A new world order: How tech giants are redefining government power and digital sovereignty

Kyle Chan is an American postdoctoral researcher in the Sociology Department at Princeton University, an adjunct researcher with the US-based think tank RAND Corporation, and a 2025 Fellow with the Penn Project on the Future of US-China Relations.

His work focuses on industrial policy, clean technology, and infrastructure in China and India, and he has also testified as an expert before the US-China Economic and Security Review Commission.

In an exclusive conversation with THE WEEK, Chan discusses Big Tech’s relationship with state powers, its role in the US-China contest for global supremacy, and the challenges facing India. Excerpts from the interview:

 

In economist Yanis Varoufakis’ book 'Technofeudalism', he introduces the idea of the "cloudist" class: a new, cloud-based ruling elite that wields immense power, resembling modern-day feudal lords through their control over digital platforms and data. That’s his philosophical framing. 

However, despite their apparent dominance, to what extent do you think these private firms remain under the tight control of governments—especially in countries like the US and China? Can you compare the power dynamics between these tech giants and their respective states?

Yeah, I think that’s a really provocative—and actually quite appealing—argument. These so-called private tech companies, while technically corporations, often operate on a scale and with an influence that rivals state actors.

In some ways, they are quasi-sovereign. The decisions that companies like Meta make for platforms like WhatsApp and Instagram, the gatekeeping Apple does through its App Store, or even Google's algorithm and ad policies—all of these have massive ripple effects across societies and economies.

But here's the twist: while they appear independent, these companies are also increasingly becoming tools of state power. Take the United States, for example. Nvidia has essentially become a geopolitical asset. Washington is using Nvidia’s dominance in AI chips as leverage: first and foremost against China, but also in a broader sense to maintain control over global AI development. The Biden administration’s AI export controls, like the AI diffusion rule, are a clear sign of that.

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China, meanwhile, is doing the same. Huawei, Alibaba, and Tencent aren't just tech companies. They’re also arms of state ambition. Beijing is using them to build cloud infrastructure globally and push Chinese hardware (chips, servers, etc.) into foreign markets. These efforts are seen as part of a larger national strategy to extend China's influence abroad.

So to your question: yes, these companies have amassed feudal-like power, but they are also entangled with state agendas. In the US, the relationship is somewhat transactional and strategic—there’s friction, but also alignment when national interests demand it. In China, the dynamic is more hierarchical; the state has much more direct control. In both cases, though, the boundary between private tech and public power has increasingly blurred.

 

What’s the relationship between these state powers and the tech giants? In China’s case, we know the state has that kind of control, but when it comes to the US, is it the same? Or is it more like these companies push the state to make certain policies in their favour?

That's true—yeah, that’s exactly what’s happening. That’s a really good point. It can definitely go both ways.

In the US, for example, there’s obviously a lot of influence going in the other direction as well: tech giant CEOs contributing a million dollars each to Donald Trump’s presidential inauguration, meeting with him frequently, lobbying hard for their own interests, whether that’s trying to accelerate data centre buildouts—you see Sam Altman everywhere right now, basically trying to push American policy to back him—or trying to get certain regulations lifted.

The reality is—it’s messy. Sometimes it works, and sometimes it doesn’t. Or it even backfires.

Apple is one of those cases right now. Tim Cook and Donald Trump seemed to have this on-again, off-again relationship. One day Trump is granting exemptions for Apple products, the next day—who knows what’s happening.

Same thing with Nvidia. They promised to build some ridiculous number: like hundreds of billions of dollars’ worth of AI infrastructure in the US. Then, for a while, it seemed like they had convinced Trump not to ban their H20 chips to China, but later, the ban happened anyway. That came as a bit of a surprise.

So yeah, it’s definitely a messy relationship.

 

About the powers of these American tech giants, do you believe there are significant differences among them when it comes to their vision for a new world order, or whatever we might call it?

I ask this in the context of the visible clash between Sam Altman and Elon Musk, which seems to reflect deeper disagreements over the direction and governance of emerging technologies. In your opinion, whose tech-driven vision is more likely to gain long-term support from the US administration?

The US administration seems to be championing—and absorbing from Silicon Valley—this idea that the US should be the global leader in technology, especially in AI. There's this vision of a world order with the US at the technological top, and from which everything else flows—economically, militarily, geopolitically.

That vision is something widely shared within Silicon Valley. But part of that also seems to involve a rejection—or at least a deprioritisation—of things that used to matter more in the US, like environmental concerns or value-based partnerships with other countries. Those considerations have taken a backseat.

This very techno-centric, power-first approach also seems to resonate with a lot of voters in the US—especially with the Trump base.

Among the tech giants themselves, of course, there are significant differences in how they think this should proceed. So your question—whether the US is moving in the “Sam Altman way,” or the “Elon Musk way,” or maybe even a third way—is a really good one.

The short answer is: it seems to change day-by-day. That’s part of the unpredictability of it. Sometimes it depends heavily on personal relationships. At one point, these players seemed closer to each other, but now we’re seeing more tensions—especially between Musk and Altman.

This kind of volatility is somewhat new for the American political system. We’re not really used to national tech policy being so directly shaped by interpersonal dynamics between the President and a few business leaders.

It’s a very dynamic, unpredictable situation. We really don’t know what’s going to happen tomorrow. That’s the nature of it.

As the joke often goes: Trump’s policies basically depend on whoever the last person he spoke to was. One day it might be a crypto lobbyist, the next day someone pushing tariffs. You just never quite know.

 

I wanted to return to one of your recent comments—specifically, from your expert testimony before the US-China Commission. You mentioned that foreign firms often agree to a Faustian bargain: they profit from selling to China’s market in the short term but, in doing so, end up building their future Chinese competitors in the long run.

That China used the promise of its vast and growing domestic market to actively attract foreign equipment makers and push them into joint ventures with Chinese firms. This approach may seem controversial—or even exploitative—but India is also a rapidly growing market. Are there lessons India can draw from China’s model to develop world-class high-tech companies domestically?

Yeah, I think India has a lot of the same advantages that China had: a large and fast-growing domestic market, a rapidly expanding middle class, and strong science and technology capabilities. You can look at India’s progress across sectors—from satellites to electric vehicles to consumer electronics—and you’ll see real momentum.

What’s also notable is that India, across different administrations, seems to maintain a long-term focus on economic and social development. That consistency in vision—not tied to a single government—is something that gives India a strategic advantage. So yes, I do think India is well-positioned to take a page from China’s playbook.

The key, though, lies in the details of how it's done. What China has done over time is leverage foreign capital, foreign firms, and foreign resources for its own development. Virtually no foreign company is allowed to enter the Chinese market without giving something back—whether it's technology, talent, or supply chain value.

I call it a Faustian bargain because it's a two-way street. The foreign companies do make a lot of money. For instance, Apple has made over $200 billion in China over the past decade. But in return, they’ve had to share technology, help upgrade Chinese suppliers, and in many cases, even set up R&D centres in China.

It’s not just about final assembly either. It might start with that—like iPhones being assembled at Foxconn factories—but China keeps pushing: “Okay, now localise your suppliers. Now build R&D here. Now share more of your IP.” Over time, that leads to real industrial capability.

So yes, I think India would do well to adopt a similar approach—not by shutting out foreign firms, but by ensuring that their presence leads to meaningful knowledge transfer, capacity building, and tech development locally.

Blocking everything out and trying to be purely self-sufficient didn’t work well for China in its early years, especially when it relied heavily on the Soviet Union. It wasn’t until China engaged with the world—but on its own terms—that things started to change.

If I had to boil it down to one line: China made globalisation work for China. It wasn’t just that it opened up or embraced global markets for the sake of it. Beijing was very strategic—leveraging globalisation to build up its own domestic industries.

I think India is already doing this in some areas, through certain policies and with some companies. But to the extent that India can do it more systematically, that would be a powerful move.

The goal is not to be just a customer, or just a service provider, or a body shop for someone else’s innovation, but to use global engagement to build India’s own capabilities.

China’s export restrictions on certain rare earth elements—which took effect on April 4—have disrupted global supply chains, with notable impacts on India’s auto, electronics, and clean energy sectors.

These kinds of disruptions can be expected in the future as well, not just from China but potentially from the US too. So what is the alternative? What does true self-reliance look like in terms of clean energy and access to critical resources?

Yeah, yeah. So, the whole world is grappling with this issue right now—disruptions caused by rare earth export controls, especially concerning rare earth elements and magnets.

European automakers, for example, are really concerned—you might’ve seen the news. They’re worried about supply chain vulnerabilities. And honestly, if the US hadn’t been so aggressive under Trump, there might have been a better moment for several countries to come together to address this issue strategically.

Countries like Japan and Australia—both of which are closely linked to rare earth mining and processing—could coordinate with Europe, Canada, the US, and India to form a coalition. This group could act as a counterweight to China’s current dominance over these materials.

Now, they might not be able to immediately break China’s stronghold over the rare earth market, but over time, they could develop alternative capabilities. Ideally, that’s the right long-term strategy: a robust international partnership among like-minded nations that are all dealing with the same supply-side pressures.

 

Sam Altman’s Worldcoin project aims to create a global, US-anchored identity verification system through tools like World ID and the World App, with the broader goal of integrating billions of people into US-led digital infrastructure.

Should countries like India view such initiatives as a potential threat—not just to digital sovereignty but to national sovereignty itself?

Yeah, definitely. I think India would be right to be cautious about this project.

Worldcoin is being run by a private company, and at this point, we don’t know exactly how the data will be used, what restrictions are in place, or what oversight exists. There are a lot of unknowns.

That doesn’t mean it’s a bad project—I can actually see some legitimate use cases for it. For example, in an era of deepfakes and AI-generated content, it may become increasingly important to distinguish between humans and AI. So, I get the potential benefits.

That said, we should absolutely be cautious.

Look at China—they're extremely strict when it comes to data sovereignty. They have clear rules about where data can be collected, stored, and processed. Basically, all of it has to remain within China. India also has such rules on paper, but enforcement is another story.

 

I recently came across an article that made a compelling argument: it claimed that Trump’s move to cut US aid wasn’t just an act of ignorance, but rather reflected a broader shift—where traditional, state-led development institutions are losing relevance in a world increasingly shaped by corporate power through digital platforms and infrastructure.

That shift raises fundamental questions about who really holds power in the emerging global order—governments or corporations?

So do you think the US administration views its traditional soft power tools as less essential today, given the immense influence American tech corporations now wield globally through technology?

Yeah, I think it’s interesting because I have a nuanced view of American soft power. It takes many different forms and affects people in different ways across the world.

Having spent a lot of time in India myself, I understand the strong attraction to American brands and companies—many of which are celebrated and respected there. That’s a significant part of American soft power. Beyond that, there’s the more formal, state-driven soft power—like USAID programmes focused on global development.

I personally believe the cuts to USAID were a mistake. That kind of support represented a humanitarian aspect of American soft power—basic assistance, development partnerships, and a perception of the US as a helpful global actor. With those cuts, I think an important layer of that image was lost.

Of course, American media—especially Hollywood—continues to play a huge role globally, but soft power isn’t just about entertainment or consumer culture. It’s also about how the US is perceived in terms of goodwill and development cooperation.

In that context, Japan offers an interesting alternative model. Japan has strong ties with India and has been deeply involved in Indian infrastructure projects like the Delhi Metro, the bullet train initiative, and the dedicated freight corridor.

Unlike the US, Japan appears to focus more on long-term capacity-building through infrastructure, rather than just short-term aid. That’s a fundamentally different approach, and one that resonates with many countries in the Global South.

In India and in many parts of the developing world, there seems to be more interest in sustainable development and infrastructure than in direct, short-term aid. Of course, India is a special case. It’s hard to simply classify it as a “developing country” or part of the Global South anymore. It’s increasingly in a category of its own.

Also, since we’re discussing aid, it's worth noting that the US has pulled out of the WHO, while at the same time, in the recent World Health Assembly, China emerged as one of the major donors, pledging $500 million seemingly overnight.

One concern that has come up among experts is whether this growing influence could lead to health-related resources and data flowing disproportionately toward China.

Essentially, the worry is that by becoming a major donor, China could shape WHO’s policies or perspectives in ways that serve its strategic interests—especially in terms of access to global health data and influence over critical health-related sectors.

 

India already faces serious cyber threats from advanced persistent threat (APT) groups linked to China and Pakistan. Now with China making significant strides in quantum computing, including the potential for quantum-enabled hacking, what steps should India take to safeguard its military and critical infrastructure in this rapidly evolving technological landscape? Will India be forced to rely heavily on the US for defence and cybersecurity capabilities? Can India trust the US in that regard?

Wow, those are big questions. To start with, India absolutely needs to continue strengthening its own cybersecurity capabilities: its platforms, its technical expertise, its institutional resilience. I’m sure that work is already underway, but I also think the scale of the challenge is often underestimated.

Take the US for example—arguably the global leader in cybersecurity from a government perspective. Despite this, we've seen two major Chinese cyber intrusions: one targeting critical infrastructure like the power grid, and another infiltrating telecommunications networks.

If even the US can be so thoroughly compromised, that should be a serious warning sign to every other country, including India, about the scale and sophistication of China’s cyber capabilities.

 

We also have a lot of Chinese-made equipment embedded in various sectors—like power systems, for instance. These may have been installed not directly by Chinese firms, but through third-party vendors. Does this make us vulnerable?

 Absolutely. That’s a critical point. Even when systems aren’t purchased directly from China, components sourced through intermediaries can still create significant vulnerabilities.

So yes, it’s time to rethink those dependencies—urgently. India needs to bring in highly skilled technical experts, conduct thorough security audits sector-by-sector, component-by-component, and ask some hard questions: How much data might be flowing back to China or other hostile actors? How many of these systems can be remotely accessed or manipulated via the internet?

You might not see a breach today, but that doesn’t mean there isn’t a long-term threat already embedded in your infrastructure. I’m not trying to sound alarmist, but this is a serious issue that demands rigorous, proactive investigation.

 

The European Union approved the AI Act, making it the world's first comprehensive framework for regulating artificial intelligence. However, the US administration has expressed dissatisfaction with this approach. Vice President JD Vance criticised the European model, calling it a form of “authoritarian censorship” and asserting that the US intends to maintain its dominance in AI.

In your view, how is Europe navigating this emerging landscape? Could stricter regulations leave European companies trailing behind their US and Chinese counterparts, forcing them to eventually align with US-led standards? And finally, are there any lessons India can learn from Europe’s regulatory framework, especially when it comes to managing the risks and ethical challenges of AI?

Yes, Europe is definitely facing a complex situation. It’s a two-sided risk. On one hand, you want strong legislations on deepfakes, unauthorised use of personal data as AI training material, and so on.

On the other hand, if the rules aren’t clearly defined or are too restrictive, it can delay Europe’s ability to develop frontier models that compete with the US and China.

We already see some examples—OpenAI and Google, for instance, have delayed releases of their models in Europe due to regulatory uncertainty. So, it’s important that the rules are clear and don’t end up stifling innovation.

That said, good regulation can serve a critical role: protecting privacy, preventing manipulation of democratic processes, and ensuring ethical AI development. China is an interesting case here.

Every AI model there must be officially registered. They also have strict deepfake rules, yet they are still producing competitive AI models. So, safeguards and innovation aren’t mutually exclusive.

 

Europe has long been aligned with the US on values, but we’re now seeing US tech giants building massive data centres in Middle Eastern countries—some of which have authoritarian, theocratic regimes. Does this signal a shift away from value-based alliances, driven more by business interests?

That’s a really important observation. The US has a history of prioritising resources over values. Previously, it was oil in the Gulf States. Now, the “resource” is capital, data infrastructure, and cloud expansion.

You’re right to sense that alignment based on shared democratic values is weakening. We’re seeing this in how US companies approach China as well, where access to the market can outweigh concerns about authoritarianism or censorship.

So yes, there is a realignment happening, and it's increasingly driven by strategic and economic interests rather than democratic ideals.

In some circles, democracy itself seems to be viewed as an obstacle—especially by certain technocrats and Silicon Valley elites. There's admiration for the Chinese model—centralised control, rapid execution, no delays from regulation or dissent. Do you think democracy is being undervalued in this new tech-driven world?

Yes, I do. There’s been a notable shift in the US, especially since the Trump era, marked by less emphasis on promoting democracy, a free press, or the rule of law: both at home and abroad.

And you’re right, there is a growing admiration among some tech leaders and politicians for China’s centralised control. They see it as efficient. But that view also oversimplifies things. China has its own internal contradictions and long-term risks.

Still, this admiration is shaping US foreign policy. There’s a retreat from value-based leadership. That message is reaching other countries, including democracies like India.

The concern is that as the US recalibrates its global stance, countries that traditionally looked to it for democratic leadership may find themselves navigating without that anchor.

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