Tech war between Washington, Beijing hits Silicon Valley

BATUHAN TAKIŞ @Batuhantakis
ISTANBUL
Published 22.06.2019 00:03
Updated 22.06.2019 00:09
emFile Photo/em
File Photo

The tech capital Silicon Valley has been in dire straits for the past couple of years due to the deepening tech war between the U.S. and China. With President Donald Trump's administration adopting hawkish measures against the expansionist investments of Beijing in global tech giants, the pressure on Silicon Valley has reached a new peak.

News reports argue that U.S. intelligence services have already sounded alarms for China's campaign to gear up its export volume from leading American tech companies, putting Chinese investors under strong scrutiny.

Beijing is accused of working on a system to transfer technology out of Silicon Valley and bring it home. Some claim Chinese investors are trying to convince U.S. startups to sneak into Silicon Valley by bolstering them with funding. There have also been allegations of China encouraging its own domestic entrepreneurs to set up research and development (R&D) centers in the San Francisco Bay Area in northern California, where the heart of U.S. tech beats. Washington says its adversary in the international technology market is trying to undermine U.S. influence over companies in Silicon Valley.

The present war between the two superpowers harbinger a bipolar future for the technology world, meaning the new "digital iron curtain" is likely to compel sectoral countries to choose between the two blocs, the U.S. or China, in the future.

The Trump administration's decision to ban China's Huawei, the largest smartphone maker in the world after Samsung and ahead of Apple, from doing business with U.S. companies, for example, proves the duality of power imminent in the global sector, signaling that harder times are ahead for many companies.

Chinese President Xi Jinping threatening to impose tit-for-tat restrictions on American companies also backs claims that the tech world must prepare for more retaliation from the two sides.

Meanwhile, there is another struggle for Silicon Valley amid the U.S.-China rift as the Pentagon, the headquarters of U.S. Department of Defense (DOD), is reportedly seeking to recruit the best and brightest talent of tech companies.

In an interview with Yahoo Finance last month, former Secretary of Defense Ash Carter, an expert on defense tech, indicated that "there's really a war for talent among" big companies of the valley.

According to him, the DOD is doing more R&D than leading tech companies of the valley, such as Apple, Microsoft and Google.

The Pentagon's goal is neither to weaken nor to damage the power of Silicon Valley, the most successful tech project of the United States in last century, but to gain sufficient capabilities in the case of a modern battle of cyber and artificial intelligence (AI) against U.S. competitors, such as China.

The Pentagon is aware that a tech battle is looming on the ground, most likely against China, and software engineers are the sole actors that can pave the way for the DOD to gain victories.

It is surprising but true that Trump and the Pentagon have joined forces for the first time about U.S. defense policies when it comes the urgency of measures needed to deal with China.

For now, the U.S. has managed to secure a strong position in the tech world by having the top five most valuable companies globally, while the leading Chinese companies, such as Tencent and Alibaba, are seeing more rapid growth rates than their U.S. rivals in the sector. The figures, however, point out that unless the U.S. counters Chinese companies' attempts to penetrate Silicon Valley, Chinese capitalization is set to surpass the U.S. soon.

The Trump administration's ban on Huawei, which is claimed to be an unparalleled leader in 5G, is based on a logic that serves U.S. interests in the short-term. Yet, since the challenge in the tech world depends on the formula of "being one step ahead of your rival," Trump's Huawei move contains more negative side effects for long-term U.S. interests.

Xi used an aggressive tone in response to the U.S. restrictions on Huawei, even threatened Trump, but he couldn't have been sincere on it as Beijing would never want its mega Silicon Valley plan to collapse for a mere act of retaliation. Already dealing with internal crises due to data breaches and privacy violations, Silicon Valley now has another problem to tackle: the spreading influence of the U.S.-China tech war. If executives of Silicon Valley companies continue to adopt wait-and-see policies, the end of idealism and optimism for future tech is near.

In a speech last Sunday at Stanford University, Apple Ceo Tim Cook warned that Silicon Valley companies are "becoming better known for a less noble innovation," calling on them not to "build a chaos factory."

"If we accept as normal and unavoidable that anything in our lives can be aggregated, sold or even leaked in the event of a hack, then we lose so much more than data. We lose the freedom to be human," Cook said.

The valley must now find a solution or establish a mechanism to get away from both the Pentagon's involvement and Beijing's expansionist policies as the conflict between the U.S. and China seems to be long term. It can start by keeping the Pentagon at arm's length while observing and limiting politically motivated Chinese tech offices.

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