How Silicon Valley’s Leap Ahead Was Preceded by Visible Government Footsteps

The recent passing of Intel co-founder Gordon E. Moore at age 94 has brought back well-deserved stories about how this tech legend played a leading role in developing silicon microprocessors, which served as the foundation for the exponential growth of our modern computer age. But this Big Bang in Silicon Valley was preceded by a series of events that created the environment that allowed Moore and his brilliant colleagues – notably Intel co-founder Robert Noyce – to achieve the technological breakthroughs that have changed the world.

Silicon Valley is a noted center of technological advancement and entrepreneurship, achieving innovations that have left lasting and unmatched imprints on society, here and abroad. Its centrality to such developments as the personal computer, social networks, and cloud computing has made the region so successful, with continual fueling by venture capital. Few are aware, however, that the staggering growth of the area had its roots in Washington, D.C., during the regulation-intensive climate of the late 1940s through the late 1950s.

That story starts on the east coast, at Bell Labs in central New Jersey, which was the acclaimed research and development unit of AT&T. In 1947, a small team of scientists there created the first transistor (and later won the Nobel Prize for their invention), which revolutionized the world of electronics to become a fundamental building block of virtually all electronic devices that followed. This achievement boosted the image of Bell Labs and AT&T as innovative pioneers in the electronics field. Already seeming to be poised at the center of the boom of technological enterprise after World War II, the company was poised to be an unstoppable force in technical research and development for computing.

In 1949, however, the Antitrust Division of the Justice Department began an investigation of AT&T centered on its vertically integrated business structure and the monopolistic activities that were generated by it. The investigation, which lasted for seven years, eventually culminated in 1956 with a government consent decree with AT&T that was delegated for enforcement to a federal district court.

The resulting court order effectively barred AT&T from the computer business while giving other companies unprecedented access and support through royalty-free licenses of its transistor patents. This proved particularly devastating to AT&T since it had emerged as a leader of the post-war technological research boom while other companies still were only building early computer prototypes.

As the 1956 AT&T consent decree took hold, a small start-up company, Shockley Semiconductor Laboratory in Mountain View, Calif., began working on silicon semiconductor devices, in the shadows of Stanford University. Not coincidentally, this laboratory was started by the same team of scientists and engineers who had invented the transistor in 1947 while employed at Bell Labs. This team, which included Gordon Moore and Robert Noyce, designed a new method for producing silicon, which would replace germanium as the then-prominent material in transistors. And the area now known as Silicon Valley began to develop an entirely new innovation ecosystem.

Today, the Silicon Valley region is synonymous with the production of silicon microprocessors. But the essential linkage between the 1956 AT&T divestiture (a subsequent one separating Ma Bell from its telephone operating companies was settled in 1981) and its role in stimulating the growth of Silicon Valley is a critical missing piece of American technology history.

This linkage is especially relevant today, given the growing involvement of Silicon Valley companies in national policymaking. Yet, as a residual part of the 1956 AT&T antitrust final judgment, there remains a notable corporate culture aversion of leading technology companies to become too close to federal government regulators. The longstanding and deep-seated aversion to government oversight, spawned by Intel and peer companies in the 1950s as the AT&T antitrust prosecution moved ahead, applies to a range of Silicon Valley companies today, including Apple, Facebook, and Google.

Let’s celebrate the astonishing work of Gordon Moore and his breakthrough advancement of our understanding of how fast computer technology develops (Moore’s Law). But it’s also worth remembering the backstory of the non-technical push that led to his success. This helps provide contemporary context regarding why the Silicon Valley tech world since then remains highly skeptical of government intervention as rapid tech innovation continues to roll ahead.

Stuart N. Brotman is the Alvin and Sally Beaman Professor of Journalism and Electronic Media Enterprise and Leadership at the University of Tennessee, Knoxville. He serves as a Distinguished Fellow at The Media Institute and is the author of The First Amendment Lives On. This article appeared in DC Journal, an Inside Sources publication.