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Illustration: Rebecca Zisser/Axios

Silicon Valley's tech companies have a new argument in the unfolding debate over their size and power: We're better than the Chinese competition.

Why it matters: Washington is concerned about both China's rise and the tech giants' power. Now the companies are trying to use the former to defuse the latter, as Facebook's Mark Zuckerberg did this week.

What they're saying:

  • “So I think you have this question from a policy perspective, which is, do we want American companies to be exporting across the world?,” said Zuckerberg in an interview with Recode published Wednesday. “Because I think that the alternative, frankly, is going to be the Chinese companies.” Zuckerberg's comment was in response to a question about whether he fears calls to break up Facebook.
  • “I think this is worthy of some debate,” top Senate Intelligence Committee Democrat Mark Warner said last month to Axios, speaking about breaking up Facebook and other large tech players. “One of my hesitancies, though, would be if we kneecapped American companies and they were simply replaced by Chinese tech companies. These are global companies now with global reach and we should tread softly.”

Zuckerberg told Recode that Chinese tech companies don’t share “values” with Silicon Valley. “I think you can bet that if the government hears word that it’s election interference or terrorism, I don’t think Chinese companies are going to wanna cooperate as much and try to aid the national interest there,” he said.

The big picture: Major Chinese internet companies like Tencent, Alibaba, Baidu and JD.com are growing fast. In the hardware business, supply chains are global and U.S. and Chinese interests are often interconnected. In the software and social media worlds, China has formed its own homegrown alternatives to Western powerhouses like Google and Facebook, keeping the industries more separated.

  • “You couldn't — you couldn't do this in China, right? Or, what you did in 10 years,” Sen. Dan Sullivan (R-Ak.) asked Zuckerberg earlier this year about his development of Facebook. Zuckerberg replied: “Well — well, senator, there are — there are some very strong Chinese Internet companies.”

Yes, but: Chinese tech companies could struggle to succeed globally — even without American competition — because there is so little trust that they'll keep customer data private from the government.

  • “It’s probably right that you don’t want to create the opportunity for them, but they have significant obstacles to penetrating a global market,” said Jim Lewis, a former State Department official who is now a senior vice president at the Center for Strategic and International Studies.

Go deeper: The NYT's Farhad Manjoo argued Wednesday that the way for the U.S. to meet Chinese tech's challenge is for the government to fund more research.

Go deeper

Dion Rabouin, author of Markets
5 mins ago - Economy & Business

Biden's inflation danger

Illustration: Sarah Grillo/Axios

President-elect Joe Biden's $1.9 trillion stimulus proposal has economists and bullish market analysts revising their U.S. growth expectations higher, predicting a reflation of the economy in 2021 and possibly more booming returns for risk assets.

Yes, but: Others are warning that what's expected to be reflation could actually show up as inflation, a much less welcome phenomenon.

Ina Fried, author of Login
2 hours ago - Technology

CES was largely irrelevant this year

Illustration: Sarah Grillo/Axios

Forced online by the pandemic and overshadowed by the attack on the Capitol, the 2021 edition of CES was mostly an afterthought as media's attention focused elsewhere.

Why it matters: The consumer electronics trade show is the cornerstone event for the Consumer Technology Association and Las Vegas has been the traditional early-January gathering place for the tech industry.

The FBI is tracing a digital trail to Capitol rioters

Illustration: Sarah Grillo

Capitol rioters, eager to share proof of their efforts with other extremists online, have so far left a digital footprint of at least 140,000 images that is making it easier for federal law enforcement officials to capture and arrest them.

The big picture: Law enforcement's use of digital tracing isn't new, and has long been at the center of fierce battles over privacy and civil liberties. The Capitol siege is opening a fresh front in that debate.