While National Security Adviser Jake Sullivan has been understandably preoccupied with the Middle East and Ukraine, people on the National Security Council who nominally work for Sullivan have outsourced a critical aspect of China policy to Google and other Big Tech players. If they succeed, Big Tech will effectively write the rules governing flows of sensitive data to China.
It’s weird that the NSC, of all places, would want to help China capture sensitive data. But this saga is one part bureaucratic rivalry, one part settling of personal scores, and one part the immense influence of Google. It’s an appalling window on the way Washington often works.
Under both Obama and Trump, the domestic rules on data pretty much allowed Big Tech to send information wherever a company chose to store it. By virtually inventing a concept of “digital trade,” and selling it to the Obama and Trump administrations, the tech industry argued that their business model required the freest possible flows of data. Big Tech sought to insert these concepts of free data flows into the trade deals of that era.
With the election of Joe Biden and the appointment of Katherine Tai to head the Office of the U.S. Trade Representative, as well as Lina Khan to chair the Federal Trade Commission and Jonathan Kanter to lead the Antitrust Division of the Justice Department, this prevailing policy was changed in key respects.
With promoting competition as a whole-of-government White House priority, Khan, Kanter, and Tai worked to block efforts to use trade agreements to prevent regulation of privacy and abusive concentration. Tai has also worked to make sure that trade deals do not prevent Congress from prohibiting sensitive data from being located in China, where it could be used to spy on Americans.
As Sen. Elizabeth Warren (D-MA) and several other Senate and House progressives summed up in a letter last April to Tai and Commerce Secretary Gina Raimondo, “Big Tech is pushing for trade rules that would allow Americans’ sensitive personal data to be sent anywhere—with little ability for Congress to limit such transfers or require that critical data be kept in the U.S. While seemingly innocuous, this means that sensitive medical records, business secrets, or critical national security information could be sent and stored anywhere in the world.”
The original draft of the proposed Indo-Pacific Economic Framework (IPEF) agreement took Big Tech’s concepts and language to limit any regulatory restrictions on data flows. The draft language could have prohibited governments from screening algorithms for violations of labor law or competition policy; and most importantly, signatory countries could not limit data flows or storage for privacy or national-security purposes.
Tai, Khan, and Kanter managed to take the Big Tech–friendly language out of the IPEF agreement. The version of IPEF that President Biden unveiled at the November economic summit in San Francisco included other “pillars,” but not trade, including the digital trade provisions that were the concern. This reflected Tai’s success in postponing, but not definitively killing, Big Tech’s goals, allowing Google et al. to continue the trench warfare.
USTR then made the Biden administration position internally consistent by announcing on October 25 that the U.S. was also withdrawing a Trump-era proposal from World Trade Organization deliberations, limiting the regulation of data flows, source codes, and privacy.
If they succeed, Big Tech will effectively write the rules governing flows of sensitive data to China.
This incursion on the perquisites of Google and others made Tai some powerful enemies. At that point, the tech empire struck back.
The counteroffensive by Google and friends took several forms. Tai was called on the carpet by tech’s allies in Congress, notably Sen. Ron Wyden (D-OR), chair of the Senate Finance Committee. Google and company also came up with a storyline that turned the reality upside down. According to the Big Tech propaganda, Tai’s policy shift actually helps China.
How? As Wyden put it a scorching press release, “USTR’s action today is a win for the Chinese government’s efforts to have unlimited access to U.S. data, a win for Chinese tech giants who want to bully smaller countries into following the Chinese model of internet censorship, and a win for China’s Great Firewall, which locks out American companies and locks Chinese citizens into a repressive regime of government surveillance.”
This is exactly backwards. Tai’s decision to withdraw the Trump-era language on free flows of data makes clear that the U.S. can and will restrict data location in China by tech firms like Google. Nevertheless, I found at least a dozen pieces making the same topsy-turvy argument, with Tai as enabler of China. It’s as if the Google public relations machine got lazy and sent all of its allies the same talking points.
The Wall Street Journal editorial was titled “President Biden’s Trade Gift to China.” The piece in The Economist was called “Joe Biden’s Failures on Trade Benefit China.” An op-ed in The Hill warned that “Tai’s retreat on digital trade will subsidize China’s theft of America’s intellectual property.”
Then, in mid-November, Google allies on the National Security Council convened what’s known as an interagency policy committee. They picked a moment when Tai and her senior deputies were out of Washington, in San Francisco for the Asia-Pacific Economic Cooperation (APEC) conference. For more than another week, Tai and her most senior aides were at long-scheduled events in Africa, Asia, and Europe.
This move signaled that the NSC was attempting to take control of data policy on China, while elbowing Tai and USTR aside. The prime architect of the NSC coup is an NSC trade staffer named Nora Todd, who once worked as Tai’s chief of staff until she was dismissed. Todd is close to two other key players: Google’s chief trade lobbyist Nick Bramble, and the top China official on the NSC, Kurt Campbell, whom Biden recently appointed to be deputy secretary of state.
Campbell is usually described as a China hawk. But offsetting his supposed China hawkishness are his long-standing views as a “free trade” traditionalist and a revolving-door corporate lobbyist. Under Obama, he was a champion of the now-defunct Trans-Pacific Partnership (TPP), which was really an anti-regulation deal masquerading as a trade deal. Campbell saw IPEF as the corporate-friendly successor to TPP, and was furious when Tai rejected that version of it.
So there are now two key people looking to settle personal scores against Tai—Todd and Campbell—by trying to impose key policies on USTR’s domain. What is doubly weird is that Todd once worked for Sen. Sherrod Brown (D-OH), who is no friend of the corporate view of trade and is a strong ally of the labor-centered trade policy that Biden and Tai are promoting. It was Brown who effectively shut down the trade pillar of IPEF by criticizing it just before the APEC conference in San Francisco.
Also odd is that Sen. Wyden seems to be on both sides of this issue. Wyden was livid when Tai changed the official U.S. government position on data flows at the WTO. Wyden is widely considered one of Google’s best friends in the Senate. He’s a major recipient of campaign funds from Big Tech PACs. But Wyden is also a lead sponsor of legislation that would authorize the (tech-friendly) Commerce Department to restrict the sale of data on Americans to foreign governments and companies when deemed a security threat. It may be that Wyden has worked with Google to try to find a way to restrict data flows on national-security grounds in a fashion that doesn’t interfere with Google’s business model.
All of this becomes far more consequential in light of recent revelations about real-time bidding. RTB is a widespread practice used by Google and other large platforms. According to a new, deeply researched investigative report, “America’s Hidden Security Crisis,” “Almost every time a person loads new content on a website or app, instantaneous ‘Real-Time Bidding’ (RTB) auctions determine what ads appear in front of them.” According to the report, the data in these auctions “are broadcast without any security measures.” The report’s lead author is Johnny Ryan, a veteran of the tech industry and a senior fellow at the Open Markets Institute in Washington and the Irish Council for Civil Liberties.
The report documents that both China and Russia are large consumers of RTB data. RTB can allow the user to connect data on word searches, cellphone locations, bank accounts, credit card purchases, and medical records, and give foreign spy agencies access to the most sensitive personal information on top government and military officials, as well as corporate trade secrets. These revelations provide a definitive reason for government to challenge the Google view of free data flows.
NSC chief Jake Sullivan needs to take some time out from his vital work on Israel-Palestine to find out what the agency he leads is doing on the equally crucial issue of China’s free access to data via Google and other platforms. The question of the right U.S. policy or combination of policies is far too important to be decided based on turf rivalry or personal grudges, let alone on the basis of what works best for Google.
