A public battle has erupted among the titans of Silicon Valley. One camp, led by Elon Musk, PayPal co-founder Peter Thiel and venture capitalists Marc Andreessen and Ben Horowitz, is backing Donald Trump for president. The other, led by LinkedIn co-founder Reid Hoffman, is backing Trump for president. behind Kamala Harris.
We must not make the mistake of thinking that this is an ideological or political battle, but rather a battle to maximize Silicon Valley's profits regardless of the consequences for society.
On this goal, both sides agree. Andreessen Horowitz is one of the largest investors in cryptocurrencies and artificial intelligence, and Trump has indicated that would keep the government out of their affairs. Meanwhile, shortly after donating $7 million for a Harris, Hoffman super PAC called to remove Federal Trade Commission Chair Lina Khan, who has brought antitrust cases against Big Tech and introduced rules to protect workers.
Silicon Valley, once a powerhouse of human achievement, has become a major source of harm to humanity. Aware of the coming backlash, its leaders have thrown themselves into political struggle to protect their wealth.
Two Silicon Valley obsessions threaten to do the most harm: creating human addiction to boost profits and eliminating humans altogether to cut costs.
Social media platforms, which once served to bring together old friends and give a voice to the otherwise powerless, have become “social slot machines” that compel overuse. Gaming companies have a similar goal. Today, teenagers spend more than 100,000 hours gaming. eight hours a day on screens, driving digital advertising revenues that reached 225 billion dollars last year.
Meanwhile, the artificial intelligence revolution promises to reduce labor costs. A recent study study MIT economist Daron Acemoglu found that between 50% and 70% of the growth in inequality between more and less educated workers can be attributed to automation. Poverty rates In Silicon Valley's home state, profits are rising even as AI makes Big Tech Richer.
The broader outlook is equally worrying. AI is… Enabling killer robots, autonomous weapons and massive, destructive disinformation.
The root of the problem is that America, and Silicon Valley in particular, is dominated by what we call an “investor monoculture.” Modern corporations are designed to serve investors and no one else. Around 80% of the shares of US public companies are owned by institutional investors, most of whom have one goal: to maximize profits, largely in the short term and without regard to costs to society. In 1980, their shareholding was only 29%.
Venture capital firms, the largest funders of Silicon Valley startups, have… grown From less than $400 billion in assets in 2010 to nearly $4 trillion today, their performance is measured by “multiples on invested capital,” or “MOIC,” as experts call it.
Suicide rates Among young people, unemployment rates have risen by more than 60% since 2007 and American democracy is in jeopardy. But these are not the concerns of investors.
Regulation and promotion of companies can make a difference, no doubt. But big tech companies have a lot of money, lawyers and the ability to outwit regulators.
It’s time for a different approach. When companies are owned and governed by employees, customers, suppliers or communities, they become less predatory and more benign. And it turns out that corporations have been designed that way across time and cultures. Capitalism comes in many forms.
Some of the world’s most respected companies, including Ocean Spray, Publix Super Markets, Organic Valley, New York Life Insurance Co. and Vanguard, are owned and managed by farmers, employees or customers. Corporations such as Patagonia, Rolex, Novo Nordisk and Ikea are owned or controlled by nonprofits, trusts or foundations, which have no investors and therefore face less pressure to increase profits.
Silicon Valley also has examples. Mozilla, which operates the Firefox web browser, is owned by a nonprofit. It has no incentive to maximize profits, which explains why it does not sell user data to advertisers. Wikipedia, one of the most visited websites in the world, is also run by a nonprofit, showing that scale and impact do not always depend on investor capital.
A nonprofit organization owns the majority of shares in OpenAI, the creator of ChatGPT, a design it chose to “ensure that artificial intelligence benefits all of humanity.” But its minority investors, like Microsoft, are motivated by profit, which has led to concerns which is releasing products at an irresponsible rate.
Many tech companies would be more benign if they were owned and governed by their users. Users have the most to lose from technology-driven addiction and automation, and their data generates most of the companies’ value. User-owners would share in this value and have an incentive to prevent companies from causing harm.
How might users come together to create and run more tech companies? Bringing together a group of disparate, dispersed people is difficult; economists call it the collective action problem.
Influential non-profit organizations such as Humanitarian Technology Center and Freedom Project It can play an organizing role, incubating a new generation of user-owned social media companies. While it is a competitive field with entrenched players, social media technology is not complex and there is a real desire for more benign versions.
Existing companies can also be redesigned. Instead of raising capital from for-profit corporations, OpenAI could seek funding from users and give them representation on its board of directors. And with users on the board, the company could take more care to safely launch products and devote resources to maintaining employment. Most importantly, more of the financial gains from the AI revolution would flow to the people who create the value.
If Keith Gill, aka Roaring Kitty, was able to organize retail investors to increase GameStop’s market value by $10 billion, could a similar approach have been employed to acquire Twitter for users in 2022? Considering the millions of defections from the platform since Musk bought it, it may not be too late.
Government can also help if it is not hampered by political contributions from big tech companies. The Small Business Administration, the Department of Energy and the National Science Foundation should encourage user ownership of the companies they fund.
The Sand Hill Road venture capitalists will, of course, cry out that this is socialism, but they will be wrong. It's just business.
Hans Taparia is a clinical professor and Bruce Buchanan is a professor of business ethics and marketing at New York University's Stern School of Business.
