The Fragility of the Tech Broligarchs
Hi friends –
When people ask about my religion, I often say that because I grew up in Silicon Valley I was raised as a tech libertarian. It’s kind of a joke, because I’m actually Jewish. But it’s also true that to grow up in Palo Alto was to be submerged in a dismissive “we don’t need you” attitude toward government.
This approach was poetically summed up in John Perry Barlow’s electric “Declaration of the Independence of Cyberspace” published in 1996.
“Governments of the Industrial World, you weary giants of flesh and steel, I come from Cyberspace, the new home of Mind. On behalf of the future, I ask you of the past to leave us alone. You are not welcome among us. You have no sovereignty where we gather,” Barlow wrote.
Barlow’s manifesto has long served as a kind of spiritual inspiration for techies. But thirty years later, it no longer accurately describes the relationship between tech and government. As the recent lovefest between tech CEOs and the Trump Administration demonstrates, the tech titans now need and are actively seeking government support.
In my latest piece for New York Times Opinion, I write that the reason for this pivot is the hidden fragility of the tech industry (gift link). The tech titans are, of course, some of the biggest and most profitable companies on the planet. But they are also facing the soaring costs of complying with global regulations and the astronomical costs of the race for AI dominance.
I’m not usually inclined to agree with Trump advisor Steve Bannon, but I think he has identified something real when he recently said the tech bros are cozying up to Trump because they “want essentially a bailout.”
What’s the Problem? Renowned investor Warren Buffet has a famous saying about how to identify a good business: “If you’ve got the power to raise prices without losing business to a competitor, you’ve got a very good business.”
The opposite happened last week after a new Chinese AI startup, DeepSeek, began offering an AI product with the equivalent quality as the leading AI firms for a tiny fraction of the price.
Silicon Valley panicked.The stock market plummeted. Microsoft and OpenAI subsequently dropped prices for various AI services. OpenAI CEO Sam Altman even speculated on Reddit about giving away OpenAI models for free.
On his blog, Dario Amodei, the CEO of leading AI company, Anthropic, begged the US government to step up its export controls to prevent China from gaining any further AI advantages. He urged lawmakers to close loopholes that allow China to buy the chips that were used by DeepSeek.
“If we can close them fast enough, we may be able to prevent China from getting millions of chips, increasing the likelihood of a unipolar world with the US ahead,” he wrote.
It’s not just trade protections that the tech titans want. In recent years, they have also lobbied for permission to use copyrighted material to train AI and for the TikTok ban which conveniently takes out one of their major competitors. And surely the titans must have lobbied for the generous handout that the Biden Administration gave them in its final days in office: An executive order granting access to federal lands to build AI data centers.
In short, the companies have great wealth, but they are increasingly in need of political power – which only the government can grant them.
What Can be Done? One fundamental problem is that investors and the stock market demand perpetual growth. It's not enough that Google has consistent 30% profit margins – the market wants revenue growth, too.
But it’s not just about Wall Street. It’s also about a class of billionaires who have unimaginable wealth and are now realizing that they want political power, too. The truth is that companies that get too big often focus on maintaining their position more than they focus on innovation and winning in the marketplace.
“The U.S. is competing through the denial of innovation,” renowned tech analyst Ben Thompson wrote in his newsletter Stratechery. “Yes, this may help in the short term — again, DeepSeek would be even more effective with more computing — but in the long run it simply sews the seeds for competition in an industry — chips and semiconductor equipment — over which the U.S. has a dominant position.”
AI researcher Ritwik Gupta wrote on his blog, “If your only move is to gatekeep, you’ve already lost.” Gupta argues that the U.S. is trying to win the AI race by investing in hardware and gatekeeping access to hardware, while China has focused on nurturing human talent.
I second that motion. Investing in people is the best move we can do - not only for AI but for our collective future.
As always, thanks for reading.
Best
Julia