The ruling Communist Party is tightening political control over China’s internet giants and tapping their wealth to pay for its ambitions to reduce reliance on U.S. and European technology.
Anti-monopoly and data security crackdowns starting in late 2020 have shaken the industry, which flourished for two decades with little regulation. Investor jitters have knocked more than $1.3 trillion off the total market value of e-commerce platform Alibaba, games and social media operator Tencent and other tech giants.
The party says anti-monopoly enforcement will be a priority through 2025. It says competition will help create jobs and raise living standards.
President Xi Jinping’s government seems likely to stay the course even if economic growth suffers, say businesspeople, lawyers and economists. “These companies are world leaders in their sectors in innovation, and yet the leadership is willing to squash them all,” said Mark Williams, chief Asia economist for Capital Economics.
The crackdown reflects Xi’s public emphasis on reviving the party’s “original mission” of leading economic and social development, said Steve Tsang, a Chinese politics specialist at the School of Oriental and African Studies in London. He said it could also help Xi politically if, as expected, he pursues a third five-year term as party leader.
Chinese leaders don’t want to reimpose direct control of the economy but want private sector companies to align with ruling party plans, said Lester Ross, head of the Beijing office of law firm WilmerHale.
“What they are worried about is companies getting too big and too independent of the party,” said Ross.
Chinese internet companies and their billionaire founders, including Alibaba Group’s Jack Ma and Tencent Holdings’ Pony Ma, are among the biggest global success stories of the past two decades. Alibaba is the biggest e-commerce company, while Tencent operates the popular WeChat messaging service.
But party plans emphasize robots, chips and other hardware, so these companies are rushing to show their loyalty by shifting billions of dollars into those.
The ruling party’s campaign is prompting warnings the world might decouple, or split into separate markets with incompatible technology. Products from China wouldn’t function in the United States or Europe, and vice versa. Innovation and efficiency would suffer.
U.S. curbs on Chinese access to telecom and other technology haven’t helped.
Alibaba said it will invest $28 billion to develop operating system software, processor chips and network technology. The company has pledged $1 billion to nurture 100,000 developers and tech startups over the next three years.
Last year, Tencent promised to invest $70 billion in digital infrastructure. Meituan, an e-commerce, delivery and service platform, raised $10 billion to develop self-driving vehicles and robots.
Chinese officials recognize the campaign imposes an economic cost but are unwilling to speak up, said Tsang. “Who is going to stand up and say to Xi Jinping, your policy is going to be harmful to China?”
Investors, many burned by the drop in technology shares, are keeping their money on the sidelines. Tencent’s market capitalization of $575 billion is down $350 billion from its February peak, a decline equal to more than the total value of Nike Inc. or Pfizer Inc.
CEO Masayoshi Son of Japan’s Softbank Group — an early investor in Alibaba — said on Aug. 11 he will put off new China deals. Softbank invested $11 billion in ride-hailing service Didi Global, whose share price has fallen by one-third since its U.S. stock market debut on July 30.
The crackdown began in November when Beijing ordered Ant Group, which grew out of Alibaba’s Alipay online payments service, to postpone its stock market debut in Hong Kong and Shanghai. The company, which offers online savings and investment services, was told to scale back its plans and to install bank-style systems to vet borrowers and manage lending risks. Industry analysts cut forecasts of Ant’s expected stock market value.
Buried deep in Biden Infrastructure Law: mandatory kill switches on all new cars by 2026
Remember that 2700-page, $1 trillion dollar infrastructure bill that the US government passed back in August? Well, have you read it? Of course we’re joking — we know you haven’t read it. Most of the legislators who voted on it probably haven’t either. Some folks have, though, and they’re finding some pretty alarming things buried in that bill.
One of the most concerning things we’ve heard so far is the revelation that this “infrastructure” bill includes a measure mandating vehicle backdoor kill-switches in every car by 2026. The clause is intended to increase vehicle safety by “passively monitoring the performance of a driver of a motor vehicle to accurately identify whether that driver may be impaired,” and if that sentence doesn’t make your hair stand on end, you’re not thinking about the implications.
Let us spell it out for you: by 2026, vehicles sold in the US will be required to automatically and silently record various metrics of driver performance, and then make a decision, absent any human oversight, whether the owner will be allowed to use their own vehicle. Even worse, the measure goes on to require that the system be “open” to remote access by “authorized” third parties at any time.
The passage in the bill was unearthed by former Georgia Representative Bob Barr, writing over at the Daily Caller. Barr notes correctly that this is a privacy disaster in the making. Not only does it make every vehicle a potential tattletale (possibly reporting minor traffic infractions, like slight speeding or forgetting your seat-belt, to authorities or insurance companies), but tracking that data also makes it possible for bad actors to retrieve it.
More pressing than the privacy concerns, though, are the safety issues. Including an automatic kill switch of this sort in a machine with internet access presents the obvious scenario that a malicious agent could disable your vehicle remotely with no warning. Outside that possible-but-admittedly-unlikely idea, there are all kinds of other reasons that someone might need to drive or use their vehicle while “impaired”, such as in the case of emergency, or while injured.
Even if the remote access part of the mandate doesn’t come to pass, the measure is still astonishingly short-sighted. As Barr says, “the choice as to whether a vehicle can or cannot be driven … will rest in the hands of an algorithm over which the car’s owner or driver have neither knowledge or control.” Barr, a lawyer himself, points out that there are legal issues with this whole concept, too. He anticipates challenges to the measure on both 5th Amendment (right to not self-incriminate) and 6th Amendment (right to face one’s accuser) grounds. He also goes on to comment on the vagueness of the legislation. What exactly is “impaired driving”? Every state and many municipalities have differing definitions of “driving while intoxicated.”
Furthermore, there’s also no detail in the legislation about who should have access to the data collected by the system. Would police need a warrant to access the recorded data? Would it be available to insurance companies or medical professionals? If someone is late on their car payment, can the lender remotely disable the vehicle? Certainly beyond concerns of who would be allowed official access, there’s also once again the ever-present fear of hackers gaining access to the data—which security professionals well know, absolutely will happen, sooner or later. As Barr says, the collected data would be a treasure trove of data to “all manner of entities … none of which have our best interests at heart.”
Microsoft employees say hello by pronouns and race
Facebook plans to shut down its facial recognition program
- Meta, the company formerly known as Facebook, on Tuesday announced it will be putting an end to its face recognition system.
- The company said it will delete more than 1 billion people’s individual facial recognition templates as a result of this change.
- Facebook services that rely on the face recognition systems will be removed over the coming weeks, Meta said.
Facebook on Tuesday announced it will be putting an end to its facial recognition system amid growing concern from users and regulators.
The social network, whose parent company is now named Meta, said it will delete more than 1 billion people’s individual facial recognition templates as a result of this change. The company said in a blog post that more than a third of Facebook’s daily active users, or over 600 million accounts, had opted into the use of the face recognition technology.
Facebook will no longer automatically recognize people’s faces in photos or videos, the post said. The change, however, will also impact the automatic alt text technology that the company uses to describe images for people who are blind or visually impaired. Facebook services that rely on the face recognition systems will be removed over the coming weeks.
“There are many concerns about the place of facial recognition technology in society, and regulators are still in the process of providing a clear set of rules governing its use,” the company said. “Amid this ongoing uncertainty, we believe that limiting the use of facial recognition to a narrow set of use cases is appropriate.”
Ending the use of the face recognition system is part of “a company-wide move away from this kind of broad identification,” the post said.
Meta, which laid out its road map last week for the creation of a massive virtual world, said it will still consider facial recognition technology for instances where people need to verify their identity or to prevent fraud and impersonation. For future uses of facial recognition technology, Meta will “continue to be public about intended use, how people can have control over these systems and their personal data.”
The decision to shut down the system on Facebook comes amid a barrage of news reports over the past month after Frances Haugen, a former employee turned whistleblower, released a trove of internal company documents to news outlets, lawmakers and regulators.