Is Silicon Valley About To Lose It's Monopoly On Tech? My Thoughts On "Sovereign" Tech Stacks.

00:00 - The Monolithic Rise of Silicon Valley
03:10 - The Erosion of Tech Monopoly
06:05 - Geopolitical Implications of Tech Sovereignty
08:51 - Emergence of Global Alternatives in AI

Summary:
In this conversation, Brian McCullough discusses the historical dominance of Silicon Valley in the tech industry and the potential challenges it faces as global dynamics shift. He explores the implications of a possible breakdown of Silicon Valley's monopoly on technology, particularly in light of geopolitical factors and the emergence of local alternatives in various markets, especially in AI. The conversation highlights the changing landscape of tech sovereignty and the need for countries to reassess their reliance on American tech products.

Takeaways:
Silicon Valley has enjoyed a monopoly on tech for 30 years.
The tech stack's dominance may be breaking down.
Geopolitical factors are influencing tech sovereignty.
European companies are reconsidering reliance on US cloud services.
Chips are now a geopolitical necessity.
Countries may seek to reshore their tech stacks.
Trust in US defense tech is waning in Europe.
Silicon Valley faces competition in the AI space.
Local alternatives to Silicon Valley products are emerging.
The global market for tech products is shifting.

I think there’s a fundamental structural advantage that Silicon Valley and the US tech industry has enjoyed for 30 years that might be on the verge of breaking down, and I don’t think enough people are thinking about this.

Tech has become monolithic, right? It’s eaten the world. Tech is now 40% of the S&P 500. The magnificent 7 companies alone, Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla by themselves account for 35% of the US stock market. Individual tech companies have market caps bigger than the GDP of entire countries. By some estimates, the gap in GDP growth between Europe and the US is entirely due to tech. We know this. The entire world uses Silicon Valley’s products and services. The modern world literally runs on the innovations Silicon Valley has produced.

Why has this happened? Well, one reason that is so obvious people don’t think about it much is that, in a way, for 30 years, Silicon Valley has had a monopoly on the tech stack and the innovation stack that covered the whole world. The world uses our phones, our operating systems, our computers, our social networks, our servers, our cloud, our streaming video and music services. Modern silicon valley exploded in the 1990s right after the cold war ended and Silicon Valley piggybacked on the fact that the whole world was open to trade and America was the sole superpower and there wasn’t really any other competition for our tech products beyond maybe Japan and South Korea. And besides exceptions like China, literally the whole world was open to our products. Sure, our stuff was manufactured elsewhere, China, Taiwan, but it was still our stuff people were buying. We were the default option. If there were local alternatives in various markets, that didn’t stop Silicon Valley products from proliferating and often dominating. Write the code once and distribute it everywhere, right? When we talk about scale we talk about the fact that the potential market for Silicon Valley products has been, I dunno, potentially every single human being on the planet?

But what if that monopoly on the modern that Silicon Valley has had over the whole world is breaking down? What if the real secret of silicon valley success was the post-cold-war neoliberal order, free-trade order, that seems to be coming to an end now? Does Silicon Valley’s business model work in a world where it no longer has a monopoly?

It's articles like this one that I’ve been reporting on on the podcast that have made me think this. In an open letter: ~100 EU companies urge EU lawmakers to take “radical action” to shrink the reliance on foreign infrastructure by fostering a so-called “Euro stack.”

Remember this story I did from Wired this week? Quote: There are early signs that some European companies and governments are souring on their use of American cloud services provided by the three so-called hyperscalers. Between them, Google Cloud, Microsoft Azure, and Amazon Web Services (AWS) host vast swathes of the internet and keep thousands of businesses running. However, some organizations appear to be reconsidering their use of these companies’ cloud services—including servers, storage, and databases—citing uncertainties around privacy and data access fears.

“We have more demand from across Europe,” says Mathias Nöbauer, the CEO of Swiss-based hosting provider Exoscale, adding there has been an increase in new customers seeking to move away from cloud giants. “Some customers were very explicit,” Nöbauer says. “being very explicit that they want to move away from US hyperscalers.” ENDQUOTE