Silicon Valley’s robber barons want to devour us
First published in the Sunday Times on 22nd November 2015.
“Software is eating the world,” said Marc Andreessen, the co-founder of Netscape. What he meant was the tendency of digital interlopers to insert themselves into industries, disrupting the status quo and levying enormous costs for their computer technology.
This trend might suit the Silicon Valley elite, but it does Britain only harm. Here it leads to net job losses, a diminishing tax base, an evaporation of privacy, a withering of arts and culture, and an ever more dependent society. The digital universe gravitates towards the invention of crushing monopolies, which inevitably exploit their customers and rake in excessive profits. I believe in free enterprise, but I also believe passionately in our national interests, and they are being disembowelled by the Silicon Valley crony capitalists.
In the early 20th century a number of American corporations came to Britain and built huge businesses here. Politicians and domestic firms complained that we were the victims of a transatlantic takeover. The novelist Edgar Wallace, famed for King Kong, wrote a ripping novel on the subject, featuring an acquisitive US department store magnate. It was called The Man Who Bought London. But the investors then — such as General Motors, Ford, Woolworths, Heinz and Gillette — employed many tens of thousands of British citizens, built factories, paid taxes and were generally decent corporate citizens. Their 21st-century equivalents from Silicon Valley are a different breed.
To a large degree, tech behemoths such as Google, Uber, Apple and Facebook add minimal value to our economy. They make vast profits here, employ paltry numbers relative to the toll they take, act as free riders on existing companies and infrastructure, and go to great lengths to avoid paying taxes. They take pains to disguise their profiteering by dressing their accounts with charges and transfers while they hollow out our society. That enormous sucking sound you hear is our cash being vacuumed up and transferred to tax havens by the tech billionaires.
Of course, if anyone objects to this booming tide of tech, they are seen as an old-fashioned and protectionist. Deluded fans use bogus phrases such as “the sharing economy” to promote these stripminers, as if their one-sided commercialism were somehow cuddly. But these supporters are the equivalent of the West’s “useful idiots” who were manipulated by the KGB to cheer on Soviet Russia during the Cold War.
These American companies take no prisoners, but enjoy egregious margins, siphon off our personal data and obliterate local competition. They are not friendly — they are here to conquer.
Britain seems especially vulnerable to this invasion. We do more ecommerce as a proportion of overall retail sales than virtually any other country; we speak the right language, enjoy the rule of law, and are welcoming to foreign investors. We have a huge and successful creative industry, which is being gradually eviscerated by the depredations of parasites such as Google. The decline of the printing industry, the music business, retailing, the taxi trade and dozens of others owes a great deal to the tech pirates. Our politicians are star-struck by the tech barons, and too often fall for their blandishments. So regulations about health and safety, copyright protection, tax compliance and employment are brushed aside. Meanwhile, America has huge economies of scale, enabling it to produce tech champions that can dominate markets globally. It is incredibly hard for our industries to compete against all that capital, momentum — and no-holds barred tactics.
Of course, free markets will always be subject to creative destruction, whereby innovators displace inefficient incumbents. New technology can undoubtedly bring advantages to consumers, but communities also need jobs, and we should not willingly embrace a future where Britain becomes an impoverished branch economy. Instead, we should demand the genuine investment needed to become a true knowledge economy, and construct the education system to foster it.
If America played fair with British companies, one might feel differently. But in recent years the US has become a scary place to do business, thanks to its litigation culture and biased justice and political systems. BP has been bullied out of at least $50bn (£33bn) over the Deepwater Horizon oil spill; HSBC had to hand over $1.9bn in a money- laundering settlement.
Just as we have to tolerate one-sided extradition treaties, so America applies different standards to foreign companies than to its own. We are probably in the midst of what can only be described as a transatlantic economic war, waged using capital, technology and legal means. Our authorities need to be as patriotic as their US equivalents, and understand the employment implications of the Silicon Valley onslaught. They must defend British interests more vigorously.