When Mark Zuckerberg, Facebook’s CEO, testified to Congress in April 2018, a photographer captured his notes, which slimmed the contention down to its core: “Break up FB? US tech companies key asset for America; break up strengthens Chinese companies.”
Facebook’s COO, Sheryl Sandberg, placed the words in other people’s mouths to make the same point. “Let me share with you something else I heard in my meetings in D.C. And I heard this in private meetings from both sides of the aisle,” Sandberg said on CNBC last year. “That while people are concerned with the size and power of tech companies, there’s also a concern in the United States with the size and power of Chinese companies, and the realization that these companies are not going to be broken up.”
Read: Silicon Valley is not a force for good
Eric Schmidt, the former CEO of Google, said much the same last year. “Chinese companies are growing faster, they have higher valuations, and they have more users than their non-Chinese counterparts," he said. "It’s very important to understand that there is a global competition around technology innovation, and China is a significant player and likely to remain so.”
This is a full reversal of the language that tech promoters used to sell Silicon Valley–style innovation and competitiveness for decades. Saxenian has noticed the change in how the Valley describes itself, or at least in how the dominant firms do. “Advocacy of the small, innovative firm and entrepreneurial ecosystem is giving way to more and more justifications for bigness (scale economics, competitive advantage, etc.),” Saxenian wrote to me in an email. “The big is beautiful line is coming especially from the large companies (Facebook, Google, Amazon, Apple) that are threatened by antitrust and need to justify their scale.”
This sort of talk prompts one obvious, knee-jerk response: It’s simply hypocrisy. When Google and Facebook were start-ups, their executives said start-ups were good. Now that Google and Facebook are huge, their executives say huge companies are good. It’s cynical, if not unexpected.
But there’s a more troubling possibility. Maybe something has changed about the nature of innovation, at least in software.
The start-up tradition traces back to Hewlett-Packard, the original company-in-a-garage, in 1937, and later to the Fairchildren of the 1960s, a tangle of semiconductor companies that successively spun out of larger companies, one after the other. The go-your-own-way ethos infused later cohorts of entrepreneurs across the spectrum of technologies, all the way up through the 20th century. The best thing you could be in Silicon Valley was a founder, and the best thing a founder could do was supercede those who came before.
The newest generation of companies has not been able to fulfill the latter half of that prophecy. It’s more difficult to dislodge the elder companies, which have grown ever more entrenched and valuable. CB Insights, a research firm, recently added up the (likely inflated) value of all 439 “unicorns”—start-ups that investors have valued at more than $1 billion—in the world. It got roughly $1.3 trillion, or about one Apple’s worth of market value. Remember, that figure accounts for hardly tech companies, such as Juul; so-far dubious technologies, such as augmented-reality headsets from Magic Leap (valued at $6.3 billion on this list); and all the Chinese and Indian players.