This month, Congress is debating the latest version of the National Defense Authorization Act. One of the most difficult defense issues on the table has nothing to do with new weapons systems, force structure or personnel. The bill includes a plan for changing the interagency process for vetting foreign investment and reforms to the Committee for Foreign Investment in the United States (CFIUS). CFIUS reviews and can stop foreign investment in what are deemed to be critical industries to national security. CFIUS has come under increasing scrutiny as China has invested heavily in the U.S. tech sector and many fear are attempting to buy or steal the crown jewels of U.S. technology.
The tech world has bristled at the expansion of CFIUS. China has deep pockets and has thrown money at many budding Artificial Intelligence startups. China has aspirations to lead the world in AI, robotics, and aerospace; and has invested heavily in those areas. However, Chinese investment in the U.S. in the first half of 2018 have dropped 90% compared to the same period in 2017. Some of this is due to CFIUS and some of this is a reflection of the budding trade war that the Trump administration has hinted about since the campaign.
China is a dream market for tech start-ups. Its size and growing affluence make it hard to ignore. While Europe has led the way in new digital privacy and “right to be forgotten” laws, China has gone in the opposite direction, centralizing their internet and giving their tech titans access to some of the largest data sets in the world. And, as new Artificial Intelligence applications depend on access to larger and larger data sets, “Data is the new oil” has become the new, trendy tech maxim.
Some national security experts think that CFIUS has not gone far enough. Senator Marco Rubio is one of the loudest voices opposing the Trump administration’s lifting a seven-year ban on Chinese telecom ZTE from selling in the US. The Commerce Department imposed the ban after the intelligence community raised concerns about ZTE installing backdoors in its phone’s security to more easily allow Chinese hackers to spy on them. The Commerce Department choose to waive the ban in exchange for a $1.4 billion fine and sacking the firm’s leadership.
Former Deputy Defense Secretary Bob Work has gone farther, criticizing Google for pulling out of recent DARPA AI project citing ethical concerns while expanding its presence in China. “Google has a center in China, where they have a concept called civil-military fusion,” he said. “Anything that’s going on in that center is going to be used by the military.” China has combined its lack of privacy laws and its newfound acumen in big data and AI to spy on its people, stifle dissent, and oppress its ethnic minorities in its Western provinces.
All technological advantages are fleeting and vulnerable. The Global Positioning System originally only offered selective availability to the civilian world to prevent our enemies from using it against us. When the signal was unscrambled in 2000, what was a niche military technology became a ubiquitous commercial technology. This made it both possible and practical to put a GPS device in every pocket and gave us disruptive, hyper-localized systems like Yelp, Uber, and Tinder.
While the decision to unscramble the signal was wise, it was almost fait accompli. The Russian government was developing a similar satellite system that could have guided their ICBMs to our cities if they hadn’t already cracked our encryption. On balance, developing the GPS system gave us both a temporary military advantage and a more substantive technological and economic advantage that we still enjoy today.
The challenge for CFIUS is knowing how and what to protect. Trying to defend all American intellectual property is a fool’s errand. Expanding the definition of “critical industries” to include these new technologies is undoubtedly wise.
However, too many restrictions might not only harm our businesses but also deny the world the progress that AI promises. It also makes the hubristic assumption that the U.S. will continue to maintain its lead in the AI world and that Chinese advances won’t bleed over into the U.S. as well. We must hope that they choose their battles wisely.
‘Mal Ware’ is the nom de guerre of someone who was fighting in the AI wars before you even knew there was one.
