In 2024, a highly unusual conflict erupted between Elon Musk, the world’s richest entrepreneur, and Brazil’s Supreme Court, raising profound questions about corporate power versus state sovereignty. The clash began when Musk’s platform X (formerly Twitter) refused to comply with court orders requiring the restriction of accounts spreading harmful content or the appointment of a legal representative in Brazil. Justice Alexandre de Moraes branded Musk an “outlaw” after repeated defiance, leading the Court to impose a nationwide ban on X, freeze Starlink’s assets, and levy heavy fines. Musk escalated matters by encouraging Brazilians to bypass the ban and leveraging Starlink to resist enforcement, an unprecedented instance of an individual challenging a major democracy’s highest legal authority. Though Musk ultimately backed down and complied after weeks of confrontation, the standoff underscored the potential for private actors to openly resist core political institutions of sovereign countries. This case not only highlighted the fragility of enforcing national laws in the digital age but also raised broader concerns: whether Musk’s defiance signals a broader trend of individuals placing themselves above state authority, and what risks such behaviour might pose for democratic governance and global order.

Inspired by these questions, in a new TILEC Discussion Paper, titled “From Economic Power to Political Power”, together with Ivan Khomyanin I construct a series of game-theoretic models. We analyze how co-investment in public infrastructure by private firms can create vulnerabilities for states, especially in digital markets where services can be withdrawn at short notice. The models reveal that a firm’s economic power can translate into political power when governments become dependent on private investment, and that repeated interactions increase the risk of such confrontations. Empirical illustrations—including cases involving Google, Meta, and OpenAI—underscore the growing potential for corporate actors to exert political influence, sometimes even at the expense of profit. The paper concludes with policy recommendations to mitigate the risks of private actors undermining democratic governance. It is also available as CCP Working Paper, including a 2-page policy briefing.