Fight between Gawker and tech tycoon reflects "new power structure"

The dispute between tech billionaire Peter Thiel and Gawker Media highlights the growing wealth and power of Silicon Valley.

In a way, the battle represents the collision of two of Silicon Valley's core values: freedom of information and the right to privacy. It also shows how much the center of American capitalism has been shifting west, from Wall Street to the Bay area, reports Josh Elliott of CBS News' digital network, CBSN.

Silicon Valley innovations have transformed the way we listen to music and watch movies, how we consume news and even how we get around.

It's also minted a new class of wealthy industrialists, whose spats - like the one between Thiel and Internet pioneer Nick Denton - are now front page news.

"Sometimes we think the Valley is basically Steve Jobs' backyard -- a kind of creative playground for manic geniuses," said Fred Turner, a professor at Stanford University and author of "From Counterculture to Cyberculture." "If you're wealthy, your voice can be louder in this country. Peter Thiel, in many ways, is doing what's common in other parts of the country."

In this dispute, Thiel has been cast as a "rampaging magnate," while Gawker has been denounced for its "bad behavior." The PayPal co-founder told the New York Times he has spent about $10 million on a series of lawsuits that could drive Gawker out of business - apparent retaliation for a 2007 report that outed Thiel.

"I think folks like Peter Thiel are a little surprised when a company like Gawker does the kind of tabloid-oriented expose reporting that's taken for granted in New York," Turner said. "I think that's probably what's going on there."

Silicon Valley values privacy -- remember when Apple refused to decrypt a phone belonging to the San Bernardino shooter? But the Valley also exists to facilitate the flow of information. It's why Facebook was criticized for allegedly censoring conservative news on its trending page.

Wired's Jason Tanz thinks there will be more scrutiny of Silicon Valley the more powerful it gets.

"There is some irony that Peter Thiel is on the board of Facebook, whose entire business is premised on the idea that people should be much more open and should be sharing more information," Tanz said. "It does fly in the face of that kind of radically transparent ideal that a lot of these companies profess."

Amazon founder Jeff Bezos bought the Washington Post in 2013. Apple is reportedly considered buying Time Warner, parent company of CNN and HBO.

"This started as a bunch of true believers in their garage -- somewhere with their crazy ideals -- and what has happened is they've won and now they are the new power structure and that is a very different relationship," Tanz said. "And I'm not sure that everybody within Silicon Valley, within the tech industry appreciates that people look at you as the big guys now, and sometimes the bad guys."

Gawker is reportedly valued at more than $250 million, but Denton had to bring in an outside investor in order to raise the funds to fight the lawsuits. Peter Thiel, on the other hand, is worth $2.7 billion, according to Forbes.