Silicon Valley’s approach to the Pentagon: market adaptation, not political turn

When Donald Trump returned to the White House last year, Silicon Valley's most powerful entrepreneurs surprised many Americans by expressing support for him. Suddenly, the same CEOs and investors who once celebrated globalization and consumer applications are embracing patriotism and advanced weapons like killer drones.

Don’t misunderstand this as a deliberate political pivot or attitudinal shift. Silicon Valley has always been a fertile ground for myths, and the biggest myth among them is the belief that there is an unfathomable ideological gap between Silicon Valley and the Pentagon.

For technology companies, the personality and politics of the person in the White House are far less important than whether that person is willing to buy what Silicon Valley has to offer. The federal government is essentially a procurement agent, and Silicon Valley’s turn to military industry—and its turn to Trump—is less a political “conversion” than a market adaptation.

Silicon Valley's values ​​haven't changed, only its customers.

People seem to forget that Silicon Valley was largely built on Pentagon funding during the Cold War. Fairchild Semiconductor, the birthplace of the computer chip industry, is one of the beneficiaries. Conventional wisdom holds that as recently as 2016, many companies (not to mention their employees) were averse to defense projects and found participating in such projects unthinkable. Trump’s election that year seemed to exacerbate that divide. In 2018, Google withdrew from Project Maven, a Pentagon-funded artificial intelligence project aimed at developing drone warfare technology, under pressure from its employees.

The real line between tech bosses and the Pentagon has less to do with politics and everything to do with markets. For more than 30 years, technology industry leaders such as Apple and Hewlett-Packard have focused on the consumer—whether it was personal computers, smartphones and, later, apps. The market is global, allowing companies that started selling products in China in the 2000s (many already had production bases there) to reach more than 1 billion consumers.

Unlike today, China in the early 21st century represented an opportunity rather than a threat, prompting venture capital firms such as Sequoia Capital to make huge investments in China. Digital service companies such as Uber, Airbnb and Facebook are chasing this market. Investors marveled at China's booming tech economy even as Washington began to warn of strategic threats from Beijing. “From an economic perspective, China should be another America,” venture capital prophet Marc Andreessen said in 2013, the year Chinese leader Xi Jinping took office. "And Beijing should be another Silicon Valley."

Since then, China has closed its doors to many U.S. technology companies. Over the next decade, relations between Washington and Beijing deteriorated. Recently, Tesla CEO Elon Musk denied that he was considering abandoning the China business and pushing for a merger of his electric car company with a major Pentagon contractor, SpaceX. But he is well aware of the dilemmas posed by his China operations.

Today, the shift from the consumer market to the defense industry is evident in Anderson's company, which has set up a dedicated unit called American Dynamism to focus on investing in weapons and technology designed to compete with, and possibly even fight, China. Sequoia Capital, one of Silicon Valley's most storied venture capital firms, has spun off its China operations and joined a growing number of venture capital firms funding companies developing military weapons. Sequoia Capital's original defense tech investment was a startup founded by a 19-year-old that was building killer drones.

As for Google, it took only a few years for the company whose motto was “Don’t be evil” to seek cooperation with the Pentagon again. This was not motivated by patriotism but obvious financial self-interest. The federal government, and the Pentagon in particular, has become one of the world's largest customers of artificial intelligence and autonomous weapons - technologies needed for future warfare, especially in the Pacific. Earlier this year, Google agreed to provide the Department of Defense with artificial intelligence for use in classified networks after a dispute erupted between Anthropic and the Pentagon over how exactly its AI models were used.