The EU and the US are not the only global powers seeking to curb major technology giants through competition rules and national security appeals. While tech companies from China are still often treated internationally as extensions of the ruling Communist Party, visible cracks are now appearing in the picture of symbiosis.
In the US, network technology company Huawei was banned over concerns about secret backdoors that could be used by intelligence agencies or for subversive purposes. The Trump administration launched the ‘Clean Network Initiative’ as part of decoupling digital infrastructure from its communist-led polar opposite. EU member states (minus Hungary) and other democratic allies rallied to prevent tech companies from becoming an outcast dragging data for state purposes. TikTok, with which a lot of data is shared in addition to videos, was also considered a threat to American national security.
New interventions by Beijing question the impression of a shared agenda between the technology sector and the state. Restrictions under the guise of competition rules or guarding cyber or national security suggest that the private power of companies and their top executives is now seen as competitive or undermining the communist party itself. Chinese authorities use the same arguments as Washington and Brussels: sharing data with third countries is undesirable, certainly from a security point of view, and competition must be fairer.
The tighter ties started last year with the dramatic approach of Ant Group, which hangs under Alibaba, run by the successful Jack Ma. Just before the planned, historically valued IPO, the regulator imposed restrictions. And last month, China’s Uber company, Didi, was attacked under the guise of national security arguments and concerns about the lack of driver licenses. This time, the intervention came just after the company went public. While foreign data access was cited as the reason, there is no definition of data in the national security interest. This gives the authorities plenty of room to intervene arbitrarily.
The question is whether the damaging economic impact of these decisions, which is also being felt in China, will undo the policy. The cybersecurity decree from Beijing is also causing a ripple effect around the world, as a trillion dollars in market value has already evaporated as new requirements are also imposed on listed companies outside of China. This year alone, they raised about 16 billion dollars (14 billion euros) from American investors. The US Securities and Exchange Commission froze all IPOs of Chinese companies in response.
Although motives and methods for intervention in China are completely different than in the EU or US, it appears that states worldwide are concerned about their own power in relation to that of tech giants. In any case, the Communist Party is showing that its own destiny does not automatically match that of national tech giants. For the time being, the confrontation for Brussels and Washington mainly confirms the iron grip of the Chinese government.
Marietje Schaake writes a column on technology, policy and economics here every other week.
A version of this article also appeared in NRC on the morning of August 6, 2021