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December 3 - December 16, 2024
Those who praised the democratizing possibilities of technology and social media platforms failed to appreciate that repressive authoritarian regimes could be tech-savvy too.
Right when European governments were condemning the repression of people and their human rights, European companies were exporting sophisticated monitoring software to Middle Eastern rulers.
When the Pegasus Project released a series of articles about government espionage in the summer of 2021, the news filled me with a mix of horror and hope.13 Pegasus is the flagship spyware product of NSO Group—an Israeli technology firm that holds the pole position in the billion-dollar global spyware market.
Despite their trendier branding, tech oligarchs are just as power hungry—and possibly more powerful—than the government institutions that internet pioneers sought to challenge decades ago.
start-ups have scaled massively by offering low- or no-cost products without worrying about making a profit and with the hope of reaping massive profits once an entire market was captured. This model explains why Uber just started to be profitable in 2023, nearly fifteen years after the company was created in 2009 and only after incurring a whopping $32 billion in losses.
As Uber gradually crowded out its competitors, its prices skyrocketed—with average fares increasing by 92 percent between 2018 and 2021.15
coins this practice as “blitzscaling,” explaining that “the competitive advantage comes from the growth factors built into the business model, such as network effects, whereby the first company to achieve critical scale triggers a feedback loop that allows it to dominate a winner-take-all
Eric Schmidt, Google’s former CEO and a key adviser to various U.S. presidential administrations, has warned that the United States may lose its lead in AI “fairly quickly” unless the government continues to fund and collaborate with the tech sector while offering it a regulatory break. An uncritical government alliance with tech companies is portrayed as the only option for America to defend democracy, particularly vis-à-vis China.
In 1996 Congress responded by passing the Communications Decency Act (CDA), the first set of rules around harassment and obscenity online. Despite the fact that key portions of the law were later overturned by the U.S. Supreme Court, it was the first—and remains arguably the most important—American law governing the internet.
The most consequential part of the CDA is Section 230, which allows platforms to moderate content while exempting them from responsibility for that content.
It was Trump who signed the executive order that created the Cybersecurity and Infrastructure Security Agency (CISA), which serves as the operational lead for federal cybersecurity and plays key roles in virtually every aspect of America’s cybersecurity policy, ranging from misinformation to infrastructure resilience to AI governance. But when the agency’s first director, Chris Krebs, rebuked Trump’s false claims about fraud in the 2020 election, the president fired him.
Every major tech company has begun hiring former government officials, bringing knowledge about politics and policy in-house, while building valuable connections to key policymakers.
75 percent of newly hired lobbyists for Amazon, Apple, Facebook, and Google came out of Capitol Hill offices, other government jobs, or political campaigns.70
This scale creates a systemic influence far greater than in most other industries. It means the tech sector represents roughly 10 percent of U.S. GDP.
In many ways, Silicon Valley has become the antithesis of what its early pioneers set out to be: from dismissing government to literally taking on equivalent functions; from lauding freedom of speech to becoming curators and speech regulators; and from criticizing government overreach and abuse to accelerating it through spyware tools and opaque algorithms.
“For all the lip service that Silicon Valley has given to changing the world, its ultimate focus has been on what it can monetize.”
There is no possibility of good public policy without access, yet tech companies use every method available to prevent society at large from understanding the technologies they create and the business models they employ. How can one govern something one cannot understand?
A new fab currently under construction in Arizona will cost a total of $40 billion and saw workers arriving from Taiwan to get the critical work done.4 Just one advanced lithography machine in a fab—used to pattern the finest details—can cost as much as $150 million.
Powerful countries around the world fear their own overdependence on imported microchips and the inability to control supplies of them.
Europe and the United States are similarly dependent on foreign suppliers: the EU and the United States currently comprise 21 percent of global semiconductor manufacturing capacity, but they are responsible for 43 percent of the world’s semiconductor consumption.
To make matters worse, one of the key production hubs for microchips, Taiwan, is also a country that has long-standing tensions with China.
Taiwan Semiconductor Manufacturing Company (TSMC). According to industry estimates, TSMC accounts for more than 90 percent of global output of the most sophisticated chips, which are used by Apple and many other major companies.
China itself plays a different but critical role in the semiconductor supply chain as the supplier of rare earth materials.
Beijing could close access to its mines, leaving the world without the basic components needed to make most high-tech goods.
Today cloud computing has a larger carbon footprint than the airline industry. Add to that cryptocurrency mining, which uses around 0.5 percent of electricity worldwide.40 Combined with AI, the two emerging technologies account for 2 percent of the world’s power consumption.
By taking over or sidestepping government functions, cryptocurrencies are one of many private technologies that have damaged democracy by fundamentally reshaping the purpose and power of government.
A mere $2,000 worth of Bitcoin in mid-2016 would have been worth almost $2 million by 2021. The total value of the global cryptocurrency market at that time was $3.2 trillion.
China, the first to crack down on the trade in cryptocurrencies, banned them all together in September 2021.53
Days before elections took place in 2020, Apple and Google dealt a significant blow to Russian voters by removing the app that Navalny’s associates developed to help identify the strongest candidate opposing Vladimir Putin in each of the 225 voter districts.
The threat was effective: the companies cited the danger to employees as their main motivation for removing the app from their platforms.
authoritarian regimes often mandate some staff presence within their borders precisely so that they can leverage employees as hostages to advance their political agenda.
And this provides the corporate leaders who hold power over those technologies incredible power over geopolitics.
Shutting it off could incapacitate military operations—and result in real casualties. In effect, what had seemed like a goodwill gesture from Musk was instead attempting to turn the U.S. government—and all of Ukraine—into a major Starlink customer.
American policymakers are hyperfocused on the national security segments of tech regulation while remaining downright apathetic on questions of civil liberties like data privacy.
Although Apple has attempted to shift some of its manufacturing outside of China in recent years, the country still produces over 95 percent of its iPads, iPhones, and Macs as of 2023.70 Similarly, 95 percent of the rare earth materials relevant for high-tech production come from China.
But in the past, respecting the law of the land for Apple has meant the opposite as the company challenged law enforcement in the United States.
Google is one of the platforms banned by the CCP.
Despite all of the buzz surrounding X and Musk, journalists have paid little attention to the second largest investor in the platform: Prince Alwaleed Bin Talal of Saudi Arabia, who leads the Kingdom Holding Company.43 This is remarkable backing from the state fund of a repressive country that restricts freedom of expression, and one that should raise significant concerns in a company and country that purport to champion free speech.
Public accountability and transparency will likely require reforms to trade secrecy protections. Today companies can easily hide behind intellectual property protections when trying to avoid scrutiny of their products.
The U.S. federal government is, in fact, the largest buyer of IT products in the world.55 To give some sense of the spending, over the past five years, Microsoft earned over $1.65 billion from the U.S. Department of Defense alone.
