The digital Gilded Age: DC faces Silicon Valley’s riches – and ever-growing power

The late 19th century was a period known as “the Gilded Age” in America. As the railroads, mining industries and factories boomed, millions of workers were inspired to migrate from Europe, yet the wealth became concentrated among a small set of industrialists such as Andrew Carnegie, a steel magnate, and the oil baron John D Rockefeller. These men wielded massive power through business, political efforts and philanthropy.

Yet even Carnegie, whose ruthlessness earned him a reputation as a “robber baron”, would have been amazed by the power the heads of technology firms wield today, according to the Carnegie biographer David Nasaw.

“Carnegie could never have imagined the kind of power Zuckerberg has,” said Nasaw, a history professor at City University of New York. “Politics today is less relevant than it has ever been in our entire history. These CEOs are more powerful than they’ve ever been. The driving force of social change today is no longer government at all.”

Tech CEOs have spent 2016 wading into politics when it suits their own ends, and even going head-to-head with the US government. Mark Zuckerberg, Facebook’s CEO, opened the company’s annual developer conference by calling out the anti-immigration stance of Republican presidential frontrunner Donald Trump.

“I hear fearful voices calling for building walls and distancing people they label as ‘others’,” he said. “I hear them calling for blocking free expression, for slowing immigration, for reducing trade, and in some cases, even for cutting access to the internet.

“Instead of building walls, we can help people build bridges,” Zuckerberg told the audience.

This was markedly political language for the usually private CEO, who has quietly supported lobbying efforts for a more liberal approach to immigration. And he’s doing more than just politicized product launches: in December, he set aside 99% of his fortune – a now untaxable $45bn – to be spent “to advance human potential”, as the announcement claimed. That potential is whatever fits with Zuckerberg’s worldview.

Facebook employees have asked Zuckerberg whether they should actively work to defeat Trump, according to leaked documents given to the tech site Gizmodo on Friday. More than 1.04 billion people use Facebook every day, and for many it has become their most important news source.

When the FBI won a federal court order saying Apple must help the agency break into an iPhone, chief executive Tim Cook issued a public statement refusing to comply. Despite the sensitivity of the investigation into the San Bernardino terrorist attack, Cook tried to reassure the public that he was not talking about toppling democracy. “We are challenging the FBI’s demands with the deepest respect for American democracy,” the statement began. “This demand would undermine the very freedoms and liberty our government is meant to protect.”

Do Apple – the world’s most valuable company by market capitalization – and its figurehead boss, Tim Cook, know how to protect democracy better than the American government does? Public sentiment has been on Apple’s side. The night Cook issued that statement, a small crowd assembled outside San Francisco’s Apple store to express support , and at the company’s annual shareholder meeting, he received a standing ovation. And after some very public back and forth, the government announced they had figured out how to open the phone without Apple’s help after all, essentially admitting defeat in a case that would have set a precedent in forcing a tech firm to weaken its own security to help the government.

Is Tim Cook a better protector of democracy than the US government? Photograph: Eric Risberg/AP

One of several major tech companies to issue legal briefs in support of Apple during the confrontation, Microsoft appeared emboldened to push further. On Thursday, Microsoft announced it was suing the US government for the right to tell users when it receives legal requests for their personal data, claiming the government “has exploited the transition to cloud computing as a means of expanding its power to conduct secret investigations”.

Tellingly, the company called for a united front among tech CEOs, as had been established during Apple’s battles with the FBI. “Just as Apple was the company in the last case and we stood with Apple, we expect other tech companies to stand with us,” Microsoft’s chief legal officer, Brad Smith, later said.

Alongside the legal conflict, tech titans have established new soft power centers in the form of massive charitable gifts, such as Sean Parker’s to cancer research, and tax-free foundations for lobbying, such as Zuckerberg’s.

This week, Parker, known as the bad boy founder of the music filesharing service Napster and first president of Facebook, announced a $250m gift to six nationwide cancer centers. Tech founders have been criticized for not giving enough to charity, and this gift shows Parker seeking to establish himself in the pantheon of history’s power players, according to historians.

Announcing it, Parker spoke about fixing the healthcare system to look more like the venture-funded, high-risk world of startups. “The system is broken somehow – funding doesn’t reward risk-taking. We don’t get ambitious science … we get incremental science.”

These efforts represent a new united front of tech titans pitted against the old establishment of Washington – an industrial force many American historians say hasn’t been seen since the Gilded Age.

“Our lives are channeled once again through fewer and fewer companies controlled by a few men,” said TJ Stiles, Pulitzer prize-winning author of The First Tycoon: the Epic Life of Cornelius Vanderbilt.

“During the Gilded Age, there were a lot of startups, new companies, and this ruthless process of consolidation, dominance and power. And you had these men who would do anything they could to cut costs and avoid political control – and they usually won.”

The excesses of the Gilded Age led to another cultural moment that Nasaw says looks familiar today. “Back then there was a lot of rage, a lot of anger about the philanthropies. And then these new politicians popped out of nowhere. It was called the populist movement.”

The most politically powerful place that wealth can go is into charitable contributions and lobbying, according to Nasaw.

“There was a backlash against Carnegie and Rockefeller when they set up their philanthropies. There was a congressional hearing about whether this concentrated wealth should be allowed,” Nasaw said.

“There’s always this conversation between democracy and billionaires, and today those billionaires have more power than ever.”

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