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Donald Trump

Huawei CFO arrest: everything we know so far

Huawei chief financial officer Wanzhou Meng faces extradition to the US over potential violations of American sanctions on Iran. Here are the latest developments. Original Link

China state media calls Huawei arrest a ‘despicable rogue’ act

China’s state media called the arrest of Huawei’s chief financial officer in Canada a “despicable rogue’s approach”, painting the move as a politically motivated effort to contain China’s rise. Original Link

‘Shocking’ Huawei arrest threatens US-China trade truce

On the same day Donald Trump and Xi Jinping struck a trade war truce in Argentina, some 11 000km away Canadian authorities made an arrest that now threatens to make the US-China conflict much worse. Original Link

Huawei CFO arrested, sparking China outrage

Huawei Technologies’ chief financial officer was arrested in Canada over potential violations of US sanctions on Iran, provoking outrage from China. Original Link

iPhones could get hit with 10% Trump tariff

Apple is poised for another setback after US President Donald Trump suggested that 10% tariffs could be placed on mobile phones, like the iPhone, and laptops made in China. Original Link

US allies urged to shun Huawei equipment: report

The US government is reportedly contacting key allies to get them to persuade telecommunications companies in their countries to avoid using equipment from China’s Huawei Technologies. Original Link

Your old phone is a security risk. Live with it

That obsolete smartphone stashed away in a drawer or closet may not look like a national security risk, but the Trump administration is contemplating treating it as one. Original Link

How Trump may have saved the market from an Apple-led tech slump

On the same day the world’s largest company issues its biggest disappointment in years, US President Donald Trump, does an about-face on China. Original Link

Chip hack a sign of Chinese cyber threats to US, officials say

The White House national security adviser has said Chinese cyberattacks on the US validate the Donald Trump administration’s emphasis on offensive cyber operations of its own. Original Link

Jack Ma says US trade war to destroy commerce

Jack Ma, the co-founder of Alibaba Group and China’s richest man, gave a dire warning that the escalating trade war with the US is going to be severe and long-lived. Original Link

Backspace: ‘Who do you trust?’

View the latest contribution from TechCentral cartoonist Jerm. Original Link

Trump steps up attacks on Big Tech

US President Donald Trump, stepping up his criticism of technology firms he says are favouring liberal points of view, said they may be in a “very antitrust situation” but repeatedly said he can’t comment publicly on whether they should be broken up. Original Link

Trump’s bogus claims stir up tech risk

It’s tempting to ignore the early morning tweets of a technology-challenged US president. Donald Trump is wrong on the facts, but his complaints underscore the business threats to tech companies from growing and largely disingenuous complaints. Original Link

Trump accuses Google of rigging search results against him

US President Donald Trump has accused Google of rigging its search results to give preference to negative stories about him, adding his voice to conservatives who accuse social media companies of favouring liberal viewpoints. Original Link

Microsoft says Russian cyber-attackers meddling in US politics

Microsoft has warned that cyber-attackers linked to the Russian military are once again targeting American political groups, in a potential attempt to manipulate and disrupt the US midterm elections in November. Original Link

US signs deal to lift restrictions on ZTE

The Donald Trump administration said ZTE took another step toward ending a US ban on the company doing business with American suppliers, a key Chinese government demand amid an escalating trade dispute between the world’s two largest economies.

The Chinese telecommunications giant has signed an escrow agreement with the US commerce department and the ban will be lifted as soon as the company deposits US$400-million in escrow, the department said in an e-mailed statement Wednesday. The company is currently operating on a temporary waiver that expires on 1 August.

“Once the monitor is selected and brought on board, the three-pronged compliance regime — the new 10-year suspended denial order, the $400-million escrow, and the monitor — will be in place,” commerce said in the statement. “The ZTE settlement represents the toughest penalty and strictest compliance regime the department has ever imposed in such a case. It will deter future bad actors and ensure the department is able to protect the US from those that would do us harm.”

A person familiar with the matter said the escrow payment should be completed within a day.

ZTE representatives met with commerce department officials on Monday to discuss a path forward for the deal, people familiar with the meeting said on condition of anonymity.

The Trump administration in April announced a seven-year ban on US exports to ZTE after it said the company violated sanctions agreements by selling American technology to Iran and North Korea. The ban had forced ZTE to announce it was shutting down.

President Trump reversed course in May, saying he was reconsidering penalties on ZTE as personal favour to Chinese President Xi Jinping. Later that month, his administration announced it would allow the company to stay in business after paying a $1.3-billion fine, changing its management and providing “high-level security guarantees”.

ZTE took a major step forward in meeting the White House’s conditions by sacking its entire board and appointing a new chairman last month. ZTE’s new management now faces the challenge of rebuilding trust with phone companies and corporate customers. The company is said to be facing at least $3-billion in total losses from the months-long moratorium, which cut off the flow of chips and other components it needed to make its networking gear and smartphones.

A bipartisan group of US lawmakers remains concerned about ZTE’s threat to US national security and is pushing for legislation aimed at restoring harsher penalties. Wednesday marks the start of negotiations on legislation that will try to balance concerns that ZTE presents a security risk with efforts to get the company back into business.  — Reported by Jennifer Jacobs and Jenny Leonard, (c) 2018 Bloomberg LP

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Huawei says roadblocks to US market are being constructed by its rivals

Huawei says roadblocks to US market are being constructed by its rivals · TechNode

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Huawei pushes back as US pressure grows

Huawei Technologies has said a proposed ban on selling its gear to some US mobile providers isn’t lawful, pushing back against assertions it poses a risk as the Trump administration increases pressure on China over trade and national security.

The Shenzhen-based networking giant’s presence in the US “has been artificially restricted by unfounded allegations and suspicions based solely on misperceptions” about its relationship with China’s government, Huawei said in a filing with the Federal Communications Commission that was made public on Tuesday.

The agency under chairman Ajit Pai, an appointee of President Donald Trump, has proposed barring telecommunications companies from using a federal subsidy to buy gear from companies such as Huawei and ZTE that are judged to be a national security risk.

Huawei, China’s top telecoms equipment vendor and the world’s number three smartphone maker, was founded in 1988 by former Chinese army engineer Ren Zhengfei. The company took the unusual step on Wednesday of publicising the minutes of a recent high-level meeting during which the ex-military officer emphasised the symbiotic relationship between the two world powers, and China’s dependence on cutting-edge American technology. Huawei will buy some 50 million chips from Qualcomm alone this year, he was cited as saying.

“The US-China trade dependency is mutual and extensive, I don’t foresee strong conflicts,” Ren was quoted as saying in a transcript posted on social media platform WeChat. “American communications technology crested in the 1960s, when we were mere college students.”

The rapid ascendancy, however, of Huawei and other Chinese companies in just the past decade has raised red flags. On Monday, another federal agency asked the FCC to block China Mobile from entering the US market, citing national security grounds. A spokesman for China’s foreign ministry said the US “should stop groundless speculation and intentional suppression against Chinese companies”.

The US is set to impose tariffs on US$34-billion of Chinese goods on Friday, with China vowing to retaliate. Trump has also threatened additional tariffs on $200-billion of Chinese imports that could be implemented if China imposes counter-measures. Talks between the US and China have stalled in part over American demands that Beijing reduce government support for high-tech industries.

‘Highly concentrated market’

Huawei, in its comments to the FCC that became available on Tuesday, said it’s an independent, privately owned business. Letting Huawei compete freely could yield savings, while restrictions “will result in excessive profits for a handful of other equipment suppliers in this highly concentrated market”.

The result would leave the US falling behind other countries, with harm concentrated in remote and poor areas, according to the filing. “The US cannot afford to become the only country in the world that lacks access to the best communication technologies,” Huawei said.

The FCC’s authority over the subsidy, the Universal Service Fund, doesn’t encompass national security concerns, Huawei said.

Huawei’s flagship smartphone, the P20 Pro

CTIA, a Washington-based trade group with members including US mobile providers AT&T and Verizon Communications, didn’t express outright support or opposition to the measure. It said in a filing that the FCC should proceed cautiously and consult with the department of homeland security and other agencies before acting.

FCC action could have the “inadvertent effect” of inhibiting investment in secure equipment by creating uncertainty over which suppliers can be used, the CTIA said.

The Competitive Carriers Association, with members including regional and rural mobile providers, opposes the FCC’s rule which will “devastate impacted rural carriers”, according to an e-mailed statement from the Washington-based trade group.

The Telecommunications Industry Association, a trade group for gear makers, said it supports the FCC’s proposal.

The FCC in April cast a 5-0 vote to advance the restriction, which won’t be final until a second vote that hasn’t been scheduled. The agency in its draft order said congress scrutinised Huawei and ZTE as possible security threats.  — Reported by Todd Shields, with assistance from Gao Yuan, (c) 2018 Bloomberg LP

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Now US targets China Mobile as tensions escalate

The US has moved to block China Mobile from entering its telecommunications market on national security grounds, launching another salvo in the fight between the world’s two biggest economies days before they’re expected to impose tariffs on each other over trade.

The Federal Communications Commission should deny state-backed China Mobile’s seven-year-old application to offer international voice traffic between the US and foreign countries, the National Telecommunications and Information Administration said in an e-mail on Monday. NTIA, a branch of the commerce department, said China Mobile’s entry “would pose unacceptable national security and law enforcement risks”.

Though hardly as threatening as the US measures against telecoms equipment maker ZTE — China Mobile generates virtually all of its revenue at home — the move comes as the US is set to impose tariffs on US$34-billion of Chinese goods on Friday, with China vowing to retaliate in kind. President Donald Trump has also threatened additional tariffs on $200-billion of Chinese imports that could be implemented if China imposes counter-measures.

Talks between the US and China have stalled in part over American demands that Beijing reduce government support for high-tech industries. It remains unclear if the differences can be bridged before the first round of tariffs take effect. White House press secretary Sarah Huckabee Sanders on Monday said negotiations with China were continuing, but declined to elaborate.

Asked in January about US opposition to China Mobile’s entry into the US market, a spokesman at China’s ministry of foreign affairs said that the government encourages Chinese enterprises to abide by the laws of the markets they invest in and that countries should level the playing field for Chinese enterprises.

China Mobile shares fell 2.2% to HK$68.20 as of 1.02pm in Hong Kong, while the Hang Seng Index was 2.8% lower. A representative at the company had no immediate comment when reached by phone.

ZTE, the Chinese telecoms equipment maker that was blocked off from US suppliers in April for violating a sanctions settlement, has seen its stock fallen by about half since the ban was announcement. The company relies on US-made components for some of its products. The US in June reached a deal to allow ZTE to get back in business after the Chinese telecoms company pays a record fine and agrees to management changes.

World’s largest

China Mobile is the world’s largest mobile phone operator by customers, with about 899 million subscribers. In the NTIA filing, the carrier indicated it didn’t intend to offer mobile service within the US.

“The deepening integration of the global telecoms market has created risks and vulnerabilities in a sector replete with a broad range of malicious activities,” the NTIA said in its filing.

The Chinese government could use links established by China Mobile for economic espionage and intelligence collection, according to the filing. Customers could include fixed and mobile network operators, calling-card companies, and business customers.

Officials had “significant engagement” with China Mobile but weren’t able to resolve concerns, David Redl, assistant secretary for communications and information at NTIA, said in a news release.

FCC spokeswoman Tina Pelkey said the commission would review the filing.  — Reported by Todd Shields, with assistance from Danni Wu and Jing Yang de Morel, (c) 2018 Bloomberg LP

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ZTE tanks as US lawmakers seek to restore ban

ZTE dived 24% after American lawmakers green-lit a bill to restore severe penalties on the Chinese telecommunications gear maker, potentially up-ending a deal struck with US President Donald Trump to allow it to get back in business.

The company’s Hong Kong shares slid to their lowest since July 2016, while its Shenzhen stock fell below its 10% daily limit on Tuesday. The selloff ensued after the US senate passed legislation on Monday that would restore penalties on the company, complicating Trump’s efforts to ease sanctions on ZTE after it pays a record fine and reshuffles management. A settlement on the issue is also deemed pivotal to tense US-Chinese negotiations over trade.

The wrangling over China’s second largest telecoms equipment maker produced a rare instance of Republicans allying with Democrats to defy Trump. Reinstating a ban on ZTE’s purchases of American technology would cut off access to the chips and components it needs to build smartphones and networking equipment — essentially a death sentence.

“This is the first time congress has really stood up to him on a trade issue, and it’s clear they are angry,” said Bill Reinsch, a senior adviser at the Center for Strategic and International Studies in Washington. “There will be a lot of congressional resistance to weakening the ZTE amendment, but I would not be surprised to see a compromise.”

The bipartisan measure, part of a defence bill, passed 85-10 and came two days before Trump was to host Republican members of congress to discuss ways that would allow ZTE to get back into business.

Trump’s agreement with ZTE was struck after the US in April blocked its access to US suppliers, saying it had broken a sanctions settlement and then lied about it. That prompted the company to declare its operations were grinding to a halt just weeks later. A settlement was deemed a key Chinese demand as the world’s two largest economies try to avoid a trade war and negotiate the denuclearisation of North Korea. After a personal plea from Chinese President Xi Jinping to help the company get back into business, Trump last month instructed the commerce department to find a solution to save ZTE.

The Trump administration wants legislators to modify the senate language on ZTE in the defence bill, once the house and senate begin work to merge their versions of the legislation. Lawmakers hope to wrap up negotiations by the end of July. Commerce secretary Wilbur Ross and treasury secretary Steven Mnuchin in recent weeks have tried to persuade lawmakers of the administration’s approach to ZTE, but legislators said the deal failed to address their national security concerns.

“We’ve articulated our desire to better educate members about the ZTE action by commerce, and we expect to address it in conference,” White House legislative liaison Marc Short said last week. “We think we can fix it in conference,” Short added, referring to the process when differences in house and senate bills are reconciled.  — (c) 2018 Bloomberg LP

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AT&T cleared to buy Time Warner in big blow to Trump

AT&T has been cleared by a judge to take over Time Warner in a US$85-billion (R1.1-trillion) deal that will fuel the mobile phone giant’s evolution into a media powerhouse and could spark a wave of new mergers.

US district judge Richard Leon on Tuesday rejected the justice department’s request for an order blocking the Time Warner acquisition, saying the government failed to make its case that the combination would lead to higher prices for pay-TV subscribers. The judge put no conditions on the deal.

Time Warner gained as much as 5.8% in after-hours trading, while AT&T fell as much as 3.9%.

After nearly two years, AT&T is on the cusp of completing its acquisition of Time Warner, a deal it struck in a bid to become an entertainment giant that can feed Time Warner programming like HBO and CNN to its 119 million mobile, Internet and video customers, and go head-to-head with Netflix and Amazon.com.

“We think the evidence throughout the trial was quite clear and we’re very pleased that the court saw it the same way,” said Daniel Petrocelli, AT&T’s lawyer. The company said in a statement that it plans to complete the takeover on or before 20 June.

The justice department can appeal and could ask an appellate court to stay the ruling, though Leon said he hoped the government would have the “good judgment” not to do so. The justice department’s antitrust chief, Makan Delrahim, said he was disappointed and will consider his next steps.

The judge’s decision could open the door to other mergers, including Comcast making a formal bid for the 21st Century Fox, which gained as much as 7.3% after the ruling and is also the target of competing interest from Walt Disney Co. The decision also may make it easier for Verizon Communications to buy a content company and clear the regulatory path for deals Cigna and CVS Health have already announced.

All of those deals would unite companies in different parts of an industry’s supply chain. For years, these so-called vertical deals have typically received light treatment from antitrust enforcers, unlike the horizontal mergers that bring together direct competitors. Opposition to the Time Warner acquisition marked an aggressive turn by the justice department.

‘Gossamer thin’

Leon described part of the government’s case as “gossamer thin”, saying that during the trial the justice department’s expert witness declined to back some of the government’s own theories.

“I conclude the government has failed to meet its burden to establish that the proposed transaction is likely to lessen competition substantially,” the judge wrote in his opinion.

Leon said the government fell “far short” of showing that AT&T’s new Turner Broadcasting unit would have increased leverage in negotiations with distributors. He rejected testimony by distributors who said they were worried Turner would be able to raise prices.

“The bulk of the third-party competitor testimony proffered by the government was speculative, based on unproven assumptions, or unsupported — or even contradicted — by the government’s own evidence,” Leon wrote.

The judge found similar deficiencies in the government’s other theory of harm to customers: that the deal would stunt development of streaming services.

US President Donald Trump

Leon’s decision is a blow to Delrahim, who brought in a new enforcement approach with the case. The government’s November lawsuit was also the first major merger challenge under President Donald Trump, who railed against the tie-up when it was announced during the 2016 campaign. He vowed that his administration would oppose it, and as president, he has relentlessly attacked CNN for its news coverage.

Trump’s criticism prompted speculation that the lawsuit was politically motivated. Still, the justice department’s case laid out a traditional antitrust theory: that combining two companies in different parts of a supply chain can give the merged company the ability to harm rivals.

The suit stunned investors and antitrust lawyers because it broke with years of past practice for reviewing such deals, known as vertical mergers. Rather than negotiating an agreement that imposes conditions on how AT&T can conduct business, Delrahim demanded AT&T sell businesses to address threats to competition, which the company refused to do.

“This is extremely bad for the DoJ,” said Chris Sagers, an antitrust law professor at Cleveland-Marshall College of Law. “This is probably the end of meaningful vertical enforcement for a good long time.”

After Delrahim took over the division, he announced that the department would require asset sales to remedy harm to competition from vertical deals. Leon’s ruling raises the question of whether Delrahim can successfully maintain that stance.

The justice department claimed that AT&T’s acquisition of Time Warner would give the number-one pay-TV provider increased bargaining leverage over rivals like Dish Network that pay for Time Warner programming.

Because of AT&T’s ownership of DirecTV, it can drive a harder bargain with other distributors that want Time Warner content, the government’s lawyers argued during the trial. If negotiations break down and rivals can’t secure that programming, their customers could switch to DirecTV, the lawyers said. That leverage would allow AT&T to raise prices for Time Warner content, with those costs being passed on to consumers, according to the justice department.

The government’s case hinged on an economic model produced by Carl Shapiro, an economist at the University of California at Berkeley, who predicted an annual price increase to consumers of at least $285-million. AT&T attacked that projection as baseless, repeatedly poking holes in the various inputs Shapiro used to calculate the estimate.

In his opinion, Leon said Shapiro’s analysis had so many problems the government started backing away from it.

“I couldn’t help but notice that the more and more questions were raised during trial about the reliability of Prof Shapiro’s theory and model, the more the government appeared to be minimising the importance of his analysis,” the judge wrote.  — Reported by David McLaughlin, Andrew Harris, Scott Moritz and Erik Larson, with assistance from Greg Stohr, Tom Schoenberg, Jeran Wittenstein and Ben Brody, (c) 2018 Bloomberg LP

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ZTE’s US troubles may be far from over

The US senate plans to advance legislation to restore penalties on ZTE after President Donald Trump drew sharp criticism for easing restrictions to get the Chinese company back in business.

The senate is voting late on Monday to start debate on the defence authorisation bill for fiscal 2019, and senators said the ZTE measure has been included.

“Great news! Our bipartisan amendment restoring penalties on #ZTE is included in the #NDAA bill the Senate will be advancing to later this evening,” senator Marco Rubio said in a Twitter post.

Rubio, a Republican from Florida, is co-sponsor of the amendment, with senators Chris Van Hollen, a Democrat from Maryland, and Tom Cotton, a Republican from Arkansas.

Commerce secretary Wilbur Ross last week announced the US reached a deal with ZTE that includes a record fine, changes to the company’s board and management and US compliance officers.

The US blocked ZTE’s access to US suppliers in April, saying the company violated a 2017 sanctions settlement related to trading with Iran and North Korea and then lied about the violations. The telecommunications company announced it was shutting down just weeks after the ban was announced.

Trump has said he reviewed the penalties as a personal favour to Chinese President Xi Jinping. Lifting the sales ban on ZTE was a key demand China made in the broader trade talks with the US to avert a trade war between the world’s two largest economies.

The deal has sparked bipartisan push-back, with many lawmakers citing national security as their main concern.

White House trade adviser Peter Navarro on Sunday likened the deal to “three strikes you’re out”, referring to two prior violations ZTE committed under the sanctions agreement with the US.

Ross was planning to brief senators on the ZTE deal on Monday, senate majority whip John Cornyn said.

‘Bipartisan reaction’

Van Hollen said the move is a very good sign for stopping the ZTE deal. “What you are seeing is a bipartisan reaction against letting ZTE off the hook,” he said.

The quick action to stop Trump from rolling back the ZTE penalties shows the seriousness of the issue, senate minority leader Chuck Schumer said in a statement.

“The fact that a bipartisan group of senators came together this quickly is a testament to how bad the Trump administration’s ZTE deal is and how we will not shy away from holding the president’s feet to the fire when it comes to keeping his promise to be tough on China,” Schumer said.  — Reported by Roxana Tiron and Jenny Leonard, with assistance from Erik Wasson, (c) 2018 Bloomberg LP

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A risky get-out-of-jail-free card for ZTE

While the world waits to see whether North Korea will agree to dismantle part of its nuclear arsenal in return for a rapprochement with the US, Washington appears to be planning a unilateral disarmament on trade.

The US and China are closing in on a deal that would suspend American sanctions on Chinese mobile phone maker ZTE in return for Beijing not imposing tariffs on US farm goods, The Wall Street Journal reported on Monday, citing people it didn’t name who’d been briefed on the plan.

While this columnist is all in favour of lowering the temperature on US-China trade, that particular quid pro quo sets a dangerous precedent for Washington.

After all, most trade politics takes place on a reasonably level playing field where either partner can inflict more or less equal amounts of pain on the other. The sanctions regime that tripped up ZTE is potentially far more powerful.

Because of the critical position of the US in the semiconductor industry and the dollar’s crucial role in global trade, Washington has been able to punish Chinese and European companies for doing business with countries it sanctions, even when their own governments don’t prohibit such activity.

BNP Paribas agreed to pay a US$8.8bn penalty for doing business with the Iranians, Sudanese and Cubans in one 2015 case. ZTE’s settlement last year totalled as much as $1.2bn, and included an extensive list of undertakings on internal compliance and disclosure. It was for violating one such undertaking (on taking disciplinary action against specified employees) that the US commerce department last month ordered American companies to stop selling components to ZTE, pushing a business with $16bn in annual revenue to the brink.

That ability to inflict extreme pain on one of China’s largest technology companies — and the threat that the punishment could be extended to the far larger Huawei Technologies — represents a potent weapon in any trade dispute. So it’s remarkable to see Washington trade it away so readily now.

Lied to investigators

The strength of the law typically depends on the perception of its implacability. The whole point of Washington’s case against ZTE is that it has thumbed its nose at the law, first exporting US-made components to Iran, then lying to investigators about the practice, then secretly resuming the trade while it was under investigation, and finally failing to uphold the terms of its plea agreement.

Trading the penalties on ZTE for a deal on farm exports blows up that argument. China will be doing no more than upholding the status quo; in exchange, Washington will decommission one of its most powerful weapons. The moral hazard is perhaps even worse: any government entangled in a dispute with Washington now knows that it need only threaten the Trump-voting farm belt to get off the hook.

For all their legal underpinnings, this wouldn’t be the first time that trade politics ended up in a grubby exchange of spoils. Indonesia and the US in 2014 signed a wide-ranging agreement covering issues such as intellectual property and mining to settle a trade dispute over exports of clove cigarettes.

Still, at a time when trade tensions between the US and China are running high, Washington is sending one of its most powerful divisions off the battlefield. Soybean and sorghum farmers in the US grain belt must feel they’ve become the punchline of that old Woody Allen joke: in the event of trade war, they’re the hostages.  — Reported by David Fickling, (c) 2018 Bloomberg LP

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Trump’s ZTE reversal sparks bipartisan rebuke

US President Donald Trump. Image: Gage Skidmore

US President Donald Trump’s conciliatory move to help Chinese telecommunications equipment maker ZTE stoked bipartisan condemnation in Washington on Monday, as lawmakers warned the US president’s concession could endanger national security.

Trump shocked many in Washington with a tweet on Sunday that he was working with Chinese President Xi Jinping to give ZTE “a way to get back into business, fast”. Trump said “too many jobs in China” had been lost and that his commerce department “has been instructed to get it done”.

It was an abrupt shift from the campaign Trump has mounted against Chinese technology companies, which he regularly accuses of stealing American intellectual property and exploiting unfair trade rules. The US commerce department cut off ZTE from American suppliers last month, saying it violated a 2017 sanctions settlement related to trading with Iran and North Korea and then lied about the violations.

Commerce secretary Wilbur Ross told reporters on Monday at the National Press Club in Washington that the department is now considering “alternative remedies” for ZTE’s sanctions violations and will seek to resolve the issue “very, very promptly”.

In a sign that both sides are trying to avoid a trade war, Chinese regulators restarted their review of Qualcomm’s application to acquire NXP Semiconductors, according to people familiar with the process. The work had been shelved earlier in response to growing trade tensions with the US. San Diego-based Qualcomm supplies semiconductors to ZTE.

Both Republican and Democratic lawmakers have expressed concerns that Chinese telecoms companies, such as ZTE, have ties to the Chinese government and pose a cyber-espionage threat as they move into the US market.

Senator Marco Rubio, a Florida Republican, tweeted on Monday that the US would be “crazy” to allow ZTE to operate in the country “without tighter restrictions”.

“Any telecomm firm in #China can be forced to act as a tool of Chinese espionage without a court order or other review process,” Rubio said.

‘Bad deal’

Those concerns were echoed by senate Democratic leader Chuck Schumer, who said in a statement on Monday that the plan was “a bad deal if there ever was one”.

“The toughest thing we could do, the thing that will move China the most, is taking tough action against actors like ZTE,” Schumer said. “But before it’s even implemented, the president backs off. This leads to the greatest worry, which is that the president will back off on what China fears most — a crackdown on intellectual property theft — in exchange for buying some goods in the short run.”

And representative Tim Ryan, an Ohio Democrat, noted that Trump’s tweets had highlighted layoffs in China even as autoworkers were losing their job in his home state.

“On top of that, the NSA, FBI and CIA all have cybersecurity concerns with ZTE,” Ryan said. “The Pentagon even stopped selling its phones in its bases. Your willingness to throw a lifeline to ZTE and China puts our national security at risk. What happened to America First?”

Members of the president’s own national security team have expressed concerns over Chinese telecoms manufacturers in recent months. In February, director of national intelligence Dan Coats told the US senate intelligence committee that he believed Chinese cyber-espionage capabilities would “continue to support China’s national security and economic priorities”.

Gina Haspel, nominated by Trump to lead the CIA, said during her confirmation hearing last week that she wouldn’t use a phone manufactured by Chinese telecoms manufacturer Huawei.

“I don’t even have a social media account, but I wouldn’t — I wouldn’t use Huawei products,” Haspel said.

Even as some lawmakers levelled criticism at the administration’s move, analysts said it still wasn’t clear what impact the president’s tweet would have. The White House has refused to explain what specific direction was provided to the commerce department, but said in a statement that the ultimate decision on how to handle the restrictions imposed against ZTE would reside there.

“It certainly sends a bad signal about sanctions on companies that do business with Iran and for the normal procedures at commerce,” in terms of “the consistency with US sanctions and follow-through,” said Adam Segal, director of the Digital and Cyberspace Policy Programme at the Council on Foreign Relations in New York.

The US retreat from penalising ZTE may also be determined by talks on Tuesday between treasury secretary Steven Mnuchin and Chinese vice Premier Liu He.

“I don’t think this tweet tells us that the US is going to relax its suspicion of ZTE products sold in the US,” said Stewart Baker, a partner at Steptoe & Johnson and a former assistant secretary for policy at the department of homeland security. “This was about whether to cut ZTE off entirely from US products that it needs as components for the systems it sells around the world. The US can and probably will work to keep ZTE out of the US; the tweet is about whether the US is going to put ZTE out of business entirely.”

The US blockade forced the suspension of most operations at ZTE, which employs about 75 000 people. The firm’s shares were suspended from trading in Hong Kong last month.

ZTE faces two likely scenarios, according to analysts Edison Lee and Timothy Chau at Jefferies: the commerce department may conclude ZTE’s violation is a careless mistake and will lift the ban without additional penalty, or the agency could suspend the ban temporarily, subject to further investigations and negotiations. Lee and Chau said the second scenario is much more likely, which would make it harder for ZTE to sign up new, overseas customers because of the uncertainty over its future.  — Reported by Justin Sink, with assistance from Yuan Gao, Nafeesa Syeed and Todd Shields, (c) 2018 Bloomberg LP

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Trump reverses course on China’s ZTE

Donald Trump

President Donald Trump has ordered the US commerce department to get ZTE back into business, weeks after cutting off the massive Chinese telecommunications equipment maker from its US suppliers with a condemnation of ZTE’s “egregious” behaviour.

Trump said in a Sunday morning tweet, posted minutes after arriving at his golf course in Virginia, that he and Chinese leader Xi Jinping are working together to give ZTE “a way to get back into business, fast”.

In a major reversal for a president who has accused China many times of stealing US jobs, Trump said the “commerce department has been instructed to get it done” because “too many jobs in China lost”. The tweet comes as China plans to send vice Premier Liu He to Washington this week to discuss trade tensions.

The US blockade has choked off the revenue of the number two Chinese telecoms gear maker, which employs about 75 000 people. The firm said last week it’s suspended all major operations, and its shares stopped trading in Hong Kong last month.

With ZTE facing possible ruin, Chinese officials have stepped in. The US delegation that held talks with China this month was expected to be told that reversing the commerce department’s action was a condition for discussions to continue, said administration officials who asked not to be identified discussing private deliberations.

ZTE suppliers rallied after the Trump tweet. Mobi Development jumped as much as 18% in Hong Kong, while Nextronics Engineering rose as much as 8.5% in Taiwan and Zhong Fu Tong surged the daily limit of 10% in mainland trading.

This week’s Washington trip by China’s vice premier comes after the US delegation to Beijing, led by treasury secretary Steven Mnuchin, didn’t produce a deal following Trump’s threats to impose tariffs on US$150bn of Chinese imports with promised Chinese retaliation.

While Trump said in his tweet he’d “instructed” the commerce department to “get it done”, the White House said the president expects secretary Wilbur Ross to “exercise his independent judgment, consistent with applicable laws and regulations, to resolve the regulatory action involving ZTE based on its facts”. Specific questions were referred to the commerce department, and a spokesman could not be immediately reached on Sunday. The state department referred comments to the White House and commerce.

Seven-year ban

ZTE has been trying to resolve the blockade that Trump’s commerce department imposed in April as punishment for violating the terms of a 2017 sanctions settlement related to trading with Iran and North Korea, then lying about it. That seven-year ban prohibited ZTE from buying American technology it needs to build most of its products, including Qualcomm’s semiconductors and optical chips from Lumentum Holdings.

In a sharply worded statement on 16 April, Ross said ZTE made false statements to the US government and “covered up the fact” that the company paid full bonuses to employees that had engaged in illegal conduct.

“ZTE misled the department of commerce,” Ross said. “Instead of reprimanding ZTE staff and senior management, ZTE rewarded them. This egregious behaviour cannot be ignored.”

US military exchanges also have stopped selling smartphones made by ZTE and Huawei Technologies, China’s largest mobile and telecoms company, after the Pentagon warned that the devices pose a security risk to military personnel and operations, the defence department said earlier this month.

Representative Adam Schiff of California, the top Democrat on the house intelligence committee, said in a tweet that US intelligence agencies have warned that ZTE technology and phones “pose a major cybersecurity threat”. He told Trump: “You should care more about our national security than Chinese jobs.”

The president’s most recent call with Xi was on 8 May. A White House readout at the time said the president “affirmed his commitment to ensuring that the trade and investment relationship between the US and China is balanced and benefits American businesses”.

In another tweet on Sunday, Trump said the US and China “are working well together on trade” but past negotiations “have been so one sided in favour of China, for so many years, that it is hard for them to make a deal that benefits both countries”.

“But be cool, it will work out!” Trump said.

Trump’s apparent directive to the commerce department was stunning, said a former commerce official who worked on the ZTE case during the Obama administration.

“That’s never happened before, because the rules are not designed this way. I don’t know how to even think through this,” said Kevin Wolf, a partner at Akin Gump Strauss Hauer & Feld in Washington who helped oversee export controls as an assistant secretary at the Bureau of Industry and Security.

ZTE’s precarious position is exacerbating tensions between the world’s two biggest economies, now involved in sensitive negotiations to try and forestall a trade war. Trump is also weeks away from a high-stakes summit with North Korean leader Kim Jong Un, where having China on his side would be beneficial.

The company also has been working on new, faster 5G wireless technology, along with local rival Huawei. That’s a key technology battle between the US and China — and one that China has a chance to win.

The US’s only major telecoms equipment maker, Lucent Technologies, was acquired by France’s Alcatel in 2006, with the combined company later absorbed into Finland’s Nokia. Nokia and Ericsson have floundered as their Chinese rivals churned out capable and relatively cheap gear for wireless networking customers such as China Mobile and Telefonica.

US reliance

But ZTE still relies on US companies to supply it with components for its networking gear. Qualcomm and Micron Technology provided chips. Lumentum Holdings and Acacia Communications sold key optical equipment. ZTE’s smartphones used Google’s Android operating system. The moratorium disrupted these relationships, putting the Chinese company on life support.

Even though Trump is reversing course, the blockade will make Chinese companies more reluctant to rely on US firms on grounds that “the US is an unreliable supplier”, said Andrew Bartels, an analyst at Forrester Research.

The move by Trump, who’s bragged about the relationship he has forged with Xi, also has larger implications for Trump’s threats to impose sanctions and tariffs, Bartels said in a telephone interview.

“People might say the only thing you have to do to counter those is have a relationship with Trump,” he said.

Patrick Moorhead, founder of Moor Insights & Strategy, a technology research firm that works with ZTE suppliers including Qualcomm, said he thinks it’s the right move to give a company another chance, because no one wants to see it die or go bankrupt.

“I think we can be sure that Trump is going to get something out of this,” Moorhead said. “It’s all part of the big picture, which is to get a fair shake for US companies.”  — Reported by Ben Brody, Alistair Barr and Jenny Leonard, with assistance from Noah Buhayar and Shahien Nasiripour, (c) 2018 Bloomberg LP

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Trump’s Iran move piles pressure on MTN

US President Donald Trump’s decision to re-impose sanctions on Iran may limit the ability of MTN Group to repatriate cash, both in the form of dividends and loans, from its investment there, it warned on Wednesday.

On Tuesday evening South African time, Trump announced he will withdraw from the landmark 2015 accord to curb Iran’s nuclear programme and reinstate financial sanctions on the Islamic Republic, opening an uncertain new chapter for the Middle East.

Iran is a key market for MTN, where it owns a 49% stake in the fast-growing mobile operator Irancell.

In 2018, the JSE-listed telecommunications group has repatriated about €88m from MTN Irancell, including €61m relating to the full 2017 dividend as well as a further €27m of historical dividends. The remaining balance due to MTN is about €200m, it said in a statement to shareholders.

“MTN Group remains committed to our investment in Irancell and to repatriating the balance of legacy cash in Iran while remaining compliant with appropriate legislation,” it said.

Trump’s decision, widely anticipated by allies and analysts before his announcement on Tuesday at the White House, was intended to force Iran to renegotiate an agreement the country’s leaders have said they will not revisit. Trump’s political opponents warned he could lead the US into another Middle East war.

“The fact is this was a horrible one-sided deal that should have never ever been made,” Trump said. “We cannot prevent an Iranian nuclear bomb under the decaying and rotten structure of the current agreement. The Iran deal is defective at its core.”

West Texas Intermediate crude briefly pared losses as Trump announced his decision. The price for June deliveries of the commodity fell US$1.32 to $69.41 a barrel at 2.28pm in New York.

French President Emmanuel Macron, who personally lobbied Trump to remain in the deal during a state visit to Washington last month, said on Twitter that “France, Germany, and the UK regret the US decision to leave the JCPOA”, using an acronym for the agreement.

“The nuclear non-proliferation regime is at stake,” he said.

‘Nuclear arms race’

Trump has long criticised the Iran deal, negotiated under his predecessor Barack Obama, as the “worst” ever. He has complained that it doesn’t address threats from the country’s ballistic missile programme or its involvement in fomenting regional conflicts, and that provisions of the deal that expire in the next decade would allow Iran to resume nuclear work.

“If I allowed this deal to stand, there would soon be a nuclear arms race in the Middle East,” Trump said. “Everyone would want their weapons ready by the time Iran had theirs.”

He said that because of limits on international inspectors, they are “not able to prevent, detect or punish cheating” by Iran and “don’t have the unqualified right to inspect many important locations” including military bases.

Trump said in a tweet on Monday that he would announce his decision ahead of a 12 May deadline set by US law to continue waiving US sanctions lifted by the accord. The US will be instituting the “highest level” of sanctions against Iran, Trump said.

The skyline of Tehran, Iran’s biggest city

The US treasury department said in a statement that sanctions would be reinstated after “wind-down periods” of 90 or 180 days. Nuclear-related sanctions that had been waived under the deal would take full effect after 4 November, the department said.

Oil prices have climbed in recent weeks as uncertainty over the future of the agreement rose. A resumption of US sanctions would threaten Iran’s ability to attract foreign investment, keeping the country’s output flat or lower through to 2025, according to a research note published Monday by Barclays.

It is unclear what may unfold following the US withdrawal. American and European diplomats have sought to negotiate side agreements aimed at addressing Trump’s concerns about the deal, and the delay in reinstating sanctions may allow those talks to continue — a prospect that Iran’s ally Russia, a party to the accord, raised ahead of Trump’s announcement.

Russia’s ambassador to the International Atomic Energy Agency, Mikhail Ulyanov, said the Iran deal wouldn’t end immediately as a result of Trump’s action and “we will have a certain amount of time for diplomatic efforts”, according to the Interfax news service.

Iranian President Hassan Rouhani suggested his country would continue to abide by the agreement, but that it was now between Iran and the five other signatories — not the US.

Diplomats engaged in the talks on side deals had signalled that they were close to a breakthrough, but key allies have been sceptical that Trump would remain part of the current pact, which curbs Tehran’s nuclear programme in exchange for relaxing Western financial sanctions. Macron and German Chancellor Angela Merkel both signalled after meeting with Trump last month that he seemed intent on quitting the agreement.

Ali Shamkhani, secretary general of Iran’s Supreme National Security Council, was reported to say Tuesday that “if the US initiates confrontation with Iran, we won’t stay passive”.

If the nuclear agreement “gets destroyed due to the US assault, for sure it won’t be to their benefit,” he said, adding that the “biggest loss will be for the Europeans”.

EU trade with Iran has nearly tripled since 2015.

Following the visits by Merkel and Macron, UK foreign minister Boris Johnson was in Washington this week to make a last-ditch argument to persuade Trump to remain in the accord, arguing that it is flawed but can be improved by the side agreements.

‘Mess’

Johnson met this week with vice President Mike Pence, national security adviser John Bolton, secretary of state Mike Pompeo and other administration and congressional officials.

Trump foreshadowed his decision on Monday, complaining on Twitter about the Iran agreement and deriding former secretary of state John Kerry for meeting with Iranian foreign minister Javad Zarif two weeks ago at the United Nations to discuss salvaging the deal. “He was the one that created this MESS in the first place!” Trump said of Kerry.

Under legislation passed by the US congress, Trump has until Saturday to decide whether to keep waiving sanctions on banks of foreign countries that haven’t reduced Iranian oil imports, according to an analysis by the Congressional Research Service. Under that law, those sanctions have to be waived every 120 days.

Trump last agreed to waive the sanctions in January, but his frustration with the agreement has only grown since then. Declining to waive the restrictions again means an assessment of whether foreign countries are violating the sanctions would be due on 8 November, according to the CRS study.

Israeli Prime Minister Benjamin Netanyahu said on Sunday that the 2015 accord is fatally flawed and must be “fully fixed or nixed” to stop Iranian aggression sooner rather than later. Rouhani warned earlier that the US would face “historic” regret if it pulled out.

Netanyahu delivered a televised presentation last week on secret Iranian files his country’s intelligence services obtained that he said prove that Tehran sought to build a nuclear weapon in the past despite its government’s denials. Trump watched the presentation, and White House press secretary Sarah Huckabee Sanders issued a statement declaring that the Israeli intelligence proved “Iran has a robust, clandestine nuclear weapons programme”.

The White House later corrected the statement online to say Iran “had” a nuclear programme, blaming a clerical error. Netanyahu did not claim that Iran currently has a nuclear programme.

Members of Trump’s own party are split. Representative Mac Thornberry, chairman of the house armed services committee, said on Sunday he “would counsel against” Trump quitting the accord. Representative Ed Royce, who heads the house foreign affairs committee, agreed, saying in a statement on Tuesday: “I fear a withdrawal would actually set back these efforts” to stop Iran’s nuclear activities.

But house majority leader Kevin McCarthy has said he’s “very comfortable” that the president is standing up to Iran. — Bloomberg reporters, with additional reporting from TechCentral

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Huge blow for ZTE as US imposes 7-year ban

Donald Trump

The US government said Chinese telecommunications gear maker ZTE violated the terms of a sanctions settlement and imposed a seven-year ban on purchases of crucial American technology needed to keep it competitive.

The commerce department determined ZTE, which was previously fined for shipping telecoms equipment to Iran and North Korea, subsequently paid full bonuses to employees who engaged in the illegal conduct, failed to issue letters of reprimand and lied about the practices to US authorities, the department said.

“Instead of reprimanding ZTE staff and senior management, ZTE rewarded them,” commerce secretary Wilbur Ross said in the statement. “This egregious behaviour cannot be ignored.”

The ZTE rebuke adds to US-China tensions over trade between the world’s two biggest economies. President Donald Trump threatened tariffs on US$150bn in Chinese imports for alleged violations of intellectual property rights, while Beijing vowed to retaliate on everything from American soybeans to planes. Trump on Monday accused China along with Russia of devaluing their currencies, opening a new front in his argument that foreign governments are exploiting the US.

China’s ministry of commerce rapidly responded to the ZTE ban, saying it would take necessary measures to protect the interests of Chinese businesses. It said the Shenzhen-based company has cooperated with hundreds of US companies and contributed to the country’s job creation.

For ZTE itself, the latest US action means one of the world’s top makers of smartphones and communications gear will no longer be able to buy technology from American suppliers, including components central to its products. ZTE has purchased chips from Qualcomm and Intel, and optical components from Acacia Communications and Lumentum Holdings. A seven-year ban would effectively cover a critical period during which the world’s telecoms carriers and suppliers are developing and rolling out 5G wireless technology.

“All hell breaks loose,” wrote Edison Lee and Timothy Chau, analysts at Jefferies, after the export ban was announced.

Downgraded

They downgraded ZTE shares to underperform and cut their price target on its stock by more than half. Trading in ZTE shares was suspended in Hong Kong.

The company’s suppliers in Asia tumbled in response, with MOBI Development down 13% and Zhong Fu Tong off 7.9%. Shares in Acacia and Lumentum plunged in the US.

ZTE faces tough options in particular due to the ban on buying Qualcomm’s processors and modems, the main components in smartphones. China’s Huawei Technologies makes those chips for use in its own handsets, while MediaTek is Qualcomm’s largest rival in offering chips on a so-called merchant basis. ZTE may have to either buy from a competitor or get chips from a Taiwanese company whose products generally lag those of its US rival’s in performance.

ZTE said it was aware of the sanctions and is evaluating its impact while talking with related parties. Qualcomm declined to comment.

Separately, the UK’s National Cyber Security Centre warned the country’s telecoms companies and regulator that national security risks from using ZTE equipment and services “cannot be mitigated”.

A senior official with the US commerce department’s Bureau of Industry and Security told reporters that the ZTE decision was unrelated to the administration’s threats to impose tariffs on Chinese imports, saying the actions against the Chinese company are part of an investigation. The official, speaking on the condition of anonymity, said the timing of the ZTE action was unfortunate because it could seem related to US steps to stop alleged theft of intellectual property.

ZTE agreed in March last year to plead guilty and pay as much as $1.2bn for violating US laws restricting sale of American technology to Iran. The agreement called for the company to pay $892m in fines and forfeitures and be subject to an additional $300m in penalties if it violates the terms of the settlement. It was the largest criminal fine for the US justice department in an export control or sanctions case.

“ZTE acknowledges the mistakes it made, takes responsibility for them, and remains committed to positive change in the company,” ZTE’s chairman and CEO, Zhao Xianming, said at the time. The company is making personnel changes and instituting new compliance procedures, he said.

Denying ZTE export privileges prevents the company from “participating in any way in any transaction” subject to the US government’s export administration regulations, which govern sales of sensitive technology abroad. It’s also illegal for other businesses or individuals to participate in transactions with a company that has been denied export privileges, according to the department.

CICC predicted the commerce ban will have a significant effect on ZTE’s business — and perhaps on the building of wireless networks.

“If they can’t operate normally because of the US export ban, that will clearly impact global and Chinese network construction and could affect future 5G roll-outs,” CICC analysts including Wang Xinglin wrote in a research note on Tuesday.

The US Federal Communications Commission on Tuesday plans to consider a ban on networking equipment from companies such as ZTE and Huawei.  — Reported by Andrew Mayeda and Ian King, with assistance from Gao Yuan, Edwin Chan and Abhishek Vishnoi, (c) 2018 Bloomberg LP

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It’s China vs US in new computing arms race

As the US and China threaten to impose tariffs on goods from aluminium to wine, the two nations are waging a separate economic battle that could determine who owns the next wave of computing.

Chinese universities and US technology companies such as IBM and Microsoft are racing to develop quantum computers, a type of processing that’s forecast to be so powerful it can transform how drug makers, agriculture companies and car manufacturers discover compounds and materials.

Quantum computing uses the movement of subatomic particles to process data in amounts that modern computers can’t handle. Mostly theoretical now, the technology is expected to be able to perform calculations that make today’s computers look akin to an abacus.

While overall spending by China is unknown, its government is building a US$10bn National Laboratory for Quantum Information Sciences in Hefei, Anhui Province, which is slated to open in 2020. US-funded research in quantum is about $200m/year, according to a July 2016 government report, and some researchers and companies don’t believe that’s enough.

One “killer app” may be encryption, the code scrambling technology that secures modern global commerce and communications. China, Chinese universities and Western financial institutions are rushing to patent more ways to use quantum technology for encryption, a study by research firm Patinformatics found.

“We’re talking about encrypting data so it can’t be broken, certainly not by a classical computer,” said Tony Trippe, MD of Dublin, Ohio-based Patinformatics. “It would be an unhackable system.”

At the same time, it could break encryption that was on a classical computer. “An organisation or a nation that had quantum computer technologies would have a significantly easier time of wreaking havoc on other systems,” he said.

Trump

US President Donald Trump accused the Chinese government in March of stealing intellectual property by forcing American companies to share their most valuable secrets and sign joint venture agreements with local firms if they want to operate in China, although there are no specific allegations regarding quantum computers.

China has also been aggressive in pushing homegrown innovation as it supports companies in obtaining patents and trademarks around the world, and has increased its research funding. In its annual scorecard, the Organisation for Economic Cooperation and Development called China “the second largest scientific powerhouse”, behind the US.

Technology companies from Microsoft to IBM to Google view quantum computing as the next revolution.

IBM Research scientist Jerry Chow conducts a quantum computing experiment at IBM’s Thomas J Watson Research Centre

“Over time, quantum in the field of computation is so important is that it will redefine the category of computers themselves,” said Dario Gil, vice president of IBM’s Artificial Intelligence research. “It is the future of computing.”

IBM’s inventions may be having the most impact on the nascent field, when judged by the number of times its research has been cited by others in their patent applications. The Armonk, New York-based company already has developed computers being tested by customers, including Oak Ridge National Laboratory in Tennessee, the US energy department’s biggest lab, as well as finance companies like JPMorgan Chase & Co and Barclays, Gil said.

Intel, which started its own programme two years ago, said the technology promises to be “transformational”.

“There are many tough problems to solve before quantum computing is a commercial reality,” said Jim Clarke, director of quantum hardware at Intel. “Some of these problems involve materials science, quantum chip design and manufacturing — those are sweet-spot problems for Intel.”

Clarke said Intel is competitive in the number of patents it’s seeking, though many aren’t yet public. Applications are made public after 18 months.

While there will still be a place for what’s being called “classical computers” — a category that includes modern smartphones and even super computers — the quantum computers could have “an infinite number of applications” in the fields of life sciences, chemistry and agriculture, said IBM’s Gil.

It’s too early to say which company or country will be the leader in quantum computers, though at this stage it looks like US companies will excel in hardware while Chinese and Japanese ones are focused on the software and applications, Patinformatics’ Trippe said.

“Japanese and Chinese companies aren’t as concerned about building them as they are about how they’ll be used,” Trippe said. “They’ve started to patent the potential. The next five years are going to be pretty fascinating.”

The US China Economic and Security Review Commission, created by the US congress in 2000 to assess national security implications of bilateral trade between the countries, said in its most recent report that China “has closed the technological gap” with the US in quantum information science, a sector Americans have long dominated, “due to a concerted strategy by the Chinese government and inconsistent and unstable levels of R&D funding and limited government coordination by the United States”.

Closing in

Studies by the US Chamber of Commerce and Bloomberg have independently shown that China is rising in its overall score for innovation, which includes education, government research and the number of patents. The World Intellectual Property Organisation reported on 21 March that China is closing in on the US in filing international patent applications.

Quantum physics is one area in which the Chinese government, through its ministry of science & technology, is beefing up its technological prowess, according to a report by the US trade representative that laid the groundwork for Trump’s tariff plans. The China Academy of Sciences and Beijing University are among the Chinese research firms seeking more patents on quantum IT, according to Patinformatics.

The Chinese government invested by giving a lot of money to companies and researchers to “replicate what we did in the US and elsewhere”, said Carl J Williams, deputy director of the Physical Measurement Laboratory at the US National Institute of Standards and Technology. “They’ve come a long way.”

The Chinese researchers are focused on encryption, based on their patent applications. In August 2016, China’s state news agency said the government had launched the world’s first quantum communications satellite, and a year later claimed to have sent the first “unbreakable” code from space.

“That should be very scary,” said Jonathan Dowling, co-director of Louisiana State University’s Hearne Institute for Theoretical Physics, “at least to the intelligence agencies.”

In the US, the department of energy, Naval Research Lab and defence contractor Northrop Grumman are among the government entities or contractors researching quantum computers. Overall, though, the US government has cut back on its own funding of computing and cryptography hardware, Dowling said.

A July 2016 report by the National Science and Technology Council under former President Barack Obama recommended it be “considered a priority for federal coordination and investment”.

In the coming age of quantum, it’s an open question whether federal funding will enable the US to maintain the edge it’s had during the PC era and smartphone wars. Scott Crowder, IBM’s chief technology officer for quantum computing, told a house panel in October that “the US government investment in driving this critical technology is not sufficient to stay competitive”.

LSU’s Dowling said it could mean the US comes out the loser in the quantum race.

“What we’re seeing is a bunch of different things going on at once with no overall organisation,” LSU’s Dowling said, “unlike in China, where they are exactly sure what they’re doing.”  — Reported by Susan Decker and Christopher Yasiejko, with assistance from Dina Bass, Jeremy Kahn and Ian King, (c) 2018 Bloomberg LP

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Trump renews assault on Amazon

An Amazon fulfilment centre in the US

US President Donald Trump said he will take a “very serious look” at Amazon.com and what he said is an “uneven playing field” the retailer enjoys against competitors.

“I’m going to study it and take a look,” Trump told reporters aboard Air Force One on Thursday. “We’re going to take a very serious look at that.”

Trump aides said earlier in the week that the White House wasn’t preparing punitive measures toward Amazon, but it wasn’t immediately clear whether the president’s comments indicated a potential shift.

Amazon was little changed in extended trading, dropping 0.1% to US$1 451.75 at 5.43pm in New York. While Trump’s broadsides against the company battered the stock last week and into Monday, investors have shrugged off his latest assaults and sent the shares up each of the past three days.

Trump has fired off a barrage of criticism against Amazon and CEO Jeff Bezos in Twitter postings since last week, sinking the Seattle-based Internet retailer’s market value by as much as $55bn at one point. Trump has argued the company receives favorable treatment on taxes and postal rates.

“You look at the sales tax situation which is going to be taken up I guess very soon, there’s going to be a decision from the supreme court,” Trump told reporters on Thursday. “So we’ll see what happens. The post office is not doing well with Amazon that I can tell you.

“The playing field has to be level for everybody,” he said as he returned from a trip to West Virginia.

Amazon collects sales tax in every state that has one. But Amazon’s policies don’t apply to third-party merchants selling goods through its website, and many of those transactions remain untaxed. Such sales make up about half of the company’s volume. Amazon has said it’s up to the sellers to collect any taxes and many don’t.

The Trump administration has urged the US supreme court to let state and local governments collect billions of dollars in sales taxes from online retailers. The justices are scheduled to hear arguments next month centring on a South Dakota law that calls for collecting sales taxes from large Internet retailers even if they don’t have brick-and-mortar stores in the state. A ruling is expected by late June.

Confidential

While its contract with Amazon is confidential, the Postal Service has argued that its e-commerce services benefit the organisation and its mail customers. It is legally prohibited from charging shippers less than its delivery costs. Further, taxpayers don’t directly support the Postal Service’s operations.

Amazon regularly uses the Postal Service to complete what’s called the “last mile” of delivery, with letter carriers dropping off packages at some 150m residences and businesses daily. The company has a network of 35 “sort centres” where customer packages are sorted by postal code, stacked on pallets and delivered to post offices for the final leg of delivery.

The company remains exposed to government action on other fronts.

Donald Trump

The US justice department or Federal Trade Commission could open antitrust or consumer protection investigations. The company is also competing for a multibillion-dollar contract to provide cloud computing services to the Pentagon.

Safra Catz, the CEO of Oracle, one of Amazon’s rivals for the defence department contract, criticised the bidding process in a private dinner with Trump on Tuesday, complaining that it favoured Amazon, people familiar with the plans said.

Trump heard her out and said he wants the contract competition to be fair, but made no indication he’d interfere in the bidding, the people said. White House press secretary Sarah Huckabee Sanders said on Wednesday that Trump isn’t interfering in the contract decision.  — Reported by Jennifer Epstein, (c) 2018 Bloomberg LP

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Outlawing fake news will chill the real news

The term “fake news” has gained prominence in recent years thanks to US President Donald Trump’s attacks on the media during the 2016 US election. In 2017, it was one of Collins English Dictionary’s 2017 words of the year.

Unsurprisingly, politicians use the fake news label to discredit media stories that portray them in a negative light. And it’s back in the headlines after the largest television company in the US — Sinclair Broadcasting Group — issued a coordinated campaign of scripted warnings about fake news in terms that echo Trump’s sentiments: “The sharing of biased and false news has become all too common on social media… Some members of the media use their platforms to push their own personal bias… This is extremely dangerous to our democracy.”

Trump tweeted in support of Sinclair’s message, slamming the mainstream media in the process: “So funny to watch Fake News Networks, among the most dishonest groups of people I have ever dealt with, criticize Sinclair Broadcasting for being biased. Sinclair is far superior to CNN and even more Fake NBC, which is a total joke.”
Meanwhile, a new study suggests that actual fake news may have helped Trump to secure the election. Ohio State University researchers found a high statistical association between belief in fake news items and voting in 2016.

Whatever the impact of fake news on election outcomes, some governments are introducing legislation to control the problem. But these laws are more likely to limit free speech, chill the real news and create unintended consequences.

Trump and other politicians’ attacks mirror widely held suspicions about the media. A recent poll by Monmouth University showed that more than 77% of Americans believed that mainstream media reports fake news. One in three believed this happened regularly, whereas 46% thought it only happened occasionally.

Fake news was defined broadly: twenty-five percent thought it referred to wrong facts, whereas 65% believed it also covered editorial decisions and news coverage. Eighty-seven percent of Americans thought interest groups plant fake news on platforms such as Facebook and YouTube. Of concern, 42% believed media reported fake news to push an agenda, and 35% trusted Trump more than CNN.

The congruence of public distrust and politicians’ self-interest has reached an obvious denouement: legislation.

The most egregious of these laws was just passed by the Malaysian parliament’s lower house. The Anti-Fake News Act 2018, which imposes jail terms of up to six years, will become an act after senate approval. The law defines fake news broadly to include “any news, information, data and reports, which is or are wholly or partly false, whether in the form of features, visuals or audio recordings or in any other form capable of suggesting words or ideas”.

Laws

The law is particularly dangerous because it has extra-territorial application — foreigners can be dealt with “as if the offence was committed” within Malaysia. In other words, it is not just Malaysian journalists who could be locked up — foreign media can also be locked up if Malaysian law enforcement can reach them.

Malaysia is not an isolated instance. The Philippines is considering a similar law. The Irish parliament is also considering a bill to criminalise the use of bots on social media platforms to promote fake news — such as those thought to have been used by Russia to influence the US election.

India proposed a law that would suspend the accreditation of journalists for fake news, but retracted the order within a day due to a backlash.

It is unclear if the Malaysian law — and other national variants — is masquerading as an attempt to promote real news when it is actually an attempt at censorship by stealth. Regardless, even assuming good intentions, anti-fake-news laws are incapable of tackling the menace.

Fake news is a slippery concept. Who decides what is fake? And how do we manage the distinction between facts and opinion? There is no bright-line definition that would provide clarity, and each item must be assessed on its own. Moreover, not all fake news is harmful — a precondition for regulation.

Regulation would turn judges into fact-checkers for potentially millions of news items or social media posts — an impossible task even without crowded dockets. Replacing judges with bureaucrats might improve efficiency marginally, but would generate a censorship state.

Buttressed with criminal penalties, these laws will chill free speech and substantially diminish the marketplace for ideas. Media outlets will be overly cautious with negative consequences for transparency and accountability. In addition, the laws are unlikely to advance the cause of real news — they have no connection to the incentives for providing truthful information.

Countries committed to free speech should not adopt anti-fake-news laws. The current legal regime represents a pragmatic compromise. Our system of free speech tolerates the risk of inaccurate news for several reasons.

Firstly, it is difficult to establish intention to fabricate falsehoods and harm, and the causal link between the two. And giving the state tools to police speech is dangerous, with fear alone generating self-censorship. Also, judges and bureaucrats are not experts at separating fake from real news — public debate in the marketplace of ideas is more efficient. Finally, modern news does not stop at geographic boundaries, and national law cannot solve a transnational problem.

This does not mean that social media platforms should be free to spread falsehoods and compromise elections. Some options for preventing the proliferation of fake news that could crowd out real news include accreditation to distinguish legitimate news outlets, liability for search engines and distributors where actual harm and intent to fabricate can be established in private litigation, and accessible remedies for defamation. However, such regulation goes well beyond the scope of current anti-fake-news laws.The Conversation

  • Written by Sandeep Gopalan, vice-chancellor (academic innovation) and professor of law, Deakin University
  • This article was originally published on The Conversation

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Broadcom abandons its pursuit of Qualcomm

Broadcom has formally abandoned its attempt to acquire rival chip maker Qualcomm after US President Donald Trump blocked the deal citing national security risks.

“Although we are disappointed with this outcome, Broadcom will comply,” the company said in a statement, bringing an official end to a months-long battle to land the technology industry’s biggest ever deal.

The retreat ends CEO Hock Tan’s most ambitious move yet in his efforts to build a chip empire, after leading Broadcom through a string of deals that have reshaped the US$400bn semiconductor industry in the last several years.

The company launched its unsolicited bid in November and was quickly and repeatedly rebuffed by Qualcomm’s management and board. Singapore-based Broadcom had been gathering support from investors to overturn its target’s resistance to a deal.

An investigation of the deal by the committee on foreign investment in the US, which reviews purchases of American businesses by foreign investors, confirmed national security threats related to the acquisition by Broadcom, the treasury department said in a second letter to both companies made public on 12 March. Later that day, Trump took the committee’s recommendation and banned the deal.

Broadcom has also withdrawn its slate of independent director nominees to Qualcomm’s board, it said in the statement.  — Reported by Marthe Fourcade, (c) 2018 Bloomberg LP

Original Link

Trump blocks world’s biggest-ever tech deal

Donald Trump

US President Donald Trump issued an executive order on Monday blocking Broadcom from pursuing its hostile takeover of Qualcomm, scuttling a US$117bn deal that had been scrutinised by a secretive panel over the tie-up’s threat to US national security.

Trump acted on a recommendation by the committee on foreign investment in the US, which reviews acquisitions of American firms by foreign investors. The decision was unveiled just hours after Hock Tan, the CEO of Singapore-based Broadcom, met with officials at the Pentagon in a last-ditch effort to salvage what would have been the biggest technology deal in history.

“There is credible evidence that leads me to believe that Broadcom,” by acquiring Qualcomm, “might take action that threatens to impair the national security of the US,” Trump said in the order released on Monday evening in Washington, DC.

The order underscores the tough stance the Trump administration is taking on foreign takeovers of US technology firms. In September, he blocked the sale of Lattice Semiconductor to a Chinese-backed investor. That was just the fourth time in a quarter century that a US president stopped a foreign takeover of an American firm on national security grounds. At least half a dozen technology deals have collapsed during the Trump administration in the face of concerns raised by CFIUS.

Broadcom said in a statement it was reviewing the order and that it “strongly disagrees that its proposed acquisition of Qualcomm raises any national security concerns”. Qualcomm didn’t respond to requests for comment.

The order marked an unprecedented move by the White House to stop a hostile bid for a company. Broadcom didn’t have an agreement to buy San Diego-based Qualcomm. It was fighting to win support from Qualcomm shareholders to gain control of its rival’s board and move forward with its offer. Before waiting for an actual deal, CFIUS opened an investigation to review the risks to national security.

Initially, CFIUS was split on whether to weigh in. Pentagon officials insisted on a review of Broadcom’s proxy battle, while the US treasury department had pushed back, according to people familiar with the matter.

Fear of Huawei

But then, on 4 March, treasury ordered Qualcomm to postpone its shareholder vote by 30 days, saying that a takeover by Broadcom threatened Qualcomm’s leadership in developing the next generation of wireless technology. The government said it feared Broadcom would cut investment in research and development in order to increase short-term profits. That could allow Chinese companies, namely Huawei Technologies, to become the dominant supplier, the US said.

Trump’s order came as Broadcom was in the midst of moving its headquarters from Singapore to the US. Broadcom had announced the move in November after Tan met with Trump at the White House. After the meeting, CFIUS approved Broadcom’s takeover of Brocade Communications Systems, conditioned on the headquarters move, according to Broadcom.

Qualcomm’s chips dominate in smartphones

On Monday, Tan went to the Pentagon to meet with CFIUS officials in a bid to address their concerns. Tan argued that combining Broadcom and Qualcomm would actually further US interests by advancing the development of the next generation of wireless technology known as 5G, according to a person familiar with the meeting.

Tan’s meeting followed a letter from treasury to the companies on Sunday that said national security risks from the takeover may prompt a recommendation to Trump to block the deal.

“In the absence of information that changes CFIUS’s assessment of the national security risks posed by this transaction, CFIUS would consider taking further action, including but not limited to referring the transaction to the president for decision,” treasury said in the letter, which Qualcomm made public earlier on Monday.  — Reported by David McLaughlin, with assistance from Ian King, (c) 2018 Bloomberg LP

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Trump praises commercial space at Cabinet meeting

Flanked by models of launch vehicles, President Donald Trump praised private investment in space during a brief media availability at a meeting of the Cabinet March 8. Credit: White House

WASHINGTON — President Donald Trump offered praise for the U.S. commercial space industry in comments March 8 that appeared to cement previous policy on the issue rather than create new policy.

Near the end of a 20-minute session with the media during a Cabinet meeting, Trump discussed commercial spaceflight, prompted by the presence of models of several launch vehicles, including United Launch Alliance’s Atlas 5 and SpaceX’s Falcon 9, on the table. The status of the National Space Council, chaired by Vice President Mike Pence, was one of the topics of the Cabinet meeting.

Trump appeared particularly interested in last month’s successful inaugural launch of SpaceX’s Falcon Heavy rocket, which featured the synchronized landings of the rocket’s two side boosters back at Cape Canaveral. “To me that was more amazing than watching the rocket go up, because I’ve never seen that before,” he said.

He was also pleased with the vehicle’s price. “They said it cost $80 million,” he said, an apparent reference to the vehicle’s list price of $90 million. SpaceX Chief Executive Elon Musk said last month that the company spent more than half a billion dollars developing the Falcon Heavy.

“If the government did it, the same thing would have cost probably 40 or 50 times that amount of money,” Trump said. “When I heard 80 million, I’m so used to hearing different numbers with NASA.”

Trump did praise the space agency, though, for making “tremendous strides.” He didn’t elaborate on those efforts, beyond noting that “we’ll be sending something very beautiful to Mars in the very near future.” NASA is launching the InSight Mars lander mission on May 5. A model of NASA Space Launch System was also on the table but at a smaller scale than the other vehicles, such that it appeared dwarfed by the Atlas 5 posed next to it.

After the Cabinet meeting, Pence highlighted SLS and Orion. “As I briefed @POTUS & @Cabinet today: with @NASA_SLS & @NASA_Orion leading the way back to the moon and with support of our commercial partners – the U.S. is keeping high skilled jobs & advancing us in the #NextFrontier,” he tweeted, attaching a map that showed that there were companies involved with SLS, Orion and ground systems in all 50 states.

Trump’s comments appeared to encapsulate current policy that supports the continued development of commercial space capabilities. Space Policy Directive 1, signed by President Trump in December, called on NASA to work with “commercial and international partners” on its exploration program, refocused on the moon.

NASA’s fiscal year 2019 budget proposal, released Feb. 12, requested $150 million to support initial development of commercial capabilities that could either take over operations of the International Space Station by 2025 or develop commercial successors. The proposal projected spending $900 million on that effort over five years.

At the latest meeting of the Pence-chaired National Space Council, held Feb. 21 at the Kennedy Space Center, members approved several recommendations intended to support commercial space through regulatory changes. Those included streamlined launch licensing and a consolidation of other regulatory activities in the Office of Space Commerce within the Department of Commerce.

“What we’re trying to do is to make it easier for legitimate space activities to be conducted,” Secretary of Commerce Wilbur Ross said in a March 1 interview. “The rate of regulatory change must accelerate until it can match the rate of technological change.”

While Pence briefed the Cabinet on the activities of the National Space Council, neither he nor Trump disclosed if they took any new actions based on that briefing. Trump, though, made it clear he supported private investment in space systems.

“You know, rich guys, they love rocketships. And that’s good. That’s better than us paying for them,” he said.

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Prospects dim for world’s biggest-ever tech deal

Broadcom’s hostile takeover attempt of Qualcomm could pose a national security risk because of Qualcomm’s leadership in developing critical semiconductor technology, according to the US treasury department, setting up a potentially insurmountable hurdle to getting a deal done.

Qualcomm’s sale to Singapore-based Broadcom could hurt the chip maker’s competitiveness by reducing research and development, which would threaten US security, treasury said in a 5 March letter released by Qualcomm on Tuesday. Harm to Qualcomm’s innovation would allow China to expand its influence in key wireless technology, the government said.

The US “has identified potential national security concerns that warrant a full investigation of the proposed transaction”, treasury said. “Articulation of the potential national security concerns, in significant part, is classified.”

Qualcomm on Monday postponed a shareholder vote on Broadcom’s nominees for Qualcomm’s board after the committee on foreign investment in the US, which treasury leads, ordered a delay to review the deal. Broadcom is on track to win all six of the seats it’s seeking, giving it a majority of the board to push ahead with its hostile $117bn bid.

The government’s scrutiny of the proposed combination of the two chip makers threatens to derail what would be the biggest transaction in the history of technology. It lends weight to Qualcomm’s argument that the hostile bid would struggle to get regulatory sign-off.

The investigation by CFIUS, which considers national security risks to foreign acquisitions of US companies, came after Qualcomm filed a notice with the panel seeking a review. Broadcom blasted the move as a “blatant, desperate act” to entrench its incumbent board of directors.

Broadcom said it’s cooperating with the review by CFIUS.

“There can be no question that an American Broadcom-Qualcomm combination will provide far more resources for investments and development,” Broadcom said in a statement. “Entrusting this effort to a failing Qualcomm management who lack the support of its owners, and that pays out much of its excess cash flow in fines as a result of serial lawbreaking, would not be in America’s long-term interests.”

Trump

Broadcom’s CEO Hock Tan joined US President Donald Trump in the White House last year to announce he was moving Broadcom’s headquarters to the US from Singapore — a move that appeared designed to appease US officials and facilitate future acquisitions.

The US move to suspend the shareholder vote pending the security review is the most high-profile example yet of the Trump administration’s national security concerns about foreign purchases of American technology firms.

Several proposed takeovers by overseas investors have fallen apart over the last year after failing to resolve the concerns. Washington has long been wary of acquisitions of sensitive technology, particularly by Chinese buyers, but scrutiny has intensified under Trump, according to lawyers who work on such deals. Since Trump took office last year, at least half a dozen foreign acquisitions of American technology firms have been scuttled in the face of national security concerns raised by CFIUS.

Donald Trump

CFIUS, led by treasury secretary Steven Mnuchin, has become more demanding under Trump, according to Brian Fleming, a lawyer at Miller & Chevalier Chartered in Washington, who previously worked in the US justice department’s national security division.

“The risk tolerance has been lowered significantly in the current administration,” Fleming said. “Whereas it may have been the case in the previous administration that certain risks could be tolerated and perhaps addressed through mitigation, those risks are not as well tolerated anymore, and it is a higher bar you have to clear.”

CFIUS can approve or propose changes to deals, but only the president can block a transaction on national security grounds. Trump signed an executive order blocking the sale of Lattice Semiconductor to a Chinese-backed investor in September. The panel doesn’t confirm or comment on its work.

In its letter, treasury heaped praise on Qualcomm for having “led the mobile revolution in digital communications technologies”. The government said it fears an acquisition by Broadcom could threaten Qualcomm’s competitiveness. The debt Broadcom would need to finance the deal would increase pressure to earn short-term profits at the expense of spending on research and development, according to the letter.

If Qualcomm’s position is weakened, treasury said, Chinese companies like Huawei Technologies would gain an opening to become dominant. Huawei has long been seen by the US as a security threat.

Treasury also cited Qualcomm’s contracts with US government agencies with national security responsibilities. Qualcomm has “active sole source classified prime contracts” with the Pentagon, according to the letter.

“Qualcomm’s partnership with the US government encompasses efforts to address cybersecurity in the next generation of wireless, 5G and the Internet of things,” treasury said. “Limitation or cessation of supply of Qualcomm products or services to the US government could have a detrimental impact on national security.”  — Reported by David McLaughlin, (c) 2018 Bloomberg LP

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Humans are getting smarter, except, weirdly, in Scandinavia

When US President Donald Trump infamously declared his preference for immigrants from Norway, he was presumably unaware that he selected one of the few developed economies in the world experiencing a decline in average IQ.

Norway and the other Nordic countries have seen an IQ downturn, admittedly from relatively high levels, even while intelligence measurements in the rest of the world continue their long upward rise. A key question is whether the recent downturn in Norway and elsewhere suggests the global phenomenon may soon end, too.

Average intelligence levels, as measured by standardised intelligence tests, have been rising since at least the early 20th century. A recent meta-analysis that included more than four million people in 31 countries found an average gain of about three IQ points per decade, or roughly 10 points per generation. Another recent study found a similar increase.

The phenomenon is commonly called the “Flynn effect”, after James Robert Flynn, the New Zealand academic who documented it in a series of studies starting in the early 1980s. The rise in IQ has been found in both developed and developing countries, but it varies by degree across countries, over time, and according to the type of intelligence measured. The Flynn effect has been stronger for nonverbal tests than for verbal ones, for instance, and greater for adults than for children.

Its causes are hotly debated. One theory is that the results are a mirage, reflecting better test-taking techniques or the selection of people taking the tests. But such shifts have not been great enough to explain the phenomenon. More likely, multiple factors are at play, including improvements in nutrition; expansion of formal schooling; increases in average educational attainment; environmental improvements such as a reduction in lead exposure; and shrinking family size, which allows more focus on the education of each child. An ongoing debate exists about whether or not the increase in the average reflects a disproportionate increase in IQ levels at the bottom end of the distribution.

One implication for policy involves the need to reconsider what constitutes impaired intelligence. The US supreme court has ruled, for example, that it was cruel and unusual punishment for a state to execute someone lacking sufficient mental capability to understand the consequences of his or her own actions. For this purpose, should an IQ of 80 today be considered comparable to an IQ of 70 a generation ago? Courts have been inconsistent on the question of whether to adjust for the Flynn effect. (Flynn himself has argued vehemently that the courts should adjust.)

The military

One notable exception to the sustained, worldwide rise in average IQ is found within the US military: officers’ test scores have declined in recent decades. Given that the IQ scores for the US overall have continued to rise, the military results presumably reflect recruitment patterns rather than any broader phenomenon. What stands out is when average scores for a whole country decline.

Which brings us back to Norway. Nine studies have measured negative Flynn effects in seven countries, according to a recent systematic review of the literature. The data for Norway is particularly interesting, because it’s based on tests administered to military conscripts and cover a substantial share of young men in the country. They show declines in average IQ in Norway since the mid-1990s.

Flynn himself has conducted some of the new research on Norway and other Scandinavian countries. His analysis suggests a decline of about 6.5 points per generation.

Might these declines eventually be echoed in the rest of the world, or are they specific to the countries involved? Presumably, the causes of the Flynn effect could diminish, and be overwhelmed by other forces — including the effects of video gaming and other recent social and cultural changes.

Indeed, one of the recent studies found that the pace of increase in IQ scores has generally been slowing — a possible early warning about a potential negative Flynn effect ahead. However, the second study found no such slowing.

Since we understand so little about what causes scores to rise, we’re left with the unappealing option of having to wait to see what happens in the world.  — Reported by Peter R Orszag, (c) 2018 Bloomberg LP

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SpaceX wins accolades for Falcon Heavy success

A SpaceX Falcon Heavy lifts off Feb. 6 on its successful inaugural mission. Credit: SpaceX

ORLANDO, Florida — A rare combination of politicians, space advocates and even competitors lauded SpaceX for its successful inaugural launch of the Falcon Heavy Feb. 6.

Among those congratulating the company for the test flight of the heavy-lift rocket was President Donald Trump. In a tweet late Feb. 6, he congratulated SpaceX and its chief executive, Elon Musk. “This achievement, along with @NASA’s commercial and international partners, continues to show American ingenuity at its best!” he stated.

Vice President Mike Pence, who chairs the National Space Council that the administration reestablished last year, also praised the launch. “It demonstrates America’s unparalleled space leadership as the Trump Admin & the National Space Council seek to transform our space policy, seize 21st century opportunities & unleash the infinite potential of the cosmos for the American people,” he tweeted.

Pence also announced that he would convene the next formal meeting of the National Space Council later this month at the Kennedy Space Center. That meeting, which sources say is scheduled for Feb. 21, will be the second public meeting of the council, after its inaugural meeting in October at the National Air and Space Museum’s Udvar-Hazy Center near Washington.

Musk, in separate tweets, thanked both Trump and Pence. There was no evidence of any animus between Musk and the administration after Musk resigned from administration advisory boards he was serving on in June when Trump announced plans for the United States to withdraw from the Paris climate accord.

Sen. Bill Nelson (D-Fla.) discussed the launch in a brief speech on the Senate floor shortly after the launch. “The test launch of the Falcon Heavy is a spectacular demonstration of the comeback of Florida’s space coast and of the U.S. commercial launch sector, which is succeeding in a big way,” he said.

U.S. Air Force Gen. Jay Raymond, head of Air Force Space Command, offered his own congratulations in a tweet, also thanking NASA and the 45th Space Wing, which operates the Eastern Range. Referring to the spacesuit-clad mannequin placed in the Tesla Roadster sports car launched on the Falcon 9, Raymond said, “If #Starman gets back to Earth, he’s got a job with @AFSpace!”

Industry organizations offered congratulations as well. “Today’s successful Falcon Heavy launch represents a momentous milestone for SpaceX and the commercial space industry, as the first heavy lift launch vehicle developed and launched with fully private funding,” Eric Stallmer, president of the Commercial Spaceflight Federation, said in a Feb. 6 statement. “It serves as another example of how U.S. commercial companies continue to drive innovation and American leadership in space.”

The prospect of using the Falcon Heavy to support missions to Mars – something SpaceX is not pursuring in favor of the larger BFR reusable launch vehicle – won praise from Robert Zubrin, president of The Mars Society.

“Seven years ago, the Augustine Commission said that NASA’s moon program had to be cancelled, because the development of the necessary heavy lift booster would take 12 years and $36 billion,” he said in a statement. “SpaceX has now done that, on its own dime, in half the time and a twentieth of the cost.”

“This is a revolution. The naysayers have been completely refuted,” he added.

Even executive of competing aerospace companies hailed the launch. “SpaceX’s successful launch today has pushed our industry to go further faster,” Boeing said in a statement. “Boeing will soon launch our own new rocket intended to take humans to Mars and beyond. Congratulations @SpaceX for your contribution to help innovate, compete, and explore.”

Some executives personally congratulated SpaceX and Musk. “Congratulations @elonmusk @SpaceX,” tweeted Tory Bruno, president and chief executive of United Launch Alliance.

Jeff Bezos, founder of Blue Origin, offered his own succinct praise: “Woohoo!”

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For Elon Musk, it’s mission accomplished

Artist’s rendition of Falcon Heavy

An elated Elon Musk pulled off another seemingly impossible feat on Tuesday when SpaceX launched the world’s most powerful rocket in 45 years, then flew two of its spent boosters back to the Florida coast for a spectacular, simultaneous recovery on land.

With hordes of fans gathered along the Florida space coast, the new rocket rumbled aloft under clear skies shortly after 3.45pm local time (10.45pm South African time). The live-stream of the Falcon Heavy Test Flight was the second most watched in YouTube’s history, reaching more than 2.3m concurrent views, and the launch led all three television network broadcasts in the US on Tuesday evening.

Falcon Heavy cleared the launch pad without blowing up — a feat Musk had said would be enough to deem the mission a win — and continued on to deliver Musk’s cherry red Tesla Roadster with a space-suit wearing mannequin at the wheel toward an Earth-Mars elliptical orbit around the sun.

“It seems surreal to me,” said Musk, 46, during a post-launch press conference. “Crazy things can come true.”

Falcon Heavy, with three boosters and 27 Merlin engines, makes SpaceX a competitor to United Launch Alliance’s Delta IV Heavy, a workhorse for large US military payloads. Its 2.3m kilograms of thrust are the most since the Saturn V used for Apollo moon missions in the late 1960s and early 1970s. US President Donald Trump, Nasa and rival Boeing were among those congratulating SpaceX.

“A private company just outperformed every government on Earth,” said Greg Autry, a professor at the University of Southern California and a former Nasa White House liaison. “This is bigger than anything Russia or China is doing. No one else is even close.”

The strides Musk has made rendering Falcon 9 launches more routine — SpaceX pulled off a record 18 launches last year– has helped make it one of the word’s most richly valued private companies.

Following the launch, SpaceX accomplished a feat never before seen in space history, re-landing two rocket cores back on Earth. Two touched down on land in tandem; the third centre core that was slated to settle on an unmanned drone ship ran out of propellant needed to slow down the descent and slammed into the ocean instead.

Centre core

“The centre core didn’t land on the drone ship,” said Musk, who said early reports are that the rocket booster “hit the water at 300 miles per hour and sprayed the drone ship with shrapnel”.

Hawthorne, California-based SpaceX already has paying customers committed to flying with Falcon Heavy, including commercial satellite operators Arabsat, Inmarsat and Viasat, according to its launch manifest. The US Air Force also chose Falcon Heavy for its STP-2, or Space Test Program 2, mission, though the vehicle still needs to go through certification.

Musk outfitted his Roadster with cameras to capture views of the car as it floated through space, but the batteries are only expected to last for roughly 12 hours. Behind the wheel was “Starman”, clad in the same space suit that astronauts will wear during SpaceX’s Crew Dragon flights to the International Space Station. Musk said that Crew Dragon is now the company’s top priority, with the first demo flights slated for later this year.

Image c/o SpaceX

A nearly indestructible disc carrying a digital copy of Isaac Asimov’s science fiction book series Foundation is also on board, along with a plaque engraved with the names of SpaceX’s 6 000 employees.

The successful test flight means that SpaceX can move forward with Falcon Heavy missions for paying customers, with the first to take place within three to six months.

Musk founded SpaceX in 2002 and has led the company since the beginning. Falcon Heavy was developed without any government funding, and took far longer than originally planned.

“We tried to cancel the Falcon Heavy programme three times because it was way harder than we thought,” said Musk. “Our total investment is over half a billion (dollars).”  — Reported by Dana Hull, with assistance from Mark Bergen and Julie Johnsson, (c) 2018 Bloomberg LP

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Tech giants voice support for US Cloud Act

Microsoft chief legal officer Brad Smith

Microsoft, Google and Apple have thrown their support behind proposals in the US congress to deal with cross-border data requests from law enforcement — even as the issue heads for review before the supreme court.

The companies, along with Facebook and Oath, on Tuesday signed letters welcoming bipartisan house and senate versions of the Clarifying Lawful Overseas Use of Data Act, or Cloud Act.

Separately, according a statement from the office of British Prime Minister Theresa May, President Donald Trump told May on Tuesday that passing the proposals was “vital” to the two countries’ security.

The White House said in its own statement that Trump and May would “advocate for legislation” around a pending data agreement like the one in the congressional proposals. The White House, however, did not mention a specific bill.

The Cloud Act, according to a statement from its sponsors, would allow the US to make agreements with foreign countries for dealing with law enforcement requests.

The legislation would also make clear that US warrants apply around the world, while allowing technology companies to notify foreign governments of any requests — as well as a process for challenging them.

“The new, bipartisan Cloud Act is an important step toward enhancing and protecting privacy while reducing international legal conflicts,” Microsoft president and chief legal officer Brad Smith tweeted on Tuesday.

In October, the supreme court agreed to hear a case stemming from a 2013 request by federal authorities for data held overseas by Microsoft and other companies. Microsoft has refused to turn over the information, calling for a legislative solution. It has supported previous legislative proposals on the issue.

Privacy concerns

The US justice department supports the legislation, representative Doug Collins of Georgia said in the sponsors’ statement. The White House and justice department did not immediately respond to requests for comment.

The US Chamber of Commerce is also supporting the proposals, while the Center for Democracy & Technology, a policy institute in Washington, objected that they do not do “enough to protect the privacy of Internet users” and would “erode trust in the privacy of data stored in the cloud”.

In October, Microsoft dropped another lawsuit against the justice department over the privacy of customer data after the department moved to scale back the use of orders forcing technology companies to turn over data without alerting users.  — Reported by Ben Brody, with assistance from Dina Bass, (c) 2018 Bloomberg LP

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Foust Forward | Third time’s the charm to return man to the moon?

President Donald Trump, speaks before signing the Presidential Space Directive – 1, directing NASA to return to the moon, in the Roosevelt room of the White House in Washington, Monday, Dec. 11, 2017. (Credit: NASA/Aubrey Gemignani)

“Foust Forward” appears in every issue of SpaceNews magazine. This column ran in the Dec. 18, 2017 issue of SpaceNews magazine.

The timing of the announcement was a surprise. Its content, however, was not.

The fact that President Trump would be signing what the White House called Space Policy Directive 1 was announced just the day before the Dec. 11 ceremony. That date made sense in one aspect: it was the 45th anniversary of the landing of Apollo 17 lunar module, the last human mission to the moon to date.

The president made clear he wanted to change that. “It marks an important step in returning American astronauts to the moon for the first time since 1972 for long-term exploration and use,” Trump said of his directive.

The administration, though, had been signaling for months that it wanted to go back to the moon. The directive was a recommendation unanimously approved at the National Space Council’s first meeting in October, and officials such as Vice President Pence had been dropping hints for months before that about putting the moon back on the path to Mars.

But neither the directive nor comments at the brief signing ceremony — it lasted less than 10 minutes — offered details about just how the United States will send humans back to the moon. The directive simply replaces one paragraph of the 2010 National Space Policy developed by the Obama administration, with no details about timelines or budgets. Neither Trump nor Pence set deadlines, or made funding promises, in their remarks.

NASA, in a statement issued after the ceremony, said that implementation of the policy “will be reflected in NASA’s Fiscal Year 2019 budget request” to be released early next year, and left it at that.

The timing of the announcement, some suggested, was intended as a signal to the White House Office of Management and Budget as it finalizes that budget proposal, given that it proposed cutting funding for exploration programs in its 2018 budget.

The directive is the third time in less than three decades that a president has formally called for a human return to the moon. The two Presidents Bush made similar declarations, 14 and a half years apart, only to see them falter, one undone when it was saddled with a $500 billion price tag and the other failing to survive a change in administrations.

This third proposal, arriving as if on cue nearly 14 years after the second President Bush announced the Vision for Space Exploration, will have to be different. There’s no sign Congress is willing to significantly increase NASA’s budget to pay for a conventional, NASA-led approach, or for raiding funding from other agency programs.

The directive offers a hint of what might work, though. The new paragraph added to the space policy directs NASA to lead “an innovative and sustainable program of exploration with commercial and international partners.”

International interest in lunar exploration has been growing in recent years, such as the campaigning by the European Space Agency’s leader, Jan Woerner, for his “Moon Village” proposal. Japan’s government recently endorsed cooperating on NASA’s proposed Deep Space Gateway as a way to send Japanese astronauts to the moon.

The commercial sector has demonstrated increasing capability for supporting a human return to the moon, and willingness in doing so. Blue Origin, for example, has proposed building a lander system for delivering cargo to the lunar surface to support human missions there.

Even SpaceX, which has long been focused on Mars, has a new interest in the moon. “If you want to get the public really fired up, I think we’ve got to have a base on the moon,” Elon Musk said this summer.

Translating that commercial and international support into a sustainable program to send humans back to the moon will be a key challenge for NASA, the National Space Council and the White House.

If they fail this third time around, a future president may not bother with a fourth attempt.
jeff_foust_4c

Jeff Foust writes about space policy, commercial space, and related topics for SpaceNews. His Foust Forward column appears in every issue of the magazine.

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US said to mull single network for 5G

The US is in talks with private companies to build a secure 5G network amid concerns about China and cybersecurity, said two administration officials familiar with the plans.

Talks are preliminary, and key decisions over funding and control haven’t been reached, said the people, who discussed the deliberations on condition of anonymity. The government aims to decide on a plan by the end of September and build it out over the next few years, said one of the officials.

If the US opts for one secure network rather than multiple systems, the main unresolved questions would be what portion of the project would be taxpayer funded, and whether it would be owned by the government, a private consortium or some combination of public and private entities, one of the officials said.

If the federal government directly participates in building a wireless network intended for commercial use, it’d be a departure from the decades-long tradition of auctioning licences to telecommunications companies to build their own networks.

A handful of carriers, including Verizon Communications, have already been moving from trials to deployments of the next-generation wireless network known as 5G. Most mobile phone companies are targeting 2020 for the initial roll-out of the technology, which promises 10 times faster speeds and lower latency, or lag time, in transferring data when it’s requested.

The Trump administration is in contact with US, European and Asian companies, but not Chinese firms, one of the officials said.

Engineers are still trying to figure out how to make 5G work. Rain, fog and trees have long been the enemy of high-frequency radio waves. Given the relatively short, fragile nature of 5G signals, carriers have to configure networks differently. They’re shifting more of the network hardware from tall towers that are scattered to spread signals over broad areas, to smaller, more clustered sites like rooftops and street poles.

Takeover

Axios, citing sensitive documents it had obtained, reported earlier on Sunday that Trump national security officials are considering a takeover of part of the nation’s mobile network to guard against China, The best way to protect against China — the “dominant malicious actor in the information domain” — is for the US to build a network itself and then rent access to carriers such as AT&T, Verizon and T-Mobile, Axios quoted a memo as saying.

One of the officials dismissed the notion of a “takeover” referenced by Axios as not part of the administration’s thinking.

“Thanks to multibillion-dollar investments made by American companies, the work to launch 5G service in the US is already well down the road,” AT&T said in a statement. “We have no doubt that America will lead the 5G revolution.”

The company didn’t comment on whether it was in talks about a government-run network. Verizon, Sprint and T-Mobile didn’t respond to requests for comment late on Sunday.

According to the documents, a secure 5G network is critical to create a secure pathway for new technologies like self-driving cars and virtual reality, Axios reported.

US lawmakers have sounded alarms about the growing power of Huawei, the Chinese network equipment maker that’s expanded its market share around the globe, with its products operating networks in Europe and Latin America. A government-backed plan to accelerate the development of 5G in the US would require support from Huawei’s top rivals, such as Nokia and Ericsson.  — Reported by Margaret Talev and Jennifer Epstein, with assistance from Scott Moritz

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Apple faces mammoth $38bn tax bill

Apple has said it will bring hundreds of billions of overseas dollars back to the US, pay about US$38bn in taxes on the money and spend tens of billions on domestic jobs, manufacturing and data centres in the coming years.

The iPhone maker plans capital expenditure of $30bn in the US over five years and will create 20 000 new jobs at existing sites and a new campus it intends to open. The Cupertino, California-based company’s shares rose 1.7% to a record closing price of $179.10.

“We are focusing our investments in areas where we can have a direct impact on job creation and job preparedness,” CEO Tim Cook said in a statement on Wednesday, which also alluded to unspecified plans by the company to accelerate education programmes.

Apple also told employees Wednesday that it’s issuing stock-based bonuses worth $2 500 each following the new US tax law, according to people familiar with the matter.

In its December approval of the most extensive tax-code revisions since 1986, the US congress scrapped the previous international tax system for corporations — an unusual arrangement that allowed companies to defer US income taxes on foreign earnings until they returned the income to the US. That “deferral” provision led companies to stockpile an estimated $3.1 trillion offshore and many were criticised for the moves, including Apple.

By switching to a new system that’s designed to focus on domestic economic activity, congressional tax writers also imposed a two-tiered levy on that accumulated foreign income: cash will be taxed at 15.5%, less liquid assets at 8%. Companies can pay over eight years.

Apple is the first major US technology company to act on the new tax law and it joins others, such as Intel, in responding to criticism by President Donald Trump and others that corporations have been ignoring American workers and manufacturing. Job creation was a key pillar of Trump’s election campaign. That means the new positions created by Apple are likely to have a more significant political impact than its $38bn tax payment, according to Erik Gordon, a professor at the University of Michigan’s Ross School of Business.

American jobs

“The thrust here is American jobs, jobs on American soil, build manufacturing here, don’t build everything in China,” Gordon said. “You can’t have an announcement of a million jobs. But you can have companies like Apple saying that we’re going to have 20 000 new jobs here. If other companies say they’re going to have new jobs, too, it does add up.”

Later on Wednesday, Trump tweeted a response lauding Apple’s announcement. “I promised that my policies would allow companies like Apple to bring massive amounts of money back to the United States,” he wrote. “Great to see Apple follow through as a result of TAX CUTS. Huge win for American workers and the USA!”

Apple has the largest offshore cash reserves of any US company, with about $252bn at the end of September, the most recently reported fiscal quarter. The tax rate indicates that Apple is likely bringing back a majority of its overseas cash back to the US, leaving only a small portion for international investments like retail stores.

Apple CEO Tim Cook

“They’re going to have well over $200bn by the end of this year that will be available for incremental investments, capital returns and M&A,” said Matthew Kanterman, a New York-based Bloomberg Intelligence analyst. The new tax law lets US companies bring overseas cash reserves back home in one year and pay the resulting tax bill over eight years. “And Apple hasn’t historically done big M&A,” he said.

The $30bn in capital expenditures will come as part of $350bn that Apple expects to spend in the US over the next five years. The 20 000 new jobs include additional Apple employees at its campuses, data centres and retail stores, but not third-party developers for iPhone and Mac apps, an economy Apple has touted in the past.

Apple said that part of the $30bn in capital expenditure will go toward a new US-based campus, new data centres and additional supplier investments. The company, which opened a new headquarters in Cupertino last year, said its new US site initially will be focused on employees who provide technical support to Apple product users. The new location, which Apple said it will announce later this year, will be similar to the company’s existing campus in Austin, Texas, for supply chain and technical support employees.

Apple said it will increase its local manufacturing fund, announced last year, from $1bn to $5bn, indicating that it will be sourcing more components for its products domestically. As part of the original fund, Apple invested in Corning and Finisar, companies that make components for iPhone glass screens and lasers for Face ID and AirPods, respectively.

“These are probably many capital expenditure initiatives and new site build-outs that Apple was already planning on doing regardless of repatriation,” said Michael Olson, an analyst at Piper Jaffray, who has the equivalent of a buy rating on the stock.

“What’s not said in this release is that there is more potential for increased buybacks for shareholders and acquisitions that might not have taken place if it were not for the cash influx from overseas,” Olson said. Apple typically provides updates on its share buyback program when it announces second quarter earnings.  — Reported by Alex Webb and Mark Gurman, with assistance from Alexis Leondis, (c) 2018 Bloomberg LP

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Davos elite fear cyberattacks and war

World Economic Forum founder Klaus Schwab

The threat of large-scale cyberattacks and a “deteriorating geopolitical landscape” since the election of US President Donald Trump have jumped to the top of the global elite’s list of concerns, the World Economic Forum said ahead of its annual meeting in Davos, Switzerland.

The growing cyber-dependency of governments and companies, and the associated risks of hacking by criminals or hostile states, has replaced social polarisation as a main threat to stability over the next decade, according to the WEF’s yearly assessment of global risks, published on Wednesday at Bloomberg’s new European headquarters in London. The Davos forum starts 23 January in the Swiss ski resort.

While the economic outlook has improved, nine in 10 of those surveyed said they expect political or trade clashes between major powers to worsen. Some 80% saw an increased chance of war.

“Cybersecurity is the issue most on the minds of boards and executives, given the visibility of state-sponsored attacks in an environment of increasing geopolitical friction,” John Drzik, president of global risk at Marsh USA, which contributed to the study, said in an interview. “Businesses are increasingly dependent on technology and are aware that the openings hackers have are growing. As they invest in things like artificial intelligence, they are widening their attack surface.”

Drzik said recent high-profile security breaches that have fuelled this perception include the WannaCry ransomware attack, which infected more than 300 000 computers across 150 countries, and NotPetya, which caused two companies losses in excess of US$300m. The cost of cybercrime to firms over the next five years could reach $8 trillion, the WEF said.

Similarly, thousands of attacks every month on critical infrastructure from European aviation systems to US nuclear power stations show state-sponsored hackers are attempting to “trigger a breakdown in the systems that keep societies functioning”, the WEF said.

In the preview, which would suggest Davos attendees are in for one of the bleaker forums in recent memory, almost two-thirds of global leaders saw risks intensifying from 2017. Climate change and extreme weather remained the greatest concerns of those surveyed. Economic worries receded as a unified pickup in growth and stocks at record highs suggest the world may finally be recovering from the financial crisis, a decade on.

Trump appearance

Donald Trump’s appearance at the WEF’s annual meeting — the first for a sitting US president since Bill Clinton in 2000 — is sure to dominate proceedings, as well as ruffle feathers. Treasury secretary Steve Mnuchin has said Trump and his advisers will use the event to talk about the president’s “America First” agenda, arguing that an economy that’s good for the US is good for everyone else.

However “America First” is interpreted, Marsh’s Drzik said “unilateral, protectionist policies and nationalism are another key risk” that Davos attendees have identified, and one that clashes with the WEF’s core philosophy.

“To address complex issues like climate change, cyber warfare and food security requires a multilateral response, but the political direction is going in exactly the opposite way,” Drzik said. “Trump is an example of this, but far from the only one.”

The town of Davos in Switzerland

The report singled out the US on trade after Trump pulled out of the Trans-Pacific Partnership and sought a renegotiation of the North Atlantic Free Trade Agreement. Around the world in 2016, about three-quarters of so-called interventions — such as imposing tariffs, or blocking imports of certain goods to protect domestic jobs — were protectionist in nature, and the trend appears to have continued through last year, the WEF said. The UK’s trade barriers may also increase as it leaves the European Union, it noted.

The Global Risks Perception Survey quizzed 999 business leaders, politicians and academics — of whom 70% were male — on 30 potential global risks, ranging from deflation and asset bubbles to natural disasters, terrorist attacks and water crises. They identified trends that could exacerbate those risks, including an aging population and income inequality.

Each year, the forum ranks these perceived dangers by impact and likelihood. While weapons of mass destruction retained their place as the most destructive risk, their use was judged the least likely to occur. Extreme weather events and other natural disasters were the next most impactful, and were also rated the most likely to occur. The next most likely: cyberattacks, mass data frauds or thefts and a failure to slow climate change.

The report also delineated some more far-fetched dangers, including fleets of AI-controlled pirate drone ships that decimate the ocean’s fish stocks.

Societal polarisation — 2017’s headline risk, after the populist wave led to Brexit and Trump’s victory — slipped down the rankings, but remained one of the main destabilising forces, according to the report. The WEF reiterated that rising income inequality is one of the most important underlying trends determining global events.

The report will provide the backbone for the talks in Davos, whose theme this year is “Creating a Shared Future in a Fractured World”.

That slogan might clash with some of the realities of the $50 000/head event, which takes place in a sealed-off Alpine retreat guarded by thousands of soldiers and police. Famed for lavish, booze-fuelled, corporate-sponsored parties with tight guest lists that take place after the official meetings are done for the day, the WEF has drawn criticism over whether it’s an appropriate forum to discuss solutions to society’s biggest problems.

WEF founder Klaus Schwab, in the report’s preface, didn’t address this criticism head-on, but said the forum aims to support change for the better of humanity by encouraging cooperation between governments and the private and charitable sectors. That said, even he struck a pessimistic tone.

“This generation enjoys unprecedented technological, scientific and financial resources” but is “the first generation to take the world to the brink of a systems breakdown”, Schwab wrote.

Optimists, if there are any left, be warned: the forum also identified several more tail risks.  — Reported by Stephen Morris, (c) 2018 Bloomberg LP

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Why Twitter won’t ban Donald Trump

Twitter has defended its decision to allow US President Donald Trump’s controversial tweets to remain on the service, saying that blocking a world leader or removing their tweets “would hide important information people should be able to see and debate”.

Selectively excluding certain tweets from such figures “would also not silence that leader, but it would certainly hamper necessary discussion around their words and actions”, Twitter said in a blog post on Friday.

Earlier this week, Trump tweeted threats of nuclear action in response to North Korea’s taunts, leading to calls for Twitter to ban Trump, claiming that he violates the social media platform’s own terms of service regarding inciting abuse or promoting violence.

The exchange prompted a protest group in San Francisco, called Resistance SF, to gather outside of Twitter’s headquarters, calling on CEO Jack Dorsey to step down or remove Trump from Twitter.

Earlier last week, Brian Fallon, a political commentator and former spokesman for Hillary Clinton, tweeted to Dorsey: “Hey @Jack. It’s time to kick Trump off this website.”

Trump’s tweets that have insulted women and his retweet of an anti-Muslim post have caused repeated uproars among its users.

The company has maintained that Trump’s tweets are newsworthy.

In Friday’s blog post, Twitter said it reviews tweets by leaders within the “political context that defines them, and enforce our rules accordingly.”

Twitter has also emphasised its use as a place to see what’s happening and that it’s easier for the social media company to deliver on its mission if influential people like Trump start discussions there. Last year, Twitter executive chairman Omid Kordestani said that “it’s good to have him talk on Twitter”.  — Reported by Selina Wang, (c) 2017 Bloomberg LP

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Op-ed | A new direction in space policy

Commercial capabilities, like Blue Origin’s proposed Blue Moon cargo lander, are key to implementing the White House’s new plans to return humans to the moon and then to Mars. Credit: Blue Origin

President Trump just articulated a dramatic new direction for America’s space presence. On Dec. 11, he announced a plan to send American astronauts back to the moon — and eventually, Mars and beyond. The announcement included a call for “innovative and sustainable” collaboration with commercial companies.

The direction is an exciting one. And the call for increased collaboration is smart. America can no longer depend on government alone to get into orbit. Companies like SpaceX and Blue Origin are creating new generations of launch vehicles capable of doing what only government assets could do in the past.

Of course, government is still the largest customer for space launch activity. But even that is changing. Governments across the globe must awaken to a new reality: they can now use launch and satellite capabilities built by the private sector.

This new reality underpins President Trump’s space policy. It is a policy that will put humans back on the moon to stay. Later, we will explore the far reaches of our solar system, first with robots and then with humans.

To begin this journey to the stars, the government would shift non-military or intelligence-related low Earth orbit activities to the private sector. The government will not abandon LEO. It would still be able to buy LEO services from on-orbit commercial assets and access LEO using commercial vehicles.

But the government would recognize that vehicles and satellites are now mature enough that it doesn’t need to control their development. The private sector can take the reins instead.

In the very near term, with the right policies, it will be possible to have humans live and work in space in commercially developed stations. The government simply will rent space aboard those stations rather than operate them.

Unfortunately, there are still those inside the space community who reject the idea that government money can be better spent buying space-related services than building and operating its own space assets through cost-plus contracts.

Both the Air Force and NASA have used cost-effective commercial launch services contracts for missions. Our intelligence agencies buy much of their remote sensing data from commercial companies. Most of the Defense Department’s communications network, for instance, depends on commercial satellites.

The Trump space policy would regularize all this current activity and aim to employ commercial capabilities as a first choice rather than as just another option. While it is true that certain government missions, particularly in national security, cannot be readily purchased in the private sector, many others can. And the cost effectiveness of doing so is considerable.

When we look at the potential expansion of NASA’s space exploration missions, the use of commercial assets also should be considered. Heavy-lift rockets are being developed in the private sector with the ability to go beyond LEO and into deep space.

Congress looks likely to continue to invest in the Space Launch System (SLS) and Orion spacecraft, two efforts it has been pursuing for more than a decade. But even SLS/Orion will have to be supplemented with other capabilities if we are going to have a robust lunar exploration program.

SLS/Orion, even after it goes into service, will fly only a few missions each decade. In those missions it will lift to orbit significant tonnage, and that special capability has elicited congressional support.

But a robust moon program will require more, such as landing capabilities and the ability to fly dozens of times per year. Luckily, the commercial sector is developing lander technology and the ability to get those landers into lunar orbit.

Assembly in orbit, a capability that the United States developed while building the International Space Station, also will prove useful. This proficiency can be used to build spacecraft that are sent in orbit in pieces aboard commercial rockets and assembled there. And, of course, SpaceX has announced its intent to build an ultra-heavy-lift rocket called BFR in the 2020s, a significant new private sector resource.

Accessing all the upcoming space potential will necessitate clear policy direction and goals. Technology is advancing rapidly, and the commercial sector is in the forefront of technology leadership with developments like reusable launch vehicles. Government, with its bureaucratic lethargy and annual appropriation delays, cannot keep up with these advances. So America cannot rely on it for our space technology advances.

Leadership in space requires vision, innovation and an ability to work at the speed of technology. A blend of national resolve, government investment and commercial inventiveness will propel the United States to the front of an expanding space race.

Those are the elements of the Trump administration’s new direction in space and that direction is straight up.

Robert Smith Walker represented Pennsylvania’s 16th congressional district from 1977 to 1997. The executive chairman of Wexler & Walker, a lobbying firm, he is on the board of directors of Space Adventures and has served as board chairman of the Space Foundation.

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Trump orders Nasa to return to the moon

US President Donald Trump directed Nasa on Monday to send American astronauts back to the moon and eventually to Mars, but eliminated his predecessors’ deadlines for such missions.

“This is a giant step toward that inspiring future and toward reclaiming America’s proud destiny in space,” Trump said on Monday at a White House ceremony, where he signed the new Nasa directive. “And space has to do with so many other applications, including a military application. So we are the leader and we’re going to stay the leader and we’re going to increase it many fold.”

Deputy White House press secretary Hogan Gidley said in a statement that the new policy reflects recommendations from the National Space Council, a White House advisory panel Trump appointed earlier in the year. The White House didn’t provide details about how Nasa’s work to return to the moon would be funded, or whether any current programmes would be cut.

The directive, released later in the day, changes a single paragraph in an 18-page memo former President Barack Obama issued in 2010.

Obama had called for Nasa to begin “crewed missions beyond the moon, including sending humans to an asteroid” by 2025 and to “send humans to orbit Mars” by the mid-2030s. Trump’s directive orders Nasa instead to “enable human expansion across the solar system”, “lead the return of humans to the moon” and follow that with “human missions to Mars and other destinations”. But he set no deadlines for the missions.

Nasa said in a statement that the new policy would scrap its mission to send humans to an asteroid.

It isn’t unusual for recent presidents to scale back their predecessors’ ambitions for space exploration. President George W Bush had called for Nasa to return astronauts to the moon by 2020, a mission that Obama ended out of cost concerns.

‘First step’

“This is the first step in a very long process,” John Logsdon, founder and former director of the Space Policy Institute at George Washington University, said in an interview. “The crucial next step is: is there money for returning to the moon in the budget? It’s been 45 years since we’ve been to the moon, and a lot of people have a lot of ideas.”

Marco Caceres, a space analyst with defence and aerospace consulting firm Teal Group, said “there’s not a lot of meat on” presidential directives to Nasa, given that they haven’t been accompanied with specific funding proposals since the Apollo era, when America was racing to beat the Soviet Union in space.

“I don’t think simply an order to Nasa is going to do anything unless it is accompanied by a notable increase of Nasa’s budget, and by notable I mean a doubling or a tripling or a quadrupling of Nasa’s budget,” Caceres said.

The US retired the space shuttle programme in 2011, three decades after it began. During the programme’s span, the five shuttles flew 135 missions. Since the programme ended, the US has been forced to rely on Russian rockets, at the cost of US$70m/seat.

In September, Trump nominated representative Jim Bridenstine, a Republican from Oklahoma, to be the next Nasa administrator. Bridenstine, who if confirmed would be the first elected official to head the agency, is known as an advocate for bringing private companies such as Elon Musk’s SpaceX into Nasa’s operations.

SpaceX launches rockets for customers including Nasa, commercial satellite operators and the American military. On Wednesday, the closely held company is slated to fire off a Falcon 9 rocket and Dragon spacecraft laden with cargo supplies destined for the International Space Station, in what will be the company’s 17th mission of the year. Musk, 46, served on Trump’s early advisory councils until June, when he parted ways with the administration over Trump’s decision to pull the US out of the Paris climate agreement.

After the shuttle programme ended, Nasa turned to private industry to fill in the gap. SpaceX and Boeing both have billion-dollar contracts to send American astronauts to the space station, with the first key tests of the technology slated for 2018. Musk has also announced plans to send paying tourists on flights around the moon.

Astrobotic, a Pittsburgh-based start-up that spun out of Carnegie Mellon University, praised Trump’s announcement, urging Nasa to rend robotic landers to the moon starting in 2020 in advance of a human return.

The Commercial Spaceflight Federation, which represents companies like SpaceX and Virgin Galactic, also applauded Trump’s action in an e-mailed press release.

“The US commercial space industry has invested hundreds of millions of dollars in private capital to develop innovative capabilities for lunar transport, operations and resource utilisation,” said Eric Stallmer, the group’s president. The administration should direct Nasa to better use that private investment to achieve the goals of the directive, Stallmer said.  — Reported by Jennifer Jacobs and Dana Hull, with assistance from Justin Bachman, Alan Levin and Jennifer Epstein, (c) 2017 Bloomberg LP

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Trump formally establishes lunar landing goal, but without details

President Trump signs Space Policy Directive 1, instructing NASA to return humans to the moon, during a White House ceremony Dec. 11. Credit: NASA/Aubrey Gemignani

NEW ORLEANS — President Donald Trump signed an order Dec. 11 formally directing NASA to send humans back to the moon, but provided no information on schedules or budgets for such an initiative.

In a brief White House ceremony, Trump signed what the administration is calling Space Policy Directive 1, which enacts a recommendation made at the National Space Council meeting in October to make a return to the moon a step towards eventual human missions to Mars.

“The directive I’m signing today will refocus America’s space program on human exploration and discovery,” Trump said at the event, attended by several members of Congress, other government and industry officials, and current and former astronauts. “It marks an important step in returning American astronauts to the moon for the first time since 1972 for long-term exploration and use.”

“This time, we will not only plant our flag and leave our footprint, we will establish a foundation for an eventual mission to Mars,” Trump added.

Vice President Mike Pence, who also spoke at the ceremony, hailed the policy as an early success for the National Space Council, which unanimously approved that recommendation at its first meeting Oct. 5.

“Today’s action by President Trump makes that recommendation official national policy,” he said. “As everyone here knows, establishing a renewed American presence on the moon is vital to achieve our strategic objectives and the objectives outlined by our National Space Council.”

Neither Trump nor Pence, however, offered additional details beyond that policy statement. That included no information on a timeline for a human return to the moon, or estimated costs or other budget information for the initiative.

NASA, in a statement issued after the ceremony, said that the policy directs the agency to “lead an innovative and sustainable program of exploration with commercial and international partners to enable human expansion across the solar system and to bring back to Earth new knowledge and opportunities.” Work on the initiative, it stated, would be reflected in the agency’s fiscal year 2019 budget proposal, to be released in February.

“NASA looks forward to supporting the president’s directive strategically aligning our work to return humans to the moon, travel to Mars and opening the deeper solar system beyond,” NASA Acting Administrator Robert Lightfoot said in the statement.

Other government and industry officials expressed general support for the new policy despite — or perhaps because of — the lack of details about how it will be carried out.

“After 45 years, it is time to return humans to the region of the Moon even as we look toward Mars,” said Mary Lynne Dittmar, president and chief executive of the Coalition for Deep Space Exploration, an industry group. Dittmar was among the guests at the White House ceremony.

Eric Stallmer, president of the Commercial Spaceflight Federation and another attendee of the event, said he supported both the overall policy as well as the administration’s willingness to consider commercial roles for the effort.

“They would like our input” on how to achieve that policy, Stallmer said in an interview after the event. “The White House and the National Space Council want to work with industry on this.”

Individual companies also weighed in. “We support the president and vice president’s vision and commitment to return America to the moon,” Lockheed Martin said in a statement. “A lunar mission with today’s technology would further our understanding of the moon’s history and resources. And it will build a strong foundation that will not only accelerate the U.S. to Mars and beyond, it will foster a thriving new space economy that will create jobs and drive innovation here on Earth.”

Sen. John Thune (R-S.D.), chairman of the Senate Commerce Committee, noted that the statement aligned with provisions of a NASA authorization bill enacted in March setting Mars as a long-term goal for human exploration. “I applaud the president for his engagement on sending a manned mission to the moon and, as underscored in the bipartisan reauthorization of NASA signed into law earlier this year, eventually to Mars,” he said.

Among those in attendance at the event was Harrison “Jack” Schmitt, the Apollo 17 astronaut who landed on the moon exactly 45 years ago on the last human lunar landing to date. “Today, we pledge that he will not be the last,” Trump said in his remarks, adding that humans will be landing elsewhere as well.

“What do you think, Jack? We’ll find some other places out there? There are a couple of other places, right?” Trump asked.

“Yes, we should,” Schmitt responded. “Learn from the moon.”

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President to sign space policy directive Monday

President Donald Trump signed an executive order June 30 establishing the National Space Council in a White House ceremony. A similat event Dec. 11 will mark the administration’s first space policy directive. Credit: NASA/Aubrey Gemignani

Updated 9:55 a.m. Eastern.

NEW ORLEANS — President Donald Trump is scheduled to sign his administration’s first space policy directive in a White House ceremony Dec. 11, one that will formally direct NASA to send humans back to the moon.

A White House schedule of the president’s activities, released late Dec. 10, includes a 3 p.m. Eastern “signing ceremony for Space Policy Directive 1.” The schedule didn’t provide additional details about the event or the document, but a White House official later confirmed that the directive is linked to human space exploration policy.

“The president, today, will sign Space Policy Directive 1 (SPD-1) that directs the NASA Administrator to lead an innovative space exploration program to send American astronauts back to the Moon, and eventually Mars,” Deputy White House Press Secretary Hogan Gidley said in an statement Dec. 11.

The directive, Gidley said, was prompted by initial work of the National Space Council, which was reconstituted by the president in a June 30 executive order and held its first public meeting Oct. 5. “The president listened to the National Space Council’s recommendations and he will change our nation’s human spaceflight policy to help America become the driving force for the space industry, gain new knowledge from the cosmos, and spur incredible technology,” he said.

The event will coincide with the 45th anniversary of the last crewed mission to land on the moon. The Apollo 17 lunar lander touched down on the moon on Dec. 11, 1972. Statements from administration officials, including Vice President Mike Pence, has have made clear their interest in human lunar missions.

“We will return American astronauts to the moon, not only to leave behind footprints and flags, but to build the foundation we need to send Americans to Mars and beyond,” Pence said at the first meeting of the reconstituted National Space Council Oct. 5 at the National Air and Space Museum’s Udvar-Hazy Center.

Pence, at that meeting, directed NASA to provide a 45-day report on plans to carry out such missions. “The Council is going to need the whole team at NASA to work with the Office of Management and Budget to provide the president with a recommended plan to fill that policy,” Pence told NASA Acting Administrator Robert Lightfoot at the meeting.

Lightfoot, speaking at a meeting of the NASA Advisory Council Dec. 7, said the agency had delivered a version of the report on those plans to the Council. “We continue to work with the Space Council on that action, and they’re reviewing the preliminary draft of that now,” he said. “Once that report becomes more final, we’ll share more information.”

Some space advocates fear that a renewed emphasis on a human return to the moon could delay plans for eventual human missions to Mars. At a Dec. 7 briefing by Explore Mars, a Mars advocacy group that recently held the fifth in a series of workshops on affordable Mars mission architectures, representatives said they were not opposed to human lunar missions provided they fit into a broader plan that supported Mars missions as well.

“The one thing we want to make sure is to follow the guidelines that the National Academies set out in their ‘Pathways’ report, which is don’t go down any dead ends,” said Joe Cassady, a member of the board of directors of Explore Mars, referring to the 2014 “Pathways to Exploration” report by the National Academies that examined the various approaches to human missions to the moon, Mars and asteroids.

“Anything we do there should have a feed-forward component that takes us in the direction of Mars,” he said of any lunar missions.

NASA’s planning for the Deep Space Gateway, a cislunar outpost, could support lunar missions while also laying the groundwork for expeditions to Mars, he said. “You can envision that, with partners, surface exploration can be undertaken utilizing the gateway.”

Congress has already offered its view of NASA exploration priorities in the form of NASA authorization legislation. The latest NASA authorization, signed into law in March, endorses a “stepping stone approach to exploration” with “missions to intermediate destinations in sustainable steps” while maintaining a long-term goal of human missions to Mars.

That bill directed NASA to develop an “initial exploration roadmap” that outlined its plans, to be delivered to Congress by Dec. 1. A separate provision instructed NASA to perform an independent assessment of the feasibility of a human mission to Mars specifically in 2033, due 180 days after the bill’s enactment in March. NASA has not announced the status of either report.

Those reports, and the administration’s actions, have given space exploration advocates some hope for a more detailed strategy for human missions beyond Earth orbit, be they to the moon or Mars. Jeff Bingham, a former Senate staffer, said at the Explore Mars event that the National Space Council can play a key role in creating a “final consensus” on those plans.

“I think we’re coming close now to an opportunity that I think was presented by the more recent legislation that Congress passed,” he said, referring to the roadmap provision in the 2017 authorization act.

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US set to abandon net neutrality rules

US Federal Communications Commission chairman Ajit Pai will propose vacating Barack Obama-era net neutrality rules, according to a person briefed on the development that will hand a victory to broadband providers such as AT&T and Comcast that oppose the regulations.

Pai’s proposal is to be presented to fellow FCC commissioners on Tuesday ahead of a vote set for 14 December at the agency, where the chairman — an appointee of President Donald Trump — leads a Republican majority. Pai will seek to vacate the rules adopted in 2015, retaining only a portion that requires broadband providers to explain details of the service they are offering, said the person briefed on the matter, who asked not to be identified because the proposal isn’t yet public.

Rules to be set aside include a ban on blocking or slowing Web traffic, and a prohibition on offering “fast lanes” that give quicker service to content providers willing to pay extra. Broadband providers have argued that competition will ensure they don’t unfairly squelch traffic.

Tina Pelkey, an FCC spokeswoman, declined to comment.

Pai’s proposal is the latest step in a years-long tug-of-war over regulations dictating how companies such as AT&T and Comcast allow access to Internet content — from Facebook’s social media site to Netflix’s streaming videos.

Supporters including Silicon Valley firms argue the rules are needed to keep network owners from favouring their own content and discouraging Web start-ups. Critics say the rules discourage investment while exposing companies to a threat of heavier regulation including pricing mandates.

The regulation survived a court challenge from broadband providers last year. Previous attempts by the FCC to pass such rules ended with courts tossing them out or sending them back to be rewritten.  — Reported by Todd Shields, (c) 2017 Bloomberg LP

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Twitter employee briefly pulls plug on Donald Trump

US President Donald Trump’s personal Twitter account went down abruptly for about 11 minutes on Thursday evening, a brief deactivation the social media company blamed on an employee who was heading out the door.

Attempts to call up Trump’s personal page, @realDonaldTrump, turned up a message saying, “Sorry, that page doesn’t exist!”, prompting many Twitter users to send out screenshots. Within minutes, the account was once again available. The official feed for the US president, @POTUS, wasn’t affected.

“Through our investigation we have learned that this was done by a Twitter customer support employee who did this on the employee’s last day. We are conducting a full internal review,” the company tweeted, after citing inadvertent “human error” in an earlier post.

Twitter has mistakenly frozen accounts in the past. In 2016, CEO Jack Dorsey was locked out of his own for a few minutes. Dorsey said in a tweet that the suspension was “an internal mistake”. Users can also deactivate their own accounts. Once someone chooses to do so, Twitter retains that data for 30 days, after which it begins the process of deleting the information. An account can be reactivated during that period simply by logging in.

Twitter has come under fire from critics who say the company should banish Trump for violating its terms of service. The US president often uses Twitter to disseminate his thinking, sometimes making disparaging remarks. Twitter’s rules let the company suspend accounts for violent threats, gender-based attacks and other forms of abuse and harassment.

Questionable tweets

In June, Trump tweeted remarks aimed at MSNBC’s Morning Joe hosts Joe Scarborough and Mika Brzezinski: “I heard poorly rated @Morning_Joe speaks badly of me (don’t watch anymore). Then how come low I.Q. Crazy Mika, along with Psycho Joe, came…to Mar-a-Lago 3 nights in a row around New Year’s Eve, and insisted on joining me. She was bleeding badly from a face-lift. I said no!”

The next month, the US president posted a video in which he’s shown wrestling and punching a person whose head bears the CNN logo. Many said that tweet violated Twitter’s policies against violent threats and targeted abuse.

The fact that Twitter hasn’t closed Trump’s account appears to be “a violation of Twitter’s own rules”, Stephen Balkam, the founder of the Family Online Safety Institute, a nonprofit organisation that’s part of Twitter’s Trust and Safety Council, said in a recent interview. “If an ordinary citizen tweeted some of what he tweeted, I would think some of them would be taken down.”  — Reported by Selina Wang, (c) 2017 Bloomberg LP

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