“It is becoming harder to be a truly global tech platform,” said Dipayan Ghosh, the co-director of the Digital Platforms and Democracy Project at the Harvard Kennedy School.
The conflict is bleeding over into the relationships those countries have with other global powers, too. The United Kingdom, for example, is re-examining its decision to grant Chinese tech company Huawei the ability to help build the country’s 5G network. That review comes after the United States, which has repeatedly targeted Huawei, imposed sanctions on the company that could prevent other firms from supplying it with the chipsets it needs to build its next-generation technology.
“My impression is that the tech companies are only now waking up to the fact that life in the future is going to be a lot less globalized,” said Michael Witt, a senior affiliate professor of strategy and international business at INSEAD, the international business school. “They are really on the horns of a dilemma.”
A bitter rivalry
The United States has responded by seeking to limit China’s advance.
As Washington escalates its fight against Beijing, international technological cooperation looks increasingly likely to disappear.
“China will expand efforts to reshape international technology, trade, and financial architecture to better promote its interests in an increasingly bifurcated world,” they wrote.
The ‘virtual Berlin Wall’
As the relationship between the world’s two largest economies deteriorates, several analysts warned that the fallout will have major implications for every global power, along with the tech companies that operate across their borders.
The Eurasia Group analysts wrote that the “new virtual Berlin Wall” will push world economies to choose sides. They said traditional US allies such as Taiwan and South Korea, for example, may tilt toward China because they supply cutting-edge semiconductors that Chinese firms rely on to compete with global rivals.
“Both the US and China have demonstrated they’re willing to weaponize global trade and supply chains,” the analysts added.
Global tensions are also causing countries to view tech firms as “national sectors, and not global actors,” said Samm Sacks, a senior fellow at Yale Law School’s Paul Tsai China Center who studies cybersecurity and US-China relations.
“It’s the idea that a tech company is going into a market on the other side of the world, and now is being asked to carry the flag of the country,” she added. “This is a sea change from even a decade ago.”
Huawei has perhaps become the most prominent example of that shift.
The advancement of technology in other parts of the world also suggests that there are “evolving, multiple playbooks” beyond the rivalry between the United States and China, according to Kislaya Prasad, a research professor at the University of Maryland’s Robert H. Smith School of Business.
Retreat or decentralize
For the tech companies stuck trying to navigate this world, there are no easy options.
Witt, the INSEAD professor, said firms must choose between giving up on part of the world, or decentralizing their operations to such a point that the company is essentially two or more different entities.
“The close connection to the Chinese government is what has shut Huawei out of so many markets,” said Ghosh, of the Harvard Kennedy School. (Huawei maintains that it is a private firm owned by its employees.)
“I think TikTok sees that and wants to distinguish itself from Huawei,” he added.
“The problem is, I think, for them it’s too late,” Witt said. “That light of public attention, that is already brightly shining on them. I think that’s not going to end well for them.”
— Brian Fung contributed to this report.
Source : Nbcnewyork