Monday Brief for 22 March 2021

5 Questions for "big tech"; Can we talk about "industrial policy?"; and 2020 was a very bad year for cybersecurity

Five Questions Congress Should Ask Tech CEOs

What’s New: On Thursday, two subcommittees of the House Energy & Commerce Committee are teaming up to discuss “the misinformation and disinformation plaguing online platforms.”

Why This Matters: This is the first time Facebook CEO Mark Zuckerberg, Twitter CEO Jack Dorsey, and Google CEO Sundar Pichai will be testifying since 6 January insurrections at the U.S. Capitol — an attack spurred on by digital and offline disinformation campaigns about the 2020 presidential election. 

Key Points:

“This hearing will continue the Committee’s work of holding online platforms accountable for the growing rise of misinformation and disinformation,” Energy and Commerce Committee Chair Frank Pallone, Jr. (D-NJ) and the chairs of the Communications and Technology and Consumer Protection and Commerce subcommittees, Mike Doyle (D-PA) and Jan Schakowsky (D-IL), said in a statement. “For far too long, big tech has failed to acknowledge the role they’ve played in fomenting and elevating blatantly false information to its online audiences. Industry self-regulation has failed. We must begin the work of changing incentives driving social media companies to allow and even promote misinformation and disinformation.”

  • The Committee sent a letter to Facebook in February, requesting specific information on the company’s “research on divisive content and user behavior, the reported presentations and recommendations made to Facebook executives and their actions in response, and the steps Facebook leadership has taken to reduce polarization on its platform.”

  • Early this month another letter was sent to Zuckerberg’s squad looking for information on the Capitol siege and “ads showing gun accessories and protective equipment next to content that amplified election misinformation.

  • Google also got mail, with lawmakers looking for details on how the platform makes recommendation and moderation decisions, with specific questions on YouTube’s “policies and practices for combating extremism.”

What I’m Thinking: I doubt this hearing is going to change very much in the near-term. Congress is, however, slowly growing more sophisticated in its engagement with “big tech” and we’re likely to see some interesting questions and answers in the hearing. Obviously, the majority of the hearing will focus on domestic issues; but, there are serious foreign and national security policy hooks to this issue as well. Here are five questions I think should be asked:

  • To all three CEOs: Please provide your company’s definition of “misinformation” and “disinformation.” What, if any, distinctions do you draw between domestic and foreign sources of this content?

  • To all three CEOs: Does false information from known foreign propaganda sources fall into your companies’ “misinformation” and “disinformation” policies? If not, why not? If so, why does it continue to proliferate on your platform?

  • To Mr. Dorsey: Why did Twitter provide training to Chinese officials, diplomats, media, and government in 2019? Do you believe this training directly facilitated the current surge in Chinese government propaganda currently on your platform? In fact, Lijian Zhao’s tweet suggesting the US military is responsible for the Coronavirus is still up on your platform.

  • To Mr. Pichai: The Times has reported on how Beijing pays British YouTube stars to make pro-China propaganda videos — including videos that claim the Chinese Communist Party is working to HELP Uighur Muslims — why are you promoting these clear examples of “disinformation” and “misinformation?”

  • To Mr. Zuckerberg: You and other Facebook executives have routinely testified that your artificial intelligence (AI) finds and removes nearly 99% of harmful content, such as child sex exploitation, human trafficking, and terrorist content. It appears you intend for us to believe this means that 99% of this content is removed from your platform; but, don’t you actually mean that — of this harmful content that is removed, AI is responsible for 99% of these removal? And doesn’t that mean that as much as much as 75-80% of this objectionable content remains on Facebook?


Can We Talk About Industrial Policy?

What’s New: My AEI colleague, Elisabeth Braw, has a new article in Foreign Policy arguing, “With China strongly backing its big national firms, the West should consider doing the same.”

Why This Matters: China’s blending of its government and industry — particularly in the technology sector — is generating real results and it is forcing US strategists to think anew about the promises and perils of industrial policy.

Key Points:

  • Braw argues that global market is no longer a place of “fierce but mostly fair competition.”

“Instead, many governments openly do their firms’ bidding at the expense of Western competitors. Western governments, though, cling to their belief in the old ways and are hurting their own companies as a result. As they look for ways to begin digging out of the pandemic’s economic collapse, Western governments and their allies should collectively protect their top-performing businesses against Chinese rivals who don’t play fair. Otherwise, it is precisely their top performers they risk losing.”

  • This does not require, however, a complete embrace of industrial policy.

“Selecting Western champions wouldn’t even need to be a formal process—and if it were, it would run afoul of the World Trade Organization. It could simply be an agreement to publicly support providers of critical goods and services. And every Western country has at least one enterprise that’s competing against an unfairly supported Chinese rival. By banding together to protect them, they can fight off a collective challenge together.”

  • Failing to do this, though, risks strategic failure.

“Today, distorted globalization presents such a fundamental threat to Western prosperity that a loose government embrace of vital Western enterprises in response to Beijing’s full-blown support for Chinese firms may well be inevitable. Keep the invisible hand alive among the group of countries that operate fairly. Against other rivals, tilt the scales back.”

What I’m Thinking:

  • What’s in a name? Some will wrongly dismiss Elisabeth’s article as a call for naked “industrial policy.” I think this is wrong on two counts. First, she goes out of her way to explain that responding to China does not require abandoning free market principles. Second, even if she did (but again, she doesn’t), it’s an argument that deserves to be taken seriously. Too often, critics throw out the epithet of “industrial policy” as though it’s an unassailable argument-finisher. It’s not. I love the free market and I want to protect it. That’s precisely why the market and geopolitical distortions created by China have to be acknowledged and addressed. There have always been national security caveats to free market norms; the challenge now is that, as the private sector’s national security role grows, so does the scope and consequences of those caveats. We’re not just talking about jets and tanks, we’re talking about chips and algorithms.

  • Let’s get serious. American technology companies must acknowledge their growing national security responsibilities. They must also accept the fact that Great Power competition is returning and that this return requires them to choose sides. While the Chinese market may be lucrative, it is also a moral minefield and ultimately a dead end for Western companies. American companies’ submission to Beijing’s predatory demands on intellectual property, proprietary information, trade secrets, data and other assets weakens American economic competitiveness, individual and national cybersecurity, and broader national security to the degree that this capitulation enables China’s technological ascendance over the U.S. This participation also gives cover to Beijing’s rampant political oppression and human rights violations. Companies that chase short-term profits in the Chinese market over long-term stability are in for a rude shock. Ultimately, western technology companies and the US government must recognize that the long-term interests of both are better served through national security partnerships. They should do this out of patriotism, out of economic interest, and because these partnerships enable the expansion of truly free markets and human thriving around the world.


FBI Says Cybercrime Cost $4.2B in 2020

What’s New: The FBI’s annual cybercrime report says 2020 posted record losses due to internet crime.

Why This Matters: The $4.2 billion in losses is a 20% increase over the $3.5 billion reported in 2019.

Key Points:

  • The Bureau reports that it received 791,790 internet and cybercrime complaints in 2020, up nearly 70% from the 467,361 reports in 2019.

  • This makes five years running when the reported incidents and total losses numbers exceeded those of the previous year.

  • Email account compromise (EAC) and business email compromise (BEC) attacks accounted for nearly $2 billion in losses and were the number one threat last year.

  • Besides EAC/BEC attacks, ransomware attacks increased 225% from $8.9 million in 2019 to nearly $30 million. But, even these numbers are likely low because there is significant underreporting of these attacks — particularly among businesses. As Catalin Cimpanu from The Record put it:

“The discrepancy in the FBI numbers and what’s seen by security firms in the real world comes from the fact that not all individuals or companies who suffer a ransomware attack report the incident to authorities, and most pay the ransom and never even disclose the incident to acquaintances or customers. This is specifically true for business entities, most of which also want to avoid the legal consequences of admitting to a security breach, such as lawsuits, fines, and reputational damage.”

What I’m Thinking: I’m simply going to quote the executive summary of the Cyberspace Solarium Commission report (emphasis added):

“Our country is at risk, not only from a catastrophic cyberattack but from millions of daily intrusions disrupting everything from financial transactions to the inner workings of our electoral system … The reality is that we are dangerously insecure in cyber. Your entire life—your paycheck, your health care, your electricity—increasingly relies on networks of digital devices that store, process, and analyze data. These networks are vulnerable, if not already compromised. Our country has lost hundreds of billions of dollars to nation-state-sponsored intellectual property theft using cyber espionage … The status quo is not getting the job done. The status quo is inviting attacks on America every second of every day. The status quo is a slow surrender of American power and responsibility.”


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