China isn’t the only economy decoupling from the U.S.
Since the Trump administration plunged the U.S. and China into a still-unresolved trade war in 2018, political pundits have argued that the two superpowers are entering a great “decoupling,” in which leading industries in each nation grow increasingly isolated from their counterparts in the other.
But Accenture CEO Julie Sweet says the trend of decoupling isn’t limited to China and the U.S.
“It’s much wider than just the U.S. and China. You see the same thing happening in Europe, for example, with different focuses on data sovereignty,” Sweet said Tuesday, virtually speaking at the Fortune Global 500 Summit in Hangzhou, noting the recent cancellation of the data Privacy Shield framework between the U.S. and the EU.
The Privacy Shield regulated data exchange between the EU and the U.S. and was implemented in 2016 after the European Court of Justice (ECJ) invalidated a previous protocol because it was inadequate for preventing the export and abuse of European consumer data collected by U.S. companies.
The ECJ again invalidated the Privacy Shield in July 2020, ruling once more that the law failed to protect European consumer data from abuse by U.S. intelligence agencies.
Security concerns have driven the decoupling of tech spheres in the U.S. and China too.
Under the Trump administration, the White House excluded numerous Chinese tech companies from either operating in the U.S. or bidding on federal contracts, citing “national security” concerns. Meanwhile, Beijing mandated in 2017 that any tech company operating in China must store all Chinese data on Chinese servers, part of its own drive to strengthen “data privacy.”
Sweet says Accenture is “working with our ecosystem partners to build products” that allow multinational companies to operate more seamlessly across a world of fractured data security regulations. And certainly, the great decoupling hasn’t excluded all U.S. tech companies from operating in China.
In January, China’s State Administration for Market Regulation (SAMR) approved network gear maker Cisco’s $4.5 billion acquisition of optical telecoms group Acacia, provided that Cisco continues to serve Acacia’s Chinese customers “in accordance with the principles of fairness, reasonableness, and nondiscrimination.”
“What we want to do is continue to be an example of a U.S. company that can help navigate the complex world that we live in, because I don’t think decoupling is the right thing,” Cisco CEO Chuck Robbins told the Fortune Global 500 Summit in a separate virtual interview on Tuesday.
Even though Acacia was a U.S.-based company, global regulators held a right to veto the acquisition if it could alter Acacia’s business in their jurisdiction. The SAMR’s approval was the final hurdle for Cisco to complete the deal and came after Robbins told investors in 2019 that Cisco had been “uninvited to bid” on contracts tendered by Chinese state-owned firms as a result of the trade war.
Still, it doesn’t seem as if major decoupling events are over yet.
Last week, U.S.-based LinkedIn announced it would shutter the Chinese version of its site by the end of the year, citing the “challenging environment” of operating in China, where local rules on censorship and data protection had already forced other Western social media platforms out of the country.
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