This week, Russia fired six hypersonic missiles against targets in Ukraine, the German government launches a security review of its telecommunications networks, and the Biden administration proposes a 3.2 percent increase to the FY 2024 defense budget. Additionally, the cost of cyber insurance is rising while coverage becomes more limited, and researchers have found that established tech hubs grow at faster rates than new centers of innovation, even when talent moves away.
Industrial Policy & International Security
Biden proposes Pentagon spending increase with industrial base focus | DefenseNews
The Biden administration has proposed an $842 billion defense budget for fiscal year 2024, representing a 3.2 percent increase. The budget proposal includes $9.1 billion for the Pacific Deterrence Initiative to boost the US military’s presence in the region amid rising tensions with China, and $37.7 billion to continue modernizing the nuclear arsenal. Specific references are made to bolstering the ballistic submarine fleet, the submarine industrial base, and naval shipbuilding and carrier maintenance. The administration also seeks to invest in key technologies and sectors of the US industrial base including microelectronics, munitions production, and biomanufacturing. Notably, $6 billion is pledged to support Ukraine, though it’s unclear whether the funds would be directed for military or economic aid. Republicans are expected to criticize the budget for being too small to meet national security needs and too large to reduce the deficit. Budget negotiations will take months to complete.
Russia is firing hypersonic missile into Ukraine that are nearly impossible to stop | NPR
In an early morning attack on Thursday, Russian forces launched six hypersonic Kinzahl missiles against Ukraine. Air force spokesman Yuriy Ignat commented on Ukrainian TV that this was the most Kinzahls Russia has fired in a single attack. The hypersonic missile is capable of accelerating to Mach 4—possibly up to Mach 10—with a range of 1,250 miles and can make unpredictable course changes to evade countermeasures. While there is debate over how much of a game changer hypersonic missiles may be, experts agree that they pose a real challenge to air defenses and even US missile defense systems. Ignat observed that, during the recent attack, Ukraine shot down only thirty-four of the eighty-one total incoming Russian missiles. Reportedly, Russia has also developed a hypersonic anti-ship missile and a more sophisticated hypersonic glide vehicle that can reach a speed of Mach 27, according to the Kremlin.
Germany reviews 5G network safety, opening door to possible Huawei ban | The Wall Street Journal
The German government has launched a security review of its 5G high-speed mobile telecommunications networks, which could lead to a ban of Chinese suppliers. Nearly 60 percent of the hardware in Germany’s 5G radio access network comes from Chinese vendors, compared to 41 percent in the UK, 17 percent in France, and 0 percent in Sweden. The review marks a shift for Berlin, which has resisted calls to ban the use of equipment made by Huawei Technologies and state-controlled ZTE Corp in their critical infrastructure. Under Chancellor Angela Merkel, Germany favored close links to China, which is the country’s largest trade partner. But her successor, Olaf Scholz, may draw lessons from the impact Russia’s invasion of Ukraine had on Germany’s energy market and change course. The Chancellor also faces increased pressure from Washington to reduce dependence on Chinese telecommunications. The US has expressed concerns that alleged back doors could compromise intelligence sharing between the allies. It remains unclear whether Chancellor Scholz would back an outright ban of Chinese suppliers.
US Regulation
The US shouldn’t import European ‘tech envy’ | The Hill
Opinion contributors Tirzah Duren and Steve Pociask of the American Consumer Institute argue that US lawmakers should avoid adopting the EU's approach to tech regulation: imposing fines, taxes, and strict antitrust regulations that unfairly target US big tech companies. They suggest that the EU's regulations function as tariffs, hindering competition and harming consumers, and contradict the open market environment that enabled American tech giants to thrive. The estimated compliance and fine costs for US companies operating in Europe under the Digital Markets Act and Digital Services Act range from $22 to $50 billion, according to a 2022 Center for Strategic and International Studies report. Duren and Pociask observe that US lawmakers from both parties seem eager to emulate European regulations and have taken an aggressive stance against big tech (e.g., FTC and DOJ complaints against Meta, Microsoft, and Google). They argue that antitrust and privacy reforms should not compromise the open market environment that is essential to tech innovation.
Innovation
Worldcoin, co-founded by Sam Altman, is betting the next big thing in AI is proving you are human | TechCrunch
Worldcoin, a company co-founded by Open AI CEO, Sam Altman, is attempting to create a digital currency system with biometric identification for payments, purchases, and transfers. Current beta testing requires users to download an app and have their iris scanned to verify their identity, after which they are assigned a cryptographic “hash” to prove their identity in future transactions. But the inspiration for Worldcoin goes beyond cryptocurrency. With the rise of online bots, phishing schemes, and the development of continuously smarter AI, Altman believes that it will become nearly impossible to determine whether you are communicating with a real person or an AI. Worldcoin has received $125.5 million in funding through several notable investors including Tiger Global, Andressen Horowitz, Khosla Ventures, Coinbase, and Variant. Altman remains on the board of Worldcoin, which is currently led by CEO Alex Blania.
Cyber
As cyber attacks on health care soar, so does the cost of cyber insurance | Axios
While cyber insurance used to be included within other insurance policies, the increased frequency and sophistication of cyber attacks on healthcare facilities since 2019 has caused cyber insurance to become a standalone policy. Moreover, insurance providers now require healthcare providers to meet certain digital security requirements to qualify for cyber insurance in the first place. Coverage is often limited; separate add-ons are required for social engineering attacks and state-backed cyber attacks are excluded in most policies. Although insurance costs are stabilizing for the industry overall, individual health systems still report major upticks in their premiums and policies have largely become unaffordable for smaller health care providers.
State & Local Tech Ecosystems
For Tech Jobs, the Rich Cities Keep Getting Richer | Wired
Research suggests that few coastal tech hubs like San Francisco and Seattle continue to separate themselves from other cities in terms of growth of high-paying tech jobs, investment, and innovation. Mark Muro, a senior fellow at Brookings, claims that although the disparate growth trend between tech hubs and other cities has existed for over twenty years, the trend is stronger today. Additionally, Enrico Moretti, an economist at UC Berkeley, found in a recent study of scientists moving in and out of hubs like the Bay Area, that patent activity was significantly greater when they were located within tech hubs. The Brookings report also points out that newer, smaller tech hubs located in places like Pittsburgh and Madison, Wisconsin are also growing at slower rates than the established cities. The consequence is that strategies to build innovation hubs from scratch, such as government investment in infrastructure, don’t often work. Researchers believe that investments in R&D or education fellowships alongside tax incentives can encourage the growth of tech hubs in cities that already have some existing academic or tech talent.
Democracy Online
Accuracy and social motivations shape judgements of (mis)information | Nature
In a new study published in Nature Human Behavior, researchers Steve Rathje, Jon Roozenbeek, Jay J. Van Bavel, and Sander van der Linden examine how accuracy goals, social goals, and pre-existing knowledge affect people’s identification of misinformation. Through a series of four experiments with US participants, the researchers sought to understand what factors cause individuals to correctly identify true and false political news headlines. They found that financial incentives improved the accuracy of participants’ judgments by 30 percent and reduced partisan bias. Non-financial incentives were also effective. However, social incentives to identify headlines that participants’ political allies would like decreased accuracy. Overall, conservatives were less accurate than liberals but incentives significantly reduced this partisan gap. The researchers conclude that partisan tendencies are not immutable. Strategies to shift motivations surrounding the consumption of news could establish more common acknowledgement of true news headlines.
