In January 2017, the Trump administration shocked the world when it issued an executive order banning entry for 90 days by nationals of Syria, Libya, Somalia, Sudan, Iraq and Yemen. The same order also indefinitely halted the intake of Syrian refugees. In June 2018, the shock wave continued when the Supreme Court upheld the travel ban in a 5-4 decision. Both the original order and the Supreme Court decision fueled a national debate on immigration.

The conversation on immigration managed to infiltrate the core of companies such as Google. Frustrated with the travel ban, Google’s employees tried to find a way to counteract the negative effects of the policy. Internal company emails, obtained by The Wall Street Journal, indicate that Google considered displaying pro-immigration information when people searched for the travel ban. The emails also suggest the use of a search algorithm to provide different results for “prejudicial” search terms.

Both as a citizen and a first-generation immigrant, I could relate to the employees’ outrage and desire to act. However, the potential impact of filtering information to promote a political view alarmed me more than the executive order and the decision of the Supreme Court combined. Limiting people’s access to information based on a private company’s idea of morality would set a dangerous precedent and forever change the way we receive our information. While people might sympathize with Google’s motivation in the context of immigration, they might not all agree on other controversial issues such as women’s rights, LGBTQ issues, or euthanasia—just to name a few. Additionally, filtering information might have the unintended effect of making people uninformed about the issue at hand. The potential consequences could be catastrophic both in the short term and the long term.

However, Google denies that any such filtering occurred. Google claims that search results have never been altered for political purposes and that the emails were “just a brainstorm of ideas, none of which were ever implemented.” According to Google, company policy would never allow the manipulation of search results to promote political ideologies. Nonetheless, the discussions that took place at Google, and technology’s ability to implement such discussions, should make all of us very uneasy.

The issue of immigration requires an ongoing national debate and new policies. However, filtering information to combat ignorance creates a very slippery slope and allows corporations to dictate our stances on both moral and political issues—a slope we don’t want to find ourselves on as a nation.

From Immigration to Information Filtering: Google Shows Its Pro-Immigration Stance

For several years, Airbnb insisted that its product is nothing more than a platform that connects hosts with guests. Several Silicon Valley companies, such as Airbnb, Uber, and Facebook, have insisted on their role as platform providers, often as a means of skirting regulations that otherwise apply to the industries they seek to disrupt. Users of these platforms are generally seen as neither employees nor customers but rather as independent contractors and consumers. Without employees or customers in the traditional sense, platform companies hold that they are not responsible for violations of regulations, payment of taxes, or civil liability and that these burdens ought to fall on their platforms’ users instead.

But, that may soon change. Airbnb has recently filed a request with the SEC to give its hosts equity stakes in the company. Federal regulation stipulates that while private companies, like Airbnb, can grant stock to employees and investors, they can’t grant stock to contractors. Airbnb has long held publicly that it wishes to align the interests of all stakeholders, including employees, hosts, guests, and investors, in the company’s business. A change in Rule 701 of the Securities Act to include “gig economy workers” would dramatically change how these workers are compensated and taxed.

By granting some stock to its hosts, Airbnb is also creating a financial incentive for hosts to boost the company’s long term financial prospects. Hosts would be incentivized to support the company’s interests when it comes to lobbying for looser regulations concerning Airbnb and hoteliers. Hearkening back to an infamous advertisement campaign that featured an African-American couple describing how Airbnb helps them meet their mortgage payments, hosts are likely even more encouraged to fight for their ability to continue making an income from the platform. Given that Airbnb “believes that 21st-century companies are most successful when the interests of all stakeholders are aligned,” this proposed change could be an integral step for all gig economy companies towards reinventing corporate governance and equity distribution in the private market.

While hosts stand to become part owners of Airbnb, there still lurks the question of whether sharing economy companies can still call their products mere platforms. Hosts would no longer be impartial, neutral users of the site but are rather investors in the company that are being compensated with not just the direct value of their rentals but with a share of the company’s overall value too. These hosts could wind up in an employee-employer relationship with Airbnb that would result in a more significant portion of the hosts’ compensation coming in the form of equity. A claim that one’s product is merely a platform would likely become a far less plausible defense in light of these changes.

The question of whether or not this new shareholder class of gig economy workers will come with voting privileges remains unanswered. Nevertheless, the SEC ultimately will have to look at whether such a change affects hosts and investors fairly while cities looking to regulate will re-evaluate whether a platform where the users are also part-owners could still be classified as a platform.

Airbnb Seeks to Turn Hosts into Shareholders

As the midterm elections draw near, approximately 150 companies, including Walmart, Patagonia and Lyft, have come together to form the Time to Vote campaign. This initiative is aimed at increasing voter turnout at the midterm elections.

The companies involved in Time to Vote are taking different steps to achieve this goal. Some are focused on ensuring that their own employees go to the polls. For example, Patagonia will shut down its corporate campus and all US retail stores on November 6^th to give employees time to vote. Further, Levi Strauss will give all employees at least three hours off to vote.

Other companies are focused on increasing voter awareness and accessibility to vote. For instance, Walmart created a website with election materials and information. In addition, Lyft is offering discounted rides anywhere in the United States and free rides to people in underserved communities.

Executives say the Time to Vote initiative is a nonpartisan effort aimed at increasing voter participation. However, it is impossible to ignore the symbolism in America’s current political climate. Though the Trump administration might have a business-friendly reputation, as evidenced by this year’s tax overhaul, many of the companies involved in Time to Vote have become increasingly outspoken in their opposition to President Trump’s policies.

Patagonia sued President Trump last December over the diminishment of national monuments. Further, Walmart’s chief executive, Doug McMillon criticized President Trump after he refused to condemn white supremacists following the violent protests in Charlottesville in the summer of 2017. Lyft also made a $1 million donation to the ACLU after President Trump announced his initial travel ban.

Regardless of whether the companies have an underlying goal of expressing disdain for President Trump or whether their efforts are truly non-partisan, the companies seem to be responding to their stakeholders’ interests. Scott Farrel, communications executive for the international PR firm Golin, said in August 2017 that, “Millennials want companies to take a stand. A measured risk needs to be taken, and whichever way you want to go, you can’t sit in the middle anymore.”

Farrel’s sentiment appears to be shared by many companies, so it will be interesting to follow the businesses involved in Time to Vote as we approach Election Day.

Walmart, Patagonia and Lyft Make Push to Increase Voter Turnout

President Trump has announced new tariffs on Chinese imports, further escalating the ongoing trade war between the United States and China. On September 17^th, the administration released a sprawling list of Chinese products, ranging from food items to industrial machinery. In total, the slew of goods (everything from tuna to fertilizer to cranberries to steam turbines) amounts to roughly $200 billion worth of Chinese products. Each item will be subject to a 10% tariff. Importantly, the extensive list includes circuit boards, semiconductors, cell tower radios, and internet modems. A 10% tax on these items will have devastating effects throughout Silicon Valley. The Valley’s smaller tech startups will be among the first to feel the adverse impacts.

In recent years, fledgling American innovators have managed to carve out their space in the Silicon Valley market largely thanks to cheap Chinese manufacturing. By outsourcing their operations to China, these startups are able to produce goods in much larger quantities, thereby benefitting from economies of scale. Utilizing China’s cheap labor and lax regulations, smaller startups have managed to avail themselves of the advantages that come with mass-production. With these new tariffs, however, small-tech is struggling.

Under the new import restrictions, young businesses will be faced with a 10% tax when they try to import their Chinese-made products back to the Silicon Valley. There are only two ways for companies to deal with this problem: 1) absorb the extra cost by cutting into their profit margins or 2) pass the cost along to consumers, in the form of higher prices. The former option is unavailable to small startups; with thinner margins, many of these nascent companies simply don’t have the ‘wiggle-room’ to take on additional costs. And pursuing the latter option would likely mean being priced out of the market. Thus, startups who rely on outsourcing will struggle to remain afloat. If small businesses truly are the backbone of the American economy, the weight of these tariffs will likely crack some vertebrae.

The tech industry’s larger companies do not face the same existential threat. With massive margins, they are better able to absorb extra costs. Moreover, they are better equipped to reorganize their supply chains. Already, Micron has discussed shifting its production out of China, moving its factories to other low-wage countries within its global supply chain. For smaller companies with limited funds, uprooting an entire production facility is not so simple. Further, large industry titans can exercise lobbying power, thereby insulating themselves against the tariffs. For example, thanks to Apple’s successful lobbying efforts, the administration exempted the Apple Watch and Apple AirPods from the import tax. Of course, smaller startups lack the political influence to have their imports exempted. Thus, while big tech is protected by transferrable supply chains and lobbying, small businesses remain vulnerable.

Although the tariffs may not send Google and Apple plummeting into collapse, the impact on small businesses cannot be ignored. A recent empirical analysis shows that startups account for nearly all net job growth in the U.S. economy. Indeed, that data reveals that, for the past four decades, startups have been responsible for virtually all net job creation. Moreover, beyond their indispensable contributions to employment, startups are also essential to innovation. Research indicates that larger companies tend to invest in ‘incremental technologies’ (i.e. improvements upon existing technologies); this is because improving an existing device—for example, upgrading the camera on a Samsung Galaxy or equipping an iPhone with a thumbprint scanner—involves less risk and a more predictable return. Meanwhile, smaller startups are more amenable to high-risk, high-reward ventures and therefore direct their R&D towards developing groundbreaking innovations.

For these reasons, startup growth is absolutely crucial to economic progress. Currently, Silicon Valley leads the world in startup growth. Between 2012 and 2017, the Valley produced 57 ‘unicorn’ startups (i.e. startups that grew to be worth $1 billion). Over that same time period, China produced only 46. Simply put, the Bay Area alone cultivates more successful startups than the entire nation of China. The Valley’s explosive startup growth is one of the few areas in which we outpace China by leaps and bounds. If these new tariffs undermine the growth of Valley startups, it will threaten a key pillar of our economic dominance, thus undercutting the very objective Trump seeks to achieve.

Deeply concerned by the tariffs’ impacts on our economy, some have called for legal action against the Trump administration. President Trump has been levying these tariffs pursuant to 19 U.S.C. § 2411. In a recent statement, the Consumer Technology Association (CTA) argued that President Trump and the United States Trade Representative have not conformed to the stringent requirements of the law. Specifically, the CTA alleges that President Trump has failed to meet certain statutory deadlines and, moreover, is acting outside the scope the authority conferred upon him by 19 U.S.C. § 2411.

Silicon Valley Startups: Caught in the Crossfire of the U.S.-China Trade War