Techno-Authoritarian China Shouldn’t Be an Inspiration for U.S. Antitrust Techlash

Aurelien Portuese August 30, 2021
August 30, 2021

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As Congress considers enacting anti-big-business antitrust reforms as part of the so-called “techlash,” many see China’s techlash as an additional justification for U.S. action. Yet, lawmakers should be careful what they wish for.

David Cicilline (D-RI), chairman of the House antitrust subcommittee and main proponent of the antitrust legislative package, said techlash “is a monopoly moment. Not just for the United States but for the entire world.” The “entire world” here not only refers to Europe’s proposed discriminatory regulations against U.S. tech companies but also to China’s recent antitrust crackdown against its own companies. Given that the Chinese Communist Party (CCP) runs China with no constraints, The Economist noted that the speed and ease at which China’s crackdown concretizes might generate “envy among Washington DC’s trustbusters.” 

However, notwithstanding the narrative from “anti-monopoly” advocates, China’s moves are not about “efficiency,” “consumer welfare,” or “innovation”—the concerns U.S. antitrust agencies focus on. In China, this is all about an authoritarian crackdown against tech leaders to show them that the CCP is the boss. 

After a crackdown on puns, China’s antitrust crackdown started when Jack Ma, the founder of the e-commerce platform Alibaba, publicly criticized Chinese regulators for having a “pawnshop” mentality. He told Chinese officials that “to innovate without risks is to kill innovation.” In line with its tradition of silencing its billionaires, Jack Ma suddenly disappeared from months, the Chinese competition watchdog slammed Alibaba’s public offering and fined Alibaba last April $2.8 billion.

On July 7, China’s competition watchdog announced another swath of antitrust punishments: Alibaba, Tencent, Didi, Baidu, and Suning were sanctioned for illegal deals. Didi, the Chinese Uber, was later punished for going public against the will of the CCP. Additionally, China’s competition watchdog issued guidelines and draft competition rules to tackle “unfair competition.” Under the guise of “preventing disordered capital expansion,” Chinese regulators can pick up winners and losers in the tech industry at their discretion. 

These initiatives are not about improving the competition and innovation but making it clear to Chinese tech platforms, with hundreds of millions of Chinese customers, that the CCP is still the boss. All of these companies now have party officials on their boards just reinforces who the boss is. The leaders of these companies are anything but politically tone-deaf. They can read the tea leaves. They already have become more philanthropic and now praise how the government regulates them. These developments may very well align with President Xi Jinping’s vision of a “great modern sociality country” by 2049, but they utterly clash with American ideals. 

When U.S. lawmakers complain about tech leaders presumably behaving like “kings” who have amassed too much political power, do they envy the clampdown by Chinese politicians on successful entrepreneurs? The inflamed rhetoric during congressional hearings and the numerous calls to break up tech companies suggest that the Chinese government’s stranglehold on its companies may indeed appear attractive to some U.S. lawmakers.

Hopefully, the rule of law principles and constitutional guardrails will preclude the worst weaponization of antitrust for political purposes. U.S lawmakers may lament about the constitutional hurdles related to passing federal antitrust legislation, or with the lengthy and unpredictability of judicial proceedings, or even with the evidentiary requirements that each antitrust case needs to convince a judge. But these obstacles are the very foundations for the respect for the rule of law without which no democracy can properly function. Should antitrust be exempt from the reach of the rule of law principles, discretionary power fueled by populism looms? 

As Dwight D. Eisenhower once declared, “the clearest way to show what the rule of law means to us in everyday life is to recall what has happened when there is no rule of law.” Congress not only has to recall what’s happening with China’s antitrust techlash and must draw no inspiration from it. Lawmakers should ensure that antitrust reforms reinforce (rather than undermine) the rule of law in America. 

The kind of anti-big-business-inspired antitrust reform many in Congress want will only hurt U.S. competitiveness and U.S. workers. Amid a “technology cold war,” lawmakers should not be focused on weakening large U.S. companies competing internationally against Chinese companies; they need to support these companies. It can do this by focusing on bills such as the U.S. Innovation and Competition Act (USICA) and abandoning its tech-lash-inspired antitrust attack on U.S. companies.