Joe Biden is set to become the biggest venture capitalist in Silicon Valley.
The text of the White House-backed Infrastructure Investment and Jobs Act, now supported by enough Republicans to pass the Senate, was released on Sunday. In its 2,700 pages is so much money for technology and research it blows away any new funding records from the Sand Hill Road lot.
The whole thing adds up to a little over $1 trillion — or, to put that another way, just over one Facebook — and there are hundreds of billions of dollars available for electric vehicles, broadband access, and physical infrastructure.
The big picture: It has the potential to rearrange the direction of the tech industry altogether.
Silicon Valley as we know it wouldn’t exist without government money. The Internet itself came about because of the investments by the Defense Advanced Projects Agency, or DARPA, but the relationship between tech and government — and especially the military — goes much further.
Taxpayer money flooded into the tech sector after 9/11 and the passage of the USA PATRIOT Act, paving the way for the iPhone, massive data collection, drones, and facial recognition technology — just to name a few. The tech we use today, and the issues around privacy and civil liberties that they raise, have a direct tie to the War on Terror era.
Like any piece of legislation, the infrastructure bill has a carrot and a stick. The incentives here are largely for tech that has a connection with the physical world — say, $65 billion to expand broadband access, $7.5 billion for a national network of uniform electric vehicle charging stations. Part of a $75 million, three-year grant program will go toward “high-risk research and development to accelerate transformational transportation innovations.”
But it goes well beyond that. There’s money for tech that keeps drunk drivers off the roads, that weeds out implicit racial bias at traffic stops, and to purify wastewater. There’s funding for tech that will monitor upgrades and replacements for these public works — a kind of Internet of Infrastructure, if you will. They’re not as sexy as programs that can put a Tesla in every garage, but a little bit of funding can go a long way with small programs.
The stick here is deployed against one of the least physically-grounded technology industries: crypto. Buried in the bill is a provision that would require the reporting of cryptocurrency transactions to the I.R.S. — an expansion of the current tax law that could raise around $28 billion. This sounds…modest? The industry is fighting this, calling it a job killer, but it looks like it just puts crypto in the same category as many other financial assets. Maybe it’s just me, but if tax avoidance is central to a relatively developed industry’s growth plan, it doesn’t sound like a winning political argument.
The bill hasn’t passed yet, and may not until the fall, so there’s still time for its wording and provisions to change. There’s also a likely companion bill, said to be around $3.5 trillion and would pass through the reconciliation process — a maneuver that only requires a simple majority of votes.
That could pack additional research investment into new technologies that wouldn’t have passed through this bill — but gives Biden three times as much sway to mold Silicon Valley in his image.
Kevin T. Dugan
@kevintdugan
NEWSWORTHY
The crypto crackdown is here: The Securities and Exchange Commission's head made an unequivocal broadside against the crypto industry Tuesday, calling for more regulation and oversight of digital currencies and assets. "Right now, we just don't have enough investor protection in crypto," said SEC Chairman Gary Gensler, who went on to compare the assets to the "Wild West." Bitcoin was down about 5% after his remarks.
Blizzard president iced out. J. Allen Brack, president of Blizzard Entertainment, left his job after an explosive sexual harassment lawsuit alleging "constant sexual harassment" was filed against the company last month. The suit alleges that Brack himself had groped employees, and knew about an open "frat house" culture in which sexual harassment and discrimination was allegedly rampant. According to the suit, one woman committed suicide after an onslaught of harassment. In a previous statement, Blizzard said some of the accusations were "distorted" or false, and denied that the woman's suicide had anything to do with her treatment at the company.
Nikola lowers expectations: The embattled electric car company, whose founder is under indictment for fraud, said it may only deliver 25 electric vehicles this year. On July 29, the Justice Department charged former CEO Trevor Milton with criminal securities fraud for allegedly lying about the company's technology. The company now says that it is having trouble sourcing parts for its vehicles, sending the stock down to a 52-week low.
Amazon could have union re-do. The National Labor Relations Board wiped out the results of this year's controversial Alabama union drive, which the tech company won by a 2-to-1 margin, the union reportedly said. The union accused Amazon of illegal tactics to try to stop the effort, like firing pro-union employees. The tech giant is expected to challenge the ruling once it's public.
Tencent falls on gaming crackdown. Chinese tech behemoth Tencent fell about 10% on Tuesday after China's government compared gaming to "opium." In a since-edited article published in state-run media, the government linked gaming to near-sightedness in children and compared online games to the opiate that enriched the British at the expense of the Chinese. The stock slide came as broader worries mount on Chinese regulation of tech.
Alibaba also slumps. Speaking of, Jack Ma's Alibaba reported a fall in profits last quarter as it spent to comply with the changing Chinese regulatory environment, even as its overall revenues rose. The company has been under increased pressure from the government there to rein in allegedly anticompetitive practices.
FTC loses economist in Facebook battle. Carl Shapiro, a professor and economist at the University of California at Berkeley who was enlisted by the Federal Trade Commission to help in its battle against Facebook, has left the effort, according to Politico. The exact reasons why Shapiro left remain unclear, but the departure represents the latest challenge the regulator must deal with just weeks before it has to decide whether to file a new version of its lawsuit.
Take a hit, be somebody: With the Delta variant of COVID-19 continuing to rip through the world, states are no longer playing coy with requiring people to get vaccinated or face frequent testing to go about everyday life. New York and California have imposed some of the toughest restrictions, requiring shots for public workers, and in some cases, just to enter restaurants.
FOOD FOR THOUGHT
The chips are up: Fortune writer Eamon Barrett delved deep into the ongoing semiconductor crisis that's stalling out cars, phones, and other electronics the world over. It's not a coincidence that Google announced yesterday that it was taking its chip manufacturing in-house as it seeks to make its new phone a high-end product — a blow to chipmaker Qualcomm, which has been dealing with shortages and delays.
Barrett looks ahead, though, to a not-so-distant future where the biggest manufacturers have over-corrected, and what that would mean for consumers and industries.
From the article:
In the U.S., the Biden administration plans to allocate $52 billion in incentives for the domestic semiconductor industry via a bill Congress is currently debating. The EU has committed $160 billion of COVID recovery funds to developing regional tech capabilities as it aims to boost the bloc’s share of semiconductor manufacturing to 20% of the global total by 2030. Meanwhile, chipmakers in South Korea, buoyed by government tax breaks, have committed $450 billion over the next 10 years to building chip capacity.
IN CASE YOU MISSED IT
DHL orders a fleet of all-electric planes as logistics sector gets serious about emissions by William Wilkes and Bloomberg.
Nasdaq CEO Adena Friedman talks SPACs, meme stocks, and the new generation of investors by Emma Hinchliffe
Don’t fear ‘DeFi’: It could be less risky than traditional finance by Brian Brooks
Stocks climb, crypto sinks ahead of another busy earnings day by Bernhard Warner
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BEFORE YOU GO
Keep on truckin': Just one more thing on infrastructure, I promise. Carbon emissions, and how to cut them, are now central to any political discussion about the future of U.S. industry. Electric vehicles have received a lot of attention, but Germany is trying something different: electric highways. According to the New York Times, the country is experimenting with turning trucks into de facto light rails by running overhead wires along its highway system. It's still a fledgling idea, but hey, worth a shot!
