US-China Tech Rivalry Creating ‘Splinternet’

Last year, former Google CEO Eric Schmidt warned of “a bifurcation into a Chinese-led internet and a non-Chinese internet led by America.” In recent years, concerns have grown in some quarters over this pending bifurcation and a corresponding “China Model of ,” as Freedom House outlined in last year’s “Freedom on the Net” report. This digital divide, or “digital iron curtain,” is becoming readily apparent in Zambia, where many local activists worry that the country’s democratic norms are being undermined by Chinese influence in the tech and media sectors. Sheridan Prasso reported last month for Bloomberg:

What’s playing out in is part of a larger contest between the U.S. and China for dominance over the future of technology and . Companies from both countries sell tech products around the world, but Chinese businesses are offering a wide range of gear and relatively cheap financing in countries from Zimbabwe to Vietnam. They have an advantage in developing nations such as Zambia, which are looking to modernize their technology infrastructure.

The rivalry risks dividing the world with a digital iron curtain. The potential for bifurcation is already noticeable, as U.S. allies including Australia and New Zealand have banned Huawei and ZTE from providing equipment for 5G wireless technology on national security grounds and Canada arrested Huawei Chief Financial Officer Meng Wanzhou in December on allegations she defrauded banks to violate Iranian sanctions. Huawei and ZTE are both private companies and have pushed back against allegations that they’re pawns of the Chinese government. [Source]

Arjun Kharpal further reports for CNBC on what he calls “the splinternet” and how the divide will be determined by which apps people in various countries choose to utilize or have access to, according to Kaifu Lee:

[..W]hile there may be two internets coming, “it will not be China and the rest of the world. It will be China and countries that adopt Chinese apps, and countries that adopt American apps,” Kaifu Lee, the CEO of China-based venture capital firm Sinovation Ventures, told CNBC at Davos.

“While Chinese apps will have a hard time getting adopted in U.S. and Europe and English-speaking countries, I think they’re proving their rapid acceptance in India, Southeast Asia, South America, Middle East and even a little bit in Africa. So I think in five years, if you look at all the people in the world that took their phone and counted how many Chinese apps and American apps, I’d say it would be fifty-fifty,” added Lee, who prior to his current job was the head of China for Google. [Source]

In The New York Times, Columbia University law professor Tim Wu argues that the American government and internet firms are ceding too much ground to Chinese internet control, writing, “you don’t need to be a trade theorist to realize that the censorship is also an extremely effective barrier to international trade”:

When it joined the World Trade Organization in 2001, China agreed to a broad liberalization of trade in services, including data processing and telecommunications. China’s internet policies must be understood as a violation of these commitments. China will presumably counter that its internet policies are “necessary to protect public morals or to maintain public order,” invoking the relevant exception to the World Trade Organization’s rules. But while that exception might justify bans on gambling sites or even Peppa Pig, in the case of most of China’s internet barriers the real purpose seems to be the protection of homegrown business interests.

Why is the United States not demanding change? It’s not as if we lack leverage. Chinese firms like Tencent and the online retailer JD.com have aggressively pursued operations in the United States, seeking to take advantage of our open internet and open market. The Office of the United States Trade Representative even cited Chinese internet blocking as a trade barrier in 2016. Why allow a country to do business here if it won’t let us do business there? The basic principle of trade policy is reciprocity: Lower your barriers and we’ll lower ours. When it comes to the internet economy, the United States has unilaterally disarmed and is being played for a fool. [Source]