Geopolitics on the rocks

Geopolitics of technology and the rise of Peter Thiel

North America

In the next years conflict between tech companies and traditional powers will spawn a non-neutral view of technology among Western populations. As much as they’re now resisting free trade, they will call for a technology recession. Why Peter Thiel, linked to U.S. defense apparatus, is destined to benefit from such a development.

ERIC SCHMIDT: This growth of modernity and commerce and so forth means a world of less war, less conflict. Am I wrong?


In recent years we have experienced the rise of tech powers, such as Google-Alphabet, Amazon, Facebook, Apple, Alibaba. Their increasing influence in our lives and in the economic and political realm has been considered both a neutral event and an unstoppable necessity.

This is changing and it will change even more in the near future. Links and conflicts among tech powers and traditional geopolitical actors will be increasingly relevant, while public awareness of the non-neutral role of technology will garner a political impact. Automation, even more than trade, will be a theater of conflict in three realms.

First, it’d be a traditional geo-economic conflict, mostly consisting of industrial acquisitions of enabling technologies, such as robotics, artificial intelligence and data analytics. Europe - a weakening part of the world sporting relevant industrial capabilities - will be the main theater of this conflict; for instance through targeted acquisitions by China and targeted barriers to stave the Chinese off, but also through the attainment of European data by other world players.

Secondly, we will experience more conflict between tech companies and traditional powers. This will include antitrust actions by the governments and more transparent actions by tech players in the political realm, as Mark Zuckerberg’s political ambitions plainly prove.

Thirdly, we will witness a growing socio-political opposition to technology, including brazen calls for a technological recession.

All these trends will help mainstreaming a non-neutral view of technology, such as the one publicly championed by Peter Thiel. In a nutshell, technology will submit to geopolitics.

Peter Thiel and the Trump “Doctrine”

In December 2015, Republican presidential candidate Donald J. Trump stated: “We’re losing a lot of people because of the Internet. We have to go see Bill Gates and a lot of different people that really understand what’s happening. We have to talk to them about, maybe in certain areas, closing that Internet up in some way. Somebody will say, ‘Oh freedom of speech, freedom of speech.’ These are foolish people.”

During the 2017 New Year's Eve celebrations at Mar-a-Lago, then president-elect Donald J. Trump was inquired about the role that cybersecurity would have in his incoming administration. At first he flatly replied, “It’s very important”; then he outlined his doctrine more accurately: “You know, if you have something really important, write it out and have it delivered by courier, the old-fashioned way. Because I’ll tell you what: No computer is safe”.

Trump is a prolific tweeter who does not care much about technology. While contemporary politicians almost unanimously lavish praises on the value of innovation, he keeps cheering the “old-fashioned way”. He prefers to write things down and he does not like emails.

However, for one to move beyond the comfortable mockery of Trump’s supposed ignorance and try to grasp what is changing between technology and geopolitics, it is necessary to take into account the rise of Peter Thiel.

Thiel is Trump’s key supporter in Silicon Valley. A German-born venture capitalist, co-founder of PayPal and first outside investor in Facebook (where he is still a board member), Thiel partly financed Trump’s 2016 campaign; he then got a speaking slot at the Cleveland convention right after Reince Preibus and was part of Trump’s transition team. He also set up a much discussed meeting at the Trump Tower among technological leaders, where Alphabet’s Eric Schmidt sat between Steve Bannon and Alex Karp of Palantir Technologies (a company co-founded by Thiel).

Thiel loves being a contrarian. He publicly clashed with Eric Schmidt, calling him Google’s Minister of Propaganda, and arguing that Google is not an innovative company, rather a bet against innovation in search engines. In a January 2017 conversation with Maureen Dowd, Thiel compared Trump’s personality to Elon Musk’s. As far as Trump’s take on cybersecurity is concerned, he remarked: “Well, one does have to be very careful with what one says in an email”. According to Thiel, our technological present is the outcome of unfulfilled promises: “We wanted flying cars, we got 140 characters instead” can be considered his political manifesto.

By doing so, Thiel pits “manipulation with bits” against “experimenting with stuff”. While he made money with IT, he wants much more “stuff innovation”: pharmaceuticals; aeronautics; electric engineering; civil engineering; nuclear engineering. As a libertarian, he opposes public regulation in those sectors, but supports targeted government planning to advance science and technology. During Trump’s electoral campaign, Thiel emphasized the positive role of government, battling with conservatives who believe public sector does not have any role to play.

Three principles for the geopolitics of technology

At the last Gop convention Thiel proclaimed: “The American dream is to make all of America high-tech, including the government, that once completed the Manhattan Project and today uses floppy disks in nuclear bases”. Thiel loves the Manhattan Project and the Apollo program and would like for the government to spend on defense huge chunks of its budget. This is his own “Make America Great Again”. And this helps one to formulate a first principle of the geopolitics of technology: “It is all about defense”.

Tech progress would never stamp out the need to invest on defense. On the contrary, defense has fueled, still fuels and will fuel technology. This was true for the “endless frontier”, the postwar pillar of U.S. scientific and technological power, driven above all by defense and security, in both offensive and defensive terms. This is also true for today’s geopolitics. Chinese quantum and artificial intelligence investments are linked to improving defense capabilities. Likewise, Europe’s uncertain awakening from its “holiday from history” is related to increasing defense spending. Maybe stemming from the European Investment Bank, such a process will be set in motion more efficiently by a “tech and IP scramble for Europe” pursued by China, Japan and the U.S.

Most of all this is true for Thiel’s very personal company, Palantir Technologies. Over the years, Palantir Technologies - its last valuation being 20 billion dollars - has thrived behind an aura of mystery. It is not a listed company yet, but it is expected to pursue an IPO in the near future. In the past it received investment from In-Q-Tel, the venture capital of the CIA, and has had customers in the public and in the private sectors, including JPMorgan and BP. Palantir offers a range of services based on different needs, including anti-counterfeiting, cyber security, defense, intelligence, law enforcement.

Ash Carter, former Secretary of Defense, has claimed that the Pentagon’s R&D spending (now totaling $72 billion) is more than double the cumulative expenditure of Apple, Intel and Google. In the Trump era, Palantir is expanding in Europe; in 2017 it has announced major partnerships with Merck and with Airbus. And, of course, the boost in defense spending currently pursued by the White House could look particularly attractive for Palantir. While Donald Trump can be considered a wild-card, a bargain between Peter Thiel and the U.S. security and defense apparatus is likely.

Only by thinking in terms of defense and security, one can understand the second principle of geopolitics of technology: “The politicization of technology is inevitable.” Tech utopianism is an illusion destined to fade away. As Thiel himself wrote in 2009, the notion that technology possesses an autonomous force, independent of politics, is simply false. U.S tech companies, apart from a Newspeak made of buzzwords (innovation, disruption, game-changer, big data) mocked by Thiel and TV shows as “Silicon Valley”, do have a distinctive ideology.

Three principles matter for them above all; opening to immigration; tax efficiency based on preferential treatments; a direct relationship with users, without intermediaries. When those principles are questioned, for instance on antitrust, we experience conflict between tech powers and governments, and an ensuing increase in lobbying expenditure.

From a naive standpoint, tech giants distribute Christmas gifts in a borderless world. But, since we do not live and we will not live in a world without borders, this assumption is bound to give way to reality. In the next years the geopolitical ties of tech powers, their international agendas and the “revolving doors” the exploit in many nation-states and empires will be increasingly scrutinized. And the coming competition will not be just on bits, but on “stuff” as well. Rather than lying in no man’s land, servers and cables are placed in a specific territory, and satellite power systems are linked to military infrastructures.

Getting back to Trump Doctrine on cybersecurity, one should now consider the third principle of geopolitics of technology: “A tech recession is possible”.

The tech recession could affect cybersecurity itself, trade and the social environment. For policymakers, it would be rational in some cases to renounce speed and connectivity for a greater perception of safety. But this is only part of the story, which concerns the imbalance between the cost of attack and the cost of defense. The cryptographer Bruce Schneier has made an interesting analogy between data technology and nuclear power.Despite its inherent risks, nuclear power has not been abandoned. Rather than being the world’s sole energy source, it is now part of a wider energy mix. According to Schneier, complex systems and the Internet of Things could experience a similar fate. If we cannot provide complete safety, then we cannot build a world where everything is computerized and connected. We’re still living the honeymoon of computerization and connectivity, but within a decade we will reach the point of saturation. Beyond that point, we could have targeted areas of technological recession.

Automation will also change the balance of power among professionals. For instance, as we previously wrote, courts and judges are destined to increase their influence. Ten years from now, EU lawmakers will have an algorithm organizing their proposals on public policy, comparing international policies, taking into account budget constraints and State aid procedures. In the end, EU lawmakers will be championing public policy drafted by algorithms. Likewise, top lawyers working on a success fee will benefit from algorithms knowing their success rate and suggesting whether they should take a case or not. However, as long as the world is ruled by human beings, the final decision on the law, in both cases, will be taken by a human judge. This is why courts will be increasingly influential, as machine learning won’t replace judicial learning.

Large swaths of population living in the advanced economies, including the United States, could start resisting technology as much as they’ve been resisting international trade for the past few years. And ultimately we will have to face another unfilled promise, as neither Elon Musk nor Donald Trump can restore the 1960's manufacturing employment. This is not going to happen. However, surfing on Trump’s tide, Peter Thiel could obtain his dreamed new Apollo Program or Manhattan Project, in order to secure U.S. defense and technological supremacy.