Silicon Valley is Courting Gulf Monarchies to Fund AI

Paris Marx: Nitasha, welcome to Tech Won’t Save Us.

Nitasha Tiku: Thanks for having me. Huge fan of the pod.

PM: Thanks so much. I’ve been reading your work for a long time. We occasionally send messages, or at least, tweet at one another, but it’s great to finally have you on the show to dig into some of your work. And in particular, you co-wrote a recent piece in the Washington Post digging into how Silicon Valley is really returning to the Middle East and to Saudi Arabia and the UAE in particular to seek funding for its various companies and projects and things like that. So I wanted to dig into that.

But before we talk about what’s happening now, I was wondering if we could talk a bit about the history of Silicon Valley’s relationship with the Middle East, because this certainly isn’t the first time that a lot of Silicon Valley companies have looked to the vast oil wealth of these countries to try to fund some of their companies. So what did we see about tech funding from Saudi Arabia and the UAE in the past, say, in the 2010s?

NT: So this began, I would say, around 2015. This is when MBS (Mohammad bin Salman), the leader of Saudi Arabia, issued this vision about how the area could diversify away from oil. He never wanted to be trapped in commodity prices again; investing in tech was a big part of that. And they started with a direct investment in Uber. But quickly moved through — one of my co writers, Elizabeth Dwoskin wrote as like the side door — they invested in the SoftBank Vision Fund. And it was a hundred billion dollar fund. It just threw the whole system out of whack. Up until that point, Silicon Valley, they were raising — for individual venture capital firms — they were raising up to a billion.

But once you’re trying to compete with a hundred billion dollars, and this is at close to when things are really getting heated, close to the apex of this 13-year stretch of just up into the right, up into the right, everything is growing and going up. So, that money, which primarily came from MBS and came from the public investment fund of Saudi Arabia, it was going into WeWork, Uber. It went into a chips company, AMD. They were shoving it into like dog walking startups. Basically, if you seemed like you could dominate your category, you would be getting a call from the Vision Fund about: Well, if you don’t take our money, then we’re going to invest in your competitor. And then they will be the one that’s able to dominate. So ,it was hugely influential in this like defining decade for tech.

PM: It’s fascinating to hear how all of that money really just kind of threw things out of whack, because you have all this money entering. You have this $100 billion Vision Fund partially funded by this kind of gulf oil money that is throwing things off. And naturally, of course, then a lot of these companies went to try to get some of that money, went to get their piece of it to fund their business models, but we also know that in 2018 Saudi Arabia killed Jamal Khashoggi, which really changed, it seemed like at least, the relationship that Silicon Valley had with Saudi Arabia and the UAE and the Gulf more generally. Can you talk about what happened there and how that shifted things?

NT: I was at Wired at the time and looking back at my effort to try to get comments from various companies that had public investment fund money from Saudi Arabia or vision fund money, and most of them would not comment. So, there were some, some vocal people who found it the connection with this authoritarian regime that had committed this atrocious murder, morally reprehensible, and wanted to draw a line in the sand and wanted to have a moment of reckoning about thinking, where is the tech industry getting its money from? Does this align with our values?

But, most of them already had the money and they just weren’t willing to do more than say that they weren’t going to attend Davos in the Desert that year. You didn’t really have an overwhelming feeling of it being taboo in some way. It was just sort of like: Let’s not highlight it. You’re not going to see him, anyone taking pictures with MBS the way that they did just earlier that year when he was kind of going on a tour of Silicon Valley. And, you saw him with Tim Cook and Sergey Brin and Sundar and, basically everybody.

So it was, I guess, more put in the background and then the Vision Fund itself was sort of falling out of grace. You saw what happened with WeWork. Many of its investments didn’t quite pan out as we wrote in the piece, it was perceived a little bit more as dumb money. So the two things, like the political pressure or the political scrutiny on where the source of the funding is coming from and kind of the business savvy of the Vision Fund and of Saudi Arabia. They’re both taking a nosedive at the same time.

PM: That makes a lot of sense, especially to hear the response of some of these folks in tech where maybe it’s not so much cutting off access to this money for an ethical reason, but a need to distance themselves from Saudi Arabia in particular and MBS because it would be like a public relations nightmare if they did keep up this relationship during that time. But would it be right to understand that there were still relationships ongoing, even during this kind of colder period in relations between the United States or Silicon Valley, particularly, and these kind of gulf monarchies and like those relationships were still happening. It was just kind of not publicly championed in the way that it would have been in the past or that it increasingly is today?

NT: The Saudi stopped investing in the Vision Fund in 2020. So I think there was a lull; there wasn’t new money to allocate at the time and Saudi Arabia still causes people to draw this line in the sand. Currently, you’ll have companies say: They think it’s fine to raise money from authoritarian Gulf states, but not Saudi Arabia or not Qatar, or they’ll make distinctions between countries. But I don’t think that there was. It was just really hard to get people to comment on what they thought about Saudi Arabia at the time. Either one of your portfolio companies had money from there, or you didn’t know what would happen in the future geopolitically. It was definitely frowned upon, but you didn’t see many people crusading against it, I guess.

PM: That makes sense. And so if we are looking closer to what is happening now, what is driving the tech industry to head back to, say, the UAE and Saudi Arabia in this really concerted way to try to get access to the capital that these countries are ready to hand out through their funds?

NT: I should say — so around the same time the UAE is moving in the same direction as Saudi Arabia did, except that they issued a plan that looked at like their future when it came to artificial intelligence in particular. Back in 2018, they laid out this plan to become a leader in the space by 2031. So, this is when many investors here are still talking about crypto or whatever was hot at the time. It changes very quickly and the UAE has this really prescripted idea of how they’re going to build themselves into a name within this industry. And, it doesn’t involve just being the dumb money. It involves building up their own capabilities.

They started MBZUAI. MBZ is the MBS of UAE and his brother. So that’s Mohammed bin Zayed, and his brother Tagnoon bin Zayed is the national security leader. Actually, I made a map for the story trying to display visually all of the connections and it stretched very wide across my Excel sheet. Basically, he is the head of the chair of G42. Oh, I guess we’ll get into that part later, but sorry, going back to your initial question, why are they coming back to these authoritarian Gulf States for money?

I would say that it was driven in large part by the AI boom and the need for massive amounts of capital in order to get the chips that they need in order to get the computing power that they need, the energy that they need and compete with others. And then you have that coinciding also with drying up of access to funds. across the tech industry, this two year slow down in tech stocks, challenges with getting LPs to give you money.

And at the same time, this part to me was really new and interesting is you have the U.S. government in close contact or the Commerce Department in the White House, at least in close contact with both officials in the Middle East, especially in the UAE and tech CEOs, Brad Smith from Microsoft, Sam Altman, other folks are in the room. It’s always hard to tell what’s the chicken and the egg. But it’s many different interests aligning.

So, basically the short way of saying it is that the U.S. would like for UAE and everyone in the Middle East to choose the U.S. over China. And so much of the way we discuss AI policy and geopolitical policy is all around this lens of China and Russia being the enemy. So, they are saying: Maybe your deals with the UAE will help convince them to take Huawei technology out of their data centers; it will convince them to align with us. And in terms of the UAE, they have very close ties with China specifically on their AI effort. So it was just a confluence of forces, but also forces with much, much higher stakes than the tech industry has historically had in geopolitics.

PM: That’s really fascinating to hear and there are a few points that I want to pick up on from that answer. So I’m going to put a pin in the geopolitical point for just a minute and we’ll come back to that one because that’s a big topic to dive into. When you’re talking about the funds drying up for these Silicon Valley companies, obviously within the valley that becomes more difficult, but I guess to some degree that’s also linked to the higher interest rates and how that has made it more difficult to access the cheap capital that these companies were used to, which at a time when they’re pushing this, this idea that AI is the future and we need to make all these investments in AI requires all this capital. So, that’s a clear incentive to look for these other areas where people have a lot of money that they can try to draw from. And obviously, if we’re talking about the Gulf monarchies, that is one of the places where there is a lot of capital that’s ready to be lent.

NT: Exactly. I would add, though, that it’s not the end of zero percent interest rates. You can’t overstate the importance of how that played a role in the growth of the tech sector. Venture capitalists were also having to write down investments. They just weren’t seeing the kind of breakout successes that they had promised their investors as they grew these funds larger and larger. The economics of it just didn’t work as well at a $5 billion fund some firms found as it did, when they were a billion and below.

And when you have such strong competition and you are investing at higher valuations and it’s challenging to go public. What’s your liquidity event? Who’s going to buy your company? How are investors going to get the money back to the universities, the pension funds, the family offices that give money to venture capital firms?

PM: That makes perfect sense. No, I’m happy that you added that additional context for us. And when you talk about the UAE’s AI’ s strategy, basically coming out of 2018, can you expand on that a little bit, what the UAE is really trying to do in terms of turning itself into like a hub of artificial intelligence development or work?

NT: So they had a multi-pronged plan, but basically they want to bring the technical talent into the country. Faisal Al Bannai, he’s the Secretary General of the Advanced Technology Research Council, which is like — as I mentioned, it’s kind of a complex to visualize — but he’s very high up there. And he was a former head of DarkMatter, as well, which we might get into, but he has this speech where he talked about it’s not just a memo of understanding between the UAE and other foreign companies or individuals that they’re doing partnerships with. They have their own AI agenda.

They have AI projects that they want to work on within the country and they’re giving researchers incredible visas and opportunities. They wine and dine them and bring them over. And, they have just like incredible access to resources to study resources for compute. And, they have their own agenda in terms of modernizing. their technology, but also like growing their own AI companies. Their large language model, Falcon from the UAE was at the top of the leaderboard for Hugging Face for a while last year. And they’re continuing to build other large language models, and do the same sort of thing that the U.S. and other countries hope to do, which is like use AI in theory to make kind of every industry in theory, more efficient, more productive, et cetera. So they had various ways of going about this. They’re also building a satellite network and kind of unfathomably ambitious projects, which they can do because of the access to oil money that they have.

PM: Wow. I didn’t realize that they were such a player in trying to move that forward. That’s kind of new to me, but I guess it’s not surprising when you see that these countries are really trying to move away from this dependence on oil and trying to reposition their economies in other ways. And I guess going back to that point that you made around Saudi money and UAE money previously, in the last cycle, being seen as dumb money that would just be invested in tech and didn’t have a lot of strings attached to it. How have we seen that evolve in this era as these countries clearly have some other incentives backing their more recent investments in tech companies and in AI companies, in particular?

NT: Now, the negotiations, first of all, they’re going to involve if you are an American company having to talk to the Commerce Department concerns about export controls over semiconductor chips like is the UAE’s connection with China, just a way to get past the export controls on NVIDIA chips is your deal as an American company with the UAE. So you have that. And then you also have really savvy negotiators, who have a choice right between partnering with China and partnering with the U.S. when they want to go forward on these massive projects like building out data centers for AI or building out a satellite network or space technology. That’s another big ambition of theirs. So we know that for The partnerships with G42, like the one that Microsoft announced back in March or April, that one took years or a year at least of negotiation with officials coming over from the UAE, the Secretary of Commerce going over there. It’s the big leagues. It’s the biggest leagues.

PM: It’s really interesting to hear how those deals are being structured and also how there was one thing that was mentioned in the story that you worked on about Silicon Valley going back to the Middle East where they were really saying that: Okay, there was this company that got this investment from the UAE and it allowed them to set up, I think it was data centers in like Dallas and somewhere in California, but also build one in the UAE. They don’t just want this work to be happening in Silicon Valley. They kind of want a piece of this and for some of it to start being done in the Middle East itself, right?

NT: Exactly. That company was Cerebrus, which is building a semiconductor chip. So they’re a great prism to look at this issue through because, they are competing with NVIDIA. I don’t know if you saw the image going around of Jensen Hwang, the CEO of NVIDIA signing this woman’s boobs today. I was like: Should I share it with my coworkers on Slack? We’re not going to write about this, but…

PM: Oh my God.

NT: I think lots of people are like: Is this the top of the market? So like not only the amount of capital that it takes to build something like new chips or data centers, but then you also have this intense competition, right. And this feeling like whoever can control and harness AI, whatever country, whatever company, whoever dominates now, this will set the tone for the next stage of technology. And, it took Silicon Valley a lot of searching, like what’s the thing we want to put everything behind? What will give us like that iPhone moment? And they definitely think that they found it in generative AI. So you can just imagine like the amount of pressure on Cerebrus to make a name for itself as publicly traded companies are competing in this area and the demand is so high for access to compute.

PM: It also seems to put the UAE and Saudi Arabia in a really favorable position, because if you have the United States increasingly carving out this position where it sees itself on one side and China on the other, and it wants to get as many other countries into its camp as possible. And then it looks to Saudi Arabia and the UAE, which have, I think it’s fair to say, traditionally been like U.S. allies or countries that the United States has depended on and had a good relationship to, and tried to keep that relationship together. Then those two countries can kind of sit in the middle and say: Okay, we can get a good deal from China, so the United States and Silicon Valley, you need to make this look attractive enough for us so that we can get what we want out of it as well, or else, we’re just going to go with these Chinese companies like Huawei or whatnot.

NT: Right. And the U.S. does have massive bargaining power, also. People would prefer to work with NVIDIA chips rather than Huawei chips. So I would love to be in these rooms and if anybody who’s in the rooms wants to give me any intel, please reach out. It’s also the U S saying: Look, you can’t have it both ways, you have to decide. So G42 before this Microsoft deal happened, they were told people use the expression with us, ‘rip out,’ rip out Chinese technology, rip out Huawei technology in order to build these closer ties with the U.S., which is not what UAE overall said, but G42 is their premier tech firm in the Emirates.

PM: Interesting. And obviously the kind of comparisons here can’t be escaped. Obviously, we know that the competition between the United States and China is more geopolitical. But the United States and many other Western countries often try to frame it as bigger, more ethical concerns in terms of the questions around human rights abuses in China being one of the things that are frequently brought up. And then it does, of course, cause you, I think, to question some of that sincerity and look at the real motivations when you see these companies in the United States seeking to foster these relationships with countries like Saudi Arabia in particular, where obviously we know that they dismembered a journalist, an American journalist. More than that, he was, of course, Saudi as well, but Saudi American, worked for the Washington Post. And it does show you that, okay, human rights abuses matter, but like only in certain circumstances, right?

NT: Completely. And I think, in talking to sources who are from the region or who closely follow it, they were just talking to me about the cognitive dissonance of the West around: Russia is bad; China is bad. Because the UAE has played a role in the Tigray genocide. It’s played a role in the Yemen civil war. And from what my sources said: It’s just pure racism that you can consider Russia evil because of the deaths in Ukraine. But you can blame the media, as well. You’re not seeing the Tigray genocide in the Yemen civil war as prominently in your newsfeed. And so maybe you don’t even know, but that’s one of the consequences of looking at things through the prism of China is the enemy.

And, when it comes to AI, like they have been ahead of us militaristically and China’s increased militarism is also why you see people in the U.S. trying to move faster and, shifting the way that they see the world. But, it just gives you this really stark view on this calculus, and how, I wonder, if the sometimes ahistorical or narrow way that Silicon Valley can think about the world or geopolitics or even the way Americans think about it really prepares us for this really complicated moment.

PM: That’s a really good point. And, especially to bring up those examples around the UAE and what it’s been up to, because of course, I think It’s fair to say that in North America, in Canada, or the U.S. where you are, we tend to look at what’s happening in the Middle East, of course, we see what Israel is doing right now. We know that Saudi Arabia is the big bad player, but usually we look at Dubai and it’s like: Okay, we know that they don’t have a democracy, we know that there are these issues there, but it doesn’t seem as bad, yet they are still involved in these really serious actions that should be very concerning. And even when it comes to Khashoggi, like was mentioned in the piece that you worked on, UAE technology was involved in kind of spying on Khashoggi’s wife’s phone, which was instrumental in the Saudis essentially getting him, right?

NT: Yeah, it was. It was the Israeli-built Pegasus spyware, used by the UAE on his wife’s phone. But the idea of cyberwarfare and surveillance, that’s something that it’s kind of another massive rock to turn over when it comes to the UAE and the role that they’ve played. They had hired a number of former NSA officials to work on spyware that ended up being used on journalists and dissidents. And it’s shocking how little that comes up in these discussions. When I was reporting on this piece, if not for my sources continuing to emphasize these issues to me, if you look at, say, Representative Gallagher’s letter to the Secretary of Commerce about G42 and about these ties, it was purely about the connections to China, really not that much about their own use of surveillance. And as one of my sources pointed out, the UK parliament has even shown that the UAE has given money to the Wagner group in Russia. So it was one of the most fascinating stories, I guess, to report.

PM: Obviously we’ve been talking about it, but I want to break down what both sides of this are looking to get out of it. So with Saudi Arabia And the UAE where they’re engaging in these deals with Silicon Valley companies and with the United States more broadly to get access to these technologies, to invest in these tech companies and not to be excluded from doing that in the way that say the United States is trying to do with Chinese capital or Russian capital or things like that. We’ve talked about how they’re trying to move their economies away from this dependence on oil and to have more diversified economies. But what specifically are they trying to do here? Are they trying to build up their tech economies? Are they trying to increase their government’s legitimacy in the West? Is it a mix of different factors? How would you kind of sum it up?

NT: I would say it’s a mix of different factors. And it’s sort of like putting together a closer sense of their strategy based on their actions and, and some of these public documents for when they laid out their plans, Saudi Arabia, for example, when it was looking at diversifying its economy and increasing its cultural capital, they didn’t just look at Silicon Valley, they also have made for example, like major inroads in golf. I don’t follow it. I just started looking into this as a as a function of this, of the story, but very similar thing. They came in with a lot of money and built this alternative to the PGA in the U.S. And apparently offered Tiger Woods insane sums of money that he said no to, but other golfers didn’t.

So I think it’s like a multi-fold approach. They want the same reason that tech companies and sports companies are in business. They want that revenue, but also like the cultural capital that comes from being at this frontier technology avant-garde. The rich and powerful people of the planet right now are in tech. And also I think to strengthen their own economy, diversify their own economy. And, they’re savvy players — they think about AI, at least in the same way that we do, that it could boost productivity and GDP, across sectors, right? You can apply it to agriculture or I’m sure oil extraction or what have you, but they are trying to anticipate for peak oil, which is expected to come this decade.

PM: Definitely. And with Saudi Arabia, I guess that attempt to bring in tech is part of this broader push as well, where we’ve seen them investing in video game companies and, in getting soccer players and other sports players to come to Saudi Arabia. And they’ve traditionally been a very closed country, but are opening up a bit more, it seems, and trying to offer more tourism to bring more people in. I was even invited earlier this year to speak at a conference in Saudi Arabia. I was like: No, thank you. I thought it was weird to get the invite.

NT: Who invited you?

PM: I can’t remember who it was now, but it was for like a digital wellness conference. And I was like: Why is there a digital wellness conference happening in Saudi Arabia?

NT: Oh my gosh. You have to go back through your emails and find it. I’m so curious.

PM: I’m going to have to do that.

NT: That’s really interesting.

PM: So I guess you can see them trying to build up this legitimacy be seen in a different way, but also of course, diversify their economies and whatnot away from this oil dependence. And I guess when we look at the United States, obviously, they have long had relationships with these oil rich companies in the Gulf, previously more kind of colonial imperialist relationships, especially when they were overthrowing governments and things, way back in the mid 1900s and whatnot.

But now that looks quite a bit different, and as these countries are very important players, it seems clear that the United States is trying to keep them out of the Chinese sphere of influence and technology. But is there any worry that in trying to cultivate this relationship and these deals with the UAE and Saudi Arabia, that this could backfire or that they could give these countries, which obviously have these very authoritarian governments, technologies and, this kind of technological ammunition that they might need to do some pretty horrible things.

NT: Yes, certainly. With the Middle East story, I worked with Ellen Nakashima who writes about national security, Cat Zakrzewski, who writes about tech policy, and Lizza [Elizabeth Dwoskin], who I mentioned earlier. And we asked everyone these questions because it is surprising to understand that, oh, these tech deals have been gone over in detail through the Department of Commerce and you do see more Commerce Department officials talk about these deals rather than NatSec, and I think it’ll be really interesting to see how divisions within the U.S. who weigh the risks differently, how that will play out.

We saw a great New York Times report about looking into G42 and you had AI companies saying: No, we talked to D.C. about this. And yet you have national security agencies, wondering whether they need to like sanction it or block it in some way from working with American companies. So one of the quotes from our story was “trust, but verify.” So they say that they have plans to continue looking into this and that promises were extracted after detailed negotiations. But, obviously there’s no guarantees. Before, Khashoggi’s murder, MBS was really seen as this reformer figure.

And as I mentioned, he was photographed with all of these leading venture capitalists and tech CEOs. And you could see, if you look at the press from the time, how much this cultural capital also impacted him. Imagine if it had never happened and he still had that same reputation and you can secure the deal with open AI and Microsoft as opposed to UAE, like these are really valuable narratives that they’re spinning.

PM: You can definitely see that. And, on that point, when you think about what these countries and these governments are doing, as we’ve been talking about, the goal of the United States is really to keep them from doing these deals and having these relationships with Chinese companies and with China. More broadly, but in the story, you mentioned that the United Arab Emirates AI minister was saying that it can’t go all in on one superpower, previously. Is it clear how much they are really pulling away from China? Are they really cutting ties or are they just kind of reducing things for now? What do we see there?

NT: I think we probably won’t have a very clear sense of it until some of these projects come to fruition. But you were right to note that comment from the AI ambassador. I’m forgetting his title, but he told my colleague Cat Zakrzewski that when she was in Davos and yet when G42 was talking to us, they said they had decided they were aligned with the U.S. So, I was looking through some of the recent deals with the UAE and they’re still working with China on their satellite network that I mentioned they’re building. And it might really come down to some technical specifications, as well. What are the protections in the data center? How are things structured in such a way? You definitely hear a lot more people talking about ways that this can be done safely, but I would say it’s still a big unknown.

PM: And I’m sure it will be for quite a while yet as we start to see how these things play out and even how this wider, like division between the United States and China evolves. I’m sure that that will shape this too. But if we move our focus back to Silicon Valley, what does it say about these Silicon Valley figures that they were so quick to run back to Saudi Arabia or the UAE, knowing the human rights implications? They’re like the blood that some of this money is soaked in, that if there’s money there, they’re going to go after it. And it doesn’t really matter. Or it doesn’t seem to matter that these questions are there about the governments who they’re getting the money from.

NT: I would say when you put these questions to tech CEOs and investors in the past couple years and in the past year, especially, you hear a very nationalistic argument. They are an American company. They will work with American allies. If DC had told them not to do this, they wouldn’t be doing it. And, they’re getting approval for all of the deals that there are. And you will also hear, hand-in-hand with they’re an American company and they’re doing this for America with concerns about China. So, it’s really, I can’t like stress enough how much it is viewed through that prism. We are in the fight of our lives to dominate AI and everything must be approached through that lens.

PM: That’s a really important point because it also plays into this bigger question that I wanted to discuss with you too based on some other reporting that you’ve been doing over the past few months, where we have really seen this, I think, notable shift over the past few years in Silicon Valley, where, we previously had this narrative that the tech industry was kind of oppositional to government or had this difficult relationship to it because of these older Ideas that were around at, say, the turn of the Internet age and whatnot.

And now we do really see these tech companies and these tech CEOs very firmly saying that they are working with the American government. They are working with the American military. There’s a lot of investment being made in defense technologies, and they are basically there to support this basically conflict with China and to support the United States in doing that. What does that tell us about this shift that has happened in Silicon Valley over the past few years?

NT: I would say this is like a massive ideological shift. I always think about when Mark Zuckerberg went to that White House dinner and it was reported that he offered to let Xi Jinping give his child a Chinese name. The way that tech companies talked about China in the 2010s compared to the view now is just night and day. In the 2010s, it was like the hope that they could still get into the Chinese consumer market. If you are searching for growth, you cannot ignore the Chinese market.

And that’s why compromises were made for Google’s search engine initially. And then when they went back with Project Dragonfly, and the idea of getting into China now is just not something you hear about. But it was like the goal for large scale, massive, multinational American tech companies. They were talking about the next billion, and obviously there is a lot of emphasis on Indian consumers as well, or at least there’s a lot of adoption there, but China was the goal.

So that has completely shifted. And during that time, I don’t think that like, it was very rare to hear companies talking about themselves even as American companies, right? It was like, we’re a democratizing force, it was a lot of, I guess, more framing themselves as bringing democratic values, more like, freedom, transparency. If you think back to like the role of Twitter and Facebook in the Arab Spring and the way that the executives parlayed that into a lot of goodwill and benevolence kind of surrounding them . But they weren’t talking about themselves as American companies.

And now this is a shift we’re seeing across the country. It’s not just among tech executives, but to me, that is unlike how much did they pull away from Saudi Arabia or from authoritarian regimes. You don’t hear people up on a soapbox about that, but being American companies is now something that comes with its own cultural cachet and is part of this larger political shift that we’ve seen in terms of the loudest voices in tech.

PM: That’s so fascinating, because even from an international perspective, it makes you think: So, how does that then change the perception of these companies from other countries, if They’re not even framing themselves so much as these internationalist companies, these companies who have these like particular democratic values or whatnot, that they’re just pushing out there. But now they’re explicitly saying that we are American companies; we’re here to support the United States and it’s kind of geopolitical goals or whatever you have to imagine that that then results, even from potential U.S. allies, a further changing of how they view these companies and, and what they’re doing then.

NT: I don’t think it would have served them well to emphasize that they were American companies in the 2010s at all. So, it worked out in their favor and now you do hear less about like democratizing force or that kind of rhetoric, but you do hear that they consider themselves American companies. Sometimes that fact is brought up at the most convenient times, but that is how they reconcile raising money from authoritarian regimes in the Middle East. Those are our allies. So we’re operating no differently than the U.S. government.

PM: Exactly. If the U.S. government decided the UAE and Saudis were not okay countries anymore, we would back off because, we’re aligned with them now, very clearly and very openly so. I guess I was also wondering when we’re talking about this kind of patriotic turn or nationalistic turn in the tech industry and this desire to openly embrace the geopolitical goals of the United States and of the U.S. military. There has to be more than just kind of a patriotic angle to this. There has to be an economic angle. Are we just seeing a lot more funding for defense tech companies or a lot more funding from the U.S. government for this type of stuff? What are we seeing in the actual economic side of it that would be driving the shift as well?

NT: Just like the confluence of forces we saw in the Middle East, there’s also a lot to untangle here, as well. You have the slowdown in the tech sector overall — not if you’re at the top of the stock market. But not if you’re an AI. But for everybody else, you have the challenge of raising capital. If you are a venture firm, or if you are an ambitious tech company that had a really high valuation, you also have the U.S. Department of Defense making these massive industrial policy changes where they are also trying to make themselves more hospitable to startups under pressure from venture capital investors who have been lobbying very heavily for this.

But, it’s after the success of Palantir and Andruil to kind of take on the defense primes, it started to be seen as like: Oh, okay, maybe it’s not just these tiny little contracts. I don’t know, 1000th of Boeing. Maybe you can really go for getting a bigger chunk of the defense budget and you have the U.S. government trying to find ways to smooth out the process for tech startups. You have them also giving guarantees to investors that are backing some of this technology that they think will be important for national security.

And also, I would say at the same time, you had this kind of, I don’t know, identity crisis in a way, I think Silicon Valley was wondering like around with the war in Ukraine, and China’s increased militarism, all of these global tensions that you saw with the supply chain issues during COVID, it just made, I think, the tech industry wonder about its place in the world. And also venture capitalists who really have to be able to persuade young people that this is the industry that they should go into, and I am the source of funding that you should take?

So I think like this shift to nationalism and looking at working in defense as this higher calling, to keep your country safe, to fight for Western values, to build more ambitious tech. This is not like a SaaS player. This isn’t going to be derided like the way that Juicero or some of the Uber for X, or I don’t know, WeWork for Y companies were in the 2010s. It just gave everybody an opportunity to slough off that like negativity and in the narrative shift to techno-optimism and techno-solutionism. We have national security concerns. We have the youngest, smartest, most ambitious people. They can build for that. It all aligned in this way. I was wondering what VCs were going to do. And now I’m like: Oh, it really it worked out.

PM: Unfortunately. Obviously, there’s always a lot of money going into weapons and war and things like that, but then to see the tech industry be so embracing of it as well, it just makes you feel, I think, a bit worried for where things are going — even more worried, I guess. But I wanted to ask you a bit about the rank and file aspect of this too. Because in the piece that you wrote about this, you talked about how many in the industry, including, these regular workers at these tech companies believe that helping the U.S. government is the right thing to do.

But then there are also these events like we saw with the Google workers recently demonstrating against its contracts with Israel who are opposed to these sorts of things and seem to be questioning these relationships that these tech companies have with governments in the Middle East, whether it’s Saudi Arabia, the U.A.E., but also Israel as well. What are we seeing in that divide between the rank and file in this company? And is it clear where the majority opinion stands? Are these protesters more or of the minority in the companies, or do they have a larger voice than we might expect?

NT: I think that what we’re hearing from workers is shaped so heavily by who is controlling the tech platforms and who has the political power and clout right now in the tech industry. So we are just in a completely different moment than we were during the protests against Google’s contract with the Pentagon for Project Maven, which was using computer vision with drones. And I think people really forget that Google went back into the fray not long after those protests. I think it was really interesting to see how many of the tech accelerationists, for example, and I know you’ve talked about it on the pod, but just for a short definition, people who want to see technology progress quickly, unburdened, without policy hindrance or dissent from tech workers.

There’s massive amount of negativity around just tech workers speaking out period. I think a lot of the pushback that you saw around basically like the slacktivism during the pandemic and during the George Floyd era really angered a lot of tech CEOs. And they have this extremely negative, the way that they talk about, engineers or about like, who is hired at Google? Should Facebook cut 50 percent of the staff? Why can’t you just pull an Elon and fire everyone? I think it’s really shaped how safe tech workers feel in speaking out. And I think also the layoffs have made their job security a lot more precarious. So it’s always been hard to gauge what the mood of a massive company with 80,000 employees is right.

But, but the appetite for dissent or the willingness to hear dissent is been largely shut down, at the top of tech companies on tech platforms. If you look, I guess I’m talking about like the tenor of discussion on Twitter or on X, you will hear folks say: Thank goodness we don’t have to censor ourselves anymore, the folks in power. So, I think, again, this is also what you’re seeing country wide. Who are the people who are losing their jobs because of their stance on the war in Gaza? Certain people can speak freely and certain views are unwelcome at the moment.

PM: Definitely. And we’ve certainly seen reporting as well on people in the tech industry who feel like they can’t speak out in support of Palestinians because they would they feel that they would be retaliated against or they have been retaliated against by their employers. And, obviously we’ve been talking about the Middle East and the tech industry’s relationship with the Middle East in relation to Saudi Arabia and the UAE. But would it be fair to say that despite everything that has been going on in Israel over the past eight months, that that really hasn’t changed Silicon Valley’s relationship with the Israeli tech industry or the Israeli government as well? Or have we seen shifts there?

NT: I haven’t noticed any shift, but I also haven’t reported on this topic, in particular, those protests that we saw around Project Maven and during the Trump era, those were an aberration, compared to the majority of the time. You don’t get to be a giant multinational conglomerate by listening to a minority of your workforce. So, there was this period of time when the U.S. politics were shifting. We’re going from Obama to Trump, and these companies are going from they’re shifting out of their own narrative of their relationship with their workers, how candid they can be and searching for growth and needing to compete in the cloud and other like highly lucrative spaces, you have government clients or you have enterprise clients who just want you to do the job.

So I think it’s fascinating and I wish that everyone could speak more candidly. I would be really curious to hear what’s going on more inside tech companies, but I also think the voices that we’re not hearing from also happen to be the more marginalized voices.

PM: I appreciate you outlining that for us. And I think it’s really important to understand that stance and what is going on within these companies, the divisions that exist within them and in the broader tech industry and how this increasingly reflects questions that are happening in American society. And just to close off our conversation, I wanted to ask, broadly, your reflections on this entire conversation. We’ve been talking about how Silicon Valley is now courting these authoritarian monarchies that have a lot of oil money. In the Middle East, how they haven’t turned away from Israel, despite the intense bombing and death in Gaza over the past eight months or so.

And then of course, what we’re just seeing with the tech industry more generally, where it’s basically saying that we are here to serve the American government and the American military, and it’s geopolitical objectives, because that aligns with what we see our interests as being. So I wonder what that tells you more broadly about what’s happening in Silicon Valley right now, the politics, I guess, of the tech industry and the people who lead that industry, and I guess if you have any thoughts on where you see this going into the future, now that you have the tech industry really embracing this particular vision of what it is and what it’s going to be moving forward.

NT: Those are really great questions [both laugh]. Let me think for a second. You know what I was thinking just earlier today? I was looking up when was it that Andreessen Horowitz invested in Yuga Labs, the Bored Ape NFT company, at a $5 billion, $4 billion valuation, and it was March 2022. So, I would also say that it does show us that these are businesses. It is the most vibrant sector of the economy for a reason. So, as long as the financial winds are blowing in the same direction, I think that we will probably see more embrace of working for the defense sector, as long as generative AI and AI more generally is seen as this transformative economy appending technology, we will see more deals with sovereign wealth funds in the Middle East, but the tech industry also follows where the growth is. So, some of the same folks were also talking to us about crypto just as passionately a couple years ago.

It’s hard to say. I think we’ve seen though that there has been like a major political shift in the loudest voices. I would say it’s always been a real challenge to color Silicon Valley with one brush. Part of what was so Illuminating about the protests in the 2010s and worker revolt was seeing this differentiation between management and workers, which you previously had not seen because, in part, because of the way that they talked about the media as, be candid with us, we will have frank conversations, we the CEOs of Google or the co-founders of Google, we will tell you what’s what. And we will do our best to not be evil, and we have planet scale technology and very real concern. So just like keep it in house and we’ll work it out.

And those stratifications were exploded when workers started talking more. And I think right now the loudest voices for sure are folks the All-In Podcast, many of the investors who backed Elon Musk, who see his ownership of X as a turning point in terms of who can set the agenda for what’s talked about, but that’s also the folks who have time to talk on social media. So it’s just going to be a very illuminating next phase to see whether this is something that they settle into.

There’s also the chance that the financial upside that tech investors are hoping to see from the Defense Department won’t be able to come to fruition in the same way. It won’t work with venture structures, which have these like five to 10 year horizons. They depend on like one or two breakout stars from a fund. Does that match with the government procurement strategy? Maybe not. So we know that some of these investors still spoke a certain way about the government for years. So, it’s a very tumultuous time and I’m just watching as closely as I can to try to understand those stratifications and where we might be going next.

PM: As are we all. And I think that gives us some things to watch for how venture capital is approaching these things, how the people at the top of Silicon Valley are looking at it, and whether the U.S. government strategy changes or shifts in the years to come and what impact that might have on the tech industry and its orientation toward this broader question. And of course, we’ll be watching your work as we do that, as I’m sure you’re going to keep following it and reporting on it. Nitasha, it was really fantastic to speak with you. I really appreciate it.

NT: Thanks so much for having me. Great to talk to you too, Paris.