The giants of Silicon Valley have a lot in common with Laura Ingalls Wilder, who portrayed her life on the prairie as a triumph of self-sufficiency, barely mentioning that the government underwrote the railroads, provided the farmland and tided the family through rough winters.
Tech companies, too, like to tell stories in which government rarely appears except as an outside force threatening to break the beautiful things they’ve created with their minds and their hard work. The part of the story that doesn’t get told is how Silicon Valley’s successes have relied on the steady support and occasional dramatic interventions of the federal government.
On Tuesday a federal judge ordered Alphabet, the company better known as Google, to share some of its search data with its rivals. The decision is intended to limit the dominance of the company’s internet search engine, which was ruled an illegal monopoly last year. The government had sought to break up the company, which Alphabet decried as a “radical” intrusion on its business, and the court decided not to go that far. But the decision still marks an overdue return to the government’s longtime role.
Antitrust regulators repeatedly intervened in the 20th century to limit the power of big tech companies, which created room for new firms to emerge. The business historian Alfred Chandler wrote in his 2001 book, “Inventing the Electronic Century,” that in the mythos of Silicon Valley, the role of the gods — the invisible hands that shape human events — has in fact been played by the “middle-level bureaucrats in the U.S. Justice Department’s antitrust division.”
The government abandoned that role in recent decades, allowing a small handful of tech firms the luxury of growing old without any real threat to their market dominance. As new technologies emerged, Alphabet and its peers bought and swallowed them, in much the same way the Greek god Kronos ate his children to prevent their emergence as rivals. The most recent chapter in this story is how the biggest tech companies have absorbed the pioneers of artificial intelligence, so that the profits from the next generation of innovations will flow to the same shareholders whose firms dominate the current era.
Alphabet in its current form — huge, and hugely profitable — is the beneficiary of two large doses of good luck. The company benefited from the final round of federal interventions around the turn of the last century, and then it benefited even more from the absence of further interventions.