What Does It Really Mean to Talk about Tech Competition?

Advances in technological innovations have become central to the ability of companies and countries to compete. The importance of such technologies has placed the concept of “tech competition” at the fore of a significant swath of policy debates. But what does it really mean to talk about tech competition? That depends on who you’re asking and what you’re targeting.

Tech competition in the context of encouraging private sector innovation and managing potentially monopolistic practices of large dominant companies in the technology industry is one perspective. The Federal Trade Commission and the Department of Justice have now brought antitrust actions and suits, under the leadership of Lina Khan and Jonathan Kanter, respectively, against essentially every single major technology platform company. From looking at Meta’s acquisitions of Within, Instagram, and WhatsApp, to Google’s search engine and adtech market dominance, Microsoft’s purchase of Activision Blizzard, and, most recently, Apple’s control of its iPhone ecosystem, there is a clear focus on probing the powers held by the largest tech firms.

While some critics have highlighted the so far mixed (at best) results of the novel antitrust theories being used in many of these lawsuits, that is missing the point. The endeavor is to create innovative arguments (particularly theories around the downstream implications of vertical and nontraditional mergers) that can then be tested to see which ones stick. In a field that is heavily based on legal precedents given the relatively short texts of the Sherman Act, the two antitrust agencies do not need a preponderance of victories to shift antitrust norms—just a few judicially accepted arguments can create precedence on which to base future actions.

The sentiment that large tech companies hold too much power and can impact lives too readily resonates outside of the United States, too. Even before the turn toward scrutinizing Big Tech in the United States picked up speed, Chinese and European regulators (among others) had intervened in markets to limit perceived harms to innovation, data protection, and smaller firms’ ability to compete. From fines and divestitures to delayed initial public offerings, the environment for Chinese tech companies has been challenging for several years now. Meanwhile, the European Union’s much-touted Digital Markets Act and Digital Services Act are also clear indications of significant adjustments of the tech markets to change the calculus of private sector competition among tech companies.

But if this antitrust focus is one understanding of tech competition, it has the problem of being potentially in tension with a second understanding of the concept: that of the use of technology as a tool for competition between nation-states. This is especially central to the dynamics of the relationship between the United States and China, where technology is increasingly described as the main area of competition. In this context, the target is not firms but rather nation-states, and interventions by the government often veer toward decisions that promote homegrown firms and protect against foreign ones.

Much digital ink has been spilled describing the myriad potential and actual ways in which foreign adversaries can use technologies to weaken the national security of the United States, from the spread of misinformation to the collection of vast amounts of data to the ability to hack critical infrastructure. In response, slowing down technological advances of adversaries (for example, through some combination of export controls, technology transfer restrictions, technology supply chain friendshoring or nearshoring, and restriction of the use of foreign-originated software and hardware) while promoting the expansion of domestic technology companies has become somewhat of a national security prerogative. As U.S. commerce secretary Gina Raimondo noted at a recent Semafor event, in many ways, technology security is national security.

The resulting interplay between antitrust priorities and national security priorities has been perhaps best highlighted by the number of intelligence officials who spoke out against antitrust bills for fear that the bills could undermine U.S. tech firms. The rationale is that any limiting of the dominance of U.S.-originated firms through antitrust policy opens up space for non-U.S. companies and hurts U.S. competitiveness. It emphasizes the concern that, in the race for greater control of technology use and cyberspace norms, U.S. Big Tech would start to fall behind large Chinese tech companies in having the scale to develop and implement new technologies, whether in the United States or around the world. On the other hand, there are just as many arguments pointedly contending the opposite, that a dynamic and crowded tech market with many firms as opposed to a few big monopolies can drive U.S. innovation and prevent single sources of failure. Those resisting calls to soften antitrust ambitions accuse tech companies of opportunistically leveraging the national security argument while also claiming that it is in fact the interplay of many actors in vibrant markets that has historically enabled the United States and the U.S. technology industry to remain at the global forefront.

This apparent tension between antitrust and national security, however, conceals a third and more critical frame of reference within the tech competition discourse. This third aspect bridges the focus on company-to-company competition and the focus on government-to-government competition by being principally a question of whether the private sector or the public sector should take the lead to define the best ways to use and enable technology.

In this sense, rather than being at odds, both antitrust actions and national security impulses are in fact fundamentally emphasizing the same thing: that the government rather than the market is increasingly taking control of how and where technologies evolve, and that there has been a shift in the primacy of government actors over commercial actors, of the interests of politics and security over the rules of economics and markets, and of bureaucrats over investors when it comes to technology growth. This is a paradigmatic rebalancing of power between markets and governments within the narrative (previously driven by Silicon Valley) of technological innovation in the United States.

Nowhere is this particular framing of the tech competition story—as one of growing government influence competing and winning against private sector dominance—clearer than in the surprising restoration of terms like “industrial policy” and “data sovereignty” in the United States. The starring role of the CHIPS Act as industrial policy for semiconductor chips and the recent pullout by the Office of the U.S. Trade Representative from supporting free and open data flows in World Trade Organization negotiations can also be viewed from this lens. Such actions have surprised the United States’ adversaries and allies alike since they are discordant with traditional U.S. support for laissez-faire free market liberalism. They are, however, indicative of the growing trend on both the left and the right for greater regulatory oversight of Big Tech. Antitrust and national security are merely two of the main instruments used for this oversight.

The instrument of antitrust ensures that the government has more control over the scope of commercial activities available to tech companies. The result is that previously common activities, such as startups exiting through acquisitions by larger tech companies, are no longer viewed as simple business decisions and instead frequently trigger public reviews and require implicit approval by government agencies. The instrument of national security aims more at encouraging deeper collaborations with, and even a degree of co-optation of, private tech companies toward public priorities, in effect creating larger opportunities for certain tech companies over others for reasons that are not commercial. This has, for instance, motivated the return of manufacturing (particularly of chips) to U.S. soil and the intensification of cyber information-sharing engagements between government agencies and Big Tech. Working in distinct ways and with divergent implications for tech companies, antitrust and national security maintain their ongoing tension. Yet, precisely because both have value in shifting the balance of power between public and private influence, they are also interestingly both areas of clear and sometimes unusual partnerships across the political spectrum in a climate of otherwise stagnant bipartisanship.

While the trend is toward Washington exhibiting increased oversight and direction over Silicon Valley—a trend shared to some extent with national capitals around the world—there is ambiguity and more than a little diversity in thought about how that should ultimately look. How far should this government-driven approach go? Should it aim to be targeted, with industrial policies focused on narrow objectives? Or should there be a more systematic approach, one that reshapes not just the winners and losers of small parts of the technology market but rather reorients everything from trade policy to labor rights, given how much technology (and AI in particular) is changing societies? While governments have always intervened in markets, those interventions in the United States were inclined to be limited and restrained. As such, advancing an economic sector through broader government intervention and industrial policy is a little-used muscle in the United States (though some recent research has sought to argue that this may not have always been as unfamiliar). So far the various attempts have been inchoate and chaotic in messaging.

There is also a degree of irony here in the appearance of convergence with China, as the expectation of deference by the tech sector to government priorities is one that is familiar in Beijing. Beijing’s control over its tech companies has seen both radical limitations as well as supportive policies, leading to heightened sensitivity by markets in response to any and all government actions, including drops in stock market valuation and reputational damage. Erring on the side of aggressive enforcement, Federal Trade Commission actions have also caused stock market churn for U.S. tech companies, and congressional hearings have not been shy about dramatic public thrashings of tech CEOs. More troubling is the emphasis on tech companies having national identities and not just national origins. Whether it is TikTok or Microsoft, Huawei or Intel, tech companies are finding their multinational statuses becoming superseded by the two governments’ requests for and accusations of support of national goals. Previously a common accusation against China by the West, the sentiment that tech companies should help their own country has been expressed even in the United States.

Certainly, there remain sharp differences between the United States and China, but this seeming convergence of rebalancing public over private priorities for the technology industry has created disquiet and uncertainty for tech companies and for the rest of the world. It has also brought about a sense of fragility to the role of multilateral organizations like the World Trade Organization, whose work is made more challenging in the face of shifting national politics. Classical liberal economics favors minimal government interventions not because the market is always right, but because the market tends to be right more often than politicians and because there are unexpected (particularly global) side effects of government interventions. The sheer impact on daily life and the dual-use nature of emerging technologies also make it fundamentally challenging to know where to draw the regulatory line. As a result, the rebalancing has triggered much hand-wringing from thoughtful commenters. Regardless of the results of the upcoming U.S. presidential election, however, it is most likely that this shift will continue in the United States. The tech companies themselves recognize this and are attempting to influence it; they significantly strengthened their lobbying spending in Washington in 2022, only to intensify it further in 2023.

It becomes critical, then, to more clearly map out exactly what the new rules of tech competition between private and public interests should be. Doing so is necessary for two reasons. The first is to enable better cooperation with U.S. allies who need to be assured that their interests are not being ignored. This, in turn, would create more opportunities for the United States to shape better relationships with much of the developing world, especially countries in Africa, Asia, and South America who often have strong technology partnerships with China, though they remain both skeptical about Chinese influence and unimpressed with the United States’ inward turn. The second is to limit the possibility of competition with China from veering into conflict. Precisely because China sees the United States as converging with its views on supporting and controlling internal firms and prioritizing a broader definition of security, there are doubts about any real distinction in the United States’ talk of de-risking versus decoupling. If China believes the distinction is only rhetorical and mistrusts the scope of de-risking—and there are valid reasons to doubt the practicality of the distinction—then there is more incentive to attempt to aggressively seek advantage now.

The days of technology firms moving fast and facing little regulation is past. Governments now want to have a much stronger say in how, when, and where new technologies deploy. Rather than talking about tech competition as being between companies or between nation-states, the real crux of the debate is regarding the extent to which public or private sectors should dictate the direction of technological innovations. Fully addressing tech competition requires redefining and rewriting the overarching rules of the game for the technology sector, and this should be done in ways that do not cause surprise and alarm but are rather clearly understood and accepted by tech companies and U.S. allies and adversaries.

Yinuo Geng is an adjunct fellow (non-resident) with the Strategic Technologies Program at the Center for Strategic and International Studies in Washington, D.C.