“[W]hen it comes [to] managing the growing might of the American tech industry, Washington has been ‘asleep at the switch.’” So claimed the former Representative David Cicilline, who introduced the 2021 version of the AICOA bill in the U.S. House of Representatives, in a 2023 interview. However, not only was Cicilline off the mark on the underlying policy; by 2023 he was describing a “tech industry” that had ceased to be a single distinct sector. In making this error, Cicilline was hardly alone.
Unfortunately, the error continues to be made by many to this day. Policymakers on both sides of the Atlantic keep drafting rules, taxes, and enforcement priorities aimed at “tech” or “digital” companies, as if those words picked out a discrete corner of the economy. They do not. The people whose job it is to draw sector boundaries, from federal statistical agencies to the index providers that define Wall Street’s sector funds, have spent the past decade conceding that the line cannot be drawn cleanly. The evidence suggests it should not be drawn at all.
Digital Activity Does Not Respect Sector Boundaries
The Bureau of Economic Analysis (BEA) spent years building a Digital Economy Satellite Account to measure identifiable digital production. Its last estimate put that production at 10 percent of GDP in 2022, and BEA has since discontinued the account because of budget constraints. However, that was not a true estimate of how much of the economy depends on digital technology: though it represented a good-faith effort by the government to put a number on “digital” economic activity, the inability to draw clean boundaries was already apparent in 2022.
The account included hardware, software, and e-commerce margins, which was a respectable effort at definition but couldn’t help but undercount much of the activity facilitated by digital technology. Measuring those product categories does not turn the rest of the economy into a non-digital sector. For example, banks, retailers, and manufacturers use digital technology to produce output that remains classified as financial services, retailing, and manufacturing. That pattern applied more broadly to the whole economy in 2022, and it applies even more forcefully in 2026.
Wall Street Reshuffles “Tech” Companies Around Sectors
The Global Industry Classification Standard maintained by S&P Dow Jones and MSCI is the closest thing markets have to an official definition of “tech.” In 2018, it moved Alphabet and Facebook out of Information Technology and into an expanded and renamed Communication Services sector alongside AT&T and Comcast, citing the integration of telecommunications, media, and internet companies. As S&P’s index committee chairman explained at the time: “The internet began as a technological approach to sharing information; it has become the way many businesses operate.” eBay went to Consumer Discretionary, where Amazon already lived.
In 2023, Global Industry Classification Standard (GICS) reclassified Visa, Mastercard, PayPal, and Fiserv as Financials, and sent payroll processors ADP and Paychex to Industrials. By the index providers’ own classifications, Alphabet, Meta, Amazon, Visa, and Mastercard sit outside Information Technology. What remains in Information Technology is largely concentrated in a few companies such as Nvidia, Apple, and Microsoft. The market’s own classifications show that “tech” is not a synonym for digital business. Search, social media, online retail, payments, and payroll processing span several sectors, even though software is central to all of them.
Supposed Non-Tech Leaders Are Becoming Tech Companies
Consider leading companies not usually grouped with tech.
Walmart: The retail giant booked $713 billion in fiscal 2026 revenue, including $150.4 billion in global e-commerce sales, up 24 percent. Its own SEC filings describe it as a “people-led, tech-powered omnichannel retailer.” In December 2025, it moved its stock listing from the NYSE to Nasdaq, citing alignment with a “technology-forward approach.” Across all U.S. retail, e-commerce accounted for 16.4 percent of sales in 2025, or $1.23 trillion, and most of that volume runs through companies classified as retailers.
Goldman Sachs: The firm has more than 12,000 engineers, approximately a quarter of its global workforce, developing the technologies on which its financial businesses depend.
Deere & Company: The 189-year-old farm equipment maker has exhibited at CES since 2019, and a senior vice president stated plainly that “Deere is a technology company.” At CES 2025, it unveiled a fully autonomous 9RX tractor, an autonomous orchard tractor for spraying, an autonomous quarry dump truck, and an autonomous electric mower, all using its second-generation autonomy technology.
Domino’s Pizza: By 2018, the chain was already generating more than 65 percent of its U.S. sales through digital channels and had launched a voice-recognition ordering assistant four years earlier. A company whose primary customer interface is software is a software company that also bakes.
The Labor Market Shows Software Devs Work In Almost Every Industry
Software developers are not confined to the sectors commonly called tech. In fact, nearly half of software developers work outside of the industry classifications commonly grouped into tech. In the Bureau of Labor Statistics’ May 2022 occupational employment estimates, the United States had about 1.53 million software developers. Roughly 703,000 of them, about 46 percent, worked outside the six technology-related industries examined here: computer systems design, software publishing, computing infrastructure and hosting, web search portals, computer manufacturing, and social and streaming media.
Corporate headquarters alone employed 78,000 software developers, while banks and credit institutions employed another 51,000. Clothing retailers and local delivery firms appear on BLS’s list of the top-paying industries for the occupation. The talent that policymakers associate with Silicon Valley is embedded in every sector of the economy because every sector now runs on code.
In the Modern Economy, Most Businesses Are in Tech/Digital
Rules that focus on a tech or digital label rather than business conduct produce arbitrary results in a modern economy where most businesses are significantly digitized, and many integrate cutting-edge technologies into their business practices. The OECD recognized the underlying problem in 2015: as digital activity becomes integral to the economy, separating it from the rest of the economy for tax purposes is not feasible. The UK’s digital services tax can reach online marketplace intermediation while excluding a retailer’s own-inventory online sales. That makes a huge and very economically discriminatory distinction between business models, rather than between digital and non-digital commerce: both retail activities take place online.
Policymakers should justify such distinctions by the activities at issue, not by pretending one business is digital, and the other is not. The relevant distinction must be the activity and alleged harm, not whether a company runs on code, because most companies run largely on code in 2026, and even more will in the future. Competition law, privacy law, and tax law all work best when they attach to what a company does: processing payments, selling goods, intermediating advertising, extending credit. Those activities can be measured, compared across firms, and regulated consistently.
The “tech sector” was a useful shorthand in 1999, when GICS was created, and e-commerce accounted for just 0.6 percent of retail sales in the fourth quarter. Today, the phrase describes a set of tools that nearly every large enterprise uses. Policy should catch up to that reality and retire the idea of regulating a “tech sector” in favor of consistently regulating business conduct.
