“When it comes time to hang the capitalists, they will vie with each other for the rope contract”
America is in the middle of–arguably–the greatest technology buildout in its history. Last year, U.S. private AI investment captured close to 50% of all global start-up funding. The numbers are staggering. Alphabet, OpenAI, Oracle, and Softbank have committed up to $500 billion over four years to build data centers across the United States. Apple has pledged billions in U.S. investment focused on AI over the next four years. Though the build-out has many critics, it seems almost inevitable. Like it or hate it, this investment is a clear indication that AI will define soft and hard power for the next generation.
However, U.S. AI dominance is not guaranteed nor should it be taken for granted. China has announced its goal to become the world’s leading AI power by 2030, and its ambitions span the entire technology stack. U.S. companies that transfer knowledge, talent, and platform access to Chinese companies are not only accepting commercial risk, they’re also negotiating away America’s national security edge.
Most U.S. industry leaders recognize that their success is closely tied to America. But some major U.S. technology companies are hedging their bets, particularly on the Middle Kingdom.
In May, Microsoft launched an incubator in Shenzhen—standing alongside local Chinese Communist Party (CCP) officials to unveil the “Shenzhen Global Expansion Center,” a platform to provide Chinese startups with cutting-edge AI technology, platform capabilities, and access to Microsoft’s global ecosystem. The project has reportedly reignited fears in Washington about the company’s coziness with Beijing. Microsoft brushed it off as “a marketing and advertising training initiative” – an explanation that one should view with skepticism in light of Microsoft’s history in China.
Meta has also quietly assembled a research unit, Meta Superintelligence Labs, in which seven of the eleven publicly listed hires are researchers from China, drawing on talent trained at Chinese universities and government-linked institutions. The staffing of America’s most sensitive frontier AI research with scientists educated inside Beijing’s system has, understandably, raised alarms.
These investments are not one-offs. They are part of an ongoing, concerning pattern. For example, Microsoft has operated major AI research facilities in China for decades and employs more than 10,000 people in the country. And Meta’s entanglement with China runs far deeper than its research hires. A former Meta executive testified before Congress that the company briefed the CCP on AI as early as 2015, and that Meta’s open-source Llama model contributed directly to Chinese advances such as DeepSeek. Every engineer Microsoft or Meta trains in or through China is an asset for Beijing’s AI ambitions.
Here’s another example: A ProPublica investigation last summer revealed that Microsoft had been secretly relying on China-based engineers to maintain sensitive U.S. national security cloud systems for nearly a decade—using American citizens with security clearances as “digital escorts.” Microsoft only ended the practice after it was exposed. The Department of War called it a “breach of trust” and issued a formal letter of concern.
The fundamental problem is the failure to recognize that the Chinese “market” is not a true market in any Western sense of the word. Some American commercial technology companies treat doing business in China as just part of their global technology footprint, maintaining a commercial presence in the world’s second-largest economy. That argument ignores the fundamental reality of the Chinese private sector: it does not truly exist.
Under China’s 2017 National Intelligence Law, every Chinese citizen and every company operating in the country is legally required to “support, assist, and cooperate” with national intelligence efforts. Additional laws require any company with a footprint in China to report cybersecurity vulnerabilities to the government before patching them. This almost certainly gives Beijing advance notice of exploits. Every startup Microsoft welcomes into its “global ecosystem” walks through that door with American technology in hand.
Corporate resources, in other words, are finite, and so is a company’s attention. Every dollar spent and every line of code written helping Chinese startups scale, is a dollar not used to harden the systems America depends on or to build the AI infrastructure America needs. The choice is not abstract: it is a binary investment choice between U.S. security and U.S. competitiveness and Chinese AI growth.
The U.S. government has the tools and leverage to act. Microsoft’s federal cloud business is worth billions. Meta’s platforms carry sensitive data on millions of Americans. And this Administration has demonstrated that it is not shy about flexing the government’s economic muscles. Doing business with the U.S. should come with expectations. Companies that want to be trusted partners of the U.S. government should not be incubating Chinese AI startups on the side.
The choice is between building America’s AI future or strengthening China’s. We can’t do both. The future of AI and everything that it touches depends on which choice we make.