June 2023 Global Tech Policy Bulletin: From Rishi on Robots to … – InformationWeek

Hello and welcome back to the June 2023 issue of Citizen Tech, InformationWeeks monthly global policy roundup. This month were looking mostly at artificial intelligence, and lawmakers inability to legislate it, but also a number of aggressive actions by SEC and FTC, divergent tech visions at the European Commission, crypto-financing of war, cloud computing as the front of a new cold war, and more.

Any Citizen Tech readers who watch baseball might have seen the dapper figure of Rishi Sunak, prime minister of the United Kingdom, at the Washington Nationals stadium for the game against the Arizona Diamondbacks. (Mr. Rishi didnt throw the traditional first pitch: hes a cricket player, and the sight of the windup for a slow bowl is enough to give a baseball player a stroke.) Sunak was in Washington to bang the drum for Britain, in his own words, and meet with CEOs of Americas leading companies.

The main reason for Sunaks visit, of course, was a visit to the White House, where apart from the war in Ukraine and other diplomatic questions, the PM and the president discussed tech. AI was a principle concern, according to POLITICO, who underlined Sunaks challenge as a kind of regulatory balance. Mimicking the EUs posture on AI -- that is, considering it a danger to be controlled rather than a resource to be exploited -- is unattractive to a PM like Sunak, who wants to invite as much investment and make as much use of Brexit as he can. On the other hand, the United States unwillingness to confront AI as a threat makes the British nervous: Sunaks government has, notably, categorized AI as a human rights question, according to Reuters. Thats hardly a mark of confidence.

(Perhaps its not fair to say that the US has not confronted the challenges of AI. But even Bidens boasts of a proposed AI Bill of Rights are pretty weak tea compared with the major legislation slowly taking form across the Atlantic.)

For now, Sunak is tacking west rather than east, toward Washington rather than Brussels. At the Nationals game mentioned above, Sunak met with the CEO of Denver-based Palantir, Alex Karp. Palantir will likely get a $610 million contract from the Sunak government to implement a complicated AI regimen in the British National Health Service; the company has also announced that its European headquarters will be in London.

But Sunak is tacking, not driving a straight westbound course, and as such he must satisfy the anti-AI side as well. POLITICO reported that he is interested in establishing guidelines, and perhaps a summit of G7 countries to discuss the subject. The CEOs of OpenAI and Google DeepMind have found themselves called to Downing Street for private talks.

One of the open questions, however, is whether Britain can hold its own as an international arbiter of AI regulation. If the EU manages the push through an AI regulatory framework of GDPRs scope, Sunak might find his ambitions scuppered. On the other hand, if he acts fast, he might be able to beat Brussels to the punch. Washington, in the meantime, seems perfectly willing to cede this responsibility to Brussels or Westminster.

Incredibly, Sunak wasnt the only Hindu head of government to visit Biden this month. Overshadowing his visit was the arrival of the ever-controversial Narendra Modi, prime minister of India, a country whose trade with the US has doubled over the past 10 years, according to Reuters. Biden spared no horses welcoming him, between gala dinners and invitations to joint sessions of Congress. The unstated theme, which all parties denied, was the two countries common rival, China. (Its not about China, we heard over and over. One is reminded of Margaret Thatchers comparison of being a powerful country to being a lady: if you have to go around telling people) But Bidens post-COVID anxieties about supply chains are another key motivator. India is a useful friend.

But tech was another important theme, and the White House secured the august Kennedy Center as a venue for Modi to speak to various American tech barons, from OpenAIs Sam Altman to Apples Tim Cook. Modi proposed an innovation handshake to them, which amounts to a cutting back of regulatory guidelines for deals between the two countries. Micron technology has already announced plans for a semiconductor plant in India; General Electric will be partnering with Hindustan Aeronautics in the near future.

Several confidential sources told the New York Times this month that the White House was considering, with the aid of American cloud providers like Microsoft, new ways to strike at Chinese cloud computing services like Alibaba and Huawei. Strike at might be too aggressive a description, but the air of hostility is palpable, and in any event, we dont know quite what kind of new regulations are being discussed. Will this consist largely of lawsuits, like the failed suit against ByteDance? Or will new laws keep American infrastructure unattached to Chinese-owned 5G networks and Chinese cloud storage? The problem, of course, is that Chinas command economy allows for much more generous subsidies than the White House can feasibly offer domestic companies to tempt them away from cheap Chinese infrastructure. In that sense, and for all the Chinese foreign minister complained to Secretary of State Antony Blinken during his visit to Beijing about interference, this is not a fair fight. In the background, of course, looms Taiwan, producer of the worlds semiconductors, possible site of a war that America can neither fight nor stay out of.

The Biden administration might be passive in the AI sector, but it recently flexed its muscles in the cryptocurrency sector. One June 5, the SEC announced that it was charging the worlds biggest crypto trading platform, Binance, with a number of crimes: selectively allowing American investors special access, while claiming otherwise; running unregistered securities exchanges; and misleading investors. Binances founder, Changpeng Zhao, has also been charged.

According to one document flagged in discovery, Binances chief compliance officer said: [W]e are operating as a fking unlicensed securities exchange in the USA bro. Pretty damning under ordinary circumstances; much worse coming from the CCO.

For most of the month, Zhao and his colleagues scurried about between meetings with counsel and calls with the SEC, trying desperately to keep their assets from being frozen. On Sunday June 18, as CNN Business reported, the beleaguered cryptobros succeeded. According to the terms of the deal, Binance will repatriate American holdings and cede control of them.

The question on which this trial will hinge is whether cryptocurrency assets count as securities. The SEC faces exactly the same problem it faced last year, during its initial skirmishes with crypto platform Coinbase: it has no solid definition of what a security is, or at least a definition that keeps abreast of cryptocurrency. This will be SEC chair Gary Genslers most formidable obstacle going forward. Its not, however, his only problem. As Jessica Nix reports at Forbes, the cryptophobic Gensler has devoted enemies in Congress; and a rather lurid article in the in the New York Post has insinuated that Genslers 2022 meeting with disgraced crypto kingpin Sam Bankman-Fried breached the agencys ethical protocol. No other news outlet has pursued this story, but it may weigh the scales in Binances favor, if only indirectly.

The FTC has been busy in court this month, with one case against Microsoft and the other against Amazon.

Microsoft had had its eyes on Activision Blizzard, the Santa Monica-based video game producer behind popular titles such as Overwatch and World of Warcraft, for some time, and tried to acquire the company for just under $69 billion, as the Verge reported. This acquisition of one tech behemoth by another raised eyebrows in the major antitrust offices of the world. In a strange reversal of the usual trend, the European Commission decided not to pursue the case, while the Khan FTC demanded an injunction. Even stranger, the UKs Competition and Markets Authority has sided with the FTC.

This isnt the first time the FTC has pursued a video game-Big Tech merger, which underscores how important gaming is to the world economy; its also not a certain victory, as the case is ongoing. But its another sign of Lina Khans indefatigably aggressive posture. In this case, it seems to be working -- or so the Times thinks.

On the 21st, FTC brought another suit against Amazon, not on antitrust grounds but on more familiar territory for 200 million of you: they claimed Amazon had coerced or manipulated users -- duped them, in FTCs own words -- into signing up for an Amazon Prime subscription, as the New York Times reported. Allegedly, Amazon had intentionally made it difficult for users to shop without buying a Prime subscription, through a number of subtle means including the manipulation of color on a given page. This would be a violation of that great pillar of GDPR, informed consent. Amazon had just shaken hands with the FTC over a previous lawsuit, one alleging that the voice-activated Alexa service had made illegal use of childrens data. Khan is proving herself the Marshal Murat of tech regulation: when in doubt, she charges, and then she charges again.

Online misinformation is a tech battle whose fiercest crusaders have been, until now, of the liberal left. But starting this month -- justly or cynically, depending on your point of view -- Republican lawmakers have thrown the accusation of misinformation back at a series of institutions seen as sympathetic to the Democrats. These include universities, like Columbia, as well as the Atlantic Council, the German Marshall Fund, and even the Wikipedia Foundation. The Times reports that House Republicans, particularly in the House Judiciary Committee, have launched subpoenas and other, quieter inquiries and legal challenges against American civil society. Will this go very far? Probably not. But expect questions of nongovernmental influence on government, and web neutrality, to crop up in the upcoming election debates. It is, in a way, the right-wing response to left-wing accusation of censorship.

EU internal market commissioner Thierry Breton arrived in California this month in a welter, insisting in a meeting with Elon Musk and Twitter CEO Linda Yaccarino that Twitter test its compliance with the EUs new Digital Services Act. This new framework is enormous and untested; no one quite no knows what compliance would look like, and Big Tech firms -- especially online platforms with 45 million-plus users -- arent keen to find out.

Breton met with Metas Mark Zuckerberg as well, managing to secure Zuckerbergs agreement to the non-binding AI Pact first proposed at the 2023 G7 summit. Its the best Breton could do, given that the EU wont be ready to approve any AI legislation for two or three years, given the excruciating pace of EU lawmaking. However, of the two lords of California, Zuckerberg seemed the more cooperative. Perhaps its contrition, given Metas billion euro fine last month, or whatever passes for contrition in the C-suites of Big Tech firms; or perhaps its the necessarily political nature of the European Commissions interference with Twitter. Musk, after all, has displayed a certain sympathy for the other side in the ongoing Ukrainian War and a resentment of what he considers political censorship.

Speaking of Breton, heres a bit of Brussels gossip, courtesy of POLITICO. Bretons vision of AI enforcement differs profoundly from his Commission colleague Margrethe Vestagers. Bretons is more punitive; Vestagers more accommodating. The Frenchmans first concern is protecting Europes internal market; the Danes is cementing Europes role as a global regulatory player. Vestager is keen to draft AI legislation with her colleagues in Washington, for instance; Breton shows a certain Gaullist diffidence (one that his president, Emmanuel Macron, occasionally displays in these matters).

This growing competition would just by gossip, and unimportant to most Citizen Tech readers, except that the next generation of AI legislation is being drafted in Brussels, not on Capitol Hill. The repercussions are international.

However different American and European Big Tech stances can be, regulators from both sides of the Atlantic agreed this month that Google had overstepped antitrust rules grossly. Its a question of adtech, the algorithms that decide which ads a given internet user should see on any given page. Google owns a number of services, most notably Google Ads, which offer such algorithms; Google also owns the online marketplaces where these services are traded. In other words, they are buying and selling to themselves, forcing competitors out of the ad market. Or so Commissioner Vestager claimed this month in a statement; worse, she claimed, Google subtly modified its behaviour so as to make [its illegal practices more difficult to detect].

The solution, according to the statement, would be for Google to break up its adtech business, divesting itself of tools like AdX.

Notably, the Commission statement thanked the US Department of Justice:

Our cooperation with the DOJ has been close and fruitful, from the beginning of our respective investigations. There are of course differences between our legal procedures and our legal systems, but we share the same view as to what is good for competition, and ultimately, how to best remedy the issues for the benefit of consumers and citizens.

This case clearly shows the benefits of a very strong transatlantic cooperation.

Can crypto save Ukraine? At POLTICOs Global Tech Day, Ukraines minister for digital transformation, Oleksandr Bornyakov, claimed that his government had raised some $60 million in crypto donations since February 2022. Cryptocurrency occupies a somewhat depersonalized role in matters of state and war. The pace of technology seems to be moving in the opposite direction to the stable authority of the nation state. Its not a coincidence, for example, that tech regulation should be dictated by a quasi-empire like the EU, or that unregulated blockchain currency should end up filling the coffers of a state at war.

More mundanely, Bornyakov announced the creation of a new technology procurement platform, called Brave1, which allows small-to-medium sized enterprises (SME) to pitch cyber and defense tech solutions directly to Kyiv. This model could well pioneer a new approach to government procurement and SME cultivation; and as the White House continues to examine grant applications for semiconductor manufacturers, the simplicity of the Brave1 model might look very attractive indeed.

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June 2023 Global Tech Policy Bulletin: From Rishi on Robots to ... - InformationWeek