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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
The writer is special adviser to the Electronic Frontier Foundation, visiting professor of computer science at the Open University and author of ‘Picks and Shovels’
What’s a (former) trading partner to do? In Canada, Mexico and all around the world, leaders are trying to formulate a response to the Trump tariffs and they’re all landing in the same place: if US President Donald Trump tariffs us, we’ll tariff him. But tit-for-tat tariffs are the stuff of 19th-century geopolitics. Here in the 21st century, aggrieved foreign leaders have an exciting, digital countermove that could have a devastating effect on the most profitable lines of business at America’s most profitable companies.
The countermove, which could make things cheaper while removing the monopoly profits extracted by the most economically important companies in the US, is to repeal a highly technical intellectual property law called “anticircumvention.”
Anticircumvention laws prohibit tampering with or bypassing software locks that control access to copyrighted works. The first of these laws was Section 1201 of America’s Digital Millennium Copyright Act, which Bill Clinton signed in 1998. Under DMCA 1201, it’s a felony (punishable by a five-year sentence or a $500,000 fine) to provide someone with a tool or information to get around a digital lock, even if no copyrights are violated.
Anticircumvention laws are the reason no one can sell you a “jailbreaking” tool so your printer is able to recognise and use cheaper, generic ink cartridges. It’s why farmers couldn’t repair their own John Deere tractors until recently and why people who use powered wheelchairs can’t fix their vehicles, even down to minor adjustments like customising the steering handling.
These laws were made in the US but they are among America’s most successful exports. The US trade representative has lobbied — overtly in treaty negotiations; covertly as foreign legislatures debated their IP laws — for America’s trading partners to enact their own versions.
The quid pro quo: countries that passed such laws got tariff-free access to American markets. Canada enacted its anticircumvention law, Bill C-11, in 2012, after the ministers responsible dismissed 6,138 opposing comments on the grounds that they were the “babyish” views of “radical extremists”. Mexico enacted its version in the summer of 2020 in order to fulfil its obligations under the US-Mexico-Canada Agreement. It made such a hash of it that the Supreme Court triggered a review.
I trust you see where this is going. Why should every peso that a Mexican iPhone owner pays to a Mexican app creator make a round trip through California and come home 30 centavos lighter? Why accept that for every 1,000 rupees someone pays in-app to India’s Dainik Bhaskar newspaper, the paper only gets 700 rupees? After all, if an Indian tech company makes its own app store, it could charge competitive fees that lure away all of Apple’s best Indian app maker customers.
And why shouldn’t every mechanic in the world offer a one-price unlock of all the subscription features and software upgrades for every Tesla model?
Better still, since these are software products, there is no practical way to keep Americans from buying them online from overseas. Canada needn’t confine itself to exporting reasonably priced pharmaceuticals, it could also incubate a large, profitable software sector that exports the tools of technological self-determination to the American public, the first victims of the anticircumvention shakedown.
Monopolistic US companies have spent the first quarter of this century extracting trillions of dollars from consumers all over the world, insulated from competition by anticircumvention laws that they lobby to maintain. From printer ink to ventilator repairs, they have been able to pursue monopoly pricing, secure in the knowledge that no one would undercut them with cheaper and/or better add-ons, marketplaces, software, consumables and service offerings.
The companies may claim that repealing the laws raises the risk of third parties disrespecting consumer rights. But it is possible that they will be more respectful of these rights. After all, America’s tech giants have hardly shown themselves to be overly concerned with our privacy, labour or consumer rights.
Trump’s rapid, unscheduled mid-air disassembly of the global trade system represents a one-time chance for the countries of the world to establish themselves as leaders in these sectors. Some country out there could have the same relationship to app stores or payment processing that Finland had to mobile phones during the 15 years when Nokia was king.
It is fashionable to fault tech companies for their ethos of “move fast and break things”. But surely it depends on whose things are being broken? Moving fast and breaking billionaires’ things sounds like a splendid idea to me — especially when the billionaires in question are the same men who stood behind Trump on the inaugural dais.
