ReportWire

Tag: trade regulation and policy

  • China may prefer TikTok to be banned than fall into US hands | CNN Business

    China may prefer TikTok to be banned than fall into US hands | CNN Business

    [ad_1]


    Hong Kong
    CNN
     — 

    Nearly three years after the Trump administration threatened to ban TikTok if its Chinese owner didn’t sell the company to American investors, the video app is once again facing an existential threat.

    TikTok CEO Shou Zi Chew will appear later Thursday before US lawmakers, many of whom want the app banned in the United States because of the risk they say it presents to national security. The clamor for a sale is growing louder again.

    But an outright divestment isn’t in the cards, according to analysts and legal experts, not least because the Chinese government views TikTok’s technology as sensitive and has taken steps since 2020 to ensure it can veto any sale by its Beijing-based owner, ByteDance.

    At issue is who owns the keys to TikTok’s algorithms and the vast troves of data collected from the 150 million people in the United States who use the app each month.

    The Chinese government considers some advanced technology, including content recommendation algorithms, to be critical to its national interest. In December, Chinese officials proposed tightening the rules that govern the sale of that technology to foreign buyers.

    “Beijing will have no say in the US decision to mandate the sale of TikTok, but it will retain the ultimate approval authority over such a sale,” said Brock Silvers, chief investment officer for Kaiyuan Capital.

    “It also seems extremely unlikely that Beijing will accept any deal that removes TikTok’s algorithm[s] from its direct control and regulatory authority,” he said.

    TikTok’s algorithms, which keep users glued to the app, are believed to be key to its success. The algorithms give recommendations based on users’ behavior, thus pushing videos they actually like and want to watch.

    Chinese regulators first added algorithms to the restricted list of technologies in August 2020, when the Trump administration threatened to ban TikTok unless it was sold.

    Back then, Chinese state media published a commentary by a professor of trade at the University of International Business and Economics who said the updated rules meant ByteDance would need a license from Beijing to sell its technology.

    “Some cutting-edge technologies might impact national security and public welfare, and need to be included in [export control] management,” Cui Fan told Xinhua.

    The intended sale of TikTok in 2020 to Oracle and Walmart hit a snag after Beijing added algorithms to its export control list. The Biden administration eventually rescinded the Trump-era executive order targeting TikTok, but replaced it with a broader directive focused on investigating technology linked to foreign adversaries, including China.

    Now, the company is once again caught up in a geopolitical struggle between Washington and Beijing.

    “The TikTok hearings in the United States mark the beginnings of a regulatory meat-grinder facing all [Chinese] tech companies,” said Alex Capri, a research fellow at the Hinrich Foundation.

    A senior official from the Chinese regulator of digital and traditional media visited Bytedance’s offices last week. He urged the company to improve the use of “recommendation algorithms” to spread “positive energy” and strengthen the review of online content, according to a statement from the regulator posted on its website.

    The visit highlights Beijing’s resolve to keep its most powerful internet companies on a tight leash. It also has more direct levers to pull.

    In April 2021, a Chinese government entity acquired a “golden share” of 1% in a Beijing subsidiary of ByteDance, according to business data platform Qichacha. The subsidiary controls operating licenses for Douyin, TikTok’s sister app in China, and Toutiao, a news aggregation app.

    “TikTok’s algorithms make it truly unique in terms of data harvesting and strategic analytics, therefore, I don’t see Beijing allowing it to fall into the hands of US interests,” said Capri.

    “Unless they can somehow still access TikTok’s data through other means and methods, including ongoing cyber intrusion and other forms of back-door access.”

    Chinese regulators have been gradually tightening their control over algorithm technology more generally.

    Starting in March 2022, an unprecedented regulation came into effect requiring internet companies to register recommendation algorithms with the Cyberspace Administration, the powerful internet regulator that reports to President Xi Jinping.

    At the beginning of 2023, rules governing “deep synthesis algorithms” also took effect. They will restrict the use of AI-powered image, audio and text-generation software. Such technologies underpin popular apps such as ChatGPT.

    These regulatory developments suggest that TikTok’s recommendation algorithms will be subject to China’s export controls, said Winston Ma, an adjunct professor at New York University School of Law.

    TikTok has been erecting technical and organizational barriers that it says will keep user data safe from unauthorized access.

    Under the plans, known as Project Texas, the US government and third-party companies such as Oracle would also have some degree of oversight of TikTok’s data practices. TikTok is working on a similar plan for the European Union known as Project Clover.

    But that hasn’t reassured US officials, likely because no matter what TikTok does internally, China would still theoretically have leverage over TikTok’s Chinese owners. (Similar measures taken by Huawei didn’t prevent it from being kicked out of Western 5G markets.)

    And the concerns would remain even if TikTok is sold to an American buyer, Capri said.

    “A change of TikTok’s ownership solves nothing,” he said. “The real issue is general data security and who ultimately has access to that data, by whatever means, regardless of legal ownership.”

    The true test, he said, is whether user data can be effectively ring-fenced and privacy and security can be achieved through data segregation, encryption and other means.

    As for a solution, Silvers expects both sides to try to “finesse a compromise” where US concerns are addressed, but Beijing still retains control over TikTok.

    But, he believes Beijing would ultimately prefer for TikTok leave the US market rather than surrender its algorithm.

    “If any Chinese company is to have any chance of surviving increased scrutiny from Western governments, they will have to entrust their data to third party security firms and endure rigorous third party audits and government intrusion, in addition to transferring ownership,” Capri said.

    “This is really an existential crisis for Chinese firms operating in the West.”

    [ad_2]

    Source link

  • Dutch to restrict semiconductor tech exports to China, joining US effort | CNN Business

    Dutch to restrict semiconductor tech exports to China, joining US effort | CNN Business

    [ad_1]


    Amsterdam/Washington
    Reuters
     — 

    The Netherlands’ government on Wednesday said it plans new restrictions on exports of semiconductor technology to protect national security, joining the US effort to curb chip exports to China.

    The announcement marked the first concrete move by the Dutch, who oversee essential chipmaking technology, toward adopting rules urged by Washington to hobble China’s chipmaking industry and slow its military advances.

    The US in October imposed sweeping export restrictions on shipments of American chipmaking tools to China, but for the restrictions to be effective it needs other key suppliers in the Netherlands and Japan, who produce key chipmaking technology, to agree. The allied countries have been in talks on the matter for months.

    Dutch Trade Minister Liesje Schreinemacher announced the decision in a letter to parliament, saying the restrictions will be introduced before the summer.

    Her letter did not name China, a key Dutch trading partner, nor did it name ASML Holding

    (ASML)    , Europe’s largest tech firm and a major supplier to semiconductor manufacturers, but both will be affected. It specified one technology that will be impacted is “DUV” lithography systems, the second-most advanced machines that ASML sells to computer chip manufacturers.

    “Because the Netherlands considers it necessary on national security grounds to get this technology into oversight with the greatest of speed, the Cabinet will introduce a national control list,” the letter said.

    A White House representative did not immediately respond to a request for comment.

    ASML said in a response it expects to have to apply for licenses to export the most advanced segment among its DUV machines, but that would not impact its 2023 financial guidance.

    ASML dominates the market for lithography systems, multimillion dollar machines that use powerful lasers to create the minute circuitry of computer chips.

    The company expects sales in China to remain about flat at 2.2 billion euros in 2023, implying relative shrinkage as the company expects overall sales to grow by 25%. Major ASML customers such as TSMC and Intel

    (INTC)     are engaged in capacity expansions.

    ASML has never sold its most advanced “EUV” machines to customers in China, and the bulk of its “DUV” sales in China go to relatively less advanced chipmakers. Its biggest South Korean customers, Samsung

    (SSNLF)     and SK Hynix both have significant manufacturing capacity in China.

    The Dutch announcement leaves major questions unanswered, including whether ASML will be able to service the more than 8 billion euros worth of DUV machines it has sold to customers in China since 2014.

    Schreinemacher said the Dutch government had decided on measures “as carefully and precisely as possible … to avoid unnecessary disruption of value chains.”

    “It is for companies of importance to know what they are facing and to have time to adjust to new rules,” she wrote.

    Japan is expected to issue an update on its chip equipment export policies as soon as this week.

    [ad_2]

    Source link

  • Fact check: Trump delivers wildly dishonest speech at CPAC | CNN Politics

    Fact check: Trump delivers wildly dishonest speech at CPAC | CNN Politics

    [ad_1]


    Washington
    CNN
     — 

    As president, Donald Trump made some of his most thoroughly dishonest speeches at the annual Conservative Political Action Conference.

    As he embarks on another campaign for the presidency, Trump delivered another CPAC doozy Saturday night.

    Trump’s lengthy address to the right-wing gathering in Maryland was filled with wildly inaccurate claims about his own presidency, Joe Biden’s presidency, foreign affairs, crime, elections and other subjects.

    Here is a fact check of 23 of the false claims Trump made. (And that’s far from the total.)

    Crime in Manhattan

    While Trump criticized Manhattan District Attorney Alvin Bragg, who has been investigating Trump’s company, he claimed that “killings are taking place at a number like nobody’s ever seen, right in Manhattan.”

    Facts First: It isn’t even close to true that Manhattan is experiencing a number of killings that nobody has ever seen. The region classified by the New York Police Department as Manhattan North had 43 reported murders in 2022; that region had 379 reported murders in 1990 and 306 murders in 1993. The Manhattan South region had 35 reported murders in 2022 versus 124 reported murders in 1990 and 86 murders in 1993. New York City as a whole is also nowhere near record homicide levels; the city had 438 reported murders in 2022 versus 2,262 in 1990 and 1,927 in 1993.

    Manhattan North had just eight reported murders this year through February 19, while Manhattan South had one. The city as a whole had 49 reported murders.

    The National Guard and Minnesota

    Talking about rioting amid racial justice protests after the police murder of George Floyd in Minneapolis in 2020, Trump claimed he had been ready to send in the National Guard in Seattle, then added, “We saved Minneapolis. The thing is, we’re not supposed to do that. Because it’s up to the governor, the Democrat governor. They never want any help. They don’t mind – it’s almost like they don’t mind to have their cities and states destroyed. There’s something wrong with these people.”

    Facts First: This is a reversal of reality. Minnesota’s Democratic governor, Tim Walz, not Trump, was the one who deployed the Minnesota National Guard during the 2020 unrest; Walz first activated the Guard more than seven hours before Trump publicly threatened to deploy the Guard himself. Walz’s office told CNN in 2020 that the governor activated the Guard in response to requests from officials in Minneapolis and St. Paul – cities also run by Democrats.

    Trump has repeatedly made the false claim that he was the one who sent the Guard to Minneapolis. You can read a longer fact check, from 2020, here.

    Trump’s executive order on monuments

    Trump boasted that he had taken effective action as president to stop the destruction of statues and memorials. He claimed: “I passed and signed an executive order. Anybody that does that gets 10 years in jail, with no negotiation – it’s not ’10’ but it turns into three months.” He added: “But we passed it. It was a very old law, and we found it – one of my very good legal people along with [adviser] Stephen Miller, they found it. They said, ‘Sir, I don’t know if you want to try and bring this back.’ I said. ‘I do.’”

    Facts First: Trump’s claim is false. He did not create a mandatory 10-year sentence for people who damage monuments. In fact, his 2020 executive order did not mandate any increase in sentences.

    Rather, the executive order simply directed the attorney general to “prioritize” investigations and prosecutions of monument-destruction cases and declared that it is federal policy to prosecute such cases to the fullest extent permitted under existing law, including an existing law that allowed a sentence of up to 10 years in prison for willfully damaging federal property. The executive order did nothing to force judges to impose a 10-year sentence.

    Vandalism in Portland

    Trump claimed, “How’s Portland doing? They don’t even have storefronts anymore. Everything’s two-by-four’s because they get burned down every week.”

    Facts First: This is a major exaggeration. Portland obviously still has hundreds of active storefronts, though it has struggled with downtown commercial vacancies for various reasons, and some businesses are sometimes vandalized by protesters. Trump has for years exaggerated the extent of property damage from protest vandalism in Portland.

    Russian expansionism

    Boasting of his foreign policy record, Trump claimed, “I was also the only president where Russia didn’t take over a country during my term.”

    Facts First: While it’s true that Russia didn’t take over a country during Trump’s term, it’s not true that he was the only US president under whom Russia didn’t take over a country. “Totally false,” Michael Khodarkovsky, a Loyola University Chicago history professor who is an expert on Russian imperialism, said in an email. “If by Russia he means the current Russian Federation that existed since 1991, then the best example is Clinton, 1992-98. During this time Russia fought a war in Chechnya, but Chechnya was not a country but one of Russia’s regions.”

    Khodarkovsky added, “If by Russia he means the USSR, as people often do, then from 1945, when the USSR occupied much of Eastern Europe until 1979, when USSR invaded Afghanistan, Moscow did not take over any new country. It only sent forces into countries it had taken over in 1945 (Hungary 1956, Czechoslovakia 1968).”

    NATO funding

    Trump said while talking about NATO funding: “And I told delinquent foreign nations – they were delinquent, they weren’t paying their bills – that if they wanted our protection, they had to pay up, and they had to pay up now.”

    Facts First: It’s not true that NATO countries weren’t paying “bills” until Trump came along or that they were “delinquent” in the sense of failing to pay bills – as numerous fact-checkers pointed out when Trump repeatedly used such language during his presidency. NATO members haven’t been failing to pay their share of the organization’s common budget to run the organization. And while it’s true that most NATO countries were not (and still are not) meeting NATO’s target of each country spending a minimum of 2% of gross domestic product on defense, that 2% figure is what NATO calls a “guideline”; it is not some sort of binding contract, and it does not create liabilities. An official NATO recommitment to the 2% guideline in 2014 merely said that members not currently at that level would “aim to move towards the 2% guideline within a decade.”

    NATO Secretary General Jens Stoltenberg did credit Trump for securing increases in European NATO members’ defense spending, but it’s worth noting that those countries’ spending had also increased in the last two years of the Obama administration following Russia’s 2014 annexation of Ukraine’s Crimea and the recommitment that year to the 2% guideline. NATO notes on its website that 2022 was “the eighth consecutive year of rising defence spending across European Allies and Canada.”

    NATO’s existence

    Boasting of how he had secured additional funding for NATO from countries, Trump claimed, “Actually, NATO wouldn’t even exist if I didn’t get them to pay up.”

    Facts First: This is nonsense.

    There was never any indication that NATO, created in 1949, would have ceased to exist in the early 2020s without additional funding from some members. The alliance was stable even with many members not meeting the alliance’s guideline of having members spend 2% of their gross domestic product on defense.

    We don’t often fact-check claims about what might have happened in an alternative scenario, but this Trump claim has no basis in reality. “The quote doesn’t make sense, obviously,” said Erwan Lagadec, research professor at George Washington University’s Elliott School of International Affairs and an expert on NATO.

    Lagadec noted that NATO has had no trouble getting allies to cover the roughly $3 billion in annual “direct” funding for the organization, which is “peanuts” to this group of countries. And he said that the only NATO member that had given “any sign” in recent years that it was thinking about leaving the alliance “was … the US, under Trump.” Lagadec added that the US leaving the alliance is one scenario that could realistically kill it, but that clearly wasn’t what Trump was talking about in his remarks on spending levels.

    James Goldgeier, an American University professor of international relations and Brookings Institution visiting fellow, said in an email: “NATO was founded in 1949, so it seems very clear that Donald Trump had nothing to do with its existence. In fact, the worry was that he would pull the US out of NATO, as his national security adviser warned he would do if he had been reelected.”

    The cost of NATO’s headquarters

    Trump mocked NATO’s headquarters, saying, “They spent – an office building that cost $3 billion. It’s like a skyscraper in Manhattan laid on its side. It’s one of the longest buildings I’ve ever seen. And I said, ‘You should have – instead of spending $3 billion, you should have spent $500 million building the greatest bunker you’ve ever seen. Because Russia didn’t – wouldn’t even need an airplane attack. One tank one shot through that beautiful glass building and it’s gone.’”

    Facts First: NATO did spend a lot of money on its headquarters in Belgium, but Trump’s “$3 billion” figure is a major exaggeration. When Trump used the same inaccurate figure in early 2020, NATO told CNN that the headquarters was actually constructed for a sum under the approved budget of about $1.18 billion euro, which is about $1.3 billion at exchange rates as of Sunday morning.

    The Pulitzer Prize

    Trump made his usual argument that The Washington Post and The New York Times should not have won a prestigious journalism award, a 2018 Pulitzer Prize, for their reporting on Russian interference in the 2016 election and its connections to Trump’s team. He then said, “And they were exactly wrong. And now they’ve even admitted that it was a hoax. It was a total hoax, and they got the prize.”

    Facts First: The Times and Post have not made any sort of “hoax” admission. “The claim is completely false,” Times spokesperson Charlie Stadtlander said in an email on Sunday.

    Stadtlander continued: “When our Pulitzer Prize shared with The Washington Post was challenged by the former President, the award was upheld by the Pulitzer Prize Board after an independent review. The board stated that ‘no passages or headlines, contentions or assertions in any of the winning submissions were discredited by facts that emerged subsequent to the conferral of the prizes.’ The Times’s reporting was also substantiated by the Mueller investigation and Republican-led Senate Intelligence Committee investigation into the matter.”

    The Post referred CNN to that same July statement from the Pulitzer Prize Board.

    Awareness of the Nord Stream 2 pipeline

    Trump claimed of his opposition to Russia’s Nord Stream 2 gas pipeline to Germany: “Nord Stream 2 – Nobody ever heard of it … right? Nobody ever heard of Nord Stream 2 until I came along. I started talking about Nord Stream 2. I had to go call it ‘the pipeline’ because nobody knew what I was talking about.”

    Facts First: This is standard Trump hyperbole; it’s just not true that “nobody” had heard of Nord Stream 2 before he began discussing it. Nord Stream 2 was a regular subject of media, government and diplomatic discussion before Trump took office. In fact, Biden publicly criticized it as vice president in 2016. Trump may well have generated increased US awareness to the controversial project, but “nobody ever heard of Nord Stream 2 until I came along” isn’t true.

    Trump and Nord Stream 2

    Trump claimed, “I got along very well with Putin even though I’m the one that ended his pipeline. Remember they said, ‘Trump is giving a lot to Russia.’ Really? Putin actually said to me, ‘If you’re my friend, I’d hate like hell to see you as my enemy.’ Because I ended the pipeline, right? Do you remember? Nord Stream 2.” He continued, “I ended it. It was dead.”

    Facts First: Trump did not kill Nord Stream 2. While he did approve sanctions on companies working on the project, that move came nearly three years into his presidency, when the pipeline was already around an estimated 90% complete – and the state-owned Russian gas company behind the project said shortly after the sanctions that it would complete the pipeline itself. The company announced in December 2020 that construction was resuming. And with days left in Trump’s term in January 2021, Germany announced that it had renewed permission for construction in its waters.

    The pipeline never began operations; Germany ended up halting the project as Russia was about to invade Ukraine early last year. The pipeline was damaged later in the year in what has been described as an act of sabotage.

    The Obama administration and Ukraine

    Trump claimed that while he provided lethal assistance to Ukraine, the Obama administration “didn’t want to get involved” and merely “supplied the bedsheets.” He said, “Do you remember? They supplied the bedsheets. And maybe even some pillows from [pillow businessman] Mike [Lindell], who’s sitting right over here. … But they supplied the bedsheets.”

    Facts First: This is inaccurate. While it’s true that the Obama administration declined to provide weapons to Ukraine, it provided more than $600 million in security assistance to Ukraine between 2014 and 2016 that involved far more than bedsheets. The aid included counter-artillery and counter-mortar radars, armored Humvees, tactical drones, night vision devices and medical supplies.

    Biden and a Ukrainian prosecutor

    Trump claimed that Biden, as vice president, held back a billion dollars from Ukraine until the country fired a prosecutor who was “after Hunter” and a company that was paying him. Trump was referring to Hunter Biden, Joe Biden’s son, who sat on the board of Ukrainian energy company Burisma Holdings.

    Facts First: This is baseless. There has never been any evidence that Hunter Biden was under investigation by the prosecutor, Viktor Shokin, who had been widely faulted by Ukrainian anti-corruption activists and European countries for failing to investigate corruption. A former Ukrainian deputy prosecutor and a top anti-corruption activist have both said the Burisma-related investigation was dormant at the time Joe Biden pressured Ukraine to fire Shokin.

    Daria Kaleniuk, executive director of Ukraine’s Anti-Corruption Action Center, told The Washington Post in 2019: “Shokin was not investigating. He didn’t want to investigate Burisma. And Shokin was fired not because he wanted to do that investigation, but quite to the contrary, because he failed that investigation.” In addition, Shokin’s successor as prosecutor general, Yuriy Lutsenko, told Bloomberg in 2019: “Hunter Biden did not violate any Ukrainian laws – at least as of now, we do not see any wrongdoing.”

    Biden, as vice president, was carrying out the policy of the US and its allies, not pursuing his own agenda, in threatening to withhold a billion-dollar US loan guarantee if the Ukrainian government did not sack Shokin. CNN fact-checked Trump’s claims on this subject at length in 2019.

    Trump and job creation

    Promising to save Americans’ jobs if he is elected again, Trump claimed, “We had the greatest job history of any president ever.”

    Facts First: This is false. The US lost about 2.7 million jobs during Trump’s presidency, the worst overall jobs record for any president. The net loss was largely because of the Covid-19 pandemic, but even Trump’s pre-pandemic jobs record – about 6.7 million jobs added – was far from the greatest of any president ever. The economy added more than 11.5 million jobs in the first term of Democratic President Bill Clinton in the 1990s.

    Tariffs on China

    Trump repeated a trade claim he made frequently during his presidency. Speaking of China, he said he “charged them” with tariffs that had the effect of “bringing in hundreds of billions of dollars pouring into our Treasury from China. Thank you very much, China.” He claimed that he did this even though “no other president had gotten even 10 cents – not one president got anything from them.”

    Facts First: As we have written repeatedly, it’s not true that no president before Trump had generated any revenue through tariffs on goods from China. In reality, the US has had tariffs on China for more than two centuries, and FactCheck.org reported in 2019 that the US generated an “average of $12.3 billion in custom duties a year from 2007 to 2016, according to the U.S. International Trade Commission DataWeb.” Also, American importers, not Chinese exporters, make the actual tariff payments – and study after study during Trump’s presidency found that Americans were bearing most of the cost of the tariffs.

    The trade deficit with China

    Trump went on to repeat a false claim he made more than 100 times as president – that the US used to have a trade deficit with China of more than $500 billion. He claimed it was “five-, six-, seven-hundred billion dollars a year.”

    Facts First: The US has never had a $500 billion, $600 billion or $700 billion trade deficit with China even if you only count trade in goods and ignore the services trade in which the US runs a surplus with China. The pre-Trump record for a goods deficit with China was about $367 billion in 2015. The goods deficit hit a new record of about $418 billion under Trump in 2018 before falling back under $400 billion in subsequent years.

    Trump and the 2020 election

    Trump said people claim they want to run against him even though, he claimed, he won the 2020 election. He said, “I won the second election, OK, won it by a lot. You know, when they say, when they say Biden won, the smart people know that didn’t [happen].”

    Facts First: This is Trump’s regular lie. He lost the 2020 election to Biden fair and square, 306 to 232 in the Electoral College. Biden earned more than 7 million more votes than Trump did.

    Democrats and elections

    Trump said Democrats are only good at “disinformation” and “cheating on elections.”

    Facts First: This is nonsense. There is just no basis for a broad claim that Democrats are election cheaters. Election fraud and voter fraud are exceedingly rare in US elections, though such crimes are occasionally committed by officials and supporters of both parties. (We’ll ignore Trump’s subjective claim about “disinformation.”)

    The liberation of the ISIS caliphate

    Trump repeated his familiar story about how he had supposedly liberated the “caliphate” of terror group ISIS in “three weeks.” This time, he said, “In fact, with the ISIS caliphate, a certain general said it could only be done in three years, ‘and probably it can’t be done at all, sir.’ And I did it in three weeks. I went over to Iraq, met a great general. ‘Sir, I can do it in three weeks.’ You’ve heard that story. ‘I can do it in three weeks, sir.’ ‘How are you going to do that?’ They explained it. I did it in three weeks. I was told it couldn’t be done at all, that it would take at least three years. Did it in three weeks. Knocked out 100% of the ISIS caliphate.”

    Facts First: Trump’s claim of eliminating the ISIS caliphate in “three weeks” isn’t true; the ISIS “caliphate” was declared fully liberated more than two years into Trump’s presidency, in 2019. Even if Trump was starting the clock at the time of his visit to Iraq, in late December 2018, the liberation was proclaimed more than two and a half months later. In addition, Trump gave himself far too much credit for the defeat of the caliphate, as he has in the past, when he said “I did it”: Kurdish forces did much of the ground fighting, and there was major progress against the caliphate under President Barack Obama in 2015 and 2016.

    IHS Markit, an information company that studied the changing size of the caliphate, reported two days before Trump’s 2017 inauguration that the caliphate shrunk by 23% in 2016 after shrinking by 14% in 2015. “The Islamic State suffered unprecedented territorial losses in 2016, including key areas vital for the group’s governance project,” an analyst there said in a statement at the time.

    Military equipment left in Afghanistan

    Trump claimed, as he has before, that the US left behind $85 billion worth of military equipment when it withdrew from Afghanistan in 2021. He said of the leader of the Taliban: “Now he’s got $85 billion worth of our equipment that I bought – $85 billion.” He added later: “The thing that nobody ever talks about, we lost 13 [soldiers], we lost $85 billion worth of the greatest military equipment in the world.”

    Facts First: Trump’s $85 billion figure is false. While a significant quantity of military equipment that had been provided by the US to Afghan government forces was indeed abandoned to the Taliban upon the US withdrawal, the Defense Department has estimated that this equipment had been worth about $7.1 billion – a chunk of about $18.6 billion worth of equipment provided to Afghan forces between 2005 and 2021. And some of the equipment left behind was rendered inoperable before US forces withdrew.

    As other fact-checkers have previously explained, the “$85 billion” is a rounded-up figure (it’s closer to $83 billion) for the total amount of money Congress has appropriated during the war to a fund supporting the Afghan security forces. A minority of this funding was for equipment.

    The Afghanistan withdrawal and the F-16

    Trump claimed that the Taliban acquired F-16 fighter planes because of the US withdrawal, saying: “They feared the F-16s. And now they own them. Think of it.”

    Facts First: This is false. F-16s were not among the equipment abandoned upon the US withdrawal and the collapse of the Afghan armed forces, since the Afghan armed forces did not fly F-16s.

    The border wall

    Trump claimed that he had kept his promise to complete a wall on the border with Mexico: “As you know, I built hundreds of miles of wall and completed that task as promised. And then I began to add even more in areas that seemed to be allowing a lot of people to come in.”

    Facts First: It’s not true that Trump “completed” the border wall. According to an official “Border Wall Status” report written by US Customs and Border Protection two days after Trump left office, about 458 miles of wall had been completed under Trump – but about 280 more miles that had been identified for wall construction had not been completed.

    The report, provided to CNN’s Priscilla Alvarez, said that, of those 280 miles left to go, about 74 miles were “in the pre-construction phase and have not yet been awarded, in locations where no barriers currently exist,” and that 206 miles were “currently under contract, in place of dilapidated and outdated designs and in locations where no barriers previously existed.”

    Latin America and deportations

    Trump told his familiar story about how, until he was president, the US was unable to deport MS-13 gang members to other countries, “especially” Guatemala, El Salvador and Honduras because those countries “didn’t want them.”

    Facts First: It’s not true that, as a rule, Guatemala and Honduras wouldn’t take back migrants being deported from the US during Obama’s administration, though there were some individual exceptions.

    In 2016, just prior to Trump’s presidency, neither Guatemala nor Honduras was on the list of countries that Immigration and Customs Enforcement (ICE) considered “recalcitrant,” or uncooperative, in accepting the return of their nationals.

    For the 2016 fiscal year, Obama’s last full fiscal year in office, ICE reported that Guatemala and Honduras ranked second and third, behind only Mexico, in terms of the country of citizenship of people being removed from the US. You can read a longer fact check, from 2019, here.

    [ad_2]

    Source link

  • Trump proposes building 10 ‘freedom cities’ and flying cars | CNN Politics

    Trump proposes building 10 ‘freedom cities’ and flying cars | CNN Politics

    [ad_1]



    CNN
     — 

    Former President Donald Trump on Friday proposed building up to 10 futuristic “freedom cities” on federal land, part of a plan that the 2024 presidential contender said would “create a new American future” in a country that has “lost its boldness.”

    Commuters, meanwhile, could get around in flying cars, Trump said – an echo of “The Jetsons,” the classic cartoon about a family in a high-tech future society. Work to develop vertical takeoff and landing vehicles is already underway by major airlines, auto manufacturers and other companies, though widely seen as years away from reaching the market.

    “I want to ensure that America, not China, leads this revolution in air mobility,” Trump, who announced his third bid for the presidency in November, said in a four-minute video detailing his plan.

    He said he would launch a contest to charter up to 10 “freedom cities” roughly the size of Washington, DC, on undeveloped federal land.

    “We’ll actually build new cities in our country again,” Trump said in the video. “These freedom cities will reopen the frontier, reignite American imagination, and give hundreds of thousands of young people and other people, all hardworking families, a new shot at home ownership and in fact, the American dream.”

    Trump’s pitch comes the day before he is set to address the Conservative Political Action Conference in the Washington, DC, area, and as the 2024 Republican presidential field begins to take shape.

    The proposal is the latest in a series of early policy offerings from Trump, who in recent weeks has also said he would seek to ramp up domestic energy production, adopt a more isolationist foreign policy stance and purge the government and military of “warmongers and globalists,” and undo a Biden executive order that would require government agencies to submit annual public plans aimed at promoting equity.

    In December, the former president unveiled plans as part of his “free speech platform” that included vows to ban federal money from being used to label speech as misinformation or disinformation and to punish universities engaging in “censorship activities” with cuts to federal funding.

    Trump did not elaborate Friday on how he would pay for his latest proposal – leaving unanswered what could be the biggest question as Republicans in Washington seek to curb federal spending. He also did not explain how some elements of his proposal differ from similar Democratic plans.

    His plan, which was light on details, includes three additional planks: increasing tariffs on goods imported into the United States; providing families with “baby bonuses” that he said would “help launch a new baby boom”; and launching a beautification effort aimed at removing “ugly” buildings and revitalizing parks and public spaces.

    Trump did not explain what “baby bonuses” would amount to or who would qualify. It’s not clear how his proposal differs from the enhanced child tax credit, which wasn’t extended beyond 2021. A group of Democratic lawmakers and progressive advocates tried – but failed – to have it included in the $1.7 trillion spending measure in December. That proposal was blocked by Republicans.

    Trump on Friday also called for universal tariffs and imposing higher taxes on imported goods. He said he would escalate a trade battle with China, which he began during his four years in the White House. Doing so, he said, would jump-start American manufacturing.

    President Joe Biden has left tariffs in place on $350 billion of Chinese goods – nearly two-thirds of what the US imports from China – which were imposed by Trump.

    However, the costs of those tariffs are being passed on to American consumers, and contributing to inflation, experts say.

    Treasury Secretary Janet Yellen said last year that those tariffs on Chinese goods have “imposed more harm on consumers and businesses” than on China.

    Chris Rupkey, chief economist at markets research firm FwdBonds, said Trump’s proposed economic plan is reflective of the onetime real estate developer’s efforts before taking office.

    “Builders build and make dreams a reality, but this plan looks like a stretch because the country cannot afford to undertake massive new projects when the national debt is over $31 trillion,” Rupkey said in an email. “There are some interesting ideas here, but this is not the right time for bold plans that dream big. There’s no money left in Uncle Sam’s till to pay for big dreams and daring projects.”

    The nation is in the midst of a “cost-of-living crisis” that makes this too expensive of a proposition, Rupkey added.

    [ad_2]

    Source link

  • US is reviewing Huawei export license policy amid rising congressional scrutiny of China | CNN Business

    US is reviewing Huawei export license policy amid rising congressional scrutiny of China | CNN Business

    [ad_1]


    Washington
    CNN
     — 

    The US government is reviewing a policy that permits certain US exports to continue to Huawei, despite an overall push by the Trump and Biden administrations to block the Chinese telecommunications giant from receiving American technology.

    Alan Estevez, a Commerce Department official, told lawmakers Tuesday that the policy is “under assessment” as the agency conducts a “top-to-bottom review of our export control policies related to the [People’s Republic of China].”

    Estevez testified before the House Foreign Affairs Committee, which was holding a hearing to scrutinize China’s impact on US national security.

    In 2019, Huawei was one of a number of Chinese companies placed on the Commerce Department’s Entity List, which prohibits US companies from trading specified items with entities named on the list unless they obtain a license to do so.

    US officials have expressed concerns that Huawei’s 5G wireless networking gear could allow the Chinese government to spy on American communications. Huawei has denied that it poses a security risk, and its founder has said the company would resist any Chinese government effort to obtain its data.

    According to Foreign Affairs Committee chairman Michael McCaul, between January and March of 2022 the Commerce Department approved more than $23 billion in license applications to trade with Chinese-affiliated companies on the Entity List. Confronting Estevez at Tuesday’s hearing, McCaul asked the Commerce Department to square the license approvals with the US government’s wider effort to sideline Huawei and similar companies.

    “A licensing rule of the previous administration that still stands for Huawei allows things below 5G, below cloud-level to go,” Estevez said, “and I will say that all those things are under assessment.”

    Entity List restrictions do not provide for a “blanket embargo” on exports generally, Estevez added, but rather reflect specific rules about particular exports.

    Separately, in 2020 the Commerce Department moved to prevent Huawei’s suppliers from selling the company semiconductor chips made by US-built software and equipment, unless those suppliers also obtained a license.

    Other parts of the US government have also moved against Huawei. The Federal Communications Commission has prohibited US wireless carriers from using federal funding to purchase Huawei networking gear, and last year also banned future approvals of Huawei equipment for sale in the United States, in the first use of the FCC’s equipment authorization authority for a national security purpose.

    [ad_2]

    Source link

  • DOJ seeks court sanctions against Google over ‘intentional destruction’ of chat logs | CNN Business

    DOJ seeks court sanctions against Google over ‘intentional destruction’ of chat logs | CNN Business

    [ad_1]


    Washington
    CNN
     — 

    Google should face court sanctions over “intentional and repeated destruction” of company chat logs that the US government expected to use in its antitrust case targeting Google’s search business, the Justice Department said Thursday.

    Despite Google’s promises to preserve internal communications relevant to the suit, for years the company maintained a policy of deleting certain employee chats automatically after 24 hours, DOJ said in a filing in District of Columbia federal court.

    The practice has harmed the US government’s case against the tech giant, DOJ alleged.

    “Google’s daily destruction of written records prejudiced the United States by depriving it of a rich source of candid discussions between Google’s executives, including likely trial witnesses,” the filing said.

    “We strongly refute the DOJ’s claims,” Google

    (GOOGL)     said in a statement. “Our teams have conscientiously worked for years to respond to inquiries and litigation. In fact, we have produced over 4 million documents in this case alone, and millions more to regulators around the world.”

    The federal government’s call for sanctions adds to the pressure Google faces as it battles antitrust suits on multiple fronts, and highlights a rare move by prosecutors.

    Through a setting in its chat software, Google employees can save chat history for up to 18 months — but only if the setting is manually enabled, the US government said in its filing, adding that Google routinely trained and encouraged employees to discuss sensitive topics over chat messages they knew would be auto-deleted the next day.

    The filing cites several attached exhibits in which Google employees, sensing that a conversation was about to stray into sensitive territory, suggested that the discussion continue on the chat platform, with history turned off.

    The government’s filing follows a similar sanctions motion against Google by Epic Games, maker of the hit video game “Fortnite,” in a separate antitrust case related to Google’s app store. The two sides faced off in an evidentiary hearing last month; on Feb. 15, the judge in the case ordered Google to produce more chat messages.

    Thursday’s DOJ filing also cites the Epic evidentiary hearing, saying that it proved Google destroyed records of at least nine individuals who were each considered potential trial witnesses, and that the federal judge overseeing that case agreed the chats could have contained relevant evidence but that Google “did not systematically preserve those chats.”

    “Google admitted that — for litigations spanning the past five years — it has never preserved all chats for relevant individuals by turning chat history on,” the DOJ filing said.

    It was not until earlier this month that Google agreed to preserve the chats, the filing alleged, after failing to disclose to prosecutors its practice of deleting history-off chats after 24 hours.

    It is not the first time DOJ has tussled with Google over evidence. Last year, in the same case, the agency asked the court to sanction Google for a program known as “Communicate with Care,” in which the company allegedly trained employees to copy lawyers on emails as a way to claim attorney-client privilege on communications that were business sensitive but did not seek legal advice and did not merit confidentiality.

    While Judge Amit Mehta declined to issue sanctions at the time, he ordered that all of the emails in question be re-reviewed.

    [ad_2]

    Source link

  • ASML says ‘rules are being finalized’ on chip export controls to China | CNN Business

    ASML says ‘rules are being finalized’ on chip export controls to China | CNN Business

    [ad_1]


    Hong Kong
    CNN
     — 

    ASML, a Dutch maker of semiconductor equipment, says “rules are being finalized” on export controls, amid reports that the Netherlands and Japan have joined the United States in restricting sales of some computer chip machinery to China.

    “It is our understanding that steps have been made towards an agreement between governments which, to our understanding, will be focused on advanced chip manufacturing technology, including but not limited to advanced lithography tools,” the company told CNN late Friday in response to questions about export controls to China.

    “Before it will come into effect it has to be detailed out and implemented into legislation which will take time.”

    ASML is known for its prowess in making lithography machines, which uses light to print patterns on silicon. The firm says that step is crucial in the mass production of microchips.

    The company’s response came as Bloomberg, the Wall Street Journal and the Financial Times reported over the weekend that the United States had persuaded the Netherlands and Japan to agree to curb exports of certain chipmaking equipment to China, citing anonymous sources.

    A deal was reached at the White House on Friday, though it was not officially announced, partly due to “concerns by Japan and Netherlands about potential retaliation by China,” according to the Journal, which cited a person familiar with the matter.

    Bloomberg reported that the deal “would extend some export controls the US adopted in October” to Dutch and Japanese companies, including ASML

    (ASML)    , Nikon

    (NINOY)     and Tokyo Electron.

    The Biden administration had banned Chinese companies from buying advanced chips and chipmaking equipment without a license. It also restricted the ability of American citizens to provide support for the development or production of chips at certain manufacturing facilities in China.

    The White House did not immediately respond to a request for comment outside US business hours. Nikon and Tokyo Electron declined to comment.

    On Saturday, Japan’s Economy and Trade Minister Yasutoshi Nishimura told reporters that he would “refrain from commenting on diplomatic negotiations.”

    Asked about the three-way talks in Washington, Nishimura said “we would like to respond appropriately while taking into consideration the regulatory trends in each country.”

    Because of its dominance in the market, ASML has been cited by experts as a bellwether of the growing rift between China and the West over access to advanced technology.

    In recent months, the Dutch government has faced pressure from the United States to limit chip-related exports to China, particularly from ASML, according to Xiaomeng Lu, director of geo-technology at the Eurasia Group.

    In its Friday statement, the company said that based on what has been said by government officials and current market conditions, it did not expect any material impact on its financial projections for 2023.

    But ASML said its knowledge of the new rules was still limited, making it difficult to map out “the medium and long-term financial, organizational and global industry-wide impact of new export control rules.”

    “While these rules are being finalized, ASML will continue to engage with the authorities to inform them about the potential impact of any proposed rule in order to assess the impact on the global semiconductor supply chain,” it said.

    It noted that it mainly sold “mature” products to China, and its most advanced lithography technology had already been restricted since 2019.

    Those machines had been prohibited from being sent to China because the Dutch government had “refused to grant it a license under US pressure,” Lu previously told CNN.

    — CNN’s Emiko Jozuka contributed to this report.

    [ad_2]

    Source link

  • DOJ sues Google over its dominance in online advertising market | CNN Business

    DOJ sues Google over its dominance in online advertising market | CNN Business

    [ad_1]



    CNN
     — 

    The Justice Department and eight states sued Google on Tuesday, accusing the company of harming competition with its dominance in the online advertising market and calling for it to be broken up.

    The move marks the Biden administration’s first blockbuster antitrust case against a Big Tech company. The eight states joining the suit include California, Colorado, Connecticut, New Jersey, New York, Rhode Island, Tennessee and Virginia.

    The fresh complaint significantly escalates the risks to Google emanating from Washington, where lawmakers and regulators have frequently raised concerns about the tech giant’s power but have so far failed to pass new legislation or regulations that might rein in the company or its peers.

    For years, Google’s critics have claimed that the company’s extensive role in the ecosystem that enables advertisers to place ads, and for publishers to offer up digital ad space, represents a conflict of interest that Google has exploited anticompetitively.

    In Tuesday’s complaint, a copy of which was viewed by CNN, the Justice Department alleged that Google actively and illegally maintained that dominance by engaging in a campaign to thwart competition. Google gobbled up rivals through anticompetitive mergers, the US government said, and bullied publishers and advertisers into using the company’s proprietary ad technology products.

    As part of the lawsuit, the US government called for Google to be broken up and for the court to order the company to spin off at least its online advertising exchange and its ad server for publishers, if not more.

    Google, the US government alleged, “has corrupted legitimate competition in the ad tech industry by engaging in a systematic campaign to seize control of the wide swath of high-tech tools used by publishers, advertisers, and brokers, to facilitate digital advertising. Having inserted itself into all aspects of the digital advertising marketplace, Google has used anticompetitive, exclusionary, and unlawful means to eliminate or severely diminish any threat to its dominance over digital advertising technologies.”

    The suit was filed in the US District Court for the Eastern District of Virginia.

    Tuesday’s suit marks the federal government’s second antitrust complaint against Google since 2020, when the Trump administration sued over Google’s alleged anticompetitive harms in search and search advertising. That case is still ongoing. Google has also been the target of antitrust litigation by state and private actors.

    In a statement, Google said the DOJ suit “attempts to pick winners and losers in the highly competitive advertising technology sector.”

    “DOJ is doubling down on a flawed argument that would slow innovation, raise advertising fees, and make it harder for thousands of small businesses and publishers to grow,” a Google spokesperson said, adding that a federal judge last year knocked down a claim that Google colluded with Facebook in a separate antitrust suit led by the state of Texas. That judge also ruled, however, that a number of monopolization claims in the Texas case could move forward.

    The lawsuit is a frontal assault against Google’s massive, primary business of advertising. Google generated $209 billion in advertising revenue in 2021, according to its annual report, a figure representing more than 80% of its total revenue. By comparison, the next largest giant in online advertising, Facebook-parent Meta, generated $115 billion in 2021.

    Third-party estimates suggest that Google and Facebook accounted for the majority of US digital ad revenues, hitting a peak around 2017, with Google taking about a third of the market. Since then, however, others including Amazon have begun encroaching on that business.

    The US complaint echoes concerns that have prompted similar antitrust investigations in the United Kingdom and in the European Union.

    Google not only controls the platform publishers use to sell online ad inventory, the Justice Department alleged Tuesday, but also the advertising tools marketers use to claim that inventory and the exchange that facilitates those transactions.

    “Google’s pervasive power over the entire ad tech industry has been questioned by its own digital advertising executives,” the complaint said, “at least one of whom aptly begged the question: ‘[I]s there a deeper issue with us owning the platform, the exchange, and a huge network? The analogy would be if Goldman or Citibank owned the NYSE.’”

    Tuesday’s complaint marks an opening salvo against Big Tech by DOJ’s antitrust chief, Jonathan Kanter. Kanter has spent months laying the groundwork for a broader offensive against the tech industry’s most dominant companies, reflecting commitments by President Joe Biden and others in the US government to hold powerful firms accountable. Under Kanter, Justice Department antitrust officials have pushed to bring more cases to trial as well as to prosecute cases involving unconventional legal theories.

    In 2020, House lawmakers released a 450-page report finding that Google, along with Amazon, Apple and Facebook, hold “monopoly power” in key business segments. The report was the result of a 16-month investigation in which congressional staff reviewed corporate documents and interviewed the tech industry’s many customers and rivals. It concluded, among other things, that Google was uniquely positioned to benefit from its powerful role in the online ad industry.

    “With a sizable share in the ad exchange market and the ad intermediary market, and as a leading supplier of ad space, Google simultaneously acts on behalf of publishers and advertisers, while also trading for itself,” the report said.

    [ad_2]

    Source link

  • After a historic first mission, what does the future hold for this controversial rocket? | CNN Business

    After a historic first mission, what does the future hold for this controversial rocket? | CNN Business

    [ad_1]

    Sign up for CNN’s Wonder Theory science newsletter. Explore the universe with news on fascinating discoveries, scientific advancements and more.


    New York
    CNN Business
     — 

    In the fervor-filled days leading up to the November 16 launch of the long-awaited Artemis I mission, an uncrewed trip around the moon, some industry insiders admitted to having conflicting emotions about the event.

    On one hand, there was the thrill of watching NASA take its first steps toward eventually getting humans back to the lunar surface; on the other, a shadow cast by the long and costly process it took to get there.

    “I have mixed feelings, though I hope that we have a successful mission,” former NASA astronaut Leroy Chiao said in an opinion roundtable interview with The New York Times. “It is always exciting to see a new vehicle fly. For perspective, we went from creating NASA to landing humans on the moon in just under 11 years. This program has, in one version or another, been ongoing since 2004.”

    There have been numerous delays with the development of the rocket at the center of the Artemis I mission: NASA’s Space Launch System (SLS), the most powerful rocket ever flown — and one of the most controversial. The towering launch vehicle was originally expected to take flight in 2016. And the decade-plus that the rocket was in development sparked years of blistering criticism targeted toward the space agency and Boeing, which holds the primary contract for the SLS rocket’s core.

    NASA’s Office of Inspector General (OIG) repeatedly called out what it referred to as Boeing’s “poor performance,” as a contributing factor in the billions of dollars in cost overruns and schedule delays that plagued SLS.

    “Cost increases and schedule delays of Core Stage development can be traced largely to management, technical, and infrastructure issues driven by Boeing’s poor performance,” one 2018 report from NASA’s OIG, the first in a series of audits the OIG completed surrounding NASA’s management of the SLS program, read. And a report in 2020 laid out similar grievances.

    For its part, Boeing has pushed back on the criticism, pointing to rigorous testing requirements and the overall success of the program. The OIG report also included correspondence from NASA, which noted in 2018 that it “had already recognized the opportunity to improve contract performance management” and agreed with the report’s recommendations.

    In various op-eds, the rocket has also been deemed “the result of unfortunate compromises and unholy politics,” a “colossal waste of money” and an “irredeemable mistake.”

    Despite all the heated debate that has followed SLS, by all accounts, the rocket is here to stay. And officials at NASA and Boeing said its first launch two months ago was practically flawless.

    “I worked over 50 Space Shuttle launches,” Boeing SLS program manager John Shannon told CNN by phone. “And I don’t ever remember a launch that was as clean as that one was, which for a first-time rocket — especially one that had been through as much as this one through all the testing — really put an exclamation point on how reliable and robust this vehicle really is.”

    The Artemis program manager at NASA, Mike Sarafin, also said during a post-launch news conference that the rocket “performed spot-on.”

    But with its complicated history and its hefty price tag, SLS could still face detractors in the years to come.

    Many have questioned why SLS needs to exist at all. With the estimated cost per launch standing at more than $4 billion for the first four Artemis missions, it’s possible commercial rockets, like the massive Mars rocket SpaceX is building, could get the job done more efficiently, as the chief of space policy at the nonprofit exploration advocacy group Planetary Society, Casey Dreier, recently observed in an article laying out both sides of the SLS argument.

    (NASA Administrator Bill Nelson noted that the $4 billion per-launch cost estimate includes development costs that the space agency hopes will be amortized over the course of 10 or more missions.)

    Boeing was selected in 2012 to build SLS’s “core stage,” which is the hulking orange fuselage that houses most of the massive engines that give the rocket its first burst of power at liftoff.

    Though more than 1,000 companies were involved with designing and building SLS, Boeing’s work involved the largest and most expensive portion of the rocket.

    That process began over a decade ago, and when the Artemis program was established in 2019, it gave the rocket its purpose: return humans to the moon, establish a permanent lunar outpost, and, eventually, pave the path toward getting humans to Mars.

    But the SLS is no longer the only rocket involved in the program. NASA gave SpaceX a significant role in 2021, giving the company a fixed-price contract for use of its Mars rocket as the vehicle that will ferry astronauts to the lunar surface after they leave Earth and travel to the moon’s orbit on SLS. SpaceX’s forthcoming rocket, called Starship, is also intended to be capable of completing a crewed mission to the moon or Mars on its own. (Starship, it should be noted, is still in the development phases and has not yet been tested in orbit.)

    Boeing has repeatedly argued that SLS is essential and capable of performing tasks that other rockets cannot.

    “The bottom line is there’s nothing else like the SLS because it was built from the ground up to be human rated,” Shannon said. “It is the only vehicle that can take the Orion spacecraft and the service module to the moon. And that’s the purpose-built design — to take large hardware and humans to cislunar space, and nothing else exists that can do that.”

    Starship, meanwhile, is not tailored solely to NASA’s specific lunar goals. SpaceX CEO Elon Musk has talked for more than a decade about his desire to get humans to Mars. More recently, he has said Starship could also be used to house giant space telescopes.

    Yet, another reason critics remain skeptical of SLS is because of its origins. The rocket’s conception can be traced back to NASA’s Constellation program, which was a plan to return to the moon mapped out under former President George W. Bush that was later canceled.

    But the SLS has survived. Many observers have suggested a big reason was the desire to maintain space industry jobs in certain Congressional districts and to beef up aerospace supply chains.

    Members of Congress and NASA Administrator Charles Bolden unveil the Space Launch System design on September 14, 2011. From left: Sen. Kay Bailey Hutchison R-Texas, Sen. John Boozman, R-Ark., Sen. Bill Nelson, D-Fla., Rep. Chaka Fattah, D-Pa., Administrator Bolden.

    Much of the criticism levied against SLS, however, has focused on the actual process of getting the rocket built.

    At one point in 2019, former NASA administrator Jim Bridenstine considered sidelining the SLS rocket entirely, citing frustrations with the delays.

    “At the end of the day, the contractors had an obligation to deliver what NASA had contracted for them to deliver,” Bridenstine told CNN by phone last month. “And I was frustrated like most of America.”

    Still, Bridenstine said, when his office reviewed the matter, it found “there were no options that were going to cost less money or take less time than just finishing the SLS” — and the rocket was never ultimately sidelined. (Bridenstine noted he was also publicly critical of delayed projects led by SpaceX and others.)

    NASA continued to stand by Boeing and the SLS rocket even as it became a political hot potato, with some in Congress both criticizing its costs and refusing to abandon the program.

    The SLS rocket ended up flying its first launch more than six years later than originally intended. NASA had allocated $6.2 billion to the SLS program as of 2018, but that price tag more than tripled to $23 billion as of 2022, according to an analysis by the Planetary Society.

    Those escalating costs can be traced back to the type of contracts that NASA signed with Boeing and its other major suppliers for SLS. It’s called cost-plus, which puts the financial burden on NASA when projects face cost overruns while still offering contractors extra payments, or award fees.

    In testimony before the Senate Appropriations Subcommittee on Science last year, current NASA Administrator Bill Nelson criticized the cost-plus contracting method, calling it a “plague.”

    More in vogue are “fixed-price” contracts, which have a firm price cap, like the kind NASA gave to Boeing and SpaceX for its Commercial Crew Program.

    In an interview with CNN in December, however, Nelson stood by cost-plus contracting for SLS and Orion, the vehicle that is designed to carry astronauts and rides atop the rocket to space. He said that without that type of contract, in his view, NASA’s private-sector contractors simply wouldn’t be willing to take on a rocket designed for such a specific purpose and exploring deep space. Building a rocket as specific and technically complex as SLS isn’t a risk many private-sector companies are anxious to take on, he noted.

    “You really have difficulty in the development of a new and very exquisite spacecraft … on a fixed-price contract,” he said.

    “That industry is just not willing to accept that kind of thing, with the exception of the landers,” he added, referring to two other branches of the Artemis program: robotic landers that will deliver cargo to the moon’s surface and SpaceX’s $2.9 billion lunar lander contract. Both of those will use fixed-price — often referred to as “commercial” — contracts.

    Commercial landers will carry NASA-provided science and technology payloads to the lunar surface, paving the way for NASA astronauts to land on the Moon by 2024.

    “And even there, they’re getting a considerable investment by the federal government,” Nelson said.

    Still, government watchdogs have not pulled punches when assessing these cost-plus contracts and Boeing’s role.

    “We did notice very poor contractor performance on Boeing’s part. There’s poor planning and poor execution,” NASA Inspector General Paul Martin said during testimony before the House’s Subcommittee on Space and Aeronautics last year. “We saw that the cost-plus contracts that NASA had been using…worked to the contractor’s — rather than NASA’s — advantage.”

    Shannon, the Boeing executive, acknowledged in an interview that Boeing and SLS have faced loud detractors, but he said that the value of the drawn out development and testing program would become evident as SLS flies.

    “I am extremely proud that NASA — even though there were significant schedule pressures — they could set up a test program that was incredibly comprehensive,” he said. “The Boeing team worked through that test process and hit every mark on it. And you see the results. You see a vehicle that is not just visually spectacular, but its performance was spectacular. And it really put us on the road to be able to do lunar exploration again, which is something that’s very important in this country.”

    But the rocket is still facing criticism. During a Congressional hearing with the House’s Science, Space, and Technology Committee in March 2022, NASA’s Inspector General said that current cost estimates for SLS were “unsustainable,” gauging that the space agency will have spent $93 billion on the Artemis program from 2012 through September 2025.

    Martin, the NASA inspector general, specifically pointed to Boeing as one of the contractors that would need to find “efficiencies” to bring down those costs as the Artemis program moves forward.

    In a December 7 statement to CNN, Boeing once again defended SLS and its price point.

    “Boeing is and has been committed to improving our processes — both while the program was in its developmental stage and now as it transitions to an operational phase,” the statement read, noting the company already implemented “lessons learned” from building the first rocket to “drive efficiencies from a cost and schedule perspective” for future SLS rockets.

    “When adjusted for inflation, NASA has developed SLS for a quarter of the cost of the Saturn V and half the cost of the Space Shuttle,” the statement noted. “These programs have also been essential to investing in the NASA centers, workforce and test facilities that are used by a broad range of civil and commercial partners across NASA and industry.”

    The successful launch of SLS was a welcome winning moment for Boeing. Over the past few years, the company has been mired in controversy, including ongoing delays and myriad issues with Starliner, a spacecraft built for NASA’s Commercial Crew Program, and scandal after scandal plaguing its airplane division.

    Now that the Artemis I mission has returned safely home, NASA and Boeing can turn to preparing more of the gargantuan SLS rockets to launch even loftier missions.

    SLS is slated to launch the Artemis II mission, which will take four astronauts on a journey around the moon, in 2024. From there, SLS will be the backbone of the Artemis III mission that will return humans to the lunar surface for the first time in five decades and a series of increasingly complex missions as NASA works to create its permanent lunar outpost.

    Shannon, the Boeing SLS program manager, told CNN that construction of the next two SLS rocket cores is well underway, with the booster for Artemis II on track to be finished in April — more than a year before the mission is scheduled to take off. All of the “major components” for a third SLS rocket are also completed, Shannon added.

    For the third SLS core and beyond, Boeing is also moving final assembly to new facilities Florida, freeing up space at its manufacturing facilities to increase production, which may help drive down costs.

    Shannon declined to share a specific price point for the new rockets or share any internal pricing goals, though NASA is expected to sign new contracts for the rockets that will launch the Artemis V mission and beyond, which could significantly change the price per launch.

    Nelson also told CNN in December that NASA “will be making improvements, and we will find cost savings where we can,” such as with the decision to use commercial contracts for other vehicles under the Artemis program umbrella.

    This image shows technicians and engineers at NASA's Michoud Assembly Facility moving and connecting the forward skirt to the liquid oxygen tank (LOX) as they continue the process of the forward join on the core stage of NASA's Space Launch System rocket for Artemis II, the first crewed mission of NASA's Artemis program. Image credit: NASA/Michael DeMocker

    How and whether those contracts bear out remain to be seen: SpaceX needs to get its Starship rocket flying, a massive space station called Gateway needs to come to fruition, and at least some of the robotic lunar landers designed to carry cargo to the moon will need to prove their effectiveness. It’s also not yet clear whether those contracts will result in enough cost savings for the critics of SLS, including NASA’s OIG, to consider the Artemis program sustainable.

    As for SLS, Nelson also told reporters December 11, just after the conclusion of the Artemis I mission, that he had every reason to expect that lawmakers would continue to fund the rocket and NASA’s broader moon program.

    “I’m not worried about the support from the Congress,” Nelson said.

    And Bridenstine, Nelson’s predecessor who has been publicly critical SLS, said that he ultimately stands by SLS and points out that, controversies aside, it does have rare bipartisan support from its bankrollers.

    “We are in a spot now where this is going to be successful,” Bridenstine said last month, recalling when he first realized the Artemis program had support from the right and left. “All of America is going to be proud of this program. And yes, there are going to be differences. People are gonna say well, you should go all commercial and drop SLS…but at the end of the day, what we have to do is we have to bring together all of the things that are the best programs that we can get for America and use them to go to the moon.”

    [ad_2]

    Source link

  • As egg prices rise, so do attempts to smuggle them from Mexico, say US Customs officials | CNN

    As egg prices rise, so do attempts to smuggle them from Mexico, say US Customs officials | CNN

    [ad_1]



    CNN
     — 

    High prices are driving an increase in attempts to bring eggs into the US from Mexico, according to border officials.

    Officers at the San Diego Customs and Border Protection Office have seen an increase in the number of attempts to move eggs across the US-Mexico border, according to a tweet from director of field operations Jennifer De La O.

    “The San Diego Field Office has recently noticed an increase in the number of eggs intercepted at our ports of entry,” wrote De La O in the Tuesday tweet. “As a reminder, uncooked eggs are prohibited entry from Mexico into the U.S. Failure to declare agriculture items can result in penalties of up to $10,000.”

    Bringing uncooked eggs from Mexico into the US is illegal because of the risk of bird flu and Newcastle disease, a contagious virus that affects birds, according to Customs and Border Protection.

    In a statement emailed to CNN, Customs and Border Protection public affairs specialist Gerrelaine Alcordo attributed the rise in attempted egg smuggling to the spiking cost of eggs in the US. A massive outbreak of deadly avian flu among American chicken flocks has caused egg prices to skyrocket, climbing 11.1% from November to December and 59.9% annually, according to the Bureau of Labor Statistics.

    The increase has been reported at the Tijuana-San Diego crossing as well as “other southwest border locations,” Alcordo said.

    For the most part, travelers bringing eggs have declared the eggs while crossing the border. “When that happens the person can abandon the product without consequence,” said Alcordo. “CBP agriculture specialists will collect and then then destroy the eggs (and other prohibited food/ag products) as is the routine course of action.”

    In a few incidents, travelers did not declare their eggs and the products were discovered during inspection. In those cases, the eggs were seized and the travelers received a $300 penalties, Alcordo explained.

    “Penalties can be higher for repeat offenders or commercial size imports,” he added.

    Alcordo emphasized the importance of declaring all food and agricultural products when traveling.

    “While many items may be permissible, it’s best to declare them to avoid possible fines and penalties if they are deemed prohibited,” he said. “If they are declared and deemed prohibited, they can be abandoned without consequence. If they are undeclared and then discovered during an exam the traveler will be subject to penalties.”

    [ad_2]

    Source link

  • Brexit has cracked Britain’s economic foundations | CNN Business

    Brexit has cracked Britain’s economic foundations | CNN Business

    [ad_1]


    London
    CNN
     — 

    It’s been two years since former Prime Minister Boris Johnson signed his Brexit trade deal and triumphantly declared that Britain would be “prosperous, dynamic and contented” after completing its exit from the European Union.

    The Brexit deal would enable UK companies to “do even more business” with the European Union, according to Johnson, and would leave Britain free to strike trade deals around the world while continuing to export seamlessly to the EU market of 450 million consumers.

    In reality, Brexit has hobbled the UK economy, which remains the only member of the G7 — the group of advanced economies that also includes Canada, France, Germany, Italy, Japan and the United States — with an economy smaller than it was before the pandemic.

    Years of uncertainty over the future trading relationship with the European Union, Britain’s largest trading partner, have damaged business investment, which in the third quarter was 8% below pre-pandemic levels despite a UK-EU trade deal being in place for nearly two years.

    And the pound has taken a beating, making imports more expensive and stoking inflation while failing to boost exports, even as other parts of the world have enjoyed a post-pandemic trade boom.

    Brexit has erected trade barriers for UK businesses and foreign companies that used Britain as a European base. It’s weighing on imports and exports, sapping investment and contributing to labor shortages. All this has exacerbated Britain’s inflation problem, hurting workers and the business community.

    “The most plausible reason as to why Britain is doing comparatively worse than comparable countries is Brexit,” according to L. Alan Winters, co-director of the Centre for Inclusive Trade Policy at the University of Sussex.

    The sense of gloom hanging over the UK economy is captured by striking workers, who are walking out in ever larger numbers over pay and conditions as the worst inflation in decades eats into their wages. At the same time, the government is cutting spending and hiking taxes to fill the hole in its budget.

    While Brexit isn’t the cause of Britain’s cost-of-living crisis, it has made the problem more difficult to solve.

    “The UK chose Brexit in a referendum, but the government then chose a particularly hard form of Brexit, which maximized the economic cost,” said Michael Saunders, a senior adviser at Oxford Economics and former Bank of England official. “Any hope for economic upside from Brexit is pretty much gone.”

    Although Britain voted to leave the European Union in June 2016, its exit from the single market and customs union was finalized only on December 24, 2020, when the two sides finally agreed a free trade deal.

    The Brexit deal, known as the Trade and Cooperation Agreement, came into effect on January 1, 2021.

    It eliminated tariffs on most goods but introduced a raft of non-tariff barriers, such as border controls, customs checks, import duties and health inspections on plant and animal products.

    Before Brexit, a farmer in Kent could ship a truckload of potatoes to Paris just as easily as they might send it to London. Those days are no more.

    “We hear stories every single day from small businesses about the nightmare of forms, transportation, couriers, things getting stuck for weeks at a time… the epic length of the problems is just gobsmacking,” said Michelle Ovens, the founder of Small Business Britain, a campaign group.

    “The way things have panned out in the last two years has been really bad for small businesses,” Ovens told CNN.

    Researchers at the London School of Economics estimate that the variety of UK products exported to the European Union declined by 30% during the first year of Brexit. They said that this was likely because small exporters had exited small EU markets.

    Take the example of Little Star, a UK company that makes jewelry for children. Its business took off in the Netherlands and it had plans to expand to France and Germany next. But since Brexit, only two of more than 30 of its Dutch customers are prepared to handle the costs and paperwork to obtain stock from the company.

    Products that took two days to ship are now taking three weeks, while import duties and sales taxes have made it much harder to compete with European jewelers, according to Rob Walker, who co-founded the business with his wife, Vicky, in 2017. The company is now looking to the United States for growth opportunities.

    “Isn’t it mad that we have to look to the other side of the Atlantic to do business, because it’s so difficult to do business with people 30 miles away?” Walker said.

    A truck passes a Union Jack, at the Port of Dover on April 1, 2021. The UK government has delayed post-Brexit checks on EU food imports until the end of 2023.

    A British Chambers of Commerce survey of more than 1,168 businesses published this month reported that 77% said Brexit has not helped them increase sales or grow their businesses. More than half said they were finding it difficult to adapt to the new rules for trading goods.

    Siteright Construction Supplies, a manufacturer in Dorset, told the Chamber that importing parts from the European Union to fix broken machines has become a costly and “time-consuming nightmare.”

    “Brexit has been the biggest-ever imposition of bureaucracy on business,” according to Siteright.

    Nova Dog Chews, a producer of snacks for canines, said it would have lost all its EU trade had it not set up a base in the bloc. “This has cost our business a huge amount of money, which could have been invested in the UK had it not been for Brexit,” it added.

    A UK government spokesperson told CNN that the government’s export support service has provided exporters with “practical support” on the implementation of the Brexit deal. The deal is “the world’s largest zero tariff, zero quota free trade deal,” the spokesperson added. “It secures the UK market access across key service sectors and opens new opportunities for UK businesses across the globe.”

    Britain won’t easily replace what it has lost by forfeiting unfettered access to the world’s largest trading bloc.

    The only substantive new trade deals it has struck since exiting the European Union, which did not simply roll over the deals it had as an EU member, have been with Australia and New Zealand. By the government’s own estimate, these will have a negligible impact on the UK economy, increasing GDP in the long run by just 0.1% and 0.03% respectively.

    By contrast, the UK Office for Budget Responsibility, which produces economic forecasts for the government, expects Brexit to reduce Britain’s output by 4% over 15 years compared to remaining in the bloc. Exports and imports are projected to be around 15% lower in the long run.

    Initial data has borne this out. According to the OBR, in the fourth quarter of 2021, UK goods export volumes to the European Union were 9% below 2019 levels, with imports from the European Union 18% lower. Goods exports to non-EU countries were 18% weaker than in 2019.

    The United Kingdom “appears to have become a less trade-intensive economy, with trade as a share of GDP falling 12% since 2019, two and a half times more than in any other G7 country,” the OBR said in the March report.

    The decline in exports to non-EU countries could be a sign that UK businesses have become less competitive as they battle higher supply chain costs following Brexit, according to Jun Du, an economics professor at Aston University in Birmingham.

    “The UK’s trading ability has been damaged permanently [by Brexit],” Du told CNN. “It doesn’t mean it can’t recover, but it’s been set back for a number of years.”

    Research by the Centre for European Reform, a think tank, estimates that over the 18 months to June 2022, UK goods trade is 7% lower than it would have been had Britain remained in the European Union.

    Investment is 11% weaker and GDP is 5.5% smaller than it would have been, costing the economy £40 billion ($48.4 billion) in tax revenues annually. That’s enough to pay for three quarters of the spending cuts and tax rises that UK finance minister Jeremy Hunt announced in November.

    The United Kingdom is projected to have one of the worst performing economies next year among developed nations.

    The Organization for Economic Cooperation and Development expects the UK economy to shrink by 0.4%, ahead only of sanctioned Russia. GDP in Germany is forecast to be 0.3% smaller.

    The International Monetary Fund forecasts growth of just 0.3% for UK GDP next year, ahead of only Germany, Italy and Russia, which are expected to contract.

    Both institutions say high inflation and rising interest rates will weigh on spending by consumers and businesses in Britain.

    According to the Confederation of British Industry, a leading business group, the fall in private sector activity picked up pace in December and has now declined for five consecutive quarters.

    The downward trend “looks set to deepen” in 2023, principal economist at the CBI Martin Sartorius said in a statement.

    “Businesses continue to face a number of headwinds, with rising costs, labor shortages, and weakening demand contributing to a gloomy outlook for next year. ”

    — Julia Horowitz contributed to this report.

    [ad_2]

    Source link

  • Exclusive: Biden task force investigating how US tech ends up in Iranian attack drones used against Ukraine | CNN Politics

    Exclusive: Biden task force investigating how US tech ends up in Iranian attack drones used against Ukraine | CNN Politics

    [ad_1]


    Washington
    CNN
     — 

    The Biden administration has launched an expansive task force to investigate how US and western components, including American-made microelectronics, are ending up in Iranian-made drones Russia is launching by the hundreds into Ukraine, multiple officials familiar with the effort tell CNN. 

    The US has imposed tough export control restrictions and sanctions to prevent Iran from obtaining high-end materials, but evidence has emerged that suggests Iran is finding an abundance of commercially-available technology. 

    Last month, the UK-based investigative organization  Conflict Armament Research examined  several drones that had been downed in Ukraine and found that 82% of their components were manufactured by companies based in the US. 

    Among the components found in some of the drones are processors built by the Dallas-based technology company Texas Instruments, according to an investigation by the Ukrainian Armed Forces and a source familiar with the US inquiry, as well as an engine made by an Austrian firm owned by Canada’s Bombardier Recreational Products. Both companies have condemned any use of their technology for illicit purposes. 

    Their apparently unintentional ensnarement in Iran’s drone manufacturing industry underscores how inexpensive products intended for civilian use can be easily retrofitted for military purposes, and often fall just outside the bounds of sanctions and export control regimes.  

    Texas Instruments said in a statement to CNN that “TI is not selling any products into Russia, Belarus or Iran. TI complies with applicable laws and regulations in the countries where we operate, and partners with law enforcement organizations as necessary and appropriate. Additionally, we do not support or condone the use of our products in applications they weren’t designed for. ”

    Bombardier Recreational Products  said in a statement that it was launching an investigation into how the engines ended up in the drones.

    The investigation has intensified in recent weeks amid intelligence obtained by the US that the Kremlin is preparing to open its own factory for drone production inside Russia as part of a deal with Iran, the officials said. 

    Iran has already begun transferring blueprints and components for the drones to Russia to help with production there, CNN has reported, in a dramatic expansion of the countries’ military partnership. 

    Agencies across Washington are involved in the task force, including the departments of Defense, State, Justice, Commerce and Treasury, with one official describing the inquiry as an “all hands on deck” initiative. The effort is being overseen by the White House National Security Council as part of an even bigger, “holistic approach” to dealing with Iran, a senior administration official said, from its crackdown on protesters and its nuclear program to its deepening role in the war in Ukraine.

    But the drone issue is particularly urgent given the sheer volume of US-made components, many of them manufactured in the last couple years, that have been found in the Iranian drones Russia has been deploying across Ukraine against civilians and critical infrastructure. 

    Conflict Armament Research found that the Iranian drones they examined in Ukraine in November had “higher-end technological capabilities,” including tactical-grade sensors and semiconductors sourced outside of Iran, demonstrating that Tehran “has been able to circumvent current sanction regimes and has added more capabilities and resiliency to its weapons.”

    National Security Council official John Kirby told reporters earlier this month that the US would be sanctioning three Russian companies involved in acquiring and using the Iranian drones, and is “assessing further steps we can take in terms of export controls to restrict Iran’s access to sensitive technologies.” 

    Much of that work has fallen to the task force, officials said, and among its first tasks has been to notify all of the American companies whose components have been found in the drones. Congressional staffers briefed on the effort told CNN that they hope the task force provides lawmakers with a list of US companies whose equipment is being found in the drones in an effort to force greater accountability by urging the companies to monitor their supply chains more closely.

    The task force is also having to coordinate with foreign allies, since the components being used in the drones are not limited to those produced by American companies.  Conflict Armament Research also found that “more than 70 manufacturers based in 13 different countries and territories” produced the components in the Iranian drones they examined.

    In October, CNN obtained access to a drone that was downed in the Black Sea near Odesa and captured by Ukrainian forces. It was found to contain Japanese batteries, an Austrian engine and American processors. 

    An Iranian-made drone, the Mohajer-6.

    Iran may also be acquiring near-exact replicas of western components from China, according to a study published last month by the Washington-based Institute for Science and International Security. “China plays a larger role than previously assessed in enabling Iran to manufacture and supply drones to Russian forces,” the report found. “It appears that Chinese companies are supplying Iran with copies of Western commodities to produce UAV combat drones.”

    The White House believes it is successfully driving home the scale of the issue with allies. The senior administration official told CNN that there was “growing broad and deep international consensus on Iran, from the EU to Canada to Australia and New Zealand, which is being led by US diplomacy.”

    There is no evidence that any of the western companies are knowingly exporting their technology to be used in the drones, and that is partly why the task force’s job has been so difficult, officials said. 

    The task force has its work cut out for it in tracing supply chains for the microelectronics industry, which relies heavily on third party distributors and resellers. The microchips and other small devices ending up in so many of the Iranian and Russian drones are not only inexpensive and widely available, they are also easily hidden. 

    Parts of a drone after Russian strike on fuel storage facilities in Kharkiv, Ukraine October 6, 2022.

    Iran also uses front companies to buy equipment from the US and EU that may have a dual use, like the Austrian engines, that Tehran can then use to build drones, according to the Treasury Department, which sanctioned several of those companies in September. 

     That makes supply chain monitoring a challenge, though experts say US and European companies could be doing a lot more to track where their products are going. 

    “American companies should be doing a lot more to track their supply chains,” said Dmitri Alperovitch, the former chief technology officer at the cybersecurity firm CrowdStrike. 

    Keeping better track of resellers is a first step, he said, but the task is admittedly difficult because so many of these companies’ products are so commoditized and available off-the-shelf and online for civil purposes. Ultimately, neutering some Iranian front companies with sanctions and cutting off their supply from some western companies will be akin to “a game of whack a mole,” Alperovitch said, noting that they “can easily find another supplier.”

    He added that the real “weak underbelly” of US policy when it comes to export controls is enforcement—and prosecuting the specific individuals involved in the illicit transactions. 

    “We have to beef up the resources for enforcement of our sanctions to achieve the desired effect,” Alperovitch said.

    “You can put companies on the [sanctioned] entities list,” he added, “but if you don’t actually go after the people involved, it doesn’t mean a whole lot.” 

    [ad_2]

    Source link

  • China challenges US chip curbs at WTO, citing ‘trade protectionism’ | CNN Business

    China challenges US chip curbs at WTO, citing ‘trade protectionism’ | CNN Business

    [ad_1]


    Hong Kong
    CNN
     — 

    China has challenged a move by the United States to block sales of advanced computer chips and chip-making equipment to Chinese companies by launching a trade dispute at the World Trade Organization, calling the measures “trade protectionism.”

    The country’s commerce ministry filed a formal complaint against the United States with the WTO on Monday, according to a statement. The two countries are both members of the trade body, which has a mechanism for resolving disputes.

    “China’s filing of a lawsuit at the WTO is to resolve China’s concerns through legal means and is a necessary way to defend its legitimate rights and interests,” the ministry said.

    On October 7, the Biden administration unveiled a sweeping set of export controls that ban Chinese companies from buying advanced chips and chip-making equipment without a license. The rules also restrict the ability of US citizens or green card holders to support the “development or production” of chips at certain manufacturing facilities in China.

    The commerce ministry blasted the US move as threatening global supply chain stability and called it “a typical practice of trade protectionism.” The complaint is the first action China has taken at the global trade body against the US chip sanctions.

    US officials say the export controls were intended to protect national security interests.

    Analysts widely consider the measures to be a major threat to China’s tech ambitions, as the global semiconductor industry is heavily dependent on the United States and countries aligned with it for chip design, the tools that make them, and fabrication. It also comes as the United States is looking to bolster its domestic chip manufacturing abilities, after chip shortages earlier in the pandemic highlighted the country’s dependence on imports from abroad.

    Washington has also pressured its security partners to comply with chip-related curbs on China. Jake Sullivan, the White House national security adviser, said on Monday that Washington had spoken with its partners including Japan and the Netherlands to tighten chip-related exports to China, according to Reuters.

    Beijing has tried to push back against the sanctions. Last month, Chinese President Xi Jinping met with leaders from South Korea and the Netherlands, both key to the global chip-making supply chain, at the G20 summit in Bali, Indonesia. He called for both countries to boost cooperation in high-tech manufacturing and avoid “the politicization of economic and trade issues.”

    Chips are a growing source of tension between the United States and China. In recent years, Washington has turned up the pressure on China’s tech sector by limiting access to cutting-edge chip components and machinery.

    Before the October sanctions, the US government had already banned sales of certain tech products to specific Chinese companies, such as Huawei. It also ordered top chipmakers Nvidia and AMD to halt their shipments to China.

    To secure its own chip supplies, Beijing has stepped up efforts to boost domestic semiconductor production in recent years.

    In November 2018, just months after Washington hit Chinese telecoms giant ZTE Corp with an export ban, the Chinese government set up an industry alliance of companies and research institutes as part of efforts to design advanced chips. The group’s focus is on developing Risc-V, an open-source chip design architecture that has increasingly become a rival to Softbank

    (SFTBF)    ’s Arm, the current global leader. Members of the consortium include the Chinese Academy of Sciences, Alibaba

    (BABA)    , Tencent

    (TCEHY)    , and Baidu

    (BIDU)    .

    [ad_2]

    Source link

  • DOJ antitrust regulators should look at Apple, Google’s handling of TikTok, says FCC commissioner | CNN Business

    DOJ antitrust regulators should look at Apple, Google’s handling of TikTok, says FCC commissioner | CNN Business

    [ad_1]


    Washington
    CNN Business
     — 

    Apple and Google’s continued hosting of TikTok on their app stores, despite US national security concerns about the short-form video app, reflects the tech giants’ “gatekeeper” power and should be made part of any antitrust reviews the app stores may face, a member of the Federal Communications Commission wrote to the Justice Department last week.

    The previously unreported letter — sent on Dec. 2 to DOJ antitrust chief Jonathan Kanter and obtained by CNN — said that continuing to make TikTok available on the app stores risks harming consumers, whose personal information US officials have worried may be being fed to the Chinese government.

    Beyond possible consumer harm, TikTok’s continued presence on app stores also undercuts Apple and Google’s arguments that their dominance in app distribution leads to better user security and privacy, FCC Commissioner Brendan Carr wrote in the letter.

    It’s the latest attempt by Carr, a top Republican at the FCC, to pressure Apple and Google to remove TikTok. Last month, Carr called for the US government to ban TikTok over the bipartisan concerns that China could wield its influence over TikTok’s parent, ByteDance, to gain access to US user data or to disseminate propaganda and disinformation. Now, Carr is trying a new tack by framing the TikTok matter as an antitrust issue.

    “Apple and Google are not exercising their ironclad control over apps for the altruistic or procompetitive purposes that they put forward as defenses to existing antitrust or competition claims,” Carr wrote. “Instead, their conduct shows that those rationales are merely pretextual — talismanic references invoked to shield themselves from liability.”

    DOJ’s Antitrust Division should consider that “to the extent that it assesses the reasonableness of Apple’s and Google’s anticompetitive actions,” Carr added.

    Google declined to comment. Apple the Justice Department didn’t immediately respond to a request for comment.

    The FCC does not regulate app stores or social media, focusing instead on telecommunications and traditional media such as radio and television broadcasters and cable operators. But Carr has become the most vocal commissioner to speak out on TikTok, drawing what he’s said are lessons from the FCC’s own decisions to block Huawei, ZTE and other telecom companies with ties to China from the US market.

    His remarks also echo those by prominent lawmakers of both parties, including Virginia Democratic Sen. Mark Warner and Florida Republican Sen. Marco Rubio, who together lead the Senate Intelligence Committee.

    Carr’s call comes as Apple and Google’s critics have increasingly sought to apply the nation’s antitrust laws against the tech giants. Third-party software developers have long alleged that Apple and Google’s app store fees and rules are monopolistic and anticompetitive. A high-profile 2020 lawsuit along those lines brought by Epic Games, the maker of video game “Fortnite,” has so far proven largely unsuccessful, though an appeal is pending.

    More recently, Apple’s conservative critics have accused the company of abusing “monopoly” power by allegedly threatening to remove Twitter from its app store — a claim that Twitter’s new owner Elon Musk has made without evidence and that he says has since been resolved thanks to a conversation with Apple CEO Tim Cook. Apple has not commented on Musk’s allegation or purported exchange with Cook.

    For years, TikTok has been negotiating with the Committee on Foreign Investment in the United States, a multi-agency US government panel charged with reviewing the national security implications of foreign investment deals, to arrive at an agreement to allow TikTok to operate in the US market despite the security concerns.

    TikTok has said Project Texas, its plan to migrate US user data exclusively to cloud servers hosted by Oracle, is a core part of the solution. Last week, TikTok CEO Shou Zi Chew said at a conference hosted by the New York Times that “no foreign government has asked us for user data before, and if they did, we would say no.”

    In congressional testimony, TikTok has said it maintains robust data controls but has sought to sidestep questions about its parent company and declined to stop letting China-based employees access US users’ data.

    [ad_2]

    Source link

  • The US-China chip war is spilling over to Europe | CNN Business

    The US-China chip war is spilling over to Europe | CNN Business

    [ad_1]


    Hong Kong
    CNN Business
     — 

    Two European chip deals have run into trouble over their links with China, a sign of concern spreading in the West over potential Chinese control of critical infrastructure.

    Last week, the new owner of Britain’s biggest chipmaker was ordered to unwind its takeover, just days after another chip factory sale was blocked in Germany. Both transactions were hit by national security concerns, and had involved acquisitions by Chinese-owned companies.

    In the United Kingdom, Nexperia, a Dutch subsidiary of Shanghai-listed semiconductor maker Wingtech, was told by the government to sell at least 86% of its stake in Newport Wafer Fab, more than a year after taking control of the factory. Staffers have since been protesting the decision, saying it puts nearly 600 jobs at risk.

    In Germany, the economic ministry barred Elmos Semiconductor, an automotive chipmaker, from selling its factory in the city of Dortmund to Silex, a Swedish subsidiary of China’s Sai Microelectronics.

    Chipmaking was already emerging as a new front in US-China tensions. Now the two troubled deals illustrate how the pressure is also rising in Europe, particularly as Western officials face calls for key sectors to be kept out of Chinese control.

    “These decisions mark a shift towards tougher stances regarding Chinese investment in critical industries in Europe,” said Xiaomeng Lu, director of geo‑technology at Eurasia Group.

    “US pressure definitely contributed to these decisions. [A] growing sense of technology sovereignty also likely prompted these moves — governments around the world are increasingly [viewing the] semiconductors industry as a strategic resource and seek to protect them from foreign takeovers.”

    Legal experts said the two decisions were notable because each deal was initially thought to have been cleared.

    The Newport Wafer case is “the first completed acquisition” that needs to be unwound under a UK national security and investment (NSI) act, which took full effect in January, according to Ian Giles, head of antitrust and competition for Europe, the Middle East and Asia for Norton Rose.

    Nexperia said last week that it was “shocked” by the decision, and that “the UK government chose not to enter into a meaningful dialogue with Nexperia or even visit the Newport site.”

    The company added that it had offered to avoid “activities of potential concern, and to provide the UK government with direct control and participation in the management of Newport,” a 28-acre site in south Wales.

    The factory makes silicon wafers, the basis for making computer chips. Many of its products eventually power cars and medical equipment. Nexperia has indicated that workers at the facility now face an uncertain future.

    In an open letter to the UK government last Thursday, the Nexperia Newport Staff Association said that it was “in disbelief” that employees’ livelihoods had been “put in jeopardy in the run-up to Christmas.”

    “This is clearly a deeply political decision,” the group wrote, rejecting the idea that the deal would undermine British security. “You must see sense and protect our jobs by allowing Nexperia to keep their Newport factory.”

    For Elmos, German authorities had initially indicated that they would issue a conditional approval, and even shared a draft approval after an intense review process lasting about 10 months, the company said in a statement following the injunction.

    Tim Schaper, head of antitrust and competition for Germany at Norton Rose, said government intervention was also significant given that “Elmos’ technology is said to be quite old, state of the art in the 1990s, and allegedly not of great industrial importance.”

    “The transaction became the plaything of a public debate about Chinese investors’ acquiring stakes in key German technologies,” he said.

    A company sign of Elmos Semiconductor, seen on Nov. 9 in the German city of Dortmund.

    It’s possible that regulators were concerned about an outflow of technical know how, according to Alexander Rinne, the Munich-based head of international law firm Milbank’s European antitrust practice.

    “Elmos is known for making chips for the automotive sector, which is Germany’s core industry and the pride of the country,” he said in an interview.

    Elmos and Nexperia both declined interview requests. A Nexperia spokesperson told CNN Business on Tuesday that it was “considering its options regarding the UK government’s decision.”

    Chips are a growing source of tension between the United States and China. Washington has declared a shortage of the materials a national security issue, and highlighted the importance of remaining competitive in advanced technology capabilities.

    This year, the United States ramped up its own restrictions and pressed allies to enact their own, according to Lu. In August, the US government ordered two top chipmakers, Nvidia

    (NVDA)     and AMD

    (AMD)    , to halt exports of certain high-performance chips to China.

    Two months later, the Biden administration unveiled sweeping export controls that banned Chinese companies from buying advanced chips and chip-making equipment without a license. The rules also restricted the ability of American citizens or US green card holders to provide support for the development or production of chips at certain manufacturing facilities in China.

    The pressure is mounting. On Monday, NATO Secretary General Jens Stoltenberg urged the West to “be careful not to create new dependencies” on China. Speaking at a NATO parliamentary assembly in Madrid, Stoltenberg said he was seeing “growing Chinese efforts” to control Western critical infrastructure, supply chains, and key industrial sectors.

    “We cannot give authoritarian regimes any chance to exploit our vulnerabilities and undermine us,” he said.

    China has pushed back on the handling of the two European semiconductor cases.

    “We firmly oppose the UK’s move, and call on the UK to respect the legitimate rights and interests of Chinese companies and provide a fair, just, and (a) non-discriminatory business environment,” Chinese Foreign Ministry Spokesperson Mao Ning told a press briefing last Friday when asked about the Newport Wafer order. “The UK has overstretched the concept of national security and abused state power.”

    Zhao Lijian, another Chinese Foreign Ministry spokesperson, called on Germany and other countries to “refrain from politicizing normal economic and trade cooperation” at a press conference earlier this month, without addressing Elmos specifically.

    Germany has shown greater scrutiny of Chinese buyers this year. Last month, a bid by Chinese state shipping giant Cosco for a stake in a Hamburg port terminal operator sparked similar controversy. Under pressure from some members of the government, the size of the investment was later limited.

    Attorneys say if the chipmakers appeal, they could face an uncertain battle that may drag on for years.

    In each case, they would need to file a challenge in court within roughly a month of regulators’ decisions, barring exceptional circumstances, according to Norton Rose.

    Both Britain and Germany have recently added rules that expand government oversight over such decisions, making outcomes harder to predict. In Germany, a change to foreign direct investment rules in 2020 meant the government can intervene in prospective deals “if there is a ‘probable impairment of public order and security,’” said Schaper.

    Previously, by contrast, it could only impose restrictions “if there was an ‘actual, sufficiently serious threat to public order and security,’” he told CNN Business.

    In the UK, the ability of the government to retroactively review deals under the NSI Act “was really something that was considered surprising and far-reaching,” said Andrea Hamilton, a London-based partner at Milbank.

    “If challenged, as Nexperia apparently intends, it will also become a test case as to [the] extent of the NSI Act’s limits,” she said.

    Elsewhere, attention is shifting to the Netherlands. The Dutch government is currently facing pressure from the United States to limit exports to China, particularly from ASML

    (ASML)    , a semiconductor equipment maker that holds a dominant position in the lithography machine market, according to Lu at Eurasia Group.

    “It will become the next case study,” she told CNN Business.

    The Netherlands has made clear it will form its own position.

    Asked about the issue this month, Dutch Minister for Foreign Trade Liesje Schreinemacher said the country would “not copy the US export restrictions for China one-to-one.”

    “We make our own assessment,” she said in an interview with Dutch newspaper NRC.

    — CNN’s Zahid Mahmood, Rose Roobeek-Coppack and Laura He contributed to this report.

    [ad_2]

    Source link

  • Opinion: ‘Africa’s COP’ made some big promises. Here’s how to deliver | CNN

    Opinion: ‘Africa’s COP’ made some big promises. Here’s how to deliver | CNN

    [ad_1]

    Editor’s Note: Adjoa Adjei-Twum. She is the Founder & CEO of the Africa-focused and UK-based advisory firm Emerging Business Intelligence and Innovation (EBII) Group for global investors interested in Africa and emerging markets.
    The opinions expressed in this article are solely hers.



    CNN
     — 

    The recently-concluded COP27 was dubbed the “African COP” – with the continent center stage in the global effort to fight the causes and effects of climate change.

    As negotiations in the Egyptian resort of Sharm el-Sheikh spilled over into the weekend, there was a significant breakthrough on one of the most fractious elements – creating a fund to help the most vulnerable developing nations hit by climate disasters.

    The backdrop for COP27 was a series of catastrophic global weather events including record-breaking floods in Pakistan and Nigeria, the worst droughts in four decades in the Horn of Africa, and severe European heatwaves and hurricanes in the US.

    The loss and damage fund – to pay for the sudden impacts of climate change which are not avoided by mitigation and adaptation – has been a major obstacle in COP talks.

    The richest, most polluting nations have been reluctant to agree to a deal, worried that it could put them on the hook for costly legal claims for climate disasters.

    I welcome progress here, as African nations are bearing the brunt of climate change. The continent contributes around 3% of global greenhouse gas emissions, according to the UN Environment Programme and the International Energy Agency (IEA).

    Climate change is estimated to cost the continent between $7bn and $15bn a year in lost economic output or GDP, rising to $50bn a year by 2030, according to the African Development Bank (AfDB).

    But my joy is muted – the devil is in the detail, as ever. As an African diaspora entrepreneur whose work focuses significantly on the impact of climate change on the risk profile of African financial institutions and nations, I am concerned about the lack of detail about how the fund would work, when it will be implemented, and the timescale. I fear these could take years.

    During a recent visit to the US, I discussed reparation money with US Democrat Congresswoman Rep. Ilhan Omar. She said it was important for the US and other countries to make heavy investments, which could come in the form of reparations.

    She spoke about the importance of consulting impacted communities in Africa to avoid exploitation and the need for countries such as the US and China to end fossil fuel expansion and phase out existing oil, gas, and coal in a way that is “fair and equitable.”

    Adaptation is Africa’s big challenge – the AFDB estimates that the continent needs between $1.3 to $1.6 trillion by 2030 to adapt to climate change.

    The bank’s Africa Adaptation Acceleration Program, in partnership with the Global Center on Adaptation (GCA), aims to mobilize $25bn in finance for Africa, for projects such as weather forecasting apps for farmers and drought-resistant crops.

    It is now time for African nations to levy a climate export tax on commodities, such as cocoa and rubber, to help pay for climate adaptation. But it still falls short of the money Africa needs.

    Adaptation is all about building resilience and capacity, and I believe our governments, banks, and businesses must also adapt.

    I am calling on our governments, institutions, and companies to boost efforts to attract green finance and make Africa more resilient by improving governance, tax systems, anti-corruption efforts, and legal compliance.

    Sustainability is not a business tax, it is essential for business survival. Only companies focused on the changing world around us – from regulation to consumer and investor attitudes – will survive the climate crisis.

    Businesses that ignore this can expect fines, boycotts, and limited access to funding. Banks will suffer too. So the financial sector must be better prepared and more agile.

    This message will be reinforced when I meet CEOs, banking executives, and Nigeria’s central bank at the 13th Annual Bankers’ Committee Retreat, organized by the Nigerian Bankers Committee, in Lagos next month. The aim is to support the country’s biggest banks as they navigate new international sustainability rules.

    Increasingly, investment funds must conform to green taxonomies – a system that highlights which investments are sustainable and which are not. In other words, banks will only support investments by institutions in G20 countries if they conform to national or supranational rules, such as the European Union’s Green Taxonomy.

    This will not only help tackle greenwashing but also help companies and investors make more informed green choices. Additionally, G20 countries are asking their banks to forecast how risky their loans are due to climate change.

    African nations must implement robust systems to mobilize private capital and foreign direct investment in key sectors. Governments must ensure they have an enabling environment for increased green investments.

    Regulators must strengthen their capacity to develop and effectively enforce climate-related rules. Companies, especially banks, should strengthen climate risk management teams, regulatory compliance expertise, and preparation of bankable projects for international climate finance. This is the foundation for a successful transition to a low–carbon economy.

    Looking ahead, there are other actions we can take. The African Continental Free Trade Area (AfCFTA) – the world’s largest free trade area and single market of almost 1.3bn people – could protect Africa from the adverse impacts of climate change, such as food insecurity, conflict, and economic vulnerability.

    It could lead to the development of regional and continental value chains, inter-Africa trade deals, job creation, security, and peace. A single market could drive less energy-intensive economic growth while keeping emissions low, for example by developing regional energy markets and manufacturing hubs.

    But we need much better pan-Africa coordination, like the European Union, to accelerate the AfCFTA. I urge our governments to work together and take swift and concrete actions to ensure the full and effective implementation of the AfCFTA. There is no time to waste.

    This will not be popular with some African regimes because they will be forced to be more transparent and accountable with their public finances.

    This year’s COP may have been marred by chaos, rows between rich and poorer nations, and broken multi-billion-dollar pledges by developed countries who created the climate crisis.

    Many observers point out the final deal did not include commitments to phase down or reduce the use of fossil fuels.

    But, the deal to create a pooled fund for countries most affected by climate change is significant, and as UN secretary general António Guterres warned, it was no time for finger-pointing.

    It is also no time for the blame game. It is a wake-up call for African governments, banks, institutions, and companies to unite, step up, and adapt to a new climate reality.

    [ad_2]

    Source link

  • Taylor Swift ticket snafu caused by Ticketmaster abusing its market power, Senate antitrust chair says | CNN Business

    Taylor Swift ticket snafu caused by Ticketmaster abusing its market power, Senate antitrust chair says | CNN Business

    [ad_1]


    New York
    CNN Business
     — 

    Senator Amy Klobuchar criticized Ticketmaster in an open letter to its CEO, saying she has “serious concerns” about the company’s operations following a service meltdown Tuesday that left Taylor Swift fans irate.

    In the letter to CEO Michael Rapino, the Democrat from Minnesota and chair of the Senate Judiciary Subcommittee on Competition Policy, Antitrust, and Consumer Rights, wrote that complaints from Swift fans unable to buy tickets for her upcoming tour, in addition to criticism about high fees, suggests that the company “continues to abuse its market positions.”

    “Ticketmaster’s power in the primary ticket market insulates it from the competitive pressures that typically push companies to innovate and improve their services. That can result in the types of dramatic service failures we saw this week, where consumers are the ones that pay the price,” Klobuchar wrote.

    Ticketmaster and Live Nation, the country’s largest concert promoter, merged about a decade ago. Klobuchar noted that the company at the time pledged to “develop an easy-access, one-stop platform” for ticket delivery. On Thursday, the senator told Rapino that it “appears that your confidence was misplaced.”

    “When Ticketmaster merged with Live Nation in 2010, it was subject to an antitrust consent decree that prohibited it from abusing its market position,” Klobuchar wrote. “Nonetheless, there have been numerous complaints about your company’s compliance with that decree.”

    The letter includes a list of questions for Rapino to answer by next week. Ticketmaster did not immediately respond to a request for comment from CNN Business.

    On Tuesday, the company said “there has been historically unprecedented demand with millions showing up” to buy tickets for Swift’s tour and thanked fans for their “patience.”

    Klobuchar is the latest high-profile politician to openly criticize Ticketmaster for the ticketing disaster that left bad blood between Swift fans and the company.

    “@Ticketmaster’s excessive wait times and fees are completely unacceptable, as seen with today’s @taylorswift13 tickets, and are a symptom of a larger problem. It’s no secret that Live Nation-Ticketmaster is an unchecked monopoly,” Rep. David Cicilline, currently the chairman of the Antitrust Subcommittee, tweeted on Tuesday.

    “Daily reminder that Ticketmaster is a monopoly, its merger with LiveNation should never have been approved, and they need to be reined in,” tweeted Rep. Alexandria Ocasio-Cortez.

    Complaints about the company’s monopoly power go back long, long before Tuesday’s ticket problems, when the platform appeared to crash or freeze during presale purchases for Swift’s latest tour.

    In 1994, when Taylor Swift was only four years old and ticket purchase queues were in person or on the phone, not online, the rock group Pearl Jam filed a complaint with the Justice Department’s antitrust division asserting that Ticketmaster has a “virtually absolute monopoly on the distribution of tickets to concerts.” It tried to book its tour only at venues that didn’t use Ticketmaster.

    The Justice Department and many state attorneys general have made similar complaints over the years.

    Despite those concerns, Ticketmaster continued to grow more dominant. Pearl Jam’s complaint was quietly dismissed. The Justice Department and states allowed the Live Nation Ticketmaster merger to go through despite a 2010 court filing in the case raising objections to the merger. In the filing, the Justice Department said that Ticketmaster’s share among major concert venues exceeded 80%.

    – CNN Business’ Chris Isidore contributed to this report.

    [ad_2]

    Source link

  • US curbs on microchips could throttle China’s ambitions and escalate the tech war | CNN Business

    US curbs on microchips could throttle China’s ambitions and escalate the tech war | CNN Business

    [ad_1]


    Hong Kong
    CNN Business
     — 

    Chinese leader Xi Jinping’s push to “win the battle” in core technologies and bolster China’s position as a tech superpower could be severely undermined by Washington’s unprecedented steps to limit the sale of advanced chips and chip-making equipment to the country, analysts say.

    On October 7, the Biden administration unveiled a sweeping set of export controls that ban Chinese companies from buying advanced chips and chip-making equipment without a license. The rule also restricts the ability of “US persons” — including American citizens or green card holders — to provide support for the “development or production” of chips at certain manufacturing facilities in China.

    “The US moves are a major threat to China’s technological ambitions,” said Mark Williams and Zichun Huang, analysts at Capital Economics, in a recent research report. The analysts pointed out that the global semiconductor industry is “almost entirely” dependent on the United States and countries aligned with it for chip design, the tools that make them, and fabrication.

    “Without these,” the analysts said, “Chinese firms will lose access not only to advanced chips, but to technology and inputs that might over time have allowed domestic chipmakers to climb the ladder and compete at the cutting edge.” They added: “The US has chopped the rungs away.”

    Chips are vital for everything from smartphones and self-driving cars to advanced computing and weapons manufacturing. US officials have talked about the move as a measure to protect national security interests. It also comes as the United States is looking to bolster its domestic chip manufacturing abilities with heavy investments, after chip shortages earlier in the pandemic highlighted the country’s dependance on imports from abroad.

    Arthur Dong, a teaching professor at Georgetown University’s McDonough School of Business, described the recent US sanctions as “unprecedented in modern times.”

    Previously, the US government has banned sales of certain tech products to specific Chinese companies, such as Huawei. It has also required some major US chip-making firms to halt their shipments to China. But the latest move is much more expansive and significant. It not only bars the export to China of advanced chips made anywhere in the world using US technology, but also blocks the export of the tools used to make them.

    With its Made in China 2025 road map, Beijing has set a target for China to become a global leader in a wide range of industries, including artificial intelligence (AI), 5G wireless, and quantum computing. At the Communist Party Congress earlier this month, where he secured a historic third term, Xi highlighted that the nation will prioritize tech and innovation and grow its talent pool to develop homegrown technologies.

    “China will look to join the ranks of the world’s most innovative countries by 2035, with great self-reliance and strength in science and technology,” Xi said in the party congress report, released on October 16.

    Dong said the latest US sanctions will make it harder for China to advance in AI as well as 5G, given the role advanced chips play in both industries.

    “In any circumstances,” Williams from Capital Economics said, “China would find achieving global tech leadership hard to achieve.”

    One dramatic, and potentially disruptive aspect of the rules is the ban on American citizens and legal residents working with Chinese chip firms.

    Dane Chamorro, a partner at Control Risks, a global risk consultancy based in London, said such measures are usually “only enacted against ‘rogue regimes’” such as Iran and North Korea. The decision to use this against China is “unprecedented,” Chamorro said.

    Many executives working for Chinese firms may now have to choose between keeping their jobs or acting as lawful US residents. “You can’t do both,” Chamorro said.

    The ban could lead to a mass resignation of top executives and core research staff working at Chinese chip firms, which will hit the industry hard, Dong from Georgetown University said.

    So far it’s not clear exactly how many American workers there are in China’s domestic chip industry. But an examination of company filings indicates that more than a dozen chip firms have senior executives holding US citizenship or green cards. At Advanced Micro-Fabrication Equipment China (AMEC), one of the country’s largest semiconductor equipment manufacturers, at least seven executives, including founder and chairman Gerald Yin, hold US citizenship, the latest company documents show.

    A woman inspects the quality of a chip at a manufacturer of IC encapsulation in Nantong in east China's Jiangsu province Friday, Sept. 16, 2022.

    Other examples include Shu Qingming and Cheng Taiyi, who currently serve as vice chairman and deputy general manager, respectively, at GigaDevice Semiconductor, an advanced memory chip firm. The Financial Times report said in a recent report that Yangtze Memory Technologies has already asked American employees in core tech positions to leave, citing anonymous sources. But it’s unclear how many.

    AMEC, GigaDevice Semiconductor, and Yangtze Memory Technologies didn’t respond to requests for comments.

    If these senior executives depart, “this will create a leadership and technological void within China’s chipmaking industry,” Dong said, as the country loses executives with years of chipmaking experience in an industry with “one of the most complex manufacturing processes known to mankind.”

    While much of the world’s chip manufacturing is centered in East Asia, China is reliant on foreign chips, especially for advanced processor and memory chips and related equipment.

    It is the world’s largest importer of semiconductors, and has spent more money buying them than oil. In 2021, China bought a record $414 billion worth of chips, or more than 16% of the value of its total imports, according to government statistics.

    But some Western suppliers have already started preparing to halt sales to China in response to the US export curbs.

    ASM International

    (ASMIY)    , the Dutch semiconductor equipment supplier, said Wednesday that it expected the export restrictions will affect more than 40% of its sales in China. The country accounted for 16% of ASML’s equipment sales in the first nine months of this year.

    Lam Researc

    (LRCX)    h, which supplies semiconductor equipment and services, also flagged last week that it could lose between $2 billion and $2.5 billion in annual revenue in 2023 as a result of the US export curbs.

    The party congress, which recently wrapped up, has slowed China’s response to latest US export controls, analysts said. But as Beijing starts assessing the significance of the measures, it might retaliate. Xi is “concerned” about US plans to bolster domestic chip production as his administration moves to restrict China’s ability to make them, said US President Joe Biden in a speech on Thursday.

    “This conflict is just beginning,” said Chamorro.

    Chamorro said the most valuable “card” in China’s hand might be the supply of processed rare earth minerals, which Beijing could embargo. Rare earth minerals are important materials in electric vehicle production, battery making and renewable energy systems.

    “These are not easily or quickly replaced and China dominates the processing and supply chain,” Chamorro said.

    The Biden administration, meanwhile, is also weighing further restrictions on other technology exports to China, a senior US Commerce Department official said Thursday, according to the New York Times.

    If either country takes these steps, it could shift the tech arms race between the United States and China to a whole new level.

    [ad_2]

    Source link

  • An antitrust battle over GIFs could be a wake-up call for Silicon Valley | CNN Business

    An antitrust battle over GIFs could be a wake-up call for Silicon Valley | CNN Business

    [ad_1]


    Washington
    CNN Business
     — 

    GIFs — those short, animated images that were a staple of internet memes and culture in the 1990s and 2000s — may be going out of fashion now as social media users have largely moved on to emojis and video.

    But a long-running legal battle over who can control access to them, culminating this week in a rare defeat for Meta (META), the parent of Facebook, could have major ramifications for Big Tech regulation. While the stakes of the case itself were relatively small, policy experts say the outcome is certain to embolden antitrust regulators around the globe and could chip away at the image of Big Tech as an invincible juggernaut.

    On Tuesday, UK regulators forced Meta to unwind its 2020 purchase of Giphy, one of the largest searchable internet libraries of GIFs.

    Meta had fought the breakup effort. But after an appeals tribunal this past summer largely upheld the government’s decision, Meta said this week it would sell Giphy in response to the final order from the UK requiring a spin-off.

    The concession marks a key moment in the global tug-of-war between governments and tech giants. It’s the first time any government — and one outside the United States at that — has successfully forced Meta to accept a breakup, albeit a partial one, since regulators worldwide began scrutinizing its economic dominance.

    “The Citadel may have been breached,” said Joel Mitnick, an antitrust attorney at the law firm Cadwalader, Wickersham & Taft.

    Meta, more than any other tech company, has drawn the attention of regulators for its acquisitions, which to critics have often looked like attempts to kill off potential competitive threats before they can flourish. In particular, they’ve pointed to its deal for Instagram in 2012 and WhatsApp in 2014, both of which were far pricier than the $400 million it reportedly paid for Giphy.

    Meta is currently defending against a US government antitrust suit seeking to force the company to spin off Instagram and WhatsApp, and another that would block a more recent proposed acquisition of a virtual reality startup known as Within Unlimited.

    The company said this week that it will continue to explore acquisitions despite the UK ruling. In issuing its decision, the UK’s competition regulator said Meta’s Giphy acquisition risked eliminating a competitor in digital advertising and cutting off third-party access to Giphy’s GIFs.

    GIFs aren’t a core part of Meta’s business; the company has sought to reposition itself instead as a leader in virtual reality technology. Even when Meta’s deal was first announced, it was widely regarded as a headscratcher and not an obvious threat to competition, according to Adam Kovacevich, CEO of the Chamber of Progress, an industry advocacy group funded partly by Meta.

    “Almost no one thought Meta was securing some kind of major coup with this deal,” Kovacevich tweeted, arguing that the case primarily served as a political exercise for UK regulators to demonstrate their post-Brexit relevance.

    Paul Gallant, an industry analyst at Cowen Inc., said that that only emphasizes how closely regulators are watching tech mergers now, and underscores how much of a wake-up call the UK ruling is.

    “Successfully blocking this deal will catch the eyes of the biggest tech companies in the world,” Gallant said. “The biggest tech companies have grown significantly through mergers and acquisitions, so this decision has the potential to complicate that strategy.”

    In many ways, the UK’s success in rolling back the Giphy merger reflects the cooperation and consensus that has emerged among antitrust agencies around the world, said William Kovacic, former chairman of the Federal Trade Commission and a law professor at George Washington University.

    The ruling will give non-UK regulators greater confidence that their own attempts to block tech industry consolidation may be achievable or, at the very least, not be viewed as radical, he added.

    “It gives you the ability to resist the argument that you are a rogue agency or a rogue jurisdiction,” Kovacic said. “It is more comforting to travel in a group than alone.”

    Emboldened regulators could seek to block more deals, or perhaps bring more cases alleging anticompetitive behavior. But just because the Giphy case could inspire more enforcement, that doesn’t necessarily mean they’ll be successful. That’s because, in major markets such as the United States, antitrust cases first must be proven in court before any penalties can be imposed. And US courts don’t typically take foreign antitrust rulings into account; their job is to interpret US law.

    In that respect, said Mitnick, US antitrust officials face a tougher challenge than their counterparts in Europe and in other places where regulators face lower procedural hurdles.

    A successful US breakup prosecution, Mitnick said, “remains a very high wall to scale.”

    [ad_2]

    Source link

  • Seagate to pay $300 million penalty for shipping Huawei hard drives in violation of US export control laws | CNN Business

    Seagate to pay $300 million penalty for shipping Huawei hard drives in violation of US export control laws | CNN Business

    [ad_1]



    Reuters
     — 

    Seagate Technology has agreed to pay a $300 million penalty in a settlement with US authorities for shipping over $1.1 billion worth of hard disk drives to China’s Huawei in violation of US export control laws, the Department of Commerce said on Wednesday.

    Seagate

    (STX)     sold the drives to Huawei between August 2020 and September 2021 despite an August 2020 rule that restricted sales of certain foreign items made with US technology to the company. Huawei was placed on the Entity List, a US trade blacklist, in 2019 to reduce the sale of US goods to the company amid national security and foreign policy concerns.

    The penalty represents the latest in a string of actions by Washington to keep sophisticated technology from China that may support its military, enable human rights abuses or otherwise threaten US security.

    Seagate shipped 7.4 million drives to Huawei for about a year after the 2020 rule took effect and became Huawei’s sole supplier of hard drives, the Commerce Department said.

    The other two primary suppliers of hard drives ceased shipments to Huawei after the new rule took effect in 2020, the department said. Though they were not identified, Western Digital

    (WDC)     and Toshiba

    (TOSBF)     were the other two, the US Senate Commerce Committee said in a 2021 report on Seagate.

    The companies did not respond to requests for comment.

    Even after “its competitors had stopped selling to them … Seagate continued sending hard disk drives to Huawei,” Matthew Axelrod, assistant secretary for export enforcement at the Commerce Department’s Bureau of Industry and Security said in a statement. “Today’s action is the consequence.”

    Axelrod said the administrative penalty was the largest in the history of the agency not tied to a criminal case.

    Seagate’s position was that its foreign-made drives were not subject to US export control regulations, essentially because they were not the direct product of US equipment.

    “While we believed we complied with all relevant export control laws at the time we made the hard disk drive sales at issue, we determined that … settling this matter was the best course of action,” Seagate CEO Dave Mosley said in a statement.

    In an order issued on Wednesday, the government said Seagate wrongly interpreted the foreign product rule to require evaluation of only the last stage of its manufacturing process rather than the entire process.

    Seagate made drives in China, Northern Ireland, Malaysia, Singapore, Thailand and the United States, the order said, and used equipment, including testing equipment, subject to the rule.

    In August, the US Department of Commerce sent the company a “proposed charging letter,” warning the company that it may have violated export control laws. The letter kicked off some eight months of negotiations.

    Seagate’s $300 million penalty is due in installments of $15 million per quarter over five years, with the first payment due in October. It also agreed to three audits of its compliance program, and is subject to a five-year suspended order denying its export privileges.

    [ad_2]

    Source link