The 2014 midterm elections turned out to be bad news for President Obama as the GOP nearly ran the table in key Senate races, giving Republicans control of both houses of Congress. For the tech industry, the news is more mixed — here are five reasons the arrival of the Republicans will have an impact:
Tax code reform could help companies like Apple bring cash back to the U.S.
A lot of the political outrage over corporate tax gimmicks like the “Double Irish” and “inversions” are actually the result of quirks in the tax code that punish U.S. companies if they repatriate overseas income. The situation affects tech companies especially (due to the way they categorize intellectual property revenues), and has led companies like Apple to simply sit on hoards of cash rather than take it home and suffer a tax hit.
Even though most consider the tax code is outdated and dysfunctional, reform has been stymied by rhetoric over “corporate tax breaks.” Now there is a chance for a breakthrough — provided the White House is willing to be pragmatic and the Republicans, who have declared tax reform their top priority, don’t overplay their hand.
The FCC will face new pressure to forsake net neutrality, and approve the Comcast-TWC merger
Chairman Tom Wheeler’s agency has for months been at the center of a massive political brawl over how to rewrite rules for the internet. But as Americans experience some of the slowest broadband rates in the world, Republicans have made clear that they regard efforts to halt fast lanes or oppose the merger of the country’s two biggest cable companies as nothing more than government meddling.
Until now, the FCC’s proposals to regulate have been partly shielded thanks to the Democrats’ control of the Senate. That will now change as companies like Verizon and Comcast can let loose their full lobbying might, in the form of telecom-funded Republicans, who might threaten to punish Wheeler with subpoenas and budget cuts if his FCC gets in their way.
Patent reform can finally happen
The White House, the House of Representatives and a bipartisan group of Senators all supported a patent reform bill called the “Innovation Act” — but it died anyway in May, thanks to the machinations of Sen. Harry Reid. The outgoing Senate Majority leader made a tactical decision to protect patent trolls and trial lawyers, and smothered the bill.
That’s not going to happen again. Dennis Crouch of PatentlyO, a reliable patent blog, has a good run down on why the Republicans could pass the law sooner than later, as well as a fresh review of the bill itself.
Less scrutiny of the NSA and government intrusion into tech companies
The revelations of Edward Snowden alarmed not only civil libertarians, but tech companies who fear that customers in Europe and elsewhere will bolt their cloud computing services due to U.S. spying. The revelations also led to proposed reforms such as Sen. Patrick Leahy’s USA Freedom Act, which would curtail many of the bulk data collection practices that have made the NSA so controversial.
But now Leahy’s bill, which was already on shaky ground, could be doomed in the upcoming lame duck session of Congress. Many Republicans have objected to such reforms on the grounds of national security, and their win in the midterms could lead to them double down on those positions. Meanwhile, as National Journal notes, the defeat of Sen. Mark Udall (D-Co.) means civil liberties advocates just lost one of their two champions in the Senate.
It may finally be easier for tech companies to hire overseas engineers
Immigration reform has been a third rail throughout Obama’s presidency, and a major frustration for the tech industry. Despite high-profile lobbying campaigns, including the $50 million debacle known as FWD.us, companies like Facebook have had no success in streamlining the process for hiring employees from overseas.
A Republican-controlled Senate may, paradoxically, make such reforms easier. In this view, the business wing of the Republican party — which supports immigration reform as a way to obtain cheaper labor — might be able to muzzle demagogues in the House in order reach a deal with President Obama on “path-to-citizenship” and other middle-ground measures.