The Development of the Militarized Data Trader
Although often glorified as an achievement in promoting human freedom, the Internet and many of its most popular companies were born directly out of the United States national security apparatus.
Today, the world economy is no longer powered by oil, but by data. Shortly after the introduction of the microprocessor came the Internet, unleashing a torrent of data that runs along spools of fiber optic cables beneath the oceans and satellites above the skies. While the Internet is often portrayed as liberating humanity from the oppressors of nation states, enabling previously impossible networking and social organization between geographically separated cultures to circumvent the monopoly of violence held by world governments, the Internet itself was ironically born out of the largest military empire in the modern world – the United States.
The ARPANET
The Internet began as ARPANET, a project of the Advanced Research Projects Agency (ARPA), which became known as the Defense Advanced Research Projects Agency (DARPA) in 1972 and is currently under the Department of Defense. ARPA was founded in 1958 by President Eisenhower within the Office of the Secretary of Defense (OSD) in direct response to the successful launch of Sputnik, the first artificial satellite in Earth orbit with data transmission technology, by the United States’ greatest military rival, the USSR. While historically considered the birth of the space race, the founding of ARPA actually began the now decades-long militarization of data intermediaries that quickly led to world-changing developments in global positioning systems (GPS), the personal computer, computer-aided information processing (“time-sharing”) networks, original artificial intelligence, and autonomous drone technology with weapons.
In October 1962, the recently formed ARPA appointed JCR Licklider, a former MIT professor and vice president of Bolt Beranek and Newman (known as BBN, currently owned by defense contractor Raytheon), to head its Information Processing Techniques Office (IPTO). At BBN, Licklider developed the earliest known ideas for a global computer network and in August 1962 published a series of memos that laid the foundation for his concept of the “Intergalactic Computer Network.” Six months after his appointment at ARPA, Licklider distributed a memo to his IPTO colleagues—addressed to “members and partners of the Intergalactic Computer Network”—describing a “time-sharing network of computers,” drawing on a similar study of collaborative, distributed computing by John Forbes Nash Jr. in his 1954 paper Parallel Control, commissioned by the defense contractor RAND, which would form the basic concepts for ARPANET, the first implementation of today’s Internet.
Before the technological innovations explored by Licklider and his ARPA colleagues, data communications—at the time, primarily voice over telephone lines—were based on circuit switching, in which each telephone call was manually connected by an operator to create a dedicated, end-to-end analog electrical connection between the two parties. Paul Baran of the RAND Corporation, and later ARPA itself, began working on methods that would enable impressive data communications in the event of partial disruption, such as from a nuclear event or other act of war. This led to a distributed network of unmanned nodes that broke the desired information into smaller chunks of data—now known as packets—before forwarding it separately, to be reassembled only after reception at the desired destination.
Although the engineers of the time were certainly not aware of it, these achievements in distributed routing and global information processing via data packets created a completely new raw material – digital data.
A Brief History of Financial Intelligence as a Weapon
Long before the USSR got the United States to formalize ARPA because they feared the militarization of satellites following the launch of Sputnik, data brokers played a significant role in warfare and particularly in the markets surrounding military conflict. A well-known but early example occurred during the Napoleonic Wars in the 19th century, when the Rothschild banking family used carrier pigeons and horse-riding couriers to gain an information edge on battle outcomes while also communicating quickly with their traders in London. These animal-powered technological advances allowed Rothschild-affiliated brokers to make well-informed bets on the outcome of French warmongering in order to position themselves on the winning side of large currency and commodity bets. This similar but modernized technique was later used in the 1980s by figures such as commodities trader (and Mossad agent) Marc Rich, who used satellite phones and optical imaging techniques to track and relay the movements of oil tankers between nations, giving his trades an asymmetric advantage when trading within the active petrodollar system. Similarly, Louis Bacon’s Moore Capital made a profit of 86% in its first year, largely due to correctly predicting Saddam Hussein’s invasion of Kuwait due to clever sharing of intelligence from military sources and correctly betting on rising oil prices while shorting stocks.
As modern warfare slowly evolved from direct military action to weaponized financial speculation, the market for data became as valuable as the defense budget itself. Because of this, the need for sound data became the most important issue in national security, leading to a proliferation of advanced data brokers emerging from DARPA and the intelligence community, resembling the Manhattan Project of the 21st century.
The San Jose Project: Google, Facebook and PayPal
The creation of the CIA venture capital firm In-Q-Tel and the proliferation of Silicon Valley venture capital firms that congregated on Sand Hill Road in Palo Alto, California, are examples of the full financialization of a new generation of American data brokers. The first firm to locate on Sand Hill Road was Kleiner Perkins Caufield & Byers, better known as KPCB, which participated in financing Internet pioneers Amazon, AOL, and Compaq while also directly founding Netscape and Google. KPCB’s partners included such well-known government figures as former Vice President Al Gore, former Secretary of State Colin Powell, and Ted Schlein, who is a board member of In-Q-Tel and a member of the NSA’s advisory board. KPCB also had a close connection with Internet networking pioneer Sun Microsystems, best known for building most of the network switches and other infrastructure needed for a modern broadband economy.
Aside from the obvious need for network infrastructure for a data economy, a former Sun employee and later KPCB partner, Bill Joy, patented a widely used distributed file system software known as NFS, or Network File System. In the early 1990s, Sun also formed a public sector-focused subsidiary called Sun Federal. By 1991, Sun Federal was responsible for more than half of the workstations ordered by local, state, and federal government agencies in the country. Perhaps the world’s most famous data broker, Google, whose founders both came from Stanford University, was founded by former Sun Microsystems founder Andy Bechtolsheim and his partner at the Ethernet switching company Granite Systems (later acquired by Cisco), David Cheriton, with Google’s best known CEO, Eric Schmidt, being the former CTO of Sun Microsystems.
The emergence of Silicon Valley from the academic environment of Northern California was no accident, and was in fact directly influenced by an unclassified program called Massive Digital Data Systems (MDDS). The MDDS was created with the direct involvement of the CIA, NSA, and DARPA itself within the computer science programs at Stanford and CalTech universities, as well as MIT, Harvard, and Carnegie Mellon University. According to a report by Quartz, this research, which has clear national security implications, would largely be “funded and managed by unclassified scientific institutions such as the National Science Foundation (NSF), allowing ‘the architecture to be extended in the private sector’ to try to ‘achieve what the intelligence community hoped to do’.” The MDDS White Paper was published in 1993, and over the course of several years, more than a dozen multimillion-dollar grants were distributed through the NSF to capture the most promising efforts and ensure that these efforts become intellectual property controlled by United States regulators.
“Not only are activities becoming increasingly complex, but changing requirements require the IC [Intelligence Community] to handle different types of data as well as larger volumes of data,” the MDDS white paper states. “Consequently, the IC is taking a proactive role in promoting research in the efficient management of massive databases and ensuring that IC requirements can be integrated into or adapted to commercial products. Because the challenges affect more than one agency, the Community Management Staff (CMS) has commissioned a Massive Digital Data Systems (MDDS) Working Group to address the needs and identify and evaluate potential solutions.”
The first unclassified briefing for scientists was called the Birds of a Feather Briefing and was formalized at a conference in San Jose, California in 1995 under the title “Birds of a Feather Session on the Intelligence Community Initiative in Massive Digital Data Systems.” That same year, one of the first MDDS grants was awarded to Stanford University, which had already been working with NSF and DARPA grants for a decade. The primary goal of that grant was “query optimization of very complex queries,” with a closely followed second grant aimed at building a massive digital library on the Internet. These two grants funded research by then-Stanford graduate students and future Google co-founders Sergey Brin and Larry Page. Two intelligence executives met regularly with Brin while he was still at Stanford completing the research that would lead to the creation of Google. All meetings were funded by grants provided by the NSA and CIA through the MDDS.
Although it is often not mentioned when describing the origin story of Google, the principal investigator of the MDDS grant specifically named Google as a direct result of his research: “The core technology that allows it to find pages much more accurately than other search engines was supported in part by this grant,” wrote Jeffrey Ullman. Developing this concept further, the Stanford Infolab website explains that “the development of Google’s algorithms was carried out on a variety of computers provided primarily by the NSF-DARPA-NASA-funded Digital Library project at Stanford.”
Google certainly set the standard for success during the first dot-com bubble, but shortly after its founding, two similar Silicon Valley companies with significant ties to the intelligence community emerged from MDDS-affiliated colleges – PayPal and Facebook.
PayPal was founded in December 1998 by founders Peter Thiel and Max Levchin, along with Luke Nosek and Ken Howery, as Confinity Inc. The company aimed to provide financial institutions with the technological capabilities to secure mobile and online economic transactions using cryptography—a technology that was heavily regulated in the United States at the time. Thiel had graduated from Stanford Law School in 1992 and then briefly worked at Wall Street law firm Sullivan & Cromwell—a firm long known for its ties to the U.S. intelligence apparatus. Confinity Inc. was initially located at 165 University Avenue in Palo Alto, California, a building that housed Google in its “formative years” after previously sharing an office with Elon Musk’s Twitter (now X).
During these formative years, the PayPal team also worked closely with the intelligence community. Levchin later explained in an interview with Charlie Rose, “I think it’s great when the government works with the private sector. When we were working on security and anti-fraud measures at PayPal, we worked with every three- or four-letter agency you could think of, and those were some of the best, most productive relationships I’ve had as an entrepreneur. I think if the private sector can help them, we should.” Due to the unprecedented viral growth of their user base, PayPal engineers spent much of the company’s formative years developing software to identify fraudulent transactions and mitigate the growing costs of rampant fraud in the ecosystem. Eventually, they developed an adaptive algorithm called “Igor,” named after a Russian criminal who frequently mocked PayPal’s fraud department.
In 2003, a year after selling PayPal to eBay, Thiel approached fellow Stanford graduate student Alex Karp with a new business concept: “Why not use Igor to track terrorist networks based on their financial transactions?” Thiel used funds from the PayPal sale to start the company, and after several years of courting investors, the newly formed Palantir received an investment of an estimated $2 million from the CIA’s venture capital firm, In-Q-Tel. Palantir’s co-founders consulted with John Poindexter during his tenure as head of DARPA’s then-controversial Total Information Awareness program to privatize the controversial surveillance program. In 2020, Intelligencer spoke to a former intelligence official involved in the investment who claimed the CIA hoped that “leveraging Silicon Valley’s technical expertise” would allow it to “integrate widely disparate data sources regardless of format.”
In 2013, Palantir’s client list included “the CIA, FBI, NSA, Center for Disease Control, Marine Corps, Air Force, Special Operations Command, West Point and the IRS,” with about “50% of its business” coming from public sector contracts. Palantir has close ties to the U.S. government, but its financial spin-off, Palantir Metropolis, focuses on providing “analytical tools” for “hedge funds, banks and financial services firms” to outsmart each other. As The Guardian reports, “Palantir not only provides the Pentagon with an engine for global surveillance and data-efficient warfare, it also controls Wall Street.”
Much like Palantir, Facebook was one of the vehicles used to privatize controversial U.S. military surveillance projects after 9/11, as it too grew out of one of the MDDS partners, Harvard University. PayPal and Palantir co-founder Peter Thiel became Facebook’s first significant investor at the behest of file-sharing pioneer Sean Parker, who first came into contact with the CIA at age 16. What Facebook became after Thiel and Parker’s involvement resembled another cancelled DARPA project from the same era known as LifeLog, so much so that LifeLog’s architect and project manager at DARPA even noted the direct parallels. One of those parallels, not mentioned by former DARPA project managers, is the fact that Facebook launched on the same day LifeLog was cancelled. Facebook’s long-standing ties to the military and intelligence agencies extend far beyond its origins, including revelations about its collaboration with spy agencies in the Snowden leaks and its role in influence operations – some of which even directly involved Google and Palantir.
An unspoken result of Facebook’s global spread was the clever, indirect creation of the first digital ID system—a necessity for the coming digital economy. Users would set up their profiles by feeding the virtual communication network a wealth of personal information, with Facebook able to use that data to generate vast networks of connectivity between otherwise unknown social groups. There is even evidence that Facebook generated placeholder accounts for people who appeared in user data but did not have their own profile. Both Google and PayPal would use similar digital identification methods to allow users to log into other websites, creating interoperable identification systems that could permeate the internet.
A similar development is taking place in the financial sector, as social networks of data brokers – including Facebook and Musk’s X (formerly Twitter) – position themselves as the future of financial services firms. This idea makes more sense when you consider that money itself is a communications technology and can be easily integrated into existing communications platforms – especially those built on user data and identity systems. At the same time, we’re seeing financial services firms like the largest dollar-denominated stablecoin issuer Tether, which is overly tied to PayPal, pour millions into investments in next-generation data broker technology. Tether has recently funded Earth observation/satellite-as-a-service firm Satellogic, brain chip firm Blackrock Neurotech, AI computing firm Northern Data, and even Rumble, a Thiel-funded competitor to Google’s YouTube.
From public-private to private-public
As outlined above, it is evident that public sector intelligence agencies used the private sector veil to create financial incentives and commercial applications for building the modern data economy. A simple look at the seven largest stocks in the American economy illustrates this concept: Meta (Facebook), Alphabet (Google), and Amazon – with founder Jeff Bezos, the grandson of ARPA founder Lawrence Preston Gise – lead the software side, while Microsoft, Apple, NVIDIA, and Tesla lead the hardware component. While many of these companies had close ties to the intelligence community and public sector during their formative stages, these private sector companies are now driving public sector globalization and national security interests.
America’s data economy sits on two pillars: artificial intelligence and blockchain technology. The new Trump administration’s close advisory relationships with PayPal, Tether, Facebook, Palantir, Tesla, and SpaceX make it clear that data brokers have returned to Pennsylvania Avenue. AI requires massive amounts of deep data to be of use to the technologists, and the data provided by these private sector stalwarts is destined to feed their learning modules—surely after they secure juicy government contracts. Private companies using public blockchains to issue their tokens not only offer the United States significant opportunities to address its debt problem, but also serve as a “surveillance boon,” as one former CIA director noted.
The fact that the Trump administration is embracing blockchain—the final stage of public-private commodification of data—despite its libertarian stance reveals the culmination of a decades-long technocratic Trojan horse. Almost all of the underlying technology needed to push the world into this new financial system was developed in secret by the military and intelligence agencies of the world’s largest empire. While technology can certainly provide solutions for greater efficiency and economic prosperity, the same tools can also be used to further enslave the world’s citizens.
What once seemed like a lodestar luring us toward free speech and financial freedom has turned out to be nothing more than the shine on Uncle Sam’s boot taking his next step.
yogaesoteric
January 23, 2025