What happens when a private company becomes so strategically important that a government cannot afford to let it fail — but also cannot easily control it?
Historian William Dalrymple raises this question in his essay, "What It Took to Dismantle the Most Powerful Company in the World." His subject is the British East India Company, but the warning extends beyond colonial history.
The company began as a trading enterprise in 1600. It eventually collected taxes, governed territory, negotiated treaties, and maintained a vast private army. It exercised powers normally associated with a state while remaining accountable to its shareholders.
Modern technology companies do not govern colonies or command private armies. The comparison should not be taken literally.
The more useful lesson is about what happens when public and private power become difficult to separate.
The Original "Too Big to Fail"
By 1772, the East India Company was in financial crisis. It was badly administered, corruption was widespread, and its political and commercial commitments had become expensive.
But the company was too important to Britain's economy and imperial ambitions to be treated like an ordinary failed business.
Parliament intervened. The East India Company Loan Act provided financial support, while the Regulating Act of 1773 increased government oversight. The state preserved the company but demanded greater control in return.
It was an early version of "too big to fail."
The Dutch East India Company followed a related path. Founded in 1602, the VOC became a major commercial and political power. By the end of the eighteenth century, it was corrupt, heavily indebted, and no longer sustainable. In 1799, the Dutch government revoked its charter and assumed its debts and possessions.
In both cases, corporate ambition had expanded beyond the institutions designed to supervise it. When the companies failed, governments inherited more than commercial losses. They inherited debts, territories, political obligations, and the consequences of decisions made under private authority.
When Corporate Rescue Becomes Public Policy
Britain's support for the East India Company also produced consequences far beyond the company itself.
The Tea Act of 1773 was intended partly to help the financially troubled company sell 17 million pounds of surplus tea. It allowed the company to sell more directly in the American colonies and undercut many competitors.
The policy supported the company, but it also intensified colonial anger over taxation and monopoly power. Resistance culminated in the Boston Tea Party and contributed to the chain of events leading toward the American Revolution.
The Tea Act did not single-handedly cause the loss of the thirteen colonies. But it shows how a government can become so invested in protecting a strategically important company that corporate problems begin shaping national policy.
Modern readers may recognize the pattern from the 2008-2009 financial crisis. Governments supported major financial institutions because their failure threatened the wider economy.
The problem was not simply that the banks were large. They were interconnected. Their failure could spread through credit markets, savings, employment, and public finances.
Technology companies are becoming interconnected with the state in a different way.
The New Relationship
Some private companies now operate infrastructure and capabilities that governments consider strategically important.
SpaceX's Starlink became critical to civilian and military communications in Ukraine after conventional infrastructure was disrupted. Its value was clear. So was the vulnerability created when military activity depended on a privately controlled communications system.
Palantir represents another form of dependence. Its data and AI platforms support defense, intelligence, and other government operations. As specialized software becomes embedded in public institutions, replacing it can become slow, expensive, and operationally risky.
Semiconductors reveal the same pattern at an industrial scale. The CHIPS and Science Act supports domestic manufacturing because the United States considers advanced chips essential to economic resilience, defense, and technological competition.
The ordinary explanation is specialization. Governments cannot build every satellite network, cloud platform, semiconductor plant, cybersecurity system, or AI model themselves. Private firms often move faster and possess skills the public sector cannot easily reproduce.
That is true.
Dependence becomes more serious when switching suppliers would interrupt a critical public function, weaken national security, or delay a strategic program. At that point, the relationship begins to affect the government's freedom to regulate, negotiate, or walk away.
Mutual Dependence
Today's technology companies are not replacing governments. They are becoming indispensable partners.
Governments rely on private firms for innovation, computing infrastructure, satellite communications, semiconductor supply chains, cybersecurity, and artificial intelligence.
Those firms also depend on governments.
They rely on public contracts, research partnerships, regulatory approvals, infrastructure policy, market access, subsidies, and diplomatic support. Their position in global markets is often strengthened by the states whose authority they may also complicate.
This is not simply corporate domination. It is mutual dependence.
Dalrymple argues that governments can ultimately master powerful corporations if they have the political will. Britain eventually dismantled the East India Company's governing authority, transferred its territories and army to the Crown, and ended its administrative role.
History supports that conclusion. States retain legal and coercive powers that companies do not possess.
But I am less convinced that "mastering" corporations is the right framework for the AI era.
Britain could reclaim territory, absorb institutions, and transfer formal authority back to the state. A modern government cannot simply nationalize its way to a competitive semiconductor industry, frontier AI capability, global cloud platform, or satellite network. The knowledge, infrastructure, supply chains, and engineering talent are distributed across companies and countries.
The modern challenge is not only how governments control companies.
It is how governments govern relationships they cannot easily end.
Governing the Dependence
The risk is not necessarily that governments will need to rescue technology companies exactly as Parliament supported the East India Company or states supported banks during the financial crisis.
The greater risk is that governments and corporations become so closely connected that it becomes difficult to distinguish where public priorities end and corporate interests begin.
Breaking up a company may reduce concentrated market power, but it does not automatically create public alternatives to its technology. Subsidizing a strategic industry may increase national capacity, but it can also deepen the political importance of the companies receiving support.
A more practical response begins with reducing unhealthy dependence.
Governments need transparent procurement that makes supplier relationships visible. They need interoperable systems that lower switching costs. They need independent oversight of AI used in public decisions. They also need contingency plans for critical services that should not depend on one vendor, one executive, or one proprietary platform.
The East India Company demonstrates that governments can eventually reassert control over powerful corporations.
It also demonstrates how expensive the relationship can become before they do.
The future may depend less on who controls whom and more on whether governments and technology companies can manage their dependence without making public interests and private interests indistinguishable.
References
- William Dalrymple — "What It Took to Dismantle the Most Powerful Company in the World" — originally published by The New York Times
- UK Parliament — Parliament and the East India Company
- Encyclopaedia Britannica — Dutch East India Company
- Encyclopaedia Britannica — Tea Act
- Carnegie Endowment for International Peace — Private Tech Companies, the State, and the New Character of War
- Congressional Research Service — Semiconductors and the CHIPS Act: The Global Context