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# State Platform Capitalism
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One objective of state financial support is to support the incorporation of platform and other high-tech firms into the defence sector. This requires more than an alignment of financial interests, and explains the growing integration between political and tech elites in Washington and Silicon Valley. For example, the Defense Innovation Board (DIB) was established in 2016, bringing together leaders from the private tech sector, venture capitalists and former military officers who advise the Department ofDefense on its technology policy. Its first chair was Eric Schmidt. The DIB (Defense Innovation Board, 2024) explains:
Peer and near-peer competitors are challenging U.S. primacy across a number of domains and technologies, and DoD must navigate shifting economic and industry environments to meet these challenges and achieve mission success. In this context, the DIB provides outside independent expertise to the Department to support the warfighter and encourage innovative best practices throughout the armed forces.
The DIB’s mirror image in the private sector is the America’s Frontier Fund (AFF). AFF is a tech-focused venture capital outfit, whose website announced that:
The time to act is now. We are in a great-power competition, and the United States is falling behind. By 2030, we risk losing our edge in microelectronics, AI, 5 G, and quantum to our adversaries. At a time when technology advantage is strategic advantage, this is not a risk we can take. (America’s Frontier Fund, 2022)
The AFF can boast tech, financial and governmental elites among its employees. Its Board ofDirectors has included former Secretary ofDefense Ash Carter and retired Lieutenant General H. R. McMaster, while its current CEO Gilman Louie previously served as the CEO of IQT (formerly In-Q-Tel), a public venture capital firm established in 1999 by the CIA and other US government agencies that receives well over \$100 m annually in tax revenue. IQT itself ‘focuses on the 15,000+ early stage venture-backed startup companies in the U.S. and select other countries’ (IQT, 2024).
Sustained efforts by both sides to integrate digital technologies with the US military explains the explosion of government contracts with Amazon, Google, Microsoft, Facebook, and Twitter since 2017.2 The CIA signed an initial \$600 m contract with Amazon Web Services (AWS) in 2013, and awarded a decadelong contract worth ‘tens ofbillions ofdollars’ to AWS, Microsoft Azure, IBM, Google, and Oracle in 2020 for cloud computing services (Konkel, 2020). Similarly, the National Security Agency (NSA) inked a US\$10 bn contract with Amazon in 2021 for cloud computing services (Gregg, 2021). Google has developed collaborative relationships with the CIA, US Navy, and Air Force as it develops a bid for the Joint Warfighter Cloud Capability contract with the Pentagon (Simonite, 2021). And the NSA (2022) recently established a Cybersecurity Collaboration Center it describes as a ‘groundbreaking hub for engagement with the private sector . . . to create an environment for information sharing between NSA and its partners combining our respective expertise, techniques, and capabilities to secure the nation’s most critical networks . . . [representing] a vital part of a whole-of-nation approach to cybersecurity’.
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2 See https://bigtechsellswar.com/.
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3.3 The American Pivot
Until recently, the United States largely pursued a ‘free’ global digital trade regime which upheld the dominance ofits platforms globally. However, Donald Trump’s message that free trade represented a cost to the US economy has since come to form a cross-party consensus on the need for mercantilist practices, especially in the digital sphere. The Biden administration committed to protecting strategic sectors within a proverbial ‘small yard’ by a ‘high fence’ that includes export controls, investment screening, and tariffs (Sullivan, 2022). Such initiatives signal a broad shift in US policy, in which the global and systemic significance of US digital platforms is recognized – and safeguarding their overwhelming power is an explicit objective requiring direct and explicit forms of intervention anathema to a free trade agenda. In addition to discouraging other governments from regulating US platform firms, this is done by limiting Chinese platform firms’ access to capital, technology, and markets.
The Clean Network Initiative (Table 2) was introduced by the Trump administration, and it represented the first major rupture in the field of digital policy. Whereas previous policy underpinned globalization and prioritized free trade, the Clean Network Initiative discouraged governments and firms from working with ‘high-risk’ Chinese firms such as Huawei and ZTE that are purportedly ‘required to comply with directives of the Chinese Communist Party’ (U.S. State Department, 2021). Six fields of regulation were identified, whose collective ambition was to ‘clean’ the technology stacks of third countries of Chinese operators.
The results of the Clean Network Initiative were mixed. While it attracted broad formal support, fewer countries were prepared to make the hard trade-offs involved in ending relations with Chinese firms. A number of countries did cease doing business with Huawei: Canada commissioned Ericsson, Nokia and Samsung to build its 5 G networks, while the UK banned the installation ofnew Huawei equipment in 2020 and plans to remove it entirely by 2027 (Payne and
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Fildes, 2020). While it impacted Huawei’s global operations, it failed to deal the Chinese firm a mortal blow. Huawei has since recovered and even strengthened its competitive position across a widening range of product categories and services. But despite mixed results, the Clean Network undeniably altered the course of US policy.
The Biden administration formally shelved the Clean Network Initiative, but it largely maintained and expanded the intent behind the Trump-era policy regarding technology diplomacy. The CHIPS Act,3 the Biden administration’s flagship technology sector initiative subsidizing domestic semiconductor production, includes ‘strong guardrails, ensuring that recipients do not build certain facilities in China and other countries of concern’ (The White House, 2022a). These guardrails dovetail with a welter of new export controls aimed to starve Chinese platform giants of the advanced chips and manufacturing technologies necessary for their development of advanced networking equipment, smartphones, and AI (Ryan and Burman, 2024).
While the business strategies ofUS tech firms were once premised on access to both the United States and China, the CHIPS Act and associated US policymaking increasingly forces firms to choose. Meta, Google, Apple, Amazon, and Microsoft all recorded lobbying interest over the CHIPS Act (Bordelon and Oprysko, 2023) and have shown little hostility to other measures towards containing China’s technology sector. US platforms are, as observed, heavily limited their ability to do business in China, while they often regard the revenue loss from such measures as a price worth paying to damage Chinese competitors. Indeed, firms seem prepared to go beyond the letter of the law. In May 2024, Microsoft announced it was offering 700–800 members ofstaffat its flagship Research Asia AI centre in Beijing relocation to the United States and elsewhere (Huang and Kubota, 2024).
In addition to supporting domestic semiconductor production, the United States seeks to inhibit Chinese firms from securing strategic positions in an increasingly substantial portion of the global digital ecosystem. Perhaps most notably, Washington has signalled that it would like to establish a regional trade deal that would inhibit the operations ofChinese platforms, particularly in Asia. The much-vaunted Indo-Pacific Strategy unveiled in February 2022 committed the United States to:
[P]romote secure and trustworthy digital infrastructure, particularly cloud and telecommunications vendor diversity, including through innovative network architectures such as Open RAN by encouraging at-scale commercial deployments and cooperation on testing, such as through shared access to test beds to enable common standards development. We will also deepen shared resilience in critical government and infrastructure networks, while building new regional initiatives to improve collective cybersecurity and rapidly respond to cyber incidents. (The White House, 2022b, 17)
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3 The full title is the CHIPS and Science Act 2022 (see: www.congress.gov/bill/117th-congress/ house-bill/4346/text).
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A strategy document leaked by AXIOS news agency in January 2021 revealed the existence of a China Strategy Group, co-chaired by Eric Schmidt and Jared Cohen (Hillary Clinton adviser), that produced a series of recommendations to the incoming Biden administration to restrain Chinese tech ascendancy (Allen-Ebrahimian, 2021). These included developing a ‘new plurilateral coalition of “techno-democracies” to strengthen cooperation’ and ‘protect and preserve key areas of competitive technological advantage’. It further proposed an ‘International Technology Finance Corporation . . . to extend loans and loan guarantees to developing nations for tech infrastructure buildout consistent with liberal values, to counter the Digital Silk Road’, alongside a ‘Global Body for Standard-Setting’ and ‘multilateral trust zones to achieve global integration that promotes American values’. The objective was to ‘incentivize collective innovation against China in AI, quantum computing, 5 G, etc . . . To gain access to the benefits of the Trust Zone, countries would have to commit to a Huawei-free zone’.
The Biden and second Trump administrations have transformed a considerable part ofthe China Strategy Group’s recommendations into policy. Initiatives have proliferated, from the addition of Chinese technology firms to the US (restricted) Entity List and the expansion of export controls (many of which impact third countries via the Foreign Direct Product Rule), to inbound and outbound investment screening mechanisms, and a punitive licensing regime for semiconductors, AI, and access to compute (Sastry et al., 2024). Measures have also targeted particular firms. Along with platform giants Huawei and ZTE, AI firm DeepSeek has attracted a range ofpunitive measures following the release of its breakthrough R1 model – including CFIUS reviews, bans on public procurement and use by government personnel, and the potential ban ofits app from Apple and Android stores. Meanwhile, the Trump administration signalled its support for domestic US platforms by co-ordinating the \$500 bn Stargate investment, a project to build AI datacentres within the United States funded by a private sector consortium led by OpenAI, SoftBank, Oracle, and UAE-based MGX, while repealing AI safety regulations. And Trump inked well over \$200 bn in major deals for the proliferation of AI data centres involving OpenAI, NVIDIA, Amazon, and others on a tour of the Middle East in May 2025 (Ghosh, 2025).
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Platforms are at the centre of US geostrategic objectives because, on one hand, they integrate the various components of the technology stack, while, on the other hand, they carve out digital ecosystems in which they can establish and enforce rules which bolster the global power of the United States. The United States uses subsidies and lucrative contracts to incorporate platform firms into the defence and national security sectors, while encouraging firms to bolster its geostrategic objectives. It also discourages its platform firms from engaging with their Chinese counterparts. Meanwhile it seeks to deny Chinese firms access to expertise, capital, and markets. To this end, the United States encourages other countries to establish exclusive relationships with US-based platform firms at the expense of their existing relations with Chinese tech firms. US platform firms have been willing, and in many cases eager, collaborators to these ends. The US variant of state platform capitalism is geared towards the construction and maintenance of a geographically extensive ‘national stack’ – devoid of Chinese technology – that progressively expands its role as supreme mediator of socio-economic relations worldwide.
4 The Chinese Stack
4.1 Introduction
China is home to the only concentration of globally significant internet giants outside of the United States (Table 3). Firms such as Alibaba, Tencent, Baidu, and Huawei are principally domestically focused, and form part ofa technology stack with a considerable degree of operational autonomy from US platform services. But China’s platforms increasingly operate with the aim ofinternationalizing their operations, and they are the closest that US platforms have to global rivals. This section charts the integration of Chinese platform firms’ entanglements with the party-state, and the resultant emergence of a variety of state platform capitalism, before exploring how state and corporate motives align in Chinese platforms’ internationalization drive.
4.2 Private Power?
Until recently, some viewed China’s digital platform economy as a potential bastion of private economic and political power that could even potentially challenge the authority of the party-state (Tse, 2015). After all, China’s digital giants emerged in the shadows of the state economy, driven less by central planning or state subsidies, but by innovative and often ruthless entrepreneurialism in a fiercely competitive domestic market (Fannin, 2019). Moreover, despite regularly attending Party Congresses and otherwise being connected with the upper echelons of China’s political elite, China’s new breed of tech entrepreneurs cultivated an air of distance from the party-state. Their messaging, media and fintech apps were largely not integrated with extant stateowned systems, and seemed to point towards the weakening of state monopoly control of strategic sectors like banking and media.
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\*\*\* Shein sales figures are loose estimates from the Financial Times McMorrow et al. (2024)
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Any such notions were dramatically dispelled in the autumn of 2020. Ant Financial – a spinoff of Alibaba specializing in fintech services – was due to be dual-listed on the Shanghai and Hong Kong stock exchanges on November 5. Ant’s IPO generated huge excitement amongst investors, and was to represent the world’s largest ever (with a predicted valuation of \$313 bn). A week beforehand, however, Jack Ma (Alibaba and Ant founder) delivered a potent speech to assorted bankers and party-state officials at the Shanghai Bund Forum. He attacked China’s state-dominated financial system, which he accused of having a ‘pawnshop mentality’. He lamented that there are ‘no systemic financial risks in China because there’s no financial system in China’, emphasizing the country’s strict regulations on private lending (Collier, 2022, 2). Ma proposed opening the financial sector to digital platforms, with big data to be used as a source of trust rather than traditional collateral (exactly what Ant set out to achieve with its AliPay system). The response from the party-state was swift. Two days before the IPO was due to proceed, the Shanghai Stock Exchange posted a notice suspending the IPO due to disclosure issues. Rumour had it that Xi Jinping had intervened directly.
The year that followed witnessed a dramatic ‘regulatory storm’, as interventions tore through the business operations of China’s digital giants (Naughton, 2021). Tencent, Alibaba, and Meituan faced antitrust fines surrounding their sprawling acquisition strategies and engagements with suppliers. Tencent also suffered the consequences (alongside rival NetEase) of a crackdown on young people’s video gaming habits. Education platforms offering for-profit tutoring services were banned outright. And major players in the transport service platform sector such as Didi and Full Truck Alliance faced protracted scrutiny over their cybersecurity and export of user data. The storm culminated in the world’s first regulatory frameworks for recommendation algorithms and generative AI.
The regulatory storm hit China’s highly valued platform firm stocks hard, contributing to the broader wipeout of \$6 trillion from Chinese equities from 2021–4 (Vishnoi and Yang, 2024). But even more significantly, it laid bare how deeply China’s platform economy was both exposed to and imbricated with the Chinese state (To, 2023). Such dramatic and public interventions against large private-sector firms had previously been rare in China, where subtler methods of ensuring political acquiescence were typically favoured – and regulators thought to lack the toolkit necessary to effectively corral private enterprise to pursue political ends (Collier, 2022). This regulatory overhaul precipitated a new era in which high technology was increasingly put ‘in service of the state’ (Segal, 2018).
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4.3 Entanglements with the State
Despite their Silicon Valley–inspired language and branding, China’s platforms had never been simple products of the ‘free market’, or evidence of ‘entrepreneurial spirits’ chafing under the pressures of a bureaucratic state. Rather, they owed their very existence to the Chinese party-state’s extensive and powerful internet content regulations. American internet firms entering the Chinese market during the late 1990s and early 2000s typically did not face formal exclusions, and were generally allowed to operate in markets where incumbents largely did not exist. However, they did encounter a thicket of regulations and licensing requirements which made doing business considerably more difficult than in most jurisdictions. Alongside cultural and language barriers, this meant their adoption was very slow – which eventually allowed local rivals to steal a march on US internet giants (Mueller and Farhat, 2022).
From the late 2000s, China began to block access to sites like YouTube, Google, Facebook, and Twitter in response to concerns over foreign penetration of China’s otherwise strictly regulated media ecosystem. These bans dealt a succession of blows to US-based platform firms’ efforts to operate in China, leaving the field clear for China’s domestic internet firms to consolidate control over the domestic market. For instance, Baidu was able to quintuple its revenues in the year after Google’s withdrawal from China in 2009 (McKnight et al., 2023, 248–252). The rocky terrain of China’s internet economy and the state’s efforts to block foreign media content collectively amounted to an accidental infant industry protection policy for its nascent platform companies (Foster and Azmeh, 2020). The outcome was a curious kind of ‘Galapagos effect’ that allowed indigenous Chinese platforms that were largely disconnected from the US-centred stack to grow rapidly (Bratton, 2018).
The relatively late development of China’s internet infrastructure further enabled Chinese firms to pursue leapfrog development strategies (Li et al., 2018; Davis and Xiao, 2021). Most consumers bypassed desktop and laptop computers altogether. Already by 2014, 90% of Chinese accessed the web via mobile rather than desktop devices. As such, Chinese platform firms optimized their business processes and technical designs for smartphone systems in ways which US platforms (which had legacy desktop-optimized versions) found challenging, giving them a substantive advantage on home terrain.
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Restricting foreign firms’ operations did not undermine competition. Intense domestic rivalries drove Chinese internet firms to adopt adaptable and innovative business strategies (Zeng and Glaister, 2016). Their vast local base of operations – with over one billion internet users to date – offered opportunities to compete for users, innovate, and ultimately hone highly effective business strategies. For example, lax regulatory oversight (including a virtual absence of private sector competition policy) encouraged these companies to develop sprawling cross-equity holdings of smaller firms across multiple product lines (Jia and Winseck, 2018). China’s platforms increasingly exhibit the horizontal integration characteristic of East Asian business groups such as keiretsu and chaebol (Jia et al., 2018) – with Alibaba Group offering services in e-commerce, social media, fintech, cloud computing and electric vehicles, for instance. China’s app economy is characterized by ‘superapps’ such as Tencentowned WeChat – multifunctional platforms which integrate social media, digital payments and fintech, with services such as booking cabs and making restaurant reservations. Network and lock-in effects have cemented the role of these platforms in China’s digital ecosystem.
Around the mid-2010s, policymakers recognized the critical and developmental potential of digital technologies. Since then, China’s digital platform economy has become folded into this China’s techno-nationalist developmental strategy (Jia, 2021; Zhang and Lan, 2023) – an increasingly comprehensive set of industrial policies dubbed by economist Barry Naughton (2020b, 82) as the ‘greatest single commitment of government resources to an industrial policy objective in history’.
State capitalist practices target platforms in several ways. China’s digital platforms increasingly fulfil key institutional functions delegated by state agencies. Government services are increasingly delivered through PPPs that involve platform firms (Ma et al., 2023). For instance, WeChat provides a growing range ofessential administrative services such as digital identification cards, access to urban medical booking portals, and health codes during the COVID-19 pandemic. Didi systematically shares data with urban authorities to assist in transport planning and management (Chan and Kwok, 2022). And Shanghai’s mapping and food delivery platforms are delegated responsibility and authority to regulate food hygiene standards by the municipal government (Chan and Kwok, 2024).
These PPP arrangements have, in some cases, developed into full-blown ‘state-commercial complexes’ (Liu, 2024a). Alibaba Group’s construction of a data centre for Guizhou province’s government was initiated by the provincial and central governments in 2014. Within months, Alibaba Cloud’s engineers had constructed a cloud system at no monetary cost to the provincial government. In exchange, Guizhou offered exclusive access to its vast reservoir ofadministrative data which Alibaba Cloud could analyse and capitalize. It also provided privileged opportunities for Alibaba’s Taobao to develop e-commerce infrastructures in the province’s rural areas. Alibaba’s role in Guizhou was subsequently given national-level endorsement as a key node in the 2022 National Integrated Big Data Centre System (NIBDCS), which aims to build an integrated national system of administrative data.
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