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(The author is a Reuters Breakingviews columnist. The opinions expressed are her own.)
By Gina Chon
WASHINGTON, Aug 4 (Reuters Breakingviews) - The White House is dangling a nearly $100 billion loyalty test in front of the technology industry. Silicon Valley chieftains clash with President Donald Trump on many issues, including immigration and global warming. Most are sticking around to advise him anyway. Some may have a practical reason: the big plan to upgrade government IT.
The Information Technology Industry Council, which represents firms including Amazon, Google and Apple , on Wednesday condemned Trump’s backing of a Senate proposal to cut the number of immigrants in half over a decade. In June, several of these companies defied the president's decision to pull out of the Paris climate accord and vowed to support its conditions anyway. Many of them turned up two weeks later at 1600 Pennsylvania Avenue anyway to talk government innovation.
There's a good incentive. Trump wants to spend $95 billion on IT next year, a 16 percent increase from his predecessor's last budget. The president put his son-in-law, Jared Kushner, in charge of an effort to overhaul government systems. On Thursday, Kushner asked tech companies to help the government better use technology and suggested engineers do brief stints advising the administration, according to Recode.
Meg Whitman, chief executive of the biggest government IT provider, Hewlett Packard Enterprise, wasn’t invited to the White House talks in June. She was critical of Trump during the presidential campaign and backed his rival. Her company generated about $7.2 billion in revenue from federal contracts, according to 2016 estimates by the FedScoop news site and consultancy International Data Corp.
Those deals may not be safe, given Trump's apparent predilection for allegiance above all. Amazon, which has doubled the number of government agencies using its cloud services since 2015, could be vulnerable, too.
Soon after the June tech CEO meeting, Trump lashed out against the e-commerce giant. He cryptically tweeted that the Washington Post, which is owned personally by Amazon boss Jeff Bezos, was "sometimes referred to as the guardian of Amazon not paying internet taxes."
IBM is right behind HPE in the rankings with about $5 billion in revenue from Uncle Sam, while Microsoft rounds out the top 10 with roughly $1 billion. At the same time, relative Washington newcomers have been scrapping to increase their market share. Alphabet's Google, for example, is pitching its Apps product as an alternative to Microsoft Office. With so much at stake, tech titans have billions of reasons to keep their seat at Trump's table.
CONTEXT NEWS
- The Information Technology Industry Council, which represents Amazon, Apple, Google and other online companies, said on Aug. 2 that it rejects a U.S. Senate proposal to curb immigration to the United States by half over a decade. President Donald Trump praised the plan, which would transition U.S. immigration to a merit-based system from the current program based on family ties.
- “This is not the right proposal to fix our immigration system because it does not address the challenges tech companies face, injects more bureaucratic dysfunction, and removes employers as the best judge of the employee merits they need to succeed and grow the U.S. economy,” the council said in a statement.
- Separately, Trump has proposed a $95 billion budget for information technology for the 2018 fiscal year, a 16 percent increase in spending from the last year of Barack Obama's term in office.
- Trump issued an executive order in May creating the American Technology Council, which is made up of government officials charged with overhauling technology. The effort is led by Trump's son-in-law, Jared Kushner, who is a senior adviser and also heads the Office of American Innovation.
- Apple Chief Executive Tim Cook, Amazon CEO Jeff Bezos, Oracle CEO Safra Catz and Microsoft CEO Satya Nadella were among the tech leaders who attended a White House meeting on June 19, where Trump asked for their advice on modernizing government IT.
- Bezos told Trump that the government should use commercial technology whenever possible. A separate group of CEOs has presented Trump with a plan on how the government could save $1 trillion by updating its technology. For example, spending more on big data and analytics could save the government $205 billion, according to their report. Trump cited some of the research at the gathering of technology chieftains.
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(Editing by Jeffrey Goldfarb, Tom Buerkle and Martin Langfield)
© Reuters News 2017
