Big Tech and the state (2025)

From the January 2025 issue of the Socialist Standard

What is Big Tech? How did it get so big? Has Big Tech got too big for the rest of the capitalist class?

Big Tech is a loose definition to describe the largest digital technology-based enterprises – it always includes Google (Alphabet), Facebook (Meta), Amazon and Apple. Microsoft is usually included now, sometimes Tesla, the electric car manufacturer, and Nvidia, the semiconductor manufacturer, and some perspectives will include the Asian firms: Baidu, Alibaba, Tencent, and Xiaomi – who by their nature and size fulfil a similar role.

As socialists we understand the integral role of technology in capitalism. In the Socialist Standard No 9 in 1905 we said:

‘The capitalist-class, the most revolutionary class that has ever oppressed human society, cannot increase its riches but by incessantly revolutionising the means of production by the never-ending introduction of new applications of the mechanical, physical, and chemical sciences to the industrial tool. Its thirst for inventions is so insatiable that it has created factories of inventions.’

Whilst most employees in Big Tech are supporting existing products rather than being inventors – factories of inventions seems like a suitable description of commercial research departments or startup companies.

And of course many years earlier Marx and Engels in the Communist Manifesto wrote:

‘The bourgeoisie cannot exist without constantly revolutionising the instruments of production, and thereby the relations of production, and with them the whole relations of society.’

Marx also wrote at length about Machinery and Modern Industry in Capital Volume 1.

Whilst many analysts of the left and right sides of capitalism have defined capitalism in our current era variously as platform capitalism, the app economy, surveillance capitalism, and techno-feudalism. The fundamentals of capitalism in terms of social relations are the same and the driving forces are the same, but they are right to recognise that capitalist enterprises have organised themselves differently from other eras.

Technology in perspective

We are not living in a world where most of society is working in information technology, but many use it as part of their jobs.

The Office for National Statistics report UK Digital Economic Research: 2020 showed that using the OECD’s ‘narrow’ definition of the digital economy, digital products accounted for 5 percent of Gross Value Added (GVA) in 2020. Using the wider OECD definition, products significantly affected by digitisation accounted for up to 20.7 percent in 2020, down from a revised figure of 21.2 percent in 2019. This report showed that research, health, finance, retail, manufacturing and real estate industries are all larger than the digital products sector in terms of GVA.

You can’t eat technology for dinner, it doesn’t keep the rain off and you can’t ride it into town, but technology helps produce food, houses and transportation – more and more efficiently with every iteration. The massive amounts of quantitative analysis, the number crunching, and instant communication, has enabled production at scales and efficiencies not seen before.

Productivity figures from sweatshops in Cambodia, for instance, can be analysed in air-conditioned offices in California and decisions made and responses delivered in a matter of seconds.

Some of the Big Tech enterprises are in direct competition: Google and Facebook (which includes Instagram and Whatsapp) are selling ads, giving opportunities to platforms that want to gather information about you to puts ads right in your face. Google and Facebook are said to share a duopoly in online advertising.

Amazon is mainly known for its online retail and delivery business, but most of its operating profit is in ‘the cloud’ (tinyurl.com/yc2j3s4h) – that is data centres where it rents out disk space and computing power. Second in the data-centre business is Microsoft (MS), which is primarily about business software and operating systems (OS), and Google is also pushing into the data centre market.

Apple is primarily in consumer hardware including iPhones, iPads, laptops and desktop computers. In the developed world the iPhone is the dominant mobile phone technology. In the less developed world, Google’s Android OS dominates but the hardware comes from different suppliers.

How did big tech get so big?

Analysts have identified four phenomena that allowed Big Tech to emerge: deregulation, financialisation, globalisation and technological convergence.

Often cited as the key piece of deregulation that paved the way for social media was Section 230 of the 1996 US Telecommunications Act which stated:

‘No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider’.

Social media sites, it can be argued, are fulfilling the same role as paper publishers who are responsible for what they publish, but for social media after Section 230 it was considered that anything posted on them was ‘user-generated content’ – and users were responsible, not publishers.

Software rarely has the regulatory safeguards that physical products have – think of trying to sell a car with no brakes or a kettle that catches on fire. Fujitsu has paid private compensation for its part in the UK Post Office scandal and, unusually, is also facing criminal proceedings (tinyurl.com/u2xz9zx7). In July this year 8.5 million MS Windows servers were made inoperable due to a faulty software update from an anti-virus company. Delta Airlines, whose operations were massively disrupted, are suing the anti-virus company claiming the outage cost them $500 million, with 1.8 million passengers affected (tinyurl.com/4kaj3s2x). Only those who can afford to sue them will get any money back.

Perhaps ‘lack of regulation’ is a better term – it’s largely a case of legislation not being able to keep up with the rapid innovation of digital services.

The expectation of profits means big tech firms don’t have to look far for sources of investment, which means they can expand in-house, or alternatively acquire smaller firms to increase market share either by embracing or extinguishing a rival technology. A current example is OpenAI, owners of ChatGPT, with an estimated $2 billion in revenue in 2024, though yet to turn a profit due to the huge cost of training AI models (tinyurl.com/2cub8my8). Twitter, for example, made profits in 2018 and 2019, the first since its inception in 2012. Since Elon Musk took over and renamed it, revenue has fallen sharply and ‘X’ has massive debts (tinyurl.com/rbtsh74f).

Globalisation allowed Big Tech companies to minimise their tax burden and move production to places with lower wages. They often have European headquarters in low-tax Ireland. Many consumers are familiar with Microsoft’s Indian Tech Support call centre, while the Foxconn City Factory complex in Shenzhen, China, makes parts for Apple products, and a global army of content moderators work for Facebook and ChatGPT in less developed parts of the world.

Technical convergence basically means devices doing more and more and being linked over the internet. Whilst a telephone handset makes calls, a camera takes pictures, a torch shines a light and a computer runs apps, in a smartphone these roles are combined into one device. These hardware functions rely on software to work, providing apps through app stores, and gateways to other services such as shops, entertainment and games. Both Google Play Store and Apple App Store charge a fee to stock software in their stores, and up to 30 percent commission on app sales and in-app purchases. This is a part of what is known as platformisation (tinyurl.com/5ybrxmdv).

Too big?

Any casual follower of the industry will have noticed that the tide seems to be turning. The section on the Wall St Journal website providing advice for potential investors warns that:

‘Governments around the world are evaluating the impacts that massive tech platforms and social networks have on businesses and consumers. In the coming months, regulations in the European Union and the United States will likely take effect, pushing tech companies to prioritise data protection, harm reduction, the ethical use of AI, and commitment to sustainability goals.’

Over the years there have been a number of skirmishes but the 2023 EU Digital Markets Act, and the EU Product Liability Directive currently being revised to include digital technology, are more significant. A US federal judge ruled in August that Google had violated US antitrust (anti-monopoly) law by maintaining an internet search monopoly. In October the US Department of Justice said in a petition to the court that it may recommend dismantling Google’s core businesses, writing that:

‘That would prevent Google from using products such as Chrome, Play, and Android to advantage Google search and Google search-related products and features — including emerging search access points and features, such as artificial intelligence — over rivals or new entrants.’

The Digital Markets Act (DMA) is an EU regulation that aims to make the digital economy ‘fairer’ and more contestable. It became applicable in May 2023. The DMA aims to ensure a higher degree of competition in European digital markets by preventing large companies from abusing their market power and by allowing new players to enter the market.

Twenty-two services across six companies – Alphabet, Amazon, Apple, ByteDance, Meta, and Microsoft – were identified as ‘core platform services’ by the EU in September 2023. The companies are known as ‘gatekeepers’ due to the ‘durable market position in some digital sectors’ and because they also meet certain criteria related to the number of users, their revenue, or size.

However, there have been accusations from US-based commentators that the rules were carefully constructed so as not to affect European companies and that it is purely about protectionism. As one example, Spotify, a Swedish company which trades on the New York Stock Exchange via a company in Luxembourg, could well have been on the list.

Almost 40 years after it came into force, the European Union is undertaking a major revision of the Product Liability Directive (Directive 85/374/EEC). The aim of this reform is to adapt ‘the standards to the conditions and needs of the digital single market’. To this end, software will in future be considered as a product.

The UK government prior to the general election this year also passed the Digital Markets, Competition, and Consumers Act (DMCC), a similar piece of legislation which surprisingly is the only one to include some protection for consumers, specifically for mis-selling and secondary ticket-pricing, such as the recent fiasco with the tickets for Oasis concerts.

We know there is a to and fro that goes on between lawmakers and Big Tech whilst the laws are being drafted, as Big Tech tries to make sure the legislation, if it has to exist at all, isn’t too damaging.

What’s in store for Big Tech in the future? Will we see monopolies destroyed, and how much will that affect the working class as a whole? Of particular interest to us is, how will it affect us as socialists?

Does it matter?

So in the current era of capitalism we have seen the immensely innovative system undergo great changes in the forces of production, and these changes are ongoing. Perhaps monopolies in certain markets will be broken, or perhaps it is a tendency for states always to be reactive and too slow.

As socialists the monopoly we are mainly concerned with is the monopoly that the capitalist class has over the means of producing wealth, and creating a socialist society where no such monopoly is possible, as everything in and on the world will be owned in common and managed democratically.

Here and now our job as socialists is to make socialists, and digital technology is a major method of promoting socialist ideas – so with changes in the platforms and networks we use there could be profound effects for spreading socialism. There might be profound effects if and when the socialist movement gets big enough to become a threat to capitalism, and when we do win there might be big consequences in having forces of production so complex and powerful at our disposal. Then the factories of invention will go from merely servicing the capitalist system to becoming communities for finding creative solutions to fulfil human needs.

PDH

50 Years Ago: The Separation of Ownership from Management (1957)

The 50 Years Ago column from the July 1957 issue of the Socialist Standard

The logic of events has altered somewhat the character of the opposition that is made to the Socialist. He is now seldom told that the personal management of the capitalist is essential to the working of industry, for it is precisely those concerns in which the personal supervision of the capitalist is lacking that are driving the personally managed businesses to the wall . . .

It is only the small businesses that can, in any real sense of the word, be said to be personally directed, and the small concern is in a parlous way beside the great public company. The large firm is able to considerably reduce the proportion of management expenses by distributing them over a larger volume of work. It is also able to extend the division of labour and to introduce and suitably employ the most efficient machinery. It is, able to buy in large quantities and, therefore, more cheaply; to make consignments of goods in bulk and, therefore, at lower rates, and in many ways both in buying and in selling to overreach its smaller rival . . .

The sweating underground master-baker is out-competed by the eight hours day machine bakery. The struggling tobacconist, tea dealer, and the like, are being crushed by the branches of the great distributing trusts. The small cycle maker is losing ground before the great Coventry companies, and on all sides a similar process is going on . . .

The working class now runs industry to its own misery for the profit of its oppressors, but the day is near when it should take those industries that have been built up with its blood and sweat and transform them from means of profit for a handful of parasites into the means of its deliverance from slavery and degradation.

(From an article “ Industrial Democracy.” in the
 "Socialist Standard,” July, 1907.)

50 Years Ago: The Concentration of Capital (1959)

The 50 Years Ago column from the January 1959 issue of the Socialist Standard

“For while on the one hand the concentration of the separate Capitalist concerns into fewer hands is proceeding, on the other hand with the development in the division of labour the mutual dependence of the seemingly independent undertakings is growing. . . . This mutual dependence, however, becomes continually more a one-sided dependence of the small Capitalists upon the larger ones. . . . Many Capitalists having the appearance of independence, yet subservient to others, and many Capitalist concerns that appear to be independent, are in reality merely branches of one huge Capitalist undertaking."

[From the Socialist Standard, January 1909.]

Cooking the Books: Big Fish Swallow Small Fish (2013)

The Cooking the Books column from the April 2013 issue of the Socialist Standard

Interviewed on Desert Island Discs on BBC Radio 4 on 3 February, Sir Terry Leahy, former chief executive of Tesco, said that ‘the death of the high street is progress’, adding that ‘the loss of some shops was a price worth paying for the lower costs at supermarkets’ (Times, 4 February).

He would say that, wouldn’t he? But the expansion of supermarkets at the expense of small high street shops confirms Marx’s view that one of the tendencies of capitalism is the concentration and centralisation of capital.

At the turn of the last century this was challenged by critics of Marx, but the whole of the last century confirmed Marx’s contention and it is no longer challenged by bourgeois economists. All sectors of the capitalist economy are now dominated by a handful of firms. Economists have even invented a new word to describe this – ‘oligopoly,’ or the domination of a market by a few sellers. Food retailing is no exception. In Britain this is dominated by just four supermarkets: Tesco, Asda, Sainsbury’s and Morrisons.

Marx put it this way:

‘The battle of commodities is fought by the cheapening of commodities. The cheapness of commodities depends, all other circumstances remaining the same, on the productivity of labour, and this in turn depends on the scale of production. Therefore the larger capitals beat the smaller.’ (Capital, Volume 1, chapter 25, section 2)

So, the supermarkets outcompete the smaller high street shops because, being bigger, they can sell more cheaply. Sir Terry is right on this point, but is he right when he says that the closure of many small shops that this results in is ‘progress’ and a ‘price worth paying’? Many disagree, especially the small shop-owners but also, on the political level, the Green Party which specialises in spearheading campaigns against the opening of new supermarkets as this conflicts with their vision of a smaller-scale capitalism.

People, however, have been voting with their feet – or their cars – and deserting the high street shops for the supermarkets. For most, this is an economic necessity, as to make ends meet they have to shop where the prices are lower.

Also, the ‘lower costs’ that Leahy mentions benefit the capitalist class generally since, in keeping the cost of living lower than it would otherwise be, they also keep down the amount employers must pay in wages to allow their employees to maintain their working skills. In other words, they lower the costs of production generally.

As long as capitalism lasts and by its very nature, supermarkets are going to triumph over high street shops. It is true that some small shops can and do survive by selling better quality goods at a higher price, but these will only ever be patronised by the higher paid. The Green Party will never be able to realise its nostalgic dream of a small-scale, more human capitalism.

Socialists take a different position. In socialism there will be neither supermarkets nor small shops, just distribution stores and centres from which people will be able to take what they need without having to pay. They will all be ‘Payless.’

Concentration of Industry (1967)

From the January 1967 issue of the Socialist Standard

Under capitalism wealth takes the form of capital. Wealth is used to produce more wealth not to satisfy human needs but to make profits. Most of these profits are re-invested and in this way capital accumulates. What forces the capitalist to re-invest his profits (rather than consume them all in riotous living) is competition. Each capitalist competes against other capitalists for a share of the market. This means he must run ever faster to stand still. He must use his profits to buy machinery that will cheapen his costs. This has certain technical effects: it leads to an increase in the size of productive units. This competition between capitalist enterprises is the motive for increasing productivity.

But competition has another result. It tends paradoxically to reduce the number of competitors. As the technical process becomes more complex and costly only large enterprises can survive. The weak and inefficient go under and their wealth passes into the hands of those who survive. Thus industry becomes controlled by fewer and fewer enterprises.

This whole social process makes Socialism a practical possibility. Ever-increasing productivity makes a society of abundance possible. Socialised methods of production make the private ownership of socially-produced wealth outdated—and worse, a fetter on production. As control of industry is centralised into fewer and fewer enterprises democratic social control becomes possible. Thus does capitalism prepare the technical basis for Socialism.

Marx, the man who did so much to put socialist theory on a scientific basis, when he was studying capitalism over a hundred years ago discovered this tendency towards the concentration of industry.

A recent study of this subject was published in The Journal of the Royal Statistical Society in 1965 by Alan Armstrong and Aubrey Silberston under the title “Size of Plant, Size of Enterprise and Concentration in British Manufacturing Industry 1935—58”. For this study they used the 1958 Census of Production and previous studies. Their conclusions were:

  Output has risen greatly since 1935, but the number of plants has risen much less, and in recent years has been falling. There has been a movement towards fewer, larger plants in most industries . . .  Further the average size of the largest plants, measured by employment, has in general increased, and large plants now account for a higher proportion of total employment in nearly all industrial groups than formerly. The same is true of their share of total output. Finally, plants are, in general, being operated by fewer enterprises, and the extent to which many industries are dominated by a few “giant” enterprises seems to be increasing.

(By plant is meant “premises under same ownership or management at a particular address”; by firm “one or more plants under the same trading name”; by enterprise “one or more firms under common ownership or control”.)

One of their tables, reproduced here, is particularly revealing.

A further table shows the percentage of workers employed by the largest three enterprises in some “industries” (as defined by the Census).

Employment is used rather than output as it is easier to measure. But as the larger enterprises will tend to be more efficient the concentration in terms of output will be greater than the figures given here. For oil refining the percentage is 84; for man-made fibres 81; for sugar between 70 and 91; for Tobacco between 66 and 85; for watches and clocks 70; for margarine between 59 and 75; for steel tubes between 49 and 79; for asbestos 63; and for soap, detergents and candles and linoleum both 60. The top four enterprises in dyestuffs employ 88 per cent of those in the industry and in cement between 71 and 85.

Although both Tories and Labourites praise competition and denounce monopoly they have long since ceased to tilt at the windmills on this point when in office. They accept—and even encourage —the concentration and the centralisation of control of industry. A White Paper put out in January 1966 spoke of setting up an Industrial Reorganisation Corporation just to encourage concentration. The White Paper stated:

  The need for more concentration and rationalisation to promote greater efficiency and international competitiveness of British industry, which was emphasised in the National Plan, is now widely recognised.

and went on:

  There is no evidence that we can rely on market forces alone to produce the necessary structural changes at the pace required.

Hence the IRC. There’s no talk of protecting the small man here.

On this point no defender of capitalism can deny that the early Socialists were right, though they will of course deny where it leads: the social ownership and democratic control of the means of production.

Adam Buick

Editorial: Neither London nor Brussels, but World Socialism (2012)

Editorial from the January 2012 issue of the Socialist Standard

No wealth is produced in The City. It is a place where the proceeds of working-class exploitation transformed into rights to a property income are the subject of trading, speculation and gambling. Around this has grown up a whole range of “financial services” – wheelers and dealers of one kind or another – vying for a share. In short, it is entirely parasitic on those parts of the world economy where wealth is actually produced by those working there.

So – apart from the fact that the Conservative Party has always been committed to defending the interests of The City, going back to the time when it was the place through which the loot plundered from the British Empire was channelled – why did Cameron make such a fuss about defending The City “from Europe” and expect people to think that this was a good thing? After all, is not The City the habitat of the same bankers that the media has been vilifying since 2008? It is, but they’ve got him over a barrel just as they had the previous Labour Government.

According to the Times (12 December), the financial services sector (not just The City) makes up ten percent of UK GDP and contributed £53 billion as taxes for the upkeep of the government. In addition, The City achieved a “trade surplus” of £36.4 billion, a measure of how much surplus value produced in the rest of the world it sucks in. Clearly, The City is an important part of the British capitalist economy which no government can ignore. But The City is not the only section of the capitalist class.

There are also the businesses producing for export. It was precisely to further their interests by gaining them free access to a wider European market that Britain joined the “Common Market” in the first place. They still benefit from the single market with its common standards and regulations and do not want Britain to withdraw from the European Union. To placate them, Cameron has had to make it clear that the government has no intention of doing so.

He did win the plaudits of his backwoodsmen, the Eurosceptics, but they represent small businesses producing for the home market (and financed by some bigger businesses in the same position). They want a referendum on withdrawal, which they expect to win. It is precisely because they could well do so that no government is going to hold one. They are not there to govern on behalf of small businesses but of Big Business.

This is a dispute between different sections of the same capitalist class which should be left to them to settle for themselves. No working class interest is involved. We don’t care whether or not there is a referendum on the matter and, if there is, wouldn’t take part in it except to write “World Socialism” across the ballot paper. As socialists we refuse to pander to petty nationalism but work to promote a world without frontiers where the Earth’s resources have become the common heritage of all.

Archetypal Fat Cats (2004)

Book Review from the September 2004 issue of the Socialist Standard

Bad Company: The Strange Cult of the CEO by Gideon Haigh. Aurum £6.99

They used to be called something like ‘general manager’, but nowadays the main term for the head of a big capitalist company is ‘chief executive officer’. While they are nominally salaried employees, their pay as archetypal fat cats is so high that they are in fact clearly members of the capitalist class.

It was the growth of limited liability from the early nineteenth century that gave rise to the modern capitalist corporation and hence to the CEO Firms were originally run by their founders (or their heirs), but the owners faced the debtors’ prison if they went bankrupt. So few would buy shares in a company unless they could be personally involved in supervising how it was run. Limited liability meant that shareholders were no longer personally liable for any misdeeds or bankruptcies, so owners could delegate day-to-day control to a salaried manager, with a board of directors overseeing the whole thing.

As the title of this short volume suggests, the CEO has become a kind of cult figure, with in many cases a celebrity status and a pay packet to match (averaging over $30 million a year in large US companies in 2002, for instance). Many CEOs work long hours, apparently, though of course a lot of this time is spent in luxury hotels and swanky restaurants, and they are seemingly surprised when their employees fail to share their taste for sixty-hour weeks. Their income is reinforced by the curious idea of a ‘guaranteed bonus’, and of a ‘golden parachute’, paid to them if they are sacked by the board of directors.

And what does a CEO do in return for this generous remuneration? It’s clear that they do not in any real sense run the company, since big corporations are far too complicated to be managed by individuals. Rather, they concern themselves with the company as a business, often having little detailed idea about what it actually produces, and give orders that others have to implement. The impression gained from Haigh’s book is that if the share price keeps rising, irrespective of any medium- or long-term benefits to the company, then shareholders and directors are happy. Reducing costs by cutting staff is a favourite, and none too sophisticated, approach.

With golden parachute in pocket, a number of CEOs go into politics - President Bush’s cabinet, for instance, is full of them, from Dick Cheney to Donald Rumsfeld. As Haigh quips, “the Bush administration is more a CEOcracy than a theocracy.” The extent of this cosying-up is fairly new, but governments do not have to be full of ex-businessmen in order to serve capitalist interests.

Haigh makes the useful point that, while workers are urged to keep wage demands in check so that they can compete with other workers (especially those in other countries), CEOs instead always want to be paid more so as to be in line with their counterparts overseas — the idea of ‘internationally competitive’ has different meanings for bosses than for workers. While he is well aware of the absurdities of CEO pay, he has some odd ideas about the way capitalism works. For instance, he claims that “Companies do not exist to make profits; they make profits in order to exist” He seems to think this is an important correction to a common myth, but in whichever version it just means that companies are motivated by profit-making. Nevertheless, his book does give a useful picture of what CEOs do and don’t do, and of why we have no need of them and their fellow-exploiters.

Paul Bennett

Why doesn't big business support a national health service?

Cross-posted from the blog, Stephen's Blog.

It is often argued that a "single payer" health insurance system run by the federal government or a national health service would be in the interests of American big business apart from the health insurance companies. The growing burden of healthcare costs on the economy would be brought under control, and companies would no longer have to pay insurance premiums for their employees. Companies in Britain and Canada are quite happy with the national health service in those countries.

So why does big business not promote a real healthcare reform? This is the question asked by Doug Henwood in Issue 120 of his Left Business Observer (a publication that I highly recommend for its astute analysis of American economic and political developments; see here).

Apparently some people offer a "web of influence" explanation that focuses on interlocks (overlapping membership) between insurance companies and other companies and on the role of insurance companies as a source of finance for other companies. Henwood presents detailed evidence to show that these are not very significant phenomena.

Basing himself on testimony from researchers who have interviewed top executives on the issue, Henwood states that some (perhaps even many) executives support "single payer" in private but are reluctant to make their views public for two reasons.

First, they worry about the possible reaction of other firms with which they do business. Small companies especially are considered hostile to "single payer." They do not stand to gain in terms of costs because they do not provide health insurance to their employees, while they would have to bear part of the additional tax burden. So they would see such a reform as an attempt to shift costs from big business to small business.

Second, they are afraid of "encouraging would-be expropriators." One informant formulates this fear as follows: "If you can take away someone else's business -- the insurance companies' business -- then you can take away mine." In other words, the politics of capitalist class solidarity trumps the economics of cost reduction.

Henwood adds another consideration: "Employers like workers to feel insecure. Fear of losing health coverage makes workers less willing to strike or resist pay cuts or speedups."

At least in this case, it is misleading to view reform politics solely as an arena of conflict among diverse business interests. It is also an arena of class struggle.

Stefan