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China and US tech crackdowns set the stage for the next phase of competition

This is the first in a pair of articles comparing the impact of the U.S. and Chinese tech crackdowns. This piece, by Special Series Editor Scott Bade, considers the geopolitical consequences of each country’s respective approaches. Tomorrow, Nathan Picarsic and Emily de La Bruyère examine how China’s “techlash” is driven by domestic politics.

It’s not a good time to be a tech giant. In China, high-flying tech firms were once some of the few able to operate with relative independence. Tech leaders like Alibaba’s Jack Ma and Didi’s Jean Liu were mainstays of Davos and became global symbols of Chinese innovation. No longer.

After Ma gave a speech critical of Chinese regulators last year, his company’s record IPO was suspended and he was effectively “disappeared” for months. Tencent was then hit with numerous fines for antitrust violations; since last year both firms have lost about 20% of their respective value — a combined total reaching over $300 billion. Meanwhile Didi’s shares tumbled 40% after they were ordered off of the country’s app stores. More recently, Chinese regulators have imposed new restrictions on edtech and gaming — and banned cryptocurrency altogether.

America’s tech tycoons may have their freedom, but they and their businesses are also coming under government scrutiny. Leading antitrust advocates like Lina Khan, Tim Wu and Jonathan Kanter have all landed senior roles in the Biden administration. Meanwhile Congress is considering new legislation that would regulate tech on issues ranging from privacy to age restrictions.

In both Beijing and Washington (not to mention Brussels, which has been battling tech giants for years), the consensus is increasingly clear: Big Tech has grown too powerful and too unaccountable. Government, politicians across the global ideological divide believe, must now exert some measure of control in the name of the public good. For founders, executives and investors, political risk has never been higher.


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