USA technician sets at risk of giving up ones own intercontinental hegemony

Ever since complaints from Microsoft’s domestic enemies contributed to the series of European antitrust actions that tied the software company in knots in the 1990s, Brussels has been a favoured venue for such battles. One effect has been to increase the influence of EU regulators in setting global digital norms.

China has been another matter. Often left on the outside, US tech companies have been far more likely to complain of a lack of protection for their intellectual property, or heavy-handed actions that block market access, than seek to use the mainland legal system to their own advantage.

The case is a private suit filed in a Chinese court, and echoes the way private battles over IP between the leading tech concerns have spilled over into many different jurisdictions.

But the complaint also looks like a barely veiled invitation to Chinese regulators to weigh in again, two years after they forced the us chipmaker into a $975m antitrust settlement.

The dispute also confirms China’s growing influence over digital issues with global resonance. The sheer size of its domestic market, and a tough domestic anti-monopoly law that has been wielded aggressively, most notably against Qualcomm, have given it new power.

The Apple lawsuit was not the only sign this week that a path is opening up for China to become a more significant arbiter for the information economy. Half a world away, in Washington, President Donald Trump formally withdrew the us from the Trans-Pacific Partnership, a pact whose strategic intent was to cement American influence over trade policy in Asia and act as a counterweight to China.

Digital trade was a key part of the deal. The TPP would have been the first international trade agreement to enshrine formal rules for cross-border ecommerce — specifically, banning countries from insisting that data be held locally or putting up blocks to prevent data flows.

These ground rules have favoured the us tech industry, and have supported the emergence of the large-scale data storage and computing clouds that are coming to dominate the IT landscape.

Silicon Valley, wary of riling the new president, was silent about Trump’s withdrawal from TPP, though the ITI, a trade group whose members are a who’s-who of tech, including Apple, Google and Facebook, allowed itself an expression of regret.

Abandoning the us ground rules opens the door for China to have more influence over policy in the region — to the benefit of its own digital companies. At least, that is the theory. Whether China can effectively step into the vacuum is a different matter.

In reality, it has become increasingly unsuitable as a trading partner for digital services, according to Erik van der Marel, an economist at the European Center for International Political Economy in Brussels.

He tracked the “complementarity” between the US and China as a trading partner for other nations covered by the TPP when it comes to cross-border services that are delivered over the internet. In effect he was looking at whether Chinese companies could easily step into the shoes of American concerns and provide the same services.

According to this analysis, until 2008, the gap between the two countries was narrowing and China was becoming more digitally competitive. But since then it has widened sharply again.

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