Big tech and the proliferating platform business model represented the best venue for capital seeking out returns in a broader environment of stagnation (Rikap and Lundvall, 2021). Rather than competing in oversaturated markets for particular product lines, platforms compete with one another to intermediate social and economic exchanges between users at scale (Srnicek, 2017). For platform firms, securing first-mover advantage is a matter of survival because they operate in ‘winner-take-most’ markets (Brynjolfsson and McAfee (2014). Success often means establishing a ‘digital ecosystem’ that serves as a ‘market maker’ insofar as users are locked in, network effects take hold, and rival platforms struggle to attract users or complementors (Gawer, 2022). After the 2008 crisis, the abundance of cheap capital combined with rock-bottom interest rates allowed platform firms to expand at breakneck speed. Profits became virtually passé as platforms focused on ‘growth at all costs’ – and often at exorbitant cost to investors. Capital was ploughed into (making or buying) innovations in software, but also very tangible assets such as data centres and network infrastructure. While they were slow to come, the gains being chased were real for those platforms that could establish a dominant position. After years of losses, Silicon Valley giants like Facebook, Google, and Amazon generated \$90 bn in profits in the pandemic year of 2020 (Tarnoff, 2022).
As platform firms have proliferated, they have come to intermediate an ever greater quantity of routine social and economic interactions. The burgeoning ‘platformization’ of everyday life means ordering food, hailing a cab, messaging a friend, or paying for goods is increasingly difficult – if not impossible – without the exchange being intermediated by one (or many) US technology firms. It is not just consumers who cannot avoid the platform giants. Global businesses and governments too have come to depend upon the data centres, software, networking equipment, and financial technologies owned and operated by platform giants to conduct their everyday business. Platforms have consequently become the critical infrastructure upon which other sectors of the economy and society rely for their everyday functioning. The newfound powers of such ‘private infrastructure’ providers have led to growing concern for state sovereignty and capacity (Rahman, 2018). Some have argued that their power has grown so large that they have suspended the rule of capitalism altogether (Varoufakis, 2024).
But despite what seems to be their growing global dominance, US tech giants do face mounting competition. The threat of regulation by foreign governments – so far held largely at bay by Washington – looms large (Bradford, 2023). But more strikingly, they confront mounting commercial competition from the country which contains their only serious rivals: China. Beijing inhibited the operations of Silicon Valley tech giants in China throughout the
State Platform Capitalism
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