Newsflash: FTC Over-Regulation And Regressive Bills Like AICOA Would Harm The U.S.’ Ability To Compete With China In Tech
As China continues to invest in its own tech capabilities, American interests are best served by maintaining a vibrant tech sector. However, recent comments from the FTC about overregulation somehow “helping” competition with China and Congress’ attempts to slow down growth in the tech industry with bills like AICOA threaten to harm the pace of innovation. Here’s what you need to know about the importance of a strong American tech industry in competing with China, and promoting a strong digital economy.
Policymakers Are Aligned On The Importance Of America’s Tech Sector In Competing With China
President Biden’s 2022 National Security Strategy points out that the U.S. must use national capabilities to “outcompete our strategic competitors.” “We will use these capabilities to outcompete our strategic competitors, galvanize collective action on global challenges, and shape the rules of the road for technology, cybersecurity, and trade and economics.”
The strategy report adds that China “is using its technological capacity and increasing influence over international institutions to create more permissive conditions for its own authoritarian model.” “The PRC (People’s Republic of China) is the only competitor with both the intent to reshape the international order and, increasingly, the economic, diplomatic, military, and technological power to do it. Beijing has ambitions to create an enhanced sphere of influence in the Indo-Pacific and to become the world’s leading power. It is using its technological capacity and increasing influence over international institutions to create more permissive conditions for its own authoritarian model, and to mold global technology use and norms to privilege its interests and values.”
Former National Security Advisor Robert O’Brien and the Hudson Institute’s Arthur Herman emphasize that the U.S. intelligence community relies on tech companies “to maintain the United States’ advantage in key areas.” “Lawmakers must also take care not to alienate major technology companies. The Pentagon and the intelligence community rely on the resources and expertise of leading American developers to maintain the United States’ advantage in key areas such as artificial intelligence, machine learning, cyber, robotics, and autonomous systems.”
American Tech Companies, Which Lead The World in Research And Development, Would Be Harmed By Restrictive Legislation
Five of the top seven companies by global R&D spending are U.S. tech companies, according to NASDAQ. Additionally, such spending is “imperative to withstand competition, waves of disruption, and obsolescence. R&D initiatives provide an edge of innovation to corporates for their products and services.”
— The report notes that the top companies for R&D spending are Amazon ($42.74 billion), and Alphabet ($27.57 billion).
American tech companies currently lead their competitors globally, and make up the most innovative companies in the world, according to BCG’s Most Innovative Companies, fueling “remarkable product innovations” and “major developments in technology.”
According to Daniel Goure of the Lexington Institute, anti-tech legislation “would upset the entire tech innovation ecosystem.” “To counter China’s tech aggression, the U.S. is dependent on a handful of private companies which have the skills and resources to compete with Chinese firms to develop precisely those technologies Beijing seeks to dominate. These are also the firms targeted by the antitrust bills your article references. The proposed legislation would not only harm these critical national assets and impede their ability to compete with Chinese firms, it would upset the entire tech innovation ecosystem as well.”
Recent Actions Taken By The FTC And Congress Threaten The Stability Of America’s Tech Sector
Jennifer Huddleston of American Action Forum points out that recent FTC action would allow action against tech companies “even though consumers were not harmed.” “Most specifically, rejecting the consumer welfare standard signals the FTC may apply its enforcement power in more subjective ways based in changing political motives and policy preference, as was seen in earlier eras of antitrust enforcement. For example, if not focused on the consumer welfare standard, the FTC could act against some of the largest tech companies to break them up or prevent mergers even though consumers were not harmed—or were even helped—by these changes in the market.”
Former National Economic Council Director Larry Kudlow and Former National Security Advisor Robert O’Brien note that anti-tech legislation “will place US companies at a structural disadvantage vis-à-vis China.” “Unfortunately, legislation now under consideration in Congress — specifically, bills like the Open App Markets Act and the American Innovation and Choice Online Act — will place US companies at a structural disadvantage vis-à-vis China, leaving our tech industry weakened and vulnerable to the CCP. If these bills become law, China could quickly surpass and displace the United States in the global tech sector. We cannot afford to cede this important ground to Beijing. We all support and welcome robust competition in the marketplace. But government mandates that open our tech platforms to foreign rivals without sufficient safeguards will lead to more malign activity by Russia, China, Iran and North Korea, not to mention cyber mercenaries or non-state criminal actors.”
Former U.S. Senator Scott Brown and Robert O’Brien explain that passing anti-tech legislation could help China’s global standing “grow and grow fast.” “America must maintain its edge in the technology sector. As we have seen in Ukraine, U.S. tech leadership has real world national security consequences for the U.S. and its allies. But we cannot take our status for granted. Today, five of the top 20 global technology firms are based in China. If we hobble our private sector innovators by passing anti-innovation legislation, China’s position will grow and grow fast. America will, in turn, suffer.”