A weekly digest of the latest news and research related to the work of the Technology, Economics, and Governance Working Group. Topics covered in the digest include cybersecurity, domestic regulation, innovation, international competition, social media disinformation, and the California exodus.
This week’s roundup features analysis of Western sanctions against Russia, international supply chain disruptions, and how public-private partnerships have frustrated Russia’s cyber offensive. Additionally, major tech firms joined the Metaverse Standards Forum, income disparity increases along racial lines in Silicon Valley, China-based engineers can access US TikTok user data, and January 6th committee members are the target of violent rhetoric online.
Industrial Policy & International Security
The initial, short-term impact of Western sanctions against Russia was significant but the government is taking action to stabilize the Russian economy and currency, and secure oil and gas revenue. Western governments are considering additional measures to restrict Russian oil exports and further sanction Russian banks, but CSIS Senior Fellow Gerard DiPippo believes that the coercive power of these measures is decreasing. Western sanctions had the greatest deterrent potential before Russia’s invasion. While continued economic measures may not be powerful enough to force Russia to withdraw from Ukraine now, DiPippo argues that export controls could sufficiently weaken the Russian military to give Ukrainian forces a better chance on the battlefield.
The war in Ukraine is disrupting mineral markets for defense products from munitions to semiconductors. While the Department of Defense has been looking for solutions to supply chain vulnerabilities for a few years, the need to replenish stockpiles after sending weapons to Ukraine adds a new layer of urgency to this challenge. The Senate version of the 2023 National Defense Authorization Act includes authorizations for $1 billion in funding for the National Defense Stockpile and $600 million to use the Defense Production Act to address domestic industrial base constraints for products like missiles and critical minerals. Pentagon leaders are also looking to augment domestic efforts with defense industrial collaboration between allies and partners. Thales Australia, for example, is already providing artillery ammunition to the US Army.
Intel announced that it is delaying construction of its planned semiconductor manufacturing plant in Ohio as a result of uncertainty surrounding CHIPS Act funding. As Congress works on a compromise between House and Senate versions of the legislation, industry leaders are concerned that the summer recess will interminably postpone the expected $52 billion in funding for chips. Secretary of Commerce Gina Raimondo is concerned about the impact on national security if supply chains are disrupted; the US continues to rely on semiconductor manufacturers in Taiwan.
Firms warn of China Shipment Delays as US Bans Xinjiang Imports | The Wall Street Journal
The Uyghur Forced Labor Prevention Act, which was signed into law in 2021, went into effect this week. The new law presumes that items produced in Xinjiang are the product of forced labor and requires companies, instead of US customs, to prove otherwise before imports may be allowed into the country. Lack of access to factories and Chinese government surveillance already frustrate Western efforts to investigate forced labor claims, and it’s unclear what documentation US enforcement agencies will accept as proof. During this period of uncertainty and adaptation, US businesses expect supply chain disruptions and increased compliance costs. China’s Foreign Ministry views the law as further evidence of an American strategy to contain Chinese development. Xinjiang is a major producer of cotton and polysilicon.
This week, major industry players came together to form the Metaverse Standards Forum. An oversight body led by Khronos Group, the Forum is free to join and will facilitate cooperative development of interoperability standards among companies building metaverse products. In addition to encouraging open interoperability, the Forum has an opportunity to build security and safety measures into the metaverse up front. While Meta, Microsoft, Epic Games, Adobe, NVIDIA, Sony, and Unity are some of the Forum’s first members, others like Apple and Niantic are missing. The success of standards development efforts rests upon widespread adoption.
How Russia’s vaunted cyber capabilities were frustrated in Ukraine | The Washington Post
The Russian cyber offensive in Ukraine has been largely defeated by cooperation between major tech companies, US and NATO intelligence agencies, and Ukraine. According to a Microsoft official, the company has spent $239 million assisting Ukraine with network protection, for example. Google is deploying software to protect open communications channels. And SpaceX is bolstering internet connectivity through its Starlink satellite network. Public-private information sharing and technical collaboration has allowed Ukraine to act quickly to minimize vulnerabilities and repair networks in the wake of Russian attacks. Moreover, the longer the war goes on, the more prepared Ukraine and its supporters will be—continued exposure will weaken Russian cyber offensive tools and tactics.
Biden signs cyber bills into law | The Hill
This week, President Biden signed the Federal Rotational Cyber Workforce Program Act and the State and Local Government Cybersecurity Act into law. The former bill creates greater transparency about open cybersecurity positions in government and establishes a program allowing federal cybersecurity professionals to rotate between agencies. The latter bill seeks to increase coordination between the Department of Homeland Security and state and local governments through the National Cybersecurity and Communications Integration Center.
State & Local Tech Ecosystems
Silicon Valley Pain Index: income gap widens along racial lines | The Mercury News
The third annual Silicon Valley Pain Index report by San Jose State professor Scott Myers-Lipton shows that income disparity in the region is widening along racial lines. Black and Latinx workers’ average income is declining while White workers’ incomes are on the rise, and minorities are woefully underrepresented in tech leadership. Moreover, rising rents are exacerbating the consequences of the income gap as people are priced out of their communities and move to lower-income school districts or face homelessness; more than 45% of children live in households struggling to fulfill basic needs. Myers-Lipton hopes the report will inspire state and local lawmakers to take more meaningful action.
As the January 6th committee hearings continue, former President Trump’s supporters are posting violent rhetoric across alternative social media platforms including Truth Social, 4chan, and Gab. Users have targeted Rep. Liz Cheney, Rep. Adam Kinzinger, and former Vice President Mike Pence by name. The language used in many posts mirrors the tone and tenor of right-wing social media activity leading up to the insurrection, which reveals the long-term consequences of the misinformation spread about the 2020 election results. While the alternative social media platforms do not support unlawful speech, this still leaves a massive gray area for the platforms and authorities as they seek to evaluate users’ intent. It is difficult to distinguish which posts are hyperbole and which represent an active threat of violence.
Contrary to assurances from company leadership last year, audio recordings of internal TikTok meetings as recent as January 2022 indicate that China-based engineers have access to nonpublic data about US users. The recordings include statements from nine employees and are corroborated by screenshots and company documents. After a 2019 CFIUS investigation, TikTok initiated Project Texas to separate US operations and data flows to prevent their Chinese parent company, ByteDance, from accessing protected US user data. The project hinges on a contract with Oracle to store US user data at a center in Texas. However, TikTok is still determining what counts as protected data and US lawmakers worry that the Chinese government could force ByteDance to turn over data regardless of the outcome of Project Texas.