Big Tech's challenge to the nation state

Making sense of the new digital dominion

On the second day of the HowTheLightGetsIn festival, a distinguished panel sought to make sense of the impact of Big Tech on both capitalism and the power of the nation-state. Among the panellists were Kenneth Cukier, the Deputy Executive Editor at The Economist, Anu Bradford, the Henry L. Moses Distinguished Professor of Law and International Organization at Columbia University, and Aaron Bastani, the co-founder of Novara Media. The timely nature of this topic is underscored by the ongoing legal battles, which are arguably the most significant challenges to Big Tech's power and influence in decades. Steering the discussion was Stephanie Hare, a researcher, broadcaster, and the author of 'Technology Is Not Neutral', whose insights added a compelling dimension to the discourse.

 

What do Big Tech - Apple, Google, Meta, Amazon, and Microsoft - all have in common?

They all have immense reach, with billions of users around the world. Many, if not all, dominate entire markets. Most also benefit immensely from network effects. And all, have thus far, obviated regulatory scrutiny with the ease of companies that have market capitalisations equal to the GDP of many countries, which, most of them do. Perhaps most importantly, however, all rely on collecting, analysing, and monetizing data. An approach that is not only essential to their business models but also their ability to innovate and hence in many ways define the contours of our collective future.

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There is no doubt that digital technology has transformed the world around us and in its many manifestations, most notably AI, it will continue to expand the scope of what is thought to be possible. But as the capabilities of our society have grown immeasurably greater, so too, in the words of Herbert Marcuse, has ‘the scope of society’s domination over the individual.’ From the title of this debate, ‘Capitalism, Big Tech and the Nation-State,’ one would infer that what is sandwiched in between two institutions - that have, for better or worse, been essential to the functioning of much of our society for several hundred years - represents an affront to them both.

To make sense of their sheer size, however, we must first make sense of the political climate that enabled the growth of these companies’ extreme economic concentration. This is a point touched upon early in the discussion by both Anu Bradford and Kenneth Cukier. “At the same time these companies got so large,” Kenn says, “the state as an entity lost its strength to review how companies were operating and to act.”

It is as great an irony as it is a tragedy that the neoliberal project vastly reduced the capacity of the state to intervene just as digital technology gave private entities such extraordinary reach upon our lives. The prominence of Big Tech, however, should not detract from the failure of anti-trust regulation in the US more broadly. When we want to understand why increasing monopolization and declining competition have been a feature of the US economy since the 1970s, why there are such historic levels of wealth and income inequality, or why there seems to be so little competition within US politics - the enfeebling of a legislative framework that historically checked and distributed concentrations of private power seems like a good place to start.

Yet, this debate underscores a unique dimension to Big Tech. In their sheer scale, ambition, and influence these firms increasingly resemble nation-states. If Amazon were a country, its wealth would rank it 14th globally, while Apple's valuation mirrors the GDP of the U.K.

Much like the international cartels before the Second World War and much like the East India Company in the 17th and 18th centuries, the global monopoly inhabits something akin to its own sovereignty. Ian Bremmer even goes as far as to say that Big Tech represents the next global superpower. It is not only that the colossal scale of capital behind these companies implies an ease with which they can avoid regulation (there are more full-time lobbyists working for Amazon living in Washington DC than there are serving US Senators) but that the power they exercise is at once miraculous as it is terrifying. Big tech is so ubiquitous, knows too much about us, and seems to have so much authority over what we see, hear, do, and even feel that it has reignited debates over who really rules.

This point is repeatedly made by Bradford, who states that the influence exercised by these companies is qualitatively different than any other monopoly because it has implications for our most basic rights and freedoms. “These companies are in a position to shape what we want, what we buy and what we think,” she says. Not only this, but they have the power to shape our (political) will in a way that compromises our agency. “It is not just about technology,” she says fervently, “it is also how technology affects democratic society and how it affects the fundamental rights of individuals.”

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A foundational element of a democratic society - the possibility of informed and rational debate among citizens - is also eviscerated by the fact that our communicative infrastructure has become a battleground for controlling human attention.

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In light of this, both Cukier and Bradford rightly contrast the European rights-driven approach and the American market-driven regulatory model. “In America, you don’t have a theory of anti-trust for the citizen” states Cukier, “but for the consumer.” Such a stark difference in approach is emblematic of the unique kind of power these organisations wield. The EU has taken a rights-based approach because they acknowledge business models that are clearly incompatible not only with privacy but with the very possibility of democracy, which depends upon a reservoir of individual capabilities associated with autonomous moral judgement and self-determination.

A foundational element of a democratic society - the possibility of informed and rational debate among citizens - is also eviscerated by the fact that our communicative infrastructure has become a battleground for controlling human attention. When Bastani, suggests that we must fix our politics before we can reign in Big Tech, he perhaps negates the influence many of these companies are already having on liberal democracy and ignores the fact that the consensuses that structure democratic societies are largely weaker due to the very influence of these platforms.

Yet the introduction of a federal privacy law in the US seems unlikely, as does any meaningful reform of Section 230 of the Communications Decency Act, which shields platforms from liability over content moderation. The EU on the other hand have acknowledged within the Digital Service Act and Digital Markets Act the explicit political function of these organisations within the digital public sphere through setting the effective limits of free speech and recognising their role in elections and surveillance operations.

Such measures become vital when the ability to confuse and undermine trust in our institutions and electoral processes is fast becoming the foreign policy weapon of our age. Ahead of a slew of elections in Europe, European Commission VP Vera Jourova recently pleaded that Alphabet's Google, Microsoft, Meta and TikTok do more to tackle what she called Russia's "multi-million euro weapon of mass manipulation."

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We are currently witnessing the biggest legal challenge to the power and influence of big tech in decades.

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Thankfully, we are currently witnessing the biggest legal challenge to the power and influence of big tech in decades. The FTC recently filed a suit against Amazon, alleging the online retailer illegally uses monopoly power to overcharge consumers, hobble competitors and exploit sellers on its marketplace. At the same time, a landmark case has been brought against Google over charges of monopolizing the online search space. Meta is also facing a similar lawsuit by the FTC, which was originally seeking to break up the company in connection with its Instagram and WhatsApp acquisitions. While these suits have never been more important, there is a worry that antitrust enforcement focused on anti-competitive conduct doesn’t take heed of what are entirely new market realities.

This is down to the fact that certain technologies have arguably eroded many preconditions that need to be present for markets to function. Some even go as far as to suggest that the breadth and depth of widespread digitalisation call on us to rethink the logic of capitalism.

These companies not only undercut the logic of a market system based on symmetric information, but they also extract value through their monopolistic hold over services like search and e-commerce in a way that is akin to rent-seeking. Just as landlords charge tenants for occupying space, Big Tech and their control over visibility and placement of online search allow them to extract rents, leveraging the scarcity and exclusivity of their platforms. Not only this, but network-oriented companies routinely raise huge amounts of money based on placing value on what ordinary people do online. As Bradford observes, "We pay for these services with our data,” which is effectively what these companies exploit.

Indeed, our every interaction, vast swaths of daily life, once beyond the pale of formal economic structures have become marketized, arguably replacing traditional markets as the epicentre of wealth extraction. Such processes have been so transformative many argue we are witnessing a mutation of capitalism into a new form of digital feudalism or techno-feudalism. Tech companies can also scale their offerings exponentially without zero-marginal cost or a rise in labour (Facebook pays around 1% of their total revenue to workers) and all live largely tax-free lives. All this means that, even if we aren’t witnessing a break from capitalism, we are still witnessing wealth accumulation on an unprecedented scale without any kind of compensation for those contributing to its creation.

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With the emergence of generative AI, this gap is only poised to widen. As Bastani highlights, these tech giants wield a disproportionate advantage; they control not only the tools but also the foundational elements necessary for innovation in the digital age. One such element is the vast troves of data we are all seen to have, retrospectively, consented to have given. The irony deepens further when one considers this is data used to train technologies capable of rendering vast swathes of us unemployed.

One solution to this might be to consider ownership of our data to be a fundamental right. Such a move might not only force tech companies to compensate us for the value provided and protect personal privacy, but it would also prevent further concentration of power and wealth in the hands of big tech. Without any form of recognition and redistribution, it’s unlikely that we’ll be able to redirect the basic dynamics of the economy away from the ever-greater concentration of power. As Bradford rightly states, “The more we wait the more the existing players are going to entrench their existing advantage.”

So far, she says, "we are struggling to show that there is a liberal democratic way to govern Big Tech." Issues have already been raised concerning the lack of public access to information and limited transparency in the cases currently underway. The irony reaches a boiling point when one considers the wealth these companies have accrued comes from the tsunami of digital tracking technology that has made all our lives public by default. 

When discussing the diversity of possible regulatory approaches, Kenn pleaded for “humility towards innovation.” He is right in that we should not be overly presumptuous regarding the path innovation will take, but neither should we simply be slaves to technological determinism. So far, innovation has come at the cost of many core values upon which our society is said to be built. China has shown the world that, contrary to prevailing perceptions in the West, political freedom is not a prerequisite for technological innovation.

While Big Tech may not directly challenge the traditional powers of the nation-state or represent a move away from capitalism in its entirety, their emergence signals a unique transformation of global power dynamics. Their influence, because based on digital technology, allows them to transcend mere capital accumulation as a basis for power; it is data that allows them to delve into the very fabric of our daily lives, shaping our perspectives, behaviours, and even aspirations.

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China has shown the world that, contrary to prevailing perceptions in the West, political freedom is not a prerequisite for technological innovation.

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In terms of historical analogies the speakers draw, the East India Company certainly captures the economic and political magnitude of their reach, but when it comes to making sense of their influence, a more apt comparison might be seen in the medieval papacy during its greatest heights in the 12th and 13th centuries. Many of these companies sculpt the very lens through which we have come to perceive the world. The platforms they design come to embody philosophies for not only how we see and understand ourselves, but also how we relate to and value one another. Their power stems from mediating fundamental relationships—not an individual's relationship to God, but our relationships with each other.

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It is important to remember that critical choices during the evolution of the internet were not made through democratic political processes, even though they involved traditional political issues such as sovereignty, borders, privacy, and security. And as Mariana Mazucatto rightly reminds us, publicly funded infrastructure is being capitalised on for private profit. As it currently stands, our lack of privacy equates to someone else’s wealth. In a digitalised world, privacy is not simply freedom from the state, privacy is that which allows us to foster individuality and the autonomy of thought and judgement presupposed by Western morality and liberalism. As Shoshana Zuboff alarmingly puts it, “It is possible to have surveillance capitalism, and it is possible to have a democracy. It is not possible to have both.”

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