Tech platforms like Facebook say we should protect, empower, and celebrate their concentrated power for the sake of America’s national security. But their history shows tech giants are structurally unable to defend American interests and should never be trusted with that task.
Last night (Thursday), President Trump signed an executive order banning the Chinese owned video-sharing app TikTok from the United States over national security concerns. This announcement came on the heels of a House Antitrust Subcommittee hearing on the power of Big Tech, where the CEOs of Facebook, Amazon, Google, and Apple faced scrutiny from policymakers and the public for being too powerful and oppressive.
At that hearing, Facebook’s Mark Zuckerberg hammered home the American-ness of his company and the threat from China to the internet, specifically mentioning TikTok as the fastest growing app in the US.
The meaning was clear, and echoed points Zuckerberg made during one of his previous appearances before Congress: Big Tech is essential to fight Chinese platforms like TikTok that can spy on Americans and whose opaque algorithms could be used to conduct malicious activities like censoring political content and potentially impacting an election.
The most common solution proposed for the situation is for one of the big US tech companies to save the popular app—and all of us— from Chinese overwatch by purchasing TikTok. Facebook, Amazon, Google, and Apple have all been suggested, although Microsoft appears to be at the top of the list.
The idea that big tech companies can defend us against China has gained momentum over the last year, as monopolists have turned to the use of national security talking points to push back against their critics. Both former Google CEO Eric Schmidt and Facebook COO Sheryl Sandberg, for example, cited competition with China as a reason to preserve US tech monopolies, rather than break them up. We need large tech companies, this line of argument goes, as “national champions” who will take on China and its national champions in the tech sphere. Far from breaking them up, these companies and their army of lobbyists say, we should protect, empower, and celebrate their concentrated power for the sake of American security.
If you’re amused by the irony of Big Tech protecting us from an app that could be used for election meddling, given Facebook’s role in the 2016 election, the irony doesn’t stop there. Because TikTok, the app getting all the attention right now, owes its existence in large part to Facebook.
Once upon a time, America had a popular video-sharing app similar to TikTok. It was called Vine and, like TikTok, all the kids used to share silly videos on it. Facebook didn’t like the competition and flexed its monopoly power to strangle it. As revealed in leaked e-mails, Mark Zuckerberg pulled the trigger himself, denying Vine access to Facebook and eliminating its ability to access users.
Curiously, Facebook didn’t do that with TikTok. In fact, it did the opposite. During the spring and summer of 2018, when Facebook was still pushing to access China and trying to open a subsidiary office in Hangzhou, Facebook allowed the Chinese app to blitzkrieg its site with advertising. The ad buys were so overwhelming—more than a billion dollars—that between 15 percent and 22 percent of all ads shown through Facebook on IOS during this time were TikTok ads.
In 2019, however, things changed, and it had nothing to do with patriotism or protecting the West from a Chinese app. Zuckerberg appeared to finally realize that he would never get into China, political scrutiny on Facebook’s outsized power intensified on both sides of the aisle, and TikTok stopped pouring $3 million a day into big ad buys on Facebook.
In short, Facebook claims its size should be preserved in order to serve as a line of defense against adversarial companies and that it needs to be big to innovate. Yet the evidence indicates that the latest adversarial app owes its existence, in part, to Facebook’s pursuit of corporate goals like expanding into China and increasing ad revenue. The Vine story clearly illustrates how the large tech platforms are structurally unable to defend American interests and should never be trusted with that task.
As for Facebook’s innovative capacity, its copycat app attempts have so far been epic failures. Despite its advertising access and a massive data set on potential users, it has been out-competed by a foreign media company in its own backyard.
The moral of this story? All calls to preserve massive corporations in the name of national security should be rejected because they rely on two problematic assumptions: first, that monopolies can be reliable partners who will look out for America’s national security; second, that monopolies are more effective than open markets. Neither is true.
Reliability cannot be based on words alone. It must be anchored in a structural foundation. Yet, with monopolistic corporations, the opposite is true.
When I raised my right hand to become an officer in the United States Marine Corps, I swore an oath to “support and defend the Constitution of the United States.” In Iraq and Afghanistan, and later in arms control negotiations with allies and Russia, my existence was shaped by my oath of allegiance to our common defense. Our elected officials, whose existence is shaped by accountability to voters, take similar oaths. This structure is designed to make decisions in the interest of the people.
Corporations, on the other hand, are anchored in a structure designed to make decisions in the interest of the shareholder. And, as the saying goes, no one can serve two masters. When corporate profit and national principle collide, corporations put their profit over principle. It is not a question of good or evil—it is a question of design. We designed them that way. Unless these Big Tech companies are suggesting that we nationalize them and bring them under the national security structure, empowering them as national champions is a structurally unsound approach.
In fact, there are bountiful examples of our biggest institutions eschewing principle to chase profit in China. Hollywood studios work with the Chinese Communist Party to modify films. Microsoft, Google, and Apple all kowtowed to the Chinese regime at one time or another. Mark Zuckerberg himself has done virtually every single thing imaginable to get Facebook into China. Other tech companies even helped China build out its oppressive surveillance regime.
Former Exxon Mobil CEO Lee Raymond succinctly captured the reality of our structural situation: “I don’t make decisions based on what’s good for the US.”
The significance of Raymond’s statement should not be overlooked. In this context, any offer from one of these companies to stay out of China or do anything else for national security, in exchange for antitrust protection, should be seen for what it is: a hollow and unenforceable promise cloaked in patriotism, but subject to change when their corporate goals no longer align with national security goals.
Google is a case in point. In 2018, amid protests by employees, Google walked away from a project with the Department of Defense, called Project Maven, involving the use of artificial intelligence to analyze drone imagery. Because Google’s accountability stream runs only to shareholders, defense policymakers were powerless to do anything about it.
This wasn’t the first time Google made profit-driven decisions that, intentionally or not, negatively impacted national security. When Google purchased long-time defense ally Boston Dynamics, it quietly pulled it out of the DoD-backed Robotics Collaborative Technology Alliance, an organization of universities, businesses, and the military working on robotic solutions to national security problems. The loss of Boston Dynamics, according to an Army Lab Researcher I spoke with, set the alliance back years. Google later sold the robotics corporation to a foreign company, SoftBank.
Google’s decisions made sense from a corporate perspective. It needs to attract foreign employees and appease shareholders, whose objectives apparently did not align with US national security aims. The US should not empower monopolists, as national champions or otherwise, to make core decisions about American power. Their decisions are made under the wrong type of incentive structure. And even if we reorient our corporate system so it is less short-term oriented and can oblige companies to work toward national security, monopolies themselves are ineffective and inefficient tools for national interests.
TikTok and the other Chinese apps are not the first tech competition we have dealt with as a nation. We faced an earlier tech competition in the 1980s with Japan. Japan protected and promoted its national champions, and we took the opposite approach, promoting competition. We broke up AT&T, and pursued antitrust against IBM, freeing the markets from the era’s monopolists. This led to the creation and expansion of important companies like Microsoft, Sun, Lotus, Apple, CompuServe, and America Online. Japan, with its national champions, fell behind.
In the 1940s, when Alcoa held a monopoly on aluminum production in America, our country was unable to produce enough aluminum to keep up with the Germans and Japanese on the war front. Recognizing that this was because Alcoa was acting in its own self-interest to extract monopoly profits from its production, the federal government broke open the monopoly by creating competition in the form of other companies, including Reynolds, which is still a household name for its post-war product, Reynolds Wrap. The aluminum boom resulting from this action was a contributing factor in arming our troops to win the war.
Our most recent fully-consolidated industries are a great example of how bad it is to rely on monopolists. Boeing, the closest thing the US has to a national champion, has airplanes falling out of the sky because it chose profit over-engineering. Yet there are no market consequences, and it would probably be bailed out if necessary because the market is entirely consolidated and the US military has nowhere else to turn for much of its aircraft. Intel, our semiconductor champion, is collapsing under dwindling innovation, outsized share buybacks, and bad decisions. Since the US has really nowhere else to turn outside of Taiwan or—gasp—China, US lawmakers are considering a semiconductor industry bailout that would undoubtedly be a windfall for Intel.
Our history shows us that our strength does not lie with monopoly champions. It lies in our ability to foster competitive markets. But we are far from that era of the arsenal of democracy that won World War II.
The top Air Force acquisition chief, William Roper, faced with a lack of companies to design new aircraft, recently told a crowd that he “would just hope that, in the future” the next time a billionaire is “thinking about the next thing they need to do to avoid being bored, that building really cool airplanes or satellites might be on the list.”
Jeff Bezos won the hearts and minds of gathered defense officials at the 2019 Reagan National Defense Forum by proclaiming that the United States would be in trouble if big tech companies “turn their backs on the Department of Defense.” Still reeling from the shock of Google’s decision to leave Project Maven, to which Bezos alluded, they applauded as he appealed to his fellow big tech billionaires to overcome the “emotional issues” around national security work, and join him in supporting US national defense.
US markets have become so consolidated that our defense apparatus relies on the exhortations of one billionaire to his fellow billionaires to achieve national security objectives.
The United States’ advantage over China will never be through size. The numbers just aren’t there. The US must instead embrace its strengths: a tradition of fair and competitive markets, equal opportunity for innovative ideas, and grit. Embracing short-termism and creating national champions out of monopolies will only make the situation worse.
It would be a bitter irony for a country whose founding was closely tied to the Boston Tea Party’s rejection of the East India Tea company’s monopoly power if it was to diminish because it turned to monopolists as national champions.