The Daily: How a Trump administration will affect media, advertising and technology

On today's podcast episode, we discuss what might happen to just a select few traditional media companies, what AI rules might look like, and how a Trump presidency will affect the US ad market. Tune in to the discussion with Senior Director of Podcasts and host Marcus Johnson, Senior Analyst Gadjo Sevilla, and Vice President of Content Paul Verna.

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Episode Transcript:

Gadjo Sevilla (00:01):

They're going to deregulate AI development for the sake of innovation, to speed it up, right? Because those are the two switches there. You want safe AI, it takes time, you have to test it. But if you want powerful AI, then take off the guardrails.

Marcus Johnson (00:23):

Hey gang, it's Thursday, December 5th. Paul, Gadjo and listeners, welcome to the Behind the Numbers Daily and eMarketer podcast made possible by LiveRamp. I'm Marcus, today I'm joined by two people. We start with our senior analyst who writes for our AI and technology briefings is based in New York City. It's Gadjo Sevilla.

Gadjo Sevilla (00:42):

Hey Marcus, how are you?

Marcus Johnson (00:44):

Hey fella. Very good. How are you? No one asks anymore, you know? Terrible people. Don't know why I bother. Thank you for asking though. Appreciate it.

Gadjo Sevilla (00:44):

Sure.

Marcus Johnson (00:53):

All right Paul, time for you to step up. We're also joined by one, our vice presidents of content who covers everything, advertising media. He covers everything. Okay? He covers most things. Well, he's based in Maine now. Ladies and gentlemen, it's Paul Verner.

Paul Verner (01:11):

Great to be here. And how are you Marcus, by the way?

Marcus Johnson (01:14):

Paul, you don't have to ask. Okay? You shouldn't have. But I appreciate it. I'm great. Thank you for... You didn't mean it.

Paul Verner (01:22):

I knew you were great, and so does our audience. That's why they don't ask.

Marcus Johnson (01:27):

They're misinformed. I'm in a terrible place.

(01:30):

Anyway, today's fact. So this is a BBC article from 2018. The Micronesian island of Yap has a famously unusual currency; hundreds of giant disks of rock that are scattered all over the island are used as money. I don't know how, because they're too heavy to move. I've read this article a million times. They're too heavy to move, each village has a stone money bank where pieces that are too heavy to move are displayed, but I don't know how you pay people. Do you just go, "Oh, that would be three rocks", and then you just have to walk to where they are and you're like, "This is them".

Paul Verner (02:13):

Wonder how little kids get their allowance.

Marcus Johnson (02:18):

Yeah. The unique stone currency has been used for several centuries, although no one's quite sure how the concept began. I still don't. This was not a good factor the day, because I don't know how it works. But it's true, they're using rocks as money. It's kind of brilliant to be honest.

Paul Verner (02:34):

I'm still trying to wrap my mind around the fact that I've never heard of this island.

Marcus Johnson (02:37):

Yeah.

Paul Verner (02:39):

New to me.

Marcus Johnson (02:39):

11,000 people.

Paul Verner (02:40):

Wow. Okay.

Marcus Johnson (02:41):

Soon to be 11,001. I'm coming Yap. It sounds like you've got everything figured out, to be honest. Anyway, today's real topic: how the outcome of the US presidential election will affect media, advertising, and technology.

(02:59):

All right, gents. So Mr. Donald Trump was once again elected President of the United States, but how will his administration affect the areas of media, advertising, and technology? I asked Paul and Gadjo, who are joining me today, to think about how Mr. Trump's presidency might influence those areas. Paul's up first, and he's going to tell us one of the main ways he thinks the incoming president might affect the world of media. Let's begin with media, Paul, what are you expecting?

Paul Verner (03:26):

I guess I would have to caveat the whole conversation by saying to expect the unexpected, because this is a very unpredictable administration. But what I foresee in the relative near term is that the administration is going to make good on its threats to exact retribution against traditional media companies, particularly the ones that it has characterized as hostile or "enemies of the people" or some other term that clearly puts them in the crosshairs. And those would include Comcast, Disney, Paramount Global, and Warner Discovery, those being the parent companies respectively of NBC News, ABC News, CBS News and CNN. I think the Washington Post is probably also on the hit list. And as far as what penalties the administration might try to exact, they have threatened things like revoking broadcast licenses or forcing their reporters to reveal sources. Could be easier said than done, but then again, I think we're in uncharted waters and the things that we have assumed to be part of the way government works in the US, a lot of that could be out the window as this administration takes hold.

Marcus Johnson (04:45):

Mm-hmm. Why do you think they're in danger this time around? Because those same news organizations were less in favor of the President the last go around as well. Correct?

Paul Verner (04:56):

I think that Trump feels like he has a very strong mandate, despite not having won a majority of the popular vote. I think that he doesn't have to worry about reelection, and I think that he's been a lot bolder in choosing people on the basis of loyalty as opposed to on the basis of qualifications. That includes the people he plans to nominate as head of the FCC and other government agencies that will impact how these things play out. So I think it just has a different flavor now, it has a different feel. He's got both houses of Congress in his favor, so even the fact that he won election again is an indication that he obviously controls the party. And every indication is that he's going to move more aggressively than he did last time, which is why I think these companies are more in the line of fire. I think also that things have happened during his first term, and since his first term, to only solidify those opinions on these companies, and that doesn't bode well for them in terms of what might be in store.

Marcus Johnson (06:09):

Yeah, yeah. Your point about the 22nd Amendment as well, the fact that he can't be elected again, we have seen presidents say, "You know what? I'm going to be more bold this time round because I don't need people's votes a third time, because I can't be elected to the office a third time". Paul, before we move on to technology and what he might do in that space, Gadjo is going to give us a take there. I was wondering whether you're going to talk about, in terms of his effect on media, whether time spent with media will get another Trump bump?

Paul Verner (06:39):

Mm-hmm.

Marcus Johnson (06:39):

Because we saw that the first time around people were glued to their screens, to their devices, to the news when he was elected the first time. And Frank Sesno, a professor at George Washington University and former Washington Bureau Chief of CNN, was saying, "Trump 2.0 will likely be a very different administration than we saw before. That will carry immense consequences and news value. It will energize right-wing media and will panic the left". And Benjamin Mullin, he was quoting Benjamin Mullin's article, he writes for the New York Times, he was noting that the Times the Washington Post and other newspapers saw a sudden influx of subscriptions in 2016 as readers puzzled through the consequences of Mr. Trump's initial victory. And he goes on to write that David Clinch, a revenue consultant for Media Growth Partners, a media advisory firm, said that he thought news organizations would see another uptick in customers, but they would be more muted than the first Trump administration because some readers have become fed up with or exhausted by mainstream news coverage. What are your thoughts there?

Paul Verner (07:36):

I think that, for starters, the mainstream or the legacy media outlets carry a lot less weight in terms of public discourse and their power of persuasion than they did in 2016. I think also that the bumps that some of the organizations that you might consider left-leaning saw at that time, they may not happen the same way. And the Washington Post is a case in point, because when they declined to make an endorsement for the presidency, they actually lost a lot of subscribers. So I think that backlash effect is very much in play, and that was not a factor I think in 2016. The left was generally shocked, but also mobilized and interested in keeping track of what's been going on. I mean now I think we live in a world where Joe Rogan has more sway than any of the traditional cable or news networks.

Marcus Johnson (08:35):

Yeah. [inaudible 00:08:35]

Paul Verner (08:35):

So it is a different climate, but that doesn't discount the possibility of an influx of time span or a growth in time span or a temporary spike, and potentially some outlets gaining subscribers. I mean I think for one thing, X, we have been talking a lot over the past year and a half since Elon Musk took it over that it's been losing users, it's been losing ad revenue, that could actually turn positively for them given that obviously Elon Musk right now is very much in the graces of Trump, and I think the administration is going to do a lot to pump up that platform. Going back to my original point, it's almost impossible to make predictions because there's so many forces pulling in different directions, but that's kind of how I see it right now.

Marcus Johnson (09:29):

Yeah, yeah. We talked about X and what we can you expect from them on Monday's episode. Tuesday we talked about Bluesky and whether they're going to steal some users from them. I'll continue to. That was on Tuesday's episodes, so we'll see. I went back and looked at our time spent with media numbers. TV did get a bump in 2016, but it also had the Summer Olympics, so maybe that gave it a bit of a bump. So it's hard to know to parse it out and say, "Was this just Trump related because he got voted in?" Social media also did slightly better in 2016 than it had done in previous years. So it's hard to know exactly, but there was something there.

(10:00):

Gadjo, we turn to you for a prediction on how you think the upcoming presidency is going to impact technology in that space?

Gadjo Sevilla (10:06):

Sure. So technology, that's a very big question. I mean you're talking EVs, AI, all of that is going to be touched. But I wanted to focus on the innovation part of it. And mostly there's been an indication that the incoming administration is going to clamp down on immigration, and this is going to have a ripple effect on H-1B visas, which are a huge part of what makes the tech industry as vibrant and innovative as it is. So according to the Center for Strategic and International Studies, 60% of doctorate level computer and mathematical scientists and engineers in the US are foreign born. And more than that, there's 19% of the entire US STEM workforce comes from abroad. So that may seem like a small number, but their contributions are disproportionately concentrated in the most advanced fields, including AI.

Marcus Johnson (11:07):

Yeah, yeah. You said 60%, right? Six zero, that first statistic?

Gadjo Sevilla (11:11):

Six zero, yeah, of upper level computer and mathematical scientists and engineers.

Marcus Johnson (11:16):

Wow. Okay, okay.

Gadjo Sevilla (11:17):

And it goes the same for the students. Like 83% of STEM doctorate degrees are awarded to international students, and a majority of those, 71%, remain in the US.

Marcus Johnson (11:31):

Mm-hmm. Mm-hmm.

Gadjo Sevilla (11:31):

They do contribute to very key fields. Again, AI, engineering, security, defense contracts. So constricting that brain trust does risk short-term and long-term choking of the intellectual capital.

Marcus Johnson (11:50):

Mm-hmm.

Gadjo Sevilla (11:51):

Just imagine a world without Google's Sundar Pichai, Microsoft's Satya Nadella, or Nvidia's Jensen Huang.

Marcus Johnson (11:58):

Mm-hmm.

Gadjo Sevilla (11:59):

We're all foreign born, and we've come here through that path.

Marcus Johnson (12:02):

Yeah, yeah.

Gadjo Sevilla (12:04):

And these are individuals that didn't just grow companies, they've shaped industries and we've seen the effects of their work. So it's really more than immigration, I think it's about global competition. Shutting down that door just means a lot of this talent, which is already here, will have to look elsewhere. And given how competition across various fields and technology is at a heightened clip right now, that can't be a good thing for the US.

Marcus Johnson (12:34):

Do you think this is going to have... Like is this something that's going to happen within months of him getting in office? Or is this something by the end of his term we're going to start to see this play out?

Gadjo Sevilla (12:43):

It's hard to say. Again, it's super unpredictable right now, depending on who he puts in charge of this and what their agenda is. My fear is they want to have something to show for it right away, so there's going to be numbers. And for that to happen, it's likely going to be discouraging for a lot of these visa holders and students to sort of see a future where they can grow in the industries that they've chosen.

Marcus Johnson (13:08):

Mm-hmm. Mm-hmm.

Paul Verner (13:08):

Yeah. I could see the potential for short-term impacts in terms of people who are already in positions at these tech companies having to leave, or having their lives disrupted because family members are deported or can't be allowed to come into the country. But I think in the longer term, I agree Gadjo, that if you look at the leadership of these companies, these are many, many immigrants. First generation immigrants. So in terms of what a protracted restrictive immigration policy might do, yes, I think you will see that America could lose its leadership role in some of these industries, but that would play out in a longer timeline.

Gadjo Sevilla (13:54):

Right.

Marcus Johnson (13:54):

Mm-hmm. Mm-hmm. And there's this Forbes article I've got pulled up here from Stuart Anderson. 65% of top AI companies have immigrant founders. So it's going to hit certain industries harder than others as well. And Gadjo, sticking with AI for a second, you mentioned that... I said give me a prediction on how this is going to affect technology, and to your point, that covers literally everything pretty much. But you mentioned AI as one of those pieces. So if we zoom in on that for a second, what do you expect from AI and how that might be impacted with this new administration?

Gadjo Sevilla (14:26):

Yeah. I think we're going to see a sea change from where the Biden administration took it, which is they're pushing for regulation. They got a lot of AI startups and big tech companies to buy into that idea. They sort of signed initial ways to ensure that there's regulation. I think that's going to change. And the reason is they're going to deregulate AI development for the sake of innovation, to speed it up, right? Because those are the two switches there. You want safe AI, it takes time, you have to test it. But if you want powerful AI, then take off the guardrails. And that could be problematic, because according to a 2020 Brookings report, 45% of AI experts are citing inadequate regulation as a top risk to ethical AI deployment. And that's at scale. And we're seeing businesses and governments adopting these tools. That's their first and biggest concern is how safe is this, right?

Marcus Johnson (15:29):

Yeah.

Gadjo Sevilla (15:29):

And to what point do we have to be cautious about it? That might get thrown into a loop for the sake of innovation, just to speed up the models, what they can do. I also think there'll be more application into areas that we're kind of in the gray before, namely military and defense applications. So the Department of Defense's 2020 budget for AI related R&D was just under 4 billion, but that could grow under the Trump administration, especially since we know that the objective there is to outpace China. So you could see more investment getting into those applications, defense, AI applications for government as well.

Marcus Johnson (16:19):

Yeah, yeah. So pushback here for a second is folks like Gavin Newsom, governor of California, didn't sign SB 1047.

Gadjo Sevilla (16:30):

Right.

Marcus Johnson (16:30):

And some people were upset about it, some people weren't. But the argument for that, at least from his camp, was look he signed multiple bills that have tried to regulate AI, just not this one. He's trying to crack down on deepfakes, he's trying to encourage AI watermarking, protecting children, combating AI-generated misinformation, things like that. So what do you make of the argument that, look, the big existential threats may not be regulated, but there are other things happening with AI laws at a more granular level?

Gadjo Sevilla (17:02):

I do agree. I mean on an industry basis, we're starting to see that. But again, without the foundation of the government initiative, then that sort of opens up a Wild West of possibilities, right? Because there won't be any sort of oversight on a national or governmental level.

Marcus Johnson (17:23):

Right. I'm talking state level here. Yeah, exactly.

Gadjo Sevilla (17:25):

Yeah. I mean not that we have that now, but at least there is some scrutiny, there are some checks and balances. And going back to the first point, National Foundation for American Policy Study found that 70% of AI researchers in US universities are all foreign nationals. So again, you can see a direct correlation between your desire to accelerate AI development, and also who the key personnel are for this to happen.

Marcus Johnson (17:58):

Mm-hmm. Yeah. All right, Paul, let's end by swinging over to the world of advertising. We covered media, tech, AI. Give us one prediction or one way that advertising could potentially be affected.

Paul Verner (18:12):

There are several companies that are subject right now to ongoing litigation or legislation around their business practices. Those would be Google, Meta, Amazon, TikTok, and Apple. They represent over 2/3 of the digital ad market in the US. So there's already a lot of uncertainty as to how those cases will play out, and we don't know how the administration is going to approach some of those. For example, the antitrust suits. But I do think that the overall ad economy, I don't expect it to suffer greatly. I mean even if Google is forced to, for example, sell Chrome. If that is appealed and eventually that is something that's going to happen, first of all, it'll be a long time before it actually comes to pass. But I just don't see that impacting the health of the digital ad market, which is quite strong. I mean we're forecasting 12.5% growth in the digital ad market in the US next year, which is quite big in terms of a growth factor when you consider that it's already building from a large base.

Marcus Johnson (19:21):

Yeah.

Paul Verner (19:22):

So I just don't see a direct impact in the short term on that overall economy. Clearly some companies may be winners or losers depending on the decisions that come down, but a lot of this is subject to whim as well. Everything I said earlier about the mainstream media would apply also to Meta. I think what some of the pronouncements that Trump and his allies have made about Meta and Google are quite strong. But then we come to learn that Mark Zuckerberg had a private dinner with Trump, so maybe is that enough to smooth things over? Did he make some concessions? We don't know the substance of that conversation, but we do know that Trump responds a lot to feeling like people are either on his good side or his bad side, and sometimes that is just a phone call or a dinner away from having the script totally flipped.

Marcus Johnson (20:21):

Mm-hmm.

Paul Verner (20:21):

So I think those things will have a much larger impact on the administration's decisions than any sort of thought out policy positions or anything that's predictable.

Marcus Johnson (20:33):

Yeah. Yeah, you mentioned digital ad growth that we're forecasting for next year, 12.5% growth. And you zoom out a little further to the big picture of total media ad spending, we're still expecting 7.5% growth in that overall pie for next year. That's down, but down from 12%, basically from 2024. But 7.5% is better, the next year's growth will be better, than 2023's 5%. And so it is a very healthy picture, and those numbers are hot off the press from November from our wonderful forecasting team.

(21:09):

All right gents, that is where we have to leave the conversation for today. But thank you so much as always for hanging out with me. Thank you first to Gadjo.

Gadjo Sevilla (21:16):

Thanks, Marcus.

Marcus Johnson (21:17):

Yes sir. Thank you to Paul.

Paul Verner (21:18):

Thanks. Always a pleasure.

Marcus Johnson (21:19):

Yes indeed. Thank you to Victoria who edits the show. Stuart runs the team, and Sophie who does our social media. Thanks to everyone for listening in. We hope to see you tomorrow for Behind the Numbers Weekly Listen. That is of course an eMarketer podcast made possible by LiveRamp.