Sharing the wrong platforms? Bryn Jones looks at the problems with Labour’s wooing of Big Tech and asks how it will really help economic development
Labour is showering U.S. Big Tech corporations with inducements. Enormous data centres using energy equivalent to whole countries? No problem with planning restrictions. Infrastructure costs? Here’s a few hundred million for construction, land purchase, and subsidies to relocating businesses in AI Growth Zones (AIGZs). Warning: the U.S. AI industry will consume three quarters of overall U.S. power by 2035. From a position of suspicion and concern at platform business’s tolerance of online abuse, hate speech, fascistic propaganda and interference in Europe’s liberal democracies, the UK Labour government seems willing to put these threats to personal security, civil society and democracy to one side while it woos Big Tech investment. Coincidentally perhaps, oligarchs owning online platforms are abandoning commitments to social and environmental and better governance principles as they cosy up to the anti-woke, anti-regulation Trump administration.
European governments had got increasingly agitated about monopolistic practices and tacit support for democracy disruption and hate speech from Platforms (a.k.a “Cloud Capital”) such as Facebook, Google and Amazon. Not to mention Musk’s personal propaganda channel of X. (Concerns described in the January 2024 Chartist)
Aside from environmental consequences misuses of existing online facilities could worsen if “general” AI matches its promoters” claims. Anti-democratic movements and attacks on minorities through misinformation, bullying and propagandising in social relationships and political arenas – plus misogynistic and race hate campaigns – could all increase. With closer relationships between Platform capitalists” and governments attempts to classify Platform workers as employees rather than independent contractors may well flounder. (Despite strenuous campaigning no big Platform is properly unionised.) Add to this litany of evils huge public costs from these firms” tax avoidance by using shell companies and registrations in low-tax states like Ireland. Platform corporations and their operations are clearly a social and public menace.
Most western governments, including the US, EU and UK have initiated regulatory controls for consumer protection, abuse on social media, data privacy and intrusion from personalised algorithmic recommendation. However, the main strategic policy of governments in the EU and the UK has been competition regulation: to combat tech giants” freezing out of (smaller) competitors” rival applications from their platforms. Litigation and corporate lobbying have limited progress on all these fronts. If governments decide to pander to Big Tech investment potential, in order to increase economic growth, will they be so keen to progress such regulation? Moreover, faced with the trade policy weapons the Trump administration can threaten – tariffs and regulatory hurdles – will Europeans push anti-monopoly measures against these American firms?
Two specific, recent developments are now complicating long-standing regulatory moves. First was Labour’s total conversion to a “growth-of-any-kind” economic strategy, in which AI technology is central. The second is the apparent alliance of platform oligarchs such as Bezos (Amazon), Zuckerberg (Meta – Facebook, WhatsApp) and Google’s Sundar Pichai, not to mention the ubiquitous Musk, with Trumpism and its prioritisation of profit-maximisation. This results in the abandonment of Silicon Valley’s erstwhile progressive liberalism: “inclusion, diversity and equality” promotion.
These two developments have fused into the latest growth-mania project: cloud capital’s mission to expand data processing server installations for AI operations. The latest and future, AI systems need enormous physical data processing complexes. President Trump set a precedent by green-lighting 20 massive U.S. data centres at a privately-financed total of $500 billion investment. However, such installations have public costs: making huge demands on an already creaking US electricity grid; consuming up to 33 times more energy than task-specific systems. In the UK the Labour government says the extra energy will come from a new network of small nuclear reactors. Yet this technology has yet to be proven in actual energy grids. The resulting higher heat generation also requires advanced cooling systems: essentially greater intakes from scarce local water supplies.
Environmental concerns aside there is speculation that the US government may have to subsidise some of that necessary $500 billion outlay; using economic and national-security justifications. If the much-vaunted US tech finance system cannot stump up the kind of money needed for AI infrastructures, how will the fiscally constrained UK? Also, what are the overall financial foundations of the Platform companies? Spoiler alert: their massive capital wealth structures are not as monumental as their stock market valuations and their leaders” personal fortunes would suggest.
Most of the Big Tech oligarchs” wealth and financial power consists of shareholdings or “stock options” – share entitlements that can be sold off when the price is right – in their own companies. Take Elon Musk, allegedly the “richest person in the world’, with private wealth estimated at $440 billion. Between 2020 and 2021 Musk sold most of his tangible assets, such as real estate, to finance more investment in stocks such as Twitter, which he now owns outright. So most of Musk’s personal wealth is tied up in his shares in Tesla, Starlink, X (the rebranded Twitter), Space X – the rocket transport business – and Neuralink biotechnology (“chips in your brain”). In a nutshell: Musk’s unparalleled wealth consists not of cash in the bank, gold or land, but paper entitlements: secure when the businesses and their sectors are booming but prone to collapse if and when there are serious downturns.
The oligarchs have ring-fenced much of their share capital in their businesses. The founding entrepreneurs or their allies: respectively Tim Cook (Apple), Microsoft retiree Bill Gates and the semi-retired Jeff Bezos (Amazon) still hold similar stock levels to those of outside investors. Differently classified “tiered” share structures give other Big Tech firms” oligarchs, Sergei Brin and Larry Page at Alphabet, Zuckerberg at Facebook and Musk, more voting rights and therefore dominant control. Musk, typically, was more ruthless: borrowing millions to buy a controlling 79%, stake in Twitter, re-branding it as X but then turning it into a private company. That status allows him to choose who can buy X shares and what financial and operational information is publicly disclosed.
The capital profile of other Platform businesses is even more interesting. Four or five of the world’s biggest investment fund owners dominate platform stock ownership. At Apple, Amazon and Microsoft these are “asset management funds”; such as Blackrock, whose global wealth stands at $10.5 trillion. However, the old maxim, “the bigger they come, the harder they fall” comes into play here. To retain their enormous wealth, and keep still influential investors on-side, continuous business growth needs to be maintained. Even more importantly, the whole US economy and thus its government’s fiscal stability now depends on the Platforms” prosperity. More than 50% of the US stock market consists of investments in Big Tech. Should this falter and fail so would America’s financial system. The old saw “what’s good for General Motors is good for America” needs updating: “What’s good for Big Tech is vital for America’.
Which brings us back to the probably over-hyped AI “revolution”. With other products and services nearing market saturation, the Platforms need the massive investments and infrastructure to make this new technology popular. “Over-hyped’? Yes, judged by the recent launch of the much cheaper Chinese AI alternative model “DeepSeek”.
America’s techno-finance-state establishment quickly denounced this upstart. Firstly, on the unproven grounds that it would allow the Chinese state access to the West’s personal and public data. Secondly, because that same state could insinuate propaganda and misinformation into the answers DeepSeek provides to users’ searches.
Despite a possible element of truth in such claims they are mitigated by three other considerations. First, that informal censorship, misinformation and bias are not actually unknown in U.S. AI systems such as ChatGPT. Second, the praise that western tech experts heaped on DeepSeek was not only that its development tools were more efficient, but that DeepSeek has made the model’s operating codes “open source’. Which means that they can be tweaked and modified for free by anyone with relevant technical resources.
By contrast, Big Tech AI systems are proprietary: exclusive property of the corporations who have to be paid for their use! Thus, the real opposition to this alternative to the Big Tech models is because it threatens the profitability of their business model and, hence, the continuing source of their monopolies, financial standing and their oligarchs” wealth and political clout. After DeepSeek was unveiled, the stock market value of the US tech sector fell by an estimated $1 trillion.
All this means that the place of massive AI capital spending and infrastructure in the Labour government’s quixotic crusade for “growth” is undermined. DeepSeek has proven that AI development needs neither massive investments (most of its costs are claimed to be a fraction of Big Tech’s versions) nor the associated, huge, costly and environmentally damaging data centres lionised by Starmer, Reeves et al.
To plough on with these unnecessary top-down mega-projects increasingly looks delusional. Dodgy will be the head that relies on a crown with such fake jewels as its centre. As Big Tech converts its ethos to complement Trump’s crypto-fascism – dropping SEG commitments and hate speech monitoring – Labour and other European governments need to look at alternative, less environmentally reckless, strategies and alliances than those involving Platform capitalists.