As the China trade talks apparently have stalled, we would do well to remember what a very real part about this struggle with Beijing is about: it’s not just trade and jobs, but about who will control the technology of the future.
Above all, we are talking about the coming global 5G cellular networks. By all accounts, 5G is set to revolutionize industries. The question is who will control the networks and set the standards for 5G when it comes to privacy and the free flow of information.
China’s proxy in the fight is Huawei, which is really just an extension of the Communist government. One of our proxies in the struggle is the chipmaker giant Qualcomm. Yet in spite of the willingness of the Trump Administration to take this question seriously, one real danger to U.S. leadership on 5G is our own Federal Trade Commission (FTC) and its baseless lawsuit against Qualcomm.
Qualcomm has been the worldwide leader in mobile technology—leading the development of technology and it set the standards for 3G and 4G, most recently. According to many experts, Qualcomm currently has the advantage in leading 5G development for the world—giving the United States a strong position.
China’s Huawei, however, is making aggressive moves to catch up—with the unlimited support and finances of the Chinese government behind them. Allowing Huawei to win the battle for 5G would pose a danger for our national security and America’s economic interests.
Yet here we are. The Obama FTC launched an 11th-hour lawsuit against Qualcomm on questionable antitrust grounds, which were criticized by many antitrust experts, including Maureen Ohlhausen, the one Republican commissioner on the FTC at the time. She, and others, argued that there was no evidence of harm to consumers who preferred Qualcomm’s competitors from Qualcomm’s market position or actions and that the FTC was merely testing legal theories. Given Qualcomm’s critical role in American 5G leadership, it is dangerous to target the leading American 5G company with baseless lawsuits on novel theories.
In a bizarre move, the FTC even kicked off its lawsuit (which has now concluded and is awaiting a ruling from the judge) with a Huawei executive as its lead witness. We are turning to China’s lead 5G company—which our government has labeled a national security threat—to testify against a leading American company. Only in Washington D.C., a world detached from reality and common sense, would this even come close to making sense.
Just recently, Qualcomm and Apple reached a major settlement of all their legal disputes around the world. Apple will pay Qualcomm an undisclosed amount and the company reached a licensing deal for Qualcomm to supply 5G chips for Apple’s phones. This is a fantastic development that will help advance U.S. 5G leadership as Qualcomm will help Apple deliver 5G phone capability to its customers. The FTC’s complaint was virtually identical to many of the issues raised by Apple in this dispute—and Apple lobbied hard for the FTC to launch a case against Qualcomm. The settlement of these key issues between these two powerful companies presents a great opportunity to bring an end to the FTC’s case and remove the threat hanging over our leading 5G company.
A Wall Street Journal editorial after the settlement lauded the “peace in the tech patent wars” and argued that the FTC, “should now drop its lawsuit against Qualcomm to prevent more harm to markets and innovation.” The Journal argued that continuing the case would only give Huawei a competitive advantage.
In a sign that there is a great deal at stake in this FTC lawsuit, the Trump Department of Justice submitted a filing late last week asking the judge to grant a hearing on possible remedies should she rule against Qualcomm. The filing makes clear that the Justice Department is worried that an overly aggressive remedy would harm American innovation and 5G leadership. In the filing they wrote, “[t]here is a plausible prospect that an overly broad remedy in this case could reduce competition and innovation in markets for 5G . . . .” They added it may harm, rather than help competition.
While thankfully the Trump Administration appears to be taking the right steps on the Qualcomm front, it should also be remembered there is another key aspect to winning the 5G battle: the potential merger of Sprint and T-Mobile.
While some have argued that allowing that merger would amount to government intervention, what it actually would do is allow the new company to join AT&T and Verizon as a third strong competitor for America on the 5G front. It would lead to an innovation “arms” race and deployment, which benefits the American people on the domestic front, but also promotes and protects our national interests, and quite frankly, our standards on speech and the free flow of information on the international stage.
Make no mistake: China is coming for us. The world’s largest authoritarian police state wants to displace the world’s greatest free market economy as the center of the world’s economy, and if they succeed, it will make us, essentially, a tributary state. Whereas previous administrations, both Republican and Democrat, have actually participated in helping China reach this goal through terrible trade deals and the almost consequence free theft of intellectual property, Donald Trump has said, “No more.”
We can no longer tolerate this behavior. Let us hope for all of our sakes, and for the future of our children, that he is successful in bringing China to heel. Our future freedoms depend on it.
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