Sep 24, 2018

Axios Future

By Bryan Walsh
Bryan Walsh

Welcome back to Future. Thanks for subscribing. Consider inviting your friends and colleagues to sign up. And if you have any tips or thoughts on what we can do better, just hit reply to this email or shoot me a message at steve@axios.com.

Situational awareness: JD.com's stock ended the day down 7.4% due to a Reuters report containing text messages from a woman who accuses CEO Richard Liu of raping her earlier this month in Minnesota. JD's stock has fallen about 15% since Liu's arrest on Sept. 5. He was released without charges and is back in China.

Okay, let's start with ...

1 big thing: How the U.S. plans to win quantum

Illustration: Sarah Grillo/Axios

The White House and Congress are framing a national plan to fund and support quantum research, a field that could eventually deliver enormous advances in computational power and communication.

Axios' Kaveh Waddell reports: These advances, though still far off, may be enough to vault a country’s industry and military far ahead of its peers and create an economic boom, experts say. By devising a plan of attack, the U.S. can hope to stay ahead of China, which has for years invested deeply in developing the technology.

What's new: The White House this evening released an outline for a coordinated strategy to support quantum information science, just as a bill to fund new research and set a path for its implementation works its way through Congress.

  • For four hours this afternoon, dozens of government officials, leading academics and industry experts gathered in an office building next door to the White House.
  • They gamed out the next 10 years of quantum research, discussed coordination between the public and private sectors, and debated how to build a workforce that can take advantage of quantum technology, according to a meeting agenda.
  • The Department of Energy announced $218 million in research funding, and the National Science Foundation said it is doling out an additional $31 million.

Reality check: The funding pales next to China's planned national laboratory for quantum science, which has been seeded with $1 billion in funding but is expected to receive nearly $15 billion more in the next five years.

  • The strategic overview from the White House is a "good start," says Elsa Kania, an adjunct fellow at the Center for a New American Security. But the key question, she says, is implementation.

The nation's leading lights in quantum science and research were in attendance, Jim Clarke, director of quantum hardware at Intel, told Axios after the summit ended.

  • The roll call and the discussions made it clear that the White House Office of Technology Policy, which recently brought on a quantum physicist, is taking its organizing role seriously, says Clarke.
  • "What I saw thus far is OSTP is taking time to understand the different needs and technologies." After the summit, "I have a better understanding of who wants what," he said.

As the U.S. cobbles together a plan, China's progress is dialing up the urgency.

  • A recent study by Kania said the U.S. still has the edge in most areas of quantum research — but that China is swiftly approaching.
  • The Chinese government began creating a national plan for funding and supporting quantum research in 2013. The emphasis has borne fruit with advances like the world’s first quantum satellite, which China launched two years ago.
  • It’s the same dynamic that troubles U.S. experts in the race for supremacy in artificial intelligence. That contest, many years further along than the one for quantum hegemony, shows how the U.S. can blow a comfortable lead by neglecting to implement a national strategy.

What’s next: A bill that passed the House earlier this month would lay out a 10-year plan for funding quantum research with more than $1 billion and create a new federal office to advise the president and coordinate other agencies’ activities around quantum research.

  • Politics could get in the way, according to a report from MIT Technology Review. With all eyes trained on the Supreme Court nomination, the Senate may not take up the bill before the midterm elections, potentially rebooting the bill’s progress.
  • But Clarke says the bill has momentum: "There's a real optimism that the bill will become law before the end of the year."

Editor's Note: The version of the Axios Future email newsletter sent out Monday contained the wrong figure for China's current expenditure on a quantum lab. The correct amount is $1 billion, not $10 billion.

2. The 53% ride-hailing pay cut

Illustration: Rebecca Zisser/Axios

Ride-hailing drivers have seen their monthly paychecks cut in half in the last four years, a sign of declining fortunes for gig workers at a time when the U.S. economy is moving away from full-time employment, according to a study released today.

What's going on: While U.S. wages are generally creeping up, ride-hailing drivers are earning an average of $783 a month, down from more than $1,500 in 2014, according to a report from the JPMorgan Chase Institute, the bank's think tank.

Why it matters: The picture of plunging driver income is a public-relations risk — in particular for Uber because of its very size — at a time when Big Tech companies are under mounting scrutiny in the U.S. and Europe. On Wednesday, Amazon, Apple, Google and Twitter are to appear before yet another Senate hearing. Like them, Uber dominates its sector, last month reporting a 51% increase in second-quarter net revenue from the same quarter a year ago.

But it also is another blow to the gig narrative, a widely pushed forecast in which, it is suggested, current and future Americans will contentedly embrace the unattached working life, taking jobs when they like and being their own boss.

  • The narrative has been under attack, mostly for the lack of benefits, such as health care, enjoyed by many full-time workers.
  • Now, the JPMorgan study suggests that many workers are wise to the lesser reality of gig work: As of March 2018, only 12.5% of ride-hailing workers were driving full time, with the majority flitting in and out, filling out their income doing other jobs as well.
  • "As we talk of the future of work, we don't see a whole lot of evidence that transportation platforms are a viable source of income for a full-time job," says Fiona Greig, a co-author of the report.

Uber says that is what the service is largely for — flexible part-time income. In an email exchange with Axios, the company challenged the premise of the study, appearing to suggest that dropping income could reflect drivers working fewer hours, and not necessarily that their pay had been cut.

An Uber spokesperson said:

“The study’s findings reinforce what we and many others have said for some time: that the growth in on-demand work is driven, in large part, by people who use platforms like Uber on the side. Given the growing share of people who use platforms like Uber only occasionally, a more appropriate metric to focus on would be average hourly earnings, which have remained steady over time.”

In a report released in July, professors at The New School and Cal Berkeley found that hourly pay for full-time Uber drivers in New York City dropped by 30.4% between 2014 and 2017. Other researchers have found that Uber drivers earn an average of about $10 an hour after expenses and the company's 25% cut.

  • In numerous large cities, such as New York, a lot of people do treat ride hailing as full-time work. Last month, the city council capped the number of such vehicles at 80,000 and ordered a minimum wage for ride-hailing drivers, the first major U.S. city to regulate the industry.
  • Critics say that, short of such policy action, ride hailing will fundamentally fall short for drivers. "This is a sector that cries out for meaningful regulation — for the good of both drivers and passengers," said James Parrott, a professor at The New School and co-author of the July report on Uber drivers in New York.
  • "The unrestricted app business model has been a cruel failure."
3. Parkland and the youth vote

Youth march in August in Massachusetts. Photo: Scott Eisen/Getty

Tomorrow is U.S. voter registration day, and among the key questions heading into the November midterms is whether young people will turn out in higher numbers than usual. Since people aged 18-30 tend to vote Democratic, whether they actually cast ballots could have a decisive impact on numerous races.

What's going on: Student leaders from Marjory Stoneman Douglas High School in Parkland, Florida, have organized a partnership with some 200 mayors across the U.S. in an attempt to elevate youth voting.

  • David Hogg, a key organizer for the Parkland students, told Axios today that the mayors have pledged to have registration tables at all high schools and community colleges in their cities.
  • In Florida, youth voter registration soared more than 40% after the Parkland shooting in February, according to an analysis released in July. Hogg said youth registration is up by double-digits in numerous states.
  • The effort is in partnership with the U.S. Conference of Mayors and the African American Mayors Association.

As to whether these youths will actually get to the polls on Nov. 6, Hogg says his interactions during his tours of the country have made him "incredibly optimistic." The Parkland-led group, called March for Our Lives, is developing a "very large plan" to mobilize, but said the details are "a secret."

4. Worthy of your time

Illustration: Sarah Grillo, Rebecca Zisser/Axios

It's cool, but is Boston Dynamics a business? (Cade Metz — NYT)

Flying electric (Peggy Hollinger — FT)

Going 5G (Scott Rosenberg — Axios)

Fast shipping is disrupting retail (Christopher Mims — WSJ)

Odd, scary, and just plain off-putting AI names for apples (Janelle Shane)

Overdosing on the job (Jenny Gold — NYT)

5. 1 disruptive thing: Tiny electric cars

Photo: Fox Photos/Getty

China is having a love affair with small — really tiny, cheap and primitive — electric cars. They cost about $1,000, run on lead-acid batteries and are able to go about 40 mph tops. Three of these cares could fit in one regular-sized parking space, writes the WSJ's Trefor Moss.

What do we mean by love affair? Such cars made up more than two-thirds of the 2.5 million electric vehicles sold in China last year.

  • This seems like an important development at a time when most of the world's major carmakers are spending tens of billions of dollars retooling to produce all-electric fleets.
  • The cheapest price points — outside two-seaters like the $15,000 Daimler Smart car — are $35,000 for a GM Bolt or a notional Tesla Model 3. Mostly they are aimed at the luxury market, rely on lithium-ion batteries and approach and exceed $100,000.

The bottom line: According to Harvard professor Clay Christensen, powerful disruption often doesn't mean better, but instead cheaper — an often inferior product that overtakes a more expensive incumbent.

Such cars probably would not sell in such proportions in the U.S., but they could very well do so in other super-growth markets like India.

Bryan Walsh