Watch Industry to Follow the Politics
Twitter in India, Huawei in the USA, semiconductors in the UK.
Although companies exist largely to maximize profits from selling a particular good or service, they also pursue values and goals beyond monetary returns. Because these values and goals may be different from those of the government that primarily regulates them, governments often try to steer both domestic and foreign companies towards political goals.
Governments can react gently or strongly. A few recent examples come to mind:
Today in India, the government removed Twitter’s immunity from liability for user-generated content. The decision came after months of public debate and spats between the Indian government and Twitter over the company’s responsibility for online content in India.
Over the last few years, the United States government has banned Huawei and encouraged other countries to do the same. Recently, the Biden administration added additional Chinese companies to an investment blacklist.
Nexperia, a Netherlands-based semiconductor company nearly wholly owned by China’s Wingtech, announced it has obtained 100% ownership of Newport Wafer Fab, allegedly the United Kingdom’s largest chipmaker factory. The purchase appears to be related to the expansion of Nexperia’s automotive products. Tom Tugendhat, chairman of the U.K.'s foreign affairs select committee, says the deal is a national security threat to the country.
Why does the Indian government, run by Narendra Modi, care about Twitter? Why has the American government, over the course of two administrations, restricted the operations of and access to Chinese companies? Why are British politicians uncomfortable with the Chinese acquisition?
In each of these cases, a foreign company is feared to pursue economic and political ends harmful to the security of the country. When a company does not appear to follow neutral rules, its operations become a political matter— especially when that company appears to have outsized influence on electoral or diplomatic outcomes.
One particularly illustrative case is Twitter. The company is controversial everywhere, but some of the strongest debate over the social media company is in the United States and India. Politicians of both American political parties would like to see changes in Twitter’s policies. The Modi government wants Twitter to better manage its content, but sometimes the enemy at home is the hero abroad. For example, in response to a question regarding Twitter’s refusal to remove content deemed harmful by the Indian government, White House Press Secretary Jen Psaki said, “We always have concerns about crackdowns on freedom of speech, freedom of expression happening around the world and when it doesn't allow people to communicate and peacefully protest.”
The Indian, Chinese, and American governments can regulate their internal market as they like, but other countries often have a lot to say about how well their companies do outside their borders. It will be interesting to see how targeted countries respond.
Image obtained at https://economictimes.indiatimes.com/small-biz/security-tech/technology/the-long-term-costs-of-shortcuts-in-the-semiconductor-crisis/articleshow/82191355.cms