Tech firms are wielding unprecedented amounts of capital to expand their base of power in creative ways. Civil society should explore structural points for intervention.

The financial picture for the tech industry as a whole looks bleaker than it has in the past decade, as the industry grapples with the consequences of rampant speculation: waves of layoffs,1 Issie Lapowsky and Erin Wong, “Tech’s Very Bad Year, in Numbers,” Rest of World, March 13, 2023. the collapse of crypto markets,2See Vicky Ge Huang, Alexander Osipovich, and Patricia Kowsmann, “FTX Tapped Into Customer Accounts to Fund Risky Bets, Setting Up Its Downfall,Wall Street Journal, November 11, 2022; and David Yaffe-Bellany, “How Sam Bankman-Fried’s Crypto Empire Collapsed,” New York Times, November 14, 2022. and the failure of Silicon Valley Bank3Rachel Louise Ensign, Corrie Driebusch, and Meghan Bobrowsky, “Silicon Valley Bank Closed by Regulators, FDIC Takes Control,” Wall Street Journal, March 10, 2023. are all indicators of further turmoil. These environmental shifts are likely to concentrate resources even more deeply within the biggest firms, which are less dependent on venture capital and leveraged debt, and thus will weather—and may even benefit from—the storm. 

These firms hold an unprecedented amount of financial capital4Alex Wilhelm, “Big Tech Is Now Worth So Much We’ve Forgotten to Be Shocked by the Numbers,” TechCrunch, May 1, 2021. and wield this capital using a variety of strategies to tilt the playing field in their favor and reduce risks to their bottom line. This makes tech capital strategies a critical site for tech accountability. Researchers and advocates are increasingly scrutinizing the ways in which tech firms are influencing the funding landscape for tech policy, but this could go further, accounting for the broad scope of tech industry capital strategies as structural points for intervention. 

As Meredith Whittaker highlighted in research examining interdependencies between tech firms and the AI field, tech firms “are startlingly well-positioned to shape what we do—and do not—know about AI and the business around it, at the same time that their AI products are working to shape our lives and institutions. ”5Meredith Whittaker, “The Steep Cost of Capture,” Interactions 28, no. 6 (November–December 2021): 51. This is explicitly reinforced in a document leaked in 2020 that outlined Google’s playbook for influencing the European Commission as regulators began work on the DMA and DSA: the company sought to leverage academic researchers to raise questions about the proposed rules, attempted to erode support through lobbying MEPs, and seeded a trade dispute across the Atlantic by encouraging US officials to take stances in opposition to the policy.6Adam Satariano and Matina Stevis-Gridneff, “Big Tech Turns Its Lobbyists Loose on Europe, Alarming Regulators,” New York Times, December 14, 2020. But the industry is not inventing the wheel here; for decades, corporate actors have utilized their capital to adopt a diverse set of nonmarket strategies designed to tilt the cards in their favor.7 Zephyr Teachout and Lina Khan, “Market Structure and Political Law: A Taxonomy of Power,” Duke Journal of Constitutional Law & Public Policy 9, no. 1 (2014): 37–74.

These include:

1. Lobbying: firms can use their capital to directly lobby for policy changes.

  • In the first half of 2020, Google, Facebook, Apple, and Microsoft spent $23 million combined for lobbying in the European Union. This is equal to the entirety of their lobbying spending in the year prior.8Satariano and Stevis-Gridneff, “Big Tech Turns Its Lobbyists Loose on Europe.” In the US, the companies behaved similarly, increasing their lobbying spending to $55 million in 2021, an increase from $34 million in 2020.9Emily Birnbaum, “Tech Spent Big on Lobbying Last Year,Politico, January 24, 2022.
  • Big Tech firms have also funded ‘industry coalitions’10Chamber of Progress such as the Chamber of Progress and lobbying groups like the Connected Commerce Council to purportedly represent the interests of small businesses in opposition to antitrust and other regulatory movements. Many of the small businesses listed on the membership roll of the Connected Commerce Council reported being unaware their names were being used.11Emily Birnbaum, “Group Backed By Tech Giants Claims Thousands of Members”, Politico, March 30, 2022.

2. Staffing and recruiting from government: the “revolving door” is frequently employed by firms both to gain detailed insights into regulatory agencies and to seek to influence them.

3. Creating biased information: firms leverage the credibility of academic research through funding to create the appearance of objective evidence to support their policy objectives.20See Mohamed Abdalla and Moustafa Abdalla, “The Grey Hoodie Project: Big Tobacco, Big Tech, and the Threat on Academic Integrity,” arXiv:2009.13676v4, April 27, 2021; and “Gig Economy Project – Uber whistleblower Mark MacGann’s full statement to the European Parliament,” Brave New Europe, October 25, 2022. Even without direct influence on the substance of the research (though they do sometimes assert this as well),21Most notoriously, Uber exerted influence over the calculations used by Cornell economists in a study that concluded 92 percent of drivers made above minimum wage. A study using similar data conducted independently found that the majority of drivers earned far less. Both studies were conducted and published shortly before legislative battles in California and Washington state to determine the employment status of rideshare drivers. See Veena Dubal, “On Algorithmic Wage Discrimination,” January 19, 2023, 12–14; and Hubert Horan, “Uber’s “Academic Research” Program: How to Use Famous Economists to Spread Corporate Narratives,” ProMarket, December 5, 2019, in the current precarious funding climate this can have a significant impact on which research agendas receive support.22Whittaker, “The Steep Cost of Capture.”

4. Directing the politics of employees and contractors: companies are able to direct their employees expressly or implicitly to adopt certain political stances.

5. Power derived from being “too big to fail”: as tech firms increasingly take on the functions of critical infrastructure, this may lead to increased reticence to regulate in a manner that could lead to system failure.

  • Financial regulators have expressed concerns that increased dependency of financial systems, including payment systems, on cloud firms poses risks to financial stability and could render these companies too big to fail.28 Iain Withers and Huw Jones, “For Bank Regulators, Tech Giants Are Now Too Big to Fail,” Reuters, August 20, 2021.
  • Tech firms receive financial benefits due to their unique economic position, receive lower bond funding costs, and are treated as a “stable asset” during moments of market turbulence.29Nordine Abidi and Ixart Miquel-Flores, “Too Tech to Fail?” Faculty of Law Blogs, University of Oxford, July 13, 2022.

Collectively, these examples illustrate the multifaceted ways in which tech firms wield their capital to assert their influence over and above more traditional policy advocacy. Some of these strategies and tactics can also be used in the effort to achieve tech accountability. For example, labor unions have historically leveraged their holdings in public pension funds as a lever for shareholder advocacy in order to seek changes in corporations, such as narrowing the gap between worker and executive compensation.30See Sanford M. Jacoby, Labor in the Age of Finance: Pensions, Politics, and Corporations from Deindustrialization to Dodd-Frank (Princeton: Princeton University Press, 2021); Justice for Janitors, 2022, accessed March 15, 2023; and Christian Wihtol, “Providence, SEIU Clash Over High Exec Pay, Union Push,” Lund Report, January 12, 2019. 

In a number of cases, shareholder proposals have been used to make efforts toward advocating for greater diversity and inclusion measures at the leadership level of companies; for stronger lobbying disclosures; and for mandating evaluations of companies’ impact on human rights. These efforts have met with varying degrees of success. 

As tech firms undergo rounds of layoffs, ostensibly because of financial headwinds, these capital strategies deserve to be scrutinized all the more closely. In doing so, accountability advocates can attend to the shifting playbook used by companies to influence potential regulation and explore possible inroads that can still be used to advocate for change.