{"id":1566544,"date":"2025-07-18T12:50:26","date_gmt":"2025-07-18T16:50:26","guid":{"rendered":"https:\/\/observer.com\/?p=1566544"},"modified":"2025-07-24T11:53:02","modified_gmt":"2025-07-24T15:53:02","slug":"how-elon-musk-and-peter-thiel-consolidated-power-in-2025","status":"publish","type":"post","link":"https:\/\/observer.com\/2025\/07\/how-elon-musk-and-peter-thiel-consolidated-power-in-2025\/","title":{"rendered":"The New Tech Nationalists: Silicon Valley\u2019s 2025 Power Play"},"content":{"rendered":"
\"Close-up
A vandalized bust of Elon Musk outside Brownsville, Texas, photographed in May 2025. Erected near Boca Chica\u2019s newly incorporated Starbase city\u2014part of Musk\u2019s plan to \u201cOccupy Mars\u201d\u2014the statue now stands with its cheek peeled off and patched with a pink bandage, suggesting tech\u2019s expanding reach isn\u2019t unbreakable. AFP via Getty Images<\/span><\/figcaption><\/figure>\n

In September 2022, <\/span>Ukrainian officials made an urgent request<\/a> for Elon Musk\u2019s Starlink to extend satellite coverage to Sevastopol<\/span>. Their plan: to launch a surprise drone attack on Russian ships. Musk declined, claiming <\/span>he didn\u2019t want his company implicated<\/a> in acts of war<\/span>, even though Starlink, a vital internet service provider to the war-torn nation since the Russian invasion in February 2022, had already been used extensively in combat. This rejection raised urgent questions for the Pentagon, <\/span>which relies on Starlink not just in Ukraine<\/span> but across multiple operational arenas<\/a>.<\/span><\/p>\n

Since the Iraq War, the U.S. has <\/span>outsourced most logistical and support functions<\/span><\/a>. Today, it spends <\/span>more on third-party contracts than on government employees<\/span><\/a>. <\/span>Agencies within the National Intelligence Program\u2014including the CIA, NSA and NRO\u2014rely on contractors for <\/span>over 70 percent of their workforce<\/span><\/a>. This privatization has hollowed out public expertise and handed sensitive infrastructure to corporations that answer not to voters, but shareholders. <\/span>Unelected and profit-driven, tech corporations aren\u2019t bound by democratic accountability. When governments outsource core infrastructure, they surrender operations and agency, and, as states lean on Silicon Valley, they lose the leverage to regulate it. While Silicon Valley\u2019s entanglement with government isn\u2019t new, over the past year, it has graduated from backstage influence to front-row power, shaping not just services but policies.<\/span><\/p>\n

The European Union has fought back. In April 2025, the European Commission <\/span>fined Apple and Meta<\/a> \u20ac700 million under the Digital Markets Act (DMA)<\/span>, and continues to pressure X and Google. American firms still dominate the lobbying ecosystem in Brussels, accounting for <\/span>over 20 percent of influence<\/span><\/a>. The U.S., by contrast, operates on <\/span>court precedent and antitrust compliance.<\/span><\/a> When billionaires control the satellites, surveillance, speech platforms and A.I. systems used by both citizens and states, who governs? And if the government can\u2019t regulate them, who can?<\/span><\/p>\n

The Billionaire Who Became the Bureaucracy<\/b><\/h3>\n

Musk began as <\/span>the scrappy co-founder of Zip2 and PayPal<\/span><\/a>. Now, he presides over satellites, speech platforms, space exploration, neuroscience and transportation. In 2022, he closed a $44 billion deal to acquire Twitter, vowing to \u201c<\/span>restore free speech<\/span><\/a>.\u201d Within weeks, <\/span>journalists were banned<\/span><\/a>, fact-checking was dismantled and the platform\u2019s <\/span>algorithm began amplifying right-wing content<\/span><\/a>. During the 2024 election, <\/span>Musk pledged $45 million per month<\/a> to a pro-Trump super PAC<\/span>. Not surprisingly, <\/span>both Musk\u2019s and Trump\u2019s posts<\/span><\/a> surged in visibility.<\/span><\/p>\n

On his first day in office, President Donald Trump <\/span>announced the creation of the Department of Government Efficiency (DOGE)<\/a><\/span>, appointing Musk to lead it. DOGE\u2019s mission: gut federal bloat. The result? Almost 60,000 <\/span>federal workers laid off,<\/span><\/a> DEI programs dismantled and critical contracts slashed across FEMA, FAA and the National Weather Service. In February, delayed FEMA contracts <\/span>slowed the recovery response<\/a> after wildfires in Los Angeles<\/span>. In April, Senator Chuck Schumer <\/span>blamed FAA layoffs<\/a> for the Newark Airport security breach<\/span> that grounded hundreds of flights. In May, <\/span>cuts to NWS overnight storm coverage staff<\/span><\/a> preceded <\/span>42 tornado-related deaths<\/span><\/a> in Kentucky and Missouri, just weeks after five former NWS leaders signed <\/span>an open letter warning<\/span><\/a> that \u201cweather forecast offices will be so understaffed that there will be needless loss of life<\/span>.\u201d <\/span>Earlier this month, as flash floods ravaged Texas, killing hundreds and displacing multiples more, <\/span>Trump\u2019s cuts to FEMA dropped the agency\u2019s call response rate<\/a><\/span> from 99 percent to just 15.9 percent, leaving thousands of pleas for help unanswered.\u00a0<\/span><\/p>\n

Meanwhile, Musk\u2019s companies are thriving. Last week, just days after his A.I. chatbot Grok <\/a><\/span>drew backlash for generating Neo-Nazi content on X<\/span>, the Department of Defense <\/span>awarded the platform<\/a> a $200 million contract<\/span>. The deal came less than 10 days after Musk <\/span>launched The America Party<\/span><\/a>, with an ethos, in part, shaped <\/span>by Curtis Yarvin<\/span><\/a>, the neo-reactionary blogger whose post-democratic writings have gained traction among Silicon Valley technocrats\u2014and, of course, his <\/span>very public breakup<\/a> with President Trump<\/span>. In April, one month before Musk\u2019s stint in the White House soured, a <\/span>$5.9 billion contract from the U.S. Space Force locked in 28 SpaceX missions<\/a><\/span>. In early May (on National Space Day!), the administration proposed <\/span>24 percent budget cuts to NASA\u2019s moon program<\/a>, Artemis<\/span>, eliminating climate-monitoring satellites and redirecting $1 billion to Mars, which Musk has been <\/span>vocal about colonizing<\/span><\/a> since 2001. As Musk dominates satellites and rockets, <\/span>Peter Thiel\u2019s empire<\/a> operates closer to home<\/span>\u2014embedding itself in the systems that decide who gets policed, who gets watched and, increasingly, who gets to live.<\/span><\/p>\n

The Surveillance State\u00a0<\/b><\/h3>\n

Thiel\u2019s surveillance software, began in 2004 with <\/span>CIA seed money<\/span><\/a> and a Tolkien reference. Its Gotham platform, capable of hoovering up vast swaths of government and private data, now powers predictive policing, immigration raids and battlefield targeting. Since 2013<\/a>, it\u2019s been <\/span>used by the DHS, CBP, the Pentagon and LAPD<\/span>. Last month, Palantir\u2019s role in ICE raids and predictive patrols in Los Angeles <\/span>drew public ire<\/span><\/a>. Mayor Karen Bass called L.A. a \u201ctest case for <\/span>what happens when<\/a> the federal government moves<\/span> in and takes the authority away from the state or local government.\u201d It was not, however, the first time a major U.S. city piloted surveillance programs for private contractors. From 2012 to 2018, <\/span>Palantir partnered with the New Orleans Police Department<\/span> to test its Gotham software<\/a>, generating \u201cheat lists\u201d of individuals deemed high-risk for violent crimes. Around the same time, the LAPD launched Operation LASER using similar predictive logic. <\/span>A report from Stop LAPD Spying<\/span><\/a> flagged algorithmic bias and over-policing, disproportionately affecting Black and Latino communities.\u00a0<\/span><\/p>\n

On an international scale, governments across Europe turned to American firms during the 2015 refugee crisis to manage migration flows and counter terrorism. Several <\/span>countries, including Germany and France<\/a><\/span>, adopted Palantir\u2019s Gotham software. While <\/span>at least four contracts were canceled less than five years later<\/span>, citing flawed analysis<\/a>, racial profiling and privacy violations, Palantir remains embedded in military operations worldwide, raising sharp questions about its accuracy and bias. Both Ukrainian and Israeli forces reportedly use Gotham to <\/span>process real-time battlefield data<\/a> from drones, satellites and soldiers on the ground.<\/span> According to The Nation, Israeli forces have used <\/span>Palantir\u2019s A.I.-assisted targeting in Gaza<\/span><\/a>, intensifying scrutiny as humanitarian workers, journalists and medical personnel are killed in strikes.\u00a0<\/span><\/p>\n

Thiel believes technology will one day replace human judgment entirely, in everything from governance to warfare. Gaza shows what\u2019s at stake when life-or-death decisions are outsourced to an algorithm, but war zones aren\u2019t the only testing ground for tech-run governance. Billionaires are building cities.<\/span><\/p>\n

Privatizing Power, One City at a Time<\/b><\/h3>\n

In 2009\u2014a year before co-founding the <\/span>Seasteading Institute<\/span><\/a> on aspirations of autonomous, floating city-states beyond government reach\u2014Thiel declared he <\/span>\u201cno longer believes<\/a> that freedom and democracy are compatible<\/span>.\u201d\u00a0<\/span>Though Seasteading faded, the institute seeded a vision of privatized governance, inspiring such neolibertarian manifestos as\u00a0Patchwork<\/a>, Yarvin\u2019s 2017 outline of a political system that imagines a post-democratic world ruled by corporate-owned \u201cpatches,\u201d<\/span> published under the pen name Mencius Moldbug. <\/span>Former Coinbase CTO and Silicon Valley futurist Balaji Srinivasan expands directly on Yarvin\u2019s vision in <\/span>The Network State<\/span><\/a>, advocating for digital-first communities that organize online to raise capital, define shared goals and acquire land. <\/span>Srinivasan calls this approach a form of \u201cTech Zionism<\/a><\/span>,\u201d drawing on the idea of diaspora-fueled state formation, but with corporate land buys instead of territorial conquest.<\/span><\/p>\n

Pr\u00f3spera, <\/span>a privately governed startup city<\/a> on Honduras\u2019 Roat\u00e1n Island<\/span>, is Silicon Valley\u2019s sovereignty experiment in miniature. Backed by U.S. venture capital, including Thiel and Srinivasan, Pr\u00f3spera operated under the <\/span>ZEDE framework<\/span><\/a>, levying its own taxes, enforcing corporate-friendly regulations and establishing private courts with little national oversight. But the initiative drew fierce opposition: human rights protests, environmental concerns and, in 2021, the abolishment of ZEDE zones under new Honduran legislation. Pr\u00f3spera responded<\/a> by <\/span>suing Honduras for $11 billion\u2014nearly one-third of the country’s GDP<\/span>.<\/span><\/p>\n

This push for privatized governance isn\u2019t limited to Honduras. <\/span>In Texas, Musk has ramped up<\/a> political spending, <\/span>hiring more lobbyists than ever this year and lavishing state lawmakers<\/span> with tens of thousands in meals and gifts. In <\/span>May<\/span>, <\/span>residents of Boca Chica\u2014many SpaceX employees\u2014voted to rebrand<\/a> the Texas city as Starbase<\/span>: a de facto company town with full control over development and zoning. <\/span>Environmental groups, Indigenous communities and non-SpaceX residents<\/span> warned it would restrict access to sacred sites and accelerate damage to protected lands<\/a>. The same logic now extends to public land. Trump’s Big Beautiful Bill<\/span>, debated this spring, aimed to allow privatization of federal land<\/a> for corporate development. After a last-minute push by environmental advocates<\/a>, <\/span>the bill was rewritten to exclude<\/a> the sale of nearly 300 million acres.<\/span>\u00a0<\/span><\/p>\n

However, the broader vision remains alive: privately owned \u201cFreedom Cities,\u201d floated during Trump\u2019s 2024 campaign as low-tax, corporate-run enclaves\u2014supported by the same investors behind Pr\u00f3spera (<\/span>Thiel and Marc Andreessen<\/span><\/a>, through Pronomos Capital). <\/span>From government surveillance to private cities, the line between state and startup has all but dissolved. Over the past decade, tech corporations have embedded themselves in public infrastructure. Today,\u00a0 government agencies depend on them for essential operations, from disaster response to national security. But public skepticism is growing as costs become visible: delayed recovery efforts, mass surveillance and widening accountability gaps, all while taxpayer dollars flow into private contracts. <\/span>As digital ethics scholars Nick Couldry and Ulises Mejias argue in their book, <\/span>Data Grab<\/span><\/a>, today\u2019s tech monopolies treat public infrastructure, privacy and personal data as a digital <\/span>terra nullius<\/span><\/i>\u2014colonial no-mans-land. But they aren\u2019t satisfied with power in the cloud. Like traditional colonizers, they want land, too.\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

As Elon Musk and Peter Thiel expand their reach into military, disaster response and city development, governments find themselves increasingly reliant on private tech firms for essential services once considered public goods.<\/p>\n Read More<\/a>","protected":false},"author":177935303,"featured_media":1566563,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"apple_news_api_created_at":"","apple_news_api_id":"","apple_news_api_modified_at":"","apple_news_api_revision":"","apple_news_api_share_url":"","apple_news_cover_media_provider":"image","apple_news_coverimage":0,"apple_news_coverimage_caption":"","apple_news_cover_video_id":0,"apple_news_cover_video_url":"","apple_news_cover_embedwebvideo_url":"","apple_news_is_hidden":"","apple_news_is_paid":"","apple_news_is_preview":"","apple_news_is_sponsored":"","apple_news_maturity_rating":"","apple_news_metadata":"\"\"","apple_news_pullquote":"","apple_news_pullquote_position":"","apple_news_slug":"","apple_news_sections":[],"apple_news_suppress_video_url":false,"apple_news_use_image_component":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"_wpas_customize_per_network":false},"post_tag":[423867783,423881045,46740,1836,423806517,340578,423954760],"company":[423977341,423975251,371748],"channel":[186,11896,423874676,423875666,423950061],"location":[],"nyo_column":[],"person":[1244446,423885957,423889744,423802949,423889757,423998731,423990960,423998732,423998733],"nyo_post_hidden":[],"coauthor":[423998734],"class_list":{"0":"post-1566544","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"tag-billionaires","8":"tag-european-commission","9":"tag-european-union","10":"tag-nasa","11":"tag-national-security","12":"tag-national-weather-service","13":"tag-starlink","14":"observer_company-coinbase","15":"observer_company-palantir","16":"observer_company-spacex","17":"channel-business","18":"channel-wealth","19":"channel-policy","20":"channel-technology","21":"channel-big-tech","22":"nyo_person-elon-musk","23":"nyo_person-peter-thiel","24":"nyo_person-marc-andreessen","25":"nyo_person-donald-trump","26":"nyo_person-balaji-srinivasan","27":"nyo_person-curtis-yarvin","28":"nyo_person-karen-bass","29":"nyo_person-nick-couldry","30":"nyo_person-ulises-mejias"},"acf":{"homepage_position":"","homepage_title":"","homepage_excerpt":"","alternative_og_image":"","headline":{"seo_headline":""},"subheadline":{"optimized_seo_description":"","optimized_social_excerpt":""}},"apple_news_notices":[],"parsely":{"version":"1.1.0","canonical_url":"https:\/\/observer.com\/2025\/07\/how-elon-musk-and-peter-thiel-consolidated-power-in-2025\/","smart_links":{"inbound":0,"outbound":0},"traffic_boost_suggestions_count":0,"meta":[],"rendered":"","tracker_url":"https:\/\/cdn.parsely.com\/keys\/observer.com\/p.js"},"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/observer.com\/wp-content\/uploads\/sites\/2\/2025\/07\/GettyImages-2217999239.jpg?quality=80","coauthors_byline":"By Lindsey Brock Morales","display_channel":"","thumbnail":"\"Close-up