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1. Today I wrote up something that's been bugging me for awhile, which is how U.S. copyright/patent laws enable China to use American technology but lock Americans out of it. https://mattstoller.substack.com/p/the-qualcomm-case-why-china-uses
2. Also in this post on Qualcomm, China, and IP law, I used a picture of Ashton Kutcher as a WeWork strategic partner. Because in 2019 everything needs a little sprinkle of stupid. https://mattstoller.substack.com/p/the-qualcomm-case-why-china-uses
3. The basic theory is as follows. Silicon Valley is a result of fairly open IP rules from the 1950s to the 1970s. Antitrust suits against AT&T, IBM, Xerox, RCA, etc divested patents and know-how from monopolists to entrepreneurs.
4. The scientists/engineers knew what they were inventing, the suits didn't. So forcing patents out of the corporations helped ensure entrepreneurs - often those scientists/engineers - could deploy the cool inventions in useful ways monopolists wouldn't have.
5. That's very much how China approaches U.S. technology. They buy it, force us to hand it over, or steal it. And then they innovate on top of it. China is living in the rules of Silicon Valley from the 1950s to the 1970s. But in the U.S. we don't live by those rules anymore.
6. Instead, we lock up our technology in strict patent and copyright rules, and a pro-monopoly antitrust framework. So our technology can only be organized by U.S. monopolists, who don't deploy it well, or by China, who does. That's why we're falling behind China.
7. There's a whole collapsed ecosystem in the U.S. Twitter created Vine, and then shut it down. VCs ran away from the social media space because of FB. A few years later, China comes out with TikTok, which is basically Vine, and dominates.
8. This dynamic is exceptionally relevant because of a monopolization suit against Qualcomm, which is a leading corporation that makes 5G technology for mobile phone chipsets. The FTC sued Qualcomm for a couple of reasons.
9. The main one is that Qualcomm uses its patents on mobile chipsets to monopolize a market. Qualcomm's patents essentially cover the industry standard, so anyone making a phone has to pay Qualcomm even if they use competitor's chips. They tax their competitors!
10. The FTC actually won in district court. The court said Qualcomm had to license their technology in a fair, reasonable, and non-discriminatory manner, or FRAND. The company could earn money from its IP, but not use its IP to close off competition.
11. But the DOJ Antitrust Division, the Department of Energy, and the Department of Defense's antitrust chief, a defense contractor turned Pentagon official named Ellen Lord, filed a brief on behalf of Qualcomm's monopoly. The Federal government is split.
12. The essential argument is that Qualcomm wielding its patents to block innovation and competition in the industry is *good for national security.* It's a ridiculous argument, as @ChertoffGroup pointed out. https://www.wsj.com/articles/qualcomms-monopoly-imperils-national-security-11574634436
13. By blocking competition and innovation here, we are effectively allowing the Chinese and only the Chinese to take advantage of American technology. https://mattstoller.substack.com/p/the-qualcomm-case-why-china-uses
14. Commerce is trying to stop the bleed of technology to China by imposing new rules on tech supply chains. https://fcw.com/articles/2019/11/26/commerce-it-telecom-supply-chain-security-rules.aspx
15. But U.S. tech firms are beginning to move their tech assets out of the U.S. so they can keep selling to China. So preventing the bleed out of tech knowledge is going to require far more aggressive action, and it's not clear how to disentangle. https://www.reuters.com/article/us-usa-china-semiconductors-insight/u-s-based-chip-tech-group-moving-to-switzerland-over-trade-curb-fears-idUSKBN1XZ16L
16. A better strategy is to radically reduce monopoly, copyright, and patent rights here, so that we can begin to speed up innovation like we used to. We can out-innovate China. But right now we're not even trying. https://mattstoller.substack.com/p/the-qualcomm-case-why-china-uses
17. Putting our brilliant engineers at Google so they spend their time getting us to click on more ads seems quite wasteful, especially as China is using all the cool technology in American firms that our engineers can’t deploy to develop ways to undermine democracy.
18. Anyway, if you like this kind of mishmash of history, monopoly/business strategy, politics, and national security thinking, sign up for my newsletter. https://mattstoller.substack.com/welcome
19. Or buy my book. It's very good, and it has no pictures of Ashton Kutcher. https://www.amazon.com/Goliath-Monopolies-Secretly-Took-World/dp/1501183087
20. Also, I just learned Ashton Kutcher is a board member of a prominent D.C. think tank. Any guesses as to which one that is?
