The Geopolitics of Digital Category-King Platforms

It Takes An Army

Surprisingly enough, a lot of this has to do with geopolitical military activities. Having worked with many high-powered technology scale-ups in Silicon Valley over the years, it is not hard to notice the impact of DARPA (the Defense Advanced Research Project Agency), which was developed not long after the U.S. got spooked by Sputnik in the middle of the Cold War. The Russians had launched the Sputnik satellite that would fly over the U.S. Americans could turn on their radio sets and tune in to hear its bleeping signals.

DARPA was created in 1958 to make sure that the United States would never again be technologically humiliated as it had been in the case of the Sputnik incident. Boatloads of U.S. military money was pumped into technological innovation. The internet as we know it was a DARPA project. The first self-driving cars at Google, designed by Sebastian Thrun, were DARPA projects. It is amazing to see how influential the U.S. military funding from DARPA has been in creating the giants of Silicon Valley.

In the Chinese ecosystem, there is often the reproach that the Chinese digital category kings are too closely associated with the Chinese government. True, the growth of companies like Alibaba or Tencent would not have been possible without the connections, support and control of the Chinese authorities. Telecom infrastructure giants such as Huawei that are powering much of the backbone infrastructure of European Telecom operators have been scrutinized for their connections to the Chinese military. Huawei was founded by people close to the Chinese military, and when a Belgian national operator called Proximus decided to run its complete mobile infrastructure on Huawei equipment, this led to heated debates in Belgium: people were asking if it was wise to trust a company to supply sensitive and critical infrastructure that was so closely connected to the Chinese military.

I would argue the other ecosystem easily has as many conflicts. DARPA runs deep through the veins of many Silicon Valley giants, and the conflicts can be even more intense than in China. Palantir is the magic machine learning neural network whose A.I.-powered intelligence software helped find Osama Bin Laden. Palantir is used by the NSA and the Department of Homeland Security, and is also used by many European banks for fraud detection and to fight international money laundering, among other things. Palantir was founded by Peter Thiel and had as its first venture capital investor the investment arm of the C.I.A.

On the other hand, Europe,  which has had peace for more than 70 years., lacks any coordinated military intelligence involvement in the high-tech industry. Its military activities have been extremely scattered and as a result there is no European DARPA. This could perhaps be one of the reasons why Europe doesn't have an established set of digital category kings.

But all is not lost for the old continent. Or for the other ones, as a matter of fact. Every new set of technologies will bring the opportunity to seize them and turn them into global powerhouses. Take the embryonic technology of blockchain, which is  poised to change the landscape of transactions, and thus B2B. It is going to have as much impact as B2C did 25 years ago and as much as the World Wide Web did on the world of content. But if regions don't step up to the plate and put all their efforts and force in leveraging the blockchain, it will be incredibly difficult to compete with the two giant ecosystems, in Silicon Valley and in China.

We are still in the early days of a new century, an era governed by not just new technologies but by different economic behaviors, economics systems and economic paradigms. The advent of network effects on our global economy will undoubtedly alter the geopolitical dimensions of power. If the political leaders of the laggards want to keep their continents relevant, they really should pay close attention to these massivedigital tectonic shifts. If not, it might soon be too late.