Big Tech and the state
What is Big Tech? How did it get so big? Has Big Tech got too big for the rest of the capitalist class?
Big Tech is a loose definition to describe the largest digital technology-based enterprises – it always includes Google (Alphabet), Facebook (Meta), Amazon and Apple. Microsoft is usually included now, sometimes Tesla, the electric car manufacturer, and Nvidia, the semiconductor manufacturer, and some perspectives will include the Asian firms: Baidu, Alibaba, Tencent, and Xiaomi – who by their nature and size fulfil a similar role.
As socialists we understand the integral role of technology in capitalism. In the Socialist Standard No 9 in 1905 we said:
‘The capitalist-class, the most revolutionary class that has ever oppressed human society, cannot increase its riches but by incessantly revolutionising the means of production by the never-ending introduction of new applications of the mechanical, physical, and chemical sciences to the industrial tool. Its thirst for inventions is so insatiable that it has created factories of inventions.’
Whilst most employees in Big Tech are supporting existing products rather than being inventors – factories of inventions seems like a suitable description of commercial research departments or startup companies.
And of course many years earlier Marx and Engels in the Communist Manifesto wrote:
‘The bourgeoisie cannot exist without constantly revolutionising the instruments of production, and thereby the relations of production, and with them the whole relations of society.’
Marx also wrote at length about Machinery and Modern Industry in Capital Volume 1.
Whilst many analysts of the left and right sides of capitalism have defined capitalism in our current era variously as platform capitalism, the app economy, surveillance capitalism, and techno-feudalism. The fundamentals of capitalism in terms of social relations are the same and the driving forces are the same, but they are right to recognise that capitalist enterprises have organised themselves differently from other eras.
Technology in perspective
We are not living in a world where most of society is working in information technology, but many use it as part of their jobs.
The Office for National Statistics report UK Digital Economic Research: 2020 showed that using the OECD’s ‘narrow’ definition of the digital economy, digital products accounted for 5 percent of Gross Value Added (GVA) in 2020. Using the wider OECD definition, products significantly affected by digitisation accounted for up to 20.7 percent in 2020, down from a revised figure of 21.2 percent in 2019. This report showed that research, health, finance, retail, manufacturing and real estate industries are all larger than the digital products sector in terms of GVA.
You can’t eat technology for dinner, it doesn’t keep the rain off and you can’t ride it into town, but technology helps produce food, houses and transportation – more and more efficiently with every iteration. The massive amounts of quantitative analysis, the number crunching, and instant communication, has enabled production at scales and efficiencies not seen before.
Productivity figures from sweatshops in Cambodia, for instance, can be analysed in air-conditioned offices in California and decisions made and responses delivered in a matter of seconds.
Some of the Big Tech enterprises are in direct competition: Google and Facebook (which includes Instagram and Whatsapp) are selling ads, giving opportunities to platforms that want to gather information about you to puts ads right in your face. Google and Facebook are said to share a duopoly in online advertising.
Amazon is mainly known for its online retail and delivery business, but most of its operating profit is in ‘the cloud’ (tinyurl.com/yc2j3s4h) – that is data centres where it rents out disk space and computing power. Second in the data-centre business is Microsoft (MS), which is primarily about business software and operating systems (OS), and Google is also pushing into the data centre market.
Apple is primarily in consumer hardware including iPhones, iPads, laptops and desktop computers. In the developed world the iPhone is the dominant mobile phone technology. In the less developed world, Google’s Android OS dominates but the hardware comes from different suppliers.
How did big tech get so big?
Analysts have identified four phenomena that allowed Big Tech to emerge: deregulation, financialisation, globalisation and technological convergence.
Often cited as the key piece of deregulation that paved the way for social media was Section 230 of the 1996 US Telecommunications Act which stated:
‘No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider’.
Social media sites, it can be argued, are fulfilling the same role as paper publishers who are responsible for what they publish, but for social media after Section 230 it was considered that anything posted on them was ‘user-generated content’ – and users were responsible, not publishers.
Software rarely has the regulatory safeguards that physical products have – think of trying to sell a car with no brakes or a kettle that catches on fire. Fujitsu has paid private compensation for its part in the UK Post Office scandal and, unusually, is also facing criminal proceedings (tinyurl.com/u2xz9zx7). In July this year 8.5 million MS Windows servers were made inoperable due to a faulty software update from an anti-virus company. Delta Airlines, whose operations were massively disrupted, are suing the anti-virus company claiming the outage cost them $500 million, with 1.8 million passengers affected (tinyurl.com/4kaj3s2x). Only those who can afford to sue them will get any money back.
Perhaps ‘lack of regulation’ is a better term – it’s largely a case of legislation not being able to keep up with the rapid innovation of digital services.
The expectation of profits means big tech firms don’t have to look far for sources of investment, which means they can expand in-house, or alternatively acquire smaller firms to increase market share either by embracing or extinguishing a rival technology. A current example is OpenAI, owners of ChatGPT, with an estimated $2 billion in revenue in 2024, though yet to turn a profit due to the huge cost of training AI models (tinyurl.com/2cub8my8). Twitter, for example, made profits in 2018 and 2019, the first since its inception in 2012. Since Elon Musk took over and renamed it, revenue has fallen sharply and ‘X’ has massive debts (tinyurl.com/rbtsh74f).
Globalisation allowed Big Tech companies to minimise their tax burden and move production to places with lower wages. They often have European headquarters in low-tax Ireland. Many consumers are familiar with Microsoft’s Indian Tech Support call centre, while the Foxconn City Factory complex in Shenzhen, China, makes parts for Apple products, and a global army of content moderators work for Facebook and ChatGPT in less developed parts of the world.
Technical convergence basically means devices doing more and more and being linked over the internet. Whilst a telephone handset makes calls, a camera takes pictures, a torch shines a light and a computer runs apps, in a smartphone these roles are combined into one device. These hardware functions rely on software to work, providing apps through app stores, and gateways to other services such as shops, entertainment and games. Both Google Play Store and Apple App Store charge a fee to stock software in their stores, and up to 30 percent commission on app sales and in-app purchases. This is a part of what is known as platformisation (tinyurl.com/5ybrxmdv).
Too big?
Any casual follower of the industry will have noticed that the tide seems to be turning. The section on the Wall St Journal website providing advice for potential investors warns that:
‘Governments around the world are evaluating the impacts that massive tech platforms and social networks have on businesses and consumers. In the coming months, regulations in the European Union and the United States will likely take effect, pushing tech companies to prioritise data protection, harm reduction, the ethical use of AI, and commitment to sustainability goals.’
Over the years there have been a number of skirmishes but the 2023 EU Digital Markets Act, and the EU Product Liability Directive currently being revised to include digital technology, are more significant. A US federal judge ruled in August that Google had violated US antitrust (anti-monopoly) law by maintaining an internet search monopoly. In October the US Department of Justice said in a petition to the court that it may recommend dismantling Google’s core businesses, writing that:
‘That would prevent Google from using products such as Chrome, Play, and Android to advantage Google search and Google search-related products and features — including emerging search access points and features, such as artificial intelligence — over rivals or new entrants.’
The Digital Markets Act (DMA) is an EU regulation that aims to make the digital economy ‘fairer’ and more contestable. It became applicable in May 2023. The DMA aims to ensure a higher degree of competition in European digital markets by preventing large companies from abusing their market power and by allowing new players to enter the market.
Twenty-two services across six companies – Alphabet, Amazon, Apple, ByteDance, Meta, and Microsoft – were identified as ‘core platform services’ by the EU in September 2023. The companies are known as ‘gatekeepers’ due to the ‘durable market position in some digital sectors’ and because they also meet certain criteria related to the number of users, their revenue, or size.
However, there have been accusations from US-based commentators that the rules were carefully constructed so as not to affect European companies and that it is purely about protectionism. As one example, Spotify, a Swedish company which trades on the New York Stock Exchange via a company in Luxembourg, could well have been on the list.
Almost 40 years after it came into force, the European Union is undertaking a major revision of the Product Liability Directive (Directive 85/374/EEC). The aim of this reform is to adapt ‘the standards to the conditions and needs of the digital single market’. To this end, software will in future be considered as a product.
The UK government prior to the general election this year also passed the Digital Markets, Competition, and Consumers Act (DMCC), a similar piece of legislation which surprisingly is the only one to include some protection for consumers, specifically for mis-selling and secondary ticket-pricing, such as the recent fiasco with the tickets for Oasis concerts.
We know there is a to and fro that goes on between lawmakers and Big Tech whilst the laws are being drafted, as Big Tech tries to make sure the legislation, if it has to exist at all, isn’t too damaging.
What’s in store for Big Tech in the future? Will we see monopolies destroyed, and how much will that affect the working class as a whole? Of particular interest to us is, how will it affect us as socialists?
Does it matter?
So in the current era of capitalism we have seen the immensely innovative system undergo great changes in the forces of production, and these changes are ongoing. Perhaps monopolies in certain markets will be broken, or perhaps it is a tendency for states always to be reactive and too slow.
As socialists the monopoly we are mainly concerned with is the monopoly that the capitalist class has over the means of producing wealth, and creating a socialist society where no such monopoly is possible, as everything in and on the world will be owned in common and managed democratically.
Here and now our job as socialists is to make socialists, and digital technology is a major method of promoting socialist ideas – so with changes in the platforms and networks we use there could be profound effects for spreading socialism. There might be profound effects if and when the socialist movement gets big enough to become a threat to capitalism, and when we do win there might be big consequences in having forces of production so complex and powerful at our disposal. Then the factories of invention will go from merely servicing the capitalist system to becoming communities for finding creative solutions to fulfil human needs.
PDH