Open source software braces itself for trade war

HONG KONG, Feb 27 (Reuters Breakingviews) – The open source software movement has been an unprecedented driver of global innovation and productivity growth. By allowing code that runs databases, smartphones, and semiconductor design to be shared for free—and allowing anyone to contribute to update it and fix its bugs—OSS, as it’s known, has saved companies the need , reinventing countless wheels, accelerating the growth of the $475 billion global software industry. But increasing geopolitical tensions are jeopardizing the movement’s future economic contribution.

As with other parts of the supply chain, Chinese and American codebases are silent but deeply intertwined. China is the second-largest contributor to GitHub, a shared repository that Microsoft (MSFT.O) bought for $7.5 billion in 2018. Nearly all Chinese smartphone makers use versions of Android, an OSS operating system that brought Google $22 billion in profits from its launch in 2007 through early 2016, according to an estimate released by an Oracle lawyer this year published. Google’s owner Alphabet (GOOGL.O) does not report Android revenue generated from advertising and app downloads from its store.

Originally more buyers than shareholders, mainland tech giants like Alibaba (9988.HK) and Tencent (0700.HK) are now making generous contributions to OSS projects overseas; China Inc has also shared frameworks for AI development, including PaddlePaddle by search engine Baidu (9888.HK) and MegEngine by image recognition specialist Megvii.

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There are two big problems. Safety comes first. As Western democracies use open-source code to speed up strategic industries like artificial intelligence and semiconductor chip design, they are gifting it to Beijing at a moment when Western AI is being deployed on Ukraine’s frigid battlefields and the People’s Republic may be over military considers help for Russia.

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The second problem is moral. Chinese developers participating in international OSS machine learning projects often contribute “model weights”: mathematical formulations that neural networks learn from training on China’s massive and opaque domestic data reservoir. The most impressive AI models require billions of examples to learn model weights from and require large upfront investments, so companies generally welcome Chinese input. However, software industry insiders told Breakingview they were concerned those weights could be derived from data collected from sources such as government security cameras, some of which have allegedly been trained by companies like Megvii to keep an eye out for ethnic minorities.

The United States fired a warning shot at telecoms giant Huawei in 2019. Like most Chinese phone makers, founder Ren Zhengfei relied on Android’s open-source code to power his company’s smartphones. But President Donald Trump’s administration put the company on a blacklist that effectively prevented it from using the Google services that complemented Android, specifically its App Store.

The move crippled Huawei’s overseas smartphone business and telegraphed to China’s tech sector that the American government was ready and able to weaponize OSS. That same year, GitHub began blocking developers in Iran, Syria, and Crimea. Today, OpenAI, the somewhat misleadingly named Microsoft-backed company behind the popular ChatGPT bot, doesn’t allow residents of China and Russia to create accounts to use the tool. Beijing has instructed its own tech companies not to integrate ChatGPT with their platforms — a rare example of a shared firewall, according to a Nikkei report.

Huawei has since developed its own OSS operating system called Harmony, and GitHub now faces a rival Chinese startup called Gitee, backed by the Ministry of Industry and Information Technology. On almost every front, China is moving towards duplicating OSS functions, including chatbots and building communities it can control. Chinese developers are already complaining about censorship on Gitee.

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“The United States government is much more comfortable prosecuting companies than software because [the latter] is conceptually much more difficult for US authorities,” notes China risk adviser Isaac Stone Fish. Blocking Chinese access to OSS libraries would be legally complex since the code was donated to the global public. It would also be technologically difficult given the proliferation of virtual private networks that hide where a user is visiting from. Also, nothing prevents a Chinese intelligence officer from downloading OSS resources abroad. And yet, given the broken ties, it seems inevitable that Western democracies will start making it harder for China to take free code; they could just as easily produce less of it. Washington has already selectively blocked access to US government websites in China.

Severing the intellectual link between the world’s two largest open source communities, the United States and China, would be indirect but profound. A 2018 study estimated that the adoption of OSS in the European Union could cost up to €95 billion.

Dividing the world into competing open source camps would mean another reversal of free trade. It would also be a sad confirmation of the old adage that nothing really comes for free.

Follow @petesweeneypro on Twitter


Regulators have told major Chinese tech companies not to offer ChatGPT services, news outlet Nikkei reported on February 22, citing sources with direct knowledge, causing shares in Chinese companies that build chatbots to fall. On Feb. 24, China’s Ministry of Science and Technology said it sees the potential of ChatGPT-like technology and will push for the integration of artificial intelligence into Chinese society and economy.

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Edited by Robyn Mak and Thomas Shum

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The opinions expressed are those of the author. They do not reflect the views of Reuters News, which is committed to integrity, independence and freedom from bias under the Trust Principles.

Peter Sweeney

Thomson Reuters

Asia business editor Pete Sweeney joined Reuters Breakingviews in Hong Kong in September 2016. Previously, he was Reuters’ chief correspondent for China Economy and Markets, leading teams in Shanghai and Beijing; Previously, he was Editor of China Economic Review, a monthly magazine focused on providing news and analysis on the mainland economy. Sweeney came to China in 2008 as a Fulbright Scholar and in this capacity conducted research on the Chinese aviation industry and outbound M&A. In previous incarnations, he helped relocate refugees in Atlanta, covered the European Union from Brussels, and took an ill-timed swipe at craft beer entrepreneurship in Quito, even as the Ecuadorian currency collapsed (not his fault). He speaks Mandarin Chinese at the expense of his Spanish.