Last week, we commented on the recent congressional attack of the growth of digital age companies pursuing a strategy of acquisition of both competitive and complimentary entities. Almost simultaneously, China was cracking down of Didi, which was attempting to grow using western capital outside the control of the Chinese government. Chinese economists acknowledge that the challenges afflicting market economies, since the global financial crisis provide ample reason to proceed slowly. As Chinese Vice President Wang Qishan reportedly told then U.S. Treasury Secretary Henry Paulson in the midst of that crisis: “You were my teacher, but now here I am in my teacher’s domain, and look at your system, Hank. We aren’t sure we should be learning from you anymore.” During the Trump era, even the United States—long the world’s leading proponent of economic liberalization—seemed to call its free-market convictions into question.
China has become one of the world’s most active players on digital regulation, and its recent crackdown on ride-hailing app Didi is just the latest example. Next, a national privacy law, which seems likely to pass the country’s parliamentary body this fall — well before the U.S. has its own national privacy standard on the books.
- It’s easy for Americans to be dismissive of Chinese privacy efforts and cynical about how much such a law could possibly protect civilians from surveillance by the government or companies. But Beijing is slowly starting to acknowledge the growing, bottom-up demand for consumer privacy and data rights and experts say taking those tensions into account will be key to understanding the implications of the looming Personal Information Protection Law. A draft version of the law is modeled off Europe’s General Data Protection Regulation and similarly targets big tech companies’ use of personal data.
- The provisions that apply to so-called state organs, which would in theory put constraints on what the government can do with citizens’ personal information. Experts say those rules are rife with loopholes; many privacy advocates believe they’ll have little effect on data collection by the Chinese government and won’t stand in the way of authorities going after perceived national security threats, such as political dissidents.
- Whether the notions of privacy and consent and everything else that's built into this bill have any meaning is being challenged. When it comes to state surveillance,” former NSA general counsel Glenn Gerstell said. “ … I suspect we know the answer to that — and that’s probably none.”
The Chinese privacy initiative is in line with last Friday’s executive order on competition was part of the broader effort to rein in Silicon Valley’s biggest players, overlapping with the House's bipartisan antitrust package. The order focuses on three aspects of the giant tech platforms' behavior:
- Acquisitions of potential competitors,
- Gathering of consumers’ personal data
- Competition with small businesses.
The order’s provisions on the first point are similar to a bill from Rep. Hakeem Jeffries (D-N.Y.), although that legislation would prohibit the largest platforms from acquiring potential rivals. Biden’s order would simply increase regulatory scrutiny of these mergers — “with particular attention to the acquisition of nascent competitors, serial mergers, the accumulation of data, competition by ‘free’ products, and the effect on user privacy” — rather than banning them outright. Biden also waded into other issues, such as privacy, which falls under the FTC’s jurisdiction but has traditionally not been associated with antitrust regulation. It’s a sign of how closely linked the two matters have become in the digital age, as major tech platforms amass troves of data about their users. (Another sign of this: Across the Atlantic, European antitrust agencies are playing a major role in privacy issues.
The House is continuing to jockey over revisions to the antitrust package, which, as of late last month, House Majority Leader Steny Hoyer said wasn’t ready for floor consideration. It’s almost guaranteed that there will be legal challenges, and it’s not clear whether some of these executive actions that seem to broaden the scope of antitrust scrutiny will hold up in the courts, which have had very different ideas about antitrust over the decades.