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.
In this week’s edition, France is the newest signatory to the Artemis Accords, ESG investment frameworks are challenged by geopolitics, Congress introduces cryptocurrency regulation (again), defense startups are being valued in the billions, cyber officials suggest how to prepare for the new normal, and one group hopes to put a dent in false, inflammatory information online by targeting ad revenue.
Industrial Policy & International Security
France, Europe’s largest space power, became the 20th country to sign the Artemis Accords, which sets norms for state behavior in space, including civil exploration and mining activity on the Moon, Mars, and asteroids. The signing ceremony coincided with the 60th anniversary of France’s National Center for Space Studies. France has also publicly supported the US call for a test ban on direct ascent, destructive anti-satellite missiles. While the Artemis Accords are focused on civil and commercial activity, they complement ongoing efforts to establish military norms in space to avoid interactions that might unnecessarily lead to escalation. US officials hope that France’s actions will have a positive influence on other European nations’ decisions to sign the Artemis Accords.
How ESG investing came to a reckoning | Financial Times
Environmental, social, and corporate governance (ESG) investment frameworks, which rapidly gained popularity in 2019, are crumbling under the pressure of the global economic response to Russia’s invasion of Ukraine and the realities of geopolitics. For investors, the war creates a new context for defense, energy, and sovereign risk, and therefore challenges ESG approaches to sustainable investment. In April, Sweden’s SEB bank reversed a 2021 ban to allow six funds to invest in companies with greater than 5% revenue from defense. And sustainable investors are resisting pressures to curb fossil fuel projects while Western countries seek alternatives to Russian oil. It’s time to redefine ESG criteria but investors and regulators should avoid rigid checklists or indexes that overlook subtleties or trade-offs.
After nearly a year at the helm of the FTC, Chair Lina Khan has no plans to wait for Congress to expand the FTC’s authority to write new regulations targeting data collection and privacy. Emboldened by the arrival of a new Democratic commissioner, Alvaro Bedoya, Khan has promised to use existing powers to protect Americans from digital surveillance and business practices that qualify as “unfair or deceptive.” Privacy legislation isn’t expected to pass during this session of Congress and Democrats are looking to the FTC to pick up the slack, anticipating that, if the Supreme Court overturns Roe v. Wade, Americans’ digital footprint could be used against them when seeking information about abortions.
Earlier this week, Senators Cynthia Lummis (R-WY) and Kirsten Gillibrand (D-NY) introduced the Responsible Financial Innovation Act to bring more regulatory clarity to the cryptocurrency industry. The bipartisan bill tackles the security-versus-commodity debate and introduces new definitions of digital assets that would classify cryptocurrencies as commodities. Furthermore, the bill grants the Commodity Futures Trading Commission (CFTC) regulatory jurisdiction over all fungible assets, including cryptocurrencies, that are not securities (which are under the jurisdiction of the US Securities and Exchange Commission). Supporters of the legislation believe it clarifies compliance for projects, exchanges, and investors, but some critics question whether the CFTC has the resources to fulfill such a mandate.
Shield AI has continued a strong fundraising pace, raising $165M at a $2.3B valuation during its latest Series E round. This is a good sign for startups focused on the defense market. Shield AI develops autonomous software and hardware products for the US government and its allies–its AI-based program, Hivemind, is being integrated into the F-16 fighter. Snowpoint Ventures investor Doug Philippone, who is also Palantir’s global defense lead, led Shield AI’s latest round, which included backing from Riot Ventures, Disruptive, Point72, Andreessen Horowitz, Breyer Capital, and SVB Capital. Anduril, another defense-first startup, is also closing a lucrative funding round expected to reach the billions. The war in Ukraine has opened more investors’ eyes to the utility of defense technology as a tool to support international security interests.
‘Shields up’: the new normal in cyberspace | CyberScoop
Authors Jen Easterly, Director of the Cybersecurity and Infrastructure Security Agency (CISA), and Chris Inglis, National Cyber Director, propose an approach to deescalate the nation’s heightened cybersecurity posture without compromising on defense. They argue that the current cyberthreat environment is unlikely to change in the near future but that maintaining such a high degree of vigilance is impractical over the long term. Easterly and Inglis propose a two-pronged approach: first, public-private partnerships should be leveraged to increase the United States’ cybersecurity baseline, and second, a cyber alert and advisory framework should be established to align warnings and guidance to the populations at risk, whether the threat is localized or large-scale. While cybersecurity is a whole-of-government and whole-of-society effort, this type of posture is more efficient and responsive to specific threats.
The biggest mistakes companies make with cybersecurity–and how to avoid them | The Wall Street Journal
Companies often treat cybersecurity as a preventative technical problem to be solved by siloed teams and augmented by annual employee training. MIT researchers Keri Pearlson and Stuart Madnick argue that this approach misses opportunities to build cyber resilience and ignores the reality that careless employee behavior facilitates 80% to 90% of cyberattacks. They suggest that companies prioritize cybersecurity decisions–from managing website security to evaluating vendors’ security–and make cybersecurity a part of workplace culture through programs like phishing tests. Companies that minimize vulnerabilities and focus on resilience will likely see returns on their investments as they spend less on recovering from attacks and become more competitive in security conscious markets.
State & Local Tech Ecosystems
For the past decade, careers in tech have been highly sought after by younger generations of workers drawn to the startup culture that more closely aligned with their values. Today, the onset of the tech downturn and consequent layoffs are causing job seekers to rethink their priorities. Moreover, conventional corporations have spent the past ten years reshaping their culture and benefits to compete for talent with Silicon Valley and their demand for tech workers is increasing as they modernize their businesses. With a growing labor market, the workforce has the luxury of choice and the security and stability of a traditional corporate job may lead employees away from uncertain futures in tech.
This week, Check My Ads announced a campaign targeting advertising dollars that support the Fox News website and YouTube channel. The group argues that Fox News’s sympathetic coverage of the January 6th insurrection and promotion of false information conflicts with many advertisers’ positions on disinformation and speech that incites violence. Instead of encouraging consumers to change their behavior, Check My Ads is focused on ad exchanges, which help companies place ads with digital properties. Most online ad placement is automated across massive inventories of digital properties, which is how exchanges can end up violating their own content guidelines or the standards of their clients. The Check My Ads strategy audits this ecosystem and puts public pressure on ad exchanges when they discover violations.