The TechCrunch Global Affairs project examines the increasingly intertwined relationship between the tech industry and global politics.
This is the second in a pair of articles comparing the impact of U.S. and Chinese tech crackdowns. Yesterday, the editor of the special series Scott Bade wrote about the geopolitical consequences of each country’s respective approaches. In this article, Nathan Picarsic and Emily de La BruyÃ¨re examine how China’s âtechlashâ is fueled by domestic politics.
In November 2020, Chinese regulators abruptly suspended Ant Group’s IPO in Hong Kong and Shanghai. In July 2021, immediately after the Didi rideshare service went public on the New York Stock Exchange, Chinese authorities announced extensive investigations into the company, removing 25 of its apps from Chinese app stores – and bringing down stock prices. The following month, attacks by Chinese state media reduced Tencent’s valuation by $ 60 billion.
These companies do represent the Chinese companies PayPal, Uber and Facebook. They are the most publicized targets of the Chinese Communist Party’s crackdown on its big national tech companies. This crackdown is likely to transform the Chinese business landscape and therefore has enormous implications for the world at large, including the US tech sector.
Yet, at this time, the CCP’s technological crackdown is poorly understood. Designed as an effort to cripple China’s commercial sector, it is seen as an anti-monopoly effort similar to the one underway in Washington. Beijing has deliberately encouraged this interpretation, framing its efforts in antitrust language that resembles American rhetoric as well as privacy language that echoes that of Europe.
But Beijing’s crackdown is not similar to US antitrust efforts. Beijing is not focused on creating a competitive market, but rather on quashing any challenge to its authoritarian power – in order to strengthen both its internal control and its position in geopolitical competition. Beijing is also keen to assert a new definition of privacy, decidedly different from that of European regulators; one in which the CCP has private governance over all data. These are the goals that drive China’s techlash.
The goal is to subjugate China’s national technological landscape to the CCP – and ensure that the former serves as a power projection vehicle for the latter. This makes Beijing’s actions the opposite of an anti-monopoly effort. China is restraining its main technological players in order to support a bigger and more controlling monopoly: the CCP.
Perversely, Washington’s current antitrust push risks playing directly on Beijing’s ambition. Any American breakout of Big Tech would exacerbate the asymmetries of scale and centralization that distort current technological competition in favor of China.
The divide between the Chinese crackdown and the ongoing US crackdown is evident in the regulatory foundation underpinning Beijing’s latest initiatives. CCP actions build on an emerging legal and regulatory architecture for data governance, including, most recently, the Data Security Act (DSL) formally implemented in September. American analyzes tend to describe it as a âdata privacy lawâ. However, DSL does not promote “privacy” in the way that American Designs – or the European Union’s GDPR – might interpret the term.
DSL does not restrict the ability of companies to collect data nor does it guarantee the anonymization of information. Rather, the law restricts their ability to export data outside of China or share it with entities that are not the Chinese government (including, but not limited to, foreign governments). At the same time, DSL locks down Beijing’s access to business information. In doing so, it provides the CCP with national control over the data.
Under DSL, private data cannot be bought, sold or shipped at will. It’s not private – unless, of course, you consider the CCP to be a member of your circle of trust.
The Didi case is instructive. Did’s crime was not collecting user information, but storing that data outside of China and sharing it with foreign regulators as part of its IPO process. This is quite different from Washington’s proposals to introduce sweeping data portability and interoperability requirements aimed at increasing consumer privacy and competition.
In the eyes of the CCP, information technology is catalyzing a new industrial revolution: the digital revolution. This revolution, characterized by data as a new factor of production, will reshape the world system. The actor, whether governmental or industrial, who can control the production, distribution and consumption of data will be able to lead this overhaul, in fact claiming global hegemony. The CCP believes this is the path to unmatched Chinese military and economic might – and an unmatched international surveillance state.
To achieve this, Beijing is committed to building and internationalizing digital architectures, including networks like 5G and the industrial Internet of Things (IoT), as well as platforms like ridesharing apps and commerce hubs. electronic. These systems require scale: their integration and growth should be encouraged. But to provide competitive returns to China as geopolitical assets, these systems must exist under government control.
So as China continues to promote the growth of digital platforms and networks, the CCP will ensure that they do so at Beijing’s request. Beijing doesn’t want Apple, Facebook or Google. He wants a super integrated Apple-Facebook-Google that is an integral part of the CCP.
This approach can manifest itself in tactical moves that resemble antitrust efforts, such as investigations into AliPay and WeChat. But the operational objective is not increased competition. On the contrary, Beijing seeks to envelop these actors in the larger monopoly that is the CCP. If, as Didi’s founder would have suggested, the Chinese government were to take over the company, Didi would be part of a much bigger and more pernicious platform than Apple, Facebook or Google.
The United States will fail to prevent the relative rise and unparalleled influence of Beijing’s tech champions as long as it assumes that Beijing reflects the American approach. In fact, the United States will facilitate Beijing’s ambitions: the only real and credible alternatives to the CCP’s technological ambitions are companies like Apple, Facebook, and Google. But instead of looking to them as essential national assets in a defining economic and geopolitical struggle, the United States is focusing on bringing them to their knees. Instead of paying attention to China’s global tech offensive and the national agenda that propels it, the United States is obsessed with over-regulating its own tech sector.
The CCP’s crackdown on Big Tech is about competition, not fair competition. It’s about strengthening Beijing’s hand as it competes to shape the world of tomorrow – and to make it, for any actor other than the Chinese Communist Party, utterly unfair. Washington and Silicon Valley have the tools to prevent this: It’s time for U.S. political leaders to engage the U.S. tech ecosystem in a new kind of regulatory conversation. What we need now is a competitive strategy informed by geopolitical realities and the importance of the private technology sector to national security.