Jun 10, 2021

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1 big thing: U.S. shifts tactics to confront China's tech strength

Illustration: Sarah Grillo/Axios

Besting China is one of the very few goals that Democrats and Republicans in Washington can agree on — as a new White House executive order and Senate passage of a new $200 billion bill, both targeting China's tech industry, show.

Yes, but: Where the Trump administration took an impulsive and haphazard approach to banning Chinese companies and products, President Biden is approaching the China rivalry in a more systematic and process-oriented way, Axios' Ashley Gold and I report.

Driving the news:

  • The Biden administration on Wednesday rescinded Trump-era executive orders that threatened the ability of TikTok and WeChat to operate in the U.S. in their present form, replacing those orders with a new one ordering a wider review of foreign-owned apps under new standards.
  • On Tuesday, the Senate passed the U.S. Innovation and Competition Act, which authorizes $200 billion to strengthen the chip industry, bolster regional tech hubs, expand the National Science Foundation and establish a new technology directorate.

The big picture: The Biden administration knows China is one of its biggest foreign policy challenges, fraught with business and information security implications.

"What the administration is trying to do with this [executive order] is say, we're not just going to ban a foreign app or platform. We're going to put out clear, transparent criteria," said Samm Sacks, cyber policy fellow at the New America Foundation. 

  • "If you're TikTok, and you've gone to great lengths to try to meet a higher bar in terms of your data security practices, it's good news that now there will be a rigorous evidence-based analysis," she said, but there's still a lot of uncertainty for businesses trying to comply with the government's rules.

Between the lines: The Senate spending bill shows areas where the two parties agree on how to counter China's tech success. Reaction to the White House's executive order shows where they differ.

  • Sen. Marco Rubio (R-Fla.) criticized the new executive order for potentially letting WeChat and TikTok off the hook.
  • "The Biden Administration cannot ignore the serious threat to personal privacy and U.S. national security posed by high-risk foreign apps," Rubio said in a statement.

What they're saying: Experts say the Trump administration's approach lacked consistency and relied on blunt threats. The Biden White House wants to send a different message that it, too, is tough on China, but also, its actions will hold up in court and it will keep allies in the loop.

  • "In some cases, [the White House] may have found that the approach taken by the last administration was not legally sustainable," said Aimen Mir, a partner at Freshfields Bruckhaus Deringer and a former Treasury official.
  • China's position as a major U.S. trading partner but also as "a strategic competitor and military threat" hangs over this debate, Mir said. "With the ever increasing importance of commercial technologies to national and economic security, is any real competition from China not going to be viewed as a national security threat?"

Chinese tech equipment firm Huawei, which has been at the center of U.S. sanctions, has bemoaned fluctuations in rules for doing business in the U.S. over the last four years. The company also blasted what it sees as the U.S. government's conflation of economic and national security issues.

  • "I'm not convinced that this has much to do with sensitive data, rather than just restrictive practices to try and limit the growth of other applications in other countries," Huawei's John Suffolk said in a briefing with reporters Wednesday.
2. Lawmakers ready antitrust bills to take on tech

Rep. David Cicilline. Photo: Handout/Getty Images

Drafts of bills about tech competition and antitrust, likely to be introduced by leaders of the House Judiciary antitrust subcommittee soon, are circulating in Washington policy circles, Axios' Margaret Harding McGill and Ashley report.

Why it matters: The bills; formal introduction will cap the subcommittee's antitrust investigation, which last year produced a sweeping report (along with a separate report from ranking antitrust member Rep. Ken Buck of Colorado) recommending changes to antitrust law to better keep up with the digital age.

Details: Five draft bills obtained by Axios address interoperability, self-preferencing a company's own services and features, an update to merger fees and more money for the Federal Trade Commission and Department of Justice, limiting Big Tech acquisitions and separating platforms from sellers.

  • The bills seen by Axios are discussion drafts and may be introduced by the committee when they are finalized, but the timing is still unclear.
  • The draft text generally reflects ideas committee leaders have discussed in hearings and include areas where Democrats and Republicans on the committee have said they can find agreement.

Yes, but: House Judiciary Committee ranking Republican Jim Jordan of Ohio has been wary of aggressive antitrust action, despite his anti-Big Tech stance.

Flashback: Rep. David Cicilline (D-R.I.), leader of the antitrust subcommittee, previously told Axios he planned to introduce a series of bills rather than a single bill that could be an easier target for tech industry lobbyists.

3. Facebook ad chief Carolyn Everson departs

Carolyn Everson, Facebook's longtime head of global ad sales, has left the company, Axios' Sara Fischer reports.

Why it matters: Everson led Facebook through years of record ad growth, but also through intense scrutiny around Facebook's role in promoting harmful content.

Details: Nicola Mendelsohn, who currently runs the Europe, Middle East and Africa region of Facebook's Global Business Group, will be Everson's interim replacement.

  • The Verge's Alex Heath first reported the news.

Be smart: Everson, who has been with the company for over a decade, was the person responsible for fielding most of the angst from interest groups that were boycotting ads last summer over hate speech.

  • Under her tenure as vice president of the global business group, Facebook's revenue has grown from $3.7 billion in 2011 to nearly $86 billion in 2020.
4. Intel-based Macs won't get all new OS features

An image of the Live Text feature in MacOS Monterey, which allows people to copy and interact with text within photos. Image: Apple

Some of the features in the upcoming MacOS Monterey will only work on the newest computers that use Apple-designed chips, as noted by MacRumors. Among the features that won't be coming to Intel-based Macs is "Live Text," which lets users interact with and copy text that is present within photos.

Why it matters: Apple still sells Intel-based Macs and has promised to support them for years to come. But, as Monterey makes clear, that doesn't mean that the company is committed to feature parity going forward.

Apple didn't highlight the limitations, but the company does note in a footnote on its Monterey page that Live Text will only come to Macs running its M1 processor.

  • Intel-based Macs will also not get portrait mode for FaceTime, nor access to some improvements coming to Apple Maps and text-to-speech dictation.
5. Take note

On Tap

Trading Places

  • Twitter has added Mastercard senior VP Mimi Alemayehou to its board, replacing Jesse Cohn of Elliott Investment Management. Twitter has also put in place an information sharing agreement with Elliott.

ICYMI

  • Wired has the most in-depth look yet at what happened leading up to, and in the wake of, Google's ouster of AI ethics researcher Timnit Gebru. (Wired)
  • Meat company JBS confirmed on Wednesday that it paid an $11 million ransom following a recent cyber attack. (Axios)
  • Facebook is said to be developing its own smartwatch with two cameras and a heart rate monitor, with a planned launch next year. (The Verge)
6. After you Login
Image: Lego

I know I can only write about Legos and typewriters so often without exhausting your patience. But how could I not write about a Lego typewriter?

  • The new 2,079-piece vintage typewriter kit, part of Lego's fan-created Ideas line, isn't fully functional. But it can load a real piece of paper, and it includes a center typebar that rises each time a letter key is pressed and a carriage that moves across as one types. It's available starting July 1 for $199.