How Big Tech Plays Right Into China's Hands
In May of 1999, as the dot com bubble stood on the cusp of bursting, the financial publication Barron's ran a cover story with the pugnacious headline: "Amazon.Bomb." "The idea that Jeff Bezos has pioneered a new business paradigm is silly," read the Barron's cover, the words placed adjacent to a picture of a cartoon Bezos tucked within a lit bomb, "He’s just another middleman, and the stock market is beginning to catch on to the fact."
That cover would become, for Bezos, the stuff of inspiring commencement speech stories and "criticism comes with success!"-style anecdotes. Of course, everyone knows what happened in the two decades that followed the Barron's dig: Amazon exploded in growth, and through a deliberate strategy of low-margin purchases, it continued to grow—until it could swallow whole industries with its low-price, high-volume playbook.
Amazon's model is, ironically, a useful way to think about the threat posed by China. And it's also a useful framework for how the US government ought to think about American technology companies that continue to do business in and with China. Because just Amazon's game wasn't growth, but control, so the Chinese Communist Party plan needs to be understood in a similar spirit. China isn't trying to beat America's Microsofts and Apples—it's just trying to steal enough from them to gain economic control.
This is a crucial moment for the country to reflect on the Chinese strategy—because overall growth in China has slowed some. In 2022, China's GDP grew at roughly 3 percent; most forecasts for the near future have growth at somewhere between 2 and 5. For some in the West, this has been cause for celebration, as it's a departure from the years in which China had a double-digit growth rate.
But that kind of celebratory talk is dangerously misguided. Think of the matter differently: In the same way that Amazon didn't much care about profits, so long as it could continue to expand its reach, China doesn't much care about absolute GDP growth, so long as the Chinese Communist Party continues to expand its economic control and global dominion.
How does that translate into brass tacks geopolitics? Even as Chinese growth has slowed over the past decade, China has become more restrictive economically. It has cracked down harder on private enterprise and reined in the biggest private firms. Top Chinese businesspeople are subject to random imprisonment; even its richest titans aren't safe from the government's long arm.
Now ask yourself: If economic growth was the sole priority, would China inhibit that growth? Absolutely not. But growth isn't the goal: Reach and dominion are.
And how does China achieve those ends? By carefully calibrating its private enterprises, and by inviting American firms into China—in order to steal their intellectual property and trade secrets. To make sure the American firms don't thrive, China puts up all kinds of artificial regulatory barriers, and it gives its homegrown companies big advantages. Then once the American IP is stolen and handed to China's own firms, the CCP's mission is complete: It can expand the volume of low-margin products and services around the world, Amazon-ifying the planet and securing the CCP's control in the bargain.
How should this Chinese strategy change US policy? Simply put: American companies in our top-flight, innovative industries must be prohibited from doing business in China. And moreover, those companies who have a long track record of playing footsie with China and handing them key technologies—like Microsoft, for instance, in the field of artificial intelligence—need to be put on notice. No longer can the US abide the willing theft of American ingenuity by Chinese autocrats, especially when that thievery is aided and abetted by the executives of big tech companies.
Consider the case of Microsoft. Their years of investments and relationships in China have allowed the Chinese Communist Party and its various organs to steal artificial intelligence, surveillance, machine learning, big data, and quantum computing technology. The Chinese government then turned around and used those tools to perfect its surveillance state—up to and including the technologically-sophisticated imprisonment of China's minority Uighur population.
Given what we know of China's plans, companies like Microsoft have to be held accountable in America. In this day and age, there is simply no innocent "joint venture" with a Chinese company. And just as there would be strict scrutiny on a Chinese firm buying an American company outright, so we must apply similar restrictions to companies like Microsoft that seek to do business in China. The companies may believe they are gaining access to a rich and growing market; but in fact, they are handing China the keys to the economic kingdom and hollowing out both their and America's economic future in the process.
Talk to small businesses about getting "Amazon-ed," and you'll get a flavor of what could happen to America as we get "CCP-ed." These mom-and-pops ignored the Seattle behemoth at first; but Amazon just picked away at small percentage points and ideas from various industries. Over time, they grew, compounded, and hoovered up more industries. Soon, they became too big to fight—and "Amazon.Bomb" became the butt of a joke that could be delivered by a former CEO with a twelve-figure net worth.
We cannot let the same happen to American companies, and in order to prevent that outcome, we must appreciate the broader game that China is playing. Once we understand that control, not growth, is their aim, we can crack down on American companies who play into their hands—including and especially the tech giants who dominate some of our most innovative industries.
Ned Ryun is the Founder and CEO of American Majority.
