Big tech, regulation and national security: “Intelligence Matters” –…
In this episode of Intelligence Matters, host Michael Morell speaks with Klon Kitchen, Senior Fellow at the American Enterprise Institute, and Jamil Jaffer, founder and Executive Director of the National Security Institute at George Mason University, about a range of current national security topics, including Russia’s invasion of Ukraine, Iran’s pursuit of nuclear capabilities, and the national security implications of regulating Big Tech companies. Kitchen and Jaffer offer their views on why politically-driven legislation could negatively affect innovation that they say is crucial to U.S. national security and to maintaining the country’s competitive edge. They also share thoughts on why European and Chinese approaches are ill-suited for American markets.
- Klon Kitchen on continuing support for Ukraine: “[T]he worst possible thing we could do is for the Americans to take our eye off the ball and our foot off the gas and leave the Ukrainians without the equipment and support that they’re going to need to finish the job. Because if they can finish the job, they will achieve something that is truly in the strategic interest of the United States without an American soldier having been in harm’s way.”
- Kitchen on the national security value of innovation: “The technologies that are going to shape and win future security concerns are overwhelmingly being developed in the private sector for commercial applications. These are things like artificial intelligence, advanced robotics, quantum computing. These are the things that are going to be the decisive advantages in the next 20 to 30 years. And there’s just not going to be a time when the U.S. government out-Googles Google.”
- Jamil Jaffer on U.S. rhetoric on Ukraine: “[T]hat’s exactly the challenge of our posture in Ukraine, which is that if we’re never going to go to war, we’re never going to get into a fight with a country that has nuclear weapons, that tells every country around the world, whether it’s North Korea – who we’re trying to get to give up their weapon, or Iran who is thinking about trying to get them – that, ‘You should definitely try to pursue nuclear weapons and never give them up once you have them, because if you don’t, we won’t get into conflict with you.’ And of course, that’s the wrong message to send to Russia. It’s the wrong message to send to China when it comes to Taiwan. And it’s certainly the wrong message to send to nuclear capable, nuclear potential states like Iran.”
- Jaffer on potential drawbacks of antitrust regulation: “[W]hat you don’t want to do is penalize success, right? You want to penalize anti-competitive behavior. And what we don’t see here is things directed at actual anti-competitive behavior. We see things directed to address the political concerns through the antitrust laws. It’s the wrong way to do antitrust. It’s not the American tradition, and it’s something that conservatives and liberals alike who believe in real American issues should oppose.”
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INTELLIGENCE MATTERS – KLON KITCHEN & JAMIL JAFFER
PRODUCER: OLIVIA GAZIS
MICHAEL MORELL: Klon, Jamil, welcome to Intelligence Matters. It’s great to have you both on the show.
KLON KITCHEN: Great to be here.
JAMIL JAFFER: Yeah. Thanks for having us, Michael.
MICHAEL MORELL: You’re welcome. So before we get into our conversation, let me just say that one of the issues that we’ll talk about today is government regulation of big tech companies. And I just want our listeners to know that I, personally, I’m a member of the National Security Advisory Board for an advocacy group called the American Edge Project, which is funded in part by Facebook.
Folks should also know that I signed an open letter with several other former national security officials in April that called for a review by congressional committees with national security jurisdiction of any regulatory bills related to tech companies. I just wanted to provide my listeners with full transparency into into my own views and what I’ve been doing on some of these issues. So I just wanted to get that out there.
But guys, before we get to discussions of big tech, I wanted to ask about some other issues that I know that one or both of you follow. And Jamil, I’ll maybe start with you. You’ve been critical of the Biden administration for not providing more support to the Ukrainians, given what’s kind of transpired over the last few weeks in terms of the amount of weapons flowing in there, I wonder if you still feel that way, if you still feel we should be doing more. And if so, what?
JAMIL JAFFER: Well, Michael, thanks for the question. And you’re exactly right. I have been critical that we didn’t do enough early on when it came to this fight that the Ukrainians have encountered against the Russians, the illegal Russian invasion of Ukraine. And my essential contention is that had we done all the things that we’re doing today, the the billions of dollars of weapons that we’re pouring in, the tremendous amount of intelligence sharing that we’re engaging in now with the Ukrainians, are really empowering them to really succeed even further than that, what they’ve done thus far with respect to the Russians – we may have had a chance of actually deterring this invasion.
And I think the challenge has been consistently with respect to U.S. behavior, not just in Ukraine, but particularly Ukraine is a good example of it, where our adversaries don’t know what our, where our red lines are, what we’re going to do to effectuate our policies, how far we’re willing to go.
You know, if you’d view the Russian view of the Biden administration’s perspective when it came into this conflict, right, the central position was, ‘We’re going to sanction you, and that’ll be about it. And yeah, we’ll support the Ukrainians. But, you know, we’ll see how that goes.’
And it wasn’t clear, I think, to the Russians – they certainly didn’t understand how challenged their own military would be, how aggressive and how tough the Ukrainians would ultimately be. But they also didn’t realize, in part because we didn’t make clear to them, how much effort we were willing to put in, how much weaponry we were going to provide for the conflict.
And so I definitely laud the Biden administration for having done a much better job than I think anybody expected on sanctions, going much broader and deeper than than anybody expected with the swift sanctions and the like. I also think that they’ve gone a lot further than anyone would expect on weaponry, with the tremendous amount of javelins and and stingers and now howitzers that we’re pouring into that fight.
That being said, we’re still not at the point where the Russians are willing to give up, right. Or willing to take a loss or willing to withdraw some of their forces. And so the question becomes, how much more money are we going to pour in? How much more effort are we going to pour in? Would we not have been better off had we simply done a lot of this ahead of time, messaged it and prevented this invasion altogether?
MICHAEL MORELL: Klon, what are your thoughts on that question; your thoughts on Russia, Ukraine?
KLON KITCHEN: Yeah. So, I think while I would share a lot of Jamal’s criticism about how slow we were in the beginning, I’m also somewhat understanding as to why that was the case, right?
I mean, when these things are developing, the leadership is trying to figure out what’s the reality on the ground. We don’t always have a very clear picture on that, especially when it comes to actual intentions. You’re trying to figure out, what is Putin actually trying to do? How much of this is a bluff? How much of this is really pre-deployment preparations?
And, you know, I think all three of us have been in the Oval Office at times when these conversations were going on. And you realize that every person who comes in is highly confident in their assessment, or at least sounds highly confident, and they’re all telling you different things. And one of the reasons why the president gets paid the big bucks is to decipher all that.
And so this is a hard call. I think the biggest level of criticism that I would level is I think we were slow. I think, my speculation – I don’t know this – but my speculation is that a lot of the lawyers were overly cautious in terms of what intelligence-sharing was going to look like, whether that made us a co-belligerent or not.
These are these are heavy stake, you know, kind of gambles when we’re talking about Russia as a nuclear armed state. So, again, I’m somewhat sympathetic to that.
But I do think we were slower than we needed to be. And I think, as a demonstration, is just how effective we’ve been once we kind of shook loose those shackles. I mean, at this point, my impression is that intelligence-sharing is very good. I think it has more than proven itself. I think even some of the ‘pre-bunking,’ the preemptive sharing of of intelligence assessments about Putin’s intentions and capabilities, that kind of thing, that obviously played a helpful role in development, all this stuff.
You know, we just passed a $40 billion supplemental aid effort to Ukraine. A lot of people who would wear my political jersey – well, I say, ‘some’ – some people who wear my political jersey were were resisting that and criticizing it. I think it was a good move. I’m glad it’s gotten passed.
And I think where we stand now is we’ve got a potential stand off in the Donbas. I think there’s good reason to believe that the Ukrainians might actually be able to dislodge Russia from a huge portion of that region, and that the worst possible thing we could do is for the Americans to take our eye off the ball and our foot off the gas and and leave the Ukrainians without the equipment and support that they’re going to need to finish the job. Because if they can finish the job, they will achieve something that is truly in the strategic interest of the United States without an American soldier having been in harm’s way.
MICHAEL MORELL: Now, you guys talked about possibly having been able to deter this. And one of the things that I’ve thought about is, had we got the intelligence assessment right with regard to how difficult this was going to be for the Russians to carry out and reach their objectives quickly and how tough this fight was going to be, then maybe having put more weapons in there earlier, even before the invasion began, might have actually deterred. Just get your reaction to that. Whoever wants to go.
KLON KITCHEN: I was just going to say, I think that’s obviously true, Michael. I think one of the challenges is that it’s going to be really hard for the U.S. or any other intelligence community to accurately assess how hard this is going to be for Putin when he himself had a misunderstanding of how effective he was going to be.
He had an assessment of his own capabilities that is proving untrue. And I think that’s because there’s a lot of fraud and a lot of waste and a lot of graft in the military modernization that they’ve been going through for the last decade. And so, when the other guy doesn’t have a clear understanding of his capabilities, I think it’s equally as hard, if not more difficult for us to have that sense.
MICHAEL MORELL: So I’ve also seen both of you talk about the Iran nuclear deal and whether we, the United States, should reenter the 2015 agreement, which the Biden administration has been so far unsuccessfully trying to do. Klon, let’s start with you. What’s the argument against re-entering the deal?
KLON KITCHEN: So first, we’ve put ourselves into a position where there just aren’t a lot of good options in the near term.
So, the original JCPOA, the Joint Comprehensive Plan of Action that we negotiated in the Obama administration, so categorically deconstructed the sanction regime that was bringing Tehran to the table, that we would talk about snapback – if Iran didn’t comply, then we would quickly snap back to what we had before – but that was never really the case because we had so thoroughly deconstructed sanctions regimes and those kinds of things take a lot of effort and time.
So we’re now in a place where, with the demise of JCPOA, we don’t have the kind of sanctions stick that we had previously when we were first negotiating this. And now we have an increasingly belligerent and at least arguably closer to a nuclear capability, Iran.
I don’t think that the JCPOA agreement did half of what it claimed to do. But I am open to trying to come up with some way to more formally constrain the nuclear program. But I think what’s incredibly important is that the Americans, whether it be the Biden administration or some subsequent administration, that we understand that we’ve actually put ourselves in a more difficult situation than we were originally, and that if you want to get any type of agreement through Congress, it’s going to have to be a lot more than just a bunch of promises. There’s going to have to be some very serious verification in place or I just don’t think it will last.
MICHAEL MORELL: Jamil.
JAMIL JAFFER: Michael, I think that Klon is exactly right, which is to say that the Iran nuclear deal, the JCPOA, was a bad deal from the jump, in my view. It wasn’t it wasn’t the right approach for the United States. We did not effectively constrain the Iranian nuclear program.
Having gotten out of it, the question now becomes, with the short amount of time remaining on the original clock, and the challenges the original deal had inherent in it – Does it make sense to get back into it now? I think the answer is clearly no.
Do we need something that constrains Iran’s nuclear program as Klon played out? Of course, we do. But is getting into the current JCPOA, back into it, of any value to the U.S. at this point? I highly doubt it.
I actually think the right approach is to go back to the maximum pressure campaign, re-establish the conditions that brought Iran to the table in the first place. We were on the verge, I think, of getting to a better agreement when those sanctions were in place. And I think there is a possibility for a reasonable agreement.
The problem is the Iranians see the writing on the table, writing on the wall, which is: clearly the administration is desperate to get back in it, just like the Obama administration was desperate to get into the agreement in the first place. They’re using that to their advantage. And as a result, as Klon correctly lays out, we’re not in a particularly good position to negotiate from right now.
MICHAEL MORELL: I also wonder, with the Iranians watching what’s happened between Russia and Ukraine, the country with nuclear weapons attacks with impunity and the country that gave them up found itself incredibly vulnerable. I wonder what they’re learning from that.
JAMIL JAFFER: That’s exactly right. I mean, that’s exactly the challenge of our posture in Ukraine, which is that if we’re never going to go to war, we’re never going to get into a fight with a country that has nuclear weapons, that tells every country around the world, whether it’s North Korea – who we’re trying to get to give up their weapon, or Iran who is thinking about trying to get them – that, ‘you should definitely try to pursue nuclear weapons and never give them up once you have them, because if you don’t, we won’t get into conflict with you.’
And of course, that’s the wrong message to send to Russia. It’s the wrong message to send to China when it comes to Taiwan. And it’s certainly the wrong message to send to nuclear capable, nuclear potential states like Iran.
And so we have to be willing to go toe to toe against these nuclear powers and say, ‘Look, the use of nuclear weapons is something has to remain off the table. But it doesn’t mean we can’t get in the conflict and we can’t have a problem with what you’re doing,’ and establish a path forward.
Unfortunately, that has not been our posture when it comes to the Russians. It doesn’t appear to be our posture and it comes to the Chinese and Taiwan and everyone else around the world is watching that and learning from that.
KLON KITCHEN: I’m just going to add on to that a little bit. I think, generally speaking, the sum total of what the Biden administration has done in the response to Ukraine is – I think it’s pretty good. I think we’re navigating a pretty difficult challenge pretty well. And I have my real differences with this administration. But I think looking at the outcomes that we’re observing, looking at where we are today – and again, as I said, even with the recent passage of the supplemental funding bill or aid package, I think largely we’re handling a really tricky situation particularly well.
One area where I would align some of my criticism with Jamal’s previous point about nuclear states and how we deal with them: I do think we’re allowing the rhetorical threat of nuclear violence from Putin to become normalized. One of the things I’m concerned about is, as the Russian military has shown itself to be increasingly incapable and ultimately being hollowed out, I do worry that Vladimir Putin is going to feel the need, even for his own kind of legitimacy and security, to remind the world that he’s still dangerous. And there are a couple of ways that he can do that.
And I think by just kind of sloughing off and laughing off his continued return to nuclear threats, I think that’s a real big problem. And I think that the United States should carefully but deliberately turn up the pressure on him every time he does that, and almost start treating that type of rhetoric as not quite tantamount, but very close to use.
We cannot get into a place where, if Iran is allowed to go nuclear or if Kim Jong Un in North Korea, we cannot allow these, dictatorial regimes to think that it is okay and acceptable to threaten nuclear holocaust every time they want to get attention that is fundamentally destabilizing to the to the geopolitical order. And I that is something that I would like to see the Biden administration get a little more tight on.
JAMIL JAFFER: I actually think Klon is right about how we need to respond to Russia’s nuclear rhetoric. That being said, I think it is very dangerous to take away from our relative success in the Ukraine conflict that we’ve done the right thing here and that our approach to it from the jump has been the right approach, or that our approach right now has gotten right.
I actually think that’s completely wrong. I think that the thousands and thousands of civilian lives that we lost, the millions of refugees that have been caused by this situation, all could have been avoided, as we talked about earlier, through deterrence. And the problem is when America looks weak, which we do, and have – Afghanistan, our whiff on the Syria red line, our behavior in Ukraine, all our actions towards Taiwan and the China situation – all make us look terribly weak. And that is the truth that causes more danger, more chaos, more dead civilians, more refugees in this world.
And so I don’t see -while I do agree that the Biden administration is getting to the right place slowly – I actually think that we made the situation much more dangerous. We made it much worse, worse for civilians in Ukraine. An America strong in the world is a world that is safer for civilians and safer for allies. And unfortunately, that is not the world we live in today.
MICHAEL MORELL: And there’s no doubt about that, right. But we’re talking about a very long period of time here, in multiple administrations, I think, making mistakes and not pushing back harder against Russian behavior.
I mean, it goes it way back to Georgia, right. Slap on the hand. Goes back to 2014. Ukraine: slap on the hand. Right. So this is a sin owned by many. Do you guys want to react to that?
JAMIL JAFFER: Agreed 100% that it is a sin owned by many presidents, Republicans and Democrats alike. And it’s not just Russia. It’s our failure to to be seen as a strong ally to our allies, strong friend to our allies, and capable and willing to engage adversaries against our enemies in the world. Our adversaries do not believe America is ready to deploy, our military is ready to take the fight to them. And as a result, they’re willing to be much more aggressive around the globe.
MICHAEL MORELL: Okay, guys, let’s turn to our main topic, the government’s regulation of technology companies.
Earlier this year, you both co-authored an op-ed that was titled, ‘The American Innovation and Choice Online Act is a Mistake.’ For those listeners who don’t know, the bill is one of several being considered by Congress that targets a handful of U.S. tech companies for what the bill’s supporters argue is anti-competitive behaviour.
Before we actually get to the op-ed, I’d love to start by asking both of you to briefly explain why U.S. tech innovation is so important to national security. Jamil, you first.
JAMIL JAFFER: Look, I think we see the benefits of American tech innovation around the globe. American companies are the dominant players when it comes to nearly every area of technology. And that’s no accident. It’s because we have some of the brightest minds here. It’s because we’ve created a economic and regulatory environment here in the United States where that innovation is able to flourish and expand and grow. And that’s a good thing for our country. It’s a good thing for our economic security. It’s a good thing for our national security. It’s a good thing for our values, which are spread throughout the globe by the spread of American technology and innovation and America and people around the world looking to America as the home of that.
Unfortunately, as these companies have succeeded in growing – and by the way, it’s not just large technology companies that are innovative and successful. America’s got an amazing startup culture. Silicon Valley is now not the only place in America where innovation happens. You see Silicon Valley versions happening in the D.C. metro area, up in New York, down in Florida. I mean, it is an American phenomenon and one that has benefited us both economically, but also in terms of our nation’s security, because these capabilities that we bring to bear, the technologies that we utilize are not just used in the civilian marketplace. Our defense, intelligence community use them.
It’s why we’re able to empower the Ukrainians in the fight against Russia and maintain that innovation here at a time when China is rapidly rising up. To take that mantle of leadership is critical to our long term security, particularly the competition against China.
Klon, your thoughts?
KLON KITCHEN: So I have some principle concerns with this piece of legislation and some of the other ones. But on the more substantive issue of tech and national security, I think about it this way: that the technologies that are going to shape and win future security concerns are overwhelmingly being developed in the private sector for commercial applications.
These are things like artificial intelligence, advanced robotics, quantum computing. These are the things that are going to be the decisive advantages in the next 20 to 30 years. And there’s just not going to be a time when the U.S. government out-Googles Google. And one of the reasons why that innovation is being pioneered in the private sector and by the companies that are pioneering it, is because it’s incredibly resource-intensive, both in terms of attracting and leveraging the talent necessary to realize these innovations, but then also the actual development of the underlying computer science and data acquisition.
There’s a reason why it’s the companies who have figured out a way to operate at scale, that are also the same companies who are pioneering these technologies.
I’ll just give you an example. Last year, Alphabet, Amazon, Apple, Facebook, Intel and Microsoft alone spent a combined $140 billion on research and development, not including acquisitions. That’s just pure R&D spend. The Pentagon’s R&D budget for the same year was $109 billion. And so when we talk about these six companies being able to outspend the U.S. military, it’s precisely because they operate at the scales that they operate.
And I really don’t like the idea of us cutting ourselves off at the knees because some are looking for what I think is is a political pound of flesh.
MICHAEL MORELL: And in terms of the view that tech innovation is critical to national security, that’s not a debate. Right? Everybody agrees with that. Is that fair?
KLON KITCHEN: Well, they do up until a point. Right. They say yes, but let me be more generous to the critics. So in the past, there was always national security caveats to some of these concerns, whether it be antitrust or normal economic engagement.
But back, you know, previously, it was less costly. It was easier to make those caveats, because we were talking about essentially a particular kind of jet plane, tanks, you know, things that really had these narrow applications. But now what we’re talking about, the innovations that really matter, are dual-use. They are of equal import to the commercial private side as they are to the U.S. military or the U.S. intelligence community.
And that makes these calculations and conversations much more complex. And I think a lot of lawmakers are struggling to wrap their head around that at the same time, when domestic politics is pushing them in a direction that I think is counterproductive.
MICHAEL MORELL: So, your joint op-ed. Why did you write it? What did it argue? Klon, perhaps you could go first here.
KLON KITCHEN:Sure. So it was specifically responding to the American Innovation and Choice Act, which was put together by an admittedly bipartisan group. And basically, the bill has a narrow focus on a small number of big tech companies. Its rules would apply to only companies that have 50 million monthly active users or 100,000 monthly active business users, if they have sales or a market capitalization exceeding $550 billion and are a critical trading partner for the sale or provision of any product or service offered on or directly related to the online platform.
In other words, this is a surgical strike. This is essentially a piece of legislation that is going after a very small group of what the the sponsors would call kind of ‘Big Tech.’ Of the few major muscle movements in the text of the bill, there’s an explicit prohibition against privileging a platform’s own products and services. There’s a mandate that platforms be interoperable with one another, and it makes it illegal for tech companies to discriminate in the application or enforcement of their terms of service against a competitor.
All of which on the surface seem like, ‘Okay, it’s kind of reasonable,’ but there’s a problem. So when we talk about something like preferencing, that’s not just shelf space, right? So when you talk about Walmart and grocery stores or, you know, whomever, there’s always concerns about them reserving prime real estate for their products, which, by the way, they can do and do do. And it’s legal.
But in the context of something like Google – Google’s Threat Analysis Group, which is their cybersecurity group, within their rock star groups, they tracked more than 270 government-backed bad guys that operate in 50 different countries. And they have issued more than 50,000 warnings about those threat actors and what they might be trying to do.
Now, they use that information – that’s proprietary, that’s all being developed in-house – they use that to make Gmail safer, proactively. And there’s nothing as a Gmail user that I have to do. But the bill’s language could possibly make that type of proactive cybersecurity work illegal because they would call that ‘preferencing.’ They’re using proprietary inside data collection to make their product better than, you know, an alternative. And the law is is opaque in its language. And I think that’s, you know, a major problem.
Another example and then I’ll let Jamil jump in, is that, you know, with all of these rules, China is not going to play by them. Foreign tech companies will not be bound by these rules. And that will ultimately hamstring American companies while leaving global competitors with even more agility.
On top of that, the interoperability requirements could actually give foreign actors insights into proprietary information and to trade secrets and to other information that could not only make them more dangerous, but also to use that information outcompete us when when we’re trying our hands behind our back.
MICHAEL MORELL: Jamil.
JAMIL JAFFER: You know, Michael, I think Klon makes some really important points. And one of the things that I think we need to think about in the context of American antitrust laws is our tradition has always been we treat similarly situated entities similarly. And so that means that going after a specific set of companies through legislation is not the American approach.
The American approach is, ‘Look, we’re going to set rules for competition. Everyone’s got to abide by them. And that’ll allow innovation to flourish and allow smaller companies to come up and succeed and fight with the big ones and ultimately, you know, result in better economic outcomes.’
What this bill seeks to do, unfortunately, is target a set of companies that people have political beefs with. In a large part, the real beefs the technology companies on both the right and the left tend to be more political, less about economics. So you talk about conservatives’ concerns that they’re being repressed online by big technology companies. You talk about about concerns that liberals have about the way that tech workers are treated and the gig economy and the displacements it’s having on labor forces. And you really find out that what’s going on here is not about antitrust or competition at all. What really this is about os a political beef with big tech companies being played out through modifications, the antitrust laws that are not in the long term to support American competitiveness and support small companies rising up and being successful and turning into the big companies.
I mean, what you don’t want to do is penalize success, right? You want to penalize anti-competitive behavior. And what we don’t see here is things directed at actual anti-competitive behavior. We see things directed to address the political concerns through the antitrust laws. It’s the wrong way to do antitrust. It’s not the American tradition, and it’s something that conservatives and liberals alike who believe in real American issues should oppose.
MICHAEL MORELL: You know, it’s interesting – Klon, go ahead.
KLON KITCHEN: Sorry. I was just going to add to that. One of the important points to make on this is, if you read what Jamil and I have written together, if you read the letter that you referenced earlier, Michael, that you signed, that the security professionals who are engaging on this topic are never arguing that these companies should be immune from antitrust law or that they are somehow above accountability because they have national security equities.
Everybody is simply saying, ‘Look, if they have actually violated the law, then fine, hold them accountable.’ But let’s not start rewriting law, especially in a way like just like Jamil was just explaining that is kind of divorced from principle and that seeks only to kind of penalize and exert a political cost on any one sector of the of the American economy.
Just to kind of make that point clear. No one that I know of is arguing that they should be immune. Instead, we’re saying, let’s not recklessly and wantonly go about breaking apart, you know, 10% of our national GDP.
MICHAEL MORELL: Going back to what Jamil said about, what’s really driving this is politics, which I agree with. It’s striking, right, that the Chinese government is taking action against its own tech sector right now for largely political reasons. So there’s some similarities going on here.
JAMIL JAFFER: I mean, that’s exactly right. And that’s not a model we should emulate. Right.
You know, recently there was an article in The New York Times that suggested that America was behind the curve because the Europeans had done a great job regulating technology in a variety of ways through their antitrust laws, through privacy laws, and the like. And I would argue that if you look at European tech innovation and American tech innovation and European economic results and American economic results and European national security and American national security, the story is really clear.
We are not behind. The fact that Europeans are engaged in this aggressive approach to regulating technology in their own economies, and the Chinese are doing the same, those are not things we ought to emulate. Those are things that make America special. The fact that we’ve created an environment in which technology can rapidly be innovative, can rapidly grow.
And by the way, this idea somehow that startups aren’t successful in America today because the big tech is too powerful, I mean, that’s ridiculous. If you look at the startup economy today and the billions and billions of dollars being poured into venture capital firms and Series A and Series B companies – I just came out of a Series A and Series B company that went that through the SPAC process.
The startup economy is strong and vibrant in America. We don’t need to change the rules of the game that have worked so successfully for us to address political problems. We ought to address politics through politics and not through changing the laws that are at the core of our economic security, particularly in the midst of competition with China.
MICHAEL MORELL: So, tech regulation. You guys know that tech regulation is just one issue on Congress’s tech agenda. It’s also in the process of reconciling the U.S. Innovation and Competition Act, which in its current form includes about $50 billion, or through the Chips Act to fund homegrown semiconductor manufacturing. I think the House has its own version of a China competitiveness bill.
But one of the things that strikes me here, and let me just get your reaction to this, is that there’s a contradiction between those kind of bills, which are trying to actually push U.S. tech forward, and the tech regulation bills, which would actually hold it back. Do you share that sense?
KLON KITCHEN: Certainly. No, I mean, it’s one of these things where the national security imperatives have become crystal clear to lawmakers because they’ve been made crystal clear by national professionals, that things like semiconductor manufacturing cannot be as centralized and, frankly, vulnerable to Chinese aggression as it has become. And so we have to start acting. And the legislation that you mentioned is one of the responses to that.
Simultaneously, as both Jamil and I have commented on, there are domestic political currents that are pushing lawmakers in a different direction. And so we have this conflict where the Congress -this isn’t surprising, this isn’t certainly the first time that Congress has done this – where it’s speaking out of both sides of its mouth.
One of the reasons why both of these bills are having difficulties moving through the Congress – in one case, I’m very pleased with that, and another case I’m less pleased – is precisely because of this contradiction. Is because lawmakers have pursued each of these things individually, thinking like, ‘Okay, let’s get the domestic side, let’s go after these guys.’
But then as they pursue that effort, they’re being constantly reminded by people whose job it is to defend the nation, ‘Hey, you’re killing us. If we do this, this has real world implications and would prevent us from doing -‘ for example, it’s arguable that a lot of what the companies have done in the wake of Ukraine in terms of how Facebook or Microsoft or Google have protected users both in the United States and externally from cybersecurity threats emanating, or around the conflict in Ukraine, some of that activity may have been illegal if some of these laws would have been passed.
And lawmakers can be forgiven in some degree for not understanding all of the implications. But that’s why the letters, like you mentioned, have been pouring forth that, before we pass any of this legislation, there should be a basic national security implications review. And that, to me just seems like good governance.
MICHAEL MORELL: Jamil, how have the supporters of tech regulation responded to the national security argument?
JAMIL JAFFER: You know, they’ve largely dismissed it, Michael, and they’ve said, ‘Look, this is just another example of Big Tech lobbying.”
Which, of course, it isn’t. If you look at the kind of folks that are signing the letters, these are not people who are in the tank for a particular company or set of companies. These are national security professionals who have been around a long time who say, ‘Look, we see the threat on the horizon. We see China rising up. We see it using its capabilities to steal intellectual property in the United States, to gain economic power, to gain influence in the world. And we need to respond to that as a nation.’
The problem, of course, is exactly as Klon has laid out, which is that Congress is speaking out of both sides of its mouth, right. On one hand, it really cares about protecting American supply chains and getting American innovation back here. On the other hand, we’re going to punish American innovation. We don’t like how it behaves politically. And those two are completely irreconcilable when it comes to how we ought to deal with the larger scale conflict of the world, which is China.
All too often we look internally and debate and fight amongst one another about what’s going on inside the United States and miss what’s happening outside, which is that China is rising up aggressively. They are singularly focused on how to pass the United States, exceed us when it comes to technological innovation, exceed us when it comes to our capabilities in the world and our influence in the world, and we’re lost in this fight about Big Tech and politics rather than saying, ‘Eye on the prize: America needs to remain strong in the world.’
That’s best done by empowering American innovation here. Yes, on-shoring, reshoring, ally shoring, but also not killing our most productive sectors with overregulation, particularly overregulation that’s targeted a small set of companies and not writ large, trying to set the right races for competition.
MICHAEL MORELL: Okay, guys, so we have one minute left. Let me ask you one question. 30 seconds each. And I know it’s a tough question to you in 30 seconds. What do you think the ultimate outcome will be in the US-China tech race? Klon, you first.
I still have high confidence in our ability to outcompete, outinnovate China. I think Xi has taken some actions that are going to hurt his tech industry. And the big question is, as he begins feeling that pain, will he double down on it? And does he believe his own marketing, or will he be more pragmatic and realize he needs to let that industry thrive?
I think in either case, China becomes more dangerous. And I feel ultimately confident, however, that the United States can and still will respond.
MICHAEL MORELL: Jamil.
JAMIL JAFFER: Yeah, I agree with Klon. I think I have a lot of faith in America’s ability to innovate and accelerate. We tend to get out of our own way. We have to understand that we are and have been for 200 years the most successful and innovative country the world has ever seen. And as a result, we need to double down on the things that have been successful in that regard, which means leading around the world, having a strong military, a strong intel community with a healthy respect for privacy, civil liberties, and preserving American capitalism and innovation, and allowing that to flourish and not killing it with overregulation the way the Europeans have and the way the Chinese will.
MICHAEL MORELL: Klon, Jamil, thank you so much for joining us today. We could have kept this conversation going for some time, but thank you for taking the time.
KLON KITCHEN: Great to be here.
JAMIL JAFFER: Thanks for having us, Michael.