Working the Refs

As Trump Spread Election Lies, Big Tech Worked His Trade Office

Newly obtained emails show how Apple, Google, and Facebook sought to leverage Trump’s USTR for their corporate agendas last year, undaunted by Trump’s embrace of baseless conspiracies about the 2020 election.

As the nation’s top tech executives seek to distance themselves from Donald Trump over the riot at the U.S. Capitol, new records unearthed by the Tech Transparency Project (TTP) show how companies like Apple, Google, and Facebook made heavy use of the Trump administration to advance their foreign business interests last year, undeterred by Trump’s escalating promotion of baseless election conspiracies.

The tech giants sought the help of the Office of the U.S. Trade Representative in derailing tech legislation in other countries that the companies feared could restrict their operations or add costly new rules, according to emails obtained by TTP under the Freedom of Information Act. Apple also looked to the trade office to help it deal with a South Korean antitrust investigation.

Following the U.S. Capitol insurrection, the CEOs of these tech companies have condemned the riot fueled by Trump’s rhetoric. Google’s Sundar Pichai called it “the antithesis of democracy,” Facebook’s Mark Zuckerberg described it as “a dark moment in our nation’s history,” and Apple CEO Tim Cook said it marks a “sad and shameful chapter in our nation’s history.”

But the emails examined by TTP show the tech giants didn't hesitate to leverage the Trump administration during the months Trump spent riling up his supporters with lies about voter fraud and a “rigged” election. The communications provide a window into Big Tech’s strategy during the Trump years: squeezing favorable actions out of the administration while remaining strategically quiet on the president’s alarming rhetoric.

The emails also shed light on the Trump USTR’s surprisingly solicitous approach to Big Tech, which appeared to be at odds with Trump’s often harsh criticism of the tech platforms. They suggest a largely business-as-usual USTR advocacy for the tech giants, despite Trump’s public animosity toward the companies.

Here are some of the key findings from the investigation:

  • Apple sought the help of Trump’s USTR in dealing with multiple issues in South Korea, including proposed legislation to establish new app store rules and an antitrust investigation by regulators. Apple’s plea for intervention came in August 2020, shortly after Trump refused to say whether he would accept the U.S. election result and claimed the only way he could lose was if the vote was rigged.
  • Google pressed USTR for assistance on another piece of South Korean legislation in October-November 2020. A USTR official assured Google that he raised the company’s objections with Korean officials “without saying from whom I had the information.” During this period, Trump ramped up false voter fraud allegations and claimed he’d won the election even after Biden secured electoral victory.
  • Facebook enlisted USTR in May 2020 to fight a piece of privacy legislation in Japan that the company warned could disrupt the safety of its Messenger service and make it difficult to provide “feature-rich services.” Facebook made the ask shortly after Trump stoked the armed, anti-lockdown protests in various states, tweeting calls to “LIBERATE” Michigan, Minnesota, and Virginia.
  • USTR reached out to Amazon for “expert” advice on digital service taxes in India, Italy, Turkey, and the UK in August-September 2020. A few months later, the trade office determined that digital taxes in those same countries “discriminate” against American tech companies. The Amazon-USTR consultations occurred as Trump made numerous statements undermining the U.S. election process.

In a filing made public in January, Trump’s USTR opposed an Australian plan to make tech platforms like Google and Facebook pay media outlets for news content. The records obtained by TTP show how active Google, Facebook and tech advocacy organizations were behind the scenes seeking USTR’s help on the Australian matter. Google’s head of government affairs Karan Bhatia emailed U.S. trade officials directly on several occasions, warning about his company’s “serious challenge in Australia” and the “core discriminatory aspects” of the proposed code. (Google and Facebook eventually cut various deals to accommodate themselves to the Australian law.)

But the records obtained by TTP paint an even broader picture of the tech industry’s scramble to use USTR to secure its priorities around the world, even as evidence mounted of Trump’s effort to undermine the U.S. election process.

It’s unclear if Big Tech will be able to leverage USTR in the same way under the Biden administration. Biden's recently confirmed pick for U.S. trade representative, Katherine Tai, is expected to take a tough position on trade with China, which could mean trouble for Apple, given its heavy reliance on Chinese manufacturing, for example. But as the emails obtained by TTP show, the major tech companies clearly used the final stretch of the Trump administration to get what they could out of the agency.

Apple and South Korea

The emails indicate Apple asked the USTR to intervene on app-store legislation and a long-running antitrust investigation in South Korea that the company feared could harm its business, according to the emails obtained by TTP.

The communications show a flurry of activity by Apple in August 2020. Apple employee Chris Ahn emailed USTR officials on Aug. 21, expressing concern about a draft amendment to South Korea’s Telecommunications Business Act (TBA), which would prohibit companies like Apple that operate app markets from forcing developers to use its proprietary in-app payment system.

Though USTR partially redacted the email, it makes clear that Apple is seeking USTR’s help—an “advocacy effort”—in securing a favorable outcome on the South Korean legislation. And not only that: Apple invoked the name of Google, its smartphone rival, in making the pitch for USTR assistance, suggesting the Korean amendments would harm both companies.

 

Apple’s strategy of making common cause with Google is noteworthy in light of recent revelations about how the two companies—despite being rivals in the smartphone market—are actually deeply interdependent. According to the Justice Department’s recent antitrust lawsuit against Google, the two companies cut a lucrative deal to make Google the default search engine on Apple iPhones and other devices. The complaint cites public estimates that Google pays Apple $8 billion to $12 billion annually, or roughly 15% to 20% of Apple’s net income, under the arrangement.

Subsequent emails show that Apple and USTR discussed the South Korean Fair Trade Commission’s antitrust investigation of Apple. The probe, launched in 2016, centered on Apple’s contracts with mobile carriers.

USTR official Bryant Trick, noting that Apple had attached news reports about South Korean developments that are “rooted in competition concerns,” added his colleague Maria Choi, the trade office’s director of Korea affairs. Ahn, the Apple employee, thanked the two officials—and made clear that Apple wanted USTR’s assistance on the South Korean probe.

“We certainly look forward to working closely with Maria on the competition side of the issue when it comes to KFTC investigation in the future,” Ahn wrote, adding, “Hope to get full support on this crisis going forward.”

 

Apple’s push for USTR help appeared to be part of the company’s business-as-usual approach to leveraging the Trump administration, despite mounting signs of Trump’s effort to undermine the U.S. election process. In the days leading up to Apple’s approach to the trade office, Trump made a series of alarming statements, refusing to say if he would accept the election result, claiming he could only lose the election if it was “rigged” and appearing to endorse the baseless QAnon conspiracy theory.

It’s not clear if USTR undertook any action on behalf of Apple in South Korea. But on Aug. 23, 2020, the Korean Fair Trade Commission announced Apple had proposed measures to end the antitrust investigation, including paying about $84 million to support small businesses and consumers and fixing “unfair” terms with mobile carriers. The commission approved a $90 million settlement in February 2021.

South Korean lawmakers do not appear to have approved the app store amendment yet, but Apple has continued to face pressure over the issue. The South Korean government said in late August it planned to investigate Apple and Google for alleged anticompetitive practices with their in-app purchase systems. Meanwhile, app developers in the country have been submitting complaints to the Korea Communications Commission (KCC), urging the government to strike down in-app purchase mandates. In a possible sign of changing policy, Apple said in a Feb. 10, 2021 developer update that pricing for in-app purchases in South Korea “will be adjusted to allow for additional locally relevant pricing conventions,” without elaborating.  

South Korea’s interest is part of mounting global scrutiny of Apple’s app store policies and the fees it charges developers. The issue loomed large at a U.S. House Judiciary antitrust hearing with tech company executives in July 2020, with lawmakers pressing Apple CEO Tim Cook about his company’s app store rules. The committee’s report on digital market competition, released in October, concluded that Apple holds “monopoly power” in the mobile app store market. As pressure mounted, Apple in November said it would slash its fee from 30% to 15% for developers who make less than $1 million a year.

In the U.S., the fight over Apple’s app store rules is increasingly gravitating to the state level. Apple managed to tamp down legislation in North Dakota that would have loosened the company’s grip on its app store. (An Apple representative at one point warned North Dakota lawmakers that the bill "threatens to destroy the iPhone as you know it.”) But similar legislation has popped up in seven other states, including Arizona, expanding the threat to Apple’s control of the system.

Google and South Korea

Google also made its own direct outreach to Trump’s USTR over South Korean legislation it feared could disrupt its business model.

In October-November 2020, Google representatives sent a series of emails to USTR expressing concern about draft amendments to the Telecommunications Business Act that would require some companies to partner with a local South Korean firm to ensure service stability for consumers. The emails suggest Google feared the legislation would apply to its operations in the country—and force it to set up potentially costly partnership arrangements.

The communications show a high level of coordination between Google and USTR. Trade official Bryant Trick emailed Google’s Priscilla Baek on Oct. 30 to say he had raised Google’s concern to South Korean officials “without saying from whom I had the information.”

 

According to Trick, the wording flagged by Google remained in the draft legislation at that time. In the weeks that followed, Google and USTR exchanged a flurry of emails, going back and forth about the particulars of the legislative language. Google’s Baek, a former U.S. Commerce and Treasury Department official and ex-Facebook employee, played a key role in the communication, setting up calls and highlighting tech trade group letters designed to amplify the company’s concerns.

Trump’s increasingly alarming public statements appeared to have zero impact on Google’s effort to recruit the administration in service of its corporate agenda. During the weeks that Google was pressing the trade office for assistance in South Korea, which spanned the weeks before and after Election Day, Trump spread a litany of false voter fraud allegations and repeatedly claimed he won the election even as Biden was declared the winner.

It appears that the service-stability amendment in South Korea was eventually enacted, and it’s not clear if Google achieved any of the changes it wanted. According to a South Korean media report on Feb. 8, 2021, the government applied the new provisions to Google after an outage that disrupted services like YouTube and Gmail.

Facebook and Japan

The emails obtained by TTP also show how Facebook wanted USTR help in blocking troublesome legislation in Japan. The company told U.S. trade officials in May 2020 it was concerned that a proposed amendment to Japan’s Telecommunications Business Act would apply to social media services and disrupt its operations.

Facebook employee Sandra Luff—a former Senate aide to Jeff Sessions, later Trump’s attorney general—told USTR officials on May 5 that the amendment, known as the Secrecy of Communications provision, “requires that providers not learn, use, or disclose facts about communications intermediated by the provider without consent” and warned that “a strict application of this provision could negatively impact or even prohibit important safety work on our Messenger service (among other consequences).” (Those “other consequences,” she later noted, included Facebook’s ability to provide users with “feature-rich services.”)

Luff said Facebook is “concerned about the continued lack of clarity in whether and how the SoC provision – which was written ostensibly to regulate telephone operators – will apply to social media services.” She asked USTR to help impress on the Japanese government the need for “full and thorough consultation with industry” on the legislation.

 

Responding to Luff, USTR official Michael Beeman said trade officials had recently met with Japan’s Ministry of Internal Affairs and Communications to discuss some of the issues Facebook raised in its email. He said the team understood that the law “provides an exception for illegal and harmful materials” and therefore artificial intelligence scans to remove such content would not violate the law. He also said a terms of service agreement offered at sign-up would provide enough cover under the law for “using data for ads or customization.”

Beeman said USTR would continue to monitor the issue and stress to the Japanese government the need for consultation with industry.

 

The fact that Facebook was asking the Trump administration to help maintain its ability to monitor Messenger for illegal content is notable, since the company had recently clashed with Trump’s Justice Department over online security. Then-Attorney General Bill Barr had become increasingly vocal about the need for law enforcement to have access to encrypted messaging services to combat terrorists, child abusers and other criminals. Facebook, which plans to apply end-to-end encryption to all its platforms, including Messenger, pushed back on Barr’s demand in late 2019, saying “backdoor” access to encrypted messages would make users less safe.

But Facebook didn’t appear to be deterred by the tensions with the DOJ—or by Trump’s increasingly violent talk heading into the 2020 election. Facebook’s outreach to USTR came just weeks after Trump egged on armed protests against coronavirus lockdowns in three states, tweeting “LIBERATE MINNESOTA!” “LIBERATE MICHIGAN!” and “LIBERATE VIRGINIA, and save your great 2nd Amendment. It is under siege!” Trump was essentially inciting local insurrections, in the same way he did months later at the U.S. Capitol.

The Japan amendment is expected to take effect by spring 2021.

Amazon and Digital Service Taxes

The emails show USTR approached Amazon for its “expert” advice in the midst of an escalating dispute over digital taxes with European and other countries.

On August 28, 2020, USTR digital trade director Robert Tanner emailed Amazon policy executives Arrow Augerot and Ari Giovenco asking for a “conversation with some of your experts” on digital services taxes in India, Turkey, Italy and the United Kingdom. About three months earlier, the trade office had launched an investigation of countries that adopted or were considering such taxes, which have gained traction as governments around the world seek to raise more tax revenue from American tech giants that dominate the digital economy.  

 

Augerot quickly obliged. The Amazon policy executive spent nearly a decade at USTR herself, focusing on areas like ecommerce, and likely knew the risks posed by such taxes for her employer, whose operations extend around the world.

The emails obtained by TTP do not capture what happened at the meeting Amazon set up with USTR staff a few weeks later. But the company has made no secret of its position, calling on countries to pursue a global agreement on digital taxes instead of passing individual laws—saying that would be “clearer and fairer for businesses.” Amazon has also told countries that enact a digital services tax that it will raise fees for local third-party sellers using its platform.

A few months later, on January 6, 2021, USTR released its findings on investigations into India, Italy, and Turkey—three of the countries discussed in the agency’s meeting with Amazon—concluding that the countries’ digital services taxes “discriminate” against U.S. tech companies and “unreasonably” contravene international tax principles. The agency later released a similar report on the UK, along with several other countries. Despite Amazon’s role in briefing USTR staff, there is scant mention of Amazon itself in the reports on India and Italy; the Turkey and the UK reports contain only a handful of references to the company.

Amazon’s opposition to the digital services taxes—a position shared by the other major tech companies—likely reinforced USTR’s own approach to the issue. The agency in December 2019 threatened to impose tariffs on $2.4 billion worth of French goods in response to that country’s digital tax. In June 2020, then-U.S. Trade Representative Robert Lighthizer announced the broad investigation of digital services taxes, citing Trump’s concern that “many of our trading partners are adopting tax schemes designed to unfairly target our companies." A month later, the agency proceeded with plans for the French tariffs, though it later suspended the action in January 2021.

Despite the shared interest of Amazon and USTR in combating digital service taxes, the administration’s outreach to Amazon is notable in light of Trump’s well-known antipathy and threats toward Amazon, including his repeated accusations that the company dodges taxes and rips off the U.S. Postal Service. Amazon, for its part, sued the Trump administration for awarding a $10 billion Pentagon cloud computing contract to Microsoft, a decision it called “politically corrupted” and unduly influenced by Trump.

That history of antagonism, however, didn’t appear to deter Amazon from offering its “expert” advice to USTR on a tax issue that affects its bottom line, even at a time when Trump was actively undermining the U.S. election process—refusing to say if he’d honor the election result and claiming the only way he could lose the election was if it was rigged, among other troubling statements.