Whose side is Silicon Valley on anyway?
That’s what Secretary Hegseth may be wondering, given Anthropic’s refusal to grant the US military autonomy over its Claude model — a stance that makes the company an abject outlier in Silicon Valley. Many tech firms are eagerly building alliances and selling services to the federal government. Government contracts are booming, and patriotism is the new subscription software service.
Elon’s leadership of the Department of Government Efficiency (DOGE) is the highest profile example of bringing tech talent into the government. Although DOGE overpromised a trillion dollars of cuts and underdelivered, it still helped reduce the size of the federal workforce and pared back egregious waste at the State Department. Elon has also played a role in geopolitics by offering Starlink services to Ukrainian military forces and putting a hundred or so US government satellites into orbit via SpaceX.
But Silicon Valley’s realignment behind American interests extends well beyond Elon’s network of companies. Anduril, a major tech defense firm founded by Palmer Luckey, is supplying the US military with relatively cheap next-gen hardware and software. And the meteoric rise of Palantir, headed by Alex Karp, has been revolutionizing government intelligence and law-enforcement operations.
President Trump has aggressively courted the CEOs of Silicon Valley — and not without reason. These are the titans of the US economy managing companies worth trillions of dollars and employing millions of people. They are also on the cutting edge of technological innovation and, therefore, driving the process of creative destruction. And some key tech leaders were instrumental in helping Trump win the 2024 presidential election.
Elon Musk was the most visible and well-known tech CEO campaigning for Trump, but a large number of others, from Peter Thiel to Joe Lonsdale to Larry Ellison, and many more — pejoratively called the “tech bros” — also threw their support behind Trump. Huge swaths of the crypto community backed Trump because he promised clear, fair regulation for their industry.
This support for Trump from the tech and crypto industries represents a remarkable departure from the political status quo in Silicon Valley. San Francisco, Berkeley, and tech companies have long been bastions of Democratic and Progressive ideology. And to be fair, they remain deeply blue. The “vibe shift” or realignment towards the political right has mostly been limited to corporate executives, founders, and venture capitalists. The employees of Amazon, Apple, Meta, Alphabet, and dozens of other big tech companies remain committed to Progressive ideology by roughly a 3:1 margin.
Tech executives have moved towards the political right for two reasons: energy and self-preservation. The explosion of AI has changed the technology game and ended the era of ‘pure’ software. Silicon Valley can no longer remain insulated in the world of bits; its advancement now depends entirely on the world of atoms. More than at any time in its existence, Silicon Valley needs a physical presence to advance.
Beyond insatiable energy needs, the shift into hardware — rocketry, EVs, and autonomous drones — has forced tech companies into the same regulatory thicket that entangles the rest of the industrial economy. They must confront all the red tape created by government bureaucrats, but strongly lobbied for and supported by the political left.
Why would Google or Microsoft have cared about restrictions on nuclear power or fossil fuel utilization in the 2000s? Why would they be concerned about the EPA and other regulatory agencies choking off the development of new mines or the production of refined rare earth minerals? Their business was driven by coding and by programmers. They were only constrained by their access to talent, their customer base, and their ingenuity.
Fast-forward to the early 2020s, and the world has shifted in important ways. The push for electrification and the development of the solar panel industry has revealed the importance of the world of atoms. Silicon Valley cannot program its way to electric vehicles, solar panel production and distribution, or advanced batteries. They need inputs and refining know-how that are in rare supply in the US due to decades of tightening bureaucratic regulations.
Then there is the issue of artificial intelligence (LLMs) revolutionizing the technological infrastructure. AI represents a major advance in computing. But building and operating these models requires advanced semiconductor technology, large outputs of these advanced semiconductors, and most importantly, electricity to power these semiconductors in data centers. And so the tech companies that have inhabited the world of bits for decades have rediscovered that they depend on silicon. And they also depend on the electrons powering that silicon.
Which brings us back to the issue of realignment. Silicon Valley companies have discovered that they need inordinate amounts of electricity to drive their technology forward. But they have a problem: many politicians and regulators have been warring against energy development for decades in the name of protecting the planet. The US electric grid is old and relatively inefficient. Most legacy utility companies have tied their own hands at the demand of climate crusaders — retiring coal and gas power plants or, in the case of Germany, shuttering nuclear power plants.
Most of the data centers that tech companies want to build cannot tap the existing electrical grid without raising retail electricity rates or straining current power supplies. They also cannot rely solely — or even primarily — on wind or solar power, because these sources are intermittent and battery storage remains prohibitively expensive. Yet politically, wind and solar were treated as the only acceptable options under the Biden administration and in deep-blue states like California. The Trump administration and Republicans offered a necessary corrective, promoting all forms of energy development and advancing a policy of energy abundance.
Silicon Valley’s rightward shift has another cause: self-preservation. The Democratic Party has lurched dramatically left over the past twenty years. In the 1990s and 2000s, blue states like California would tax businesses and the wealthy more heavily than red states, but they weren’t seeking aggressive confiscation and redistribution of wealth. Now they are. The success of Democratic-Socialists in New York City and in Seattle, as well as the proposal to tax people’s wealth, not just their income, are symptomatic of Democrats’ leftward shift.
Perhaps more alarming is the perceived authoritarianism of the left, which began with pandemic-era lockdowns and has since evolved into aggressive enforcement of speech codes and militant identity politics. Rebellion and protest began erupting within tech companies. This political and cultural shift has sent a message to tech executives loud and clear.
Rather than simply bearing higher taxes to support broader welfare programs, and otherwise being respected or at least ignored, wealthy founders and venture capitalists have discovered that they are hated by left-leaning constituencies. The reaction to Elon and DOGE is instructive.
People were so outraged by him and his politics that they vandalized Teslas and firebombed dealerships. The open hostility in rhetoric towards wealth, success, and productivity caused leaders in Silicon Valley to reassess the political landscape — resulting in significant political migration to the Republican Party and physical migration to red states.
This realignment is still in its early stages. Whether this shift is transitory remains to be seen. But at the very least, being a Republican is no longer a mark of shame among the leaders of Silicon Valley, though it may still be among the rank and file. We are also in the early stages of the physical realignment caused by confiscatory tax proposals in California and other states, labyrinthine bureaucratic regulation, and general hostility to entrepreneurship and business. California alone has seen several billionaires relocate in the past few months, including the founders of Google and Meta.
Nothing guarantees Silicon Valley and San Francisco will remain the center of the tech world. In fact, if history is any indication, industrial and creative centers often change locations — just ask anyone living in Detroit or Chicago in the mid-twentieth century, or in Scranton, Pennsylvania, in the late nineteenth century. This might be a bit premature, but we are heading for a Silicon Rust Belt on the West Coast replaced by Silicon Prairie or Silicon Hills. If that materializes, it won’t be because of trade policy or unfettered capitalism. It will be because of political and regulatory failure.