Who wins in the battle between nation states and Big Tech?

For all its claims to global tech leadership, San Francisco can feel like a provincial, out-of-the-way kind of place. It’s a city of less than 1mn perched on the edge of the Pacific, a long way from most of the world’s big population centres. Filoli, the country estate to the south of town where the US and Chinese presidents met this week, feels more like a slice of sleepy, rural England than northern California.

Maybe that’s why, for us locals, this week’s meeting had a historic feel to it. San Francisco’s last claim to anything approaching this week’s Apec meeting, which reportedly drew 21 heads of state, was the 1945 convention where the UN charter was signed. Geopolitics is in flux, and when your town gets shut down for a week it does tend to make you think about the bigger issues.

But I think there’s more to it than that. In the year since ChatGPT officially launched tech’s artificial intelligence era, something profound has stirred. A newly confident US tech elite has been racing to push AI into seemingly every facet of business and personal life. With world leaders in town, it inevitably juxtaposes the power of the state with the rising power of tech.

This might just be my tech-centric view of the world (a hazard of living close to Silicon Valley for too long), but it feels like wealth and power are shifting. This year’s AI boom coincides with a US chokehold on semiconductor technology that is starting to bite in China. Presidents Biden and Xi weren’t here this week to talk tech, but with Silicon Valley as a backdrop, it was hard not to see.

I was reminded this week of a trip I made to China in 2015, back when Xi was still new in the job and China was going to dominate the tech world. The rising sense of tech triumphalism included a belief in the inevitability of companies such as Alibaba and Tencent becoming global leaders. It was also taken as given that the interests of the state aligned exactly with those of its rising tech companies.

Some years later, the Chinese Communist party clearly decided that wasn’t the case. The crackdown has driven Alibaba’s stock price roughly back down to where it was in 2015. Founder Jack Ma has packed up his Michael Jackson and princess costumes and slipped off the global stage.

Contrast all this with the position of San Francisco’s tech barons. Apple is astoundingly worth nearly 10 times as much as it was in 2015. It wasn’t that long ago that it felt frivolous to speculate about whether a tech company would ever be worth $1tn. Apple blew past that milestone in 2018, on the way to touching $3tn for the first time last year.

Clearly, there’s a lot of hype around AI, and the technology has plenty of flaws. But in more than 20 years in California, I’ve never seen anything with such broad impact catch on this fast. Microsoft, whose close ties to OpenAI has enabled it to lead the way, has added $1tn in stock market value this year. I don’t think it will be long before we’re handicapping the race to become the first $10tn tech company.

Most of the public debate about AI has (quite rightly) been about the technology’s impacts — what it will mean for online misinformation or the future of work. What has been less discussed is what it means for the concentration of wealth and power, in the tech industry but also between countries.

We’ve finally been seeing a belated response to the economic power amassed by the leading tech companies in the last boom. Europe’s Digital Markets Act is a truly ambitious attempt to weaken the power of tech’s leading “gatekeepers”. The US has finally started to mount court challenges to what it claims are anti-competitive practices, starting with Google.

Though this attempt to counter tech power wasn’t designed with AI in mind, it could help to redress the balance at a time when the stakes are rising fast. The urgency to act has got far greater in the past year. 

What do you think, Rana? We may succeed in making AI more “safe”, but leave it in the hands of an even more concentrated and wealthy tech elite that puts today’s tech titans in the shade. And, yes, I think that power increasingly rivals that of nation states.

Recommended reading

• Writing software is one of the first jobs to have been transformed by generative AI. In this piece in the New Yorker, coder James Somers explains what a big wrench it was to let a machine take over some of the mental processes that were central to his life and identity. It helped me understand why AI fills me with such fear: After a lifetime of writing, must I really learn to subcontract key parts of my brain to a computer? I hope, like Somers, I can learn to let go, but I’m not sure I can.

• San Francisco’s streets have had a makeover for the Apec meeting, though fixing the city’s fentanyl and homelessness crises will take more than a quick dash of prettying-up. This Bloomberg piece describes how venture capitalist Michael Moritz has spent more than $300mn of his own money and taken on some of what he thinks are some of the city’s most entrenched problems to try to turn the city around. The most pressing need of all might be an overhaul of the city’s balkanised governance to put more power in the hands of the mayor, as Moritz explained in the Financial Times. But one man can’t save a city — can he?

• There has been too much loose talk in the tech world about AGI — short for artificial general intelligence, supposedly the point at which machine brains can match humans — and too little hard analysis of what the term means, or how we will know when it arrives. In this piece in MIT Technology Review, Will Douglas Heaven talks to the DeepMind researchers who have proposed some much clearer definitions for the different levels of AI that are fast approaching. Let’s hope they can demystify the discussion of advanced machine intelligence; the field badly needs it.

Rana Foroohar responds

Richard, I completely agree that the power of the tech titans rivals the power of the nation state. I was struck watching this clip of Elon Musk in conversation with Rishi Sunak, who recently hosted a big global AI summit in the UK, how much Britain’s prime minister seemed like the junior partner here. The very fact that the two were positioned as equals on a stage in a fireside chat says a lot. 

But what worries me more is a false narrative that’s been put forward by US tech titans that they shouldn’t be too tightly regulated because they are the “national champions” in a technological fight with China. This started years ago, and has ramped up recently as AI has captured the public imagination. Silicon Valley’s calls to be regulated so that AI doesn’t blow up the world are a bit disingenuous, as they put all the focus on nebulous future worries over national security, versus the real economic harms of today. Just this past April, former Google chief executive Eric Schmidt talked about how AI innovation in the US must not be constrained because it would “only benefit China”.

But I’ve never bought the “bigger is better” argument in any kind of innovation — as I wrote several years ago, I think decentralisation and increased competition, not the entrenchment of existing players as “national champions”, is the way to keep the US ahead in technology. I’m hoping that the commerce department will use the power of the new White House executive order around AI safety to start figuring out more about the business model, and how we can come up with some standardised metrics to gauge both progress and harm. That would lead to much better regulation. 

On that score, I attended a big Open Markets Institute event this past Wednesday on confronting monopoly power and risk in AI, whether it comes from Silicon Valley or China. The report that came out of the event is worth a close read. 

Your feedback

And now a word from our Swampians . . .

In response to “The dumb censure of Rashida Tlaib”:
“Aside from replacing their ‘winner takes all’ (first-past-the-post) voting systems with ranked-choice (proportional) representation and taking the big money out of their politics, the USA in particular should reinstate the Fairness Doctrine in respect of the broadcast media, put an end to gerrymandering and get rid of the anti-democratic filibuster.

Where the US and Britain fundamentally diverge is in where sovereignty lies. In the UK, the still-accepted doctrine is that Parliament is sovereign. In the US, the Constitution — not ‘the will of the people’ — is sovereign. Article VI, Clause 2 effectively makes it so. And, since Marbury vs. Madison (1803) the Constitution is what the Supreme Court says it is. These unelected, unaccountable judges, with tenure for life, in effect wield ultimate power. That is particularly unfortunate when they are seen as politically committed one way or the other.” — Richard Lawes