The United States government has long had an interest in boosting its high technology sector, with manifold objectives: for soft power, espionage, and financial dominance, at least. It has accomplished this through tax incentives, funding some of the best universities in the world, lax antitrust and privacy enforcement, and — in some cases — direct involvement. The internet began as a Department of Defense project, and the government invests in businesses through firms like In-Q-Tel.
All of this has worked splendidly for them. The world’s technology stack is overwhelmingly U.S.-dependent across the board, from consumers through large businesses and up to governments, even those which are not allies. Apparently, though, it is not enough and the country’s leaders are desperately worried about regulation in Europe and competition from Eastern Asia.
The U.S. Federal Trade Commission:
Federal Trade Commission Chairman Andrew N. Ferguson sent letters today to more than a dozen prominent technology companies reminding them of their obligations to protect the privacy and data security of American consumers despite pressure from foreign governments to weaken such protections. He also warned them that censoring Americans at the behest of foreign powers might violate the law.
[…]
“I am concerned that these actions by foreign powers to impose censorship and weaken end-to-end encryption will erode Americans’ freedoms and subject them to myriad harms, such as surveillance by foreign governments and an increased risk of identity theft and fraud,” Chairman [Andrew] Ferguson wrote.
[These letters][tl] (PDF) serve as a reminder to, in effect, enforce U.S. digital supremacy around the world. Many of the most popular social networks are U.S.-based and export the country’s interpretation of permissive expression laws around the world, even to countries with different expectations. Occasionally, there will be conflicting policies which may mean country-specific moderation. What Ferguson’s letter appears to be asking is for U.S. companies to be sovereign places for U.S. citizens regardless of where their speech may appear.
The U.S. government is certainly correct to protect the interests of its citizens. But let us not pretend this is not also re-emphasizing the importance to the U.S. government of exporting its speech policy internationally, especially when it fails to adhere to it on its home territory. It is not just the hypocrisy that rankles, it is also the audacity requiring posts by U.S. users to be treated as a special class, to the extent that E.U. officials enforcing their own laws in their own territory could be subjected to sanctions.
As far as encryption, I have yet to see sufficient evidence of a radical departure from previous statements made by this president. When he was running the first time around, he called for an Apple boycott over the company’s refusal to build a special version of iOS to decrypt an iPhone used by a mass shooter. During his first term, Trump demanded Apple decrypt another iPhone in a different mass shooting. After two attempted assassinations last year, Trump once again said Apple should forcibly decrypt the iPhones of those allegedly responsible. It was under his first administration in which Apple was dissuaded from launching Advanced Data Protection in the first place. U.S. companies with European divisions recently confirmed they cannot comply with E.U. privacy and security guarantees as they are subject to the provisions of the CLOUD Act enacted during the first Trump administration.
The closest Trump has gotten to changing his stance is in a February interview with the Spectator’s Ben Domenech:
BD: But the problem is he [the British Prime Minister] runs, your vice president obviously eloquently pointed this out in Munich, he runs a nation now that is removing the security helmets on Apple phones so that they can—
DJT: We told them you can’t do this.
BD: Yeah, Tulsi, I saw—
DJT: We actually told him… that’s incredible. That’s something, you know, that you hear about with China.
The red line, it seems, is not at a principled opposition to “removing the security helmet” of encryption, but in the U.K.’s specific legislation. It is a distinction with little difference. The president and U.S. law enforcement want on-demand decryption just as much as their U.K. counterparts and have attempted to legislate similar requirements.
While the U.S. has been reinforcing the supremacy of its tech companies in Europe, it has also been propping them up at home:
Intel Corporation today announced an agreement with the Trump Administration to support the continued expansion of American technology and manufacturing leadership. Under terms of the agreement, the United States government will make an $8.9 billion investment in Intel common stock, reflecting the confidence the Administration has in Intel to advance key national priorities and the critically important role the company plays in expanding the domestic semiconductor industry.
The government’s equity stake will be funded by the remaining $5.7 billion in grants previously awarded, but not yet paid, to Intel under the U.S. CHIPS and Science Act and $3.2 billion awarded to the company as part of the Secure Enclave program. Intel will continue to deliver on its Secure Enclave obligations and reaffirmed its commitment to delivering trusted and secure semiconductors to the U.S. Department of Defense. The $8.9 billion investment is in addition to the $2.2 billion in CHIPS grants Intel has received to date, making for a total investment of $11.1 billion.
Despite its size — 10% of the company, making it the single largest shareholder — this press release says this investment is “a passive ownership, with no Board representation or other governance or information rights”. Even so, this is the U.S. attempting to reassert the once-vaunted position of Intel.
This deal is not as absurd as it seems. It is entirely antithetical to the claimed free market capitalist principles common to both major U.S. political parties but, in particular, espoused by Republicans. It is probably going to be wielded in terrible ways. But I can see at least one defensible reason for the U.S. to treat the integrity of Intel as an urgent issue: geology.
Near the end of Patrick McGee’s “Apple in China” sits a section that will haunt the corners of my brain for a long time. McGee writes that a huge amount of microprocessors — “at least 80 percent of the world’s most advanced chips” — are made by TSMC in Taiwan. There are political concerns with the way China has threatened Taiwan, which can be contained and controlled by humans, and frequent earthquakes, which cannot. Even setting aside questions about control, competition, and China, it makes a lot of sense for there to be more manufacturers of high-performance chips in places with less earthquake potential. (Silicon Valley is also sitting in a geologically risky place. Why do we do this to ourselves?)
At least Intel gets the shine of a Trump co-sign, and when has that ever gone wrong?
Then there are the deals struck with Nvidia and AMD, whereby the U.S. government gets a kickback in exchange for trade. Lauren Hirsch and Maureen Farrell, New York Times:
But some of Mr. Trump’s recent moves appear to be a strong break with historical precedent. In the cases of Nvidia and AMD, the Trump administration has proposed dictating the global market that these chipmakers can have access to. The two companies have promised to give 15 percent of their revenue from China to the U.S. government in order to have the right to sell chips in that country and bypass any future U.S. restrictions.
These moves add up and are, apparently, just the beginning. The U.S. has been a dominant force in high technology in part because of a flywheel effect created by early investments, some of which came from government sources and public institutions. This additional context does not undermine the entrepreneurship that came after, and which has been a proud industry trait. In fact, it demonstrates a benefit of strong institutions.
The rest of the world should see these massive investments as an instruction to build up our own high technology industries. We should not be too proud in Canada to set up Crown corporations that can take this on, and we ought to work with governments elsewhere. We should also not lose sight of the increasing hostility of the U.S. government making these moves to reassert its dominance in the space. We can stop getting steamrolled if we want to, but we really need to want to. We can start small.