silicon valley in california from here companies like apple and google have conquered the world but their success has come at a price yeah there's not much to see it's just um people oh you're from los altos oh you must be very wealthy well i was living in los altos before it became you know this very exclusive area to live david is a tradesman the rise of tech companies has made it impossible to pay rent for three years he's been living in a van right next to google's campus [Music] i was living in a house it was a two-bedroom house i was paying about 2400 a month i was doing okay well the guy realizes he can get 5 000 a month for this place right so he tells me you got to go when the lease is up i'm going to remodel and so people like me like i've been here my whole life i got nowhere to go silicon valley in san francisco belong to the bay area as of 2021 there are around 35 000 homeless people here alongside the highest density of billionaires in the world and the pandemic has only exacerbated that inequality it really precludes any possibility of us having a meaningful democracy when some people in our community have not only their basic needs assured but every conceivable object of opulence and other people can't even survive i think that exposes that our pretense of democracy in this country is something of a farce facebook google amazon and apple have changed the global economy have they become too big in the process politicians seem to want to limit the company's power the purpose of today's hearing is to examine the dominance of amazon apple facebook and google in fact tech bosses have been called to testify before congress the tech industry is an american success story the products we build to change the world and improve people's lives google aims to build products that increase access to opportunity for everyone no matter where you live what you believe or how much money you are tech companies don't see their marketplace power as a problem one of the biggest problems that silicon valley leaders have is that they believe that because their intentions are good that the outcomes will be good and that it's really hard for them to imagine that despite their good efforts some things have gone completely down the drain [Music] davos switzerland this is where the world's most powerful people gather for the world economic forum in january 2019 the coronavirus pandemic was still a long way off a dutch historian put his finger on the problem 1500 private jets flown in here and i mean i hear people talk in the language of participation and justice and equality and transparency but then i mean almost no one raises the real issue of tax avoidance right come on we got to be talking about taxes yes that's it taxes taxes taxes all the rest in my opinion the fact is that more and more of our world belongs to a few super rich people one reason for that is tax avoidance between 2014 and 2018 billionaire amazon ceo jeff bezos paid an effective tax rate of 0. 98 compare that to the top u. s tax rate of almost 40 percent for economic historian adam twos the problem is systemic they're also drivers of inequality at the top if you if you look at the income distribution in american society a very key element of the surge of the wealth and income of the top 1 is not just people on wall street it's the senior managerial elites and their technicians in these companies who have very big stock options very handsome compensation and then they get bonuses on top so these successful companies distort and drive increasing polarization in american society the coronavirus has exacerbated the trend between 2020 and 2022 while many americans were losing their jobs jeff bezos's fortune grew by more than 80 billion dollars the standard story that we've always been told about the creation of wealth that is that it is created at the top right by these brilliant entrepreneurs and innovators and then that'll trickle down to the rest of us right and and sure we can tax them but we also got to be grateful and we shouldn't attack them too much because that may you know disincentivize all their great work what we've come to realize maybe especially because of the pandemic is that actually it's the other way around the real wealth creators that we're really dependent on are the plumbers the teachers the nurses the care workers you name it if they stop working society crumbles tax avoidance has led tech companies to rural areas far from the big cities in remote prineville oregon facebook has invested two billion dollars in a data center this was a very sleepy city prior to the tech companies coming in this is the county seat it's also the oldest seat in county but economically it was pretty stagnant before the data companies came in in 2009 facebook was lured here with the promise of tax breaks as of 2021 the city has lost a potential 130 million dollars in taxes is the deal fair in 2020 alone facebook generated nearly 30 billion dollars in profit if they didn't show up here we wouldn't have a lot of the infrastructure we have we wouldn't have a lot of the cool programs that you know that they've helped out with the schools we would still be that small town struggling to find an industry to come here after the the early 90s timber industry shut down closing sawmills saw prineville's unemployment rate rise to about 20 then came facebook but in 2022 the data center employed only about 350 people instead of taxes facebook makes donations to the town for things like school renovations courses in programming and infrastructure does that make prineville's politicians susceptible to influence i think [Music] because they know they'll get money from them they know they'll help support some of the projects and things that the economy itself can't afford to do they're more powerful than the government i mean they really are and i don't know where or how from a legislative point of view you can interact with something that you can't anticipate and that's a problem facebook is opening its 11th data center on the site in 2023 the facility will soon have an area of 4 million square meters the company confirms that it has given out three million dollars in voluntary grants yes facebook has a huge presence here and yes a lot of people work work up there but i don't think uh i guess we're a facebook city and the fact that we're one of their partners and we've worked closely with them to build uh like they have but i think our identity still is a timber a timber town facebook's tax break in prineville won't end until 2027 only then will the town find out whether its deal with the company was a good one it isn't just small towns that have to negotiate with tech giants entire countries depend on them how did individual companies get so big one answer takes us back to 2007 the start of the financial crisis and the soaring fortunes of financial services firm blackrock as the banking sector faltered then federal reserve chair timothy geithner allowed blackrock to oversee the winding down and restructuring of banks so come the financial crisis you have to for instance rapidly dismantle a bank like bear stearns who do you ask to do it for you well you don't really want expertise in the federal reserve of new york to have its hands too dirty you'd rather contract this out and you find people who really know their way around this like blackrock for instance at the time a relatively unknown company but with huge expertise blackrock closed banks and bought up ailing financial institutions it became the first big winner of the crisis by 2020 the group was managing assets worth nine trillion us dollars and then crucially it becomes a predator so it becomes an entity that has the ready cash to buy other people's assets as they look for capital blackrock also struck in europe advising the european central bank and buying up a share of major british bank barclays in 2009.
and blackrock uses the embarrassment of barclays to pounce on this portfolio and dismantle it and incorporate it into blackrock's business and it jumps blackrock away from its major competitors at the time schwab and vanguard and pushes blackrock into a much bigger league so help you god so help me in an effort to prop up failing banks u. s presidents bush and obama pumped massive amounts of cheap money into the system buying stock in the banks with state capital if you delay acting on an economy of this severity then you potentially create a negative spiral that becomes much more difficult for us to get out of the whole strategy in early 2009 is to prevent the avalanche rolling again that's the key right you can do work creation you can do stimulus you can begin to repair american society with a health care program but what you can only do any of that if you stop the banks falling the financial system didn't collapse the us economy began to recover in part because investment capital was so cheap one man especially took clever advantage of that fact jeff bezos economics professor scott galloway has analyzed the rise of amazon people forget in the early 2000s a lot of smart analysts thought that amazon was going to face liquidity crisis and could go out of business and their stock underperformed for the better part of a decade bezos focused on spending revenue and easily gotten capital on the optimization of a supply chain the goal was to make products reach the customer faster it's easy to put up a website but it's hard to make it really good and it's hard to make sure that the stuff arrives in good condition on time what's unusual about amazon it's not a victory of marketing it's not a victory of innovation really it's a victory of supply chain they have managed to get more products to more people faster than anyone else in the world amazon is one of the most valuable companies in the world along with apple google and facebook as of september 2021 they're worth together around seven trillion dollars if you show up with more capital than your competitors the odds are you're going to win so access to cheap capital is important and has become a key strategy for the winners at amazon growth is everything employees are monitored forming a union is difficult there are two million amazon retailers that depend on the giant for their survival much like yerghu baka amazon takes care of storage shipping and returns for year baka in return it takes commission for every euro of sales hoobacher has to hand over 30 cents to amazon in 2019 amazon made almost 60 billion dollars from these commissions alone problem is people will say well it's a two-sided trade the retailers don't have to work with amazon and i would agree that's not really true amazon is now 50 of all e-commerce so to not be on amazon is really to not have an e-commerce offering and that just isn't an option for most people germany's online trade association has surveyed almost 1 000 retailers about their experience with amazon nearly 80 percent of respondents saw amazon as a difficult partner that dictated prices and encouraged dependency on the platform in may 2021 amazon cut hubocker's inventory half of his products were removed resulting in a six-figure loss in turnover [Music] you don't sleep very well when suddenly the foundation of your business is taken away and you have to put all of your employees on reduced hours overnight with no notice that's not something you can prepare for the switch gets flipped and then suddenly you're virtually out of business responding to an inquiry amazon gave the pandemic as the reason for its actions warehouses were overcrowded and hygiene measures had changed its logistics procedures if these inventory caps go on for another two months i'll have to close down i wouldn't survive because the overhead costs keep running i have 35 employees here whom i have to pay amazon didn't pay compensation hubacher had to bear the loss in turnover on his own meanwhile amazon founder jeff bezos was flying into space in his own rocket [Music] the market power of big tech firms also stems from buying up other companies both inside and outside their own sector they purchase hundreds of competitors then they either use the newly acquired technology or bury it [Music] apple park in silicon valley the headquarters of another tech giant apple was founded in 1976 with starting capital of just 1 300 us dollars in 2022 it's the most valuable company in the world with a stock market value of around 3 trillion dollars much of its profit coming from the app store [Music] founder steve jobs presented it in 2008 as a platform for selling software [Music] apple has sold nearly 2 billion iphones worldwide the success of software can depend on its presence in the app store for which apple charges 15 to 30 percent of revenue david heinemeyer hanson can't accept that the entrepreneur lives in malibu california he became famous in tech circles with his base camp software and essentially tell us if you don't like the deal you can just get out of here you can just shut down your business how is that a choice is it just felt like mafia tactics even the way they showed up to demand the money was just despicable heinemeier hanson wanted to distribute his new email software without paying huge commissions and pretty soon it's 30 of the whole economy and pretty soon like why is it 30 not 40 maybe we should just raise our prices this is a captive audience nonetheless which is exactly the essence of monopoly power other companies are also taking action against apple's commission in 2019 spotify sued in europe prompting the european commission to initiate anti-trust proceedings in the u. s game developer epic games also filed an antitrust complaint in 2020 apple's ceo tim cook had to defend himself in court this isn't about destroying apple this isn't about destroying anyone this is about giving us all a chance and access to the market the tech companies decide under what conditions others can enter their system in the process they collect oceans of data facebook holding company meta alone has a total of 3 billion users thanks to its acquisitions of whatsapp and instagram shoshana zuboff an author and professor emerita at harvard calls it surveillance capitalism they invade our private lives through surveillance they extract from our lives rendering what they extract as behavioral data and then they claim those behavioral data as their private property that's how surveillance capitalism works this is a fundamentally illegitimate operation [Music] the data is used to advertise products and for political campaigns surveillance capitalism became the dominant economic paradigm and it went from google to facebook from facebook it became the default option in the tech sector it reset the bar for investors because with the surveillance dividend you produce more revenue more quickly than you know doing capitalism the old-fashioned way which is actually creating products and service that meet people's real needs maritia from the netherlands is a former member of the european parliament she's now international policy director of stanford university's cyber policy center my sense is that one of the biggest problems that silicon valley leaders have is that they believe that because their intentions are good that the outcomes will be good and that is really hard for them to imagine that despite their good efforts some things have gone completely down the drain shaka and zuboff are part of a panel of experts that want to keep an eye on facebook meanwhile activists have placed body bags outside facebook's washington office they see the company's role in election interference and misinformation as deadly especially during the pandemic [Music] even if you may think well selling ads is not you know life-threatening it can lead to dynamics that are life-threatening with micro-targeting with the going viral of hatred with people taking to the streets because they actually believe that the election was stolen [Music] if you design the architecture for data and information with profit goals that those become dominant and that have been out of sight even if society pays the price facebook founder mark zuckerberg has testified before investigative committees several times like here in the us senate in 2018 my top priority has always been our social mission of connecting people building community and bringing the world closer together the us government has been pursuing several cases against the tech giants in the early 2020s the federal trade commission is suing facebook for creating a monopoly the department of justice is suing google the house of representatives is even considering breaking up the companies so far without much success so i think things have flipped and now our innovators and our tech companies believe that they in fact have the upper hand and more resources and are more powerful than the government that's supposed to regulate them are big tech corporations more powerful than nations for ramesh srinivasan of the university of california that's a crucial question who is influencing how we feel what we believe what we think who we connect with what we know right there's no question that that's occurring far more uh intensely and ubiquitously the governance of our lives by you know a private tech company a google google search results facebook's feeds etc right and i think the awareness of the harms of putting so much trust and responsibility in the hands of retail and advertising companies was a mistake it really was a big mistake and i think it's important that democratic governments start to use technology to advance their own democratic agendas and not have tech companies use them to advance their own corporate agendas many critics are hopeful the eu will curb the power of tech giants two new directives from 2020 are expected to get things started the digital service act or dsa aims to ensure that platforms like facebook and twitter take on more responsibility when it comes to things like deleting illegal content and maintaining transparency and fundamental rights the digital markets act dma defines fair competition rules put simply allowing competition and sharing data amazon apple and google would be affected by the directives european commissioner for competition magreta vestaya is taking companies to task with that size also comes responsibility and then line up what you have to do and what you cannot do facebook and its fellow rivals are fighting the planned regulations with help from lobbyists in 2020 alone u.
s tech companies spent around 100 million euros on political influence in brussels they hired ex-politicians with the best connections facebook even employs a former british deputy prime minister nick clegg there's definitely an imbalance the big tech companies have a lot of resources as members of the european parliament we have very small teams with three or four employees in brussels who write policy it's clear that as an individual mep you can't compete with the lobbying power the big tech companies have or their resources [Music] rasmus anderson represents the greens in the european parliament he receives weekly requests for talks from lobbyists this time it's a representative from amazon amazon amazon just wants to push its interests i think they'll try to give us suggestions on how to water down the law so it doesn't affect them or it doesn't change anything at the core of their business model lobbying isn't illegal but is it legitimate andrea schwab represents the centre-right cdu in the european parliament as well as under their own names large corporations exert influence covertly through trade associations they come to you as the first european association of american companies then they come as the european association of digital companies then the european association of tech companies then the american business association and the american business association for tech companies they come and they come and they come at some point as a member of parliament you have to ask how much time you can spend on their concerns shouldn't we be spending much more time on the concerns of other citizens and businesses lobbying is used to put pressure on undesired regulation and if that doesn't work there's a longer legal route the european commission is proposing creating 80 positions to enforce the rules but apple's legal department alone has a total of 900 employees of course we cannot compete when it comes to the funding of lobbyism we cannot compete when it comes to the number of lawyers so you know what we have to put into the process is of course a a dedication to get this right google facebook and apple also put large sums into lobbying in the us when the software developer david heinemeyer hansen decided to fight apple's market power in 2021 he found out how strong that pressure is in several u. s states when i testified in front of the arizona house and the uh chairwoman of that committee said as her opening statement for uh the proceedings that apple had bought every lobbyist in town and that before the hearing had even had a chance to happen apple had tried to squash it [Music] to do this the company hired lobbyist kirk adams a former chief of staff to arizona governor doug ducey the planned law would have enabled app providers to circumvent apple's high commissions arizona would have been the first state to crack down on the monopoly [Music] in fact i was sitting on a zoom call for that final um meeting and we were waiting to deliver our testimony and then in the middle of the proceedings they simply said oh actually we're not even going to hear this bill something has come up it's no longer the agenda and you you witness that and you think is this a movie there was no vote instead a deal was struck behind closed doors the law that would have endangered apple's market power was thwarted a similar regulation also failed in north dakota in 2021 [Music] so that was really just frightening to see up front that power as being conjured by this monopoly success gives you the resources to squash democratic accountability that when sovereign states like north dakota and arizona are not even powerful enough to hear a bill to bring it to a final vote yikes when asked about what happened apple admitted exerting influence but defended his actions saying this legislation threatens to destroy this very successful model as well as the privacy and security mechanisms our customers expect is the power of global mega-corporations a danger to democracy one of the steps to tyranny was when private power overran government government is supposed to represent our best interests and be a counterbalance or a ballast to private power that will always pursue profits and ignore the externalities whether it's teen depression or misinformation or weaponization of our elections and they're more there are more full-time lobbyists working for amazon living in washington d. c then there are full-time us then there are sitting u.
s senators the pr and communications department of facebook spinning their image is now bigger than the newsroom at the washington post relations between silicon valley and washington are close we are in the middle of the worst google was a top donor to barack obama's 2012 election campaign united states corporations can essentially buy elections the system is corrupted so the system itself has to be transformed as well on the level of who influences our publicly elected politicians belgium alibaba china's answer to amazon plans to open a distribution center here in november 2021 but the project is facing resistance from some locals it advocates for its interests on a global scale including through companies like alibaba in strategic sectors we're looking at a chinese expansion project here the project expansion liege is a stop on the new silk road china's major 21st century infrastructure project the deal was brokered in 2018 by belgium's king philip seen here with jack ma founder of alibaba the closeness between state and company is typical for china says digital expert kai fun kanop [Music] it's increased significantly in the last year because of the expansion of so-called party cells party cells are effectively communist party representatives installed within various private sector corporations but especially in the tech sector party functionaries are also working within alibaba profit and politics combine to serve the party wallonia's former finance minister doesn't see any danger in this situation i don't want to be an advocate for authoritarian states global trade is a reality and i prefer for exchange to take place between democratic countries but i'm not naive i don't believe we live in a world where we're essentially good and only good that would be wonderful but it's not the reality is it simply online trade or chinese imperialism after the decline of the steel industry in the 2010s liege's unemployment rate was high is belgium happy to pay any price for economic growth for 30 or 40 years we've been swindled by the multinationals until now it was mostly u. s companies now we're going to try it with the chinese they're taking advantage of the fact that we have high unemployment and are desperate for foreign investors in 2021 two of the top 10 tech companies were chinese another could soon join them bite dance the parent company of tick tock known as do yin in chinese the platform known for short videos has raced ahead of the u. s competition thanks to a successful recipe they were able to improve the algorithm based on a much better understanding of our online behavior china has an insanely large online community and low digital privacy that's led to an algorithm that's significantly better at recognizing what we want to has only been on the worldwide market since 2018 but has already been downloaded over two billion times more frequently than facebook and what's up the chinese state also has its place at the helm of parent company bite dance controlling data and censoring content skipped catalogue there's a catalog of sensitive issues around domestic questions tiananmen square xinjiang hong kong and taiwan are all sensitive topics that are not allowed to be spread through tick tock or the chinese equivalent i skipped this these policies exist in europe and the us too there was an example a few months ago where a user tried to criticize human rights violations in xinjiang under the premise of a makeup video how much influence does the communist party have on tick tock the company stresses that it complies with local laws but when questioned about it the chinese government won't answer if it has access to the data of tick tock users fear is growing in beijing about the power of china's own tech companies in april 2021 alibaba had to pay 2.
3 billion euros in fines after an antitrust case at bite dance the state has bought company shares the regime has been tightening the screws on the tech market since late 2020 and is looking into banning certain business models i think china looks at the us and europe and says these governments have been overrun by big tech and we're not going to get to this point and they've made some very swift aggressive actions against big tech saying when big tech overruns government as it has in the u. s and europe it leads to very bad places meanwhile in nevada a company is working towards doing business completely independent of local laws here in the desert near reno tech companies are hoping to found their own city the model comes courtesy of cryptocurrency firm blockchains llc chief executive jeffrey burns wants to create so-called innovation zones acting like completely independent local governments burns donated money to nevada governor steve sisilak and hired influential lobbyists [Music] a few months after backroom talks in early 2021 the governor announced a bill [Music] journalist sam metz has been covering the story so under the innovation zones as it was proposed any tech company with a certain amount of land that promised a certain amount of investment could apply with the state to create an innovation zone which would give them the powers akin to local government the condition is that tech companies invest at least 1. 25 billion us dollars in return they're allowed to introduce their own local tax judicial and school systems so is sovereignty up for sale i think the story of nevada is really the story of politicians trying to diversify a single industry economy so first was mining and it was gambling and tourism and now i think the pandemic has really made the state aware that it's hard to just rely on one industry the pandemic has hit nevada hard the governor is hoping for a cash injection from blockchain's llc i think in nevada critics are worried about actors with enough resources to buy land hire lobbyists and get an audience with the governor why does jeffrey burns want to eliminate local governments [Music] our requests for an interview went unanswered only his security advisor was available i think that we there are ways we can incentivize places that have suffered a lot to be investment hubs for businesses but i don't think it has to mean that they're given all this power to basically become like their own states that that's a violation on many different levels of sovereignty of like state-based sovereignty i mean that that to me sounds like some sort of like district 9 or some or some sort or like robocop some kind of dystopic sci-fi [Music] after heavy criticism the bill was withdrawn in august 2021 governor steve sisilak and blockchain's llc are holding on to their idea however to sell the powers of state to tech corporations meanwhile in washington the fight against the market dominance of google apple facebook and others continues congress is relying primarily on antitrust laws simply put they have too much power this power but how promising are these proceedings legal expert chris sagers is skeptical personally i think the the risk with even very aggressive antitrust is not so much that it will wreck anything uh it's just that whatever good it does won't be permanent and what i fear is you know we we may have this period of a few years of very aggressive intervention um and even though it seems unlikely you know perhaps the government will manage to break up google or facebook or some other firm and then it will only be a matter of a few years before somebody else figures out how to make a new monopoly out of it president joe biden has shown a willingness for the fight but he's had to compromise you know democrats are in control of both houses of congress and the white house but in the senate it will be very difficult to to adopt any uh legislation that doesn't have some republican support and republicans will be very much against any very serious change sages estimates that proceedings in the u.
