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The Pentagon has split a $9bn contract for cloud computing services among Google, Oracle, Amazon and Microsoft, one year after scrapping a previous contract that was marred by accusations of political interference by the administration of former US president Donald Trump and bogged down by legal challenges.

The Joint Warfighting Cloud Capability succeeds the Joint Enterprise Defense Infrastructure (Jedi), which aimed to build a large common commercial cloud for the entire Department of Defense. While the Trump administration wanted to concentrate the cloud computing programme under one provider, the administration of Joe Biden elected to parcel it out to multiple groups as many private sector companies do.

The project is estimated to be completed by June 2028, according to a statement from the Pentagon. The Joint Warfighting Cloud Capability “will provide the DoD the opportunity to acquire commercial cloud capabilities and services directly from the commercial cloud service providers at the speed of mission, at all classification levels”, the Pentagon said.

The DoD had initially awarded the contract to Microsoft in October 2018, but legal challenges delayed its implementation. Last summer the Pentagon cancelled the initial Jedi contract, saying it no longer met its needs because of changing requirements and industry improvements and that it would seek proposals from additional companies.

Amazon had accused Trump of putting pressure on the Pentagon to “screw” its founder, Jeff Bezos, and award the contract to its rival because of the former president’s personal animus. Oracle had claimed the single-vendor contract was unfair, while Google had withdrawn its bid in 2018 following a staff outcry for working with the DoD.

Last November the DoD issued formal solicitations to Amazon, Google, Oracle and Microsoft to replace the ill-fated Jedi project. The companies did not immediately respond to requests for comment on Wednesday.

The $9bn deal will be spread over six years. Big Tech groups have been vying for the contract in hopes that it could lead to decades of work in a fast-growing sector.

Chinese-owned social media platform TikTok is facing growing political backlash in the US as it was sued by the state of Indiana over data security and child safety concerns and banned by multiple Republican state governors from government devices.

A pair of lawsuits filed on Wednesday by Indiana’s Republican attorney-general against the popular short-form video platform, which is owned by Beijing’s ByteDance, alleged that the company had made false claims about its practices. The suits are seeking emergency injunctive relief and civil penalties from TikTok.

In one of the lawsuits, the state claims TikTok had “lured children” on to its platform by suggesting that it only hosted “infrequent/mild” sexual content, profanity, or drug references when the app was actually flooded with such content.

The second lawsuit argues TikTok misled Indiana consumers by suggesting that sensitive personal data it collects on users is protected from the Chinese government and Communist party, when it is not.

The lawsuits come as the social media app is facing mounting scrutiny from US lawmakers over its data practices and the potential threat to national security if private user information is accessible by the Chinese government due to the party-state system — a suggestion the company denies.

For months, TikTok has been working on a national security deal with the US government to address those concerns. This has involved partnering with US cloud software company Oracle to introduce better data protections for American users and more controls over when Chinese staffers have access to that data. However, the deal has yet to be agreed, despite pressure from lawmakers for a timely conclusion.

Separately this week, Texas became the latest state — alongside South Dakota, South Carolina and Maryland — to ban the use of TikTok on government devices, citing the growing “threat of the Chinese Communist party gaining access to critical US information and infrastructure”. 

The bans follow comments by the FBI director Christopher Wray last week, who alleged that the app’s parent company is “controlled by the Chinese government”. This “gives them the ability to control the recommendation algorithm” and “manipulate content”, as well as the ability to collect data for “traditional espionage operations” and conduct other “malicious cyber activity”, Wray said.

Indiana’s attorney-general Todd Rokita in a statement on Wednesday said: “The TikTok app is a malicious and menacing threat unleashed on unsuspecting Indiana consumers by a Chinese company that knows full well the harms it inflicts on users.”

“At the very least, the company owes consumers the truth about the age-appropriateness of its content and the insecurity of the data it collects on users. We hope these lawsuits force TikTok to come clean and change its ways.”

TikTok on Wednesday said “safety, privacy and security of our community is our top priority”, and that it had built “youth wellbeing” into its policies. It also expressed “disappointment” about the decisions by state agencies, adding that these were “largely fuelled by misinformation about our company”.

“We are also confident that we’re on a path in our negotiations with the US government to fully satisfy all reasonable US national security concerns, and we have already made significant strides toward implementing those solutions,” the company said.

A Labour government would set up a state-backed group to boost small businesses by linking up institutional investors and venture capital firms, shadow chancellor Rachel Reeves will announce on Thursday.

Reeves will say that a “British Tibi” — a reference to the French technology finance scheme — could strengthen engagement between investors and venture capital groups to improve the flow of money into young companies.

The plan is one of several recommendations made in a “start-up review” for Labour by former Treasury minister Lord Jim O’Neill, which will be unveiled on Thursday at a business event hosted by Reeves and party leader Sir Keir Starmer.

The event — involving 350 business leaders — is part of Labour’s attempts to be seen as a pro-enterprise party despite its longstanding financial links with the trade union movement.

The pivot is part of a broader effort by Starmer to take the party down a more centrist route followed by former Labour prime minister Tony Blair, who won three general elections a generation ago.

O’Neill, former chair of Goldman Sachs Asset Management, is a cross-party peer who previously served as a Treasury minister in David Cameron’s Conservative government where he was responsible for the “Northern Powerhouse” project to boost economic growth in the north of England.

He will say that British start-ups have “huge potential” to improve the UK’s economic fortunes far beyond London.

The French Tibi scheme was launched in 2020 by President Emmanuel Macron and has since secured over €18bn of commitments from institutional investors for French tech companies.

Under O’Neill’s plan, the UK scheme would match institutional investors with an accredited list of VC firms, with the former asked to allocate a small proportion of their funds to the latter.

Kwasi Kwarteng, former Tory chancellor, proposed a similar idea in July when he was business secretary, however, the proposal ran into some resistance from the Treasury.

The report will also recommend that the government give the British Business Bank, the state-backed economic development investor, greater independence, the ability to leverage external funds and more focus on encouraging the growth of entrepreneurial clusters around universities.

It will also propose the introduction of a new annual “dashboard” summarising each university’s record in creating “spinouts”, businesses based on academic research that would otherwise be likely to go unexploited.

“All universities [should] offer a range of options for spinout founders to choose from, including an option where the university keeps a relatively small stake of equity,” it will say.

The O’Neill review involved a panel that spoke to more than 120 industry leaders at roundtables across the country.

Reeves will hail the report as a “radical plan to make Britain the high-growth, start-up hub of the world”, telling the event in Canary Wharf: “These are challenging times. But I know the spirit of enterprise, of creativity, of endeavour are as present in Britain today as they have ever been.”

On December 6, US president Joe Biden joined Morris Chang, founder of Taiwan Semiconductor Manufacturing Company, in Arizona for a symbolic “tool-in” ceremony to mark the latest step in the chipmaker’s investment in a new factory in the US.

Chris Miller could hardly have wished for a better way to underline the timeliness of his book Chip War. On the eve of Biden’s Arizona visit, Miller won the Financial Times Business Book of the Year Award. His book is a highly topical history of the development of the semiconductor and how TSMC and a few other manufacturers came to dominate the global supply of advanced microchips.

Chang and Biden appeared in Arizona alongside the chief executives of Apple and Nvidia, two of TSMC’s biggest customers. “Companies like TSMC are facing multiple reasons to rethink the geography of supply chains. And it’s not just politicians calling them . . . but their customers as well,” Miller told the FT this week.

Taiwan sits on geopolitical and seismic faultlines. Until recently, companies trusted that seamless globalised networks would underpin their chip supply. But boards are suddenly worrying about “Taiwan risk”. They are contemplating the possibility of military confrontation between the US and China and grappling with the implications of a trade war over chip development and supply.

Academics call this situation “weaponised interdependence”, in which, Miller writes, “rather than defusing conflicts and encouraging co-operation” the intertwined interests of the economic powers create “new venues for competition”. Encouraging more investment in local chip manufacturing, as the US, China and EU are trying to do with subsidies and tax breaks, is one way to offset these risks.

This was not the “unexamined assumption” with which Miller started work on his book five years ago. He believed the risk of “mutually assured economic destruction” would prevent superpowers from using their position in the chip supply chain to put pressure on each other. “And then, over the course of the five years of writing it, it seemed like every day I was reading the Financial Times and a new horrifying data point was coming, suggesting that that wasn’t the case.”

For instance, the pandemic had a whipsaw effect on demand for chips used in the automotive and other industries, creating shortages and underlining dependency on manufacturers such as TSMC, South Korea’s Samsung. Russia’s invasion of Ukraine undermined expectations about geoeconomic stability. In October, just as Chip War was hitting the bookshelves, the US imposed export controls on China, to slow down its attempt to become self-sufficient in the manufacture of advanced semiconductors.

Miller explains the main difference between the concept of mutually assured destruction that kept the nuclear peace during the cold war and the economic version. “There’s a very clear threshold of nuclear use. [The weapons] are either used or not used, whereas in the economic interdependence space, there’s no threshold that [shows] you’ve crossed the line. And in fact, there’s lots of different lines one can cross.”

An economic historian specialising in Russia, Miller started by studying the gap that opened up between the US and Soviet militaries in the 1980s, partly because of the former’s semiconductor superiority. He switched the focus of his work when he realised “the key technology enabling the military systems that convinced the Soviets that they’d lost the arms race was also the key technology that was structuring US-China competition today”. The fact that China was spending more money importing chips than it was spending on oil — a data point so astonishing that an incredulous Miller downloaded it from the United Nations’ trade database several times to check — cemented his interest, even though he began with no deep technological knowledge.

But Chip War is more than a geopolitical and technological history. It is also the story of remarkable innovators and entrepreneurs, such as Chinese-born Chang, who fled to the US, via Hong Kong, and rose through the ranks at Texas Instruments, a pioneer of early chip technology. Chang proposed the world-changing idea of a chip “foundry”, which manufactures semiconductors for multiple clients, in the 1970s. TI rejected the plan and later thwarted Chang’s ambition to become chief executive. As a result, he was at a loose end in 1985 when Taiwan’s government called and gave him a blank cheque to develop his foundry idea there. The success, sophistication and sheer scale of his creation TSMC are now hard for rivals to match.

Miller wonders what would have happened if Chang had become TI’s chief executive instead. “I think it’s easy to imagine ways in which TSMC could [by now] stand for the Texas Semiconductor Manufacturing Company,” he says. Another missed opportunity, Miller says, was US chipmaker Intel’s failure to build on its success in semiconductor innovation under another US immigrant, Andy Grove, its chief executive. “Intel was too powerful for too long and didn’t take some of the risks that it needed to take,” claims Miller. “Missing the smartphone, for example, missing the early [artificial intelligence] shift in the industry, and I think missing a bit of the paranoia that had made Grove such an effective, if terrifying, manager.”

Miller, associate professor of international history at Tufts University’s Fletcher School of Law and Diplomacy, places great emphasis on the importance of often undervalued capabilities, such as managerial excellence, supply chain mastery and manufacturing efficiency. They were as important in the race to secure semiconductor supremacy as the original breakthrough innovations, or the government support that encouraged them, he suggests.

For example, he singles out ASML, the Dutch manufacturer of highly complex chipmaking tools. “They describe their job as managing a complex supply chain,” says Miller, which includes sourcing parts from other manufacturers. “They’re brilliant engineers. But in some ways the real brilliance is actually in assembling components which, when you say it that way, sounds low value-add.” In fact, ASML’s assembly prowess adds enormous value: the company’s extreme-ultraviolet lithography machines for etching the most advanced chips contain hundreds of thousands of precision parts and cost $100mn apiece, according to Miller.

If anything, Miller says he has become less optimistic in the past five years about how the world will reconcile the overlapping and sometimes contradictory interests of customers, manufacturers and governments in semiconductors.

In trying to increase pressure on China over chips, the “fundamental problem” for US policymakers, as outlined by a semiconductor executive quoted in the book, is that “our number one customer [China] is our number one competitor”. Miller says the Biden administration’s biggest challenge in chip diplomacy is convincing its allies that it can “strike a balance between security considerations and economic considerations”, when “there are voices on both sides of this issue — people more concerned about security, people more concerned about keeping open markets”.

It is possible, says Miller, that the risks of economic self-immolation will keep the peace between China and Taiwan and between the US and China, but “if you asked me how confident I am in that, I don’t see a lot of reason for great confidence.”