Op-Ed: Paul Rosenzweig: The Art of the Deal requires getting tough on Big Tech in China

The Trump administration should use its market power to incentivize U.S. companies to stop playing both America and China, Paul Rosenzweig writes.

One of the Trump administration’s first-year priorities will be addressing the many ways China threatens U.S. national security and economic strength. The most obvious threats include cyberattacks, intellectual property theft, and the massive trade deficit. However, an often-overlooked yet directly addressable threat lurks: some American tech companies provide software and technology to both the U.S. government and the Chinese Communist Party (CCP).

As Donald Trump’s nominee for Secretary of Defense, Pete Hegseth, prepares to go before the U.S. Senate for his confirmation hearing next week, he should speak to how the Department of Defense (DoD) will address this risk. These companies — charged with helping keep the U.S. government secure — risk the security of the United States by playing both sides in the U.S.-China tech war and helping China in the race for technological advantage.

One example of this is Microsoft, which controls 85 percent of the U.S. government’s productivity software market and at the same time has significant operations in China. While some other American companies exited the Chinese market, Microsoft continues to invest heavily in China — so much so that Hegseth himself referred to Microsoft as “Chinasoft.”

Microsoft has a long-standing commitment to “actively participate in the digital transformation of China’s economy,” and China’s military uses Microsoft technology to support warfighting efforts in nearly the same way as the U.S. Army. Multiple former defense officials have raised concerns about the DoD’s overreliance on Microsoft’s cybersecurity tools and services making the U.S. military's computer networks more vulnerable to cyberattacks.

Microsoft isn’t alone. While Amazon Web Services (AWS) is the DoD’s primary AI and cloud computing provider (receiving over $20 billion in contracts in 2022), it simultaneously maintains several high-impact contracts with Chinese government partners. Oracle, the cloud provider for TikTok's U.S. operations and a top defense contractor, has also built extensive AI infrastructure throughout China and has deeply embedded itself in the country’s public institutions.

The risks to the United States are real. In 2021, the Chinese government infiltrated tens of thousands of U.S. businesses and federal agencies. And in a 2023 attack, the Chinese stole emails from numerous organizations in the United States and the United Kingdom, including those belonging to senior U.S. government officials. There can be little doubt that these exploits were powered by familiarity with the underlying American technology — a familiarity that corporate America regularly gives away to China.

Rep. Pat Fallon (R., Texas) proposed one solution to this problem at the end of the last Congress: a bill that would prevent the DoD from “entering, renewing, or extending an IT contract” with companies that have ties with China. By “banning contracts with companies that operate in China, are funded by the People’s Republic of China, or allow China access to critical code, the bill would help ensure our IT infrastructure remains secure.” The bill would thus position the DoD to better prevent future compromises by China, and keep U.S. technological advancements out of China’s hands.

A second solution would be for the Trump administration to use its market power to incentivize U.S. companies to stop playing both sides. The administration could say, for example, that if an America company wants a lucrative U.S. government contract, it should serve only the U.S. government — not the CCP.

Rep. Fallon’s bill is a welcome step in holding American tech companies like Microsoft, AWS, and Oracle accountable, and it sets a standard that should be applied beyond the DoD to guide all U.S. government contracts under the Trump administration.

For too long, the United States has allowed China to take advantage of companies that work with both governments. Now is the United States’ chance to secure its systems from China’s inevitable next cyberattack.

Paul Rosenzweig formerly served as Deputy Assistant Secretary for Policy in the Department of Homeland Security.