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The Chinese state is continuing its crackdown on its Big Tech giants, banning the use of machine learning to set per-customer prices, control search results, or filter content. As Will Knight and Jennifer Conrad write for Wired, the regulation covers "ride-hailing, ecommerce, streaming, and social media."
https://www.wired.com/story/china-regulate-ai-world-watching/
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This is just the latest salvo in the Chinese state's war on its biggest businesses. From the start of the pandemic, Chinese regulators kept the Chinese finance sector on a tight leash, freezing debt payments and blocking penalties, foreclosures and seizures of assets used to secure commercial debt:
https://pluralistic.net/2021/09/29/jubilance/#debt
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Likewise, the Chinese state has created sweeping regulations for its runaway property development market:
https://www.china-briefing.com/news/explainer-whats-going-on-in-chinas-property-market/
And the predatory practices of the private tutoring market, which created an arms race among parents and deprived kids of their childhood:
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All of this is hard to make sense of, from a western perspective. After all, when regulators from wealthy nations train their sights on "our" giant companies, we're told that these firms are our "national champions," who will defend us from Chinese soft power projected around the world by its own Big Tech "national champions."
https://www.nytimes.com/2019/05/11/opinion/facebook-nick-clegg-chris-hughes.html
What does Xi Jin Ping know that Nick Clegg doesn't?
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Xi, unlike Clegg, remembers the lessons of recent history (Clegg would doubtless like us to forget recent history, starting with his betrayal of the Libdem voters whom he sold out when he chose to go into coalition with the Tories and then capitulated on every campaign promise he'd made).
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For example, Xi surely remembers the lesson of AT&T. AT&T was a regulated US monopoly, a company that enjoyed *69 years* of business-as-usual between the first official government attempt to tame it and its eventual breakup in 1982.
https://onezero.medium.com/jam-to-day-46b74d5b1da4
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AT&T was the original American high-tech national champion, a company whose every grotesque abuse was "punished" via measures that created powerful allies in the US military and policing apparatus, who thereafter went to bat for the company to protect it from antitrust regulators.
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These alliances were key to maintaining its privileged position: by the mid-1950s, the evidence of its abuses was so glaring that the DoJ nearly broke the company up. What saved AT&T? Intercession by the Pentagon, who insisted that the US would lose the Korean War if it didn't have AT&T as a "national champion" by its side.
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The myth of the "national champion" kept AT&T intact for decades longer, and was deployed with increasing frenzy, right up to the moment the company was finally split up in 1982. In the early 1980s, AT&T's shills in the business and national security "communities" hoped that Yellow Peril scare stories would keep the regulator at bay again.
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They warned that the entire US tech sector was imperiled by an Asian adversary, an authoritarian state whose economic aggression against the USA was a thinly disguised continuation of its military campaign. This ruthless Asian titan had a sneaky tactic: rather than creating its own tech sector, it would steal American inventions and clone them, flooding the US and the world with cheap knockoffs.
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Sound familiar? Yeah. It's amazing how easily the anti-Japan rhetoric of the 1980s can be swapped for today's anti-Chinese rhetoric.
But racist dog-whistling is the *tactic* of large, abusive firms, not the *goal*. The goal is to forestall regulation by making monopolies synonymous with the national interest ("What's good for GM is good for America"), so regulators can be smeared as traitors.
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Here, it's instructive to look back at the aftermath of the AT&T breakup and the impact that had on the US tech sector. AT&T, it turned out, wasn't the national champion, it was the national *bully*. It had been stamping on the face of US tech for decades, suppressing anything that threatened its ability to extract monopoly rents from US businesses and individuals.
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In particular, AT&T had been waging war on *modems* and the idea that we might use its phone lines to connect businesses and individuals to "interactive services" that wouldn't give a veto over new products to Ma Bell. Breaking up AT&T paved the way for the demilitarization of the internet, the creation of the web, and created the conditions that today's US tech giants depended on to create their empires.
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Today, US Big Tech crushes technological imaginations of American individuals and businesses just as surely as the Bell System crushed networked services in the 1980s. Investors call the whole set of services dominated by Big Tech - and the services adjacent to those - "the Kill Zone" and refuse to back companies that want to go up against them.
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Monopolistic firms collude to steal from advertisers and publishers:
https://pluralistic.net/2021/02/21/paltrow-industrial-complex/#facecrook
They use spyware to discover and neutralize promising competitors before they can grow to scale:
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3247362
They structure entire markets and cream off the profits of all participants:
And they use their billions to block the passage of privacy laws:
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The thing is, monopolies are profitable and powerful. When major firms stop competing with one another and start conspiring instead, they can divide up the market to maximize their profits, come to agreements on which policies they want to lobby for, and then spend their monopoly gains to make those policies a reality:
https://www.eff.org/deeplinks/2021/08/starve-beast-monopoly-power-and-political-corruption
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AT&T wasn't ever America's national champion - the only thing AT&T championed was AT&T.
*That's* what Xi understands and Clegg (claims he) doesn't understand. China's tech giants aren't China's national champions, they are the champions of Tencent and Alibaba and Baidu. To the extent that Xi wants to use them to project soft power around the world, he must keep them biddable - not set them loose to grow to such power and prominence that they can capture their regulators.
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Monopolies are profitable. They are swimming in money. Money is power. Power lets you buy policies. Those policies increase profitability. Lather, rise, repeat:
https://pluralistic.net/2022/02/03/liquidation-preference/#sweet-sweet-corruption
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As I wrote this week in my Medium column, "We Should Not Endure a King: Antitrust is a political cause, not an economic one," the point of competition law is to ensure that private firms can be supervised and disciplined when they act in their shareholders' interests to the detriment of the public interest:
https://doctorow.medium.com/we-should-not-endure-a-king-dfef34628153
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Xi, it turns out, is an ardent trustbuster. The Chinese state is no paragon of democracy and human rights, but some of its interventions in its tech sector are squarely aimed at ensuring tech improves its peoples' lives. For example, rules that crack down on bad security practices and attacks on interoperability:
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Of course, China's dominant tech policy for decades has been to ensure that the sector help it surveil and censor the population, enabling human rights abuses at scale. Sadly, this is the only part of the Chinese tech regulatory program that the west has adopted, from America's SESTA/FOSTA to the EU Terrorism Regulation.
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