Big tech's unexpected reversal: The role of politics in shaping corporate culture
Big tech's unexpected reversal: The role of politics in shaping corporate culture
How Trump’s leadership has forced a dramatic change in the behavior of tech giants.
Professor Miriam Schwartz-Ziv (45) is a finance lecturer at the Hebrew University. She completed her postdoctoral studies at Harvard and previously taught finance at Michigan State University. In parallel with her academic career, Schwartz-Ziv represented the Companies Authority on several boards of directors, including the Israel Electric Company and the Israel Postal Company, and managed the energy sector at the Authority.
Schwartz-Ziv has been researching the American and Israeli capital markets for years, specializing in corporate governance, shareholders, controlling shareholders, boards of directors, and the conduct of institutional bodies that participate in general meetings of companies. One of the topics that particularly interests her is ESG—assessing companies according to three main criteria: environmental, social, and governance. These criteria are used by investors, governments, and the general public to evaluate how closely companies adhere to social and environmental responsibility and the long-term risks they pose to society. As such, she is the ideal expert to examine the rapid reversal of values by giant American companies following Donald Trump's election.
"I have no disappointments at all with Big Tech companies," says Schwartz-Ziv. "I'm not even surprised—they are the most aggressive companies with the dirtiest tactics."
And yet, we've seen a bit of a flip-flop.
"Big Tech has grown exponentially to enormous proportions in a short time. I may be surprised by the pace and intensity of the change, but they are adapting to survive in the changed political climate. That's what they need to do if they want to continue growing at a rapid pace and dominate markets. That's the way it is."
So, that’s why the CEOs showed up for the inauguration?
"Compare Trump's inauguration in his first term to his second. It's a different world. In his first term, you didn’t find these companies by his side, whereas this time, they were all there: Musk, Bezos, Zuckerberg. It intensifies the surprise and makes the 'flip-flop' so significant."
"Even the CEO of TikTok was there, which is crazy, because that very day they were going to block TikTok in the United States."
So, what happened?
“Take Facebook, for example—the poster child for this phenomenon. After Trump was first elected, CEO Mark Zuckerberg came out against him outright, and there were head-on clashes between them. Less than a decade later, things have changed dramatically.
“Facebook decided to completely end its fact-checking program, which had neutered or limited discussions in certain directions. Zuckerberg also eliminated all of its diversity and inclusion units and said that Facebook (Meta) needed to have more 'masculine energy,' which is a radical statement. He appointed Dana White, the CEO of the UFC, who is very close to Trump, to the board. Additionally, Zuckerberg promoted the number two in the government relations division, who supports Republicans, over his predecessor, who supported Democrats. So now, the top of the pyramid is Republican. All of these actions were taken in a very short time and are indicative of how Facebook has changed its narrative. Zuckerberg also published a post from the inauguration ceremony that included a very positive message about Trump."
Why do these companies do this?
"Because of economic viability. You and I could both build a company that allows people to sign up and exchange messages—there’s not a lot of technology there. The power of companies like Facebook is very much dependent on regulation. They rise and fall based on regulation. How many ads can they run? What companies are they allowed to buy? Are they allowed to buy WhatsApp? Are they allowed to buy companies that will eliminate future competition? This means that if they want to continue growing and becoming financially powerful, they have to get along with the regulator.
"Who will actually decide who buys TikTok? Trump. Because he talks directly to the potential buyers. If you want to buy companies with a lot of power, like TikTok, you have to get along with him. If the government doesn’t like working with you, and if you don’t have good relations with government employees, you won’t be at the table when they decide what regulations will look like.
"For all these reasons, companies choose to align themselves with the leader’s tune and the people who surround him. Regulation has a direct and dramatic impact on profit and a company's ability to grow. These companies are like chameleons—if they want to survive in the economic world, where the business environment is constantly changing, they must adapt. And opportunities are created for them."
What opportunities?
"There's a president who says, 'I want to be friends with all of Big Tech. Come, sit with me at Mar-a-Lago, we’ll play golf together, and along the way, I’ll decide that a certain company can buy another company, or that a third company can make more money because I’ll remove a regulatory obstacle. So, if that means you talk 'Biden' one day and 'Trump' the next, so be it. Anyone who insists on talking 'Biden' when Trump is in the White House will lose their value."
So, do business entities actually have no values?
"It’s more complex. I believe companies have understood that if they want to maximize profit, it's better for the environment to be pleasant for employees, free of sexual harassment and abuse. Everyone has understood that this contributes to a company's economic stability. On the other hand, companies that write 100 pages of ESG reports with little connection to actual practices have reached the point of being completely fake.
"It got to the point where one of Facebook's reports included claims of purifying river water in Africa and installing a boiler in the office to recycle water. Did they really care about that? Did it actually help anyone? No, but they played by the rules of the game, by the tune of that time, to the point of losing touch with the essence of their business activities. Why? Because if you want to show you're doing good things, make sure that the posts on your platforms actually help people, instead of leading them to depression and suicide. They didn’t address the real problems."
Biden also had regulation.
"I'm not kidding: even during his time, companies that spoke in the government’s tune were the ones invited to sit down with its representatives and determine what regulation would look like—and they grew exponentially. They acquired and merged through SPACs to avoid requiring Antitrust Authority approval, which they likely wouldn’t have received. Still, Biden talked about increasing competitiveness in centralized markets, prioritizing companies with a policy of diversification. You don’t hear that with Trump. What interests him is that America will be great again and overtake China. From his perspective, if the U.S. needs to discard these values to return to first place, that’s fine."
But now we’re witnessing something different: Zuckerberg says, “I want more masculine energy at Facebook,” and Bezos prevented The Washington Post from expressing support for Democrats. We thought these companies were committed to democratic values like equality and inclusion. Did they fool us?
"Big Tech learned a lesson from the first round against Trump, which was characterized by endless confrontations. They probably came to the conclusion that it doesn’t pay off. It’s not just Facebook—Big Tech as a whole is behind Trump because they feel they have no other choice. And it’s still about 'scale.' They can say that they understand they need to get along with Trump, but they avoid publicly stating that Facebook needs more 'masculine energy' or cutting their diversity and inclusion programs. Maybe that was a bit naïve. I’m not sure you’ll find many people who know Facebook well who would tell you it champions liberalism."
So now stock prices won’t move based on the basic economic reasons we were taught in college, but for other political considerations.
"Elon Musk’s value hasn’t skyrocketed for no reason since Trump was elected. Stock prices are determined by expectations, and investors assume Musk now has more business opportunities because of his ties to Trump, which increases the value of his companies. Moreover, companies like Tesla and SpaceX are heavily dependent on agreements with the U.S. government and other nations. If Trump opens the door for heads of state who depend on the United States, it will bring these companies massive value."
And what does this mean for our lives as "consumers" in civil society?
"This means that a few companies know everything about us—what we wrote, where we wrote it from, to whom, and what medicines we searched for on Google. They’ll likely make more use of this valuable personal information. Studies show that companies benefit from their connections with politicians, so if they align with the winning side and play by Trump’s rules, they will make a lot of money."
What message does this send to the business sector in Israel? Here, too, an authoritarian regime is emerging, and company executives may fear populist regulation and then give up values in favor of interests.
"The reality in Israel is that we are far behind the United States and Europe in ESG matters because the government isn’t promoting these issues. It’s not just Netanyahu, but also the ministers and professionals in senior government positions. This is not the policy, and it trickles down. Former Securities Authority Chairwoman Anat Guetta did try to encourage companies to publish ESG reports and appoint female directors, but there was no climate to promote legislation on these issues. If the government isn’t interested in promoting these matters, there are no tools, and nothing more can be done. The business sector is aligning itself with the trend."
