How Private Tech Companies Are Reshaping Great Power Competition

Big Tech is changing great power competition and may well decide the outcome. Yet many observers treat the role of large technology companies as if it were an afterthought to the military contest between China, Russia, and the United States. Major tech companies such as Alibaba, Alphabet (Google), Amazon, Apple, ByteDance, Meta (Facebook), Microsoft, and Tencent are geopolitical actors with more resources and power than most nation-states.^[1] Even with post-pandemic cutbacks, commercial tech companies are altering who succeeds and who fails in conflict, in the war in Ukraine and beyond. ^[2] As we saw with Elon Musk’s Starlink satellites, during war, tech companies can make decisions that are impactful and beyond state control.

Big Tech will not replace nation-states: it will reshape them. The real question is which of today’s major powers will meet the challenge of translating new and emerging technologies into surpassing state power. The answer is unclear. Globally, today’s cutting-edge technological innovations first emerge from the private sector. Not being the initiators, governments are forced to align with the interests of innovative tech companies, either by persuasion or coercion. The United States and China are testing two models of military technological progress—one that seeks commonality between government and commercial innovation, and the other that centralizes military and economic power under a state run by a single party.^[3] The success or failure of each model will determine future major power trajectories and success on the battlefield.

Commercial technologies and the rise of great powers have always been closely intertwined. For centuries, state power rested not just on military technology—such as broadside sailing ships, advanced cannons, and coordinated musket-firing techniques—as is often argued, but also on innovative commercial actors and processes.^[4] Beginning in the fifteenth century, European governments, including the Russian regime, capitalized on technological advances (such as metallurgy, fossil fuels, and the telegraph) and translated them into state power. China had access to the same technologies and originated essential inventions (notably, gunpowder, the compass, and the printing press). However, the Chinese government did not capitalize on them to build military power in the modern era. Economic historians debate why (as we’ll discuss below), but by the late eighteenth century, the sharp divergence between China and Western powers (especially Great Britain) was beyond dispute.^[5]

Now, as during the early modern period, transnational commercial actors are helping to shape the trajectory of the world’s great powers.

Now, as during the early modern period, transnational commercial actors are helping to shape the trajectory of the world’s great powers. In the seventeenth and eighteenth centuries, surging European powers, including Denmark, England, France, Portugal, and Spain, sent dozens of companies to monopolize trade routes and colonize distant territories. And they were remarkably successful. The Dutch East India Company (1602–1799) was worth $7.4 trillion at its peak, more than Alphabet, Apple, Meta, Amazon, and Microsoft put together.^[6] The English East India Company played a crucial role in changing the flow of wealth from East to West between 1600 and 1870, building private armies, ruling territory, and helping shift power from India and China to England.^[7] While often acting independently, even at times counterproductively, these formidable transnational commercial actors were chartered by home governments, which had a degree of oversight.^[8]

Not so today. The autonomy of today’s major tech companies makes them unusual, and many companies are innovating faster than government bureaucracies can manage. Alphabet and Microsoft (which funds OpenAI), for example, are ahead of both the Chinese government and the U.S. government in developing artificial intelligence (AI). SpaceX leads the world in space exploration and was the first entity to build a reusable rocket that landed safely back on Earth.^[9] Apple, Alphabet, and Amazon have rushed into healthcare to commercialize personal access (via the Apple Watch), diagnosis (via Alphabet’s Verily), and prescriptions (Amazon’s PillPack).^[10] Meanwhile, China has cracked down on tech companies like Tencent and Alibaba, and the effects on tech dynamism and state power there remain uncertain.

Tech companies’ geopolitical role is obvious in the war in Ukraine, shattering the myth that platforms such as Facebook, Google, and YouTube are neutral actors. Microsoft has protected Ukraine from cyberattacks, Google removes images of Ukraine from its open-source maps, and Musk’s Starlink keeps Ukrainians connected to the internet via 2,000 privately owned satellites.^[11] Microsoft has even removed Russia’s internet launching points for anti-Ukraine cyberattacks.^[12] The matter of who would prevail in a future war goes beyond the Russian armed forces—or, for that matter, the militaries of the United States and the People’s Republic of China (PRC)—because the policies and behavior of major tech giants will profoundly affect them all.

States do have tools to fight back. Russia has increased coercion, forcing tech companies like Apple, Alphabet, and Meta to flee and substituting local alternatives like Yandex and VKontakte, for example. China’s regulatory actions have forced platform companies into compliance with domestic antitrust and data security laws—including the ride-hailing company DiDi, the search engine Baidu, the online retailer Alibaba, and social media companies like Tencent and ByteDance.^[13] The American open market approach stands in contrast to both Russia and China. Companies like Alphabet, Apple, and Meta, which spent nearly $70 million on lobbying in 2021 alone, have successfully argued that their unfettered technological innovation is vital to national security.^[14] The extent to which it is true is not just a political question but an X factor in U.S. defense strategy.

A new model of public-private governance is taking shape, and the key question is which major power will adapt better to the global paradigm shift. This study assesses major technology companies as geopolitical actors affecting great power competition, international stability, and war and peace.

Modern Military Power in Historical Context

In considering great power competition, it matters what your assumptions are, so we will begin by looking backward. How and why did Europe and the United States gradually dominate the modern era, while China fell far behind over centuries, then made a comeback in recent decades? Knowing the drivers of China’s fall and rise, specifically the roles of technology and private actors, is pivotal to understanding what could happen in the future.

A secret of Western dominance in the modern era was the ability to harness technologies, often first invented in China, then commercialize and translate them into military power.

For centuries, technological innovations diffused globally from East to West through conquest and trade. A secret of Western dominance in the modern era was the ability to harness technologies, often first invented in China, then commercialize and translate them into military power. Economic historians debate exactly how, why, and when a power discrepancy developed between Asia and Europe (especially China and Great Britain), but everyone agrees that by the mid-eighteenth century, Western powers were dominant.

To understand those global dynamics, economic historians have produced reams of research, especially since 2000, when Kenneth Pomeranz’s remarkable book, The Great Divergence: China, Europe, and the Making of the Modern World Economy, appeared.^[15] Pomeranz’s work responded to twentieth-century scholarship on the “Rise of the West,” which we will first briefly reprise.^[16]

Twentieth-Century Explanations for the Great Divergence

One set of explanations argued Western dominance was a gradual process that began in the fifteenth century and advanced due to cultural, economic, colonial, and military factors. Eventually Europe (and ultimately the United States) pulled away from the rest of the world as a center of technological innovation and wealth. The twentieth-century literature on this topic was vast, and it will not be fully explored or explained here; nevertheless, four influential themes related to technological innovation stood out.^[17]

The first theme focused on culture. It was initially advanced by German sociologist Max Weber, who contended in his 1905 book, The Protestant Ethic and the Spirit of Capitalism, that cultural factors, especially the Calvinist strain of Protestantism, built a unique work ethic in Northern Europe and the United States. According to Weber’s view, entrepreneurial drive, focus, hard work, and dynamism allowed these Western countries to ultimately leave the rest of the world behind. In a subsequent book, The Religion of China (1915), Weber contended that Confucianism had held China back.^[18] Others who focused on culture included famous Harvard political scientist Samuel Huntington, whose 1996 book Clash of Civilizations and the Remaking of World Order was considered prescient during the wars that followed the 9/11 terrorist attacks.^[19] But the person who really rescued the Weberian argument and applied it to technology and modern China was historian David Landes, whose magisterial 1998 book Wealth and Poverty of Nations summed up the reason China lagged behind as, “Culture makes all the difference.”^[20]

A second theme emphasized market-driven capitalism as the differentiator in modern East-West technological evolution. Austrian American economist Joseph Schumpeter in his 1942 book, Capitalism, Socialism, and Democracy, claimed that the capitalist economic system was uniquely suited to technological innovation through “creative destruction,” a process in which dominant players fall behind, making room for new technologies and the companies who sell them. Darwinian dynamics, the argument goes, sweep unproductive companies aside and replace them with commercial actors with more significant innovation.^[21] As Communist-led China fell economically further behind capitalist countries after 1949, this seemed a logical explanation.

A third powerful interpretation was that the West rose by exploiting others. Sociologist and economic historian Immanuel Wallerstein was the most famous proponent of this argument, which others later refined and expanded.^[22] Colonialism enabled European powers to disrupt and plunder other lands, especially in India, Africa, and the Caribbean, and they extracted enormous wealth, leading to the deindustrialization of European colonies. Scientific and technological innovation happened in Europe, according to this reasoning, because the extraction of scarce assets such as lumber, rubber, diamonds, and tea, alongside the imposition of harsh tariffs, left colonial populations too impoverished to advance.^[23]

And finally, political scientists, sociologists, and military historians maintained that frequent warfare forced Europeans to develop strong states that translated technological advancements into state power. To survive, states cultivated innovative military practices, techniques, and technologies, such as broadside sailing ships, advanced guns, coordinated musket-firing techniques, and new, more robust types of fortresses (such as trace italienne or bastion forts).^[24] The warfare-innovation argument was explored by historians such as Otto Hintze, Michael Howard, and William McNeil,^[25] alongside many political scientists and sociologists such as Karen Rasler, William Thompson, and Michael Mann, as well as Charles Tilly, who famously summed up this view as, “War made the state, and the state made war.”^[26]

The Shortcomings of These Early Explanations

A weakness of these explanations was that most reflected little serious research either in the Chinese language or in China.^[27] Remember that for most of the twentieth century (especially after 1949), China was closed off from the rest of the world. Under Chairman Mao Zedong, China experienced a series of violent domestic upheavals, such as the Anti-Rightist Campaign (1957–1958), the Great Leap Forward, and the Cultural Revolution (1966–1976), which crushed Chinese intellectuals and set back scholarship for decades. Mao’s death in 1976 ushered in power struggles among the country’s leaders, and then the 1989 pro-democracy protests in Tiananmen Square took place. China did not begin to open up to foreign scholars until at least 1978, in a very small and well-controlled thaw. In practical terms, the country was not fully open until the end of the twentieth century.

At the turn of the century, better access to Chinese scholars, materials, archival sources, and data broke open the debate; exposed the Western-centrism and oversimplification of existing explanations; and rewrote the history of China in the modern era. The first two arguments—that a Weberian Protestant work ethic or market-driven capitalism explained the divergence—were overtaken by events, especially after longtime Singaporean leader Lee Kuan Yew championed New Confucianism to explain Singapore’s rapid economic growth in the 1980s and the PRC adopted a form of state capitalism in the 1990s. China’s late embrace of capitalism may have been important in the historical divergence, but that became irrelevant going forward.

The colonial interpretation, although true for many parts of the world, seemed inadequate to explain China’s evolution, since the Chinese empire had engaged in ample imperialism and expansionism of its own. During the seventeenth and eighteenth centuries, China conquered Mongolia and invaded Korea, expanded into Central Asia (into what is now Kazakhstan, Kyrgyzstan, and Tajikistan), annexed Xinjiang, and conquered Tibet.^[28] Meanwhile, anti-Chinese European imperialism and aggression (embodied by the Opium Wars of 1839–1842 and 1856–1860) happened during the nineteenth century, well after the Qing Empire’s economic decline was underway.^[29] Instead of moving into rapid industrialization during the eighteenth and nineteenth centuries by building cities and burgeoning infrastructure, China continued to rely on labor-intensive agriculture and hence lost dynamism.

The need to organize for war, to field and arm large numbers of professional soldiers with advanced weaponry, to build ships that were technologically advanced, and to tax the citizenry to support that war-making enterprise led to enormous advances in European institution building that funded further scientific experimentation and invention.

That leaves the military innovation and state-building explanation, which is directly pertinent to our investigation today. The need to organize for war, to field and arm large numbers of professional soldiers with advanced weaponry, to build ships that were technologically advanced, and to tax the citizenry to support that war-making enterprise led to enormous advances in European institution building that funded further scientific experimentation and invention.^[30] But this had also happened in China—just far earlier in its history. Archaeological evidence has shown that many of the foundational inventions for modern militaries—such as gunpowder, firearms, catapults, the foot stirrup, rockets, and iron smelting— originated in China centuries before being adopted in Europe.^[31] During the Warring States period (475–221 BCE), the vassal states copied each other’s military innovations to survive and increase their relative power. They were extremely good at fielding armies and mobilizing their populations to fight wars.^[32]

But that was not the case in the modern era. Perhaps it was because China did not have the existential military threats that states like France, Great Britain, Spain, and Portugal faced? For example, as Peer Vries pointed out in a 2010 article, the Qing Dynasty faced the Zunghar Mongols in the eighteenth century, a contest of about 600,000 Zunghars against 250 million Chinese people—meaning that China’s population outnumbered the Mongols by more than 400 to 1.^[33] By contrast, in the late eighteenth century, the British faced the French in the Revolutionary War and the Napoleonic Wars, where about 30 million French citizens confronted 10 million Britons.^[34] The challenge was more fundamental to both sides.

Yet it is still hard to explain why China gradually and steadily lost its military prowess in the modern era. As Vries observed, a great power that could raise a mighty fleet of 400,000 soldiers and sailors in the thirteenth century, and could launch the mighty fleet of the explorer Zheng He to travel half the globe in the fifteenth century, somehow shrank to having no navy to speak of over the next 400 years, even as Great Britain’s Royal Navy surged.^[35] Chinese military power shrank and weakened, as European armies’ and navies’ size, organization, and professionalism vastly increased.^[36] Why?

Renewed Efforts to Explain the Great Divergence

Capitalizing on access to new data at the turn of the twenty-first century, scholars produced a fresh argument about the divergence between East and West.^[37] Pomeranz broke open the debate with his 2000 book, The Great Divergence.^[38] In making his assessment, he compared Western Europe (especially Great Britain) to eastern and southeastern China, finding that they were remarkably alike until colonial imports, slavery, and cheaper energy enabled Europe to escape its Malthusian restraints earlier than China did.^[39] Pomeranz asserted that these parts of Europe only began to leap ahead technologically recently, in the late eighteenth century.^[40] Pomeranz was joined by members of what was dubbed the California School of sociologists and political economists, including Roy Bin Wong, Andre Gunder Frank, and Jack Goldstone, whose common thesis was that China and India resembled the West in many respects throughout much of recent history and that the shift in global power had happened late, fast, and potentially reversibly.^[41]

Their research uncovered what Pomeranz called “surprising resemblances” between the East and West.^[42] The people of China and other Asian countries were more or less equal with European populations (especially that of Great Britain) in terms of living standards, technology, and development until relatively late in the modern period. China was a world-dominant manufacturing power until about 1750 (not 1500, as some “Rise of the West” writers had argued), and overall living standards in Asia were comparable to those in Europe until about 1800. But in about 1850, there was a rapid flip, during which Europe achieved clear superiority in wealth and military power. The Great Divergence was thus not a gradual process built over five centuries of innovation and technological development, these researchers asserted, but instead a rapid, recent phenomenon that occurred between 1750 and 1850.

The shift from East to West happened quickly, these scholars argued. Key elements included sudden breakthroughs in mechanical engines and metallurgy, the availability of European coal to drive piston engines, and sharp differences in available resources (especially fossil fuels)—factors that combined with counterproductive internal conflicts in China, the Ottoman Empire, and India. Also, according to Goldstone, during the Second Industrial Revolution, Europeans flipped from producing raw materials (like coal and iron) and consuming manufactured products from India, China, and Japan (like cotton, silk, ceramics, coffee, tea, indigo dye, nuts, and spices) over to becoming producers and exporters of refined goods for much of the world.^[43] Their monopolies on trade routes and vast expansions of their customer bases were key reasons for European dominance—echoing what we might call network effects today.

What these heavily economic arguments deemphasized was the powerful role of Western commercial actors who operated as military entities between the seventeenth and nineteenth centuries.

What these heavily economic arguments deemphasized was the powerful role of Western commercial actors who operated as military entities between the seventeenth and nineteenth centuries. The Dutch East India Company had the power to conclude treaties, build forts, and maintain armies. The Hudson’s Bay Company enjoyed a trading monopoly and ruled parts of Canada between 1670 and 1870.^[44] The English East India Company could acquire territory, mint money, establish military bases, command troops, form alliances, and go to war. It oversaw major parts of India including Bengal, Madras, and Bombay, only losing de facto sovereignty in 1858, when the British crown seized direct governance, more than 250 years after the company’s founding.^[45] In these cases (and others we could cite), the government ultimately wrested control over the company.

Of course, there are limits to this comparison. An alert reader might object that today’s powerful transnational tech companies do not control territory, command armies, rule populations, or make laws independently.^[46] That is true. These primitive corporations of the colonial era operated when state sovereignty was more loosely defined. Today’s major tech companies are operating as pseudo-governments by dominating digital space, controlling access to information, building vast data empires, and controlling online commerce—all of which affect war and peace.

Still, if the divergence between China and the West happened quickly and very late, it could quickly turn around.^[47] Competition between the United States and China is happening now across a range of digitally enabled technologies, including drones, machine learning, quantum computing, biotechnology, and AI. Many observers believe that China is ahead in digital infrastructure, drones, battery development, space exploitation, and certain applications of AI.^[48] Is a reversal happening now? To address that question, we’ll dig deeper into recent patterns of innovation and diffusion, especially in the United States.

State-Dominated Military Technological Innovation: The United States During the Cold War

During the twentieth century, the ability to grasp new technologies and translate them into military capabilities defined American military power. Before World War II, the U.S. government had no unified approach to science and mainly relied on European powers for broad scientific and technological advances. Many U.S. military technological innovations emerged during the war but drew on basic and applied research happening elsewhere, especially in Germany (including in armed rocketry and nuclear physics) and Great Britain (in radar, microwaves, and computers).

In July 1945, with much of postwar Europe in rubble, Vannevar Bush, the director of the U.S. Office of Scientific Research and Development, urged president Harry Truman to fund American universities and national labs doing scientific studies relevant to U.S. national security. “[I]t is clear that only the Government can undertake military research; for it must be carried on in secret, much of it has no commercial value, and it is expensive.”^[49] Bush contended that U.S. government-funded basic research must expand before the next war broke out to keep abreast of fast-moving technological developments affecting Americans’ security in medicine, agriculture, housing, and especially “research on military problems.”^[50] To boost economic prosperity, he argued, the United States should nurture a virtuous circle of government, university, and commercial innovation, with resulting discoveries diffusing to industry and the public whenever feasible.^[51] 

The United States consolidated its status as a global superpower by harnessing key technologies, especially nuclear weapons, rockets, ballistic missiles, transistors, computers, robotics, and precision guidance systems.

Sparked by Bush’s proposal, a U.S. government-driven juggernaut of technological innovation prevailed through most of the twentieth century. The Department of Defense drew on that foundation.^[52] The United States consolidated its status as a global superpower by harnessing key technologies, especially nuclear weapons, rockets, ballistic missiles, transistors, computers, robotics, and precision guidance systems. The United States’ greatest military strength was its ability to recognize an early innovation, at home or abroad, then tap unrivalled government funding and industrial capacity to develop, engineer, and produce it for military use. Federal spending on research and development (R&D) dwarfed that of commercial actors, growing threefold between 1953 and 1960 and peaking at 67 percent of total U.S. R&D spending in 1964, when companies began to increase their own R&D spending.^[53]

Being far more closed and state-driven, the Cold War period was unique in how military technology evolved. The U.S. government dominated most cutting-edge advancements, either directly or via grants and funding. Through key U.S. agencies like the National Science Foundation or NSF (established in 1950) and the Defense Advanced Research Projects Agency or DARPA (established in 1958), federal government officials set broad questions and drove technological development in chosen directions.^[54] DARPA, in addition to supporting the internet, funded universities’ computer science departments (at schools like the Massachusetts Institute of Technology, Carnegie Mellon University, and Stanford).^[55] The federal government funded 65 percent of the “research equipment in computer science departments” between 1981 and 1995.^[56] Research on semiconductors was largely driven by the Department of Defense, and federal contracts supported more than half of IBM’s early R&D.^[57] U.S. government officials routinely chose winners and losers, as today’s free market purists might put it.

During the Cold War, significant advances were classified and required high levels of expertise; diffusion to the public happened mainly at the point of applied engineering. Closed technological innovation and controls on diffusion (or proliferation) enabled the United States to consolidate power across a range of expensive and highly developed military systems. The secrecy extended even to other agencies of the U.S. government: for example, the B-2 stealth bomber, U-2 high altitude reconnaissance aircraft, and KH-11 Kennen reconnaissance satellite were all Special Access Programs funded under the highly classified black budget.

Closed innovation and deployment yielded many slow, highly complex, proprietary weapons systems of breathtaking technological sophistication. As the decades passed, military technology evolved by making incremental improvements along expected trajectories, such as in precision-guided munitions, the size or configurations of nuclear warheads, or the stealth capabilities of aircraft. Cutting-edge military technological developments happened when the centralized Department of Defense bureaucracy set requirements, selected contractors, drove major funding, and often chose winners through competitions, politics, or both. In the early Cold War, it took about five years to produce an operationally capable system; since the mid-1970s, that time quadrupled.^[58] What was truly remarkable was how well it usually worked.

From the 1970s onward, capital military systems proceeded along known trajectories, satisfying current customers; they were what the late Clay Christensen would have called “sustaining,” not disruptive, technologies.^[59] Changes could be incremental or radical—for example, adding global positioning system (GPS) capabilities to armored vehicles or developing fully self-driving tanks—but they did not disrupt entire lines of military tactics or operations, such as wiping out the use of tanks, fielding only unmanned aircraft, or displacing the aircraft carrier.^[60] Over time, costs climbed, as major military systems—like the F-22 Raptor, Arleigh Burke class of destroyers, or the Trident II intercontinental ballistic missile—were upgraded to reduce risk, meet demanding new standards, protect sunk costs, and maintain technological leadership in known capabilities.

A small number of Tier 1 defense contractors—such as Lockheed Martin, Boeing, Raytheon, General Dynamics, and Northrop Grumman—who could navigate an increasingly complex defense procurement system gradually dominated the market. There were incentives to minimize congressional intervention by reporting that a weapon system was working well in trials, even when it was not.^[61] U.S. centralization slowed things down, but during the Cold War, the Soviet bureaucracy, with an even more closed and centralized system, moved even more slowly.

In short, Cold War military technological innovation happened in a vastly different, U.S.-dominated technological context that may have been anomalous and is entirely different from the present context. Think of the contrasts: In 1959, IBM developed the transistor-based 4020 Military Computer to track missiles for Strategic Air Command, but IBM did not control tracking data or store it on their servers, as Palantir does.^[62] In 1969, the National Aeronautics and Space Administration (NASA) relied on companies such as Northrop Grumman, the North American Rockwell Corporation, and Boeing to send Apollo astronauts to the moon, but defense contractors did not launch rockets or send astronauts on their own, as SpaceX does.^[63] McDonnell Douglas built the F-15 fighter, which first flew in 1972, but the company did not control the airspace (as private companies do for most of cyberspace) or retain ownership of technical data or software source code, as Lockheed does for the F-35.^[64]

There is no comparison between industrial state-driven military technological innovation processes in the twentieth century and what the world faces today—a much more open technological context dominated by substantial commercial tech companies with far greater power of their own. And the U.S. government set that change in motion.

The Cold War Ends: Commercial Innovation Surges

At the end of the Cold War, the U.S. government consciously shifted from closed to open technological innovation. Spurred by post–Cold War euphoria about a U.S.-dominated world order, plus an urge to stimulate domestic economic growth, policymakers shifted the central purpose of U.S. technology policy from military-oriented competition to sharing technological advances by purposively releasing key basic technologies for private commercial development.

There was no mystery to it. In February 1993, the White House publicly announced a new technology policy entitled “Technology for America's Economic Growth, A New Direction to Build Economic Strength,” signed by both president William J. Clinton and vice president Al Gore. The report stated on the first page:

The traditional federal role in technology development has been limited to support of basic science and mission-oriented research in the Defense Department, NASA, and other agencies. This strategy was appropriate for a previous generation but not for today’s profound challenges. We cannot rely on the serendipitous application of defense technology to the private sector. We must aim directly at these new challenges and focus our efforts on the new opportunities before us, recognizing that government can play a key role helping private firms develop and profit from innovations. ^[65]

So developing and profiting from U.S. government innovations is exactly what smart private U.S. technology firms did for the next thirty years.

Virtually all of today’s digitally based technologies derive from U.S. publicly financed basic and applied research from the 1960s, 1970s, and 1980s that was released beginning in the 1990s: the Advanced Research Projects Agency Network (ARPANET) became the internet,^[66] tax dollars developed GPS,^[67] and NASA and the U.S. Air Force drove the development of microprocessors.^[68] All the major components of smartphones came from U.S. government-funded programs, including the microchips, touchscreens, and even voice activation systems like Apple’s Siri and Amazon’s Alexa.^[69] That is not to diminish what was happening in tech hubs like Silicon Valley, Boston, Seattle, and Pittsburgh—or in the garage where Bill Gates started Microsoft or the Harvard dorm room where Mark Zuckerberg founded Facebook for that matter. But the U.S. government consciously funded and shared these basic technologies, and today, some thirty years later, a global wave of open, privately driven technological innovation is maturing. ^[70]

Open systems are shaped first by commercial processes. Because there is popular access to new technologies, their effects spread throughout society and are tilted toward applied engineering. There is no need to be a nuclear scientist or engineer to use emerging technologies or even any reason to fully understand them because most digital platforms are cheap, user-friendly, and specifically designed to help people experiment. Companies such as Alphabet, Meta, and Microsoft drive the development of key technologies, and they strive, above all, to expand global markets by drawing users in.

Historical periods of open and closed technological innovation have different dynamics, and they require different strategic analyses, terms, and modes of practice to shape and adapt to them. Instead of proliferating, like nuclear, chemical, or biological weapons do, these technologies diffuse, spreading globally as telegraphs, railroads, dynamite, radios, or automobiles did more than a century ago.^[71] The challenges presented by nuclear missiles and other high-end weapons are thus joined by the instability of general-purpose technologies that impact everything in society—including war and peace.

Open technological innovation has yielded clusters of technologies including smartphones, unmanned aerial vehicles (UAVs), robotics, gene-editing tools, additive manufacturing, machine learning, and even accessible forms of AI. The strategies, theories, and approaches developed during the twentieth century, a period of closed military technological innovation dominated by nuclear weapons, differ from those needed to adapt in today’s open technological context for national defense.

U.S. science and technology policy from the 1990s deliberately expedited globalization and sparked today’s multipolar world.

U.S. science and technology policy from the 1990s deliberately expedited globalization and sparked today’s multipolar world. The power of technology was to be shared—and profited from. The resulting global diffusion of applied digital technologies helped resurgent powers such as India, Russia, and China and created huge new commercial actors such as major technology companies, especially in the United States and China but also in Israel, India, Japan, South Korea, Russia, and Turkey. And the rest of the world began to catch up: between 1960 and 2016, the U.S. national share of total global R&D dropped from 69 percent to about 30 percent, and the U.S. Department of Defense’s share of total global R&D, specifically, went from 36 percent to just under 4 percent.^[72]

In short, today’s military R&D setting is entirely different from what prevailed in the Cold War. In 1945, Vannevar Bush recognized the dissimilarity between the technological contexts of the nineteenth and twentieth centuries. “In the nineteenth century, Yankee mechanical ingenuity, building largely upon the basic discoveries of European scientists, could greatly advance the technical arts. Now the situation is different,” he wrote.^[73]

Eighty years later, we must face the contrast between twentieth- and twenty-first-century patterns of innovation and build a new approach to thinking about which scientific and technological innovations are affecting war, and how. Even more important is recognizing that powerful private actors are shaping national defense and will determine the future trajectory of the great powers.

Major Technology Companies Are Now Geopolitical Actors

Whether aligned or at odds with the interests of nation-states, the biggest tech companies have become geopolitical actors with as much wealth and power as most countries.^[74] Major tech companies such as Alibaba, Alphabet (Google), Amazon, Apple, ByteDance, Meta (Facebook), Microsoft, and Tencent control and defend aspects of society that used to be the exclusive purview of states, especially the infrastructure, communications networks, educational systems, and commerce of the digital age. Some of them, such as Microsoft, have even developed independent diplomatic and security apparatuses.^[75] They also have self-perpetuating sources of wealth: unlike the East India companies of the 1700s, they need not rely on tangible products like tea, silver, oil, or fruit that must be picked, extracted, and shipped, but rather on data and consumer dependence, bearing virtually no marginal costs as the numbers grow. And what these geopolitical private actors do affects the choices and actions of states and the conflicts between them. As is obvious in the Ukraine war, large technology companies cannot remain neutral when major powers are involved.

For more than a decade, analysts have studied the role of social media platforms like Facebook and Twitter through the lens of free speech, privacy, mobilization of terrorist violence, and recruitment to war zones. Critical incidents included Twitter’s role in the 2012 Israel-Gaza conflict; the self-proclaimed Islamic State’s 2014 use of Facebook, YouTube, and Twitter to mobilize followers to Syria and Iraq; and QAnon’s viral spread on YouTube, Twitter, 4chan, and other pseudo-news websites beginning in 2017.^[76] Major tech companies such as Alphabet, Apple, and Microsoft, which are not social media platforms, stayed out of the spotlight and appeared less relevant to the evolution of war. The framing was a matter of communications, not direct geopolitical impact.

That situation has changed. Tech companies’ broader geopolitical role has become strikingly transparent in Ukraine. For good or ill, the future of warfare is emerging not just from the heroic tactics, heavy artillery, and urban combat on the streets of Ukrainian cities like Lyman, Kharkiv, and Bakhmut but also from commercial tech companies worldwide. In responding to Russia’s invasion, many firms are directly or indirectly making money, gaining market share, and engaging in the conflict themselves.

The Ukraine war is an excellent test case for how major tech companies will handle the challenge of conflict involving major powers. The most familiar example is Space X’s Starlink network—thousands of low-orbit satellites that have kept Ukrainians connected to the internet—so that is where this discussion will start.

Arguably, there would be no independent Ukraine now if the government had not been able to mobilize support from home and abroad. The Starlink satellite app was Ukraine’s most-downloaded app in March 2022, and it kept President Volodymyr Zelenskyy online, even when high-earth-orbit Viasat satellites went down.^[77] There are some 15,000 Starlink user kits in Ukraine, mostly donated by SpaceX or by other private sources—though the United States Agency for International Development may have paid for some 1,300 of them.^[78]

Yet there is a lot more to this case than meets the eye. Tech companies’ interventions have sustained Ukrainian communications and actively defended against cyberattacks and adapted under fire. Starlink’s “swarm” of satellites in low-earth orbit can rapidly rewrite its code to react to attacks.^[79] Amazon Web Services sent Snowball devices to Krakow, Poland, to facilitate data transfers to the cloud and protect Ukraine’s vital data.^[80] Microsoft has actively protected Ukraine from Russian cyberattacks.^[81] The Starlink connection has been vital to effectively using drones—connecting a spotter, a drone operator, and an artillery team, for example.^[82] And when Musk decided that Starlink should not be used for offensive targeting against Russians, the U.S. government was powerless to change its stance. Commercial tech companies have been updating software overnight instead of over months, as is typical in the Department of Defense.^[83] This is an unprecedented demonstration of their wartime agility and power.

Many other tech companies’ interventions have worked against Russia and shielded Ukraine. Airbnb offered free housing to up to 100,000 people fleeing Ukraine.^[84] Google disabled satellite imagery of Ukraine and used office space in Poland to provide legal and psychological help to Ukrainian refugees.^[85] Amazon donated critical humanitarian supplies and offered a free training program called IT Skills 4U to connect Ukrainians with employment opportunities in information technology (IT).^[86] Apple disabled both traffic and live incidents in Apple Maps in Ukraine, limited the use of Apple Pay in Russia, and removed RT and Sputnik News from the App Store outside Russia.^[87]

Meanwhile, Chinese tech companies have been ambivalent about what to do, feeling pressure from both biting Western sanctions and Chinese domestic factors. Some Chinese tech companies, such as the personal-computer maker the Lenovo Group and the electronics firm Xiaomi have quietly stopped shipping to Russia.^[88] The ride-hailing company DiDi, which announced it was pulling out of Russia, two days later reversed its decision under pressure from Chinese nationalists.^[89] In March 2023, the U.S. Treasury Department slapped sanctions on five Chinese firms and one person accused of selling parts for Iranian Shahed-136 armed UAVs that ended up in the Russian arsenal.^[90] Moscow and Beijing may be aligned, but their trade volumes have been unstable: overall, China’s exports to Russia declined by 38 percent between the second half of 2021 and April 2022 after the war began, then grew to record levels in the latter part of 2022, according to the Chinese government.^[91]

The Chinese tech company DJI is a fascinating case. In March 2022, Ukraine’s then vice prime minister Mykhailo Fedorov accused DJI of enabling Russia to target innocent Ukrainian civilians with its drone technology, then demanded the company block DJI AeroScope, a system originally designed to allow law enforcement to protect airports and other sensitive sites.^[92] Every DJI drone broadcasts an unencrypted AeroScope signal that a receiver can use to pinpoint where the drone is and where the pilot is.^[93] The Ukrainians claimed the Russians had used the capability to target civilian drone pilots with air strikes. Insisting that its drones were intended strictly for civilian use, DJI suspended sales in both Ukraine and Russia.^[94]

The most important lesson of the Ukraine war is that it is vital to have a robust tech sector and well-trained civilian population before the outbreak of hostilities, with alignment between government and private tech companies’ policies.

But the most important lesson of the Ukraine war is that it is vital to have a robust tech sector and well-trained civilian population before the outbreak of hostilities, with alignment between government and private tech companies’ policies. Ukraine’s armed forces suffered from Soviet-style hierarchical thinking before the February 2022 full-scale Russian invasion; plugging in tech-savvy civilian volunteers was a game-changer. In advance of the all-out Russian invasion, Ukraine was a hub of scientific and technological talent because companies like Alphabet, Oracle, Snap, and Amazon had long outsourced to a thriving community of well-trained Ukrainian subcontractors.^[95] Ukraine established a Ministry of Digital Transformation in 2019. As of 2020, the country had around 1,650 software companies, with major hubs in cities like Kyiv, Kharkiv, Lviv, Dnipro, and Odessa.^[96]

The benefits of advanced collaboration have become obvious during the war. The most downloaded app in Ukraine (a regularly updated one used by more than 4 million people) is Air Alert.^[97] Working with government emergency services and civil defense, Ukrainian app developers at a company called Ajax Systems built the app in a single night, and it has saved countless civilian and military lives.^[98] Ukrainian tech workers—and their government—were poised to pivot.

Ukrainians’ tech prowess developed quickly after the 2014 Russian capture of Crimea. Today, the bulk of the Ukrainian drone fleet consists of off-the-shelf, altered, or handmade models inexpensively made or altered in workshops around Ukraine, including small quadcopters and mid-sized, fixed-wing drones. The fixed-wing Punisher, which is reusable, is made in Ukraine by UA Dynamics.^[99] Meanwhile, Ukrainian hackers have demonstrated how to infiltrate the internet of things during the war, taking down electric vehicle charging stations in Moscow, then projecting on their screens a slur targeting Russian President Vladimir Putin.^[100] They have allegedly used AI-enabled voice transcription to scale Russian communications monitoring.^[101] And the Ukrainians have effectively employed Clearview AI’s facial recognition technology and machine learning to uncover targets and identify the dead.^[102]

Of course, it’s not as if enemy states lack tools to curb major tech companies in their territories. Splintering the internet increases states’ leverage. In 2018, Russia tried and failed to ban Telegram because the move was domestically unpopular at the time; now it has successfully forced U.S. tech companies to flee, substituting local alternatives like Yandex, Odnoklassniki, and VKontakte (though the encrypted app Telegram still operates there). Meta made an exception to its content moderation policies to allow Ukrainians to call for violence against Putin, so the Russian government criminalized Facebook as “extremist” and cut the Russian population off further from open media.^[103] Twitter has been blocked in Russia. Putin tries to keep Russians in a media bubble that backs the war, while Western tech companies support Ukraine.

One might conclude that tech companies are just as subject to state coercion as any other nonstate actors, but that would be wrong. Twitter, Facebook, and other social media platforms have helped mobilize unprecedented international support and facilitated civil resistance in Ukraine. Alphabet (through YouTube), and Meta (through Facebook and Instagram) have blocked Russia’s RT and Sputnik News. Open-source intelligence spread via Twitter has facilitated drone targeting not just by the Ukrainian military but also by civilian volunteers. And all of these actions have enhanced the value of Western sanctions against Russia and amplified the tens of billions of dollars in traditional military assistance flowing to Ukraine.^[104]

The argument here is not that tech companies are winning the fight in Ukraine, but that Ukraine would not survive without them. What’s interesting is how many Western tech companies, often driven by the values of their employees and their customers, have aligned against Russia’s naked aggression and with the North Atlantic Treaty Organization, the European Union, the United States, and the United Nations General Assembly (including India and China) in expressing grave concern.^[105]

With varying degrees of enthusiasm and sincerity, Big Tech has tried to do the right thing in a wartime crisis.

The Chinese Versus American Approaches

That brings us to the two contrasting models of military technological innovation prototyped by China and by the United States—one centralizing military and economic power under a state run by a single-party regime, and the other seeking commonality between government and commercial interests. Their goals are similar, but their systems are different: centralized versus decentralized governments; authoritarian versus democratic ideologies; a state-driven business sector versus a market-driven business sector; party-state-directed research and university environments versus open research and educational institutions. 

The two countries started from different places but, as in the seventeenth and eighteenth centuries, today’s major powers are building new modes of dealing with private companies that boast unprecedented wealth, power, and security impacts. As in the past, whichever model translates technological advances into state power today will most likely define the global trajectory of tomorrow.

China’s State-Driven Approach

China’s efforts to recapture government control over the country’s tech companies are a classic form of behavior for the Chinese government, born of centuries of state centralization

China’s efforts to recapture government control over the country’s tech companies are a classic form of behavior for the Chinese government, born of centuries of state centralization. Economic liberalization and devolution in the decades after the death of Mao in 1976 was what was new. Before the fall of the Qing Dynasty in 1912, for the preceding one thousand years, the great Chinese empire had been known as the Middle Kingdom, an ancient civilization considered the center of the world.

In the first decades of the twenty-first century, China has relied on West-to-East technological diffusion (a reversal of what happened in the Great Divergence), increasing trade ties, sending millions of talented Chinese students abroad, and engaging in large-scale hacking to steal Western technology and corporate secrets from firms and universities.^[106] Having made astonishing technological progress, now the Chinese government is shifting toward depending on indigenous companies’ innovation, betting that China can develop independent technological capabilities that the Chinese Communist Party (CCP) can control.

This approach means keeping Chinese citizens and private companies from becoming too rich or too independent—because the CCP wants power over their technological advances and data, but also because their popularity has become a threat to General Secretary Xi Jinping and the CCP’s domestic political control. In recent years, the Chinese government has cracked down on uber-rich Chinese tech personalities and enacted a range of regulations on Chinese tech companies. In October 2020, after founder Jack Ma criticized Chinese regulators, Alibaba’s Ant Group had to suspend its initial public offering bid shortly before it went public.^[107] In May 2021, Zhang Yiming, the head of ByteDance (which owns TikTok), stepped down to focus on “reading and daydreaming.”^[108] According to Forbes, the giant Shenzhen-based gaming company Tencent’s market value plunged by nearly $360 billion in 2021 when Beijing released new guidelines—including a move to limit Chinese children to three hours of gaming per week.^[109] Between February and August 2021, “close to $1 trillion [was] wiped off the value of Chinese companies,” according to Guardian reporter Vincent Ni.^[110]

Significantly, as the United States also reduces Chinese access to key U.S. technologies and decouples key supply chains, aggressive PRC state regulation could dampen China’s military technological innovation. It is also worth noting that the Chinese government cannot entirely evade the open aspects of today’s innovation ecosystem: the People’s Liberation Army (PLA) are reportedly developing the Xian H-20 stealth bomber as a black program, for example, but hundreds of models and pictures of it have surfaced on the internet.^[111]

The question is whether a highly centralized government that captures its tech sector (and the potent surveillance tools of the AI era) will end up being stronger or weaker. China follows a model of what it calls military-civil fusion, whereby the PLA has direct technical support from Chinese tech companies and universities. And at the Twentieth National Congress of the CCP in October 2022, Xi doubled down on self-reliance and self-sufficiency in science and technology, portraying domestic technological innovation as the engine for future Chinese growth and progress.^[112] Some observers argue that the CCP-controlled model will be an advantage in terms of consolidating state power.^[113] Still, as China’s economy slows and access to Western military technology diminishes, the effects on tech dynamism and state power remain uncertain.

The U.S. Market-Driven Approach

The United States has been the most successful nation-state in history at harnessing new technology and translating it into state military power. This knack for applied innovation was a major element of American success vis-à-vis Germany during World War II and the Soviet Union during the Cold War.^[114] But open technological innovation and diffusion dynamics are different now because of deliberate U.S. government decisions in the 1990s as well as the resulting evolution of key technologies over the past thirty years.

The models for how the U.S. military adapts cannot come from the state-dominated twentieth century. In February 2022, the Pentagon published a list of critical and emerging technologies—including quantum science, future generation wireless technology, microelectronics, renewable energy generation and storage, and human-machine interfaces. Eleven of the fourteen items on the military’s list were commercial technologies.^[115] 

Yet the mechanisms the United States has put in place during the past seven years to integrate civilian innovation of cutting-edge technologies into military organizations are inadequate. ^[116] They’re too small, too slow, and not reshaping the overall system. Why? Because in the United States, at least, they lack sufficient resources, a Department of Defense commitment to change extensive, lumbering bureaucratic processes like the Pentagon’s budgeting system, and adequate Congressional buy-in both to compel and allow the Department of Defense to be more agile. According to former director Michael Brown, the Defense Innovation Unit (DIU) transitioned thirty-five prototyped commercial solutions to U.S. service partners between 2016 and 2021, including the commercial Synthetic Aperture Radar (SAR) satellites that saw through the clouds and predicted the Russian invasion of Ukraine in early 2022.^[117] But this is a very long way from a Sputnik moment. 

The U.S. effort will not suffice on its current trajectory in this technological context.^[118] It takes about two-and-a-half years to program a dollar of U.S. spending, while the average development cycle of technologies like AI software or autonomous drones is less than two years.^[119] The 1960s-era budgeting and oversight systems that structure how the Pentagon spends taxpayer dollars are designed to be slow to foster responsible spending—but they lack the speed needed to keep pace with commercial innovation and diffusion today.

The Department of Defense also lacks the rich venture capitalist ecosystem that has powered recent tech innovation, especially in the United States.^[120] In the U.S. government, it is extremely difficult to support the kind of high-risk, personality-driven bets that venture capitalists make on promising start-ups. Venture capitalists get rich on outliers: they expect nine out of ten of their prospects to fail, and they plan for it. Any government employee who tried such high-risk gambling with taxpayer dollars would be prosecuted. Efforts like DIU’s National Security Innovation Capital or the National Security Innovation Network bring together universities, venture capital firms, and the Department of Defense, but they are small and embryonic. Yet the U.S. government also lacks the proportionate levels of R&D funding that drove technological developments in the mid-twentieth century.^[121] 

Decades of evolution in computing are reflected in Western military innovation patterns today. Advanced military organizations have shifted from big, expensive hardware (like computer mainframes) to smaller, cheaper hardware (like personal computers, laptops, tablets, and phones), to the crucial role of software driving it all. As seen in Ukraine, software engineers are as vital as soldiers: what matters is having an edge in developing the most advanced software, the best datasets, the quickest real-time updates, and the fastest processing speeds.

What it means to defend the country has also changed. According to the Moscow Times, the Russian government claims that commercial tech assets such as Starlink, Maxar, and Planet Labs satellites are now “legitimate” military targets.^[122] In an open technological context, concepts like the military-industrial complex or even public-private partnerships are too slow to fully capture what is required to drive military innovation forward in the twenty-first century. They are relics of another era.

The Pentagon will never be as fast and agile as Alphabet or Microsoft is at most types of technological innovation, plus that kind of government centralization is backward-looking.

The answer is not to emulate China by either duplicating tech enterprises within the Department of Defense or drawing commercial innovation fully into the government sphere. The Pentagon will never be as fast and agile as Alphabet or Microsoft is at most types of technological innovation, plus that kind of government centralization is backward-looking. Instead, the United States should build a new model that regulates the worst excesses and draws major tech companies into defensive alliances based on shared values and interests, as has been the case in the Ukraine war. 

Conclusion

Where does this leave us with respect to the United States, China, and Big Tech as geopolitical actors? Which great power will best adapt to new and emerging technologies and thus consolidate state power?

Although two models of governance are emerging, it would be a mistake to see the future pathways for American defense innovation as either free market capitalism as per the United States or centralized government control as per China. There is a broad range of good intermediate choices between those extremes.

Technological innovation in the United States has never been left entirely to the free market.^[123] The U.S. government knows how to build an effective system of technological innovation that makes targeted, government-driven investments in basic research and key technologies because that is exactly what it did decades ago. And even in this era of commercial-driven open innovation, that is exactly what it can do again. Making targeted investments in key industries and universities is not the same as fooling ourselves that the Department of Defense either could or should directly drive technological innovation now as it did during the Cold War. That era is over.

Instead, the NSF and DARPA should be expanded, as should the wide range of federal R&D agency programs that mimic them (including the Advanced Research Projects Agency-Energy at the Department of Energy, the Intelligence Advanced Research Projects Agency in the intelligence community, the National Institutes of Health at the Department of Health and Human Services, and the Science and Technology Directorate at the Department of Homeland Security). An additional broad federal steering committee should also be created—something like the National Network for Critical Technology Assessment—to assess the state of technological advance and make disinterested targeted investments in key industries, start-ups, and university research programs.^[124] These organizations should be funded to make proactive investments in promising technologies.

Indeed, there have been recent steps in this direction: as part of the recently passed CHIPS and Science Act, the Commerce Department is overseeing a $50 billion effort to revitalize the U.S. semiconductor industry, including boosts to both manufacturing and R&D.^[125] Making those kinds of national strategic investments can strengthen U.S. technological innovation in a deep and abiding way, to keep the country at the forefront of major power competition.

Another key difference between U.S. innovation in the twentieth century and the approach now being taken by President Joe Biden and his administration is the emphasis on allies as close partners in technological innovation. This is in sharp contrast to the emerging China model of state-driven technological innovation, which stresses autarky, self-reliance, and Chinese independence in science and technology.

The United States must also draw more brilliant U.S. scientists, academics, and engineers into public service and give them the tools to assess and fund targeted investments in basic R&D. And the country needs to fully fund the engines of innovation—meaning not just Department of Defense programs and defense contractors, but also U.S. universities, especially those driven not by profit but by the desire to impact society in a positive, transformative way. Most of the technological innovation that laid the foundation for advancements today first emerged from U.S. universities funded by federal grants and programs. That is exactly why major technology companies like Microsoft, Tesla, and Meta were later able to build on that foundational government-supported work so as to flourish and become the powerful geopolitical actors they are today.

To win a great power competition with China, the United States needs to be able to work with its powerful tech companies.

To win a great power competition with China, the United States needs to be able to work with its powerful tech companies. American interests are not separate from those of its tech giants, just as the interests of the tech giants are not separate from those of the United States. U.S. national security policymakers now face a very different dynamic from the lucrative long-term relationship that the Pentagon, Congress, and the major defense contractors built in the last century. Talk of the Department of Defense “harnessing” Western tech companies or treating them as a World War II–style arsenal of democracy is anachronistic.^[126] The Defense Department must build a forward-looking innovative model, treating major tech companies not as contractors but as allies with distinct interests, slowly realizing their geopolitical role in war and peace. By consolidating its latent power that way, the United States can build successful coalitions, protect technological innovation, and win the next war.

About the Author

Audrey Kurth Cronin is the Trustees Professor of Security and Technology and director of the Carnegie Mellon Institute for Security and Technology at Carnegie Mellon University. Her latest book, Power to the People: How Open Technological Innovation Is Arming Tomorrow’s Terrorists (Oxford University Press, 2020), was short-listed for the Lionel Gelber Prize and won the 2020 Neave Prize. She has served in the Office of the U.S. Secretary of Defense for Policy, was chairman of the World Economic Forum’s Global Agenda Council on Terrorism, and is a life member of the Council on Foreign Relations. 

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