The United States has spent the better part of four decades lecturing the world about free markets. Open competition. Level playing fields. Let the best product win. It’s a story so deeply embedded in American economic identity that questioning it feels almost heretical.
But here’s the thing: the story doesn’t match reality. Not even close.
A detailed analysis published by software developer Stefan Schüller lays out a case that’s difficult to dismiss — that the U.S. technology sector operates less like a free market and more like a state-backed oligopoly, protected by regulatory capture, government contracts, and deliberate policy choices that advantage domestic incumbents while locking out foreign competitors. The argument isn’t coming from an economist at a think tank. It’s coming from someone who builds software for a living and has watched, from Europe, as American tech firms consolidated power in ways that would trigger antitrust alarms in virtually any other industry.
The timing matters. Washington is simultaneously escalating tariffs, restricting chip exports to China, and tightening controls on AI technology — all while insisting it champions open markets. The contradiction has become impossible to ignore.
The Subsidy Machine Behind Silicon Valley
Start with the money. The CHIPS and Science Act, signed into law in August 2022, directs $52.7 billion in subsidies to semiconductor manufacturers building or expanding facilities on U.S. soil. Intel alone has received preliminary commitments of up to $8.5 billion in direct funding, plus $11 billion in loans. Samsung and TSMC have secured billions more. These aren’t tax breaks buried in obscure code provisions. They’re direct cash transfers from the federal government to some of the most profitable companies on Earth.
Schüller’s analysis points out the irony: the same political establishment that spent years criticizing European industrial policy — Airbus subsidies, agricultural supports, digital regulations — now operates the largest technology subsidy program in the Western world. And the CHIPS Act is just the most visible piece. The Department of Defense has for decades served as a de facto venture capital fund for American technology, channeling contracts worth hundreds of billions to domestic firms. The National Security Agency, CIA, and other intelligence agencies maintain classified procurement relationships with tech companies that never face competitive bidding from foreign firms.
Government procurement rules effectively shut out non-American companies from vast swaths of the federal technology market. FedRAMP certification, the security authorization process required for cloud services sold to federal agencies, is so expensive and complex that it functions as a barrier to entry for all but the largest providers. Amazon Web Services, Microsoft Azure, and Google Cloud dominate federal cloud computing not solely because they’re better — though they may be — but because the procurement structure is designed around their capabilities.
This extends beyond cloud. Oracle’s grip on federal database contracts. Palantir’s expanding footprint across defense and intelligence. Microsoft’s near-monopoly on desktop operating systems used by government agencies. These relationships create feedback loops. Federal contracts generate revenue. Revenue funds R&D. R&D produces products that win more contracts. Foreign competitors don’t get a foot in the door.
And then there’s the tax structure. As Schüller notes, American tech giants have historically paid effective tax rates far below statutory levels through a combination of offshore profit shifting, R&D tax credits, and stock-based compensation deductions. Apple famously held over $250 billion overseas before the 2017 Tax Cuts and Jobs Act created a repatriation window. The result: U.S. tech companies accumulate capital at rates their foreign competitors can’t match, then use that capital to acquire potential rivals before they become threats.
The acquisition record is staggering. Google has completed more than 260 acquisitions. Meta has bought nearly 100 companies. Microsoft’s purchases include LinkedIn, GitHub, Activision Blizzard, and Nuance Communications. Many of these deals faced minimal regulatory scrutiny in the U.S. until very recently. European regulators, by contrast, have been far more aggressive — which American commentators routinely characterize as anti-American bias rather than legitimate competition enforcement.
Standards, Surveillance, and the Soft Power of Default Settings
The protectionism isn’t always financial. Sometimes it’s structural.
Consider internet governance. The Internet Corporation for Assigned Names and Numbers (ICANN), which manages the domain name system, is headquartered in Los Angeles and was created under a contract with the U.S. Department of Commerce. While ICANN transitioned to a multi-stakeholder model in 2016, American influence over core internet infrastructure remains disproportionate. The root DNS servers, the physical backbone of major internet traffic routes, the dominant content delivery networks — all concentrated in or controlled by American entities.
Schüller raises a point that resonates with many European technologists: when the U.S. government invokes national security to justify technology restrictions, it’s often indistinguishable from protectionism. The ban on Huawei’s 5G equipment is the most prominent example. Washington argued — with some evidence — that Huawei’s ties to the Chinese government posed surveillance risks. But the ban also conveniently eliminated the most cost-effective competitor to American and allied telecom equipment makers. European carriers that had already deployed Huawei infrastructure were forced into expensive rip-and-replace programs, often subsidized by their own governments.
The surveillance angle cuts both ways. Edward Snowden’s 2013 revelations showed that the NSA had been conducting mass surveillance through programs like PRISM, with the cooperation of American tech companies including Google, Apple, Microsoft, Facebook, and Yahoo. European governments were outraged. The European Court of Justice subsequently struck down the Safe Harbor agreement governing transatlantic data transfers, and later invalidated its successor, the Privacy Shield, in the landmark Schrems II decision. The current EU-U.S. Data Privacy Framework, adopted in 2023, faces legal challenges and skepticism from European privacy advocates who doubt American surveillance practices have meaningfully changed.
So when American officials accuse Europe of using data protection regulation as a trade barrier, European policymakers respond that they’re protecting their citizens from a surveillance apparatus that American companies are legally compelled to participate in. Both sides have a point. Neither side is being entirely honest about their motivations.
The regulatory asymmetry extends to content and competition law. The EU’s Digital Markets Act, which took full effect in March 2024, designates large platforms as “gatekeepers” and imposes specific obligations — interoperability requirements, restrictions on self-preferencing, limits on data combination across services. Every company initially designated as a gatekeeper is American: Alphabet, Amazon, Apple, Meta, Microsoft, and ByteDance (TikTok’s parent, which is Chinese but operates under heavy U.S. regulatory pressure). American industry groups and some members of Congress have characterized the DMA as discriminatory. But the designation criteria are based on market capitalization, user numbers, and platform characteristics — metrics that American companies dominate precisely because of the advantages described above.
There’s a circular logic at work. American companies grow enormous through a combination of genuine innovation, massive government support, favorable tax treatment, and permissive domestic regulation. When foreign governments try to impose rules on these giants, the U.S. cries foul. The implicit argument: our companies got big fair and square, and any attempt to constrain them is protectionism. The explicit reality: the playing field was never level to begin with.
Open-source software provides another lens. Schüller, who contributes to open-source projects, observes that American companies have become adept at co-opting open-source development. They release projects under permissive licenses, build communities around them, then monetize the surrounding services while maintaining effective control over the project’s direction. When competitors build on the same open-source code, the originating company changes the license — as MongoDB, Elastic, Redis Labs, and HashiCorp have all done in recent years. The pattern is consistent enough to look like strategy rather than coincidence.
This matters because open-source software underpins virtually all modern infrastructure. Linux runs the majority of servers worldwide. Kubernetes orchestrates containerized applications. PostgreSQL and MySQL power databases across every industry. When the companies that control the most popular open-source projects are predominantly American, and when those companies can alter licensing terms unilaterally, the rest of the world’s technology stack rests on a foundation it doesn’t control.
What a Real Free Market Would Actually Require
The counterargument is straightforward: American tech companies are simply better. They attract the best talent. They operate in a culture that rewards risk-taking. They benefit from deep capital markets and a legal system that protects intellectual property. All of this is true. And none of it contradicts the protectionism argument.
A country can have genuinely innovative companies and still protect them from foreign competition. The two aren’t mutually exclusive. Germany has world-class automakers and also maintains regulatory frameworks that advantage domestic manufacturing. Japan’s keiretsu system produced globally competitive electronics firms within a highly coordinated industrial policy. The difference is that Germany and Japan don’t typically claim to be operating pure free markets. The U.S. does.
Recent moves have made the contradiction sharper. The Biden administration’s executive order on AI safety, issued in October 2023, imposed reporting requirements on companies developing large AI models — requirements that apply primarily to American and Chinese firms. The Trump administration’s tariff escalation in 2025 has added new layers of trade barriers affecting technology components and finished goods. Export controls on advanced semiconductors and chip-making equipment to China, tightened repeatedly since October 2022, represent perhaps the most aggressive use of technology trade restrictions since the Cold War.
These aren’t free-market policies. They’re industrial strategy. And they may well be justified on national security grounds. But calling them free-market policies while implementing them is intellectually dishonest.
What would an actual free market in technology look like? It would mean foreign cloud providers competing on equal terms for U.S. government contracts. It would mean consistent antitrust enforcement regardless of a company’s country of origin. It would mean no CHIPS Act subsidies — or, if subsidies exist, acknowledging them as the industrial policy they are. It would mean accepting that European data protection law, whatever its flaws, reflects legitimate democratic choices about privacy, not anti-American animus.
It would also mean accepting that American tech dominance might diminish. Which is precisely why a real free market in technology will never exist. No country with the power to tilt the playing field in its favor voluntarily gives up that advantage. The U.S. is no different from China or the EU in this regard. It’s just better at marketing.
Schüller’s analysis ends with a provocation that’s hard to dismiss: the next time an American official lectures another country about free markets and open competition, ask them to name a single major U.S. government technology contract won by a foreign company. The silence, he suggests, will tell you everything you need to know.
The free market in technology is a powerful idea. As an accurate description of how the global tech industry actually operates, it’s fiction. Useful fiction, perhaps — the kind that justifies existing power arrangements and discourages challenges to them. But fiction nonetheless.
And the rest of the world is starting to notice.
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