The international relations paradigm of the twenty-first century is witnessing a new projection of power that goes beyond the strategies of physical territorial acquisition or control over raw materials anticipated by classical geopolitical theories. The rivalry between the United States of America (U.S.) and the People’s Republic of China (PRC) differs radically from the colonial-era desire to expand geographical borders or from the conventional arms race of the Cold War period. In today’s world, the new epicenter of the struggle for hegemony is the sphere of cloud capital, where the means of production have become digitalized, algorithms modify consumer behavior, and data has become the most valuable raw material. Cloud capital is a new-generation form of ownership and power composed of cloud computing infrastructures, artificial intelligence networks, digital payment systems, and global platform ecosystems, replacing the factories and machines of traditional industrial capitalism. This new form of power extends the sovereign domains of states beyond physical borders and creates a global asymmetry of dependency through digital networks.[i]
Among traditional theories of international relations, Neorealism measures the power capacities of states through military spending, population, and geographical size, while liberal theories emphasize the conflict-preventing dynamics of interdependence. However, the current phase of U.S.–China rivalry can be explained through the concept of weaponized interdependence, which challenges the limits of both theoretical approaches. Actors that control digital infrastructures, submarine fiber-optic cables, server farms, and semiconductor supply chains hold the chokepoints of the global system. China’s transformation of technological infrastructure into a building block of its foreign policy, and the U.S. response to these moves through sanctions and technological blockades, demonstrate that sovereignty is now being redefined in cyberspace and data centers.[ii]
Understanding the concept of cloud capital means understanding the transformation of modern international political economy. During the period of industrial capitalism, the power of a state was directly linked to physical infrastructures such as steel factories, railways, and oil wells. Under cloud capital, however, power has shifted to algorithmic platforms that collect and process the data of billions of people and train artificial intelligence models through that data. American-origin artificial intelligence and cloud giants such as Amazon Web Services (AWS), Microsoft Azure, and Google Cloud have acquired structural power by storing a vast share of global data. These platforms are not simple commercial enterprises; they have transformed into geopolitical actors that control the flow of information, the security of economic transactions, and the digital capacities of states within the international system. A state’s national data security or cyber sovereignty becomes fragile in direct proportion to its dependence on these cloud infrastructures.[iii]
The PRC, by contrast, has constructed an alternative architecture of cloud capital by creating its own national champions such as Alibaba, Tencent, Baidu, and Huawei against this American monopoly. This Chinese ecosystem, which is rapidly spreading in the non-Western world, especially in the Global South, constitutes a direct threat to Washington’s structural hegemony. In traditional theories, hegemony is achieved through the control of military bases and sea routes; in the digital age, however, hegemony is established through smart city technologies, data centers, and cross-border digital payment networks. Therefore, the tension between the U.S. and China is not merely a trade war, but an ontological struggle for sovereignty over who will write the global operating system of the future.[iv]
The most concrete and aggressive example of American-style cloud capital is Amazon. Amazon crowned its journey, which began as an e-commerce platform, with AWS, the leader of the global cloud computing market. Today, AWS provides computing capacity, data storage, and artificial intelligence tools to a massive client base ranging from state institutions to financial giants, from intelligence agencies to start-ups. The fact that the U.S. Central Intelligence Agency (CIA) and the Pentagon store classified data within AWS infrastructure is the clearest indication of how a commercial company has become integrated into the American national security architecture. This situation reveals the symbiotic relationship between the hard power of the American state and the soft and structural power of cloud capital.[v]
The global expansion of Amazon and similar American technology companies provides Washington with an unparalleled capacity for control and surveillance. When the public institutions and strategic companies of foreign states use American cloud infrastructures, they involuntarily transfer part of their sovereign rights. For example, the ability of U.S. courts to request access to data stored on the overseas servers of American companies under the Cloud Act stretches the limits of international law in favor of cyberspace. This demonstrates how the classical Westphalian model, which defines sovereignty as physical territorial integrity, is being eroded by the borderless nature of cloud capital.[vi]
Rather than submitting to the West’s cloud capital hegemony, China has developed a protectionist digital ecosystem within its own borders through the “Great Firewall.” The transfer of this ecosystem to the global sphere takes place through the “Digital Silk Road” strategy. One of China’s most important actors in this strategy is Huawei. Huawei is not merely a brand that produces smartphones; it is also the main contractor of global 5G telecommunications infrastructure. By undertaking the construction of 5G networks in Africa, the Middle East, Southeast Asia, and even in certain parts of Europe, Huawei is building the physical highways of data flow. The U.S. global embargo campaign and espionage accusations against Huawei stem from the fact that the issue is not commercial competition, but a national security crisis shaped through control over networks.[vii]
While Huawei lays the physical networks, Alibaba Group and its financial subsidiary Ant Group, through Alipay, are reshaping the digital trade and financial ecosystem. Alipay and Tencent’s WeChat Pay platforms have gone beyond creating a cashless society within China and have become a new model in global payment systems. The global financial network, traditionally dependent on the U.S.-centered SWIFT system, is entering a multipolar phase through China’s cross-border digital payment systems and its digital yuan (e-CNY) initiative. Developing countries are integrating Alipay and Alibaba Cloud infrastructures, becoming part of China’s cloud capital basin, and this transforms the sovereignty preferences of these states in favor of Beijing.[viii]
Although cloud capital may appear to consist of abstract algorithms, its functionality depends entirely on the most complex physical structures on earth: semiconductors and data centers. The most advanced artificial intelligence models produced today require the simultaneous operation of thousands of advanced graphics processing units. In this field, the U.S.-based company Nvidia holds a market monopoly, while the production of these chips depends on TSMC factories in Taiwan. The U.S. bans on the sale of advanced chips and the export of chip manufacturing equipment to China constitute a strategy of depriving China’s cloud capital and artificial intelligence capacity of hardware.[ix]
China, in turn, is carrying out an enormous state-supported localization program in order to break this hardware encirclement. Huawei’s domestically developed “Ascend” series artificial intelligence processors and local foundries are attempting to prove that China can maintain its own artificial intelligence ecosystem despite U.S. sanctions. This race in artificial intelligence has opened a new era in international relations in which hegemonic power is no longer measured by military battalions, but by operations per second and the processing capacity of supercomputers. Superiority in artificial intelligence creates an absolute asymmetry in every field, from cyber defense to autonomous weapons, from economic analysis to mass disinformation.[x]
One of the most bureaucratic yet most effective fronts of the struggle for hegemony over cloud capital is intellectual property rights and international standard-setting committees. While standards were once determined by Western institutions, China has today begun to establish overwhelming weight in these institutions through state incentives. According to data from the World Intellectual Property Organization (WIPO), China has surpassed the U.S. in annual international patent applications and risen to first place. Especially in the fields of 5G/6G technologies, quantum computing, artificial intelligence algorithms, and the Internet of Things (IoT), the Standard-Essential Patents (SEPs) held by Chinese companies make it difficult even for Western companies to produce without using Chinese technology.[xi]
This concentration of patents enables states to dictate the future technological architecture according to their own national interests. If a country’s cyber infrastructure standards are determined by China, all cloud services, hardware, and software to be integrated into that infrastructure will inevitably become dependent on the Chinese ecosystem. This situation resembles the railway concessions of the colonial period; the actor that determined the width of the railway tracks also controlled which wagons and goods could be transported on that line. Today, similarly, the power that determines the standards of the cloud and data communication controls the channels through which global wealth is transferred.
The international system of the future is evolving toward a new techno-political reality in which the global economy and cyberspace are divided into two major poles. On one side stands the Western bloc, centered on the U.S., which consolidates data flow through the free market and platform capitalism; on the other side stands the Eastern bloc, centered on China, which creates infrastructural dependency within the nexus of state capitalism and digital authoritarianism. For other states caught between these two basins of cloud capital, sovereignty is compressed into the vision of choosing which umbrella of sovereignty they will enter. As a result, the question of who will control cyberspace and cloud capital will determine not only economic prosperity, but also the future political organization of humanity and the boundaries of state sovereignty.
[i] Varoufakis, Y. (2023). Technofeudalism: What Killed Capitalism. Penguin Books.
[ii] Farrell, H., & Newman, A. L. (2019). Weaponized interdependence: How global economic networks shape state coercion. International security, 44(1), 42-79.
[iii] Zuboff, S. (2023). The age of surveillance capitalism. In Social theory re-wired (pp. 203-213). Routledge.
[iv] Allison, G., & Schmidt, E. (2020). Is China beating the US to AI supremacy?. Harvard Kennedy School, Belfer Center for Science and International Affairs.
[v] “Geopolitical shocks highlight the need for diversity in cloud providers”, Financial Times, https://www.ft.com/content/9a4131e4-e9d6-4dfb-a400-28bb8037fab6, (Date Accessed: 20.06.2026).
[vi] “Clarifying Lawful Overseas Use of Data (Verilerin Denizaşırı Ülkelerde Kullanım Şeklinin Netleştirilmesi – CLOUD) Yasası”, Amazon, https://aws.amazon.com/tr/compliance/cloud-act/, (Date Accessed: 20.06.2026).
[vii] “The Digital Silk Road: Expanding China’s Digital Footprint”, Eurasia Group, https://www.eurasiagroup.net/files/upload/Digital-Silk-Road-Expanding-China-Digital-Footprint.pdf, (Date Accessed: 20.06.2026).
[viii] “Alibaba Cloud Expands Fintech Footprint with LuLu Financial Holdings and Ant Digital Technologies AI Partnerships”, Alibaba Cloud, https://www.alibabacloud.com/blog/alibaba-cloud-expands-fintech-footprint-with-lulu-financial-holdings-and-ant-digital-technologies-ai-partnerships_602216, (Date Accessed: 20.06.2026).
[ix] Miller, C. (2022). Chip war: The fight for the world’s most critical technology. Simon and Schuster.
[x] “China built hundreds of AI data centers to catch the AI boom. Now many stand unused.”, MIT, https://www.technologyreview.com/2025/03/26/1113802/china-ai-data-centers-unused/, (Date Accessed: 20.06.2026).
[xi] “World Intellectual Property Indicators 2025”, WIPO, https://www.wipo.int/publications/en/details.jsp?id=4822, (Date Accessed: 20.06.2026).
