Musk enters Trump's orbit: Tech's regulatory landscape shifts
One of the richest people in the world could join the U.S. administration. Such an event has never occurred before. Elon Musk's presence alongside Donald Trump could herald a revolution for business and technology. Changes, including those in taxes, are possible. It is known which American digital giant might have cause for concern.
Donald Trump is returning to the White House. The Republican candidate for President of the USA won the presidential election, CNN reported late in the morning Eastern Time. Official results are not yet available, but estimates indicate that the politician surpassed the required threshold of 270 electoral votes, clearly defeating Kamala Harris.
From the very beginning of the campaign, he was strongly supported by billionaire Elon Musk, Tesla and SpaceX founder, and owner of X (formerly Twitter). Trump's victory likely means that one of the world's richest people will join the U.S. President's administration. Trump made such a promise twice. He announced that if elected, he would offer Musk a government or advisory position. "He's a very smart guy," Trump said of him.
During the campaign, there was speculation that Musk might be seeking savings in the American budget. At one of the last rallies before the election, the billionaire told voters that he "prayed for Trump's victory so he could start working at a high level in his administration and curb federal spending". "We have to reduce spending to live within our means," Musk announced at the end of October. "As you know, this involves temporary difficulties, but in the long run, it will ensure prosperity," he argued.
Musk on Trump's victory: The future will be phenomenal
On Wednesday morning, Donald Trump once again praised Musk, saying that "we must protect our super geniuses." Overnight, Musk was intensely commenting on the counting election results. In one of the first posts, he wrote the significant "game, set, match," making it clear that he predicted Trump's victory. In another, he published a photo from a ceremonial dinner with Trump and stated that the future will be phenomenal.
According to Krystian Łukasik, a senior analyst in the digital economy team of the Polish Economic Institute, Musk's possible entry into Trump's administration could lead to a relaxation of regulations covering part of the tech sector. "Benefits may be felt especially by businesses operating in similar industries to Elon Musk's companies. The billionaire lobbying will most likely focus on easing the oversight of companies like Tesla and SpaceX, especially concerning environmental and safety issues. More favourable operational conditions for Musk's projects do not necessarily mean benefits for the entire big tech sector. Donald Trump has a history of conflicts with tech giants, so companies previously unfavorably disposed towards Trump may experience greater tensions," evaluates Krystian Łukasik.
Are Musk's businesses facing better times now? Under Biden's administration, his companies faced numerous investigations by the Department of Justice, the Securities and Exchange Commission (SEC), and the National Highway Traffic Safety Administration (NHTSA).
- This prompted Musk to seek political allies who would promise a softer approach to tech company regulations in exchange for financial support for the election campaign. Elon Musk's alliance with Donald Trump will likely bring more lenient regulations regarding the introduction of autonomous vehicles on the streets, greater favourability in issues such as labour law and environmental protection regulations, lower tax rates, and better chances of obtaining government contracts for SpaceX - predicts the PIE analyst.
Dr. Michał Kuź from the Jagiellonian Club and Łazarski University also believes that Musk will benefit from Trump's victory. "Trump is a wealthy man, but he is not a real member of the super-elite like Elon Musk or Jeff Bezos. Musk has shown cleverness and political savvy; few from the highest echelons of business supported Trump. Remember, Musk is not just X and Tesla; he's an important federal government contractor. Being around Trump will be associated with benefits, even with conflicts of interest - comments Dr. Kuź.
"Tech-right" gaining significance in the USA?
The expert also mentions the increasingly significant phenomenon of "tech-right" in American politics, of which Musk is an excellent example. "Currently, it's a minority of people associated with high technology, but now their number will increase. These are people who fear that the combination of 'environmentalism' and progressive censorship threatens technological development, perceiving it as a hindrance to progress," Dr. Michał Kuź tells us.
In his opinion, there may not be a revolution in American big tech, but there will certainly be a relaxation of regulatory constraints for companies working on government contracts. As for Musk, it’s possible he won't stay in the administration for long, because Trump is known for frequently changing his associates - assesses Dr. Kuź.
Trump and big techs: Known where they can be afraid
Dr. Przemysław Kwiecień, an XTB analyst, predicts that Musk will serve an advisory role in the administration, but will not be fully involved as he manages several large businesses.
I assume that he will consult with Trump on selected solutions. His role will be very interesting - says the XTB analyst.
In the context of the election result, it is not surprising that Tesla's shares surged significantly on Wednesday.
The expert notes that it’s difficult to speak about possible government contracts with Musk's companies. "The administration will want to create the impression that Musk is on the side. At least, that he doesn't obtain contracts in a blatant manner. However, it is hard to say more at this moment," Dr. Kwiecień says.
In his view, there will be no revolution in the authorities' approach to big tech, but some may fear it. "The first light will be shed on Google." Trump accused it of discriminating against him in searches. The company may face more pressure, but formally, the change in the White House shouldn't translate into more cases - evaluates the XTB analyst. He believes it is not as clear with other big techs.
He mentions, for example, the recent reaction of Jeff Bezos, who also owns "The Washington Post." "He didn't point to Kamala Harris as the preferred presidential candidate. That meant a lot," he adds.
In a morning commentary on the XTB Poland channel, the expert emphasized that Musk was at some point the "number one figure, spin doctor of Donald Trump in the campaign". "It is known that he supports cryptocurrencies, and Trump was winking at young voters. Musk's presence and authenticity in his views are seen positively," Kwiecień said.
Born in 1971 in Pretoria, Elon Musk has reason to be euphoric on Wednesday. Trump's victory resulted in Tesla shares jumping 15%. It was estimated that in just one night, Musk's wealth increased by $12 billion. At the end of December 2023, Bloomberg valued his fortune at $232 billion.
