The Covid-19 crisis caused an economic recession like no other. As Adam Tooze, the historian and New Statesman contributing writer, notes in his recent book Shutdown, never before in the history of modern capitalism had close to 95 per cent of the world’s economies suffered a simultaneous contraction in per capita GDP.
But for some, the pandemic marked the acceleration of a new gilded age. As online content consumption doubled, the world’s largest technology firms reaped a windfall. Apple enjoyed its most profitable quarter ever at the end of 2020 ($28.7bn), while Amazon’s net profits increased by 84 per cent in 2020 compared to 2019. The personal fortune of Amazon’s founder Jeff Bezos rose by $24bn in March-April 2020 alone and the world’s 20 wealthiest tech leaders are now worth a combined $1.2trn.
Yet as Bruno Maçães, the author of Geopolitics for the End Time (2021), writes in this week’s cover story on page 20, their ambitions stretch far beyond simply enriching themselves. “Facebook, Tesla, SpaceX or Amazon want to change the world, creating new experiences that were once the preserve of science fiction,” he writes. These include “a privatised global financial system; the colonisation of space; advanced artificial intelligence; autonomous cars that can be summoned across the country using a mobile phone; swarms of delivery drones; and an interface linking the human brain to the internet through a surgical procedure”.
In their scale, ambition and culture, such firms increasingly resemble nation states. If Amazon was a country, it would be the 14th richest in the world. But it paid just £18.3m in UK corporation tax in 2020 despite its revenue rising by more than 50 per cent to £20.63bn.
For too long, politicians have been dazzled by tech leaders and their utopian declarations. In the UK, Amazon was awarded national and local government contracts with a lifetime value of up to £630m between 2015 and 2020. Tech firms, in turn, felt no obligation to the public realm. Apple’s chief executive Tim Cook once described efforts by the European Union to force his company to pay more tax as “political crap”.
By shifting their profits to low-tax jurisdictions, such as Luxembourg, the Netherlands and the British Virgin Islands, tech firms have deprived treasuries of billions in revenue. In 2016 – the most recent year for which reliable data is available – the biggest US multinationals, including Google, Apple and Microsoft, offshored $1.4trn in this manner (almost 2 per cent of global GDP).
But the pandemic, and the inordinate power of Big Tech, has prompted an overdue reckoning. The minimum global corporate tax rate of “at least 15 per cent” proposed by Joe Biden would end the race to the bottom that has taken place in recent decades. Mr Biden has also appointed the legal scholar Lina Khan, one of the foremost critics of Big Tech, as head of the Federal Trade Commission – the body that has launched an antitrust suit against Facebook (which owns WhatsApp and Instagram). The antitrust division of the US Department of Justice is preparing a similar monopoly lawsuit against Google over its digital advertising business (the firm accounts for 56.8 per cent of US search advertising revenue).
Earlier this year, the German parliament passed a pioneering law allowing regulators to intervene before market abuse takes place, rather than merely after the fact – a move designed to limit the breakneck expansion of tech firms. Following the German election on 26 September, the Social Democrats, who championed the measure, are now expected to lead a new coalition government.
In a hyper-digital era, Big Tech has made itself indispensable. But the innovations it depends on are more often the product of collective endeavour than individual genius. As the economist Mariana Mazzucato charted in her book The Entrepreneurial State (2013), the 12 key technologies behind the iPhone, such as the touch screen, the Global Positioning System and the internet itself, were all products of state-funded research.
Future innovation depends not only on dynamic companies but on a robust public realm. As billionaire titans vie to conquer outer space, the job of governments is to bring them down to Earth.
This article appears in the 29 Sep 2021 issue of the New Statesman, Spirit of the Age