Morning Consult Tech: What's Ahead & Week in Review

Morning Consult Tech: What’s Ahead & Week in Review

Tech

Essential tech industry news & intel to start your day.

April 9, 2023

By AJ Dellinger

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Happy Sunday, Morning Consult Tech readers.

A couple weeks ago, when TikTok CEO Shou Zi Chew testified before Congress, it seemed almost inevitable that we were speeding toward a ban of the app in the United States. But this past week, you could feel that momentum slow to a near halt.

Sens. John Thune (R-S.D.) and Mark Warner (D-Va.) took to the editorial pages of The Wall Street Journal to pitch their Restrict Act, which would give the federal government the ability to ban communication services with ties to adversarial countries like China. Even there, it wasn’t without dissent: The Journal ran another editorial calling the bill a “sneak attack on free speech.”

Experts have warned the Restrict Act is too broad, offering the government carte blanche to exile any app it deems dangerous, including ones designed to protect privacy like virtual private networks. Even lawmakers are backing off from what seemed like a bipartisan effort to target TikTok.

Complicating matters is the realization that foreign investment, including from places with less than friendly relationships with the United States, is more common than just TikTok. Russian institutions with ties to the Kremlin have money tied up in Facebook. Investors from Saudi Arabia are among the biggest shareholders of Elon Musk’s Twitter Inc. Drawing the line on what is considered to be a risk is complicated in a global economy.

TikTok still might get the ax, but it doesn’t seem like the company is too worried. Its top lawyer reportedly laughed when asked about a potential ban during a recent all-hands meeting. We’ll see if the scrutiny picks back up when lawmakers return to the Hill this week.

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What’s Ahead

The annual Startup Grind Conference kicks off Tuesday in Redwood City, Calif. for two days of connecting and networking between startups, investors and industry leaders. Speakers at this year’s event include Notion Labs Inc. CEO Ivan Zhao, Substack Inc. co-founder Hamish McKenzie and Andreessen Horowitz general partner Connie Chan.

FTC Chair Lina Khan will speak at the 23rd Annual Loyola Antitrust Colloquium at the Loyola University Chicago School of Law on Friday. The event, hosted by the Institute for Consumer Antitrust Studies, will also feature conversations with Sarah Allen of the Department of Justice’s Antitrust Division and Public Knowledge’s Competition Policy Director Charlotte Slaiman.

Bloomberg will host a live event Thursday in Chicago titled “Intelligent Automation: Transformation in a Time of Uncertainty” as part of the Bloomberg Intelligent Automation Roadshow series. Pratik Gupta, chief technology officer of IBM Corp.’s automation division, will speak at the event.

On Monday, FTC Commissioner Alvaro Bedoya (D) and Assistant Attorney General for Antitrust Jonathan Kanter will be the keynote speakers at University of Utah Quinney College of Law event titled “Do Consumers Still Reign Supreme in the Antitrust Hierarchy? How Antitrust Can Promote the Interests of Workers and Other Stakeholders in the Economy.”

Week in Review

China

The Cyberspace Administration of China said it would launch a cybersecurity investigation into U.S.-based computer memory manufacturer Micron Technology Inc. and would review the company’s products sold in China as part of an effort to safeguard the country’s critical information infrastructure. The move follows previous efforts by Chinese authorities to crack down on U.S. companies operating within its borders.
A bipartisan group of lawmakers led by Rep. Mike Gallagher (R-Wis.) met with the CEOs of Apple Inc. and Walt Disney Co. this week, as well as top executives at Alphabet Inc. and Microsoft Corp., to discuss escalating tensions between the United States and China. The conversations are expected to center on intellectual property and trade issues, but will also branch into artificial intelligence and how the United States can “out-compete” China.
China’s State Administration for Market, its primary antitrust regulator, has slowed down merger reviews on proposed acquisitions by U.S. companies and asked that products be made available in China in order to receive approval, according to people close to the process. The tactic, viewed in part as a response to Washington’s increased scrutiny on Chinese tech firms, has affected mergers from Intel Corp. and MaxLinear Inc.

Twitter

At the guidance of Chief Executive Elon Musk, Twitter removed the verification checkmark from the account of The New York Times after the newspaper said that it would not pay Twitter for verification. While the Times had its checkmark removed, most accounts on the platform still have the verified badge despite Musk’s claims that “legacy” checkmarks would be removed by April 1.
Executives at companies including McDonald’s Corp. and Colgate-Palmolive Co. have expressed concerns that Elon Musk’s own comments about race and the willingness of Twitter to host racist speech under his ownership have made the platform toxic to advertisers. Musk is set to appear at the Possible conference, a major marketing and advertising event, where he is expected to make the case to advertisers to return to Twitter after many top brands have slowed spending on the platform since his takeover.

Artificial intelligence

Joe Biden met with the President’s Council of Advisors on Science and Technology this week to discuss the “risks and opportunities” that artificial intelligence presents for the United States. The conversation focused on ensuring responsible innovation and instilling safeguards to the technology as needed, and Biden is expected to call on Congress to pass bipartisan legislation to protect children and limit data collection performed by tech companies, according to a White House official.
Brian Hood, the mayor of Hepburn Shire, Australia, threatened to sue OpenAI over false claims made by the company’s artificial intelligence chatbot, ChatGPT. Hood said ChatGPT falsely said that he served time in prison for a foreign bribery scandal in the early 2000s, and is now giving OpenAI 28 days to fix the error before moving forward with the lawsuit, which would be the first defamation suit against the generative AI tool.
Top executives at Meta Platforms Inc., including CEO Mark Zuckerberg and Chief Product Officer Chris Cox, are spending most of their time working with artificial intelligence, according to the company’s Chief Technology Officer Andrew Bosworth. In an interview, Bosworth said that AI will benefit the metaverse and expects Meta will debut some commercial applications using AI later this year.
Alphabet. Chief Executive Sundar Pichai said that Google plans to add artificial intelligence features to its search engine, allowing users to ask questions in a conversational style. Pichai rejected the notion that chatbots like ChatGPT presented a threat to Google’s search business, claiming instead that the opportunity “is bigger than before.”
The early success of artificial intelligence chatbots released by Microsoft and Google has led to a willingness to take greater risks, according to 15 current and former employees and internal documents from the companies. In an internal email, Microsoft Deputy Chief Technology Officer Sam Schillace said it would be an “absolutely fatal error in this moment to worry about things that can be fixed later,” and five current and former employees say the company has not consistently enforced or followed its own responsible AI policies.

Antitrust and competition

The Department of Justice filed an antitrust lawsuit against Activision Blizzard Inc., alleging the company illegally suppressed the wages of players in its professional esports leagues by implementing a Competitive Balance Tax that would penalize teams if a player’s compensation exceeded a set threshold. In response to the lawsuit, the gaming giant claimed that the tax was never levied and the league voluntarily dropped the rule in 2021.
Germany’s antitrust regulator Bundeskartellamt designated Apple as a “company of paramount significance for competition across markets,” which opens the door for potential regulatory actions against any practices that are thought to pose a threat to competition. The German authority has also applied the label to Alphabet and Meta, but Apple said it plans to appeal the decision.
Ofcom, the United Kingdom’s regulatory and competition authority for the communications sector, said it found evidence of anticompetitive practices from cloud computing companies and warned that large industry players like Amazon.com Inc. and Microsoft may be using their market position to thwart competition. The agency said it will decide whether to refer its findings to the Competition and Markets Authority for a full investigation by Oct. 5.
Britain’s Competition and Markets Authority will follow the lead of the U.S. Federal Trade Commission and investigate Amazon proposed $1.7 billion acquisition of robot vacuum maker iRobot Corp. over concerns it could reduce competition in the connected device market. An Amazon spokesperson said the company is “working cooperatively with the relevant regulators in their review of the merger.”

Cybersecurity and privacy

The FTC has recommended filing a complaint against Amazon over the accusations that the company violated the Children’s Online Privacy Protection Act by collecting data on children through its Alexa-powered speakers without parental consent, according to two people familiar with the case. The Justice Department could sue the e-commerce giant over the allegations as early as this month.
Internal conflict between former National Cyber Director Chris Inglis and Deputy National Security Advisor Anne Neuberger led to the dissolving of the Biden administration’s cybersecurity “dream team,” according to five people familiar with Inglis’ thinking and emailed correspondence reviewed by Bloomberg. The discord among offices tasked with addressing cyber threats could hurt the White House’s ability to implement its new cyber strategy, while a successor to Inglis has yet to be nominated.
Genesis Market, a suspected Russian marketplace that sold access to 80 million stolen online accounts and passwords, was seized and 119 arrests were made in association with the takedown. The FBI, Department of Justice, Europol and police in 14 countries executed the takedown, dubbed Operation Cookie Monster, as part of an ongoing crackdown targeting cybercrime markets.
Tesla Inc. employees had access to images and video captured from cameras built into the company’s cars, including recordings of drivers in compromising and embarrassing situations and of crashes, and shared them via an internal messaging system, according to interviews with nine former employees. While the company has assured customers that “camera recordings remain anonymous and are not linked to you or your vehicle,” former employees said location data was available and could reveal where a driver lived.

Other news

Saudi Arabia’s Saudi Public Investment Fund, a $620 billion sovereign wealth fund, has disclosed funding relationships between its Sanabil Investments venture arm with nearly 40 U.S.-based venture capital firms, including Andreessen Horowitz, Coatue Management, Craft Ventures and Insight Partners. American firms have largely avoided publicizing fundraising efforts from Saudi Arabia following the 2018 murder of Washington Post columnist Jamal Khashoggi.