Tech firms and digital trade

Many tech firms are based upon ‘asset light’ business models. This includes rapid expansion to operate across multiple economies, with lower direct investments in each country.

Asset light models rely instead on cross-border flows of data to allow apps and systems to operate. Where national digital policy looks to shape this data it can have massive impacts on the profits of firms, and reduces the potential for such business models.

US tech firms and lobbying

Tech firms in the early days saw themselves differently from typical businesses, avoiding politics. But as these firms grew they have increasingly lobbied around key policy issues.

Over the last decade, digital companies have become important political powers in Washington, DC, with substantial spending on lobbying and campaign contributions (see table below).

FirmLobby spending 2018 ($m)
Lobby spending by internet firms in 2018.
Source: Centre of Responsive Politics, OpenSecrets

Detailed disclosure submissions by these firms shows that they are active in lobbying on international trade issues including supporting international trade agreements.

Much of the impetus for introducing digital trade into the international trade arena has emerged from these large technology firms (and with additional support from technology associations).

Tech and the ‘digital trade agenda’

The influence of tech firm was particularly important during the Obama presidency and has driven the US approach to digital trade.

Key industry players were highly supportive of Barack Obama’s two presidential campaigns and Obama was a strong supporter of the digital sector.

Once elected, President Obama nominated Robert Holleyman to the position of Deputy US Trade Representative (USTR) in 2014. Prior to this, Holleyman was an industry lobbyist and had been the CEO of the industry association, the Business Software Alliance, for thirteen years.

As a result, US trade policy started to reflect the rise of digital trade, and this has been influential in them advocating for digital trade rules in regional trade agreements such as the TPP and USMCA.

With the election of Trump, tech companies initially had reduced influence, with Trump’s rejection of trade agreements and interest in more traditional industries.

The emergence of US-led trade wars and its impact on internet firms has become a recent issue of contention though. This has led to new types of relationship with government, and with tech firms continuing to lobbying on these digital trade agendas.