Minnesota Reformer: Minnesota must curb anti-competitive tactics if it wants to be an innovation center

March 3, 2021 State and Local PolicyTech

Minnesota was Silicon Valley before Silicon Valley. Fueled by government contracts for code-breaking machines during WWII, Minnesota companies were leaders in the computing revolution that transformed our world.

Today, policymakers are seeking to recapture that past glory and build a tech ecosystem to rival the hub out West. Standing in the way of that vision is an industry that has become dominated by monopolistic firms. Fortunately, Minnesota legislators have the ability to help tip the balance of power back toward inventors and entrepreneurs.

At the conclusion of WWII, an elite group of Navy code-breakers founded Engineering Research Associations (ERA) in St. Paul and continued their work developing classified machines for the military. ERA, along with firms such as Sperry-Rand Univac, Control Data Corporation, Honeywell and IBM-Rochester created a homegrown computing industry that by the 1970s made Minnesota home to 17% of computer manufacturing jobs nationwide and 12% of all computer sales.

But Minnesota’s real strength was the numerous businesses created as spin-offs from those leading firms. Forty-five companies spun-off from CDC and another 29 from Sperry-Rand. This community was responsible for breakthrough technologies such as the first magnetic storage drum used in early computers and the world’s first successful commercial supercomputer.

Computing has evolved a great deal since Minnesota reigned supreme. The computing power that used to take up entire rooms at the University of Minnesota now fits in a pocket. But more importantly, the competitive ecosystem that helped Minnesota become a tech leader no longer exists. Today, a few giant firms like Google and Apple have employed anti-competitive tactics to build immense market power.