The Silicon Valley/Venture Capital Pentagon

Here's an exclusive first look at new research from the Costs of War Project about a tectonic shift in the political economy of American warfare. Move fast and break things

The Silicon Valley/Venture Capital Pentagon
"Handshake," by Tero Vesalainen. Via Wikimedia Commons/Pixabay, Creative Commons 0.

Edited by Sam Thielman

A NEW RESEARCH PAPER by San Jose State University's Roberto J. González details a major transformation in the composition of the U.S. military-industrial complex over the past decade. Within the world that military Keynesianism built, "a new political economy is emerging, driven by the imperatives of big tech companies, venture capital, and private equity firms," González writes in a paper published today by the Costs of War Project at Brown University. FOREVER WARS got an early look. 

While the legacy defense giants that have weathered the era of mega-acquisition can rest comfortably with their shipbuilding, missile production and other hardware contracts, the era of big data and now artificial intelligence has led to an entrenched and maturing partnership between the Pentagon and Silicon Valley giants like Amazon, Google and Microsoft for software, data storage and data networking. The Pentagon is also carving out space for venture capital-backed startups like the autonomous-dronemaker Shield AI, the autonomous-systems firm Anduril and the dataminer Palantir. With the entrance of the VCs into the defense sector comes the entrance of their prerogatives, which include militarizing artificial intelligence and accelerating the Pentagon's extant enthusiasm for "Great Power Competition" with China. And González sees trends emerging whereby the tech giants might acquire some of the legacy hardware-makers.

As FOREVER WARS recently noted, more and more distinguished Pentagon veterans are decamping for  venture capital firms like Red Cell Partners and Shield Capital, which will surely be a revolving door back to the Pentagon like the legacy defense firms are. One of the partners at the private-equity giant KKR is David Petraeus. Meanwhile, the Pentagon has quietly opened an office I keep meaning to write about called the Office of Strategic Capital, which seems to exist to put public money into unprofitable aspects of the defense industrial base and to accelerate development of technologies the Pentagon considers to have crucial "national security" application. With the Pentagon increasing its research budget, González tallies $100 billion that venture capital has supplied to defense firms—Sequoia Capital and Andreessen Horowitz are pioneers here—between 2021 and 2023 alone. 

"[L]arge and small defense contractors from the tech industry, as well as private venture capital, are transforming the political economy of war," writes González.

Silicon Valley grew up alongside the U.S. security state. Malcolm Harris' recent book Palo Alto, a history of California from settlement to late capitalism, is lowkey a history of the U.S. military-industrial complex. You're reading this over the Pentagon's most epochal creation, the Internet, which would not have been possible without the 1956 invention of the transistor at Bell Labs, in part by a respectable racist named William Shockley. "Nearly all of today’s tech giants carry some DNA from the defense industry, and have a long history of cooperating with the Pentagon," notes González. 

One of the reasons González brings up this history is because of the way the oft-discussed "cultural divide" between Silicon Valley and the Pentagon supposedly jeopardizes "national security," at least according to a lot of breathless writing. González rightfully dismisses the harm that supposed disjunct does to "national security," since differences in culture obviously don’t impede the partnerships between West Coast companies and the military. Keith Alexander, the longest-ever serving NSA director, is an Amazon board member. Eric Schmidt, formerly of Google, was the founding chairman of the Pentagon's Defense Innovation Board, on which Reid Hoffman of LinkedIn currently sits. Whatever "cultural divide" exists is not between these corporations and the Pentagon, but between the workers at these corporations and the Pentagon, who experience moral hazard when their work contributes to things like data-sifting software that combs through video footage compiled by drones on counterterrorism missions. I would not call that a cultural divide. I would call that a manifestation, in a venue so literal as to make it ironic, of class war.

González identifies at least $53 billion in Pentagon contracts between the 2018 and 2022 budgets for the tech firms, as well as $28 billion from the intelligence agencies. (Since the Pentagon controls something like 90 percent of the intelligence budget, there's going to be a lot of overlap in those figures, but that remaining 10 percent prevents me from saying with precision that the $28 billion is or isn't contained within the $53 billion.) That's a relative drop in the bucket. Lockheed Martin, which makes the F-35 Boondoggle, would think $53 billion over four years for an entire cohort of contractors is adorable—and recall above that VCs just put twice as much money into defense firms in half as much time. But Silicon Valley and its VCs are on a trajectory to integrate into the extant defense giants. 

González illustrates that through the example of Palantir, the datamining firm that got a crucial $2 million infusion from the CIA's investment arm and broke into national-security contracting during the War on Terror.

In September 2020, Palantir went public on the New York Stock Exchange. Just months before its initial public offering, it was awarded a major multi-year $800 million U.S. Army contract, beating out defense giant Raytheon. Such developments might lead some to ask: Is Palantir poised to become the new Raytheon or Lockheed Martin? Will tech companies eventually displace established defense contractors as the primary recipients of U.S. military spending? Given Big Tech’s overwhelming financial power, a more likely scenario is that corporations like Microsoft and Amazon will begin acquiring pieces of the “traditional” military-industrial complex—and that “traditional” firms like Northrop Grumman and RTX will begin buying up promising defense tech startups. Jack Poulson, a mathematician who worked at Google before founding Tech Inquiry, put it this way: "I believe we are witnessing the transition of major U.S. tech companies into defense contractors and would go so far as to predict them purchasing defense contractors in the coming years—something like Amazon buying Raytheon."

Amazon buying Raytheon. Amazon as an arms manufacturer and exporter. Fugazi outlined a bleak future on "Five Corporations," but that was beyond even its expansive imagination. 

As venture capital and Silicon Valley reshape the Pentagon in their images, "an ideological superstructure is reinforcing those processes of change," González writes. (Once again, so much for that "cultural divide.") And it's a superstructure that cheerleads for U.S. global dominance and a new cold war against China: 

[That superstructure] is made up of several elements—an AI hype machine that makes grandiose claims about the effectiveness of artificial intelligence; the overestimation of China’s military and technological capabilities; the idea that America alone has the ability (and the duty) to preserve the world’s democratic societies; and a steadfast belief that the best way to preserve U.S. dominance is through a largely unregulated free market that prioritizes corporate needs. These perspectives, which play a role in boosting demand for military AI, are promulgated by an interconnected network of tech executives, venture capitalists, think tank analysts, academic researchers, journalists, and Pentagon leaders. Over the course of a few years, this group has saturated the media landscape with a frightening scenario: they claim that America is on the verge of losing an epic struggle for global geopolitical and economic supremacy—unless it can outpace China in the "AI arms race." This compelling idea is reminiscent of Cold War narratives and serves to justify and accelerate U.S. military spending in the technology sector.

During the Occupation Phase of the War on Terror, such a concept was often dubbed a "self-licking ice cream cone," meaning a system that exists to perpetuate itself. And this is no "free market"—that's absurd when we're talking about a market that depends on military expenditure. State action shapes neoliberalism, no matter how much neoliberalism proclaims itself to champion a free market at the expense of state power. What "free market" means in this context is that state power should preserve, protect and defend the prerogatives of American capital. Anyway!

Finally, we must ask what the costs might be for those who will be most directly affected by risky AI-enabled weapon and surveillance systems currently under development: members of the armed services and civilians who are in danger of being harmed by inadequately tested—or algorithmically flawed—technologies. By their very nature, VC firms seek rapid returns on investment by quickly bringing a product to market, and then “cashing out” by either selling the startup or going public. This means that VC-funded defense tech companies are under pressure to produce prototypes quickly and then move to production before adequate testing has occurred. VC firms are interested in “selling new modes of warfare to Pentagon officials not because this approach fits some strategic framework but because it aligns with their business model.”

We can answer one part of Gonzáles’ question. Israel sure is showing us what algorithmic warfare truly looks like. More broadly, read González's whole fascinating paper on this underexplored and underappreciated subject.

IRAQI PRIME MINISTER MOHAMMED SHIA AL-SUDANI, at the White House on Monday: "We aim to discuss the sustainable foundations for a 360-degree strategic partnership, ensuring a smooth and systematic transition from a military security-based relationship to a comprehensive economic, political, environmental, educational, and security partnership according to the Strategic Framework Agreement."

And then the State Department's Bureau of Political-Military Affairs, later on Monday: "The State Department has made a determination approving a possible Foreign Military Sale to the Government of Iraq of C-172 and AC/RC-208 Aircraft Contractor Logistics Support and Training and related equipment for an estimated cost of $140 million." 

Read more about al-Sudani's Washington visit in this interview he gave al-Monitor:

In a visit to the Pentagon on Monday, Sudani told US Secretary of Defense Lloyd Austin that Iraqi military forces are “ready to maintain the stability of Iraq,” and that he was looking forward to further talks to share “suggestions for having a timetable for the withdrawal” of American-led coalition forces. 

LAST WEEK, THE HOUSE PASSED a jaw-dropping expansion of Section 702 mass surveillance over substantial bipartisan opposition. I regret that I haven't had enough hours in the day to cover this. But here's an analysis of that expansion from Marc Zwillinger, who is one of very few nongovernmental attorneys approved to argue before the secret surveillance panel known as the FISA Court (i.e., can see what we on the outside can't):

The new amendment would — notwithstanding these exclusions — still permit the government to compel the assistance of a wide range of additional entities and persons in conducting surveillance under FISA 702. The breadth of the new definition is obvious from the fact that the drafters felt compelled to exclude such ordinary places such as senior centers, hotels, and coffee shops. But for these specific exceptions, the scope of the new definition would cover them—and scores of businesses that did not receive a specific exemption remain within its purview.

Emphasis in the original. It's been revealing to watch the way accidental House Speaker Mike Johnson completely reversed himself once he became a member of the Gang of Eight congressional leaders who get the most sensitive intelligence briefings, i.e., the full-court press from the intelligence agencies. Now he "understand[s] the necessity of Section 702 of FISA and how important it is for national security," he told the Washington Post last week.

Instead of our own coverage, here's a statement from Demand Progress's Sean Vitka, who has watched with alarm the expansion of Section 702, through an amendment he calls the "Make Everyone A Spy provision," during a process that many thought would restrict that surveillance: 

As we have said for months, the Make Everyone A Spy provision is recklessly broad and a threat to democracy itself. It is simply stunning that the administration and House Intelligence Committee do not have a single answer for how frighteningly broad this provision is. While the Department of Justice wants us to believe that this is simply about addressing data centers, that is no justification for exposing cleaning crews, security guards, and untold scores of other Americans to secret Section 702 directives, which are issued without any court review. Receiving one can be a life-changing event, and Jim Himes appears not to have any sense of that. The Senate must stop this provision from advancing.

On Tuesday, he denounced the proposal on the Senate floor:

 If you have access to any communications, the government can force you to help it spy. That means anyone with access to a server, a wire, a cable box, a wifi router, a phone, or a computer. Think about the millions of Americans who work in buildings and offices in which communications are stored or pass through. After all, every office building in America has data cables running through it. These people are not just the engineers who install, maintain and repair our communications infrastructure; there are countless others who could be forced to help the government spy, including those who clean offices and guard buildings. If this provision is enacted, the government could deputize any one of these people against their will, and force them to become an agent for Big Brother. For example, by forcing an employee to insert a USB thumb drive into a server at an office they clean or guard at night.

Section 702 expires on April 19. That's Friday. All the Senate has to do is nothing, rather than trying to salvage reforms in this attempt at grabbing more and deeper surveillance powers. Can the anti-surveillance coalition's position in negotiations finally be abolition

WALLER VS. WILDSTORM, the superhero spy thriller I co-wrote with my friend Evan Narcisse and which the masterful Jesús Merino illustrated, is available for purchase in a hardcover edition! If you don't have single issues of WVW and you want a four-issue set signed by me, they're going fast at Bulletproof Comics

No one is prouder of WVW than her older sibling, REIGN OF TERROR: HOW THE 9/11 ERA DESTABILIZED AMERICA AND PRODUCED TRUMP, which is available now in hardcover, softcover, audiobook and Kindle edition. And on the way is a new addition to the family: THE TORTURE AND DELIVERANCE OF MAJID KHAN