Jeff Bezos, Mohammed Bin Salman, and the New Front of Geopolitics
Jeff Bezos and Mohammed bin Salman line up for a photo-op in 2016. (Bandar Al-Jaloud/Agence France-Presse)
If the 80’s were the era of runaway Wall Street greed and the 90s the time of the multinational corporation, we currently live in the age of the post-national corporation (PNC). PNCs are the firms with the scope, size, and most importantly, capital outlay needed to bypass borders, eschew regulation from any singular state, and independently exist as a major player in geopolitics, all on their own.
Where the policies of the United States are ultimately held accountable by voters, and the interests of the Kingdom of Saudi Arabia are driven by complex, Byzantine family politics, the PNC sets its own agenda through the direction of shareholders de jour, but actual policy is usually determined by a particularly strong CEO.
The PNCs we know best dominate the tech sphere. The Gang of Five – Apple, Alphabet, Amazon, Facebook and Microsoft – don’t just drive consumer purchases, but have fundamentally changed the way we store, transfer, and analyze data. Amazon Web Services is a more valuable entity than Amazon’s entire retail offering, and Alphabet’s developments in AI will change the relationship we have with devices over the next generation.
And then, of course, there’s Huawei. The Chinese giant is shepherding us into a 5G world, and playing a pivotal role in the Cold War between the world’s two superpowers. The US government considers Huawei to be a significant security threat, to the point of banning sales of vital inputs from American companies to Huawei last year. Alphabet pulled their Android license from Huawei as well, hampering the integration of familiar OS on the devices.
Huawei is a stern example of what we mean when we talk about the geopolitics of the PNC. They exist, as all firms do, to create value for their shareholders, but as international rivalry moves beyond state-to-state, or even proxy-state-to-proxy-state, American rivalry with China has become a clash around Huawei as its own proxy. We’ve moved into state-to-proxy-corporation conflict.
This was driven even further to the point last week, with the news that Jeff Bezos’ own iPhone was hacked by the de facto ruler of Saudi Arabia, Mohammed bin Salman. Salman and Bezos had had an ongoing WhatsApp conversation when a video file was sent from Salman’s account. Of course, in WhatsApp, video files are automatically downloaded, and malware embedded within the file began transmitting huge amounts of data out of the Amazon CEO’s device.
This data was likely used to blackmail or publicly humiliate Bezos – reference American Media’s coverage of his affair and subsequent divorce - and was probably part of a retaliatory blow after Bezos’ Washington Post began coverage of the murder of Saudi dissident Jamal Khashoggi. This isn’t the first time MBS has attacked business executives either; shortly upon becoming Crown Prince in 2017, MBS began a large-scale purge of alleged corruption within Saudi society, targeting billionaires like Al-Waleed bin-Talal and repossessing assets for use by the Kingdom.
So why this focus on the policy of PNCs now? Firms have always had impacts on global geopolitics – the East India Company colonized great chunks of the world, and Standard Oil cornered energy markets long before their offspring like Exxon. The answer centres around the movement of capital, deep coupling of private business and government action, and our own political instabilities.
Capital has never been less restricted by borders. Investment has always chased returns, but the democratisation of information and integration of technology in financial services means that owners of capital, or those charged with its deployment, know where and what will generate the premium return, and have the capability to move capital out of and into new markets with little lag. Adding to this, the dictatorial power of the executive means firms can make capital allocation decisions much faster than governments can; CEOs like Bezos, Mark Zuckerberg or Sundar Pichai hold enough voting power and oversee a cult of personality such that only dedicated activist investors could challenge a major capital investment. This is very different from the Canadian or American legislature tabling and debating an annual budget, for example.
Jeff Bezos has control of a firm with greater financial resources than all but sixteen countries. His own personal net worth exceeds the GDP of Ukraine. This is the first reason for the increased policy presence of the PNC, the ability of any given firm to boost or retrench domestic or global economic activity is on par with nation states themselves. Firms in the past could do this too, General Motors was the most valuable corporation on Earth for decades. The difference, as stated above, is the flexibility and mobility of capital. PNCs aren’t just bigger and richer, they operate with far more flexibility because of the ease of capital movement.
The second reason for this age of the PNC in statecraft is the increased partnership between them and governments. In some sectors this is nothing new, Eisenhower famously warned of the “military-industrial complex” almost seventy years ago. However, the tech explosion has forced governments and firms like the Gang of Five, PNCs all, closer and closer. This is a partnership born of efficiency, expertise and cost. Amazon Web Services is the most dominant player in cloud computing, and governments in North and South America, Europe and Asia depend on it at federal and sub-federal levels. AWS already has the expertise and cost control to do things the government can’t, and like the development of the internet itself, technology thrives when public institutions can partner with private capital and expertise.
The drawback to this, especially in light of Bezos’ hack, should be self-evident. An attack on Bezos’ phone is a national security threat given the depth of co-operation between AWS and the federal government; a cyberattack on someone overseeing such a partnership could be interpreted as a cyberattack on the government of the United States itself.
The other side of this issue comes when PNCs pick and choose which nations to align with. Apple, for example, has on multiple occasions refused to help US law enforcement build an iOS that would unlock an accused criminal or terrorist’s iPhone. Current iOS platforms do not allow for such a ‘frontdoor’ forcing, but a potential new OS could be built to accomplish that.
Meanwhile, the company has been walking a tightrope with the Chinese government and recent human rights protests in Hong Kong, going so far as to remove HKMap Live, an app that protestors were using to track demonstrations and police presence, from the App Store. The move was widely seen as a concession to the mainland government, while Apple insisted the decision was theirs alone, with no request coming from the Chinese.
So on the one hand, we have a PNC putting itself at odds with the direction of one superpower, essentially daring the US Department of Justice to court. At the same time, the same PNC is seen as bowing to the other dominant superpower, albeit over an issue less central to the main product offering.
This ability to pick and choose which jurisdiction a PNC answers to is likely only going to increase in frequency. Look for nation states to leverage the scope of a PNC against rivals on the world stage, by lowering tax rates, allowing capital expansion, or negotiating more favourable contracts for services. As the power and reach of the PNC grows, states will have little choice but to marshal them towards their own interests, lest an international rival do the same.
The reach, scope and capital available to the post national corporation afford it influence that the old model of multinational corporation could only hope for. In our changing global order, that influence is only going to grow, and resist attempts to regulate or temper it. The development of proxy conflict between nations and corporations is a natural development in this course, however unfortunately for the nation, these corporations are only growing richer and more powerful.
Joshua Diemert is a Master of Public Policy and Global Affairs student at the University of British Columbia. His primary policy interests focus around tech policy, data ownership and cybersecurity. Prior to joining the SPPGA he worked in commercial finance and venture capital in Waterloo, Ontario, with specialities in tech firms, real estate and lean manufacturing.