“The Tech Coup:” Expert Warns of Silicon Valley’s Influence on Washington

PAULA NEWTON, ANCHOR: Next, how Silicon Valley has it become too powerful? Our next guests believe so. And in an effort to advocate for more regulation of tech companies, she pivoted from serving in the European Parliament to Stanford University’s Cyber Policy Center. Maricha Shooka joins Hari Sreenivasan to discuss what the tech titans grip on Washington means for democracy.

(BEGIN VIDEOTAPE)

HARI SREENIVASAN, INTERNATIONAL CORRESPONDENT: Paula, thanks. Marietje Schaake, thanks so much for joining us. You have a book out recently, it’s called “The Tech Coup: How to Save Democracy from Silicon Valley.” I think a lot of people are thinking about this, if they saw the images from the inauguration, where just flanking the president on one side were some of the richest human beings on the planet, all from the tech sector. When you saw that what crossed your mind?

MARIETJE SCHAAKE, AUTHOR, “THE TECH COUP” AND FELLOW, STANFORD CYBER POLICY CENTER: I was actually very disappointed that they would cozy up to the political leadership by funding and by sitting on the front row while the policies are so controversial and while there’s a lot of illegitimate power now in the hands of tech CEOs, like Elon Musk. And it feels very opportunistic of all these CEOs to just join that crowd and have no regard for, you know, separation of powers, rule of law, lack of conflict of interest that, you know, we’re now clearly seeing in what is unfolding since the inauguration.

SREENIVASAN: You know, when you came up with the title for the book, people probably asked you whether the word coup was over the top. Do you feel that it’s justified now?

SCHAAKE: Well, I actually felt it was justified already because the power grab by tech companies at the expense of democracy often happens in less visible ways than what we’re seeing now. And in many ways, the synergy, the overlap between the interests of the tech CEOs and the Trump administration is just the next phase of this tech coup. It makes it more blatant, more cynical, more radical, but it’s an extension of the power grab that tech companies have been doing in visible and invisible ways for a while now. And where we just see a lack of countervailing powers, a lack of independent oversights, and I fear that the U.S. is going exactly in the opposite direction of what we need against strengthening a democratic governance and providing a balance against this outsized power of corporates in the tech sector.

SREENIVASAN: So, give me an example of how this is a threat to democracy, right? Because we’re both old enough to recognize when, for example, the Arab Spring, not too long ago, and other different movements around the world, and we looked at these things in our hands as these amazing tools to try to increase access to democracy all over the globe. We now have the ability to share our opinions and we could — you know, literally people took to the streets with it. So, how did that turn? I mean, you outlined this in the book.

SCHAAKE: Well, you’re absolutely right that the promise of the internet, the World Wide Web, mobile technologies, social media was also one of democratization, that it would lift up unheard voices, allow people to document and share human rights abuses. But what has happened is that corporate interests, profit interests, scaling interests, investor goals for shareholders have just prevailed, and that democratic governments in the meantime have neglected, advocated their responsibility to make sure that governance decisions were designed to make sure that democracy would be achieved through the use of technology. Too much trust was put in market forces. And now, we see that tech companies know so much about us, develop products and services that really challenge the role of states, think about critical infrastructure or offensive cyber capabilities, intelligence capabilities that tech companies now have. And so, there’s just been a disbalance that has emerged where the companies are extremely powerful, and they’re not acting within a democratic mandate, within a democratic oversight. In many ways, they’re overtaking the role of governments.

SREENIVASAN: This seems, at least in America, to have happened under the watch of multiple administrations, Democrat and Republican, right? I mean, what did we not see coming? Initially, in terms of regulation, we had a very light touch. We wanted to encourage innovation. We wanted to have 1,000 flowers bloom, et cetera. And at what point could we have perhaps crafted a different path?

SCHAAKE: Well, I think for a long time, there’s been an over romantization of what Silicon Valley was, what it could mean. The narrative was very much about disrupting powerful incumbents, about, you know, small companies challenging the big actors, guys with their laptops in garages on flip flops. But these companies scaled very quickly. They very quickly became the incumbents. And they’re not only selling a product, but they’re also integrating ever more data, ever more functions, ever more insights and dependencies in our lives, the lives of our governments, of our citizens. In our national security, they play a critical role. And so, I think the romanticized narrative has just been believed for too long. And there has not been a recognition of what a power grabbed by these companies could mean. And indeed, it’s been Democratic and Republican led governments that have just allowed these companies to grow disproportionately and without the sufficient guardrails that are needed to protect people.

SREENIVASAN: You know, it’s interesting when — you’re right, that startup in the garage is what we think about of Silicon Valley. But when you sort of saw amassed next to the president there, you saw the scale of how huge these companies are. I mean, it seems like there’s maybe a half dozen or more super players that are integrated into what they like to call the tech stack of the government.

SCHAAKE: Exactly. The dependencies are enormous. The wealth is enormous. And the potential for abuse of power is enormous. Look at what Elon Musk is doing through X now, through his personal wealth, supporting far-right parties in Europe. He is basically going into the U.S. government without a mandate, you know, without the kind of accountability that belongs to people who have the kind of access that he and his supporters or his staff, whatever the proper term is now, have by going into government agencies, into the tech infrastructure and tweaking that all in the name of efficiency. But outside of what is typically a rule of law-based approach to giving people power but also making sure that they are subject to oversight that they are, for example, approved by Congress, which is not the case. And so, I think if this would happen in any other country than the United States, people would clearly see there’s a conflict of interest. This is blurring the lines. This does not fit in a democratically run states. But now that it’s happening in the U.S., I think people are just paralyzed and shocked at what is happening. But that paralysis cannot last too long. There really needs to be an anchoring back in the U.S. Constitution to make sure that this kind of access and potential abuse of power, conflict of interest doesn’t go on as we see it happening today.

SREENIVASAN: There have been periods in America where we’ve had kind of a different era of now we’re calling them broligarchs, but we had the Robert Barrons, the gilded age, we had the Andrew Carnegies, the Vanderbilts, right? And I wonder that was a time where they exerted their influence over the U.S. government for favorable tariff regimes, monopolistic practices and so forth. And I wonder if you can help our audience understand the conflicts of interest that exist with, say, Elon Musk, Mark Zuckerberg, Jeff Bezos, the kind of the titans that we are seeing have greater access to the power of the White House.

SCHAAKE: Many of them actually supply government, the government of the United States, but also many governments around the world with critical services, like cloud computing, as you mentioned, with software suites, with cybersecurity protections. And so, there’s a huge dependency there, but it also means that these companies know a lot about our societies, about the government. And now, apparently, Elon Musk is in the heart of the U.S. government with access to all kinds of sensitive data. And so, I think that dependency through contracts, through potential, you know, use of the sensitive information that these companies have access to creates a conflict of interest. There are regulatory bodies that Elon Musk is now making decisions about, you know, making so-called efficiency steps that actually have direct oversight over his companies. The same with Mark Zuckerberg, who is now pushing Donald Trump to consider competition fines as a trade barrier. These kinds of, you know, whispers or actions that are much more direct, you know, using the U.S. government as a lever for individual business interest is, I think, as clear as it gets when it comes to a conflict of interest.

SREENIVASAN: The president, for the record, has said, you know, last week that there’s no cause for concern about this conflict of interest with Elon Musk. If there is one, then we won’t let him get near it. What’s the problem with perhaps Donald Trump’s understanding of that?

SCHAAKE: Well, I mean, we’ve heard the president saying many things that were not accurate in the past. So, you know, just because he says it doesn’t make it true. So, I think the problem with it is that Elon Musk is gaining access to highly sensitive government data and systems, making consequential decisions about jobs, about budgets, about operations without a mandate that is typically given to people with such access to these systems. And on top of the fact that he’s basically operating with a parallel power structure. So, it doesn’t have to rescind authority over his companies, for example, is not subject to the same ethics or accountability rules that an official government appointee would be through oversight of Congress, for example. But it’s also just very radical steps with real consequences for people around the world.

SREENIVASAN: Look, there’s going to be people that listen to this conversation and say, look, these CEOs are doing exactly what they should be doing to try to protect their interests, their corporate interests, their shareholder interests. I’m quoting from a recent column in The New York Times from Julia Angwin, and she just points out, for example, in the European Union, Google has been fined $8.6 billion in the past decade. Apple is liable for $13.5 billion in tax bills in Ireland after losing a court case. And Meta was recently fined about $830 million by the E.U. The European Commission will soon level a fine in the millions against X, right? So, doesn’t it make sense for these individuals to cozy up to whoever’s in power and say, hey, listen, can we, as the United States, exert some leverage on these old allies of ours to make sure that we are not overly regulated in these other markets?

SCHAAKE: Well, the fines that you mentioned are a lot for people like you and I, but they’re not that much for these billion-dollar companies. So, even though these are impressive fines, they are just part of the cost of doing business for most tech companies. And we have to ask ourselves whether that’s sufficient. But antitrust, having rules about fairness in the economy are based on century old laws that also exist in the United States. This is not a typically European phenomenon that goes after U.S. companies. In fact, E.U.-based companies may also be subject to competition and antitrust cases and fines. They can appeal. And then, ultimately, there’s a verdict with possible sanctions. And so, I think, you know, if you look at what the FTC has been doing under the Biden administration, the idea that too much power concentration doesn’t only hurt the economy and innovation because they can stifle that, but also impacts democracy, has impact on the right to privacy, for example, was something that we shared across the Atlantic. It’s just with the Trump administration that these tech CEOs, like Mark Zuckerberg, for example, feel emboldened and say, hey, competition sanctions should actually be considered a tariff. They should be considered part of the trade war that is now expected to be unleashed by Donald Trump, with all the negative consequences that that’s going to have. And so, indeed, the tech CEOs are very opportunistic, but that doesn’t make their claims justified in any way, shape, or form.

SREENIVASAN: You were a member of the European Parliament, and in the book, you lay out kind of different paths that we could have taken, and, well, maybe we should kind of pivot to what are the steps that we should take.

SCHAAKE: Well, I think it’s crucial to get more transparency into how the inner workings of tech companies impact our society. So, think about algorithmic amplification when it comes to social media, think about the public interest in understanding A.I. models, which, you know, is now often shielded by A.I. companies as a trade secret, but we really need to have capacity to, for example, research A.I. models much more deeply as academics, for example. But I also think it is key that governments, when they use technology to perform, you know, tax services or investigations through the police, that they have the same kind of transparency and accountability that they would have if they would not have outsourced these tasks to tech companies. What we often see is that there’s a different treatment of, let’s say, surveillance practices on the part of police when they are done directly by police forces, or when they’re outsourced to tech companies. And so, having that kind of public accountability is critical, but also, to bring in independent expertise in a legislative body so that the lobbyists that are spending, you know, hundreds of millions of dollars to influence our lawmakers are not as successful. So, that lawmakers have access to independent expertise on technology when they make laws.

SREENIVASAN: You were on stage with Eric Schmidt, the former CEO of Google, back in 2019, and something you said struck me.

(BEGIN VIDEO CLIP)

SCHAAKE: It’s very clear that tech companies cannot stay on the fence in taking a position in relation to values and rights. I personally believe that a rules-based order serves the public interest, as well as individual and collective rights and liberties that companies benefit from, but that everybody has a role to play to also contribute to the common interest and to strengthen the resilience of our democracies.

(END VIDEO CLIP)

SREENIVASAN: That was 2019. Have we gotten closer, further away from what you were interested in then?

SCHAAKE: Much further away, unfortunately. I mean, I think we’ve basically lost the United States for the foreseeable future when it comes to legislation. We’ve lost the companies when it comes to articulating respect for certain fundamental values, like human rights and democratic rights, for example. And so, I really think this is a time for those who don’t want to be represented by Elon Musk and the other CEOs who are sitting in the front row to speak out. I think it is a time to really recalibrate around constitutional principles. It’s really around those very, very basics in the United States now that the defenses have to be organized. And it also means that the regulation of technology from a democratic point of view is happening in Europe. That is really the only place where a significant market is putting democratic guardrails around how A.I. and other technologies can be used in our society. And so, that is also going to be a space to watch in terms of, you know, how safety standards are being developed, how companies can mitigate the risks that their models may present both in the short-term and in the long- term. And I think that will also be critical for trust in A.I. and technology itself. I mean, that really cuts both ways. You can’t just look at regulation as a burden, it also helps to develop trust, a level playing field. So, fair treatment for all companies. And I think that that is actually very, very important, even more so than it was in 2019.

SREENIVASAN: The book is called “The Tech Coup: How to Save Democracy from Silicon Valley.” Marietje Schaake, thanks so much for joining us.

SCHAAKE: Thanks for having me.