Jun 7, 2018

Axios PM

Situational awareness: During four days in May when Facebook was testing a new feature, it reset the accounts of 14 million users to share posts publicly by default, CNN reports.

1 big thing: Trump officially resurrects ZTE

Illustration: Lazaro Gamio/Axios

China's ZTE is alive, escaping what once looked like a death sentence for repeatedly violating U.S. sanctions and being seen as a threat to national security.

The details: The deal requires a $1 billion fine for ZTE, plus $400 million in escrow to cover any future violations. ZTE will also have to "retain a team of special compliance coordinators" who answer to the U.S., and change its top leadership.

The big picture: Trump's broad tariffs against Chinese goods concern Beijing, but the Commerce Department going after ZTE — a state-owned enterprise in a strategic sector — hit a sore spot for the Communist Party.

  • P.S. "[ZTE's] fate has gotten caught up in a bigger web, including an upcoming summit between President Trump and North Korea’s leader and the success of an American telecom company, Qualcomm, which sells a large amount of semiconductors to ZTE and is awaiting Chinese approval of a deal to acquire a Dutch telecom firm that will help it build the next generation of wireless technology, known as 5G." [N.Y. Times]

Why it matters: China's successful negotiation to save the company could embolden it to try the same for Huawei, Axios' Erica Pandey emails.

  • Huawei has been banned from military bases due to national security concerns about espionage. It's back in the headlines this week after it was revealed Huawei accessed Americans' data via Facebook. [Go deeper on Huawei]

What they're saying:

  • Marco Rubio: "I assure you with 100% confidence that #ZTE is a much greater national security threat than steel from Argentina or Europe."
  • Chuck Schumer: "@realDonaldTrump should be aiming his trade fire at China, but instead he inexplicably aims it at allies like Canada, Mexico and Europe."
  • Sen. John Kennedy: "I’m sure ZTE makes a fine cell phone, but they’re a little too close to the Communist Party of China for my tastes."
  • Go deeper: The bipartisan blowback

What's next: A bipartisan hoard of senators have introduced legislation to reverse the ZTE deal.

Be smart: China has the leverage to take on the U.S., and it's smart enough to use it when it matters — as was the case with ZTE.

2. What you missed

People seeking political asylum in the United States line up to be interviewed in Tijuana
Mexico … just across the U.S. border south of San Diego. Photo: Elliot Spagat/AP

  1. In a leaked recording from a closed-door dinner that was obtained by BuzzFeed, U.K. Foreign Secretary Boris Johnson said he is "increasingly admiring of Donald Trump." Go deeper.
  2. Trump is open to inviting Kim Jong-un to the White House if the upcoming summit with the North Korean leader in Singapore ends well. Trump also told reporters that he isn't worried about prepping for the summit. Go deeper.
  3. Another EU antitrust fine for Google is coming down the pipeline in mid-July over allegations Google has used its Android mobile operating system to beat out rivals. Go deeper.
  4. The Trump administration has released four public service videos on opioid addiction, described to Axios last week as having a "shock the conscience" rawness. See the videos.
  5. Trump went to FEMA yesterday for a very unusual hurricane forecast briefing, a transcript reveals and audio obtained by the Washington Post shows.
  6. U.S. voters don't find kneeling by NFL players during the national anthem unpatriotic, a Quinnipiac University poll released today found. Go deeper.
3. 1 lucky thing

A French man has beaten the odds to win the "My Million" lottery for the second time in 18 months, the AP reports.

  • "Le Parisien newspaper says mathematicians it queried calculated the double win at 1 chance in 16 trillion."
  • "Radio France Bleu on Thursday quoted state lottery La Francaise des Jeux as saying the winner, who wants to remain anonymous, won 1 million euros ($1.18 million) on May 18 after winning 1 million euros in November 2016."