‘Too big to fail’. This was the term bestowed on big banks during the financial crisis of 2007-8. But today it might be more aptly applied to the technology giants that are entwining their products into ever more indispensable aspects of everyday life.

The likes of Facebook, Google, Apple and Amazon have for a long time been consumer tech giants, but increasingly it's looking as if they might become more than that.

Image: iStock
Image: iStock

So how is the divide between private technology companies and governments blurring? More worryingly, do these companies hope to one day rule the world?

This may come as surprising to people born after the 1990s, but it used to be governments - rather than private companies - that were at the forefront of technological innovation. The early development of the internet was just one of the technological feats funded by government money. Space travel was another.

But this is no longer true. It’s now global technology companies who lead the charge when it comes to space travel, driverless vehicles, and artificial intelligence.

At the same time, tech companies creep onto the territory of public services, with transport being a prime example. In New York, more affluent citizens have begun to take Uber over public transport, diverting money away from struggling public services and decreasing their efficiency even further for the people who, due to more limited funds, are forced to rely on them.

The recent spate of media takeovers by technology billionaires is just another example of Big Tech's slow infiltration into public life.

“Taken together, it’s death by a thousand cuts, a slow (or not so slow) battle of attrition by 'efficiencies' against the slowness and bureaucracy of government,” writes Lucie Greene in her new book, Silicon States: The Power and Politics of Big Tech and What It Means for Our Future.

Tech giants are of course better placed to design effective services for a number of reasons. Firstly, is simply their vast financial clout. Their huge wealth puts them on a par with nation states. Amazon and Apple are both $1 trillion companies - something that was unimaginable as recently as the 90s. And Apple's cash reserves in 2017 were roughly double those of the Federal Reserve's in 2016. 

As public facing, consumer focused entities - although they’re currently experiencing more pushback than they ever have - tech companies already have the immense marketing and lobbying power to shape public opinion. Facebook has already acknowledged its power in shaping the outcomes of democracy, and is still reckoning with how it can change things for the better.

There’s also the question of the vast reams of data being collected from citizens, more so than the government could hope to accrue. Through our interactions with the products of tech giants, we cede to these companies trillions of data points about our emotional and psychological makeup, that they can then funnel into creating products that are even more essential to us.

The incredible experience tech companies offer compared to government services becomes painfully clear when you examine a public body such as the NHS. While companies explore the possibilities of artificial intelligence and new technologies like blockchain, the NHS is still mostly paper based and appointments must be made through the phone for the vast majority of services. Interacting with these services can feel like stepping 20 years into the past - it's no wonder Amazon is now stepping into the healthcare space.

Tech giants will always be more nimble, agile and responsive for these reasons, meaning it's likely they'll claim more and more of the terrain that was once the realm of governments. In addition, they're already claiming a growing number of government contracts, from ICE and the Pentagon in the US, to the Ministry of Justice and Ministry of Defence here in the UK.

This has led many to believe that, "states would be cored out, component by component, until nothing was left but a well-armed health insurance scheme with its own World Cup team," as Benjamin H. Bratton, director of D:GP at the Centre for Design and Geopolitics at the University of California writes. "In the long run, that may still be the outcome, with modern liberal states taking their place next to ceremonial monarchs and stripped of all but symbolic authority, not necessarily replaced but displaced and misplaced to one side."

These companies also suppress innovation from other, smaller companies by buying them up before they become true competitors, thus homogenising the business landscape and asserting their own monopolies.

The likes of Google is even known to use algorithms that chart the success of smaller competitors to alert them of when they should buy. This model ensures that these companies are continually absorbing more knowledge and data, cementing their own market position ever further. European regulators are paying close attention, but even its power is limited when faced with the indomitable Big Tech.

Jane K. Winn, a professor of law at the University of Washington, makes this point in her 2016 paper, “The Secession of the Successful: The Rise of Amazon as Private Global Consumer Protection Regulator,” which is referred to in Silicon States.

She writes: “The rise of global platforms, such as Amazon, Google, Apple, Facebook, and Microsoft, that own global online marketplaces and simultaneously act as their primary regulators, calls to mind the idea of the ‘secession of the successful,’ as described by Robert Reich in 1991 — the withdrawal from civil society of the wealthy and powerful into private gated communities.” 

When examining the question of whether tech companies will succeed governments, it’s also necessary of course to point out that these companies pay very little in the way of taxes. They don’t support government in its current form by depriving it of funds.

However, comments such as that from Facebook CEO Mark Zuckerberg, where he expressed a willingness to fund a universal basic income for American citizens, could imply that if they were the ones holding the reins, they might be interested in contributing more.

At the same time, these companies collect their own form of taxes. App creators must pay about 30 percent of any revenue created through the app to Google or Apple depending on which store they’re advertised on. They also charge just about every large company in the western world for advertising revenue.  

By leeching money away from the government by claiming government contracts and dominating sectors that the government once led the way in, as well as paying minimal taxes, these companies are collectively eroding the power that the government once had. Meanwhile they’re working on technologies - such as driverless cars and AI - that will eliminate many jobs, and create more of a welfare burden on the government, as their revenue from income taxes decreases.

This could be seen as the logical culmination of years of neoliberal capitalism, which since the early 1980s has seen governments cede power and strength to business: The result of what happens when government is run by people who don’t really think that government should exist, and are happy to throw every facet of civil life to the mercy of the market.

Vast swathes of public infrastructure in the UK has already been replaced by private companies - water, gas, transport, electricity - and with it, price hikes have been passed along to the consumer. This is coupled with years of disinvestment in public bodies that have hollowed out government services in the UK. How long before this affects even more industries? As tech companies step in to replace what were once public services?

This has grown simultaneously alongside the commercialisation of every aspect of our world. Maybe it was always inevitable that business would step in to fill the gap, it just so happened that as everything becomes ‘tech’, the tech sector is the best placed industry to do so.  

Does this mean that this is simply unavoidable? Or should governments be attempting to resist this future? “I think there's generally been a lack of foresight into the impact of these technologies, what they might do in terms of putting pressure on the government, what they might mean from an ethical and human rights standpoint, and how they might be taxed and monetised or regulated in other ways," says Greene.

"I've found this from talking to many people in government: that there is a lack of tech literacy that has allowed this creep effect to occur,” she says.

This lack of foresight, couple with a general pervasive apathy mean that governments may well be setting themselves up for future irrelevance. The question is, will anyone stand up to stop it?