Peter Thiel in 2019
Photo: Kiyoshi Ota/Bloomberg via Getty Images

Peter Thiel’s big bet against the California tech world

Protocol Policy

Hello and welcome to Protocol Policy! Today, we look at how the Senate races in Arizona and Ohio decide the ideological fate of the GOP. Plus, Ye agreed to acquire Parler and Musk said he’ll keep Starlink running over Ukraine.

The ‘somewhat fake California thing’

Peter Thiel finally ponied up. The most prominent conservative figure in tech reportedly plans to give up to $5 million in additional funds to Blake Masters’ Arizona Senate campaign. Thiel had originally been reluctant to spend any more on Masters, the Thiel Capital COO, beyond an initial $15 million donation to the Saving Arizona PAC.

The Senate races in Arizona and Ohio will determine Thiel’s role in shaping the future of the Republican party. Thiel has donated to over a dozen Congressional campaigns this midterms cycle. But unlike the more established politicians in this cohort, Vance and Masters are homegrown, one-time employees of the man himself — Thielian without compromise.

If Masters and Vance win, so does Thiel’s vision for the GOP. It’s a vision to move beyond the country club, NAFTA Republicans; it’s a more buttoned-up, competent version of Trumpism, capable of translating the former President’s blustery anti-establishment, anti-technocrat rhetoric into an actual social and economic program.

  • Vance holds a strong lead in Ohio. Election models from FiveThirtyEight give Vance around a 71% chance of winning the race, despite his opponent Tim Ryan having outraised him nearly 11 to 1. At a recent GOP fundraising event, Thiel reportedly told guests that Vance didn’t need more funding because the Ohio race was “done in my mind.”
  • In Arizona, Masters is playing catch-up against incumbent Senator Mark Kelly. Those same FiveThirtyEight models give Kelly an 80% chance of winning. Kelly outraised Masters by nearly 8 to 1, even if you account for Thiel’s latest $5 million pledge.
  • Masters dismissed polls that showed Kelly with a comfortable lead. He’s right to point out that this race is very much up for grabs (let’s not forget those 2016 election meters). In either case, Masters undeniably has a tougher road ahead compared to Vance.

Thiel believes Democrats hitched their wagon to Big Tech, to the detriment of the American middle class.

  • In economics, the resource curse theory posits that resource-rich countries tend to have lower standards of living relative to their resource-poor counterparts. Though it sounds counterintuitive, the general idea is that this overabundance of natural resources allows corrupt and incompetent governments to stay in power, while the economy sustains itself with minimal ingenuity.
  • In his keynote speech at this year’s National Conservatism conference, Thiel took this established idea and reconfigured it as the “tech curse,” which he defines as when a “strong technology industry is associated with social dysfunction rather than progress.”
  • Thiel posits that tech wealth enables distorted political dynamics, which has in turn led to the real estate crisis and broader hollowing out of the middle class.
  • Though he identifies “wokeism” as the religion of our resource-rich state, Thiel claims it shouldn’t be mistaken as “the main thing that’s going on.”
  • Accordingly, Thiel tells us, Democrats have no choice but to hitch their wagon to tech and “pretend that they can make [the] California [model] work for the country as a whole.” Alternatives such as the “fake blue-collar” model or the redistributionist “globalist finance model” work even less well than California, he says.

So where does that leave Republicans? Thiel criticizes the party as it stands now for being too nihilistic — only defining itself in opposition to wokeism and the broader California model. He instead wants the party to get back to “some broad-based growth that is not inflationary, not cancerous, and not some kind of narrow real estate racket.”

  • But that’s just about where the prescription ends. We can extrapolate from other Thiel statements that he wants more investment in non-software technology (“atoms, not bits”), and of course, he’ll always be in favor of less regulation. But other than that, Thiel’s vision seems more defined by what it isn’t rather than what it is. Ironically, then, it suffers from the same ideological nihilism he identifies within the conventional GOP.

In either case, Thiel doesn’t want Republicans to kill the golden goose. A tech executive reading this might think Peter Thiel wants nothing more than to wrest the state power from the Democrats and use it to destroy tech companies. That’s only half right: He wants state power, but not as a means of destroying tech. “It’s just like Saudi Aramco isn’t the main problem in Saudi Arabia — it’s the most functioning institution,” Thiel analogized to suggest we should blame political dysfunction on the superstructure surrounding Apple and Google, not the companies themselves. So Thiel identifies tech as fundamental to the problem, but doesn’t want to destroy it as part of the solution.

— Hirsh Chitkara (email | twitter)

In Washington

Noah Phillips ended his tenure as FTC commissioner and returned to law firm Cravath, Swaine & Moore. The departure of Phillips, a Republican, leaves Lina Khan, the agency’s chair, with a 3–1 majority and leaves President Biden with a GOP seat to fill. The question is whether the next commissioner, whom Biden will almost certainly choose with input from Senate Republicans, will be a traditional pro-business figure, as Phillips was, or someone from the party’s emerging anti-tech wing.

The Justice Department pushed lobbyists for Chinese surveillance-tech company Hikvision to register as foreign agents, according to Axios. Lobbyists for foreign companies use the same disclosure system that domestic companies do, so long as those international firms are independent. Lobbyists for government-controlled firms, however, have to give the public more insight into their activities and use the system that lobbyists for foreign governments do. Hikvision has denied that Beijing calls the shots.

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In the states

A second U.S. Apple store has voted to unionize. Employees at the Oklahoma City store will be part of the Communications Workers of America. A Maryland Apple store was the first one in the U.S. to successfully organize in June, but other drives have failed amid a company campaign to oppose the moves.

A third-party congressional candidate in New York who wants to legalize sex work published a 13-minute sex tape online.

In the courts

A jury found Trevor Milton, the founder and former CEO of Nikola, guilty on three counts of fraud. The charges related to claims about progress on producing zero-emissions trucks. At one point, under Milton, the company even put out a promotional video of a prototype barreling down a desert road. Nikola later conceded it was just rolling downhill.

Around the world

Elon Musk said on Twitter he would “keep funding Ukraine govt for free” despite losses providing Starlink services to the country in its war against Russia. “The hell with it,” he wrote. After bickering with Ukrainian officials for suggesting the country give up territory to end the conflict, Musk had floated that he would stop the donations and that the U.S. government should foot the bill.

Mexico’s attorney general is looking into whether the country’s prior presidential administration acted illegally in buying Pegasus spyware, according to Reuters. The government reportedly paid $23 million for the controversial software from NSO Group.

Turkey’s parliament passed a law that could result in three-year jail sentences for spreading disinformation. The country, which already scores low on measures of press freedom and free speech, will also be able to demand information on social media users.

Thiel also seems to be seeking Maltese citizenship, according to The New York Times.

In the media, culture, and metaverse

Ye, the famed musician once known as Kanye West, plans to buy Parler, according to an announcement from the parent company of the free-speech app that’s popular with conservatives. Ye, who has backed former President Trump, was recently suspended from Twitter and Instagram following anti-Semitic comments.

The fate of Microsoft’s proposed acquisition of Activision Blizzard increasingly looks like it may come down to the treatment of Call of Duty. U.K. competition regulators are digging in on the deal, and the potential for anticompetitive conduct around the popular, currently multiplatform title is a big reason why.

Protocol Policy is pro-Protocol Policy

The Salt Lake Tribune ran an opinion piece praising Republican Sen. Mike Lee as a “principled conservative.” The author was … Sen. Mike Lee, who is the top GOP member of the Senate’s subcommittee on competition law and who bashes Big Tech while also defending the industry against changes to antitrust law. The newspaper appears to have updated the byline at some point to say the author was actually Lee’s campaign, not the man himself. Lee is facing a surprisingly strong challenge from conservative, anti-Trump independent Evan McMullin, and McMullin also got to write in with his own pitch to voters.

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Thanks for reading! See you Wednesday.

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