Fair and Competitive Markets Are the Best Shield Against Chinese Corporate Influence

Washington, D.C. — The American Economic Liberties Project released the following statement after President Trump issued an executive order banning TikTok from operating in the United States in 45 days if it is not sold by its Chinese parent company.

“There is no question that we need to act on TikTok to protect American values and data, and to limit Chinese Communist influence opportunities in our society. Relying on banning companies after they have reached a lot of customers, however, is not an effective long-term strategy,” said Lucas Kunce, Director of National Security Policy at the American Economic Liberties Project. “The first shield against Chinese corporate influence should be a competitive market structure that helps Americans create innovative technology companies that win on the merits.”

That’s why it’s important to recognize that we are wrestling with TikTok because of big tech monopolies, not in spite of them. There once was a U.S. TikTok. It was called Vine. Facebook didn’t like the competition, and used its monopoly power to strangle it, denying Vine access to Facebook’s social network. Then, Facebook lost the battle to replace Vine by waiting years to roll out an ineffective substitute, and by allowing TikTok to spend over a billion in ad buys on Facebook in to order to appease China while trying to open an office in China.

It must be thrilling to collect all that ad revenue from a competitor and then have your government step in and crush the competitor right when they pose a serious threat. But, then again, that is the life of a monopolist. At that size, spending money on lobbying and political influence inevitably has a higher return than money spent on R&D and innovation, or they wouldn’t have lobbyists.

While forcing a TikTok sale to Microsoft or another big tech company solves the immediate problem of Chinese access, it does nothing to fix the structural situation that led to it in the first place.

If we are going to win the tech war, it will be through traditional American means: fair and competitive markets, equal opportunity for smaller businesses, and grit. These are our advantages over China. We cannot win by relying on slothful giants and applying force after we are wounded. We took the national champion approach with Boeing and Intel – and we’ve all seen how that turned out.

Economic Liberties’ previous statement on TikTok, and the need to make all social media platforms safe for democracy is available here. 

Economic Liberties’ recent report on Facebook and Google’s toxic business model, “Ending Our Click-Bait Culture,” is available here. 

Learn more about Economic Liberties here.

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Economic Liberties works to ensure America’s system of commerce is structured to advance, rather than undermine, economic liberty, fair commerce, and a secure, inclusive democracy. AELP believes true economic liberty means entrepreneurs and businesses large and small succeed on the merits of their ideas and hard work; commerce empowers consumers, workers, farmers, and engineers instead of subjecting them to discrimination and abuse from financiers and monopolists; foreign trade arrangements support domestic security and democracy; and wealth is broadly distributed to support equitable political power.