As the United States considers the future of its largest technology companies, the economic and security threats from the People’s Republic of China should definitely factor in any related calculations. President Trump has issued an executive order banning the popular social media app TikTok, out of concerns China is gathering data on millions of Americans. The Department of Defense has identified China as a “strategic competitor” that uses “predatory economics.”
The China challenge could affect the raging debate over whether and how to regulate Big Tech. At a recent hearing before the House Antitrust Subcommittee, many members criticized Google, Apple, Facebook, and Amazon for their size and influence. Reps. Jared Nadler (D-N.Y.) and David Cicilline (D-R.I.) expressly called for the breakup of these companies.
Unfortunately, such calls ignore both the growing threat of Chinese technological competition and the proper function of antitrust law. To rewrite or manipulate antitrust law to dismantle Big Tech could very well cede global technological leadership to China. Whatever their faults, these are American companies subject to American laws that drive America’s economy at home and soft power abroad. To disarm them unilaterally would be foolish.
The Council on Foreign Relations warns that the United States and China are competing for global technological dominance, and right now China is closing the gap. During the House hearing, Mark Zuckerberg pointed out that, “If you look at where the top technology companies come from, a decade ago the vast majority were American. Today, almost half are Chinese.”
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The Chinese government is driving these efforts. China has strengthened its “state-led approach to innovation, which uses licit and illicit means to achieve its goals.” For instance, China has coerced technological transfers by restricting foreign ownership, requiring joint ventures, stealing foreign technology, and threatening foreign companies with “dire consequences” if they adhere to the Trump administration’s ban on sales of key technologies.
Moreover, China strategically purchases technology companies to grow its superiority. Chinese venture capital investment has targeted sensitive areas such as “early-stage advanced technologies” to advance the government’s military and economic goals. In 2017, for example, Jack Ma’s Ant Group tried to buy U.S. money-transfer company MoneyGram for $1.2 billion, but the deal was scuttled by national security concerns. China’s largest tech companies, Baidu, Alibaba, and Tencent, have acquired more than one dozen other companies worth more than $1 billion each, including three in 2019 alone.
Given these concerns about national security and foreign competition, the United States should not rewrite its antitrust laws or stretch them beyond all recognition to break up Big Tech. Certainly, all companies, of any size and in any industry, must comply with our antitrust laws. Big Tech is no different. The United States should not designate these companies as “national champions” or give them a pass. If Google and Facebook conspire to fix prices for advertising rates, they should be prosecuted.
Overly aggressive antitrust enforcement, however, focusing on political rather than economic goals, could imperil America’s technological superiority. If Washington breaks up Big Tech, the world’s largest technology companies would be Chinese, not American. Those Chinese companies, rather than American companies, would have the most resources to acquire innovative start-ups.
In fact, any move to dismantle American technology companies could hamstring their ability to innovate. In 2018, Amazon, Google, Apple, and Facebook collectively invested more than $35 billion in research and development. If dismantled, each smaller company would have fewer resources to invest and less financial cushion to take risks. Chinese companies would supplant their American counterparts as global leaders in investment and innovation.
The Department of Justice has recognized that overly aggressive antitrust enforcement can harm America’s national security. In a recent brief filed in support of a domestic chip manufacturer, DOJ explained that “a significant reduction in [the company’s] technological competitiveness … could seriously harm U.S. national security.” Moreover, such enforcement efforts “would impair unduly” the company’s ability to invest in research and development and to supply the military and other national security actors.
These concerns span the political spectrum. Sen. Mark Warner (D-Va.) warns if regulators “chop off the legs of Facebook and Google,” those companies “might be replaced by Alibaba, Baidu, Tencent — companies that are totally enmeshed with the Chinese government in their global economic plan.”
Rep. Ro Kanna (D-Calif.) has said, “I don’t think competition with China means, in any way, that we give tech a pass from antitrust enforcement … What it does mean is that we need to be nuanced and strategic in how we strongly enforce antitrust law and not reflexively call for breakups of a company just because it’s big.”
Whatever their faults and mistakes, America’s Big Tech companies subscribe to American principles including the rule of law and due process, and to the Constitution. They are subject to jurisdiction in U.S. courts, house their data on American servers, and must cooperate with American law enforcement when served with a lawful process.
Even as we demand that all companies comply with existing antitrust laws, we must recognize that American technology companies underpin our national security and global competitiveness. Any effort to punish or break apart the technology companies for political reasons would, in effect, dismember the golden goose of American innovation and competitiveness and feed its carcass to the People’s Republic of China.