Policy discussions are dominated by tech. From protecting children online, market concentration, and now national security, Big Tech is becoming a ubiquitous player regardless of topic. While these issue areas create a unique overlap of varying goals and perspectives, leaders across sectors should be careful to ensure that good policy wins the day. Thankfully, in the most recent tech policy discussions, good policy for national security, antitrust, and industry go hand-in-hand.
Economic tensions with foreign countries are nothing new. The Cold War saw the Soviet Union and the United States competing across ideologies, weaponry, and technology. Today’s relations between the United States and China have been categorized by some as a second Cold War.
That is where national security concerns emerge. National security experts have sounded the alarm on the potential impacts of overreliance on foreign goods, especially technologically. For semiconductors, which are a foundational element to more complex technologies such as chips, the United States remains dominant in design and innovation while relying heavily on offshore sites for production.
As the focus increasingly shifts to artificial intelligence (AI), this manufacturing weakness is even more pronounced. Advanced AI systems rely on specific types of semiconductor chips that the United States relies heavily on Taiwan for their production. This weakness in the supply chain, through a lack of domestic manufacturing and lack of diversification, could prove problematic if foreign conflicts or natural disasters limit the United States’ ability to access these foundational technologies.
The National Security Commission on Artificial Intelligence (NSCAI) summarized this risk in the following way:
“We do not want to overstate the precariousness of our position, but given that the vast majority of cutting-edge chips are produced at a single plant separated by just 110 miles of water from our principal strategic competitor, we must reevaluate the meaning of supply chain resilience and security.”
This reality contributed to the passing of the Chips and Science Act in 2022. The Act provided funding to incentivize the domestic production of semiconductors. However, a more pressing concern is the counteracting policies that undermine the domestic tech industry.
In fall 2023, the Office of the U.S. Trade Representative (USTR) reversed its previous support for digital trade rules that included protections for tech companies. The specific rules in question where protections against data localization requirements, prohibition against forced access to source code, and restrictions against discriminations for U.S. products. These protections help facilitate free trade and information flows while protecting the U.S.’s intellectual property. Without them, U.S. companies would be at a distinct disadvantage.
Undermining tech companies is also occurring through antitrust actions. Current Chair of the Federal Trade Commission (FTC) Lina Kahn, published a widely cited critique of Amazon and antitrust enforcement in her Yale Law Journal article Amazon’s Antitrust Paradox in 2017. Years later, she assisted with a majority staff report that looked at digital market competition, and by 2021 Kahn was sworn in as Chair of the FTC.
While Kahn rose to prominence by highlighting what she saw as an Amazon paradox, the true paradox is the incoherent policy landscape currently surrounding tech that simultaneously undermines international competitiveness, punishes success through increased antitrust scrutiny, and then funnels taxpayer dollars to spur additional domestic industry.
There is a huge gap between propping up a domestic industry through federal funding and intentionally taking positions that put domestic companies on a disadvantaged playing field. Unfortunately, different lawmakers and agencies are simultaneously pursuing both paths. A better approach would be to focus efforts on recreating the policy landscape that allowed the tech sector to grow and flourish in the first place.
Economic freedom and the ability to monetize innovation served as an undeniable propellent of the tech sector. However, pushes against intellectual property as seen by the USTR’s capitulation on source code protection, and increased scrutiny on size as seen by the FTC, undermine many of the byproducts of such freedoms.
To address national security concerns, the U.S. needs a strong tech sector. This could manifest through increased domestic manufacturing, and diversified trading partners, which is a foundational principle of secure free trade. However, these manifestations are unlikely to appear if policymakers forget what led to a strong tech sector in the first place.
Protecting the United States’ national security is essential, but before rolling out programs aimed the stimulating domestic production at the taxpayers’ expense, lawmakers should first address domestic policies that undermine the tech sector. Building up tech with the right hand will do little if the government is tearing it down with the left hand.
Tirzah Duren is the Vice President of Policy for the American Consumer Institute, a nonprofit educational organization. For more information about the Institute, visitwww.TheAmericanConsumer.org or follow us on Twitter (X) @ConsumerPal.