Can Big Tech fix the government from within?
The US federal government has become an albatross. For tech leaders like Elon Musk joining the government, the goal is not top-down innovation but rather to whittle down the regulatory drag that inhibits industry, says US academic Sarah Kreps.
In 2017, Mark Zuckerberg remarked: “In a lot of ways, Facebook is more like a government than a traditional company… We have this large community of people, and more than other technology companies we’re really setting policies.” His words carried a blend of hubris and insight. Unlike other companies focused on products and profits, Facebook had taken on regulatory roles: moderating content, setting user guidelines and shaping public discourse globally, paralleling the governance functions of a government, which also enforces rules and manages communities.
But Zuckerberg and Facebook (now Meta) ultimately encountered the limits of their reach. Several nations, such as China, permanently banned the platform, while countries like Iran, Pakistan and Egypt imposed temporary bans, highlighting the power of “digital sovereignty”, a government’s right to control online platforms within its borders.
Fast forward to 2024. A number of influential figures within the tech sector, which had in the previous election overwhelmingly supported Joe Biden and historically donated to Democrats, broke with tradition and supported the Republican candidate, President Trump, promising deregulation and a friendlier environment for tech growth. The most visible of these individuals was Elon Musk, CEO of social media, space exploration and electronic vehicle companies and now an appointee in the new Trump administration, joined by another entrepreneur, Vivek Ramaswamy.
The public sector, generally known for slow-moving bureaucracies, often lacks the technical expertise needed to understand and regulate these fields.
The question now arises: what happens when Big Tech not only influences the government but becomes part of it? And what are the implications for US competition with China?
The US-China tech race: innovation over regulation
Tech competitiveness matters for two reasons. First, technology is an engine of US economic power. The top American companies in market cap are almost all tech. Second, advanced technologies underpin national security through innovations in AI, 5G networks and semiconductor chips, which are crucial for military capabilities.
Tech has become central to the US-China competition, as Beijing continues to back aggressive state-funded tech initiatives. Sustaining this edge requires an environment where American companies can innovate rapidly, unencumbered by excessive regulation. Over-regulation could hamper this progress, making it difficult for the US to keep up with China.
However, the government struggles to keep pace with the rapid development of new technologies like AI, blockchain and quantum computing. The public sector, generally known for slow-moving bureaucracies, often lacks the technical expertise needed to understand and regulate these fields. This gap has led to instances of officials appearing out of touch, like those who confuse TikTok with “Tic-Tac”, emblematic of a more systemic inability to grasp tech fundamentals.
Misguided regulatory efforts can further impede innovation. Under the Biden administration, Federal Trade Commission Chair Lina Khan and Securities and Exchange Commission Chair Gary Gensler were among the most prominent figures championing aggressive oversight of Big Tech. Khan’s critiques targeted companies like Amazon, Meta and Google, pushing for constraints to limit their power. Gensler’s SEC took an especially tough stance on cryptocurrency, questioning its value and referring to its illicit uses even as he approved the Bitcoin Exchange Traded Fund.
This regulatory zeal, some have argued, comes at a cost. A government insider called the approach “draconian”...
The Biden administration’s 2023 Executive Order on Artificial Intelligence was a notable example, mandating federal oversight of AI code from high-risk systems, along with strict “red-teaming” requirements. Such directives are resource-intensive and often complicated, particularly for smaller tech firms without the legal and financial support to meet these requirements. This regulatory zeal, some have argued, comes at a cost. A government insider called the approach “draconian”, warning that the US risks following Europe’s model, where innovation is constrained by a cautious, sometimes overreaching regulatory stance that treats new technologies as dangerous until proven safe.
Marc Andreessen and Ben Horowitz, venture capitalists well-versed in tech’s regulatory struggles, voiced these frustrations recently, suggesting that “It was inarguably the worst four years in our career in terms of White House policy as it related to technology and business more broadly...They did things that no White House has done. They went far outside the law.”
The potential for tech in government
The idea of bringing private sector expertise into government is not entirely new. In 1961, President John F. Kennedy appointed Robert McNamara, formerly president of Ford Motor Company, as secretary of defence. McNamara sought to apply private-sector efficiencies to defence, known for a “Whiz Kids” approach that prized data-driven methodologies and cost efficiency. However, McNamara’s emphasis on efficiency, standardisation, and quantitative analysis ultimately clashed with the more flexible, adaptive mindset needed for military success, particularly in Vietnam.
The task, however, is even more fraught today. The federal government has become significantly larger and more complex than in 1961. Although the size of the civilian federal workforce has remained stable, a dramatic increase in the use of contractors and grant-funded roles has expanded the broader “federal workforce” to include an estimated four to five million additional roles. Additionally, per capita government spending has gone up from US$4,333 per person in 1965 to almost US$20,000 per person in 2023, adjusted for inflation.
In a word, the federal government has become an albatross.
The regulatory environment has also expanded. The Federal Register, which publishes all federal rules, began itemising rules in 1976. Since then, it has added more than 200,000 rules. In 1960, the Code of Federal Regulations had 23,000 pages; it now has more than 185,000 pages, which compiles these rules, has grown from 2,000 pages in 1961 to nearly 200,000 pages, underscoring the federal government’s role as an enforcer of increasingly intricate rules.
In a word, the federal government has become an albatross.
Its deeply ingrained culture is likely to limit the ability of Silicon Valley entrepreneurs to infuse the public sector with private-sector dynamism and flexibility. Unlike private companies, which thrive on risk-taking, the government is bound by structures that emphasise stability and risk aversion. The US spends billions maintaining aerospace giants like Boeing and Lockheed Martin as redundancy for rocket launch — that’s simply the price to pay for the world’s most powerful country to maintain its competitive edge in space.
Musk’s new Department of Government Efficiency, for instance, may streamline bureaucratic processes that create obstacles for tech initiatives.
What entrepreneurs can offer
Here’s what these innovators can do. For tech leaders like Musk now in government, the goal is not top-down innovation but rather to whittle down the regulatory drag that inhibits industry. Musk’s new Department of Government Efficiency, for instance, may streamline bureaucratic processes that create obstacles for tech initiatives. Musk, who famously discussed the safety tests he had to conduct on seals — the marine mammals — that might be exposed to noise from SpaceX’s rockets, is well aware of how government-imposed hurdles can slow innovation.
These innovators can help trim regulatory layers that bog down industries. Musk might tackle environmental assessments that slow semiconductor chip facilities, helping expedite projects funded by the CHIPS Act. The ultimate impact of bringing tech leaders into government may not be a direct top-down push for innovation but a series of steps to get government out of industry’s way.
Ironically, this shift may reveal that tech leaders once had greater influence over policy from the outside than within. While they can streamline regulations and introduce efficiencies, the government’s size and complexity mean that their influence will likely be constrained by the very bureaucratic inertia they set out to change. Their legacy, in the end, may be that they helped create the conditions for others in the private sector to innovate and lead — without the regulatory friction that has held the industry back in recent years.
