Why Silicon Valley Is Seeing the Virtues of Nationalism

(Bloomberg Opinion) -- Would Silicon Valley, with its mantra to “make the world a better place,” ever embrace nationalism? It makes about as much sense as Uber employees hailing taxis to work. And yet, nationalism may the most compelling argument that large technology companies have against regulation and breakups. The Googles and the Facebooks can say that they represent important American assets in an emerging fight with China for technological supremacy.

Facebook chief operating officer Sheryl Sandberg raised the China issue in an interview last week, pointing out that China won't be breaking up its large technology companies – the implication being that to break up Facebook would be to weaken the U.S. in its technological rivalry with China.

Related to the ratcheting tensions between the U.S. and China, Google is restricting Huawei's access to its Android operating system, saying "We are complying with [the Trump administration's] order" barring American companies from selling to Huawei without a government license. Of course, China already restricts Facebook and Google, making it easier for the companies to pick sides.

If large technology companies think it's in their interest to highlight their strategic importance to the U.S. as a way of staving off regulation or breakups, what would that version of "Silicon Valley nationalism" even look like? It's easier to imagine Wall Street playing that role: Wall Street's cultural peak was in the 1980s, during the Cold War with the Soviet Union, a battle of New York capitalism versus communism. And after the attacks of Sept. 11, the stock market reopening the following Monday was a symbol of New York, and America, beginning to heal.

This era of Silicon Valley's growth hasn't had that kind of national culture. The internet era in Silicon Valley has coincided with the peak of globalization; part of the rationale of founders was to connect the world and make national borders less important. Technology companies are often founded by immigrants with workforces that are much more diverse than late 20th century Wall Street was. 

If large technology companies are deemed to have national security importance, they may find themselves being forced to act much more like a defense contractor. Information may have to be much more tightly monitored. Engineers might need security clearances to work on certain projects. Chinese nationals might find themselves excluded from certain roles. Amazon's decision to put its second North American headquarters in Northern Virginia, close to the FBI, the Pentagon and other national security apparatus, might be seen through an entirely different lens now.

In a way, this turn toward government and national security would be coming full circle for Silicon Valley. The growth of Fairchild Semiconductor, the genesis of Silicon Valley in the 1950s, was powered by William Shockley, who got his start doing research for Bell Labs during World War II to aid in the war effort. At some point in recent history it became fashionable to associate Silicon Valley with disruptive startups and celebrity CEOs like Apple's Steve Jobs or Microsoft's Bill Gates, but to minimize disruption to itself, the technology industry would probably have no problem going back to having closer ties to the federal government.

One way or another, Silicon Valley is going to be on a new path that will involve constraints that the industry hasn't had since the growth of the internet. Europe wants more regulation. Democrats in the U.S. want regulation and breakups of the industry's largest companies. Republicans feel the industry is biased against conservatives, and President Donald Trump, in his escalating trade war with China, may find both strategic value and the opportunity to have more control over Silicon Valley by saying the industry has national security implications.

The U.S. tech industry may decide that embracing American nationalism and falling in line with the Trump administration is its best option, even if it's not quite clear where that leads.

To contact the editor responsible for this story: Philip Gray at philipgray@bloomberg.net

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Conor Sen is a Bloomberg Opinion columnist. He is a portfolio manager for New River Investments in Atlanta and has been a contributor to the Atlantic and Business Insider.

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