When I first started digging into public budgets and corporate filings, I expected to find the usual incentives: tax credits for clean energy, subsidies for manufacturing, grants to spur job creation. What surprised me was how often those same tools quietly funnel capital into companies building surveillance technologies — facial recognition, location tracking, biometric databases — with minimal public debate.
These incentives don’t always look like "I’ll pay you to build a spyware company." Instead they take familiar, politically palatable forms: research and development tax credits, investment allowances, accelerated depreciation for certain kinds of equipment, and public procurement preferences. Layered together, they nudge investors and startups toward surveillance-adjacent projects — and because the mechanisms are routine, they escape sustained scrutiny.
How the incentives work in practice
At the most basic level, governments want to attract capital. They offer tax incentives to reduce the effective cost of investment. That motive is neutral. But the devil is in the design: when tax codes list eligible sectors or technology classes, or when public grants prioritize "security" research, lawmakers effectively steer funding toward certain outcomes.
Typical channels include:
Why this matters: incentives shape markets and norms
I’m not arguing that every dollar of public support equals state-sponsored surveillance. But incentives change risk calculations. When the state subsidizes an industry, it signals that the work is valuable — and that message matters for VCs, universities, and multinational corporations deciding where to focus talent and capital.
There’s a cascading effect. Startups chasing tax breaks and procurement contracts hire the engineers who then develop more sophisticated tracking algorithms. Universities that rely on industry funding may orient labs toward "security" topics. Investors, seeing lower post-tax costs and predictable public demand, prioritize surveillance-adjacent startups. Over time, policy choices bend the entire innovation trajectory.
Examples I’ve followed
In several countries I’ve tracked, the pattern is clear. A national security initiative is announced — often after an isolated crime or a terror attack — and is immediately followed by enhanced R&D credits for "defensive technologies." Local governments then launch smart-city pilots emphasizing public safety. Procurement guidelines are relaxed to encourage rapid deployment of camera networks and facial recognition platforms. Tech firms that had been building analytics for retail suddenly find government contracts more lucrative than private work.
Consider the case of a company I studied that originally sold analytics for shopping malls. When a municipal procurement office opened a tender for "public safety analytics," the company rewired its pitch, reused its computer vision stack, and won a citywide deployment. Because the city had allowed accelerated depreciation on installed equipment and applied a procurement preference for "domestic innovation," the project became financially attractive. That kind of pivot is routine — and often invisible to the public until the cameras are already in place.
Who benefits — and who pays the costs
The beneficiaries are familiar: defense contractors, surveillance startups, cloud providers selling the infrastructure, and the venture funds that backed them. Local economies sometimes gain short-term jobs tied to installation and maintenance. Politically, officials can claim responsiveness to safety concerns.
The costs are less obvious and more enduring. Privacy erosions, chilling effects on speech, biased policing driven by flawed algorithms, and the risk of mission creep (tools built for one purpose repurposed for others) are all exacerbated when the infrastructure is subsidized. When taxpayers foot part of the bill, there’s a moral hazard: private firms profit while society deals with the downstream harms.
Transparency gaps that make steering easy
Part of why this steering happens quietly is a patchwork of opaque practices. Tax incentives operate behind the scenes; they don’t require the same public hearings as a new surveillance pilot. Procurement can be fast-tracked under "emergency" or "national security" exceptions. Investment by sovereign wealth funds or development banks is often structured to emphasize economic development rather than the specific products being enabled.
I’ve seen public budgets where a line item reads "security innovation support" with no breakdown of eligible technologies. That ambiguity is deliberate — it lets officials claim they’re fostering innovation while avoiding scrutiny of the kinds of systems being built.
Policy levers to realign incentives
From where I sit, there are practical reforms that would preserve legitimate innovation support while reducing the risk of steering public funds into invasive surveillance:
What I ask of readers and policymakers
I believe citizens should be more skeptical of "innovation for security" narratives. That doesn’t mean rejecting technologies that can genuinely help — but I do think we deserve a transparent debate about what public money supports. When tax incentives or state investments are on the table, the public should be able to see who benefits and how the technology will be used.
For policymakers, the challenge is to craft incentives that support beneficial innovation without unintentionally underwriting systems that erode civil liberties. That requires clear criteria, stronger transparency, and safeguards that align public subsidies with public values.
I’ll keep following budgets, agency guidelines, and procurement notices, because these mundane documents reveal a lot about the future we’re building. If you’ve spotted a local tax incentive or procurement that looks like it’s nudging investment into surveillance markets, let me know — these are exactly the details that deserve sunlight.
