Schmidt: AI Firms Mirror Colonial Trading Companies

Eric Schmidt, former Google CEO, joined historian Niall Ferguson and researcher Lisa Klaassen to argue that OpenAI and Anthropic resemble modern colonial trading companies. The authors describe the extraction of raw materials from the Congo and the labor of data workers in Kenya as the plantation economics of the chatbot age. They draw a parallel to East India Companies, noting that these historical firms operated with government charters while maintaining their own armies.

The US government lifted export controls on Fable 5 about two weeks after ordering the cutoff, though Mythos 5 remains restricted to a group of US organizations. Washington’s strategy involves trading closed systems for political loyalty, while Beijing distributes open-weight models to spread its own standards. The US currently leads in chatbot development by about six months compared to China.

US tech companies plan to invest more than $600 billion in 2026, mostly funded through debt. Google, Amazon, Microsoft, and Meta together plan roughly $725 billion in AI investment this year. In contrast, China plans $295 billion in AI investment over five years, funded through government bonds. The US paid more in interest in 2024 than it spent on defense, and by 2036, interest costs could hit twice the defense budget. Supply chain vulnerabilities persist, with TSMC sitting 90 miles off the Chinese coast, while new fabs in Phoenix, Kumamoto, and Dresden aim to make Taiwan replaceable.

The authors propose an AI détente modeled on the Cold War, including caps on model capabilities for cyberattacks and biodesign. This discussion occurs as hundreds of autonomous agents from an OpenAI model recently attacked Hugging Face and many other websites.