The emergence of artificial intelligence marks the latest acceleration of the digital age. Like any revolution, this one has winners and losers and will likely transform the relationship between people and machines. It could also lend yet more power to Big Tech and their technocratic elites in government.
Just as the Industrial Revolution elevated manufacturers and their financiers over the old aristocratic classes, the current shift erodes the power of the large industrial, often unionised, corporations and hosts of smaller businesses, in favour of a small coterie of elite firms, which are aggressively anti-union and have an unprecedented hold on both the capital markets and increasingly the human consciousness.
In the past, a major tech breakthrough would have naturally created a market for upstarts. The first phase of the digital revolution in the early 21st century caught many larger players, like IBM and AT&T, flat-footed as firms like Google, Apple, Microsoft, Amazon and Facebook (now Meta) emerged, eventually well surpassing them in market value. These firms have now secured quasi-monopolistic control of everything from mobile browsers, operating-system software and online advertising sales. They also control two-thirds of the world’s cloud service infrastructure, which is critical for AI.
These Big Tech companies drive the economy, and with them the fortunes of the three-fifths of Americans invested in the stock market. About 60 per cent of the S&P 500’s gains for the year have been driven by just five tech companies – Nvidia, Microsoft, Meta, Amazon and Alphabet (the parent company of Google). Altogether, seven tech stars, adding Tesla and Apple, account for a remarkable 30 per cent of the index’s total value, a domination almost unprecedented in market history.
These same companies are uniquely positioned to raise the trillions of dollars that are needed to develop AI capacity – at a time when cash for startups is at the lowest ebb in five years. Among the AI superpowers, there is only one relative newcomer, Nvidia. It started out mostly selling chips to the videogame industry, but its hardware has since become essential to the AI boom. Overall the field is utterly dominated by the top giant interests.
The new Silicon Valley dream is not to build a great company, like Apple or Amazon, but to merge with a larger company. In 2023, the AI market was valued at $42 billion, with most of that belonging to Apple, Microsoft and Alphabet. According to two analysts writing in the New York Times, Silicon Valley has ‘learned how to co-opt potentially disruptive start-ups before they can become competitive threats’.
In the process, suggests former US attorney general William Barr, these firms have found a way to ‘pre-empt the normal evolution of emerging markets’ so that new firms become satellites in the ‘solar systems’ of Big Tech. Far from disrupting the current Silicon Valley oligopoly, AI is helping to sustain it. Not surprisingly, as newbies, younger AI founders are mostly on the outside looking in. This year’s Forbes billionaire study shows only one per cent are under 40, the lowest level in over 20 years.
Read the rest of this piece at Spiked.
Joel Kotkin is the author of The Coming of Neo-Feudalism: A Warning to the Global Middle Class. He is the Roger Hobbs Presidential Fellow in Urban Futures at Chapman University and and directs the Center for Demographics and Policy there. Learn more at joelkotkin.com and follow him on Twitter @joelkotkin.
Photo: IMF, via Flickr under CC 2.0 License.
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