Antitrust Attacks On U.S. Tech Companies Pose National Security Risks
As members of Congress and foreign policy experts have previously highlighted, recent antitrust efforts against leading U.S. tech companies could have serious consequences for American competitiveness and security. With misguided legislation aimed at breaking up America’s world-leading tech sector, it’s important to understand what is at stake—and to ensure that there is a more informed debate on security issues before rushing forward with this legislation. These proposals would:
— Undermine the U.S. goal of engaging China from a position of strength
— Give adversaries and competitors access to U.S. data and intellectual property
— Reduce our ability to invest in next-generation technologies like AI and quantum computing where China is beginning to take the lead
— Unfairly target a small group of leading U.S. companies while giving improper advantages to our foreign rivals
Undermine the U.S. goal of engaging China from a position of strength.
The Biden Administration has flagged China as the “biggest geopolitical test” for the United States, according to Reuters. “President Joe Biden singled out a ‘growing rivalry with China’ as a key challenge facing the United States, with his top diplomat describing the Asian country as ‘the biggest geopolitical test’ of this century.”
However, the changes proposed in these bills 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.”
This legislation would undermine one of America’s strongest assets, damaging a “critical counterweight to Chinese R&D efforts” and weakening efforts to combat “malicious tech activity by China,” writes former U.S. Senator and Director of National Intelligence, Dan Coats in the Washington Post. “Congress and the Biden administration agree on the need to address one of the biggest challenges facing our country — China’s efforts to develop or steal advanced technologies to further its authoritarian agenda. Yet the House is considering legislation that could inadvertently weaken U.S. efforts to combat malicious tech activity by China and other foreign adversaries because it would undermine one of our strongest assets: the U.S. technology industry.”
— Coats continues: “While the House bills assume that big equals bad, the fact is that size matters when it comes to our national security. Large integrated tech firms play a vital role in protecting our nation from a variety of threats.”
Aggressive antitrust action could give China “the boost they need to dominate,” 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.”
China will be able to “sit back as our government rips apart a key American industry,” 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 could put “the nation’s security” at risk, says Rep. Bentz (R-Ore.). “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.”
Breaking up America’s leading tech companies would leave the nation vulnerable to cyberattack as companies would have less resources and scale to defend themselves, explains CCIA. “At a moment in history when it has never been more clear that cyber threats are very real and can impact the daily operation of the economy as well as essential services, the provisions in the House bills that seek to reduce the size, scale, and integration of a handful of leading U.S. tech firms, especially H.R. 3825 and H.R. 3816, could significantly hinder the ability of the agencies to fulfill their missions to defend against such threats. A scattered group of smaller, isolated platforms with scant perspective of the threats they each face, and fewer resources, will be unable to engage in the same level of threat detection, investigation, mitigation and information sharing.”
Give adversaries and competitors access to U.S. data and intellectual property.
Proposals would potentially put American data in the hands of Chinese rivals, warn 12 former top U.S. national security officials in a joint letter to Congress. “Recent congressional antitrust proposals that target specific American technology firms would degrade critical R&D priorities, allow foreign competitors to displace leaders in the U.S. tech sector both at home and abroad, and potentially put sensitive U.S. data and IP in the hands of Beijing.”
Recent legislation “could lead to forced IP transfers to foreign competitors and foreign entities controlled by U.S. adversaries,” according to a recent white paper by the CCIA. “These broadly drafted provisions could have the unintended consequence of requiring U.S. online platforms to share sensitive or protected user data and IP with other companies, and could lead to forced IP transfers to foreign competitors and foreign entities controlled by U.S. adversaries.”
— Bloomberg coverage notes: “The report also raises the concern that the bills’ interoperability provisions mandating equal access to user data and software could jeopardize intellectual property and consumer safety in the hands of some foreign companies.”
These bills could “weaken U.S. IP at home and abroad” says CCIA’s Arthur Sidney. “[I]f enacted, H.R. 3849 would appear to be inconsistent with how the U.S. has handled intellectual property (IP) in the past, and ultimately may weaken U.S. IP at home and abroad.”
— Sidney continues: “H.R. 3849 would require leading U.S. technology companies to “interoperate” with competing services, including foreign entities. One of the main problems with the proposal is that it fails to define much of the operative language used. Rather than providing clarity and enforcement, it weakens U.S. competition, innovation, and potentially gives away data that is protected by IP.”
These bills could give the Chinese government and companies access to U.S. user data, says Rep. Swalwell (D-Calif.), Chair of the House Intelligence Modernization and Readiness Subcommittee. “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 could increase the risk of IP and data falling into foreign competitors’ hands and we must consider these consequences, says Sen. Grassley (R-Iowa). “I believe that we wouldn’t have the great country we have or the great economic system we have if we didn’t protect intellectual property and data. And we ought to be very careful—we know how China operates, and we ought to take all the extra efforts we can to make sure that these things don’t fall into the wrong hands, and that most often for the last couple decades involves China.”
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.”
Reduce our ability to invest in next-generation technologies like AI and quantum computing where China is beginning to take the lead.
“[T]he House bills would cut the legs out from under some of the main drivers of innovation, research, and development”, explains Michael Allen of The National Security Institute (NSI) at George Mason University. “In China, the government celebrates its large technology firms as national champions and invests unprecedented amounts of money into growing its high-tech sectors, with the stated goal of attaining global supremacy in several fields of emerging technology like quantum computing and artificial intelligence. In the U.S., by contrast, the House bills would cut the legs out from under some of the main drivers of innovation, research, and development in those sectors. Put simply, the proposed legislation would present grave consequences for global U.S. competitiveness.”
The bills contradict U.S. priorities in critical emerging sectors and would “hobble” firms with the greatest R&D commitments, says CCIA. “The bills would also directly contradict the signal Congress just sent about its commitment to global competitiveness with the U.S. Innovation and Competition Act. In June 2021, the Senate passed this legislation with the goal of bolstering U.S. competitiveness with China in ten critical emerging sectors, including AI, high performance computing, semiconductor chips, quantum, robotics, cybersecurity, immersive technology, and data storage and management. However, the House bills aim to break up or hobble the very firms making the greatest commitments to R&D investment in these critical emerging sectors.”
Unfairly target a small group of leading U.S. companies while giving improper advantages to our foreign rivals.
The provisions in these bills would put foreign competitors in a “better position to assume global preeminence” added 12 former U.S. national security officers in their letter to Congress. “Provisions in these bills that target a narrow group of U.S. companies without requiring similar oversight of Chinese tech giants such as Huawei, Tencent, Baidu, and Alibaba would place these already formidable competitors in a better position to assume global preeminence.”
The bills put restrictions on American companies but fail to place any comparable restrictions on foreign competitors, notes CCIA in their white paper. “The House Judiciary bills impose a series of restrictions on leading U.S. tech companies, but do not place any similar restrictions on foreign competitors. Most important from a national security perspective, the bills would make it easier for Chinese and other foreign competitors to acquire U.S. technology.”
These bills would afford foreign rivals a free look at R&D investments by U.S companies, says Matt Schruers of the CCIA. “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.”