In our globalized world, national security threats take many forms, and one area of increasing concern is the attacks on U.S. companies who are instrumental in building the nuts and bolts of the modern Internet. America’s free market economy, our way of life, can easily come under threat from foreign nations whose national interests do not align with ours if we are not careful about what happens to American-based companies and their intellectual property.
There is no better example of this dilemma than Broadcom — a Singapore-based technology company — moving to attempt a hostile takeover of Qualcomm — an American technology firm based in San Diego, Calif. Under normal circumstances, such an acquisition would be a fact of life in a free market economy. However, a hostile takeover of the one U.S. company on the cutting edge of 5G technology by a foreign company raises serious national security concerns.
The fact of the matter is, Qualcomm has played an integral role in the development of smart phone technology. Perhaps most famous as the developer of both 3G and 4G technology, Qualcomm is at the point of the spear in creating the next technological leap to 5G. The future leap will see machines talking to and directing the activities of other machines, pushing society into a world where driverless vehicles are the norm and many aspects of life are literally on automatic pilot.
Qualcomm is one of the companies most likely to create the software to make this system run, but China’s Huawei is among those competing to be first. An immediate review by the United States Government’s Committee on Foreign Investment in the United States (CFIUS) of the attempted takeover of Qualcomm by Broadcom is of the utmost importance because whoever wins the battle in developing 5G, will be providing the guts of the world’s industrial future. It can be expected that an unscrupulous company controlled by a foreign government would use this advantage to put backdoors into various systems, making the world’s economy vulnerable to blackmail.
The Chinese technology company, Huawei, is already reported by news outlets such as Reuters to be on the verge of major 5G breakthroughs. Given Broadcom’s suspected business ties with China, the access Chinese companies could have to Qualcomm’s intellectual property and 5G development would guarantee the dominance of the global Internet by an authoritarian regime and competitor to the United States.
CFIUS is a specialized institution within the U.S. Department of Treasury designed to handle financial deals of such grave national security importance, such as this hostile takeover of Qualcomm. President Trump and Treasury Secretary Steven Mnuchin must immediately engage the CFIUS process to ensure that American interests are being met. CFIUS was designed to prevent dangerous technology transfers through both sales of computers and other products, but also through the sale of companies with the patents and know-how which transfer of control over would have potential disastrous consequences.
Generally, when one company moves to acquire another, it is a perfect example of our capitalist system at work. Investors benefit along consumers and we see a greater efficiency in the market. However, we must not ignore the interests of America as a whole either. When major acquisition deals threaten our national security, there is a necessary and important constitutional role for our government to play to ensure that American citizens will continue to remain free. The Broadcom attempt to takeover Qualcomm fits this criteria to a tee.
In 2016, President Obama succeeded in giving away operational control over the Internet’s domain name system to a non-profit vendor without ties to the U.S. government, a move which candidate Donald Trump wisely opposed. Now it is up to the Trump administration to deny the foreign takeover of the one company in America that is building the guts of how business will use the Internet in the future.
With all the threats around the world, this little discussed one is as important over the long-run as the nuclear threat posed by North Korea and others. We simply cannot afford to have foreign governments through their managed corporations, have the ability to claim exclusive control the 5G technology that will be running the economy of the future.
Rick Manning is the president of Americans for Limited Government.