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China and India pose 'real risk' if US can't build 'massive' tech companies: Box CEO

President Donald Trump in his final weeks in office will continue his confrontational approach toward Chinese tech, aiming to add top chipmaker SMIC to a blacklist of companies affiliated with the Chinese military, Reuters reported on Sunday.

Looking ahead, experts anticipate President-elect Joe Biden will adopt a similar posture toward the Chinese tech sector, the Washington Post reported.

But the potential pursuit in Washington D.C. of an aggressive antitrust policy that could break up U.S.-based companies may empower their Chinese and Indian competitors, said Aaron Levie, CEO of data storage company Box (BOX) and one of the most outspoken business leaders in Silicon Valley.

In a new interview, he called for narrow regulatory measures that address concerns about U.S. tech giants but allow the companies to compete worldwide, predicting that the Biden administration will take a “nuanced” approach to trade and tech issues as opposed to the “blunt force” measures preferred by Trump.

When asked whether aggressive U.S. regulation of big tech could give a competitive advantage to tech companies in China, Levie says, “It’s a real risk.”

SAN FRANCISCO, CALIFORNIA - OCTOBER 02: Box co-founder and CEO Aaron Levie, speaks during the TechCrunch Disrupt SF 2019 conference at Moscone Center on October 02, 2019 in San Francisco, California. TechCrunch Disrupt puts the spotlight on revolutionary startups and innovators. The three-day conference features interviews with industry leading entrepreneurs, investors and hackers. TechCrunch Disrupt SF runs through October 4. (Photo by Justin Sullivan/Getty Images)
SAN FRANCISCO, CALIFORNIA - OCTOBER 02: Box co-founder and CEO Aaron Levie, speaks during the TechCrunch Disrupt SF 2019 conference at Moscone Center on October 02, 2019 in San Francisco, California. TechCrunch Disrupt puts the spotlight on revolutionary startups and innovators. The three-day conference features interviews with industry leading entrepreneurs, investors and hackers. TechCrunch Disrupt SF runs through October 4. (Photo by Justin Sullivan/Getty Images)

“If we don't create an environment where you can build massive companies, then I do think that China and India will be more significant threats for us,” he adds.

“This is something that requires a surgical approach, as opposed to broad-based solutions,” he says, adding that breaking up big tech companies “won’t accomplish much.”

A ‘heavy handed approach’

Over the course of the Trump administration, China and the U.S. have taken actions to curb the other’s tech sector. Most notably, the U.S. prohibited American companies from working with Chinese telecom giant Huawei and forced the sale of American operations for Chinese social media platform TikTok, while China continued to block major U.S. tech companies like Google (GOOG, GOOGL) and Facebook (FB) from operating in the country.

But in recent months, both countries have also shown greater appetite for regulating the tech companies within their own borders.

Earlier this month, China put out new draft antimonopoly rules for its tech giants. The more aggressive regulatory posture from the Chinese government followed soon after it halted the IPO of Ant Group, a financial technology giant.

Facebook Chairman and CEO Mark Zuckerberg testifies at a House Financial Services Committee hearing in Washington, U.S., October 23, 2019. REUTERS/Erin Scott     TPX IMAGES OF THE DAY
Facebook Chairman and CEO Mark Zuckerberg testifies at a House Financial Services Committee hearing in Washington, U.S., October 23, 2019. REUTERS/Erin Scott TPX IMAGES OF THE DAY

Meanwhile this year Capitol Hill has intensified its scrutiny of four of America’s largest tech companies — Amazon (AMZN), Apple (AAPL), Facebook, and Google — including the release in October of a scathing House antitrust report and the opening of a Justice Department antitrust lawsuit against Google that alleges the company illegally ensured its dominance in search and search advertising.

Levie spoke to Yahoo Finance Editor-in-Chief Andy Serwer in an episode of “Influencers with Andy Serwer,” a weekly interview series with leaders in business, politics, and entertainment.

He acknowledged the valid push for regulation but said rules should accommodate the specific needs of tech companies.

“The only question is, in the digital age, what types of modern forms of regulation do we need?” Levie says.

Biden has signaled that his administration will take an aggressive posture toward big tech, which will likely include the pursuit of the ongoing antitrust lawsuit against Google as well as an effort to repeal liability protections for social media platforms like Facebook.

But Biden’s policy approach will take greater steps to accommodate the needs of tech companies than Trump’s did, Levie said.

“We've been in an environment for four years where we've only had these very heavy handed, kind of blunt force types of solutions to global trade to internet censorship to things like immigration,” he says.

“We're going to see a very, very different kind of approach,” Levie says. “One that is much more nuanced to these topics, one that takes in more feedback and collaboration from the tech industry, as well as other industries that are impacted.”

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