12 September 2024
This Week:
EU Acknowledges Burdensome Regulations and Problems in Tech Sector
Russian Influence Operations Adapting
China Participates in Exercise Formosa 2024
Conservative Groups Advocate for Tariffs on China
Bank of Japan Likely to Increase Rates
Research on Disinformation and TikTok
Helium Demand to Double Over Next Decade
New Research by The Soufan Center
See previous editions of P&M here
EU Acknowledges Burdensome Regulations and Problems in Tech Sector
A report released by the European Union on September 9, authored by former European Central Bank president Mario Draghi, criticizes the EU's regulations for stifling competitiveness in digital markets and hindering innovation. Titled “The Future of European Competitiveness,” the report calls for a significant overhaul of EU industrial and competition policies and suggests substantial investment in the tech sector. It highlights how current regulations, including the AI Act and General Data Protection Regulation (GDPR), are seen as overly complex and inconsistent, potentially impeding progress in technology.
Draghi argues that Europe needs to refocus its efforts to close the innovation gap with the U.S. and China, emphasizing that restrictive regulations are a major barrier. The report could have a positive impact on the long-term viability of the EU as European Commission President Ursula von der Leyen stated that it would “inspire our work for the months and years to come.” The report, requested by the European Commission, highlights that the EU needs to invest between 750-800 billion euros annually—up to 5% of GDP—far exceeding the historical Marshall Plan levels. The report emphasizes the need for improved coordination among EU member states, streamlined decision-making processes, and potentially new common funding sources, although Germany opposes joint borrowing. Essentially, the EU must adopt a more coordinated industrial policy, make faster decisions, and significantly increase investment to keep up with global rivals like the U.S. and China.
Draghi’s report also suggests that EU antitrust regulations should focus on fostering innovation and ensuring security, not just competition within the EU. His proposals cover ten sectors, including energy, AI, pharma, and space. Despite the recommendations, analysts predict political and practical challenges might hinder their implementation, given past difficulties with similar proposals and existing divisions among EU member states. This is especially true as the EU generally is hostile towards unregulated capitalism necessary for technological innovation.
“The Europeans are taking a step in the right direction towards learning the lessons of history, how we’re going to win with the AI revolution if we missed the digital revolution,” said Joseph Coniglio, director of antitrust and innovation at the Information Technology and Innovation Foundation. Coniglio expressed his hope that advocates for stricter antitrust enforcement in the U.S. would look to the report for guidance and maintain the current American policy direction, which he believes is more favorable to fostering innovation. While the EU would have a significant amount of policy reforms to implement to restore their economic capabilities, this could ameliorate some of the fundamental problems of the bloc and reduce the tensions from the balkanization of technology.
Russian Influence Operations Adapting
Google has removed several YouTube channels linked to Tenet Media, a Tennessee-based company connected to a Russian disinformation campaign. This action follows a Justice Department indictment of two Russian nationals for using RT to pay U.S. media influencers to spread propaganda (RT left the U.S. market in 2022). The indictment ties Tenet Media and its founders, Lauren Chen and Liam Donovan, to this scheme. Chen and Donovan allegedly concealed the Russian source of their funding and used it to pay conservative commentators, including Tim Pool, Benny Johnson, and Dave Rubin, to produce content critical of the U.S. role in the Ukraine war.
The indictment reveals that Tenet Media received at least $10 million from Russian operatives and that Chen and Donovan used a fake persona to disguise the true source of the funds. The commentators involved have stated they were unaware of the Russian connection and consider themselves victims of the scheme. In total, YouTube has recently removed 378 channels tied to Russian disinformation and continues to work on countering such activities.
Essentially, Russia is increasingly using American social media influencers to covertly sway voters ahead of the 2024 U.S. presidential election. This tactic involves both witting and unwitting Americans promoting narratives that advance Russian interests. Additionally, a separate Russian operation called Doppelganger was uncovered, involving the creation of fake Western news outlets to spread misinformation. This operation also worked with influencers to promote pro-Russian narratives.
The goal is to make these foreign influence operations seem more authentic by leveraging familiar faces. Experts view these tactics as a modern update of Cold War-era propaganda methods, adapted to the digital age. While in previous elections the Russians could simply spread propaganda directly, the awareness of this tactic means they have had to shift their approach. Considering the desire of many social media users to exist in an echo chamber (see below), by utilizing familiar faces Russia is able to legitimize lies. This demonstrates a new model for Russian propagandists with which companies and governments will have to monitor and respond to.
China Participates in Exercise Formosa 2024
The Chinese People's Liberation Army (PLA) will participate in Exercise Formosa 2024 in Brazil, marking a rare deployment of Chinese military forces to the Western Hemisphere. A detachment from the PLA Marine Corps will join this annual exercise, which focuses on joint landing and anti-landing operations, at Brazil's invitation. The exercise aims to strengthen cooperation between the Chinese military and other participating nations. Exercise Formosa, hosted by the Brazilian Marine Corps, usually includes several international participants. Last year's exercise featured the U.S., Germany, France, and South Africa, though this year's participants have not yet been confirmed. This participation aligns with recent improvements in China-Brazil relations, highlighted by Brazil’s intention to join China's Belt and Road Initiative and recent meetings between Chinese and Brazilian military leaders. Historically, Chinese military engagement in Latin America has been limited, focusing more on regional forums and seminars rather than operational exercises. This is an indicator that China will likely focus more on Latin America in its geopolitical competition with the United States, moving beyond Africa and South Asia.
Conservative Groups Advocate for Tariffs on China
On September 9, over a dozen conservative groups urged U.S. lawmakers to unite in addressing the threat posed by China to American technological leadership. Conservative leaders emphasized the need for bipartisan action to counter China's growing influence in technology and research. The letter, signed by prominent figures such as James Edwards of Conservatives for Property Rights and Ed Martin of Phyllis Schlafly Eagles, calls for strengthening the U.S. patent system and protecting intellectual property rights to maintain technological dominance. The letter was sent as the House prepares for "China Week," which will involve votes on several bills related to China. Proposed legislation includes the Protecting American Agriculture from Foreign Adversaries Act, aimed at banning foreign adversaries from buying U.S. agricultural land, and the DHS Restrictions on Confucius Institutes and Chinese Entities of Concern Act, which seeks to prevent the Department of Homeland Security from funding institutions with Confucius Institutes. This letter is an indicator that the majority of the right in America have turned away from their pro-free trade position and towards protectionism, meaning that Trump’s national populism has permeated the majority of the movement. As such, organizations should start incorporating more protectionism in their political risk assessments.
Bank of Japan Likely to Increase Rates
The Bank of Japan (BOJ) plans to continue raising interest rates if inflation remains on target, according to policymaker Junko Nakagawa. Despite recent market instability, Nakagawa indicated that the BOJ's strategy to incrementally increase borrowing costs is intact, though they will consider market impacts on the economy. Her comments led to a rise in the yen and a drop in the dollar. The BOJ is expected to keep rates unchanged at its next meeting but may tighten further by year-end, depending on economic conditions. Core consumer inflation has been above the BOJ's 2% target for 28 months. Nakagawa also noted that while Japan's economy shows steady growth and wage increases support consumer spending, uncertainties abroad and a tight job market pose risks.
Research on Disinformation and TikTok
New research by The Weber Shandwick Collective, a marketing and communications firm, provides insight into disinformation consumption on TikTok. According to the study, people trust TikTok creators more than mainstream media or experts because they prioritize “personal experience.” For instance, the study mentioned that participants preferred TikTok content from indigenous Hawaiians about the Maui wildfires over a New York Times article. In addition, TikTok is seen as an echo chamber that users appreciate for reinforcing their existing views. While it offers a variety of voices, many users enjoy how the platform's personalized "For You Page" aligns with their perspectives and provides them with talking points that support their preexisting opinions. There are limitations to this report as it is a small-n study, but these two data points are fundamental to understanding why mis/disinformation will continue to spread widely. Essentially, the study shows that people do not want thoughtful analysis based on research and mostly want content that feeds preconceived notions about the world. Governments will have an extremely difficult time combatting mis/disinformation over the coming years if this research is accurate.
Helium Demand to Double Over Next Decade
Global demand for helium is projected to nearly double by 2035, reaching over 322 million cubic meters, driven primarily by the semiconductor industry, according to an IDTechEx report. The semiconductor market, crucial for AI and other technologies, relies heavily on helium for cooling and has no viable alternatives. As a finite resource, helium reserves may deplete faster due to increasing demand from various sectors including AI, quantum computing, and aerospace. While production is expected to rise with contributions from Qatar and Russia, supply could be vulnerable to geopolitical tensions. Current global helium production averages about 160 million cubic feet annually, with significant production in the U.S. and Qatar.
New Research by The Soufan Center
The Soufan Center has produced a report “that aims to explore how October 7 impacted several Western countries, including the United States, the United Kingdom, France, Germany, and Italy. While the conflict remains ongoing – and indeed will reverberate long after the fighting actually ends — this report attempts to take the pulse of five Western countries just shy of the one-year anniversary marking the attack.” According to the report, “the terrorist attacks of October 7 and the Israeli response provide [extremists] an opportunity to promote their hateful narratives and repackage them for the moment, often inciting their followers to wreak havoc and pushing their supporters to engage in violence.”
"Jealousy is all the fun you think they had."
- Erica Long
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