Valley seems an unlikely incubator for neo-feudalism. Half a century ago, it was just beginning to change from an agricultural region into a vast middle-class suburb. Wealthy people from San Francisco bought elegant estates in the South Bay and created an elite horse country alongside the farms, but most of the growth took the form of modest tracts inhabited by the middle and working classes, including many veterans. “The more people who saw the nicest place in the world to live with their own eyes, and realized it was no more expensive than back home,” observes one Bay Area native, “the more they concluded ‘I want to live here, too.’”5
By the 1950s and 1960s, these pleasant surroundings were attracting skilled but decidedly middle-class technicians and engineers, including Lee DeForest, inventor of the vacuum tube. An emerging tech economy was supercharged by massive defense and space contracts. UC Berkeley, the nation’s premier public university, was located not far to the north. Closer by was Stanford, which excelled in the physical sciences and established the Stanford Research Park in 1951. Stanford graduates had already founded Hewlett-Packard in 1939, and an engineering professor who became provost of the university, Frederick Terman, nurtured tech companies in the area.6
In the ensuing decades, the Bay Area, including San Francisco, became the world’s leading technology hub. This rapid technological growth resulted in a consolidation of wealth and power in a handful of companies. A relatively small cadre of engineers, data scientists, and marketers—a tiny sliver of humanity—began reshaping the world’s economy, and its culture as well.7
In the Middle Ages, the power of the nobility rested on the control of land and the right to bear arms; the power of today’s ascendant tech aristocracy comes mainly from exploiting “natural monopolies” in web-based business. The winners of the digital land grab are a few companies located mostly in Silicon Valley and in the Puget Sound region. Having seized the strategic digital territory, they are eclipsing and replacing the old industrial economy.8
By 2018, four tech firms—Apple, Amazon, Google, and Facebook—had a combined net worth amounting to nearly one-quarter of the S&P 500 Top 50, and equal to the GDP of France.9 Seven of the world’s ten most valuable companies are in this sector.10 The tech giants have also generated huge individual fortunes: eight of the twenty richest people on the planet acquired their wealth in the tech industry.11 Nine of the thirteen richest people under age 40 are in the tech industry, and all live in California.12 Only China, home to nine of the world’s twenty largest tech firms, presents any kind of challenge to California’s tech aristocracy.13
From Garages to Gargantua
Silicon Valley was once a center of grassroots innovation where tech companies were started in suburban garages, as epitomized by the remarkable story of Apple.14 Now the historic startup culture has been strangled by the largest companies with their fantastic resources. Many startups are soon acquired by established firms, rather than having a chance to grow large themselves.15
Antitrust actions in the United States have fallen by 61 percent since the early 1980s, leaving the tech oligarchy with almost unlimited power—under administrations of both parties—to acquire or crush competitors.16 In recent years, Facebook has swallowed potential competitors such as Instagram, WhatsApp, and Oculus, with little resistance from regulators.17 Google is among the most voracious in acquisitions, purchasing a new venture every other week in one year, and a total of 240 companies as of January 2020.18
Armed with massive war chests and the means to buy the best talent, a small number of companies have achieved monopolistic or duopolistic power over some of the world’s most lucrative markets. Google controls nearly 90 percent of search advertising, Facebook almost 80 percent of mobile social traffic, and Amazon nearly 40 percent of the world’s cloud business along with 75 percent of U.S. ebook sales. Google and Apple together provide over 95 percent of operating software for mobile devices. Microsoft still accounts for over 80 percent of the software that runs personal computers around the world.19
As a result, the once buoyant grassroots tech economy now suffers a seriously degraded condition. The entrepreneur not embraced by the big venture firms lives largely at the sufferance of the tech overlords.20 One online publisher uses a Star Trek analogy to describe his firm’s status with Google: “It’s a bit like being assimilated by the Borg. You get cool new powers. But having been assimilated, if your implants were ever removed, you’d certainly die. That basically captures our relationship to Google.”21 The rush into artificial intelligence is likely to strengthen the dominant position of those firms that already have enormous reservoirs of both money and talent. A few firms will probably join the oligarchy over time, and some familiar ones may go out of existence or be acquired by others. But the top firms tend to exist as properties of a small number of financiers and technologists who operate within a narrow, self-referential universe.22
This concentration of technological power portends a far less democratic future.23 With their huge cash reserves, the tech oligarchs have plans to dominate older industries like entertainment, finance, education, and retail, as well as industries of the future: autonomous cars, drones, space exploration, and most critically artificial intelligence. Firms like Google, Amazon, and Apple have invested billions to gain post position in both traditional and emerging industries.24
Izabella Kaminska, a technology analyst, compares the giant tech firms to the Soviet planners who operated Gosplan, the economic planning agency that allocated state resources across the USSR.25 Some may consider it preferable to cede such power to private capital rather than party hacks, but it still amounts to a great deal of power in a few hands, with little accountability.26
The China Syndrome
China, with its lack of legal restraints, may prove to be the cutting edge of a new technocratic despotism. Its tech sector is second only to that of the United States and increasingly sees itself as Silicon Valley’s successor. In certain sectors, including ecommerce and mobile payments, China has already established a powerful lead.27 Much of China’s technology boom results from massive investments by both state-sponsored and private firms in leading-edge technologies. In 2016 this investment was greater than that of Japan, Germany, and South Korea combined, and it produced ten times as many new graduates in engineering, technology, science, and medicine as the United States.28
China has spawned its own plutocratic elite, too: the number of Chinese billionaires in 2017 was just behind the number of billionaires in the United States, and growing much faster.29 Since 2000, many billionaires from tech and other sectors have entered the Communist Party in a seamless manner that Mao Tse-tung would never have countenanced.30 China thus has two intertwined elites—one political, the other economic. The rise of a technocratic elite might be said to fit neatly into the Marxist notion of “scientific socialism,” mobilizing scientists, technicians, and engineers for the common good.31 But it has demolished the basic egalitarian ethos of socialism. Marx envisioned the working class rising up against the bourgeoisie, but did not anticipate that technically skilled people could become yet another class, with their own capabilities and worldview. The merger of a wealthy tech elite with the political ruling class has created an aristocracy of intellect that replicates the historical role of the Mandarin class in Chinese culture and governance.32
Perhaps the most disturbing part of China’s technological growth is in the government’s use of artificial intelligence to regulate society and public opinion. Sophisticated algorithms are employed to control everything from legal proceedings to permission for marriage.33 The Communist Party is putting artificial intelligence to work monitoring businesses, in part to make sure their activities are congruent with Party priorities.34 The regime also uses facial recognition technology and “social credit” scoring, which includes everything from credit worthiness and work performance to political reliability. Surveillance of citizens is sometimes done with the unconscionable connivance of major American tech firms, some of which are also experimenting with bringing similar tools to the private marketplace.35
In