China is determined to supplant the U.S. as the global leader in technology. For years, China has made great strides, but ultimately, it has not kept up with the innovative model which is central to American tech success.
But China may have found an unlikely ally in its quest to put American tech down — the U.S.’s own Federal Trade Commission (FTC).
Under Chairwoman Lina Khan, the FTC has embarked on a multi-continent crusade against American tech giants, all in the name of antitrust policy. Most concerning, the FTC announced in March that it would send its own agency officials to aid Europe in implementing and enforcing the European Union’s Digital Markets Act (DMA). When challenged in an April congressional hearing, Kahn defended her position as simply “good government.”
This 2022 law from the EU is aimed at curbing Big Tech dominance and creating opportunities for European tech companies to compete. It designates a class of tech companies as tech “gatekeepers,” and subjects these companies to additional rules from which other tech firms are exempted. The EU’s goal is to give its own companies an advantage over their larger American counterparts, But in reality, it will only undermine innovation while increasing dependency on technology from China.
Specifically, the law requires gatekeepers to share certain data with rival tech companies and significantly limits their ability to use the data they collect for other services. Gatekeepers that fail to meet these new requirements will be slapped with massive fines by the EU.
The compliance costs imposed on these companies by the DMA are astounding. A recent study estimated the new compliance and operational costs on tech gatekeepers could be as high as $50 billion. These costs will be passed on to consumers one way or another. American tech companies designated as gatekeepers will likely either have to create new services that meet the EU’s compliance rules or pull their services out of European digital markets entirely. Neither of these scenarios will benefit America — or European — consumers, who greatly value the security and services offered by U.S. platforms.
Unsurprisingly, the overwhelming majority of so-called gatekeepers are American companies. Even Secretary of Commerce Gina Raimondo said in 2021 that there are serious concerns the DMA “will disproportionately impact U.S.-based tech firms and their ability to adequately serve EU customers and uphold security and privacy standards.”
The business environment created by the DMA will not create the level playing field for competition that it seeks. On the contrary, it will enable Chinese tech firms — directed by the Chinese Communist Party — to catch up and dominate digital markets. In fact, this is the goal of China’s trillion-dollar investments in advanced technology, to make the world increasingly dependent on its technology for political and economic leverage.
Allowing China’s tech companies to displace America’s is risky to say the least. It would likely create a whole host of new privacy and security concerns in the digital market, as consumer data is sent to Beijing, where the CCP could have access to it. Furthermore, while the EU is targeting American tech companies with the DMA, it also continues to embed state-subsidized, low-cost Chinese technology into its critical infrastructure, compounding the national security risks.
By aiding other nations in hobbling American tech leadership, Chairwoman Khan is jeopardizing America’s ability to remain competitive while handing an advantage to an authoritarian competitor that believes technology’s highest use should be for censorship and control, rather than unleashing human potential and safeguarding free expression. It matters greatly which country — and which set of values — builds the future.
Brian Cavanaugh is a senior vice president with American Global Strategies LLC. He recently served as special assistant to the president and senior director for resilience on the National Security Council at the White House.
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