There’s nothing new about regulating powerful tech companies
History tells us there’s nothing new in our debates about regulating powerful tech companies.
Billionaire venture capitalist Peter Thiel is an iconoclastic figure best known in recent years for demolishing the Gawker website.
Less well known, in this country at least, is his passion for setting up seasteads — permanent ocean dwellings that would be, in effect, new countries.
He’s among other rich Silicon Valley types who have promoted the radical idea of setting up territories outside the reach of government. In recent years, seasteading — an amalgam of sea and homesteading — has captured the attention of some keen to create their own precincts of corporate sovereignty. An associated movement advocates charter cities, free to set their own rules.
As academics Andrew Phillips and JC Sharman write in their new book, Outsourcing Empire, “the seasteading movement constitutes one of the most radical attempts to revive a form of corporate sovereignty within the international system”.
Thiel and co see these floating cities as a way to escape the “predation and corruption of national government”. They are designed to nourish entrepreneurs and guarantee personal freedom better than existing governments.
A very different version of corporate sovereignty is described in Phillips and Sharman’s book, a comparative history of the 19th-century company-states such as the English and Dutch East India companies and the Hudson’s Bay Company. From the 17th to the 20th century, the company-states, rather than sovereign states, drove European expansion. But unlike the seasteads, they worked hand in glove with governments rather than challenging them.
Even so, Phillips, associate professor of international relations and strategy at the University of Queensland, sees some intriguing connections.
“Silicon Valley has been an absolute catalyst for people coming up with ideas that look like the company-states,” he says.
“Peter Thiel is obsessed with this movement to set up basically independent corporate cities. Milton Friedman’s grandson is involved.
“You’ve got these incredibly powerful people in big tech who are saying: ‘We’re not public utilities so we shouldn’t be submitted to public regulation.’ And they’re fantasising about what this would actually look like in practice.”
Beyond the pale
In one sense it’s the company-state model taken to its logical extreme but, as Phillips and Sharman point out, the problem for seasteads is that today anything “even vaguely evocative of company-states is now beyond the pale”.
“Corporate sovereignty was once commonplace,” they write. “But now its afterlife can be found not in the real world of international politics but in the libertarian venture capitalists’ fantasies … this in itself is a tribute to the current universal dominance of the sovereign state, and to the unimaginability of a return to the not so distant world where companies were once kings.”
Phillips’s research background is in the way international systems change over history. His first book grew out of September 11 when he was in New York State.
“It sort of dramatised that for me and so my first book looked at military innovation and religious fanaticism as catalysts of change throughout history,” he says.
Colleague JC (Jason) Sharman is the Sir Patrick Sheehy professor of international relations at the University of Cambridge, where he is a fellow of King’s College. His research focus is regulation of global finance and international relations of the early modern world.
Phillips says the history of the company-states resonates with today’s debates around the public-private divide: “What does it mean to be a corporation? What is the legitimate distinction between what governments do and what corporations do? I think there are a lot of contemporary echoes.
“Take the big debate over the FAANGs (Facebook, Amazon, Apple, Netflix, Google, now Alphabet) and the question of whether something like Facebook warrants some kind of governmental regulation. We’re not suggesting Twitter and Facebook will ever enjoy anything near the power of the historical company-states. But the current controversies show that the boundaries of the public-private divide that we take for granted are historically contingent, often blurred and always contested.”
He says company-states were crucial actors in forming the modern international system, driving the first wave of globalisation. They were the forerunners of the modern multinational corporation, with extensive sovereign powers, armies and navies and practical independence. Some were more powerful than monarchs and they transformed the world through trade in commodities, people and ideas. They were the key mediators linking Europe with the rest of the world, with the right to declare and wage war and the ability to use violence to uphold their monopolies.
“It is impossible to see the company-states as merely mercantile concerns,” the authors argue. They were interested in profit but they were inherently political actors engaged in diplomacy, fighting wars and governing substantial domains. Or as Phillips says: “Europeans wouldn’t have been able to conquer the world without the company states. (Author) Niall Ferguson talks about Western civilisation’s killer apps. For me the company-state is clearly one of them.”
Outsourcing Empire: How Company-States Made the Modern World (Princeton University Press).