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Silicon Valley has good reason to make nice with Donald Trump

President Elect Trump Continues His 'Thank You Tour' In Grand Rapids, Michigan Photo by Drew Angerer/Getty Images

Today the leaders of America’s most important technology companies — including Google co-founder Larry Page, Apple CEO Tim Cook, Facebook COO Sheryl Sandberg, Microsoft CEO Satya Nadella, Tesla CEO Elon Musk and Amazon CEO Jeff Bezos — will go to Trump Tower to meet with the president-elect.

Silicon Valley moguls overwhelmingly backed Trump’s opponent in the November election, so the meeting is bound to be somewhat awkward. But it’s also likely to be the first step toward developing a working relationship between Trump’s administration and an industry that wields outsized influence over the American economy and society.

Top tech companies are some of the nation’s most valuable, yet they are responsible for relatively few jobs. For companies like Google and Facebook, that’s because it just doesn’t take that many employees to run a collection of websites and apps. In contrast, Apple directly and indirectly employs a vast number of people — but most of them are in China assembling iPhones and other Apple gadgets.

Trump and these tech leaders may not like each other, but there’s a lot they can do to help each other out. And while some in Silicon Valley have urged technology leaders to take a defiant tone in Wednesday’s meeting, elite business leaders tend to be more pragmatic.

We shouldn’t expect either Trump or the tech leaders to issue more than vague platitudes in their comments immediately after the meeting. But behind the scenes, they’ll be looking to forge relationships that could work to their mutual benefit.

Trump can help Apple and Apple can help Trump

Apple Holds Event To Announce New Products
Apple CEO Tim Cook.
Photo by Stephen Lam/Getty Images

The forces pushing Trump and technology leaders into each other’s arms are strongest with Apple. Several of the items on Donald Trump’s agenda — especially corporate tax breaks — could have a big impact on Apple’s bottom line, so it’s in Tim Cook’s interest to forge a working relationship with Trump. And Apple has something it can offer Trump, in turn, that would be hugely valuable: jobs.

Start with what Trump can offer to Apple: Apple has structured its international business so that most of the overseas profits pile up on the books of foreign subsidiaries. As long as Apple leaves that cash overseas, it does not have to pay America’s high corporate income tax rate on it.

US tax law is based on the idea that Apple will eventually have to bring those profits home and pay corporate income taxes on them. But Apple — and a number of other companies — have been lobbying Congress to reduce this rate. If Congress complies, Apple could bring its foreign cash home and pay the new rate not only on its new profits but also on overseas money it had left parked overseas while the higher rate was in effect.

Happily for Tim Cook, Trump’s campaign platform included a big cut in the corporate tax rate, from 35 percent to 15 percent. With Congress in Republican hands, Trump will have a real shot at enacting this proposal into law. Apple will save billions of dollars if he does.

A couple of other Trump positions would be bad news for Apple. Trump has called for slapping a 45 percent tariff on Chinese-made goods. That would likely include the iPhone and other Apple gadgets that are manufactured in China. Trump was also harshly critical of Apple’s pro-privacy stance on iPhone encryption. Under a Trump administration, law enforcement could put more pressure on Apple to help the government hack suspects’ iPhones.

So it would be hugely helpful to Tim Cook if Donald Trump fast-tracks his corporate tax reform proposal while putting the China tariff on the back burner and going easy on Apple when it comes to iPhone hacking.

And Tim Cook has something he can give Trump in exchange: jobs.

Trump’s favorite bit of political theater is to hold an event with a business leader to announce the creation or preservation of American jobs. A couple weeks ago, Trump got several days of positive press coverage for a deal that saved 800 jobs at a Carrier factory in Indiana.

Last week, Trump announced that the Japanese firm Softbank had promised to create 50,000 jobs in the United States. Details were sketchy and it appears some of those were jobs Softbank was planning to create anyway, so announcing those jobs with Trump gives him an easy win.

So in theory, Tim Cook could offer to do something similar, bringing perhaps 1,000 jobs making Apple gadgets to the United States. Such a factory might not make sense in narrowly financial terms. But the political capital Apple could earn by letting Trump claim credit for the jobs could easily be worth it.

Trump can help or hurt other technology companies too

Fortune Global Forum
Alphabet CEO Larry Page.
Photo by Kimberly White/Getty Images for Fortune

The stakes are higher for Apple than for most other high-profile technology companies. Most other technology companies don’t have so much taxable cash parked overseas, and companies like Google and Facebook aren’t manufacturing many gadgets in China. But every one of these companies has significant areas where the Trump administration can help or hurt them:

  • During the Obama years, Google was a leading voice for strong network neutrality legislation, a stance that many other technology companies also supported. Under President Barack Obama, the Federal Communications Commission passed sweeping network neutrality regulations last year. Donald Trump is likely to choose a conservative FCC chair who may reverse the Obama FCC’s decisions in this area.
  • Amazon, Google, Microsoft, and Apple all have reason to be interested in how the Obama administration enforces antitrust law. In 2012, Obama’s Justice Department sued Apple for allegedly organizing an e-book price-fixing scheme — a lawsuit that worked to Amazon’s benefit. Microsoft and Google have repeatedly been at each other’s throats over antitrust issues, primarily in Europe. On the campaign trail, Donald Trump hinted that he might pursue antitrust charges against Amazon in retaliation for critical coverage from the Bezos-owned Washington Post. Trump will name key officials at the Department of Justice and the Federal Trade Commission who will shape antitrust policy over the next four years.
  • In recent years, Google and Microsoft have both been actively lobbying for patent reforms to rein in litigious patent trolls, with Google also advocating reforms to rein in low-quality software patents. Trump will not only choose a new director for the patent office, he will also have influence over patent reform legislation over the next four years.
  • Microsoft, Apple, Amazon, Google, and other companies involved in storing user data have reason for concern about the surveillance programs of the National Security Agency and other agencies. That’s not only because they want to protect their users’ privacy, but also because concerns about NSA snooping can put US companies at a competitive disadvantage when trying to attract foreign customers.
  • Most big technology companies rely on the H-1B visa program, which allows them to hire skilled foreign workers for a renewable 3-year term. Many business-friendly Republicans have supported this program, but Trump has been more skeptical. He has said that he’s committed to “eliminating rampant, widespread H-1B abuse,” but he has also declared that “we need highly-skilled people in this country.”

Of course, big companies always have an incentive to curry favor with a newly-elected president. But the stakes are even higher in this case because Trump has less well-defined views on these issues than other recent presidents. It’s likely that he’ll appoint people with conventional conservative views on many of these issues, but it’s also possible he’ll choose a different direction. He’ll be making many of the key decisions in the coming weeks, so tech leaders have a strong incentive to try to influence him now.

For example, Republicans have traditionally favored less aggressive enforcement of antitrust law. But on the campaign trail, Trump declared his opposition to the proposed merger between AT&T and Time Warner, suggesting that he might favor stronger antitrust enforcement. So companies with a potential stake in antitrust issues — which includes several of the companies attending today’s meeting — will be looking for ways to influence who Trump picks to oversee administration policy in this area.

This helps to explain why almost all the tech moguls invited to Trump Tower have chosen to attend — and why they’re unlikely to take the defiant position advocated by principled liberals in Silicon Valley. Tech CEOs might not like the idea of Donald Trump being president. But it’s going to happen whether they like it or not, and they have strong incentives to seek the best deal they can.