A number of experts on technology have expressed concern about the national security implications of allowing Chinese companies/products like Huawei, TikTok and WeChat to have access to the US market. I’ve been skeptical of their arguments, although I concede that I am not well informed on technology issues. On the other hand, I wonder if tech experts have sufficient awareness of the “public choice” aspects of giving the government the power to run an industrial policy.
Previously I noted that the US government’s original intention to protect US consumers from possible spying by Huawei has morphed into a crusade to destroy the Chinese company. Political considerations also seem to be showing up in the TikTok case. Oracle has offered to purchase a portion of TikTok and insure that user data is safe, but some Trump administration officials remain unconvinced:
Several people said such a plan could satisfy career officials at Cfius. But some cautioned that the situation was not analogous to any previous case.
“We have a president who is running a campaign against China and any indication of giving in to Beijing over TikTok will be seen as weakness,” said a person involved in the negotiations, who was concerned about the deal receiving approval from the Trump administration. . . .
A veteran Cfius lawyer said any deal with ByteDance that let the Chinese company retain a majority ownership of the app in the US would be hard for the Trump administration to swallow.
I get worried whenever I see news reports of economic policymakers wanting to avoid perceptions of “weakness”, or outcomes being “hard to swallow”. Does this address national security issues, or doesn’t it?
In the end, I expect the deal will likely go through, but I am not entirely reassured by the reasons why:
Oracle was originally brought into the negotiations to provide an alternative to Microsoft Corp., MSFT +1.69% a rival bidder with Walmart as a partner, said one person familiar with the talks. The U.S. investment firms Sequoia Capital and General Atlantic, which are existing investors in ByteDance, went in search of a tech company with close ties to the administration and settled on Oracle, the person said.
Oracle co-founder Larry Ellison hosted a fundraiser for Mr. Trump this year at his house, and Chief Executive Safra Catz also worked on the executive committee for the Trump transition team in 2016.
It seems that the Chinese believe that US economic policy decisions are made based on personal connections with the administration. I’m not sure if that’s true, but the perception is enough to distort the market. Would a takeover attempt led by a Trump critic have had an equal chance of success? I have my doubts.
However you feel about this specific issue, it’s important to recognize that we are a long way from national security decisions being made by philosopher kings. Once you grant the government the power to enact an industrial policy, don’t expect the decisions to be free of political/personal considerations. On balance, I trust the market more than I trust any government.
PS. My wife traveled to China last week and I’ve started using WeChat. I’m willing to accept the risk that the Chinese government is spying on my calls. For years I’ve assumed that the NSA knows whatever they want to know about my digital communications.
READER COMMENTS
David Henderson
Sep 15 2020 at 4:19pm
Well stated.
Henri Hein
Sep 15 2020 at 4:27pm
I am skeptical as well. Honestly I haven’t looked into what the arguments are, but conceptually, DOD should secure their endpoints and their communications. They should consider anything that leaves an endpoint as accessible by eaves droppers. That is just sound security practice. With this in mind, it doesn’t matter who the carrier is or who makes the hardware.
Alan Goldhammer
Sep 15 2020 at 4:51pm
Excellent post!
Your presence on the Internet is another way they have of tracking you along with Facebook and other social media. It’s just today’s reality.
Jairaj Devadiga
Sep 15 2020 at 6:11pm
You write:
I would go a bit further. You are safer if the Chinese government is spying on you since they won’t share the data with the US government. After all, what can the Chinese government do to you in the US? Not much. The US government, on the other hand, can make life very miserable for you if it wants to.
Indeed, the reason why the Indian and American governments are keen on banning Chinese apps are not because they are suddenly concerned for their citizens’ privacy. Their problem is that the Chinese government won’t share the data with them.
Mark Z
Sep 15 2020 at 10:57pm
I’d guess that the reason the Chinese government might want to spy on American social media accounts (I’m not sure they actually do) isn’t military or national security related at all, but so they could help Chinese firms do more effective targeted advertising and boost profits. That’s what social media data is mostly useful for. I don’t doubt some ‘defense expert’ paid by the Chinese government has speculated about strategic military or political uses for social media info, because there is no aspect of human life – including bad breath – that militaries have not considered deploying as weapons, but realistically, if they want it, then they probably want it for the same reason Facebook wants it. Military applications seem only slightly less far-fetched than the USAF’s aborted halitosis bomb idea (though if China decides to eliminate its mouthwash-dependence on American firms we may know why).
Phil H
Sep 16 2020 at 2:02am
“I’m willing to accept the risk that the Chinese government is spying on my calls. For years I’ve assumed that the NSA knows…”
This has always been my reading of the claims made about Huawei. There has never been even a single concrete accusation made, much less any evidence, that Huawei has facilitated spying against the USA (or anyone?). So I always read the worry from the US intelligence services as meaning: we know that we’re doing it, so we know that they must be as well. Whatever claim they make about what Huawei does/might do, is a mirror to what the NSA is doing.
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