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Nicholas Thompson on China's tech U-turn
Six months ago, China's tech giants were champions of the state, working with the government to conquer US Big Tech. But then Xi Jinping started cracking down, and a trillion dollars in their market value is gone. Huh? For Nicholas Thompson, CEO of The Atlantic and former editor-in-chief of WIRED, it makes sense for Xi to go after cryptocurrencies to ensure they don't replace the yuan. But going after national tech champions, he says, could be fool's errand because it's inevitable they'll someday become more powerful than the state itself.
Watch this episode of GZERO World with Ian Bremmer: Big Tech: Global sovereignty, unintended consequences
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How to fix Facebook
Ian Bremmer's Quick Take:
Hey everybody and happy Monday. Back in the office, getting a little cool. So I've got my sweater going on. It's the first time I've had a sweater on. What do you do with that? Discussing fashion, as I talk to you about what is on my mind this week?
And what's on my mind this week, Facebook. Facebook is on my mind. It's a tough week for Facebook. There are all sorts of whistleblowers out there. There's testimony going on. There's calls for regulation. Everybody seems unhappy with them. Indeed, you even got the government relations types, Nick Clegg, who I've known for a long time back when he was a policymaker in the UK saying that the headlines are going to be rough, but we're are going to get through it. But I will say, first of all, I'm kind of skeptical that any of this goes anywhere in terms of impact on how Facebook actually operates.
I mean, if there's anything that's a real threat to Facebook going forward, it's whether or not people themselves, the consumers start to opt out. Is it a place for young people around the world or is it really just folks like me who are engaged in posting and all of that kind of thing. But why do I feel that way? Well, one, because government does not in any way agree on what to do.
I mean, on the right, you have a lot of people who think the problem is about culture warriors. It's political incorrectness not being allowed. It's people on the right being taken off unnecessarily. So of course, that starts with Trump. It goes farther with others. It is certainly true that the most viewed sites on Facebook continue to be people like Ben Shapiro and Dan Bongino and Fox News. It's not consistent every day, but it is absolutely majority. So it's hard to make that argument overall, but certainly in terms of individual people that are getting canceled and folks that are seen as putting forward, what is described as fake news and disinformation on Facebook, whether it's around the elections or around white nationalism and supremacy, or even around vaccines and the pandemic response, there has been more sensitivity on both the actions taken and the responses from the right than from the left.
On the other hand, on the left, you have people who are saying there's far too much power. This is bad for civil society. It's driving people towards extremes. It promoted all sorts of stop-the-steal behavior and promoted violence as a consequence. And so, it's a very different set of what... When the country is as tribal as it is, the responses to where you see a lot of that tribalism is very, very different.
Secondly, the company of course itself is not interested in taking on principal responsibility for solving the challenges of regulation. I mean, companies always say they'd rather functionally regulate themselves, but they don't want to have direct responsibility for that because that implies direct accountability with the population for that. So in other words, this reminds me of what you used to hear from China 10, 20 years ago, which is, "hey, we're small. We are poor. We're weak. Don't look to us for the global solutions, look to the United States for the global solutions." Facebook is kind of doing the same thing. I mean, I don't know if you read Axios this morning, but Facebook's sponsoring it. And they're basically saying, hey, we want regulation. We want the government to tell us there are problems with the kind of news that's on our and other sites. And we want the government to create new sets of rules that will apply across the entire internet, across all social media that will determine how we should function, what kind of information we should post, what we should not post. They're asking for it. And in part they're asking for it because as they know they're not really going to get it, but in part they're asking for it because it means not their responsibility. If it screws up, it's on somebody else. It's on the US government. Furthermore, Facebook, like most of these AI-driven organizations, don't really know what their algos, what the algorithms really do. And that's a problem of AI. You've got deep learning into massive amounts of big data. And you understand that it's getting you outcomes that drive more engagement, but you don't really know exactly what it's doing.
It's not telling you. I mean, you can figure out what patterns it's getting information from, but that's very different from having a human being sit down and explain, okay, here's why we're getting more engagement. Here is the strategy and the logic behind it. I mean, when you are programming algorithms to look inside data, to drive more engagement, you will get that outcome. And it's not an effort to polarize. It's not an effort not to polarize either. It's just an effort to drive more engagement. And if the companies themselves don't really know what the algos do, then it's very hard for them themselves to say, "well, here's what we would do if we wanted to ensure that civil society was stronger." Because that's not what you're optimizing for. You're optimizing for the business model itself.
Then of course you have the point that it's the United States versus China in terms of the supremacy of different technological capabilities of which Facebook is one. And if you're weakening Facebook, if you're breaking up Facebook, if you're regulating Facebook in a way that fundamentally subverts their business model, while in China with many more citizens and far more data, because there's no real privacy consolidated in super apps, well the Chinese companies are going to become more successful. They'll win. And if these companies are increasingly meant to be a big component of what national security means and how one competes on the global stage, the worst thing you can do is undermine American companies at the expense of their competitiveness, vis-a-vis China.
So I think all of these things together are reasons why it is unlikely that we are going to see structural regulation that will meaningfully undermine the power of organizations like Facebook to have more and more influence over the areas that they play. And in the case of Facebook, it really is social interaction, information, and news that the average person around the world on the platform, 3 billion people at this point are digesting.
I do think that there are some... As Ian Bremmer here, there are some obvious fixes that would reduce the level of the problem. I mean, fix number one seems pretty clear to me, that choosing not to run political ads of any sort would improve the level of information and the quality of discourse with US elections. That's number one. Secondly, systematically reducing the importance of domestic politics, or heck, even all politics on the site so that people who are going to Facebook are not being fed primarily that kind of information. That runs against my interest, frankly, but nonetheless, I think it would probably help.
And third, my favorite one, everyone should be verified. Every person that is on the site should actually be a real person like on LinkedIn, for example. They have to sign in and verify who they are. If they break the terms of agreement, then that means that they lose that. And they can't just come up with another random anonymous account. Now, the problem with all three of these fixes is that they all would actually in different ways undermine the business model. You will make less money if you don't take political ads, if you don't run them. You will make less money if something that's very popular, drives a lot of engagement, like politics is reduced in its prevalence on the site. You will make less money if you get rid of all of the anonymous accounts and the bots and the fake trolls, because they drive engagement, they drive a lot of engagement.
So there are very legitimate reasons that a shareholder-driven company would not take the steps to make those sorts of fixes. And there's also lots of reasons that I mentioned before, why the US government will not put the kind of regulations in place that would lead to fixes like that. So what does that mean? What's going to happen? What's going to happen is that we are going to need to adapt to an environment where technology companies are increasingly powerful in various digital spaces.
This reminds me of when I first came up with the idea of the "G-Zero World," a world without global leadership almost 10 years ago now, and immediately the response I got from people is, "okay, Ian, well, that's bad. So how do we stop it from happening?" And I was like, "well, what do you mean? How do we stop it from happening?" I'm telling you, I think it's going to happen and it's going to happen because it's overdetermined, because the United States increasingly doesn't want to be the global policeman or architect of global trade for reasons that are deep and structural. And the Europeans are more divided themselves and less capable and willing of providing that kind of leadership in the absence of the US. And the Russians are in decline, but angry at the Americans and the Europeans. They want to further undermine those countries and their ability and willingness to provide that leadership. And China's becoming stronger, but they are not aligned with the political and economic models of the US and Europe.
So it's not how you stop the "G-Zero" from coming. It's given that the "G-Zero" is coming, what do you do about it? How do you respond to it? How do you adapt to it? It's like climate change. We started 27 years ago, the COP process and the people involved would not even talk about adaptation because that was tantamount to surrender. If you said you were going to adapt to climate change, that meant that you were refusing, you were abdicating responsibility for a world that we had to stop climate change. And yet, the reasons that climate change were not going to be stopped were so incredibly overdetermined. So entrenched among many actors across the entire world, that it should have been obvious that we were heading towards one, two degrees, increasingly three degrees centigrade of warming. And it's a horrible thing for the environment, but we need to adapt to it. Doesn't mean that we stopped trying to mitigate the consequences themselves, of course, but you can't refuse to adapt. Adaptation has to be a big component of how you respond. And I think when we talk about Facebook, when we talk about technology companies more broadly, adaptation is increasingly a core part of the model in part because it's happening a lot faster than climate change. And for reasons that I've argued, I really don't think it is sensible to presume that we're going to be able to fix this in the near term future.
That's enough for me. Hope everyone's good. Talk to everyone soon.
LinkedIn out of China | GZERO World
LinkedIn right to shut down in China, says journalist Nick Thompson
The Atlantic CEO Nick Thompson believes in tech firms doing business in China because connecting with people there is a huge social good for the world. But in demanding LinkedIn de-platform certain people, he says, the Chinese government crossed a line, and "you can't justify that."
Watch Ian Bremmer's interview with Nicholas Thompson in an upcoming episode of GZERO World, airing on US public television.
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The US and EU further talks on technology governance
Marietje Schaake, International Policy Director at Stanford's Cyber Policy Center, Eurasia Group senior advisor and former MEP, discusses trends in big tech, privacy protection and cyberspace:
Hello, and welcome to the new Cyber In 60 Seconds. My name is Marietje Schaake, and you're finding me at the Democracy Forum in Athens. So, from my hotel room, I'm looking back at the Trade and Technology Council that took place in Pittsburgh this week.
For those who missed it, this gathering brought together high-level officials from the Biden administration and the European Commission. It was a long-anticipated meeting that was supposed to reach conclusions about a shared governance agenda for tech-related issues like AI, data, semiconductors, and foreign direct investments. But the Trade and Technology Council was also expected and hoped to mark a new start after very difficult years across the Atlantic. I think we all remember the years when President Trump was still in the White House. And thankfully, the August fallout and French anger did not end up pouring cold water over the events. Although, the general sentiment in Europe that the honeymoon weeks are over is widely shared.
The conclusions of the Trade and Technology Council actually read more like an agreement on the agenda for the next couple of years, rather than tangible actions and conclusions. Tony Gardner, the former US Ambassador to the EU actually remarked that reading them, he figured the fact that the meeting took place at all was a result to mark. But with low expectations, the only way seems up, and there is work being planned in no less than 10 working groups, focusing on green tech standards and SMEs.
And developments that I'm going to watch are trade rules such as sharing information on dual-use export controls, but also FDI screening. The coordination on semiconductors, despite respective programs to develop domestic industries. Data governance, including access for academics. But without the privacy, because that issue is negotiated separately. And then of course, the question of aligning and governing AI in line with democratic values and respect for human rights. Between now and the next meeting, it will be interesting to watch how the tensions between the EU, the US, and China may unfold and whether the EU and the US will converge as part of a larger democratic alliance, but also which domestic legislative initiatives may go on and unfold that could actually impact the agenda of the next Trade and Technology Council in a year.
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Can China limit kids’ video game time? Risks with facial recognition
Marietje Schaake, International Policy Director at Stanford's Cyber Policy Center, Eurasia Group senior advisor and former MEP, discusses trends in big tech, privacy protection and cyberspace:
China is to ban kids from playing video games for more than three hours a week. But why and how?
Well, controlling the time that kids spend online fits in a pattern of growing paternalism from a state that wants to control its population in every possible way. This time around, the gaming industry is made responsible for enforcing the time limits in China that foresee in a true diet of gaming; one hour per day on Friday, Saturday, or Sunday. And of course, children are vulnerable. Protecting them from addictive and violent activities can be a very wise choice that parents want to make. There are also laws in a number of countries that limit advertisements that target children, for example. But whether the latest restrictions on gaming in China will work or instead will inspire a young generation to learn of clever circumvention remains to be seen.
With US agencies looking to expand the use of facial recognition tech, what are the security concerns?
Well, I see moral, legal, and operational concerns around the mass deployment of facial recognition systems. For one, they do not always work accurately and even if they do, privacy rights are at stake for all. But with false positives, innocent people end up being targets. And there's a real risk of mission creep. Black men specifically but other minorities more generally, end up being particularly vulnerable to the bias, misidentification, and abuse of facial recognition systems. So from the point of view of their safety, these systems should not be used.
China data privacy law limits big tech, but has few rights protections
Marietje Schaake, International Policy Director at Stanford's Cyber Policy Center, Eurasia Group senior advisor and former MEP, discusses trends in big tech, privacy protection and cyberspace:
How does China's recently passed privacy law compare to other countries?
While China's new law is said to be similarly comprehensive as the EU's General Data Protection Regulation and would indeed limit the decision-making power of its big tech companies. However, no law exists just on paper. There's always a context. And in the case of China, there are very few rights protections for people. While in the EU, fundamental rights protections were the main aim of the GDPR. For all geopolitical blocs with new data governance laws, China, India or the EU, we see a balancing act between national security arguments, rights protections, and economic development ambitions. But conspicuously absent from the list is the United States, which still does not have a federal data protection law.
With PayPal launching a cryptocurrency service in the UK, are digital currencies going mainstream now?
Whether or not cryptocurrencies go mainstream does not only depend on what you can buy with them today, but also on what regulators will be doing in the future. Only this week, the UK's FCA said it's not capable of supervising Binance. And I suspect that that dynamic, where a supervisory authority cannot perform its core tasks because of cryptocurrencies won't be accepted much longer.
China's tech crackdown leads to huge losses; Citizen app controversy
Marietje Schaake, International Policy Director at Stanford's Cyber Policy Center, Eurasia Group senior advisor and former MEP, discusses trends in big tech, privacy protection and cyberspace:
How will China's tech crackdown affect the rest of the world?
Well, investors in the US, but also globally were not amused with Beijing's policy decisions coming right after DiDi's IPO and leading to huge losses. Overseas listings are now directly targeted in moves that are being defended as being based on national security, kind of sounds familiar, but the value of Chinese tech stock all over the world is dropping. But still, many continue to view the relationship between Chinese-based companies and the state as symbiotic. So if nothing else, recent moves certainly show that Chinese decision-makers want to keep their grip on anything that happens in the country, very firm.
What is the controversy behind the real-time crime app "Citizen"?
While the company is acting in line with its previous name "Vigilante", because it's profiting from vigilantism by offering private security services and exploiting people's fear, encouraging them to be monitored 24/7 in the name of their own safety. That means that the app can listen in on audio for the sound of screams for example. They essentially want to go around public services like the police or first aid providers. The company misidentified a suspect of a crime and put a $30,000 reward on their head. It's quite a far-reaching service and we'll have to see how much longer people will tolerate it.
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Why is China trying to game the gamers?
This week, the market value of Tencent, China's biggest video game company, nosedived after a state media outlet suggested that online gaming was as addictive and destructive as opium. Tencent immediately pledged to cap the number of hours people can play, and to keep minors off its platforms.
It's the latest example of a months-long crackdown on major Chinese technology firms that until recently were viewed as some of the world's most powerful and successful companies, as well as a source of national pride. Beijing's about-face on its own tech titans could have big implications for China, and beyond.
Who's being targeted? First they came for billionaire Jack Ma, who was fined a whopping $2.8 billion for alleged antitrust violations and stopped from launching Ant Group, part of his Alibaba empire, as the world's biggest IPO. The value of its stock has plummeted since.
Then Beijing imposed sweeping restrictions on cryptocurrency trading, perceived as being too volatile... right as China (wink-wink) is pushing its own digital yuan as a reliable alternative.
After that, it was the turn of ride-hailing app Didi, which — on the eve of its American IPO — had its offices raided by state security agents for collecting more data on passengers than Beijing was comfortable leaving in the hands of a private firm. Next, for-profit tutoring giants were taken offline for skewing college admission odds towards the kids of rich families who can afford the help.
Now, it's the gamers' turn.
Why all the fuss? Beijing has all these companies in its crosshairs because they do at least one of three things Xi Jinping doesn't seem to like: they've become too big too fast, have gathered too much data, or are making too much money at the expense of social stability.
At a time of rising inequality in China, being rich is no longer, in Deng Xiaoping's own words, "glorious."
Here are two ways to understand what's going on.
One prevailing narrative — especially in the West — is that Xi is bullying large, rich companies because he is simply an authoritarian party boss who wants to stop any tech mogul or company from becoming too influential for the ruling Communist Party. Some argue that Xi would rather put the likes of Alibaba, Didi, or Tencent in their place — and perhaps out of business altogether — than let them become rival power centers. That's especially true if US stock market listings open up sources of financing and influence for these companies from Beijing's number one rival.
But another reading is that he is using his terrible powers for an understandable purpose. After decades of breakneck growth and corporate enrichment, China is reining in companies in the interest of social harmony over infinite growth. From this perspective, Xi is astutely flexing the one-party state's (considerable) muscle to nip social ills like inequality, monopoly, or gaming-induced apathy in the bud before they become horrific political problems like in the West.
In fact, at a time when many countries want to regulate tech firms but can't do so expediently as democracies, Beijing is — as far as this argument goes — ahead of the curve. In other words, by cracking down on tech behemoths Xi's acting less like Joseph Stalin than like trust-buster Teddy Roosevelt.
Xi has found an unexpected ally in Chinese youth, who are otherwise tired of their parents and the government ganging up on them over playing video games. There's a #MeToo angle — Tencent is one of several tech firms linked to Kris Wu, a famous singer accused of sexually assaulting multiple women. In cancelling him, young Chinese and the CCP have found common ground: the youth hate Wu for being a sexual predator, while the party generally despises the celebrity obsession culture tech companies rake in billions from.
What do you think? Is Xi using his power for good or bad reasons? Let us know here.
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