This report issued last week by Brown University goes into much greater detail about how " the center of America’s military-industrial complex has been slowly shifting...to Silicon Valley” to develop " costly, high- tech products that are ineffective, unpredictable, and unsafe when deployed in real world conditions. ”
------------------------------------------------ How Big Tech and Silicon Valley are Transforming the Military-Industrial Complex Roberto J. González San José State University April 17, 2024 Over the past decade, the center of America’s military-industrial complex has been slowly shifting from the Capital Beltway Silicon Valley. Although much of the Pentagon’s $886 billion budget is spent on conventional weapon systems, and goes to well-establisheddefense giants such as Lockheed Martin, RTX, Northrop Grumman, General Dynamics, Boeing, and BAE Systems, a new political economy is emerging, driven by the imperatives of big tech companies, venture capital, and private equity firms. As Defense Department officials have sought to adopt AI-enabled systems and secure cloud computing services, they have awarded large multi-billion dollar contracts to Microsoft, Amazon, Google, and Oracle. At the same time, the Pentagon has increased funding for smaller defense tech startups seeking to “disrupt” existing markets and “move fast and break things.” This report examines how the priorities of the tech industry, the peculiarities of venture capital (VC) funding structures, and Silicon Valley’s startup model are likely to lead to costly, high-tech products that are ineffective, unpredictable, and unsafe when deployed in real world conditions. Booming demand for AI-enabled military technologies and cloud computing services is being driven by several developments. Perhaps most importantly, the easy availability of massive amounts of digital data collected from satellites, drones, surveillance cameras, smartphones, social media posts, email messages, and other sources has motivated Pentagon planners to find new ways of analyzing the information. This, coupled with years of “AI hype” generated by tech leaders, venture capitalists, and business reporters among others, has played a crucial role in sparking the interest of military leaders who have come to view Silicon Valley’s newest innovations as indispensable war fighting tools. The United States military’s shift towards AI and “data driven” warfare is connected with broader changes affecting a wide range of government agencies and industries. Over the past two years, global events have further fueled the Pentagon’s demand for Silicon Valley technologies, including the deployment of drones and AI-enabled weapon systems in Ukraine and Gaza, and fears of a global AI arms race against China. The prospect of Russian cyberwarfare and disinformation campaigns have also motivated Defense Department officials to invest heavily in new digital technologies. Consequently, DoD officials have outlined plans to develop expansive fleets of autonomous aerial, maritime, and terrestrial drones for transportation, surveillance, and combat; acquire commercial cloud computing capabilities for data sharing, data storage, and “seamless connectivity”; bolster America’s cyber defense systems; and employ AI for training and combat simulation exercises. New Pentagon spending streams are destined for a different breed of defense contractors: a combination of gargantuan tech firms (for example, Microsoft, Amazon, Google, Oracle, Hewlett Packard, Dell, Motorola, and IBM) and hundreds of smaller startup companies supported by VC firms. Almost all of the startups are in the pre-IPO phase of funding. Examples include Anduril Industries, Shield AI, HawkEye 360, Skydio, Rebellion Defense, and Epirus, among many others. Between 2019 and 2022, U.S. military and intelligence agencies awarded major tech firms contracts with ceilings worth at least $53 billion combined. This report dispels the common myth that Silicon Valley has been reluctant to do business with the Pentagon due to a so-called “cultural divide. As we shall see, the DoD has awarded large, multiyear contracts—some worth tens of billions of dollars—to the tech industry over the past decade. A conservative estimate indicates that U.S. military and intelligence agencies awarded $28 billion to Microsoft, Amazon, and Alphabet (Google’s parent company) between 2018 and 2022. The actual value of Pentagon and IC (U.S.intelligence community) contracts is likely to be significantly higher, since “many of the largest known [Defense Department and IC] contracts with U.S. tech companies are classified and withheld from public procurement databases.” In the meantime, major VC firms such as Sequoia Capital and Andreessen Horowitz—and dozens of smaller ones— have ramped up investments in defense tech startups. More than $100 billion in venture capital funding went to defense tech startups between 2021 and 2023. This paper also refutes the popular misperception that China is poised to surpass the U.S. in a global “AI arms race” that will determine the future of geopolitics and global economic dominance. It does this by showing how the arms race narrative has been propagated by Pentagon officials and tech leaders who stand to benefit from increased sales of high-tech weapon, surveillance, and logistics systems enabled by AI. These myths and misperceptions risk diverting taxpayer funds towards research and development (R&D) projects that meet military needs, rather than civilian needs. Within a relatively short period of time, Defense Department officials have created a vast infrastructure designed to provide funding support to defense tech companies. For example, in 2015, the Pentagon established a U.S. taxpayer-funded venture capital firm, DIUx (Defense Innovation Unit-Experimental, now called DIU) for financing small startups developing products for military applications. That same year, it also created MD5 (renamed the National Security Innovation Network)—billed as a “national security technology accelerator”—to speed up the development of technologies useful to the Pentagon. More recently, the Defense Department has launched the Office of Strategic Capital, an entity for linking AI, biotechnology, and other startups with sources of private capital. All major armed branches of the U.S. military now have a range of organizations designed to streamline DoD’s “innovation ecosystem.” As these Pentagon initiatives have grown in number and size, VC and private equity firms have dramatically expanded their investments in defense tech startups, signaling a shift in how military technologies are developed and deployed—and demonstrating how VC is anticipating future trends in Defense Department expenditures. This report explores how both large and small defense contractors from the tech industry, as well as private venture capital, are transforming the political economy of war. Full: https://watson.brown.edu/costsofwar/files/cow/imce/papers/2023/2024/Silicon%20Valley%20MIC.pdf -=-=-=-=-=-=-=-=-=-=-=- Groups.io Links: You receive all messages sent to this group. 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