American technological innovation has led the world for decades, but excessive government regulation risks undermining this national asset. American companies, especially in tech development, are feeling the pinch from protectionist policies and unfair trade practices abroad, from both allies and adversaries.
In recent years, America’s greatest tech innovators have navigated this hostile economic environment on their own. But this hands-off model is no longer tenable.
Tech leadership is indispensable to America’s national security and geopolitical power. To ensure that the U.S. continues to lead the world in tech and digital innovation, Washington must take a more direct approach to guarantee that American tech companies do not face unreasonable obstacles to success. Failure to do so risks ceding the field to our adversaries, as we have done before in other industries.
The headwinds American technology companies face abroad include protectionism, state-funded competition, significant regulation and intellectual property theft across a variety of established and emerging technologies. These challenges are not limited to a handful of countries or just a specific region. Rather, they are part of a global trend toward undermining American tech leadership, precisely because our tech companies have led the international markets for so long. Our lead has been bolstered by breakthrough innovations, including semiconductors, personal computers, wireless communications, cloud computing and now AI.
The goal of interventionist regulatory efforts is clear: Foreign governments are using regulations and non-market actions to impose a higher cost of doing business on American tech companies, inhibiting their ability to innovate and compete — or forcing them out of markets entirely.
The most prominent example of unfair competition comes, of course, from China. The ruling Chinese Communist Party’s massive state subsidies to industries and companies, such as electric vehicle giant BYD and telecom manufacturer Huawei, are part of Beijing’s “Made in China 2025” plan, designed to supplant American leadership in high-tech sectors.
American social media companies are banned in China, whereas Chinese apps such as TikTok and WeChat are allowed to thrive here. Chinese companies also benefit from organized intellectual property theft from the U.S. and its partners, which FBI Director Chris Wray called one of the biggest transfers of wealth in human history.
Also concerning are the European Union’s increasingly protectionist regulations. These disproportionately affect American companies while giving free rein to other tech giants from around the world. The EU apparently feels it can take on America’s leading companies with impunity, but it fears Communist Party retribution if it treats Chinese companies with a heavy hand.
Countries that are important digital trade partners with the U.S. — and, crucially, American allies such as Japan, South Korea, Brazil and Turkey — are considering similar efforts to hamstring American tech competition in support of their domestic enterprises. The enactment of laws and regulations that give an edge to these countries’ own firms is short-sighted, hurting both the global economy and global security. European-style regulation aimed at the most innovative firms in the world stifles innovation and leaves the door wide open for America’s adversaries to leap ahead of the free world in the tech race.
Our government needs to go on offense to push back against these non-market restrictions and ensure that American innovation is harnessed in Latin America, the Global South and elsewhere. Failing to do so, particularly in digital infrastructure, will have long-term national security and economic costs.
Consumers around the world want the best products. American companies are well-positioned to provide those, as they have for decades. But the failure to promote American industry affects long-term national security interests. Chinese companies, often propelled by massive state subsidies, are working hard to fill the gap.
If they succeed, then it is not far-fetched to imagine your personal financial and healthcare information sitting in a data center owned and operated by China, transmitted to China by Huawei telecom infrastructure and leaked for the world to see on TikTok. This is a risk for millions of people around the world already. We must counter it by presenting better solutions.
America is still the best business partner in the world and the safest bet for long term success, which is our other advantage. Unfortunately, this core tenet of U.S. diplomatic and economic efforts is not being communicated effectively. Washington should remind the world that our adherence to the rule of law and transparency provides the opportunity for anyone to succeed.
Leaders in Washington must ensure that American tech companies are not being unfairly targeted by foreign regulators, including onerous rules or unduly burdensome fines. And the U.S. should ensure that markets are not closed to American companies because of the unfair dumping of products by China.
Meanwhile, state-sponsored intellectual property theft must become an uncrossable red line. Our leaders must clearly articulate that if unreasonable policies or actions are inflicted on American tech companies, the U.S. will respond. And Washington must back up its words with actions by empowering negotiators and regulators to actually follow through on such warnings when foreign governments ignore them, protecting our technological primacy, economic prosperity and national security.
Similarly, the federal government should ensure that regulations here at home are calibrated to achieve an articulable national interest, with sufficient industry stakeholder input, and be aligned with our allies and partners. Washington’s message abroad won’t be taken seriously if other countries see that American regulators are imposing broad and onerous rules on our own companies.
America’s tech leaders can innovate and compete on their own, as they have done exceptionally for decades. What our tech companies require is a level playing field in America and trade relationships abroad that are fair. Unfortunately, that level playing field is in danger of disappearing and taking our strategic edge with it.
With a renewed focus on preserving America’s tech competitiveness at home and around the globe, Washington can ensure that our great innovators power the free world to victory in the tech race that will determine whether our way of life is passed down to future generations.
Amb. Robert C. O’Brien (ret.) was U.S. National Security Advisor from 2019 to 2021.
