In November, while Donald Trump was on his first state visit to Beijing, Republican Senator John Cornyn and Democrat Dianne Feinstein introduced a bill that would dramatically expand the government’s ability to block foreign investment in U.S. technology companies. The bill was directed at the Committee on Foreign Investment in the United States, or CFIUS, an interagency panel that scrutinizes purchases by “potential adversaries” that go against “national interests.” It was clear which adversary most concerned them: China had received more CFIUS reviews than any other country, according to the most recent data.
The bill is expected to pass, but not without the opposition of the Big Five firms—Apple, Amazon, Google, Facebook, and Microsoft. Silicon Valley stands to lose billions of investment dollars from China, and with tech companies spending roughly $49 million a year on Washington lobbyists, twice as much as Wall Street, resistance should be considerable. It will also highlight the fact that, after years of cooperation, Capitol Hill and Silicon Valley are, increasingly, at odds.
America’s technology companies and politicians have long spoken the same language, celebrating openness, deregulation, and disruption as the drivers of innovation—and, in theory, broad economic prosperity. During the Obama administration, over 250 people shuttled back and forth between jobs in the White House and at Google. Yet within the last year, the tone has shifted. Both parties have reacted against Russia’s manipulation of the social media giants to intervene in the presidential election, and the resurgence of populist nationalism, both here and abroad, has altered political dynamics. In the CFIUS bill, government fears of China as an economic and military rival confront the realities of a technology industry in which capital and data flow across national borders.
In recent years, Chinese companies have made large investments in U.S. startups working in artificial intelligence, augmented reality, and robotics—fields with national security implications. They now hold stakes in firms that make rocket engines, sensors for navy ships, and printers that make the flexible screens used in fighter planes. “Imagine the boost for China’s overall military capabilities, not just tomorrow but ten or 20 years from now, once some of those technologies are in full production and integrated into Chinese weapons systems,” said John Cornyn, during a June speech at the Council on Foreign Relations. “China and other adversaries”—China, in this case, was assumed to be an adversary—“will know the vulnerability of our supply chain.”
Cornyn was evoking the same sort of anti-China sentiment that Donald Trump so frequently uses. But the CFIUS bill raises more fundamental concerns. No one really knows what constitutes a “national interest” in technology. Cheap, digital sensors have made it easier to record information along supply chains. Seemingly anodyne applications like Google Arts & Culture can train the same kinds of vision-recognition algorithms used by military drones. Smartphones can be hacked to record speech, which can then be added to databases for voice-identification algorithms. When the potential for surveillance and violence is embedded in devices that we use every day, how can any government, let alone one as incompetent and unstable as the Trump administration, define its strategic interests? The United States might justifiably intervene in the purchase of an aeronautics factory—as it did two years ago, when CFIUS forced a German firm to sell a Boeing robot supplier that was about to come under Chinese ownership. But what should it do about social media?
Last July, the Chinese state council unveiled a plan to make the country the world leader in artificial intelligence. It has earmarked $150 billion for AI research over the next five years. (Trump’s 2018 budget cuts such funding by 10 percent, to $175 million.) The importance of massive data sets for machine learning already gives China a natural advantage. Twice as many people in China use the internet every day as there are Americans. And China has more smartphone users than any other country in the world. With few restrictions placed on the kinds of data they can collect and store, internet companies like Alibaba, Baidu, and Tencent are poised for breakthroughs; they have begun luring thousands of Chinese data scientists (haigui or “sea turtles,” as such professionals are known in China) back from the United States. “By 2025, they will be better than us,” said Eric Schmidt, the then-chairman of Google’s parent company, Alphabet, at the Artificial Intelligence and Global Security Summit in November. “By 2030, they will dominate.”
Technology companies seem to have decided their interests lie not in resisting China but in joining it. In January, Google opened a large office in Shenzhen, and it plans to open an AI lab in Beijing. More companies will likely follow its lead. While politicians thunder about “cyberwar,” Silicon Valley leaders are expressing admiration not just for China’s technical achievements but also for its work culture. “Top managers show up for work at about 8 a.m. and frequently don’t leave until 10 p.m.,” Mike Moritz of venture-capital company Sequoia Capital wrote in The Financial Times in January. “Most of them will do this six days a week—and there are plenty of examples of people who do this for seven.” This represents a stark shift from centuries of Western stereotypes that present Chinese culture as incapable of technological innovation, industrious but not creative. Today, Snapchat’s CEO, Evan Spiegel, calls Tencent his “role model,” and Facebook is incorporating key WeChat features into Facebook messenger.
While it is too soon to say what the outcome of the CFIUS bill will be, it is clear that China, not just Russia, is widening the gulf between an industry and a Washington political class that, until now, always said they wanted the same things.