Its subsidiaries own blockbuster games such as League of Legends and Clash of Clans, and the company holds major stakes in Fortnite maker Epic Games, and World of Warcraft maker Blizzard. It derives a major source of revenue from in-app transactions, such as the sale of new outfits for Fortnite's digital avatars.
These companies have hundreds of millions of users worldwide. This raises legitimate concerns about Chinese-owned companies holding digital real estate on so many US devices. They constitute a potential surface for attack.
However, the idea that anything benefiting China's tech industry runs counter to US interests is a dangerous and false dichotomy. The US derives considerable geopolitical power from being the largest consumer market in the world. In fact, the sheer size of its gaming market gives the US government leverage over this leading Chinese tech company. It will also force greater investment in bilateralism by China's tech elite.
It is tempting in the current political climate for US regulators to seek out bans that kneecap Chinese tech champions. But that is a short-sighted pursuit of US interests. Natural "reciprocal zones" exist in tech ecosystems, where it is impossible for one party to harm another without incurring harm too. The canonical example is iPhone manufacturing. China's Communist party could cripple Apple by shuttering its factories, but this drastic step would destroy so many local jobs that it is probably untenable.
In the absence of bilateral trust, these types of ties can bind together the world's two superpowers. They also form the basis of a relationship of "co-opetition", where the US and China compete in areas like 5G but collaborate on shared challenges such as climate change and pandemic disease.
In the tech world, the ideal reciprocal zones should be defined as having high economic value combined with low strategic political threat. Gaming likely fits the bill. Policy tools, such as divestment requirements, and technical mechanisms, such as limiting data access from within operating systems, should always be explored before resorting to outright bans.
The issue du jour is TikTok; it will be gaming tomorrow, and a recurring argument in the days beyond. Given that, the guiding principle in resolving these debates should be the pursuit of solutions that allow both sides to preserve ties built on reciprocal zones.
In a world where trust is hard to come by, we need ties that are strengthened when each actor pursues its own incentives. Such links will shape the way humanity stares down the greatest challenges of the 21st century. They are ties worth fighting for.
Written by: Frank Long
© Financial Times
