Divestment from Israeli Tech Is a Tall Order for Silicon Valley. Here’s Why

As the conflict between Israel and Hamas continues, many American protesters are accusing Silicon Valley companies, like Intel and Google, of complicity in the violence in Gaza and urging them to divest from Israel.

A few weeks ago, the group No Tech for Apartheid, staged sit-ins at Google offices in Sunnyvale, Seattle and New York. At issue was Project Nimbus, Google and Amazon’s $1.2 billion cloud services contract with the Israeli government, including the Ministry of Defense.

“We are Google workers who have had enough of this, and we do not want our work going towards aiding a genocide,” said software engineer Hasan Ibraheem, one of roughly 50 Google employees fired over the protests. Ibraheem added that the goal of No Tech for Apartheid is to raise awareness as much as to get Google to cancel Project Nimbus.

“We don’t expect that any one of our actions is going to cause these companies to suddenly pull out of the deals that they have with Israel, but we hope with each action that we inspire more tech workers to speak out and take part in more actions,” he said. “We’re making people realize that there is a connection, that these companies do have involvement in this genocide, and that they need to be held accountable for that.”

Google employees have successfully lobbied the company to cancel military-related contracts in the past, like Project Maven with the Pentagon. Before that, it was Project Dragonfly, a proposed version of Google Search that would allow the Chinese government to censor and monitor users within China.

Google continues to work with the U.S. government, the Israeli government and others worldwide — as many other Silicon Valley companies do — including Meta and Apple.

Is broader divestment from Israeli tech possible?

For some protesters aligned with the pro-Palestinian Boycott, Divestment, and Sanctions movement, the goal is not just canceling military contracts but divestment from Israel altogether.

According to many who are familiar with the tech sector, that’s a tall order. The relationship between Silicon Valley and Israeli tech spans various categories: ag tech, biotech, green tech, cybersecurity, semiconductors and so on. Economists say the economic love affair extends back to the 1970s but took off in the 1990s.

“If you are going to continue using everyday items like an Android or iPhone, a television screen, a computer chip, these are indispensable technologies created in Israel,” said Aaron Kaplowitz, president of the United States — Israel Business Alliance, and a Miami-based venture capitalist who invests in Israeli tech startups.

According to the business alliance, California now serves as the global or U.S. headquarters for 35 Israeli-founded “unicorns” — privately held companies valued at $1 billion or more. And those are just the big startups.

“Silicon Valley is not just a geography, right? It’s an idea. It’s even an ideal for Israel, right?” said Guy Horowitz, an Israeli venture capitalist who has lived in Palo Alto for six years. “Combining talent with technology and money, I think it’s the very basis of the Israel ‘startup nation’ ethos.”

Deals, deals, deals

Silicon Valley giants have spent a lot of money buying Israeli startups in recent years, including:

• The satellite navigation software company Waze, which Google bought for $1.3 billion in 2013.
• The computer networking company Mellanox, which Santa Clara-based NVIDIA bought for roughly $7 billion in 2019. NVIDIA has recently announced plans to buy two more Israeli companies focused on AI.
• Intel bought autonomous driving company Mobileye for $15 billion in 2017.

Hundreds of U.S. companies run offices and manufacturing facilities in Israel, too. Intel, with 11,700 employees in Israel, is the country’s largest private employer.

“So Israel wouldn’t be ‘startup nation’ without Silicon Valley, but by the same token, it’s hard to imagine Silicon Valley without Israel, and that’s because of what’s going on in Israel, not despite what’s going on in Israel,” Horowitz said.

Multiple generations of Israeli tech workers have learned their trade and people skills in the military, which has been engaged in conflicts with Palestinians and others in the region since Israel was founded in 1948. That’s a foundational fact, Horowitz and others say, strengthening the relationship between Silicon Valley and Israel.

Defense contracts: A foundational feature of tech, not a bug

“I know for some people, it’s hard to hear this. But Israel has always been in survival mode, and survival mode has always generated value,” Horowitz said.

According to Gallup, 58% of Americans have a “very” or “mostly favorable” view of Israel, which is down from 68% last year.

“This is the lowest favorable rating for Israel in over two decades,” the polling outfit wrote in March, roughly five months after Hamas attacked Israel and nearly four months after Israel invaded Gaza. But Horowitz said divestment is likely to be a non-starter with Silicon Valley leaders because they’re primarily motivated by profit — not geopolitics.

That’s not a new phenomenon or one specific to Israel.

Russell Hancock, CEO of Joint Venture Silicon Valley, the San José-based research outfit, said Silicon Valley companies have a long history of cultivating military contracts, initially with the U.S. government.

“In the ’60s and ’70s, Silicon Valley was built by defense spending because we were locked in a Cold War, engaged in a space race, and waging a battle in East Asia and Vietnam,” Hancock said.

Since then, the industry has expanded to pursue military contracts with governments all over the world.

“It gets to the age-old question: Is the technology good or bad? And the answer is: Yes. All of the above,” Hancock said. “The technologies can be used for lofty, soaring goals. But they can also be used to kill people.”