Did Britain become an economic colony? | technology

TTwo and a half centuries ago, the American colonies launched a violent protest against British rule, and the reason behind this was Parliament’s imposition of a monopoly on the sale of tea and the strange actions of the arrogant king. Today the tables have turned: Great Britain finds itself at the mercy of major American technology companies – so large and dominant that they form monopolies in their fields – as well as the whims of an eccentric president. To an outside observer, however, Britain seems strangely comfortable with this arrangement – ​​and at times even eager to shore up its economic dependence. Britain is not alone in submitting to US corporate power, but it provides a clear case study of why countries need to develop a coordinated response to the rise of these dominant companies.

The current era of US technology monopoly began in the 2000s, when the UK, like many other countries, became almost completely dependent on a small number of US platforms – Google, Facebook, Amazon, and a handful of others. It was a time of optimism about the Internet as a democratizing force, characterized by the belief that these platforms would make everyone rich. The dream of the 1990s – naive but attractive – was that anyone with a hobby or talent could go online and make a living from it.

American technological dominance was not the result of a single political decision. However, this remains a choice made by countries – as highlighted by China’s decision to block foreign websites and build its own. Although this move would have been much easier under an authoritarian regime, it was also an industrial policy – ​​one that left China as the only other major economy with a fully digital ecosystem of its own.

This pattern continued through the 2000s and 2000s. Amazon and Microsoft quickly cornered cloud computing. No serious competitor has emerged in Europe or the UK to challenge platforms like Uber or Airbnb. There is no doubt that these companies provided us with comfort and entertainment, but the wealth of the Internet did not spread as widely as many had hoped. Instead, American companies took the lion’s share, becoming the most valuable companies in history. Now the same thing is happening with artificial intelligence. Once again, the big profits look headed to Silicon Valley.

How was all this met with such little resistance? In short, the UK and Europe followed the logic of free trade and globalization. According to this theory, nations should focus only on what they are good at. So, just as it made sense for the UK to import French Burgundy and Spanish pork, it also seemed more logical to rely on American technology rather than try to do so domestically. We would be better off instead specializing in the UK’s strengths, such as finance, the creative industries – or the making of great whisky.

But when it comes to these new platforms, the analogy with regular trading breaks down. There is a huge difference between fine wine and the technologies that support the entire online economy. Burgundy can be expensive, but it doesn’t extract value from every business transaction or collect profitable data. Business theories of the 1990s blurred the distinction between ordinary goods and what actually constitute parts of market infrastructure – the necessary systems of buying and selling. This is what Google and Amazon represent. Perhaps a better analogy would be to let a foreign company build toll roads across the country, charging fees for what it wants to use.

We see this again with building artificial intelligence. During President Trump’s state visit in September, the UK proudly celebrated Google and Microsoft’s investments in “data centres” – huge warehouses of computer servers that power artificial intelligence systems. However, data centers are the lowest rung of the AI ​​economy, private infrastructure that simply funnels profits to US headquarters.

In another timeline, the UK could have been a true leader in AI. American researchers had previously lagged far behind their British and French counterparts. However, in a move that neither Washington nor Beijing would have allowed, the UK has happily allowed most of its key AI assets and talent to be sold off over the past decade or so – Google’s purchase of DeepMind being the most famous example. What remains is an AI strategy that consists of providing electricity and land for data centers. It’s like being invited to a party and then finding out you’re there to serve drinks.

If technology platforms are indeed more like toll roads, the logical step would be to limit their use – perhaps by capping fees or charging for data extraction. However, no country has done this: we accept these platforms but fail to regulate their power as we do other facilities. The European Union has come close to this, through the Digital Markets Act, which regulates how dominant platforms deal with subsidiaries. For its part, the US government is also at the mercy of local tech giants, yet Congress remains paralyzed.

If the UK wanted to take a different path, to resist this economic colonialism and extractivism, it could partner with the EU and perhaps Japan to develop a joint strategy – one that forces platforms to support local companies and foster alternatives to mature US technologies. But so far, they, along with other countries disenfranchised by US hegemony, have been slow to adapt, instead hoping that the rules of the game of the 1990s remain effective, despite evidence to the contrary.

The truth is that we now live in a more pessimistic and strategic age. One way or another, the world needs an antitrust framework that is far more powerful than anything we have seen so far. Wherever you live, it is clear that the world would be better off with more companies from different countries. The alternative is not only expensive, but politically dangerous, fueling resentment and dependency. We can do better than a future where what passes for economic freedom is merely a choice between dependence on the United States, or dependence on China.

Tim Wu is a former special assistant to President Biden and the author of The Age of Extraction: How Tech Platforms Have Invaded the Economy and Threaten Our Future Prosperity (Bodley Head).

Further reading

The Tech Coup by Marietje Schacke (Princeton, £13.99)

Supremacy by Parmy Olson (Pan Macmillan, £10.99)

Chip War by Chris Miller (Simon & Schuster, £10.99)