollar payoffs, like whatever deal he and son-in-law Jared Kushner made to look the other way as the Saudi royal family had Jamal Khashoggi sawed to pieces in Istanbul.
But that was just a test drive. He was so out of his depth the first time he assumed office he was forced to rely on professionals from government and the military to cut up his food for him. Whatever constraints they placed around him last time will now be thrown off. What we can expect is a more-or-less open pay-to-play kleptocracy.
Against that backdrop, it seems almost petty to focus on what a second Trump administration could mean for media and technology companies. But home-town angle and all that…So here goes:
Antitrust Elon Musk paid it forward bigly, dumping at least $75 million into Trump-aligned super PACs during the campaign. He is now expected to play some sort of Svengali-without-portfolio role in Trump’s inner circle, if not formally in the administration.
Musk has also been promised a leading role in identifying areas to make Draconian cuts to federal spending, which will likely include any department involved in antitrust enforcement.
The first name on Musk’s hit list is Lina Khan, chair of the Federal Trade Commission. Khan, along with the head of the Justice Department’s antitrust division, Johnathan Kanter, has revived and reinvigorated antitrust enforcement, with a particular focus on Big Tech and Big Media. Lawsuits have been filed against Google, Apple, Amazon, Meta and Microsoft, investigations have been opened involving Reddit and OpenAI, and deals involving Microsoft, Live Nation, Paramount and Comcast have been blocked.
Khan and Kanter, who is also expected to be tossed out, have also resurrected the doctrine of monopsony in antitrust analysis, in which one or a few dominant buyers in a market are able to dictate terms to sellers. They relied on it to block Paramount Global’s proposed sale of Simon & Schuster to Penguin Random House, citing the merger’s possible impact on authors.
Khan has also been vocal about applying a monopsony-based antitrust analysis to the use of copyrighted works to train generative AI models, even as the U.S. Copyright Office takes its time in developing its own analysis. In public comments, she raised the specter of a highly concentrated AI sector under Big Tech being able to dictate prices to media companies for access to their libraries to train on. At the same time, she warned against Big Tech AI companies could price would-be challengers out of the market for the most desirable training datasets. For creators and rights owners, losing Lina Khan means losing an powerful enemy or their enemy.
All of that will be gone under a Trump FTC and DOJ. Antitrust enforcement — to the extent it will exist — will likely return to a traditional consumer-price focused analysis, but shot through with whatever personal grudge or grievance Trump may have with the parties involved. Big Tech CEOs have clearly gotten the message and lined up quickly to kiss the ring after Trump was declared the winner.
Big Media CEOs, meanwhile, can barely contain their glee over what they expect to be an M&A bonanza.
AI Regulation Trump appears to be waiting to see which AI policy will bring him the biggest payoff. On the one hand, he has called AI “very dangerous,” and in need of oversight. On the other, the one concrete policy he has publicly committed to is dismantling President Biden’s executive order on AI. Biden’s EO directed nearly every executive agency to take steps to promote AI safety, security and transparency. It created the AI Safety Institute under the Commerce Department and directed the National Institute of Standards and Technology (NIST) to help industry develop systems and methods to identify deepfakes and other AI-generated content in the wild.
Trump’s allies in advance of the election drew up their own EO meant to “make America first in AI.” On the other hand, the likely GOP Speaker of the House Mike Johnson indicated Republicans in the House “likely will” move to repeal the Biden-passed CHIPS and Science Act that provides incentives and subsidies to bring chip manufacturing, including AI-essential GPUs, back to the U.S. from overseas (Johnson later partially walked back the comment).
U.S. participation in efforts to coordinate global AI policy is probably off the table
A number of AI-related bills were left pending in Congress ahead of the election, and Trump’s support or opposition to them is unclear.
In his first term, Trump showed little patience for international cooperation or institutions. So, U.S. participation in efforts to coordinate global AI policy is probably off the table, possibly driving an even deeper wedge between U.S. policy and Europe’s.
While AI companies try to figure out where to place their bets with Trump, states are likely to step up their own AI regulatory efforts, which could lead to a patchwork of laws around the country.
Trade The lone economic policy Trump committed to during the campaign is imposing a 10%-20% tariff on all goods imported to the U.S., from friend and foe alike, and a 60% tax on goods from China. Apart from the likely inflationary and recessionary impact of that policy, the China levy, in particular, could significantly raise the cost of chips used in data centers that train and maintain AI models, many of which are fabricated in the PRC. It could also impact the cost of components in the servers those chips power, many of which also hail from China. As with eliminating antitrust scrutiny of tech companies, that’s likely to favor the largest AI developers that can afford the higher prices, over smaller operators and startups.
Many datasets used to train AI models in the U.S. are curated and annotated in sweatshops in places like Bangladesh, India and Taiwan. It’s unclear whether Trump’s tariffs would apply to that work but it potentially could impose additional costs on AI developers.
Trump’s tough-on-China stance has also proved flexible, however. After initially supporting efforts to ban TikTok over concerns that its Chinese ownership posed a national security risk, he abruptly flip-flopped on the issue shortly after “repairing” his relationship with GOP mega-donor Jeff Yass, who owns a major financial stake in TikTok-parent ByteDance.
Trump imposed tariffs in his first term too, of course, but those also proved flexible. Many most-favored companies were able to evade the levies through one means or another, and he has already indicated that operators will be standing by this time around as well.
Intellectual Property Trump’s principal “business” for the past few decades, apart from his TV show, has been licensing his name to anyone willing to pay the price to slap it on their hotel or other property. Even his golf courses are essentially licensing deals. After acquiring a property he typically hands the operation off to someone else, who keeps most of the proceeds while Trump collects what amounts to a license fee.
It’s possible, then, that he would take an interest in the efforts to create new legal protections for an individual’s name, image and likeness (NIL). Apart from that, however, IP issues tend to present the sort of thorny thicket of policy details for which Trump has shown no appetite or aptitude.
For all the roiling debate around IP in this age of AI, don’t expect it to be a priority in the White House.