Techno-feudal giants worldwide have upended the state-corporation balance

The West would like to believe that oligarchs exist only in Russia, but that isn't the case beyond ideology

As the world breaks up into smaller and narrower blocs of trust between countries, there is a real danger that non-state corporate interests will begin to dominate global decision-making. 

In the age of multiple disruptions, the broader trend is towards sovereign technology control and building reliable supply chains that can more or less be trusted — which is partly a good thing. But sovereign control of technology also means that those powerhouses that create those technologies will be allowed to get bigger and more powerful. What is the chance that national governments will ever try to reduce their power, when this may be so crucial to sovereign power itself? We have reached a tipping point where corporate power may now equal or even be greater than state power. 

In the recent past, we have seen the United States trying to restrict access to advanced chips and even artificial intelligence (AI) tools like Mythos for other countries, but these decisions were quickly modified, if not reversed, as core commercial interests cannot be undercut by countries in the global search for dominance. In China, where the Communist party has a monopoly of power, the state quickly stepped in to curtail Alibaba when it seemed like it had gained power beyond its remit. But even China will never allow its own tech firms to lose their global power. Jack Ma of Alibaba may have been sent a tough message by his forced disappearance from public life, but Alibaba was not allowed to wither. 

In India, too, despite all the political ranting and raving over the power of “Adani and Ambani”, it is difficult to visualise any breakup when these are among the few conglomerates that can hold their own against global megacorps. Any reduction of corporate power is less likely due to anti-trust action by the state and more due to internal family feuds where progeny want their own companies to run. In the West, where family-run businesses are fewer than in India, corporate power has shifted in favour of unelected chief executive officers and powerful boards. 

When the world is adjusting to the new power structures in politics and economics, no major corporate entity will be constrained beyond a point. Far from it, they will wield enormous power over governments, even Uncle Sam. This means tech megacorps like the Mag-7 — Amazon, Apple, Alphabet (i.e., Google), Meta, Microsoft, Nvidia and Tesla/SpaceX — will always have an outsized influence in Washington and on Wall Street. One reinforces the other. The Mag-7 could soon be joined by one or two more major players, Anthropic and OpenAI, which are close to achieving trillion-dollar valuations and about to seek market listings. OpenAI will not be allowed to go down in flames, even if it slips below Anthropic and fails to build viable revenue streams. It will be rescued, even merged with stronger players, for too much money is riding on it. 

This scenario has been emerging for quite some time, even before the advent of Donald Trump, whose chaotic policies are hastening the rise of techno-nationalism. The term “techno-feudalism”, an older term that has recently been popularised by former Greek finance minister Yanis Varoufakis (among others), implies that sovereignty no longer lies only with governments. It has permeated to the massive tech platforms and corporations that dominate almost every human activity, from mobile phones to chips to the internet-of-things. 

Consider how many major anti-trust actions have been successful despite the existence of anti-monopoly laws for more than a century in the US. The two major breakups of corporate power go as far back as 1911, when Standard Oil was broken up into 34 companies, and to 1984, when AT&T was forced to divest its regional telephone businesses (aka, Baby Bells). 

In 2000, the US department of justice tried to break up Microsoft, but the latter managed to evade that blow by agreeing to some changes in its monopolistic behaviour. There are ongoing anti-trust actions against Google, Amazon and Apple, but it is unlikely that their corporate power will be curtailed significantly. 

Ideally, the big anti-trust actions must begin with the US and China, but if they are going to think of themselves as the new G2, they will be more likely to collaborate to cut down rival techno-feudals in non-G2 states, and not in their own backyards. It is difficult to visualise a scenario in which the US forces a meaningful split in Google, Amazon, Apple, Microsoft, Meta or SpaceX any more than one can expect China to break up its equivalent of the Mag-7  — BATX, which is Baidu, Alibaba, Tencent and Xiaomi. 

Consider how dominant just one company is in so many spheres: Google owns 90 per cent of the search market, 60-70 per cent of Android, Chrome and Google Maps. In a saner world, Google (or rather Alphabet, its parent) ought to have been split into at least four or five independent companies, and Amazon into as many, but the shrinking space for nations to act against techno-feudalism in an age of fragmenting political power means very little of this may happen. 

The only way techno-feudalism can be curtailed is if there is a global agreement among the major powers, not just the US and China but also the rising midi powers of Asia, Africa, Europe and Latin America, on breaking them up. But this is unlikely to happen when geopolitical power is itself fragmenting. When collective sovereign power is not a factor in enforcing corporate size restrictions globally, techno-feudalism will remain a key factor in global decision-making, even if the decisions reduce citizens to just consumers, with a concomitant loss of privacy and individual agency. Midi powers like India are hardly in any position to challenge the Mag-7 when the US and Europe are unable to do so. 

This sounds dystopian, but it is the underlying reality. The only other way this can change is if there is a major citizen revolt against granting so much power to unaccountable corporate caliphs, but such revolts bring their own kind of anarchy as they upend settled rules of law and economic order. The huge increases in unaffordable freebies and subsidies across the world, in which India, too, is complicit, are essentially about containing citizen anxieties and preventing them from spilling over to the streets. 

There is a clear and growing imbalance between sovereign power and corporate power, and also between the power of voters to bring about change when pitted against the combined power of the techno-state. We cannot know how this imbalance will be corrected, whether with a bang or a whimper, but it has to happen. The West would like to believe that oligarchs exist only in Russia, but that isn’t the case. 

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The writer is a senior journalist