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# State Platform Capitalism

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2.3 Platform Capitalism

[W]hat is internet infrastructure? Of course, there are data centres and massive server farms. There are devices produced by a handful ofcompanies, and operating systems . . . we must also include labour and practice, content moderation, device manufacture in Shenzhen, rare earth mineral mining, etc. – all of which is infrastructure . . . What affordances sit below the thing we are seeing on the surface? Who owns those affordances? These are the questions we should be answering. (Meredith Whittaker et al. 2020)

As state capitalist practices expanded during the 2010s, observers fixated on another, perhaps more dazzling, trend: the emergence ofplatform capitalism. More than simply the digitalization of economies and societies, platform capitalism is characterized by the astonishing ascendance of platform companies to the heights of the global economy (Table 1). Observers of Forbes’ Global 500 ranking of top corporations in 2007 would not find a technology company near its top-25 positions, which were dominated by oil producers, auto firms, and banks. But digital behemoths like Amazon, Google/Alphabet, and Apple skyrocketed to the top ofsuch lists in the decade after 2008. As of2025, seven ofthe world’s twenty-five top firms by market value are platform businesses (Microsoft, Apple, Amazon, Alphabet, Meta, Tencent, and SAP; see Table 1). Other major hardware firms generate the bulk of their businesses by selling hardware and services to these digital giants (NVIDIA, TSMC, Broadcom, and ASML). And manufacturers of digital devices such as Samsung and Tesla employ platform business models, as does the retailer Walmart in its online marketplace.

Platforms, many ofwhich predate the global economic crisis, grew rapidly in the post-crisis era. This is in large part because they offer a business strategy suited to a world of slow growth and low interest rates (Srnicek, 2017; Davis, 2022). Platforms’ business strategies can in this way be understood as an ‘organizational fix’ to the challenge posed by secular stagnation of economies. In the 2010s, Western financial sectors were flush with cash thanks to quantitative easing, bond purchasing programmes, and other mechanisms put in place to prop up the financial sector. Of the estimated \$35 trillion in credit created by central banks between 2009 and 2022, Varoufakis (2024) estimates that a large majority of the share invested in productive assets found its way into the platform economy. This took place via myriad mechanisms, including saturated corporate bond markets, which themselves generated soaring stock markets as investors became prepared to pay a premium for tech equity; a generalized inflation in asset prices; and a flood of private equity and venture capital into technology startups (which could be acquired, or have their innovations acquired, by hyperscalers) (Kenney and Zysman, 2019; Rikap, 2024).

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Rather than deploying this capital towards traditional competition in (saturated) global markets by offering specific goods and services, platform firms instead aim to build business ecosystems in which their infrastructure intermediates exchanges between external users, developers, and (sometimes) advertisers (Kenney and Zysman, 2016). This requires typically very considerable investments in both tangibles and intangibles, R&D, and outlays on user recruitment (Klinge et al., 2023). Because platforms’ services are substantially intangible, their low marginal cost affords opportunities to achieve scale and scope economies at breakneck speed, supported by the use of cloud computing (Narayan, 2022). Once critical scale has been achieved, the switching costs imposed by network effects serve as a powerful way of locking-in user bases. Margins on transactions are often tiny, but low margins can be offset with extremely high volume. And platforms operate across multiple horizontal business lines, using cross-subsidization to build attractive multi-service ecosystems (Thomas et al., 2024). Given their privileged access to financial markets, profitability is often less of an imperative (at least in the short term) for platform firms than their ability to scale. According to one estimate, platform firms will soon come to mediate one-third ofall global economic activity (Dietz et al., 2020).

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Broadly speaking, the open architecture of a platform constitutes a coreperiphery model, in which core technologies are under the direct control of the platform firm, while third-party designers generate complementary innovations (Rodon Modol and Eaton, 2021). External developers’ (complementors) innovations further enhance network and lock-in effects. The Apple Store, for instance, relies on third-party companies to build the majority of iOS apps which make the iPhone a useful and attractive device. But because platform firms maintain ownership of and control over their cores, they retain the authority and capacity to rewrite the rules (protocols) through which ecosystem users interact (Galloway, 2004). A core goal of platform protocol is to prevent so-called ‘multihoming’ and deepen user lock-in via technical means. Consequently, in certain sectors platform firms have become unavoidable intermediaries, mediating the exchange of goods and services amongst users within enclosed digital spaces (Langley and Leyshon, 2017).

As a function of being unavoidable intermediaries in transactions and exchanges, platform firms are able to leverage control over protocol to influence everyday habits and practices (Grön et al., 2023). Locking users into ecosystems enables platforms to extract payment from value circulating across platform networks (Sadowski, 2020; Arboleda and Purcell, 2021), but also to write the rules by which they interact. Staab (2024) consequently argues platforms represent the rise ofprivatized marketplaces. Innovations like algorithmically generated prices and supplier rankings systems disrupt market pricing mechanisms to the extent that the integrity of public markets – the cornerstone of capitalist economies – is potentially threatened. Furthermore, platforms’ control over protocol also affords them enormous power to reshape the business processes of firms which use their infrastructure (Nowak et al., 2022). Consider, for instance, the ability of Apple to exert control over third-party apps in its App Store via terms of service.

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Platform power is predicated upon the capability to integrate technology ‘stacks’: assemblages of global-scale computational hardware and software. Digital platforms constitute a user-friendly interface for efficiently navigating this subterranean ‘infrastructural complex of server farms, massive databases, energy sources, optical cables, wireless transmission media, and distributed applications’ (Bratton, 2016, 70). While this assemblage of devices and software is intrinsically open (‘the open web’), platforms seek to wall off access to sections of these stacks using technical barriers, IP law, restricted access to APIs, and algorithmic filtering and curation. They monopolize the ‘walled gardens’ they create in a way that was impossible with the open internet (Plantin and De Seta, 2019; Peck and Phillips, 2021). In this way, platform competition is distinct from typical competition in lines for specific products or services. For Jacobides (2019), ‘in a growing number of sectors, the firm and even the industry have ceased to be meaningful units of strategic analysis. We must focus instead on competition between digitally-enabled designed ecosystems that span traditional industry boundaries and offer complex and customisable product-service bundles’.

Like earlier vertically integrated corporations, platforms aim to minimize transaction costs and exercise market dominance. Yet, they differ markedly in some ways. Rather than employing vertical integrated command structures (Chandler Jr, 1977), they instead operate by organizing market interactions digitally, and exerting control through ecosystem governance via ‘terms of service’ commands rather than managerial hierarchies. The power to orchestrate and govern without owning represents a powerful evolution of corporate control strategies (Grabher, 2025).

The extreme corporate concentration and financial dominance of giant platform firms is represented by a distinctive economic geography with two main poles (Kenney and Zysman, 2020). The United States dominates, with the combined value of the so-called ‘magnificent seven’ technology firms (Alphabet, Amazon, Apple, Meta, Microsoft, NVIDIA, Tesla) representing about a third of US stock market value as of May 2025. China represents another pole of digital power in the global political economy (Figure 1). The platforms domiciled in both these countries have immense extraterritorial power, given they exercise considerable control over most of the world’s technology stacks (Mayer and Lu, 2025)

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2.4 State Platform Capitalism

Rather than cutting against one another, the distinct logics of state and platform capitalism have coalesced in unanticipated and generative ways. The specific political-economic affordances that characterize the platform business model are increasingly recognized as a vital source of power by states. As such, rather than simply trying to curtail platforms’ growth, states seek to govern through platforms: to instrumentalize and mobilize them in pursuit of geostrategic objectives. At the same time, in a world characterized by competition and growing calls for platform regulation, home state backing is becoming indispensable for US and Chinese platform firms to maintain and expand the dominance of their digital ecosystems in the global political economy. It is this increasingly symbiotic relationship between states and platform firms that we refer to as state platform capitalism (SPC).

We conceptualize SPC as the collaborative and reinforcing individual efforts of states and platform firms – principally in the United States and China – to compete to establish and maintain control over the technology stacks that serve as the underlying infrastructure of globalization. The power exercised by digital platforms derives from their technical and corporate control over the computational infrastructures and business ecosystems upon which a growing share of global economic activity depends. For states, platforms represent potential ‘points of infrastructural control [which] can serve as proxies to regain (or gain) control or manipulate the flow ofmoney, information, and the marketplace ofideas in the digital sphere’ (Musiani et al., 2016, 4). Control over the technology stacks and socio-economic exchanges which platforms orchestrate is central the competitive dynamics ofSPC. Given the ongoing expansion ofstates’ definitions of‘national security’ and the geopolitical competition for network centrality, it is unsurprising that platforms have become central to great power rivalry between the United States and China (Gray, 2021; Shen and He, 2022).

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Most major digital platform firms are domiciled in either the United States or China, and both states are deploying a barrage of state capitalist practices to establish control over digital platforms and enlist them in pursuit ofgeostrategic objectives. Three distinctive competition dynamics result, which we outline here in turn as: infrastructural platform geopolitics, digital dependencies, and cross-stack rivalry.

Infrastructural platform geopolitics has emerged as states have come to recognize the extraterritorial power potentials of transnational infrastructures (Westermeier, 2020; Abels and Bieling, 2024), while platforms have increasing taken on infrastructural properties (Plantin et al., 2018; Shen, 2022a). Some platform firms can be directly weaponized (Farrell and Newman, 2023) by their host states in nakedly geopolitical ways. For instance, WikiLeaks was famously denied vital services by internet platforms such as Amazon Web Services, and EveryDNS at the behest of US government pressure (Tusikov, 2021), while the second Trump administration has ordered a ban on access to US chip design platforms for Chinese firms. However, for the time being, such weaponization remains the exception rather than the norm, and this tremendous power to deny adversaries access to (or otherwise weaponize) platforms remains latent. Indeed, excessive weaponization initiatives are likely to reduce the appeal of platforms and induce users to switch to other platforms despite the cost. Instead, platforms’ infrastructural power derives from how they entrench power relations by monopolizing key passage points, while rerouting, ordering, and governing flows of data and capital in ways which potentially redound to the benefit of their home states (Westermeier, 2020; Bakonyi and Darwich, 2024; Hardaker, 2025). To this end, states seek to secure favourable regulatory environments (both at home and abroad), preferential financing, and forms of strategic endorsement that enable platforms to both scale and embed themselves in technology stacks.

This leads us to the second dynamic: fostering digital dependencies. Many countries are increasingly dependent upon US and Chinese platforms since they underpin access to the global economy (Mayer and Lu, 2025). Maintaining this dominant position is key to the profit strategies ofplatform firms, and it upholds the power asymmetries between states. Through lobbying, financial support, and implanting platforms with in bilateral agreements and initiatives, states seek to render third countries’ technology stacks critically reliant upon their platform infrastructures and embed them in overseas technology stacks. At the same time, states and platforms collaborate to centralize and police access to the critical resources which sustain their dominance – including compute power (as in licensing regimes for NVIDIA accelerator chips and remote AI datacentre access) and data flows (especially for AI model training). Limiting interoperability and resisting multihoming by third countries are key targets for platforms’ home states in fostering digital dependencies.

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Finally, and as discussed further in the next section, states and platforms collectively practise forms of cross-stack rivalry. Platforms compete as sprawling business ecosystems rather than price or quality of individual product lines. This can limit rivalry and competition between platforms from the same home state, giving rise to ‘frenemy’ relations or coopetition between platforms (Gupta et al., 2025). States may support the emergence of such cooperative relations in overseas markets in efforts to cohere third countries into the national technology stack ofthe United States or China. Platforms’ extraterritorial expansion may be supported by such a state-facilitated bundling of functions, as in shared investments in data centres, cabling systems, or other infrastructure that comprises digital stacks. Moreover, cooperative relations mean successful competition in one field (such as an overseas cloud market) is likely to redound to the benefit of platforms from the same home state.

None of this is to say that the interests of big tech platforms and home states are entirely aligned. They sometimes diverge and are subject to contestation and renegotiation. Platforms cannot be reduced to mere instruments of political power. Indeed, it is precisely because ‘platform ecosystems are not simply commercial mechanisms or state-controlled entities . . . [that] they are becoming more and more part of a global geopolitical contest’ (van Dijck and Lin, 2022, 65). In the following sections, we inquire more deeply into the specific mechanisms which drive platforms and states to cooperate in the global competition for digital dominance.

3 The US Stack

3.1 Introduction

In 2022, Eric Schmidt, former CEO of Google, issued a stark warning from a podium at the Capital Hilton Hotel in Washington DC. The United States risked falling behind China in the digital technology race:

It’s possible to imagine a dark future . . . Imagine that everything around you, everything you see in this room, has a component of Chinese values in it . . . free speech being restricted, being recorded, being surveilled. While China has achieved many impressive things, I would not want to live there . . . The real issue here is that we screwed up. We cannot get ‘5Ged’ again. I was part ofthe errors 20 years ago and 30 years ago in the semiconductor sector, where we collectively thought, ‘That’s fine, that’s not that important, we can figure it out, globalization will work.’ Meanwhile, we’ve ended up in a situation where my phone doesn’t work most of the time, whereas in China, where I may or may not be allowed back into, they have roughly a billion people on track to having a gigabit to their mobile phones in urban centers within the next year or two. (Schmidt, 2022)

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Schmidt was launching his new initiative, the Special Competitive Studies Project (SCSP). Explicitly modelled on Henry Kissinger’s ‘Special Studies Project’, the Rockefeller-funded bipartisan initiative which built public consent and enthusiasm for the massive military and technology investments needed to prosecute the Cold War, Schmidt’s SCSP would bring together leading industry figures and politicians to cement the consensus for public investments in digital technologies to counter the ‘China challenge’. He emphasized that the ‘unifying idea of SCSP is competition, both within the various players in our system and between countries. This competition makes us stronger, not weaker. We need to win that competition’ (Schmidt, 2022).

Schmidt’s close collaboration with the Biden administration came to an end with the return of Donald Trump to the White House. But the personal intimacy between big tech leaders and state managers did not. The front row of Donald Trump’s presidential inauguration at St John’s Episcopal Church in January 2025 was reserved for Google CEO Sundar Pichai, Meta CEO Mark Zuckerberg, Apple CEO Tim Cook, Amazon’s JeffBezos, and Tesla CEO Elon Musk – a clear signal of the privileged access to the levers of statehood to be granted to platform leaders. This section charts the central role ofplatform firms in driving the US global digital technology dominance, before examining how the state and platform firms are increasingly collaborating to defend this dominance in the face of growing Chinese competition.

3.2 The US Stack

The United States is home to the world’s most dynamic technology sector, whose firms dominate all nearly all key layers of the technology stack. Chip designer NVIDIA’s market capitalization is roughly equivalent to the top-forty publicly listed German firms, while Microsoft’s exceeds the entire FTSE 100 (Nikou Asgari et al., 2024). The United States has spawned the world’s largest platforms, whose global footprint is so ubiquitous that by some accounts it constitutes a form of ‘digital colonialism’ in its relations with other countries (Kwet, 2019). Moreover, the US tech sector is deepening its ties with the American state (González, 2024). Platform firms are central to this trend.

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Leading platform firms that emerged from Silicon Valley’s high-technology ecosystem began to develop increasingly close ties with the US government during the war on terror after 2001 (Weiss, 2014; O’Mara, 2020). Their relationship encompasses both widespread government contracting and an emphasis on public-private partnerships (PPPs) (Weiss and Thurbon, 2020). Federal institutions such as the National Science Foundation, NASA, DARPA, the SBA, and National Labs dole out substantial funding in support of research and development that is critical to the US digital economy (Mazzucato, 2013; Wade, 2017; Tassinari, 2018). Despite this financial support, however, US techno-industrial policy remains relatively decentralized – and rather than directly intervening and ‘picking winners’, policy is designed to steer and support innovation. Allen et al. (2022, 22) describe this as a ‘large, decentralized apparatus for innovation within the US federal government, in which scores of agencies, often working in a largely uncoordinated fashion, engage with private firms to promote innovative breakthroughs in a wide array of sectors’. While each of these agencies has independent priorities, an underlying but emergent strategy is increasingly discernible. The US government seeks to safeguard the dominant position of its platforms worldwide, while progressively incorporating them into the militaryindustrial complex, because they possess unique attributes that, when mobilized, augment long-term geostrategic objectives.

Military and national security interests consequently play an outsized role allocating funding in this uncoordinated funding environment. US capital markets continue to be the world’s largest and most liquid, accounting for around 40% of the world’s total equities (around four times that of China). Wall Street established powerful conduits in Silicon Valley VC during the 1990s and cemented the route to IPO via the NASDAQ, developing links between financial and tech capital have only grown in scope and scale since (Walker, 2006). Smaller tech firms enjoy uniquely abundant private capital markets, while Wall Street offers vast liquidity for IPOs or buyouts. But the influence of the US national security state looms large. Schwartz (2017, 327) describes it as a ‘vast technology enterprise spanning R&D, seed funding, commercialization, and both spin-off and spin-on of new technologies’. Private capital commonly follows in the wake ofbig bets placed on unlisted technology firms by the Department of Defense, since receiving funding from the US national security state (or one of its financial conduits) acts as a seal of approval for investors. These dynamics explain how, as Robinson (2020, 40) explains, the ‘Silicon Valley-Wall Street nexus becomes in turn interlocked with the militaryindustrial-security complex’.

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There is a long history of cooperation between the US government and American defence contractors. Yet the increasingly intimate relationships between elites in Washington and Silicon Valley, and dense financial links between public and private entities in the tech sector, represent a qualitative shift in the way that nominally civilian firms are integrated into security procurement. The US government not only offers financial resources, but it has also expanded control over tech firms – and platform firms in particular – through state capitalist regulatory instruments that are justified by the threat posed by China (Gertz and Evers, 2020). For instance, the Trump administration’s national cyber strategy published in 2018 labelled China a ‘strategic competitor’, concluding that the ‘vitality of the American marketplace and American innovation’ in the tech sector is a matter of national security (The White House, 2018, 14). The strategy envisions a symbiotic relationship between the state – namely its defence-related organizations – and American tech firms. This was echoed by the DoD’s (U.S. Department of Defense, 2018, 9) Cyber Strategy, which, in short, is designed to:

defend forward, shape the day-to-day competition, and prepare for war by building a more lethal force, expanding alliances and partnerships, reforming the Department, and cultivating talent, while actively competing against and deterring our competitors. Taken together, these mutually reinforcing activities will enable the Department to compete, deter, and win in the cyberspace domain.

Platform firms have become an important pillar of national security strategy because they provide vital infrastructural and technological services which state agencies do not possess, while their R&D budgets dwarf available public resources and incumbent defence contractors. The Defense Innovation Unit reported that US platform giants outspend its top defence contractors (e.g., Lockheed Martin and Raytheon) on R&D by 11-to-1 (Brown, 2021, 13). Google’s 2024 R&D spending amounted to \$45 bn, around five times the budget of the National Science Foundation. Collaboration offers state agencies the opportunity to influence platforms’ R&D strategies, as in the National Cyber Strategy that will ‘use its purchasing power’ to shape innovation and influence firm behaviour in support of defence goals (The White House, 2018, 8). The ‘third offset’ – a military strategy aiming to leverage private sector innovations for defence purposes – became embedded in the 2018 National Defense Strategy (Gentile et al., 2021). Ultimately the military-industrial-security complex is in the process of reworking state-business relations in the platform sector, with the objective of aligning the business strategies of the world’s largest platform firms with Washington’s geostrategic imperatives.

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