Tech State of the Union

As our most tech-oriented Commander in Chief, President Obama usually includes several nods to Silicon Valley and America’s strong start-up scene in his State of the Union addresses.

But last night, the lame duck President issued an address that didn’t contain a lot of generic tech flag-waving. Instead, he focused on a few important parts of the tech sector and made some subtle but noteworthy advances.

Who Saw it First

If you watched the State of the Union on television, you might have missed something important…

The White House actually published the full text of the President’s speech beforehand on a long-form blogging site called Medium.

Usually given to the press under embargo, the speech was instead published online.

“For the first time, the White House is making the full text of the speech available to citizens around the country online,” the preface to the speech said.

Online first: It’s not the most grandiose gesture, but it’s important when considering the state of media.

Online audiences are being considered before all others, and the White House is on board with the idea.

The Words

An associate history professor at Northeastern University named Benjamin Schmidt tweeted a list of the words that were used for the first time in a State of the Union address.

Some of these words were used for the first time because they are timely news items, such as “Ferguson” and “ISIL.” Some were words that have only recently reached near-total social acceptance (“lesbian,” “bisexual,” and “transgender”).

Others were indicative of broader social trends: “incarceration,” “bully,” “superrich,” and “gotcha.”

The tech terms used for the first time in the State of the Union included “hacker,” “coding,” and the more generic “innovators,” as well as the proper names of eBay, Tesla, and Instagram.

The President also mentioned Google, but it wasn’t the first time.

In terms of specific tech issues, the President discussed a number of things, which I’ll talk about in detail below.

Obviously trends like these are important ones you should be following already, but in his speech, the President gives them the stamp of primary national concerns.

Data Security

No foreign nation, no hacker, should be able to shut down our networks, steal our trade secrets, or invade the privacy of American families, especially our kids. We are making sure our government integrates intelligence to combat cyber threats, just as we have done to combat terrorism. And tonight, I urge this Congress to finally pass the legislation we need to better meet the evolving threat of cyber-attacks, combat identity theft, and protect our children’s information. If we don’t act, we’ll leave our nation and our economy vulnerable. If we do, we can continue to protect the technologies that have unleashed untold opportunities for people around the globe.

This rather long passage reflects some of the issues brought up recently by NSA leaker Edward Snowden.

In an interview in January, Snowden said the NSA spends more of its resources conducting cyber attacks on other nations than it does defending its own systems.

“Nobody is ever really interested in doing the hard work of defense,” Snowden said in his interview on PBS program Nova. “When you deprioritize defense, you put all of us at risk. Suddenly, policies that would have been unbelievable, incomprehensible even 20 years ago are commonplace today.”

It will be important in the coming months to watch the government adopt a strategy of data defense.

Drones

As Americans, we respect human dignity, even when we’re threatened, which is why I’ve prohibited torture, and worked to make sure our use of new technology like drones is properly constrained.

The President here is speaking about drones as weapons of war. That was their first role in the United States.

As drone legislation matures, however, they will branch out into communications and transportation. This year, FAA regulations will be changed to apply to unmanned craft in domestic skies.

Precision Medicine

Since health care reform was such a major initiative for the Obama administration, it’s only natural that medical technology should repeatedly pop up in the State of the Union address:

21st century businesses will rely on American science, technology, research and development. I want the country that eliminated polio and mapped the human genome to lead a new era of medicine — one that delivers the right treatment at the right time. In some patients with cystic fibrosis, this approach has reversed a disease once thought unstoppable. Tonight, I’m launching a new Precision Medicine Initiative to bring us closer to curing diseases like cancer and diabetes — and to give all of us access to the personalized information we need to keep ourselves and our families healthier.

Precision medicine is another term for genetic medicine and genomics. Genetic information about diseases is used to diagnose and treat them.

Cancer, for example, has a distinct genetic footprint, and treatment that analyzes genetic alterations associated with it is considered precision medicine.

Communications

I intend to protect a free and open internet, extend its reach to every classroom, and every community, and help folks build the fastest networks, so that the next generation of digital innovators and entrepreneurs have the platform to keep reshaping our world.

While this is mostly a generic rah-rah statement that the Internet can save the world and give the poor new opportunities, it’s also tacit support of net neutrality.

The fight over net neutrality continues in the FCC and on the floor of Congress. Today — the very day after the President’s address — there are House and Senate hearings between cable television lobbyists and two companies producing original content for the Internet: Amazon and Etsy.

This fight is far from over.

Shell Companies

Let’s close loopholes so we stop rewarding companies that keep profits abroad, and reward those that invest in America. Let’s use those savings to rebuild our infrastructure and make it more attractive for companies to bring jobs home. Let’s simplify the system and let a small business owner file based on her actual bank statement, instead of the number of accountants she can afford. And let’s close the loopholes that lead to inequality by allowing the top one percent to avoid paying taxes on their accumulated wealth. We can use that money to help more families pay for childcare and send their kids to college. We need a tax code that truly helps working Americans trying to get a leg up in the new economy, and we can achieve that together.

Lots of tech companies have set up a tax avoidance structure known as the “Double Irish arrangement.” Google (NASDAQ: GOOG) and Apple (NASDAQ: AAPL) are a couple of the most notable examples.

Basically, a “Double Irish” company shifts its profits from a high-tax country to a low-tax haven country.

In the classic Double Irish, an American company would have two Irish subsidiaries. One receives royalty payments for intellectual property, then that one pipes the money through to the second company, which has tax residency in a country with no corporate income tax, like the Cayman Islands, Bermuda, or the Bahamas.

Ireland is closing these loopholes. As of the start of 2015, no new companies can use those loopholes, and companies currently relying on them must stop by 2020.

It likely won’t mean more tax revenue will come to the U.S., though — it will mean these big companies will devote some time and effort to restructuring to find new loopholes. It will just mean different expenses for the companies involved.

Look for changing tax shelters in the coming year for tech companies. Even if they’re not innovating in their tech, they can be innovative in their accounting.

Good Investing,

Tim Conneally

 @TimConneally on Twitter

For the last seven years, Tim Conneally has covered the world of mobile and wireless technology, enterprise software, network hardware, and next generation consumer technology. Tim has previously written for long-running software news outlet Betanews and for financial media powerhouse Forbes.