A realistic image of the interior of a modern data center. The scene features long rows of tall, sleek server racks filled with blinking LED lights. Image by Cbrasil0 on Wikimedia Commons (CC BY-SA 4.0 Deed).
By Abdallah Khalifa Abdallah
Carpenter James W. Marshall discovered gold flakes in Coloma, a small town on the American River in the United States, on January 24, 1848. This sparked the Gold Rush, a mass movement of fortune seekers, which drew diverse miners, sparking economic competition that led to discrimination, marginalization, and genocide against Native Americans and other non-white populations in what is now California.
As California’s economy grew, gold mines solidified Anglo-American (white American) dominance through exclusionary practices. Mexican and Latino miners faced genocidal campaigns, violent opposition, and discriminatory taxes, while Black, Asian, and Latino Americans were barred from mining infrastructure.
Within this environment, San Francisco emerged as the greatest boom town, its population surging from 600 in 1848 to 25,000 in 1849. As the primary port of entry for seaborne “Argonauts” (people who moved to California during the gold rush of 1849) and global supplies, San Francisco became California’s banking, manufacturing, and economic epicenter.
Today’s Silicon Valley, a global hub for technology and innovation, is deeply rooted in the Gold Rush legacy. While academics often highlight the Argonauts’ entrepreneurial spirit and positive cultural attributes, this narrative overlooks the US government’s role in consolidating wealth through policies such as the Preemption Act of 1841, which secured land rights largely for white men, to the disadvantage of anyone else.
Moreover, these laws and government interventions led to economic consolidation around gold mines, achieved through displacement, violence, and unequal wealth distribution. Similar to their predecessor, Silicon Valley and the US Government have perpetuated these practices, consolidating global wealth and resources, often at the expense of low-income countries and former colonized states.
Myth of the equitable playing field
The US government and Silicon Valley claim to promote fair competition, but this contradicts Silicon Valley’s own history of receiving government support. For instance, in 1958, after the incorporation of Fairchild Semiconductor (the seminal company that gave rise to Silicon Valley), government agencies like the Department of Defense, NASA, and the US AIR FORCE gave the company massive support in the form of contracts, subsidies, and tax incentives.
Additionally, Stanford University, inaugurated by William Shockley, became an institution that would later become renowned for its academic output in Artificial Intelligence (AI), Quantum Computing, and its thriving start-up ecosystem, while it was initially financed by the military. Again, Silicon Valley received military funding for the Massive Digital Data system, a program that was instrumental to the creation of Google, an enterprise that would come to be synonymous with lobbyist endeavors and a champion of mercantilist policies.
Finally, in 1990, the US military allocated over 1.1 percent of the federal budget to defense contracts in Silicon Valley. In a similar vein, former President Joe Biden’s USD 850 billion defense budget proposal sparked global curiosity over its allocation.
The unseen forces shaping global politics
Analogous to the Argonauts, Silicon Valley’s rise was facilitated by a lax regulatory environment in the 1990s–2000s. This enabled tech giants like Google, Amazon, and Facebook to flourish. By 2024, Apple’s market capitalization reached USD 3.50 trillion, rivaling the combined GDP of Saudi Arabia, Turkey, Poland, and Argentina.
In addition, Apple’s value approaches that of the Dutch East Indian company, historically considered the most valuable company in existence. Other tech giants, including Google, Amazon, and Microsoft, boast market capitalizations exceeding USD 1 trillion.
Silicon Valley wields vast political influence through strategic lobbying and diplomacy, both domestically and internationally. For instance, Denmark’s 2017 appointment of a foreign minister to Silicon Valley, followed by Austria, the UK, and Estonia, demonstrates this influence. Another instance is the rise of tech specialists in politics, like Robert Holleyman, former CEO of Business Software Alliance and deputy US trade representative under President Barack Obama.
Indeed, the Silicon Valley giants spent USD 70 billion on lobbying in 2021, exceeding 2020’s USD 64 billion. A study found that every USD 1 spent on lobbying generated a USD 220 return. Furthermore, the companies aggressively pursue mercantilist policies globally, seeking to penetrate foreign markets through trade agreements such as the Trans-Pacific Partnership (TPP), the Information Technology Agreement (ITA), Trade Agreement Authority, and Tax Evasion.
The digital oligopolies
Today, Silicon Valley dominates the digital economy by controlling consumption and underlying infrastructure. The digital infrastructural space is a modern-day gold mine. Just as the Argonauts concentrated wealth and talent around gold mines, data centers now serve as hubs for economic consolidation.
Data centers offer hidden economic benefits beyond privacy and sovereignty. They attract Foreign Direct Investment, create high-paying jobs, boost local economies, and improve reliability. A 10 percent increase in internet penetration yields 1.4 percent GDP growth, while local data centers bring taxes, infrastructure, and a competitive edge.
Despite clear benefits, Africa and other global majority nations underinvest in data center infrastructure. This is because data centers are capital-intensive, making private investment unviable and government investment risky due to potential anti-competitive concerns. This hands-off approach is seen as perpetuating the digital oligopoly.
To illustrate further, the US owns over 50 percent of global data centers (5,381/11,800). Silicon Valley has more data centers than Singapore, Switzerland, and India combined. Data center-related activities generate 7.1 percent of the US’s 2.1 trillion GDP.
Global Constellation of Cloud computing data centers (Amazon green, Google blue and Microsoft red). Image by Abdallah Khalifa Abdallah. Used with permission.
Finally, Silicon Valley’s infrastructural dominance controls consumption. Google and Facebook dominate global advertising, while Google holds over 90 percent of the global search market.
A way forward
Parallel to the gold mines during the “Gold Rush,” Data centers concentrate economic resources, attracting skilled workers and enterprises. Africa and countries in the global majority need a digital integration blueprint to compete in the digital economy. Furthermore, African and other global majority regions must acknowledge their integration into the global system. However, they must contest the terms of this integration. The playing field remains uneven, leaving them vulnerable to Silicon Valley’s exploitative policies. A competitive, driven approach is necessary.
The World Trade Organization’s crisis has led nations to prioritize bilateral agreements and national interests, using data localization and other measures to promote domestic digital firms. China’s 2015 requirement for foreign tech firms to share source code highlights the need for a balance between regulation and democratic values. Africa and the global majority nations must regulate technology strategically to compete.
Inadequate infrastructure is a product of low spending on Research and Development (R&D). Africa’s R&D spending averages 0.45 percent of its GDP, far below the global average of 1.7 percent, and this can significantly impede the localization of products and infrastructure.
In another case, digital skills encompass digital literacy, content creation, and entrepreneurship. However, inadequate infrastructure can hinder the development of these skills.
Furthermore, regional institutions like the African Union, African Development Bank (AfDB), and New Partnership for Africa’s Development (NEPAD) can fund infrastructure projects through resource-backed loans. Governments and NGOs can also support local R&D spending.
The world is at a crossroads. Digital technology has interconnected people and services, but global governance driven by mercantilist interests has led to unprecedented marginalization, exacerbating poverty, the immigration crisis, and global instability. The digital economy should prioritize eradicating global poverty, not just serving corporate interests.
African governments must take a more active role in shaping the digital economy, rather than leaving it to the giants of Silicon Valley, to ensure accountability and social well-being for its consumers.
