House Judiciary Committee Bills Targeting U.S. Tech Companies Will Hurt American Competitiveness and Security
Last month, the House Judiciary Committee passed six bills that would radically undermine America’s ability to compete on the global stage, particularly with China. Here’s what you should keep in mind:
— These bills advantage large Chinese platforms that are competing directly with U.S. companies but aren’t subject to any of the bills’ rules
— Misguided changes to data portability and interoperability regulations could put American data in the hands of foreign companies and governments
— Attacking world-leading, American technology companies would make the U.S. less competitive on the global stage
When bipartisan members of Congress raised these concerns during markup, Judiciary Committee leadership swept them aside. But the impact of these bills on national security and competitiveness with China can’t be ignored.
These bills advantage large Chinese platforms that are competing directly with U.S. companies but aren’t subject to any of the bills’ rules.
American companies could have requirements not imposed on foreign competitors like China, says Rep. Issa (R-Calif.) “[I]f interoperability needs to go from Facebook, Amazon, Apple, and Google, then doesn’t it need to go from Alibaba back? On what basis would we have the dominant player in China and all over the rest of the world able to take from all four of these companies but have no requirement to be interoperable back?”
Regulatory changes would “slow innovation and make us less competitive” with China, says Rep. Swalwell (D-Calif.) “[I]t just concerns me that you would have to go through the government if you are creating an application and get approval from the government rather than commit a violation and then have the government say that it is a violation. Again, I think that would slow innovation and make us less competitive, particularly to China.”
Legislation like this could give Chinese rivals the boost they need to take over the tech market, warns the Information Technology and Innovation Foundation’s Rob Atkinson. “With Chinese internet and tech companies waiting in the wings, aggressive antitrust actions against U.S. leaders run the risk of giving a new generation of foreign rivals the boost they need to dominate global markets.’
Breaking up American tech companies will be a boon to China, says Rick Santorum. “Breaking up and regulating our tech companies will reduce their ability to innovate quickly and remain at the cutting edge of technology. That will be the single biggest boon to China in their quest to run the world’s tech services. Rather than having to innovate and produce competitive services that people want, China will be able to sit back as our government rips apart a key American industry.”
These bills would afford foreign rivals a free look at R&D investments by U.S companies, says Matt Schruers of the Computer & Communications Industry Association. “These bills would harm consumers and thousands of smaller businesses that use digital services to reach worldwide markets. They put the U.S. economy and the U.S. position as a leader in innovation at risk. Instead of boosting U.S. innovation to compete with threats from abroad, as did the recently enacted USICA, these bills would dis-incentivize innovation by affording foreign rivals a free ride on a few U.S. companies’ R&D investments.”
Unfairly cracking down on domestic tech companies could be justification for foreign governments to justify their own action, warns Bloomberg columnist Mihir Sharma. “What global authoritarians want is for the big U.S.-based social media networks to fall into line with the rest of the local media — which are already, more or less, subject to state control and intimidation. U.S. action to constrain the tech companies provides those leaders with a toolkit of controls that they can justify internationally.’
“Why isn’t Washington defending American companies for foreign assaults?” Asks former Trump advisor Stephen Moore. “These antitrust probes aren’t just harmful to the trillion-dollar companies in America that are locked in severe competition with the likes of Chinese government-sponsored companies like Huawei and Alibaba. They jeopardize jobs held by American workers, often in the highest-paid occupations. Worse, they penalize American companies for building best-in-class world products.”
— Moore continues: “[W]e should be defending our great companies when they succeed — not tearing them down. Can anyone imagine China doing something so stupid as this to their companies?”
Misguided changes to data portability and interoperability regulations could put American data in the hands of foreign companies and governments.
Interoperability requirements could give the Chinese government access to U.S. user data, says Rep. Swalwell (D-Calif.) ‘I’m really concerned about China, and if this bill would require a U.S. company to be interoperable with a Chinese company, and we all can imagine the dangers if the Chinese government has access to U.S. person data, particularly, you know, people who work in the government or work at companies that have valuable trade secrets.”
These bills would “facilitate foreign access to sensitive U.S. data and IP,” says the Computer and Communications Industry Association. “At a time when U.S. technology leadership is under threat from competitors abroad, a series of bills introduced in the House would take a sledgehammer to America’s most successful, dynamic companies – fundamentally undermining U.S. tech competitiveness and giving an unearned advantage to foreign rivals. These proposals conflict with critical R&D priorities, facilitate foreign access to sensitive U.S. data and IP, and open the door to a future where the U.S. is no longer the global technology leader.”
These bills could require American companies to share consumer information with Chinese competitors, says Rep. Issa (R-Calif.) “They will be asked, for example, with Amazon what will be — what did you buy, how much did you pay, how much were you willing to pay, and all the things that were sold to you, and that will be interoperable under this bill with Alibaba. And the committee that will decide it, whether public or private, will be a subentity created by the Federal Trade Commission that’ll decide what Alibaba gets to know about what you bought from Amazon, potentially allowing for better competition, Alibaba, to in fact interoperatively bid on the same product or a similar product, probably made in China, that, in fact, they will offer you at a lower price in competition with Amazon because they’re interoperable. They’re simultaneously able to see the data.”
“The bill throws open the door to our competitors”, says Rep. Bentz (R-Ore.) “This bill reflects a shift of control to the government. It reflects a chilling of innovation. It reflects a means of damaging privacy. The bill throws open the door to our competitors — China being the most obvious — putting not only consumer privacy at risk, but also the nation’s security.”
These bills would give China access to Americans’ data, says Rep. Tiffany (R-Wis.) “Allowing the CCP to acquire American companies, and almost certainly Americans’ data, would be disastrous.”
Attacking world-leading, American technology companies would make the U.S. less competitive on the global stage.
“The House’s proposals set its sights on knee-capping America’s largest technology providers while affording more favorable treatment to foreign technology rivals,” says Michael Allen of the National Security Institute. “The House’s proposals set its sights on knee-capping America’s largest technology providers while affording more favorable treatment to foreign technology rivals. As the largest investors in R&D, America’s big technology companies will continue to represent a growing share of America’s future workforce, as well as enhance our ability to counter the influence of foreign subsidized technology companies. The House bills could not only hamstring some of the largest drivers of U.S. innovation, but also impede the ability of these companies to create millions of new American jobs just as the economy is gearing up for a rebound.”
The proposed policies would “stymie innovation, harm consumers, and weaken America’s technology leadership,” says the U.S. Chamber of Commerce. “Antitrust should remain a law of general application and focused on the economic interest of consumers. The misguided approach taken in these bills will stymie innovation, harm consumers, and weaken America’s technology leadership. While ostensibly targeting ‘Big Tech,’ this approach to antitrust would broadly impact American business and our economy. They should be voted down.”
The changes proposed in these bills would “mandate a return to the flip phone era” and
“[destroy] US national competitiveness”, says Adam Thierer of the Mercatus Center. “America’s new #antitrust policy approach will apparently mandate a return to the flip phone era. This is recipe for not only undermining consumer welfare but for destroying US national competitiveness. A horrible step backwards.”
The bills would slow down the growth of U.S. tech and undermine U.S. competitiveness, says Marianela López-Galdos of the Computer & Communications Industry Association. “[A] ban on M&A activity on a handful of companies will eventually favor other ecosystems outside the U.S. It is foreseeable that the public sector will take advantage of regulatory frameworks that slow down the growth of U.S. tech, and subsidize local businesses that have not been able to organically compete against leading U.S. tech companies. A ban on M&A activity will only favor the foreseeable protectionist approach that will likely reign in the near future, and eventually will harm U.S. competitiveness.”
Thwarting successful tech companies runs counter to American interests, reminds Clive Crook at Bloomberg. “This shouldn’t need saying, but apparently it does: It isn’t in America’s interests to be as good as Europe at thwarting the rise of dominant tech companies. If Amazon, Google, Apple and Facebook had been stopped in their tracks, the U.S. would not be better off — nor, for that matter, would the rest of the world.”
These bills “would hobble America’s world-leading tech industry” and put U.S. economic leadership at risk, says Neil Chilson of the Charles Koch Institute. “In sum, the bills would hobble America’s world-leading tech industry. European leaders surely hope the Biden admin joins their governments in scapegoating American tech companies. But Congress should worry about strengthening foreign competitors by weakening American companies.”