In a building a few miles from Google and Facebook’s plush campuses is the Pentagon’s sparse outpost in Silicon Valley.

Here, military personnel and civilians look for commercial technology that can help the armed services solve problems they face in the field.

That could be working with a local commercial rocket company to deploy satellites faster. Or finding an up-and-coming firm that has created a novel communication system that works in some of the harshest conditions.

Defense Innovation Unit

Founded four years ago, the Defense Innovation Unit has a sense of urgency now more than ever, says its director, Michael Brown, formerly chief executive of Symantec, the cyber security firm, and of Quantum, a computer storage firm.

Because of the new so-called Tech Cold War, tensions are surging between the U.S. and China over emergent technologies, such as 5G mobile phone networks, artificial intelligence and autonomous driving.

“The Defense Innovation Unit’s mission has never been more critical, given the tech race that we’re in with China, than it is today,” Brown said.

Chinese investors and companies also are here, for many of the same reasons — to find the breakthroughs that will help their nascent and growing tech industry. But they’re presence is under increasing scrutiny, fueled by a concern that Chinese investors and companies are part of a system of transferring technology out of the U.S. and into the hands of an adversary, the Chinese government.

Raising alarms

Brown is the co-author of a report that shed light on the growing presence of Chinese firms and investors in Silicon Valley and raised alarms over whether the U.S. was in danger of losing key technology to the Chinese. 

The U.S. government has expanded its restrictions on Chinese companies buying firms deemed to hold key technology. And Chinese investors are finding it harder to be part of funding rounds of U.S. startups.

“Investors have become much more sensitive to the issue,” said Rebecca Fannin, author of “Tech Titans of China.” “They’re more cautious about investing.”

​Mixed reception

Some in the tech industry are skeptical of working for either the Pentagon or Chinese companies and the Chinese government. Employees at Google this year pushed back on projects involving both.

Brown’s job is two-fold. With his deep ties in the tech industry, he helps find technology that might help the military. He is also an ambassador of sorts for the Pentagon in Silicon Valley, building a bridge to tech firms large and small.

“For areas like artificial intelligence or cyber, we need those companies more than they need us,” he said. “But when we’re talking about smaller companies that are trying to get off the ground, get to their first $100 million in revenue, they’re interested in large customers. So, we have found no reluctance at all, in fact, enthusiastic response that they participate in our solicitations.”

American tech companies have long argued for the same access to China’s market that Chinese companies have here, for a “level playing field.” That hasn’t happened yet, but some are skeptical that disengaging from the Chinese economy is the right approach.

Vigilance, engagement

At a recent event by the Asia Society Northern California, investors, former tech executives and intellectual property experts discussed the conflict with China. Engagement with China has worked, argued Andy Rothman, an investment strategist at Matthews Asia, an investment firm, even if there is still a lot China hasn’t done that it said it would do.“The level of personal freedom that the Chinese people have today is dramatically better than it was 30 or 40 years ago and part of that is due to engagement with the rest of the world,” Rothman said.

For Brown, the issue isn’t how far China has come. It’s about the U.S. maintaining its technology edge and getting tech firms to think twice about working with the Chinese, even though the country represents a huge, largely untapped market.

“We do not share the same values as the Chinese Communist Party,” he said. “We need to be aware of that as we’re looking to make the next dollar. There’s other things at stake.”

However the trade war is settled, the ongoing tensions over whether there will be one or two tech super powers likely will remain.
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