monopoly capitalism

The Rise and Fall (and Rise?) of Gazprom: What the World’s Biggest Gas Company Teaches Us About Power, Monopolies, and Strategic Failure

How a $360 Billion Giant Lost 90% of Its Value—and What It Reveals About State Capitalism

In 2008, Gazprom was worth more than $360 billion, making it the third most valuable company on Earth. It was Russia‘s energy monopoly and largest gas company, and one of the largest companies in the world. Today? It’s worth $34 billion—a staggering 90% collapse that tells one of the most fascinating stories in modern business history.

This isn’t just a tale about natural gas and pipelines. It’s a masterclass in how monopoly power, geopolitical weaponization, and strategic overconfidence can destroy even the most seemingly invincible empires. And in an era where AI, tech platforms, and energy systems are being disrupted faster than ever, the lessons from Gazprom’s trajectory are surprisingly relevant.

Let us take you inside the story of Russia’s energy leviathan—and what its dramatic arc teaches us about power, strategy, and the dangerous illusion of permanence.

The Ultimate State-Owned Monopoly

First, let’s grasp the sheer scale we’re talking about:

  • 17% of the world’s proven natural gas reserves
  • 180,600 kilometers of pipelines (the world’s largest network)
  • Production of 414-500 billion cubic meters annually
  • Operations in 20+ countries, supplying 100+ nations

Gazprom didn’t just dominate Russia’s energy sector—it WAS Russia’s energy sector. Born from the Soviet Ministry of Gas Industry in 1989, it became the first state-run private enterprise in Soviet history, even before corporate laws existed in the USSR. That’s how strategically vital it was.

The Russian government maintains 50%+ control through various entities, making Gazprom the textbook example of a “state champion”—a privately structured company that serves as an extension of national power.

Energy as Geopolitical Weapon: The Gazprom Playbook

Here’s where things get interesting from a strategy perspective.

Gazprom wasn’t just selling gas—it was wielding it. The company’s toolkit included:

1. Strategic Supply Disruptions
Cut off countries that didn’t play ball politically. Ukraine, Belarus, and others experienced “technical problems” with their gas supply that mysteriously coincided with diplomatic disagreements.

2. Pricing Manipulation
Friends got sweetheart deals. Adversaries paid premium rates. Simple, effective, brutal.

3. Infrastructure Control
Build the pipelines, control the flow. Europe became dependent on a single supplier for 40% of its natural gas by 2021.

This is the “monopoly network effects” mental model taken to its extreme: Once you control the physical infrastructure, you don’t just have market power—you have geopolitical leverage that can shape foreign policy across an entire continent.

The Nord Stream Strategy

The Nord Stream pipelines perfectly embodied this approach. By routing gas directly to Germany via the Baltic Sea, Gazprom could:

  • Bypass unreliable transit countries (Ukraine)
  • Lock in Germany as a dependent customer
  • Divide European unity on Russia policy

It was strategic brilliance… until it wasn’t.

The Fatal Flaw: Mistaking Leverage for Invincibility

Charlie Munger often warned about “incentive-caused bias“—the tendency to believe your own narrative when you’re winning. Gazprom fell into this trap spectacularly.

The company’s leadership made several critical miscalculations:

1. Weaponizing Your Product Destroys Trust

Using energy as a political weapon worked… until customers decided they’d rather pay more than remain vulnerable. After Russia’s 2022 invasion of Ukraine, Europe went into overdrive finding alternatives.

Result: Gazprom’s European market share collapsed from 40% to 8% in just one year (2022-2023).

2. Infrastructure Becomes a Liability

That vaunted 180,600 km pipeline network? Much of it now represents stranded assets. You can’t exactly redirect physical pipelines when your largest customers ghost you.

Meanwhile, competitors with LNG terminals can ship to whoever’s buying. Flexibility > fixed infrastructure when geopolitics get messy.

3. The “Too Big to Fail” Illusion

Gazprom assumed its monopoly position was permanent. Major gas fields hit production peaks. Investment in new fields (requiring $50+ billion for Yamal or Shtokman development) was delayed. Technology partnerships with Western firms provided crucial expertise.

When sanctions hit, the company faced:

  • Asset freezes
  • Technology transfer restrictions
  • SWIFT banking isolation
  • Loss of Western expertise and financing

Suddenly, “too big to fail” looked a lot like “too rigid to adapt.”

The Pivot to Asia: Too Little, Too Late?

Facing European abandonment, Gazprom is desperately pivoting eastward:

  • Power of Siberia 1: Operational pipeline to China (38 bcm capacity)
  • Power of Siberia 2: Planned pipeline through Mongolia (50 bcm capacity)
  • Expanded LNG operations: Playing catch-up in a market they largely ignored

But here’s the problem: China knows Gazprom is desperate. Beijing isn’t paying European prices. They’re negotiating from strength while Gazprom negotiates from necessity.

This illustrates the “alternative available” principle—your leverage is only as strong as your customer’s next-best option. Europe had alternatives (LNG from US, Qatar, etc.). Russia? Not so much for customers.

From Profit to Loss to Profit Again: The Volatility of State Champions

The financial swings tell the story:

  • 2021: Record profit of 2.68 trillion rubles (during European energy crisis)
  • 2023: First loss since 1999—629 billion rubles
  • 2024: Back to profit—1.2 trillion rubles

This wild volatility reflects a fundamental truth: When your company serves political objectives first and commercial objectives second, financial performance becomes subservient to state goals. Sometimes that works (2021 energy crisis). Often it doesn’t (sanctions, market loss).

Strategic Lessons for the AI Era

So what can we extract from Gazprom’s saga that applies to today’s rapidly evolving landscape?

1. Network Effects Work Until They Don’t

Gazprom’s pipeline monopoly seemed unassailable—until geopolitical shifts made customers willing to pay the switching costs.

AI Parallel: Today’s AI models and platforms building “moats” through data, compute, or user lock-in should remember that trust, reliability, and user sovereignty matter. Abuse your position, and users will fund alternatives.

2. Geopolitical Risk Is Business Risk

Gazprom learned this the hard way. Over-optimizing for one strategic relationship (Europe) without diversification created catastrophic vulnerability.

Content Creator Parallel: Platform dependency is the same risk. Building your entire business on YouTube, or Instagram, or any single platform means you’re one algorithm change or TOS update away from collapse. Diversification isn’t optional.

3. Asset-Heavy Models Lose Flexibility

Physical infrastructure becomes a liability in fast-changing environments. LNG companies with flexible shipping could adapt; Gazprom with fixed pipelines couldn’t.

Digital Business Parallel: Heavy CapEx models and legacy infrastructure become anchors. The future belongs to modular, composable, rapidly adaptable systems—whether that’s in content creation, AI deployment, or business operations.

4. The Innovator’s Dilemma Applies to Nations Too

Gazprom focused on protecting its existing business model (pipeline gas) rather than aggressively pursuing LNG and diversified markets. Classic Innovator’s Dilemma.

When you’re dominant, investing in what might disrupt you feels unnecessary… until it’s too late.

The Future: A Giant at a Crossroads

Gazprom in 2025 faces questions that will determine Russia’s economic future:

  • Can they truly pivot from European to Asian markets?
  • Will their aging infrastructure support next-generation needs?
  • Can they adapt to climate pressures and carbon transition demands?
  • How do they compete without Western technology and financing?

The company’s 2024 return to profitability might suggest resilience. But structural challenges remain: aging fields, massive investment requirements, geopolitical isolation, and customers who’ve learned not to trust a monopoly supplier.

Final Thoughts: The Illusion of Permanence

Gazprom’s story reminds us that nothing is permanent—not monopolies, not market dominance, not even control over critical resources.

The company went from seemingly invincible to struggling for survival in less than three years. That’s faster than most product cycles in tech. It’s a humbling reminder that in an interconnected, rapidly changing world, strategic rigidity is fatal.

For anyone building in digital media, content creation, or AI-driven businesses today, the lessons are clear:

✅ Diversify your dependencies
✅ Trust and reputation are assets, not tactics
✅ Flexibility beats fixed infrastructure
✅ Geopolitical and platform risks are real business risks
✅ Never mistake current dominance for permanent advantage

The same forces disrupting Gazprom—technological change, strategic competition, trust erosion, and rapid market shifts—are reshaping every industry. The question isn’t whether disruption will come. It’s whether you’ll see it coming and adapt fast enough.

In the age of AI and digital transformation, being the biggest doesn’t guarantee survival. Being the most adaptable just might.

 

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AI accelerationism Dictionary illustration

Accelerationism Dictionary: A Complete Terminology and Lexicon

AI accelerationism, or “e/acc,” is one of the most radical and controversial ideologies emerging from Silicon Valley today. At its core, it champions the rapid and unrestricted development of artificial intelligence, rejecting calls for regulation and safety measures in favor of unchecked innovation. Proponents argue that AI holds the key to solving humanity’s greatest challenges—climate change, poverty, disease—and even envision a post-human future where intelligence transcends biological limits.

With strong libertarian leanings, the movement prioritizes market-driven progress, believing that government intervention would stifle AI’s transformative potential. Tech billionaires like legendary venture capitalist Marc Andreessen have embraced these ideas, elevating what was once a fringe philosophy into a driving force in the AI industry.

However, AI accelerationism faces fierce criticism for its disregard of ethical considerations, social consequences, and potential existential risks. Detractors warn that unregulated AI development could exacerbate inequality, destabilize economies, and lead to dangerous technological outcomes without proper safeguards.

The movement stands in stark opposition to cautious, ethical AI development advocated by groups like the effective altruism community, setting up a high-stakes ideological battle over the future of artificial intelligence. Whether one sees AI accelerationism as a path to utopia or a reckless gamble, its growing influence makes it a defining force in the ongoing debate over technology’s role in shaping humanity’s future.

This accelerationism dictionary should help get anyone up to speed on this emerging and dangerous ideology. We’ll keep adding to it over time as the field continues to evolve at breakneck pace.

A dystopian AI hellscape -- one of many potential outcomes of AI accelerationism ideology

Accelerationism Dictionary

A

Accelerate or die: A common slogan in the e/acc movement expressing the belief that technological acceleration is necessary for survival.

Accelerationism: A philosophical and political movement advocating for the acceleration of technological, social, and economic progress. Can exist in left-wing, right-wing, and politically neutral forms.

AGI (Artificial General Intelligence): An artificial intelligence system capable of performing any intellectual task that a human can do.

AI supremacy: The belief or fear that artificial intelligence will surpass human intelligence and capabilities, potentially dominating society, economies, and geopolitical power structures. It is often discussed in the context of global competition for technological dominance.

Continue reading Accelerationism Dictionary
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Or: How Milton Friedman destroyed Western civilization, the neolliberalism story.

An economic ideology first theorized in the 40s and 50s by scholars, it was brought to popular attention in the 1970s by the works of economist Milton Friedman and novelist Ayn Rand among others. It grew in popularity and became widely adopted in U.S. economic policy beginning with Ronald Reagan in the 80s.

The essential heart of neoliberalism is the idea of the rich as top performers and job creators, driving the economy forward through their achievements and innovations; and that societies work best with little government regulation and where citizens are shaped to work according to market principles. Its adoption as a major driver of policy effectively undid many of the gains to middle class opportunity created by the New Deal, FDR‘s ambitious public works project that pulled the nation out from the grips of the Great Depression following the 1929 crash on Wall Street.

Neoliberalism is the dominant economic orthodoxy in the modern era. It is both a political and a financial ideology, with the following extremist beliefs:

  • Antigovernment sentiment — Their pitch is that all governments, including democratic ones, threaten individual liberty and must be stopped (or “drowned in the bathtub,” in the words of anti-tax zealots and movement conservatives).
  • Free markets should conquer governments — They claim, absurdly, that the toppling of self-governance would improve both economies and individual liberties.
  • The victory of markets is inevitable and there is nothing you can do about it — The fall of the Soviet Union and Cold War Communism was deemed the “end of history” by neoliberals, who believed that laissez-faire free market capitalism would inevitably triumph over all other forms of economic and political systems.
  • Economies work best when governments don’t intervene — Neoliberals want to prevent the powers of government from interfering with their ability to cut corners, dump industrial waste, pay fair wages, offer benefits, adhere to safety standards, engage in deceptive advertising, commit tax evasion, and so on — while continuing to supply them a steady stream of the public’s money via unpaid for tax cuts that balloon holes in the deficit. They fight against regulation tooth and nail, and try to claim that markets operate “naturally” as if under something akin to laws of physics — while failing to mention that there are no markets without regulation, without standards of fairness, without a justice system to enforce contracts and do its best to ensure a relatively equal business playing field.
  • The alchemy of neoliberalism will transmute greed into gold for everyone — The neoliberal promise is about spreading wealth, freedom, and democracy around the world — at the barrel of a gun, missile, or drone if necessary. Neoliberals consider greed to be the essence of human nature, and have modeled an entire societal system around this most base of human instincts. They claim, improbably — and surely many are True Believers — that narcissism and the aggressive pursuit of power and wealth will somehow magically create peace, happiness, and riches for everyone.

The insistence that governments and self-rule should be subordinated to the ultra-rich, to the oligarchs — that, to me, is the core essence of why this framework is evil. The staggeringly dissonant conviction about transforming sociopathy into global peace is a very close second.

Since the 1970s and accelerating with Reagan years, wealthy elites in the right wing have been spending gobs of their ill-earned wealth on creating a conservative movement echo chamber of think tanks, talk radio, literature, televangelists, YouTube streamers, and more — it is the vast right-wing conspiracy Hillary Clinton warned us about. It most certainly exists, and it most certainly is aggressively pursuing its political aims to disenfranchise the American people as fully as possible, so as to better walk away with an absurdly unjust share of the mutually created wealth by the wealth of intelligent and diligent labor here in the United States.

Common whites

It appeals to the MAGA crowd because it allows them to vicariously tag along with the rich and powerful right-wing bigots who flaunt and dangle their wealth in front of the plebes by which to entice them to open up their wallets and send in a meagre donation for this or that white victimhood fund that does nothing but enrich the scam artists who run it as a hollow shell. It validates their hardcore white supremacy and casual racism alike, provides the sadistic satisfaction of attacking their enemies (symbolically and/or literally), gives them something to do and believe in, and keeps them entertained while their pockets are being fleeced in broad daylight.

Neoliberalism has succeeded in undermining some of the last shreds of democratic infrastructure and civic goodwill in society at this point in American political history. The defenses brilliantly architected by the Founders to ensure checks and balances would manage the power games in Washington to within workable levels have frayed even further under 4 years of Trump, and the vitriol of the January 6 coup attempt and insurrection that’s fueled further right-wing Big Lie entrenchment and domestic terrorist extremism.

Democracy is in crisis, and neoliberalism the culprit of this hostage story.

At least Joe Biden is correct in his analysis of the solution: we should tax the rich.

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According to Libertarian beliefs, the government should be as minimal as possible so as not to interfere with the workings of business. But how do you then prevent monopoly capitalism under a minimalist Night Watchman State?

The answer is: you don’t — which is “working as intended” to a libertarian. Both because their contempt for the government is so great they would sacrifice our very national treasures if it meant squeezing another cent out of the public coffers, and because they are fans of monopoly capitalism. Greed is good, and “competition is for losers” (according to tech billionaire Peter Thiel) — so what if the invisible hand must be made to slap around the little guy?!

Money is a religion, and these people are True Believers.

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