The Crackdown in China Is a Hot Mess, and It’s Coming for Us
The stakes of the U.S.-China war over the future of the internet are escalating.,
On one topic, at least, Mark Zuckerberg was right.
Three years ago, in an interview with me — while attempting to dodge questions about the growing misinformation issues on Facebook — he shifted the conversation to the growing dangers from China across the digital landscape. He argued that tech companies like his needed to be large, if only to fend off challenges from the Asian giant and its ever-more-powerful government-controlled companies.
“If we adopt a stance which is that, ‘OK, we’re going to, as a country, decide that we want to clip the wings of these companies and make it so that it’s harder for them to operate in different places, where they have to be smaller,’ then there are plenty of other companies,” he said, “that are willing and able to take the place of the work that we’re doing.” Essentially painting a stark choice for internet leadership between him and China’s President Xi Jinping, he added, “And they do not share the values that we have.”
While I did not buy his “Xi or me” argument (perhaps there’s a third option?), he was correct.
In the past few weeks, China’s government has moved against Didi, the country’s homegrown flagship ride-sharing company. It had a spectacular Wall Street debut in late June, which caused government leaders in Beijing to take a shiv to its fast-moving tires almost immediately by halting new-user sign-ups and taking Didi off app stores. As with all things in the authoritarian country, the reason for this is shrouded in doublespeak about privacy, cybersecurity and sensitive-location information — particularly rich, coming from a place that has essentially turned itself into a surveillance economy.
You certainly can make the same accusations worldwide about the abuses of personal data by tech giants, especially in the United States. But the twin forces of taking total control and allowing innovation to roam are colliding in much more troubling and malevolent ways in China.
The moves by the Xi government against Didi represent a terrifying government action. It was followed by even more moves against several other Chinese companies, all of which recently listed their shares on U.S. exchanges.
After meetings with government officials this year, ByteDance, the Chinese company that owns TikTok, said that it was delaying its initial public offering efforts over worries stemming from data security risks. Translation: It had also been cowed by an aggressive government.
As The New York Times noted of all these actions: “They send a stark message to Chinese businesses about the government’s authority over them, even if they operate globally and their stock trades overseas. And they are a reminder to international investors in Chinese companies about the regulatory curveballs that can sometimes come hurtling their way.”
It’s clear that the Xi government is cracking down on Chinese companies that are listing their shares in U.S. venues, which removes one mechanism of control. If you were the government, were worried about the growing power of tech and had no democratic rules to adhere to, the move makes sense, in a strange way.
The United States and China are vying for dominant position in the next digital age, encompassing artificial intelligence, quantum computing, autonomous transportation, automation and more. In addition, China’s Ministry of Industry and Information Technology has released a draft of a plan to develop its cybersecurity industry, a space it hopes to dominate globally.
Now it’s bit-to-byte combat over businesses and their technologies that have no border, even if they do have a country. Pick a side is the order of the day — an imperative cast in sharp relief as Didi execs quickly moved to assure its nearly 400 million active Chinese users that it had not handed over their information to the United States.
Of course, they did not. But they still had to bow and scrape before Mr. Xi, having seen the crackdown on Jack Ma, China’s most famous and popular tech entrepreneur. The government put the kibosh on the initial public offering of Ant, his fintech phenom, and put him in the penalty box.
For years, the energetic Mr. Ma and the leaders of Didi have been celebrated for their innovative spirit and rewarded handsomely. In my many interviews with them and other Chinese tech leaders, I observed a maverick streak and a cheeky version of capitalism.
No longer, as China pulls back the power to the center. The kindest interpretation of what it is doing is that it is trying to force fair competition to prevent monopoly power that could dwarf and even threaten the government’s iron grip.
It is getting worse. The government has also gone after a video platform run by ByteDance that it said glorified underage pregnancy, and another for vulgar content. And in Hong Kong, once the bastion of internet freedom in the region, there are disturbing new rules to limit what is said online, which might lead to the departure of U.S. firms that have protested them.
It turned even more bizarre earlier this month when one of the country’s most important internet companies, Tencent, added facial recognition in an effort to limit underage players, in accord with China’s video game cybercurfew laws. The conglomerate, by the way, has big investments in U.S. firms like Fortnite’s owner, Epic Games, and others.
This ongoing blending of tech companies globally will only get stickier amid escalating tensions between the United States and China and make it increasingly difficult to cooperate when necessary. That is especially true when each country has such different values around privacy.
What does this sort of aggression mean for the United States?
First of all, it means a continued forking of the internet. This is not good for the forward march of innovation anywhere as countries create the version of digital that best suits them — a blow to the idea of a free and open global internet. As those diverge, it will lead to further problematic compromises by big U.S. tech players there like Apple. It also means a race between China and the United States over whose digital infrastructure will be deployed, a contest already taking place over fast 5G mobile technology.
There are not a lot of great options for the United States, except to restrict doing business with Chinese companies, keep U.S. data off Chinese servers and other retaliatory measures. While the Trump administration’s efforts to restrict TikTok were mostly a political charade, it might be an option that the Biden team will have to consider. That could lead to escalations that would affect the very robust global supply chain in hardware, which relies on China.
It’s no surprise, perhaps, that the internal crackdown has been coupled with increased external aggression. Today the Biden administration formally organized allies to accuse China of paying criminal hackers to attack digital systems worldwide.
In other words, it’s a hot mess — not unlike the one that Mr. Zuckerberg will still be facing domestically with increasing regulatory scrutiny. He certainly still has a lot of important controversies to answer for, which President Biden underscored last week when he accused social media of “killing people” by hosting vaccine misinformation. But Mr. Zuckerberg was right back then that we might want to start spending more time thinking about China.