Random thought – did music break the USSR? As I watched 40 year old re-runs of Live Aid last week, I found myself trying to recall the emotions and vibe at that moment in time. The Live Aid concert itself was a significant exhibition of global solidarity in raising awareness of famine in Ethiopia. In hindsight, the long-lasting impact of Live Aid on preventing famine might be questionable as global leadership values currently go AWOL on the Gaza and Sudan catastrophes. However, the sheer reach of that day’s broadcast to over 2 billion people in more than 150 countries was a display of communications tech power which has to be considered against the geopolitical backdrop of the time. Saigon had finally fallen to Communist North Vietnam only 10 years earlier, Afghanistan had been invaded by the USSR just 5 years before and Poland had recently come out of a period of martial law. Nobody felt like the USSR empire was faltering. But…. its “iron curtain” was failing to block the reality of better living elsewhere.
In 1981 MTV, the US music video channel, launched on cable television and was syndicated to countries around the world. Global audiences were seeing music combined with video imagery celebrating freedom, democracy and the rewards of talent and endeavour. Live Aid confirmed communications technology was moving rapidly and posed a real threat to those who needed message control to stay in power. The Chernobyl nuclear disaster happened a year after Live Aid, the Berlin Wall fell 3 years later, and the USSR imploded 2 years after that. Today’s Russia is a rogue state with a GDP of barely $2 trillion, or about half the value of one US tech company, Nvidia. This stark reversal in geopolitical and commercial leadership is a reminder to the leaders of today about “network” power. My sense is that there are three particular ‘networks’ where governments are now beginning to assert sovereignty for national security reasons. I’d flag three stories in recent weeks which illustrate the point well.
European satellite internet network company, Eutelsat, is a competitor to Elon Musk’s Starlink and is listed on the Paris and London stock exchanges. The company is raising €1.5 billion of capital funding with a sovereign twist. The French government is investing €750m and the UK is putting in €163m in exchange for shares in the company and maintaining ownership stakes of 29.65% and 10.89% respectively. However, Eutelsat’s fleet of just over 600 satellites has a lot of catch up to do. Starlink’s network has deployed more than 7,500 satellites thanks to the dizzying rocket launch timetable of sister company, SpaceX. If you were looking for one area of European urgency on tech sovereignty, then it’s probably defence. Germany is stepping up with €500 billion earmarked for defence investment, so it was no huge surprise to see Berlin-based Planet Labs win a €240m satellite services contract from the German government earlier this month. Planet Lab’s brief is to deploy its fleet of 600 next-generation Pelican satellites to deliver high-resolution SkySat imagery, and AI-enhanced surveillance tools, specifically designed for security, infrastructure monitoring, and maritime awareness. Clearly, it’s time to look up and keep an eye on a rapidly shifting space race, but don’t forget what’s under our feet.
Earlier in this piece I kinda said that communism died in the ‘90s but the idea of centrally controlled economies is making a bit of a comeback. Bizarrely, the US is leading the charge. Again, I’m going to park the politics and walk you through a few developments in recent weeks. First, the US government via the Pentagon announced it was getting into the mining business. Yep, the Pentagon (Department of Defense) invested $400m in MP Materials, a US company which extracts and processes rare earths materials. These rare earths are the essential basic materials for the high-end magnets used in technologies from mobile phones to medical equipment to ballistic missiles. Anyway, we know the world is overly dependent on China (90% market dominance) for these rare earths/magnets and is a primary reason for the Trump TACO pause on trade tariffs with China. Clearly, critical raw material supply chains/networks are a focus of all Western governments. So, the move to back a home-grown producer with a 15% ownership stake was logical enough. However, within days Apple announced a $500m deal with MP Materials to buy magnets produced in Texas. Cue the MP Materials share price doubling within hours and you can just feel it in your bones that Apple was strong-armed by Washington into doing this deal. This is the sort of government intervention you’d expect from Beijing, but ….Washington? We live in interesting times, as the Chinese might say, but arguably there’s another network of even more importance where the Washington government is happier for China to lead.
The electrification of the global economy is very real. The advent of AI and the enormous energy appetite of cloud-supporting data centres only adds to the pressures on electrical grid networks everywhere. The race to source power is focusing the minds of Big Tech and driving deals which could be described as “outside the box” thinking. Consider these recent deals:
- Google last week agreed a $3 billion deal to modernise two hydropower plants in Pennsylvania.
- Meta said in June that it had struck a 20-year deal with a nuclear plant in Illinois to power its data centres.
- Microsoft is preparing to reopen a nuclear reactor at Three Mile Island in Pennsylvania, the site of the most serious nuclear meltdown in US history.
However, the bigger energy story is elsewhere, but with a US context. The Trump administration is actively pushing investment capital away from renewable energy solutions like solar and wind. Year-to-date in the US, more than $15 billion of clean energy projects have been cancelled. In Europe, venture capital funding of cleantech companies has nosedived by 71%. Meanwhile, China is taking a longer-term view on electrical grid networks. The numbers are absolutely staggering. China controls 80% of solar panel production and leads the world in wind turbine manufacturing. This year China will account for 74% of all solar and wind energy projects…. globally. But, it’s the electricity generating capacity numbers which truly blow the mind. Last year China added 370GW of renewable energy capacity (wind, solar, hydro) of which 277GW was solar. For context 1GW (or 1000MW) is the equivalent energy capacity of the average nuclear power station. So, on solar energy alone, China is adding the equivalent electrical capacity of five nuclear power stations to its power grid….. every week.
The headlines might be dominated by $4 trillion companies driving the AI revolution, cloud-based software economics, chip manufacturing and data centre construction. But…. two of the three networks above focus on real basics. China’s raw materials supply chains and its electricity grid are critical to its future and geopolitical power. One can only hope it’s not an “MTV moment” for other countries playing catch up, or worse – blocking the signals of rapid change.
