Leave Silicon Valley alone

Why can't this White House figure out that Silicon Valley is one of America's greatest assets?

On CNBC's Squawk Box earlier this week, Treasury Secretary Steven Mnuchin offered a cautious but nonetheless worrying answer when asked if Google was a monopoly: "As these technology companies have a greater and greater impact on the economy, I think that you have to look at the power they have. It's something I hope the Justice Department takes a serious look at."

Now, that's hardly the sort of language that energizes the radical "hipster antitrust" crowd of populist politicians and wonk-activists eager to dismantle America's largest technology companies. They have their carving knives ready, and Mnuchin clearly isn't quite ready to serve up Google on a platter. Still, big tech should take little comfort from Mnuchin's measured response. Google, Amazon, Facebook, and Apple — what Wall Street calls GAFA — are four of America's most valuable and important companies, providing a massive benefit to consumers. Collectively they're the Tony Stark of corporate America: They pay for everything, design everything, and make everyone look cooler. If the U.S. is going to remain the world's technological leader against China's challenge, GAFA will be pivotal. One would think a Republican treasury secretary could muster a bit of patriotic rah-rah for some of the crown jewels of the American economy.

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Unfortunately, big tech has few friends in Washington these days, at least vocal ones. Facebook boss Mark Zuckerberg's recent appearance before Congress illustrated Silicon Valley's troubles. Democrats attacked the social network for its supposed unchecked power, while Republicans bashed the company as politically biased against them. Amazon's Jeff Bezos, Apple's Tim Cook, or Google's Larry Page might not have been treated much better.

The good news for the tech titans is that they remain highly popular with the American public. Even Facebook is doing okay, despite Russian meddling and the Cambridge Analytica data scandal. Users didn't #DeleteFacebook, and Facebook stock has rebounded. Moreover, lawmakers are nowhere close to agreeing on what to do about them, if anything.

The other bit of good news is that at least under current U.S. antitrust doctrine, there isn't a strong case that these companies are hurting consumers with their highly-valued free services and thus need dismembering. That's why activists have been busy cooking up novel theories of harm such as they're addictive or destructive to democracy or bad for worker wages.

But the other side has its new thinking, as well. Competition researcher Nicolas Petit argues that while the tech giants might well be dominant within their core business — such as search or online retailing — they are in "holistic competition" with each other across a variety industries such as cloud computing, self-driving cars, and virtual reality devices. They also compete for talent. What's more, all are desperately fearful of even their core businesses one day being disrupted or displaced by new technologies. That's one reason they spend so intensely on R&D. They're all looking for the next big market or transformational technology — just the opposite of fat and happy monopolists who could care less about consumers and potential competitors.

President Trump has been missing from this debate about the growing role of Silicon Valley in our society and daily lives. The one notable exception is the president's constant tweeting about how Amazon is ripping off the U.S. Post Office. Of course the kvetching about Amazon's postal rates is really is just a transparent bit of redirected presidential animus toward centibillionaire Bezos and his ownership of The Washington Post, a.k.a "Amazon's chief lobbyist." There is little evidence so far that Trump sees big tech as anything other than a national liability rather than a tremendous asset.

Which is why Mnuchin's comments are worrisome. They could be a sign that hipster antitrust thinking of has spread into Trumpworld. Indeed, it's easy to imagine a self-described populist like Trump starting to reflect bubbling antipathy toward GAFA and calling for their breakup or heavy regulation.

A tweet war against them would be bad enough. But this is also a president who has shown little respect for the norms of presidential power and its limits. Recall that Rudy Giuliani recently said that Trump intervened with the Justice Department to nix AT&T's $85 billion bid for Time Warner, the parent company of another Trump foe, CNN. (The White House denied the claim, and Giuliani later walked it back.) This is the same Justice Department, of course, that Mnuchin thinks should take a hard look at the tech giants. In 2020 when the Democratic presidential nominee Bernie Sanders or Elizabeth Warren attacks Silicon Valley as suppressing innovation, undermining democracy, and destroying privacy, they might find Trump claiming to be the real trustbuster in the race.