Is Tech a Trojan Horse of Capitalism? Big Tech, AI and Digital Neo-feudalism versus Freedom

By Marcelina Horrillo Husillos

Big Tech corporations such as Google and Meta have essentially colonized the world, by starting to supposedly offering “free” services (which were paid for by selling users’ information). Those “free” platforms soon became monopolies, and were so deeply embedded into the economy that they became digital utilities, albeit privatized ones. A 21st-century economy needs all of those basic utilities plus new digital infrastructure. These Big Tech monopolies of the 21st century act as corporate feudal lords, controlling all of the digital land upon which the digital economy is based.

Then there is the cloud infrastructure that apps and websites use, which is dominated by a few mostly US companies. Amazon Web Services (AWS) had 31% of global market share as of the first quarter of 2024, followed by 25% for Microsoft Azure, and 11% for Google Cloud. Together, these three big US Silicon Valley companies control 67% of the world’s cloud computing market. This is a kind of monopolistic chokehold on the internet itself.

With the raise of AI geopolitical swing states will have a dominant role in shaping the AI-enabled landscape, which by consequence becomes the new world order future. Moreover, these players may form innovation blocs, creating alliances and partnerships with more dominant states or cooperating with each other to pursue common goals.

Individual freedoms – with tech companies reaching into the most intimate corners of our lives –; and the freedom of states – these not grouped together with the dominant techy states – are increasingly and disturbingly jeopardized.

Big Tech and Digital Neo-feudalism

In September 1970 Milton Friedman wrote an essay for the New York Times headed The Social Responsibility of Business Is to Increase Its Profits. He argued that business should only be motivated by profits, that any concern about social impact was superfluous, and it set the framework for decades of neoliberalism.

The US Big Tech monopolies of the 21st century act as corporate feudal lords, controlling all of the digital land upon which the digital economy is based. Big Tech monopolists of the 21st century don’t control just a single market, or a few related ones, but the whole market place. They can create and destroy entire markets. Their monopolistic control extends well beyond just one country, to almost the entire world. If a competitor does manage to create a new product, US Big Tech monopolies can make it disappear.

For instance, Amazon is more powerful than any 19th-century robber baron could have imagined. It charges exorbitant fees to vendors that sell goods on its platform (goods that Amazon had nothing to do with creating), and can copy their product and make its own version if it looks profitable.

The platform takes more than 50% of the revenue of the sellers on its platform, according to a study by the e-commerce intelligence firm Marketplace Pulse. A staggering 82-90% of purchases on Amazon use the “buy box” – the platform removes the button if a user sells a product at a price higher than those offered on competing websites- .So if a business does not list the price that Amazon wants, they won’t receive the buy box, and their sales will fall.

As Reuters reported in 2021, “A trove of internal Amazon documents reveals how the e-commerce giant ran a systematic campaign of creating knockoff goods and manipulating search results to boost its own product lines”.

Apple, the largest company on Earth by market capitalization (with a $3.41 trillion market cap as of August 1, 2024), uses many of the same tactics as Amazon. It charges a 30% fee on all purchases done in apps that are downloaded using the iOS store. Apple is not providing any significantly service; it simply allows people to download an app that it itself does not manage. All Apple does is host the app, nothing more. It is a digital landlord.

In other words, if a user of an iPhone, iPad, or Mac downloads a third-party app through the App Store, Apple requires 30% rent for the business done by those other companies. This is despite the fact that Apple has nothing to do with that business. The other firms manage the commerce and maintain their apps; Apple is merely the neo-feudal lord demanding its tribute.

In his 2024 book Technofeudalism, economist Yanis Varoufakis described this new form of monopolized technological capital as “cloud capital”, owned by oligarchs he dubbed “cloudalists”. Varoufakis observed that Amazon does not just dominate the marketplace; it creates demand for products that customers did not even know existed, by manipulating its algorithm. It therefore can create (and destroy) markets.

Now that US Big Tech monopolies are deeply embedded into the fabric of the global economy, with almost no competitors, large corporations control the government, and create policy on behalf of wealthy shareholders.

AI and Technofeudalism

Goldman Sachs Research estimates the widespread adoption of AI could contribute 1.5% to annual productivity growth over a ten-year period, lifting global GDP by nearly $7 trillion. The research states that the generative AI ecosystem will empower incumbent enterprises and also likely define the next generation of Big Tech companies. Private AI investment globally is considerable and growing, and is forecast to increase to more than $160 billion by 2025.

At the heart of the AI revolution are corporations such as Amazon, Apple, Google, Alibaba and Tencent. They have massive resources that outstrip most states, spending tens of billions of dollars on research and development every year. These corporations have access to pools of human talent and data that most states can only dream of. They will come under major pressure to align with their ‘home’ governments in a fragmenting world, but have the capability to be political actors in their own right and to slip national moorings in pursuit of their own corporate interests. The products they choose to develop can bring huge benefits to humanity but may also unleash forces that destroy social trust, reduce freedom and are difficult to control. Their decisions on what and where to invest, will be pivotal not only in shaping what kind of AI emerges in future, but also to the inter-state balance of power.

The drive to master AI in geopolitics was featured by the geopolitical “scramble” for AI triggered in 2023—represented by states as diverse as Britain, France, Germany, India, Saudi Arabia, the United Arab Emirates, the United States, and China—undoubtedly sparked by generative AI and machine learning more broadly.

“Cloud capital is a networked machinery. The purpose of which is for us to train it, to train us, to train it, to train us, to train it, to train us, to train it, to train us, to ad infinitum, to know us, to give us good advice, win over our mind and heart through good advice, and then input desires into our bosom, which then the same algorithm satisfies directly by selling it to us, bypassing every market, and in the process collecting 40% of the price from the capitalist, the vassal capitalist who also dwells in this digital fiefdom called amazon.com.

[Jeff] Bezos doesn’t give a damn about what you buy. He doesn’t make anything. He simply controls the digital system. He’s a technofeudal Lord on which all transactions take place through matching buyers and sellers by his algorithm that prevent you from talking to anyone, including the person you’re buying from and collecting a ground rent, which I call the cloud rent.” Yanis Varoufakis

Conclusion

We can no longer ignore the risks posed by concentrating so much power in the hands of a few companies. The reality is that our current digital infrastructure is far too reliant on these monopolies, leaving us vulnerable to both human errors and geopolitical dominance. Ultimately tech by each of its forms, bases its survival in the relation of dependency that it creates with its users.

The digital infrastructure upon which the modern economy is built must be nationalized and turned into public utilities, like water, electricity, and highways. That said, the US government nationalizing Silicon Valley Big Tech companies does not solve the problem of the lack of digital sovereignty in other countries. If Amazon, Apple, Google, and Meta are nationalized, this would still mean the United States has enormous power over nations whose economies rely on this US-controlled digital infrastructure.

AI in terms of manipulating human behaviour is so far under-studied. Manipulative marketing strategies have existed for long time. However, these strategies in combination with collection of enormous amounts of data for AI algorithmic systems have far expanded the capabilities of what firms can do to drive users to choices and behaviour that ensures higher profitability. Digital firms can shape the framework and control the timing of their offers, and can target users at the individual level with manipulative strategies that are much more effective and difficult to detect.

Breaking the dependency from the tech and from the monopoly of Big tech corporations seems nothing but an odyssey, yet gaining awareness about where we are as individuals is key to protect our individual space and inner freedom.