The Myth of Tech Exceptionalism

How tech uses the promise of endless innovation to ward off regulating even its present-day harms.

Artby Outsidein for Noema Magazine

Yaël Eisenstat is a Future of Democracy Fellow at the Berggruen Institute. In 2018, she was Facebook’s Global Head of Elections Integrity Operations for political ads. Previously, she spent 18 years working around the globe as a CIA officer, a national security advisor to Vice President Biden, and a diplomat.

Nils Gilman is the deputy editor of Noema Magazine. He is also the vice president of programs at the Berggruen Institute. He has previously worked as associate chancellor at the University of California, Berkeley and as research director and scenario planning consultant at the Monitor Group and Global Business Network. Gilman has won the Sidney Award (for longform journalism) from The New York Times and an Albie Award (for international politics journalism) from The Washington Post.

With the onslaught of press coverage and congressional hearings about Big Tech’s role in society in recent years, we have heard variations of an all-too common defense from tech leaders: “We do more good than harm.” On its face, this is both an unsubstantiated and unquantifiable assertion, based on the self-described tech industry’s views of what is good for the rest of us, both today and in the future they are building. More importantly, it is an irrelevant argument intended to subvert a fundamental purpose of democratic governance: protecting the public from predatory or harmful actors and business practices. 

What has come to be known as “tech” presents a two-faced image. On the one hand, tech represents (and especially presents itself) as all that is good about contemporary capitalism: it produces delightful new products, generates vast new troves of wealth and inspires us quite literally to reach for the heavens. On the other hand, the harms caused by “tech” have become all too familiar: facial recognition technology disproportionately misidentifying people of color, Google reinforcing racist stereotypes, Facebook stoking political polarization, AirBnB hollowing out city centers, smartphones harming mental health and on and on. Some go so far as to claim that tech is depriving us of the very essence of our humanity.

Despite these critiques, Silicon Valley in recent decades has managed to build an anti-regulatory fortress around itself by promoting the myth — rarely stated plainly, but widely believed by tech practitioners — that “tech” is somehow fundamentally different from every other industry that has come before. It is different, the myth says, because it is inherently well-intentioned and will produce not just new but previously unthinkable products. Any micro-level harm — whether to an individual, a vulnerable community, even an entire country — is by this logic deemed a worthwhile trade-off for the society-shifting, macro-level “good.”

This argument, properly labelled “tech exceptionalism,” is rooted in tech leaders’ ideological view both of themselves and government. This ideology contributes to the belief that those who choose to classify themselves as “tech companies” deserve a different set of rules and responsibilities than the rest of private industry.

For tech evangelists, “disruption” as such has become a kind of holy grail, with “unintended consequences” treated as an acceptable by-product of innovation. “Move fast and break things” was Facebook’s original motto — and if a little thing like democracy got broken in the process, well, someone could clean that up later. An entire generation of “innovators” has grown up believing that technology is the key to making the world better, that founders’ visions for how to do so are unquestionably true and that government intervention will only stymie this engine of growth and prosperity, or even worse, their aspirational future innovations.

But just as the good the Catholic Church may do in any given community does not obviate the Church’s leadership from accountability for pedophilia, or the delights of plastics do not give the chemical industry the right to poison our rivers and skies, so should the conveniences produced by tech not indemnify companies from accountability for present-day harms imposed on the public.

Tech Exceptionalism As Regulatory Absolution

The United States has a long history of corporate giants fighting regulation. During the first half of the 20th century, a consensus formed about the need to regulate industries that, left to their own devices, all too often produced malign public outcomes. Upton Sinclair’s muckraking account of the meatpacking industry, “The Jungle,” along with the widespread fraudulence of the patent medicine industry, were instrumental in justifying the formation of the Food and Drug Administration in 1906.

Likewise, the collapse of Wall Street in 1929 and the failure of thousands of banks in the Great Depression led to the establishment of the Securities and Exchange Commission. The environmental despoliation documented by Rachel Carson in “Silent Spring” spurred the creation of the Environmental Protection Agency in 1970. By the middle of the 20th century, most Americans had come to accept that regulation was necessary to protect the public from the negative externalities created by large companies.

Starting in the late 1970s, however, a reaction began to set in against regulation. In the context of that decade’s stagflation, many industry leaders saw a chance to counterstrike by arguing that excessive government regulation was inhibiting the ability of industries to retool themselves. The move toward deregulation began with transportation services (trucking and airlines) and over the next two decades became a bipartisan project to deregulate a whole range of industries. This culminated in the epoch-defining Gramm-Leach-Bliley Act of 1999, which deregulated the financial services industry, in a move that many see as having led to the 2007 subprime mortgage meltdown and consequent global financial crisis.

“For tech evangelists, ‘disruption’ has become a kind of holy grail, with ‘unintended consequences’ treated as an acceptable by-product of innovation.”

Silicon Valley came to maturity and dominance during this anti-regulation era and imbibed the swelling libertarian ethos that predominated from the 1980s onward. In this context, regulation became the enemy of “innovation,” which soon emerged as the byword for “tech” as a whole. As more recently described in a Forbes article on Tesla, “We all generally perceive the government and regulations as a hurdle to progress and innovation.” For a whole generation of entrepreneurs, abetted by market fundamentalists, the central dogma became the right to “permissionless innovation.”

All business leaders dislike being regulated (who likes rules?), but many tech leaders believe “tech” is fundamentally different from “mature” industries, like those that create chemicals or cars, whose goods and harms are eventually well understood and therefore regulatable. Tech’s identity, on the other hand, was defined around the constant creation of the radically new or the disruption of the outdated, for which the proper regulatory framework could not be anticipated in advance. Would-be tech regulators were derided as dull bureaucrats, would-be killers of the golden goose, applying rules based on systems that tech itself, if left alone, would soon supersede anyway.

In any other industry, the sorts of harms produced by Big Tech would long ago have spurred the standard response: government regulation. But the tech titans and their stalwarts have shielded themselves by resorting to two basic arguments — really, rhetorical strategies — to fend off the regulators. First, many in the tech world insist that whatever harms technology creates, it is more than outweighed by the good in the present. In a September podcast interview, for example, Instagram head Adam Mosseri argued: “We know that more people die than would otherwise because of car accidents, but by and large, cars create way more value in the world than they destroy. And I think social media is similar.” Of course, Mosseri was roundly mocked for this line — he seemed unaware that, in fact, the auto industry is one of the most heavily regulated in the U.S. and Europe.

This reasoning even permeates the talking points of some in the industry who now openly acknowledge that government guardrails are needed. Facebook’s former public policy director for global elections, Katie Harbath, who resigned in March 2021, spoke to the Wall Street Journal about the need for some form of government intervention — but even then, she said: “I still believe social media has done more good than harm in politics.”

This argument should have no relevance to whether and how government should consider tech regulation.

Futurity At Scale

The second argument hinges on the idea that as-yet-unrealized, perhaps-undreamed-of future innovations will more than offset any harms of today’s technology. This idea of tech exceptionalism has largely inoculated the industry from the same rules long applied to others. “Tech” in this sense refers not to an industrial segment, but an attitude toward the future.

Coined in the 1970s, the term “Silicon Valley” originally referred to the computer industry — first hardware (e.g. the silicon) and then later, starting in the 1990s, also to software. Over the last decade or so, however, the term “tech” has come to replace these older and more specific terms. People working for companies as different as Tesla (a car company), Amazon (a retailer), Stripe (a financial services firm), Netflix (a media company), and Uber (a taxi company) describe themselves as working in “tech.” By contrast, people working for Ford, Walmart, Visa, Disney or Yellow Cab generally do not.

Why does this matter? First, so-called tech companies’ posture toward the future became a way of making a financial claim. Tech companies, startups especially, weren’t to be assessed financially on the basis of actual revenues in the present, but on the basis of the revenues that they might make in the future as a result of innovations yet to come. This meant that companies that positioned themselves as “tech” firms got to trade at multiples of existing revenues that far outstripped those enjoyed by “incumbents,” who were presumed to be plodding, technologically-deficient dinosaurs. As an extreme case, consider Tesla, which owns less than 3% of global market share in the automotive industry — yet by positioning itself as a “tech” firm has acquired valuation higher than Toyota, Daimler, Volkswagen, Honda, Ford, General Motors and BMW combined.

But the designation of a firm as “tech” has another subtle effect that is arguably even more important than the financial benefits that accrue to its investors. The term implies that, for regulatory purposes, the social costs of these firms’ present activities should be weighed not against the benefits they currently produce, but those they promise in the future.

“We must dispel the mythology that tech is somehow different from every other industry.” 

Neil deGrasse Tyson captured the spirit of futurity that animates tech when he observed: “What Elon Musk is doing is not simply giving us the next app that will be awesome on our smartphone. No, he is thinking about society, culture, how we interact, what forces need to be in play to take civilization into the next century.” In asserting that “the current regulatory system is broken,” Musk himself argued that “there is simply no way that humanity can become a spacefaring civilization without major regulatory reform.” In both cases, prospects of a dazzling future are deployed to deflect regulatory concerns in the here and now. 

It’s important to pause here to realize how curious these claims are and what fantastic conclusions they are used to justify. Designating a firm as a “tech” company means that the future goods tech might produce (if unmolested by regulators) necessarily trump any harms the industry may be creating in the present. Given that regulations, as discussed, inherently slow what a firm can do, this means that regulations of tech firms are pernicious, by definition, since they necessarily slow the ability of these firms to deliver the beautiful promise of innovation at scale. In sum, the tech exceptionalism myth serves one function when companies are small (valuation arbitrage) and another function when they are big (regulatory arbitrage).

The Role Of Government, Rightly Understood

That our government is not as nimble, effective or innovative as we need it to be, especially when it comes to technology, is indisputable. Lawmakers may need to consider how to update or adapt laws to account for the tech-centric focus of these companies. But that cannot continue to mean that companies have a free pass from any rules that exist in their non-tech-classified competitors.

Tech exceptionalism is an ideology that has served to give tech companies a competitive advantage by removing the regulatory burden that every other industry must accept. But this is nonsense. As the debates over how to properly regulate tech swell, we must dispel the mythology that tech is somehow different from every other industry and should therefore be judged by whether the current or future good outweighs their present negative externalities

This regulatory principle, while quite straightforward when applied to tech firms competing in more traditional sectors, is more complicated for firms that in fact seem to have invented new industrial segments altogether. Which brings us back to the hardest case, namely social media, and Facebook in particular.

“It is a government’s job to protect its citizens as much as it is to help the economy grow, innovation flourish and the private sector prosper.”

Beyond the myriad legislative and regulatory debates, one basic principle should be straightforward: Facebook and other social media companies must be regulated on the basis of protecting against the harms they create. Instead, we have allowed them to continue to amass power, wealth and control over much of our daily lives, while granting them immunity from responsibility for potential harms under the premise that the upsides of innovation far outweigh any potential downsides and should therefore not be stymied by government intervention.

The core functions of regulation — safety, security, protection against harmful actors and practices — necessarily add friction into any system. But as people in tech like to say, this is a feature, not a bug; the goal of regulation is quite precisely to make negative externalities costly for the companies that produce them. But the self-conception of tech entails the exact opposite. Tech sees itself as being fundamentally about reducing friction — disintermediating old industries, increasing convenience for consumers. This tension understandably complicates the relationship between tech and regulator, and deciding what trade-offs we are willing to accept is an inherently political decision in the sense that it entails a debate not about how (i.e. efficiency) but rather about what (i.e. values). But tech’s talking-points about all the good tech does — and the even greater good it promises to do — complicates our ability to find this important balance.

It is a government’s job to protect its citizens as much as it is to help the economy grow, innovation flourish and the private sector prosper. Whereas tech leaders may claim to have a macro-level view of their products’ impact on the world, in a democracy it is up to elected representatives, answering to their constituents, to properly assess and curb the harms caused by companies, including ones touting shiny new technologies. What is crucial now is for the government to acquire the technological literacy that will allow it to effectively assess not only the harms caused by technologies, but also to design regulatory strategies as nimble as the technology companies that so clearly need to be regulated.