a message for American policymakers
At a time when the United States and its Western allies are struggling to determine the proper oversight of digital platform companies, the Chinese government is firmly pushing its own plan. That China has developed regulations for these digital platform companies to stimulate competition and innovation should send a message to Western policymakers.
The new guidelines – from enforcing competition to opening up corporate data hoards – are an exercise of sheer autocratic power. Apparently, one reason for the action is to maintain this power against the growing strength of platform companies and their charismatic leaders. Another reason for the move, however, is that the new enforcement of Chinese digital platforms will make companies more competitive and stimulate innovation.
Break down anti-regulatory rhetoric
American digital platform companies like Facebook and Google have long argued that regulation would not only put the US at a competitive disadvantage vis-à-vis China, but also put it at a disadvantage for national security. Sheryl Sandberg, Facebook’s chief operating officer, was playing the “competition with China” card when she told CNBC: “[w]While people in the United States worry about the size and power of tech companies, there are also concerns in the United States about the size and power of Chinese companies and the realization that those companies will not be broken up. “
Given this supposed “detection”, it is telling that the Chinese government itself has broken this myth by keeping digital platform giants in check. “There have been over 50 regulatory actions against dozen of [Chinese] Companies for a dizzying array of suspected crimes, from antitrust abuse to data breach, ”reported The Economist.
Google boss Sundar Pichai has propagated the supposed argument of national security against regulation. He told CNN, “I worry that if you regulate for the sake of regulation, there are many unintended consequences …[including] Impact on our national security. ”Of course, nobody who advocates the supervision of digital platform companies has proposed regulation only“ for the sake of regulation ”, but to protect consumers and market competition. The fact is that a competitive market is better at driving innovation (and national security) than a monopoly.
The “Big Tech” moniker is misleading
The nickname “Big Tech,” often used for digital platform companies, has helped perpetuate an American political misconception that the dominance of digital platform companies in the consumer market for innovation is vital to national security.
China’s action appears to be based on the opposite finding: there is a difference between “consumer tech” innovation that creates new consumer-centric services and “deep tech” innovation that is needed for national security. These “big tech” companies are primarily consumer-centric companies whose primary activity is to combine information gathered from users with the targeting sought by advertisers.
They can be technology companies as long as they use technologies like the Internet, Internet Protocol Suite standards, microchips, and other relevant technologies – most of which were developed by others (and often at the expense of taxpayers). While these companies have undoubtedly innovated to support their activities, it does not mean that their development was either done for or is an integral part of national security. Self-driving cars and new algorithms may have tangential effects on national security, but companies are developing them for their own purposes. Indeed, their fiduciary responsibility to shareholders focuses such development on skills that serve the interests of the company, not the country. Social media, search and trading platforms are simply no substitute for targeted research and development in the field of national security.
Until the recent Chinese government action, these American companies were fond of pointing to China as a bogeyman to justify their actions. “Mark Zuckerberg says the breakup of Facebook would pave the way for China’s tech companies to dominate,” read the headline from his interview in Recode. Now China is not only “breaking up” companies, it is also “tearing up” the data hoards that made these companies dominant in the first place. Chinese companies have to pass on the collected data. The Chinese state will have access to this data, but apparently also companies who can use it for competitive purposes or for innovative developments beyond the purposes of the platforms.
China’s State Administration for Market Regulation (SAMR) has also proposed additional regulations, including banning the use of “data, algorithms, and other technical means” to influence user behavior or “hijack, disrupt traffic or create barriers to the operation of others To build Internet services ”. . It remains to be seen how such broad, ill-defined, and seemingly open language will be enforced, but it certainly seems to open the door for aggressive intervention should the government decide.
China’s actions could be described as “progressively autocratic” in that it incorporates many of the market surveillance policy proposals made by progressives in Western democracies in proposals such as the EU Digital Markets Law and Digital Services Law. Make no mistake, the actions of the Chinese government are far removed from the processes of liberal democracies. But China’s realization that the anti-competitive and anti-consumer actions of its dominant digital platform companies need not be tolerated because they drive the latest technological developments should open the eyes of Western democracies.
A western democratic alternative
Consumer-centric platform companies on both sides of the Pacific have collected massive amounts of personally identifiable information about individual citizens. “Right now we have two versions of the Internet,” explains Harvard’s Shoshana Zuboff, “a market-led, capitalist version based on surveillance that is exploitative; and an authoritarian version that is also based on surveillance. “
Since the Chinese government uses the Internet for non-democratic purposes, Zuboff asks himself: “Will Europe and North America pull together to create the legal and technological framework for a democratic alternative?”
Such a democratic alternative begins with asserting the legitimate role of government in protecting the public interest. With the U.S. government failing to establish independent oversight of the platforms, digital platform companies have been able to act like pseudo-governments to create and enforce guidelines that, of course, benefit themselves. The introduction of a countervailing power to balance control over these companies is essential – and can only be done through government supervision.
The decision-making process of liberal democracies is certainly more open, deliberative and time-consuming than in China. However, as the United States and other Western governments go through this process, China’s realization that curbing unsupervised consumer-centric monopolies will not only benefit consumer welfare but also advance technological advances in support of national security is an important data point.
Facebook and Google are general, unreserved donors to the Brookings Institution. The results, interpretations, and conclusions published in this article are those of the author only and are not influenced by donations.
- For an illustration, see page 10 of Alphabet’s most recent Q&A report.