What does "TrumpNet" look like?
The Trump Administration recently appointed Ajit Pai, a fierce Net Neutrality opponent, Chairman of the FCC and signed an executive order signaling a potential undercutting the new US-EU data privacy agreement as part of the Administration’s “America First” policy evaluations. From these two early actions we can figure out “TrumpNet” will probably contribute significantly to a fractured Internet and less ability for startups to enter or disrupt markets.
The United States and the European Union originally placed a safe harbor agreement granting greater access to the European market with relatively simple compliance requirements for companies. This agreement ended up crushed by the European Court of Justice in 2015 largely due to NSA snooping on transatlantic communications. A new US-EU Privacy Shield went into place largely geared towards granting Europeans data privacy rights reciprocal to our own. Trump’s public safety executive order, while mostly geared towards immigration issues, seems to grant US agencies unfettered rights to snoop on any foreigner communicating within the United States consistent with current US law. While it’s unclear whether the Administration ever really considered the ramifications of the order to the agreement with the EU, it’s a strong indicator the Trump Administration’s “America First” policy evaluations have no real interest in sticking to the agreement and it might start coming unraveled in review in 2017.
In the event this agreement comes fully unraveled it likely means US companies will need to comply with individual European countries rather than engage in uniform compliance for entering the European market. Companies already established will have a headache but with a significant legal budget they can engage in this kind of compliance work. New companies and startups likely won’t enter the European markets as easily.
In the event Trump’s “America First” policies crush the US-EU privacy shield, the Internet will become a bit more fractured between the United States and the European Union. If Trump’s FCC pick undoes Net Neutrality—the Internet starts fracturing across data tiers creating extremely unfavorable conditions for startups and new companies to enter the US marketplace.
Net Neutrality at the FCC stands out as a serious point of contention between infrastructure owners like AT&T and companies reliant on data without price discrimination as to source. This is not currently possible under the recently upheld FCC Net Neutrality rules to discriminate based on data source. In July 2016, the Obama backed FCC Net Neutrality rules won at the D.C. Circuit Court of Appeals. This looks like a rather large win for Net Neutrality, but the Trump Administration has appointed Ajit Pai as the Chairman of the FCC.
Ajit Pai fiercely opposes Net Neutrality rules and considers the Obama backed rules unlawful. His opposition is predicated on the hypothetical argument that if service providers like AT&T and Comcast can charge different amounts for data from different sources the new revenue stream will increase private investment in infrastructure. These are some of the most hated companies in the United States and there’s very little reason to believe any kind of promise to invest more in infrastructure and currently no meaningful agreement or plan to develop given access to a new revenue stream like multi-tiered Internet exists.
Given the presumption that these companies will not reinvest in any meaningful fashion in favor of higher profits, Ajit Pai will eventually win out in the next 4 years undoing our current Net Neutrality scheme, and the Trump Administration reneges on the Privacy Shield—what does TrumpNet look like?
It’s a pretty bleak picture.
It means Internet providers can discriminate predicated on data. Data heavy startups are likely priced out of the market place. While Netflix will stick around as an established player in the market—new and innovative data heavy companies similar to Netflix won’t even startup limiting consumer choices and digital commerce.
Furthermore, new companies will have a headache trying to enter the European markets due to the increased burden complying with several different privacy schemes will have. Complying with each European country’s privacy scheme will take significant attorney time and some countries might simply make the barrier so high smaller US companies simply won’t have access to those markets.
TrumpNet isn’t a great place to wind up if you’re a new company or a startup. It’s not even a particularly great scene for established companies who rely on heavy data transfer and access to European markets. A lot of the ‘unicorn startups’, startups valued over a billion dollars, have a much more difficult time coming into existence. The only real winners for TrumpNet are some of America’s most hated companies. The losers are States losing tax revenue from successful startups, startups and entrepreneurs themselves, and American and European consumers.
(Image courtesy of the Electronic Frontier Foundation under their Creative Commons Attribution License)