State Platform Capitalism

Cambridge Elements

Reinventing Capitalism

State Platform Capitalism

Steve Rolf and Seth Schindler

ISSN 2634-8950 (online) ISSN 2634-8942 (print)

Cambridge Elements

Elements in Reinventing Capitalism

edited by

Arie Y. Lewin

Duke University

Till Talaulicar

University of Erfurt

STATE PLATFORM CAPITALISM

The United States, China, and the Global Battle for Digital Supremacy

Steve Rolf

University of Sussex

Seth Schindler

University of Manchester

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DOI: 10.1017/9781009446594

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State Platform Capitalism

The United States, China, and the Global Battle for Digital Supremacy

Elements in Reinventing Capitalism

DOI: 10.1017/9781009446594 First published online: November 2025

Steve Rolf

University of Sussex

Seth Schindler

University of Manchester

Author for correspondence: Steve Rolf, steverolf@gmail.com

Abstract: Global capitalism is being reshaped by two major trends. States have become increasingly interventionist, reshaping their economies in response to crises and geopolitical tensions. Secondly, digital platform giants have emerged from the United States and China that concentrate political economic power in private hands. This Element argues that these trends are increasingly symbiotic. Digital platforms are being folded into the spiralling rivalry between the United States and China. As states tap into their extraterritorial governance capacities by exerting control over platforms, platform firms leverage state support to pursue and expand their internationalization strategies. Therefore, the US–China rivalry is increasingly being fought at the level of the technology stack, a dynamic the authors call state platform capitalism. The Element examines four fields in which this novel regime of competition is at play: digital currencies, technical standards, cybersecurity, and smart cities. This Element is also available as Open Access on Cambridge Core.

Keywords: Political Economy, State capitalism, Digital platforms, digital business models, geopolitical conflict

© Steve Rolf and Seth Schindler 2025 ISBNs: 9781009619714 (HB), 9781009446587 (PB), 9781009446594 (OC) ISSNs: 2634-8950 (online), 2634-8942 (print)

Contents

1 Introduction 1
Part I A New Paradigm 8
2 State Platform Capitalism: Theory and History 8
3 The US Stack 21
4 The Chinese Stack 30
Part II Spheres of Competition 42
5 Digital Currencies 43
6 Cybersecurity 48
7 Standards 54
8 Smart Cities 59
9 Conclusion 64
References 66

1 Introduction

1.1 Calling All Influencers

Visitors to the US Capitol building in Washington, DC, on March 22, 2023, were greeted by a curious scene. A group of demonstrators chanted slogans, bore placards, and spoke to a group of reporters gathered at the scene. But their immaculate hairstyles, expensive watches, and luxury sunglasses betrayed that these were not campaigners against war or racial injustice. They were social media influencers, and their demand was to ‘Keep TikTok’. They hoped to influence congressional representatives as they debated the fate of the short video app.

Inside Congress, lawmakers grilled TikTok’s US CEO, Shou Zi Chew, on the company’s handling of US citizens’ data, the nature of its relationship with its Chinese parent company ByteDance, and its purported links to the Chinese Communist Party (CCP). The demonstrators outside were unable to influence the mood on Capitol Hill. Evidently unsatisfied with Mr. Chew’s answers, in March 2024, the Senate passed a bill forcing ByteDance to sell its stake in TikTok or face a ban on operating in the United States. The ‘TikTok Bill’ (Protecting Americans from Foreign Adversary Controlled Applications Act, PAFACA) will help ensure that the US digital media ecosystem remains under firm control of domestic firms like Meta (Facebook), X (formerly Twitter), and Google.¹

These events are illuminating for three reasons. First, they highlight how growing concerns about the social power of digital media platforms – including their data collection and sharing practices, and the impacts of their algorithms on public life – are increasingly driving oversight and policymaking efforts. Second, they represent the US government’s political response to TikTok, which is the first major Chinese digital platform to succeed in the US market (since followed by retail platform apps such as Shein and Temu). The case suggests the United States is willing to use the full spectrum ofits policy toolkit to inhibit Chinese platforms from gaining market share in the United States, and to protect the dominance of its digital platform firms against Chinese competitors. Third, they demonstrate that platforms have become increasingly central to the broader US-China geopolitical rivalry, a competition which is increasingly reshaping world politics and the economy.

How did apparently innocuous internet platform companies like TikTok, Meta, and Google – known principally for their banal functionalities like short video content and search optimization algorithms – become entangled with the logic of a global geopolitical conflict? As we show in the following pages, platforms increasingly provide the infrastructure undergirding the world’s social and economic networks. Not only do they facilitate and intermediate the countless exchanges that comprise much of daily life, but they increasingly hold the power to (re)shape how, and even to decide if, these interactions take place. This infrastructural role affords them tremendous power, because they write the rules – both metaphorically and literally, in devising their ‘terms of service’ – by which other social and economic agents interact. If ‘code is law’, as Lawrence Lessig (2000) once wrote, then platforms represent planetary-scale judiciaries. What is more, platforms’ infrastructural power – manifest in their vast capital, compute, and data resources – is placing them at the centre of the global race to develop and commercialize artificial intelligence (AI) (Nitzberg and Zysman, 2022; van der Vlist et al., 2024).

State Platform Capitalism

1

At the time ofwriting, President Trump appears to have secured a deal, where ByteDance will sell TikTok to a consortium of investors apparently led by Oracle’s Larry Ellison. Bytedance will retain a minority stake in the new firm, to which it will license its algorithm. Oracle will store user data within the US and control how the TikTok algorithm operates.

This steady accumulation ofpower by platform firms has not gone unnoticed in the corridors of political power. But, as we aim to demonstrate, the response to growing platform power from politicians has not been entirely hostile. In addition to curtailing some of the powers their domestic platform firms wield at home, governments in Washington, Beijing, and elsewhere have concurrently sought to bolster the global standing of their largest platform firms abroad. In this way, states are beginning to recognize the large potential for multiplying their power which can derive from harnessing platform infrastructure for public ends. And although platform firms are often hostile to new regulatory initiatives and regimes, they have increasingly partnered with states because of the economic and regulatory advantages that this affords.

1.2 Conflict and State Capitalism

Digital platforms did not arise in a vacuum. Their rise to become global economic powerhouses was propelled by the rules and institutions that underpinned neoliberal globalization in the 1990s and 2000s. The basic principle of US power after the Cold War was to open the world’s markets ever more deeply to free flows of investment, trade, and information. With the ‘Washington Consensus’, US policymakers pushed states towards ever-greater marketization, dismantling the edifice of post-war statism, and empowering global institutions such as the WTO to invigilate these new rules. The United States privatized the networking infrastructure which had emerged through its efforts to interconnect local networks under the auspices of D/ARPA, while encouraging (through consent and coercion) third countries to follow suit (Tarnoff, 2022). The new US internet firms which emerged consolidated market power by amalgamating the hitherto local networks built up within the United States into a national ‘internet’. But they also spread rapidly across borders and markets, protected by a global IP regime and encouraged by the liberal prescriptions for the world to pursue development and growth through networked integration (embodied by the WTO’s 1997 Basic Telecommunications Agreement).

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Reinventing Capitalism

Neoliberal globalization was underpinned by optimistic narrative of liberal peace underpinned by economic integration. In this ‘flat’ world, developing countries would supposedly be unencumbered by the demands of great powers or threatening neighbours. In exchange for opening their markets to firms from the developed countries, they could leverage their distinctive advantages to achieve growth and prosperity. Transnational economic integration instantiated a ‘partial shift of some components of state sovereignty to other institutions’ such as multinational corporations and international organizations (Sassen, 1996, 146).

However, neoliberalism did not simply erode state power (Comunello and Mulargia, 2023). Rather, some states and some firms gained considerable influence and control over the strategic flows and nodes that underpinned global networks, even as others saw their power wane. So even while economies became increasingly interdependent through radical increases in flows of goods, trade, and investment, power relations remained profoundly asymmetric. Critically, the United States was able to maintain its handle on many (if not all) of the key ‘chokepoints’ within transnational networks.

Much ofthis new architecture ofnetworked power remained hidden from view until conflicts over networks burst into the open during the first Trump presidency (Farrell and Newman, 2023). Trump’s first administration made clear that great power competition had not been superseded by globalization. Since he launched his ‘trade war’ on China early during his first term, the United States and China have become locked in an increasingly intense and all-encompassing rivalry increasingly analogous to the Cold War (Schindler et al., 2024). But in contrast to the Cold War, which produced a world divided economically into largely isolated territorial blocs, contemporary geopolitical rivalry is unfolding in the networked world that globalization built (Schindler and Rolf, 2024). Rather than a great unravelling ofglobalized networks, events since 2016 have driven states to radically expand their definitions of national security to include the ability to secure supply chains, access internationally integrated financial systems, and develop new technologies in innovation networks (Drezner, 2024). This expansive definition of national security – while it has encouraged states to make everdeeper interventions to securitize their economies – has not yet undermined globalization in aggregate (Babić et al., 2022).

State Platform Capitalism

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The state capitalist tools to which states have turned in pursuit of security and/ or geoeconomic leverage have deeper roots in the decades-long downward trend in global economic growth. The aforementioned neoliberal market reforms which drove globalization were supposed to allocate resources more efficiently and revive economic dynamism, but the results were underwhelming. The 2008 global financial prompted dramatic and long-lasting fiscal and monetary interventions to stabilize their economies and maintain liquidity. The quantitative easing undertaken by the US Treasury, combined with China’s stimulus spending, came to represent more of a new paradigm than stopgap measures. State-owned enterprises have experienced a comeback as states sought to pursue strategic investment programmes (IMF, 2020), and well-endowed sovereign wealth funds have purchased large stakes in leading private firms. Large-scale infrastructure investment also made a revival (Schindler and Kanai, 2021), in part as a way of mopping up surplus capital, while the complex central bank financial engineering required to prop up stock markets in 2008 never went away – resulting in perennial asset price inflation (Adkins et al., 2020). The economic and financial crises driven by the COVID-19 pandemic simply deepened these interventionist trends in both countries and beyond (van Apeldoorn and de Graaff, 2022).

Taken together these trends have been labelled as a ‘new’ form of state capitalism (Musacchio et al., 2015; Alami and Dixon, 2020b), most notable for the way in which it goes far beyond simple state-ownership to encompass a variety of novel interventionist strategies. And state capitalism has become wrapped up with geopolitical competition, as states vie to secure their economies against rivals through ever greater and deeper interventions (Alami et al., 2025). The emergent result is the rise of an increasingly multipolar world order, both increasingly geopolitically-fragmented while nevertheless marked by ‘deep’ forms of international economic integration both inside and between blocs (Lewin, 2024; Mezzadra and Neilson, 2024; Wijaya and Jayasuriya, 2024). State capitalist practices and their geopolitical corollaries have begun to remake the platform economy in dramatic new ways.

1.3 Platforms in the Ascendancy

State capitalism wasn’t the only major development to grow out of the 2008 global financial crisis. In the years of stagnation which followed, investment capital flooded en masse into the US tech sector. This fuelled an unprecedented investment boom, as start-ups sought to ‘hyperscale’ their way to market dominance by leveraging freely flowing venture capital (Klinge et al., 2023; Varoufakis, 2024).

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Reinventing Capitalism