US Government Could Scrutinize US/Chinese Tech Partnerships

The alliances between U.S. and Chinese companies in the area of artificial intelligence (AI) could receive greater scrutiny by the U.S. government, which could threaten practices that have long been the standard for technology companies.

Reuters reported that while government reviews for national security reasons have been focused on investment deals and takeovers, the expansion into looking at tech partnerships is being urged by some members of Congress and the Trump Administration, who are concerned about the theft of intellectual property and technology being transferred abroad.

AI is of particular interest because it has use for the military, sources told Reuters. The U.S. government could also increase scrutiny of the semiconductor and self-driving markets, although the idea is in the early stages and may not move forward. But if there was an effort to end partnerships between Chinese and U.S.-based technology companies, it could have an impact across the entire tech landscape.

Reuters pointed out that Advanced Micro Devices, Qualcomm, Nvidia and IBM all conduct activity in China, including research labs and training initiatives that collaborate with Chinese companies. Additionally, Chinese companies and institutions are big customers of these technology companies, and top talent in high-tech areas like AI and chip design is shared between companies and universities in China and the U.S.

“I don’t see any alternative to having a stronger (regulatory) regime, because the end result is, without it, the Chinese companies are going to get stronger,” said one of the sources, who is advising U.S. lawmakers on efforts to revise and toughen U.S. foreign investment rules. “They are going to challenge our companies in 10 or 15 years.”

Reuters noted that the U.S. can end the cooperation via an executive order if Trump invokes the International Emergency Economic Powers Act, which would give the White House power to stop and/or review informal corporate partnerships between a U.S. and a Chinese company. It would also be able to prevent any Chinese investment in a U.S. technology company or prevent the purchases of real estate near sensitive U.S. military sites by the Chinese.