with Aaron Schaffer

Former Google CEO Eric Schmidt has a stark warning for Congress: The threat of China’s rapid advancements in technology is “very, very real.” 

China announced ambitions to be the global leader in artificial intelligence by the year 2030, and Schmidt says Beijing is moving quickly. 

“In the United States, we believe we are one or two years ahead of China, not five or 10,” Schmidt said yesterday during a Senate Armed Services Committee hearing, where he appeared alongside Microsoft President Brad Smith. 

Lawmakers are turning to Silicon Valley for advice on how the United States can maintain its technological edge. 

It’s a pressing issue as the Biden administration is under bipartisan pressure from lawmakers to maintain a hard line on China which is increasingly emerging as an economic and technological power, in critical fields ranging from semiconductors to quantum computing. 

The tech industry is also increasingly warning lawmakers and regulators to consider U.S. global competitiveness as they craft legislation aimed at reining it in following concerns of anticompetitive behavior, privacy violations and harmful content on social media. 

There are some areas where China has already surpassed the U.S. tech industry. 

Schmidt noted  China's authoritarian values give it an upper hand in some subjects, such as in facial recognition, because of how the government surveils its own citizens. “Their technology is generations ahead of what is possible in the West, and you can understand why,” Schmidt said. 

He also said China is significantly ahead in commerce and mobile payments technology, and that a lack of privacy rights could also allow the country to build massive databases that could fuel new advances in fields such as health care. “We need to address these without compromising our core American values," said Schmidt, who has become something of a liaison between the Pentagon and the tech sector since his departure from Google 

Here are some key recommendations that Schmidt and Smith made during their testimony about how the U.S. government should respond:

It's time for the White House to focus on American competitiveness. 

Schmidt leads the National Security Commission on Artificial Intelligence, and he said the group plans to recommend the White House establish a Technology Competitiveness Council, which would be led by the vice president. The council would be tasked with developing, driving and funding a national technology strategy. It's among a series of recommendations he said the commission plans to release on March 1. 

Software needs to become a high priority for the Pentagon. 

Schmidt said software is currently an afterthought for the military, and that needs to change – fast. 

“We need to build missiles the way we now build cars,” Schmidt said. He said that fast, iterative design processes will be essential to maintaining American leadership, and he said the automobile industry could provide a blueprint for how the defense industry could modernize and improve production. He said the way defense contractors operate now is “completely counter to the way a Silicon Valley company would operate.”

Comprehensive immigration overhaul is key to maintaining global competitiveness. 

Schmidt quipped that he and Smith had been asking Congress for 30 years to ensure that the immigration system encouraged high-skilled immigrations. “We need these people because they’re creators of our products,” Schmidt said. 

Smith called for Congress to make it easier for highly skilled visa holders to change jobs, and to take steps to clear the green-card backlog and provide a more stable path moving forward. He also called for a path to citizenship for “Dreamers,” or people who were brought to the United States as children without the proper documentation. (Microsoft successfully challenged the Trump administration's efforts to dismantle key protections for these immigrants). 

The government contracting process needs to be streamlined. 

Smith called on Congress to review the process through which other companies can protest government contracting decisions. Microsoft is embroiled in a years-long legal battles over the multi-billion dollar Joint Enterprise Defense Infrastructure cloud contract, and Smith warned the lengthy processes don't keep up with the pace of innovation. 

“We all want to ensure fairness,” Smith said. “And that includes a fair right to be heard. But we could definitely benefit from an accelerated timeline to do so.” 

Our top tabs

California's first-in-the-nation net neutrality law will take effect following a federal judge's ruling. 

The decision is a blow to broadband providers that sought to block the law and could open the door to additional states passing similar protections, Tony Romm reports. California enacted its law to treat Web traffic equally after the U.S. government under President Donald Trump eliminated net neutrality protections.

Jessica Rosenworcel, the new acting Democratic chairwoman of the FCC, praised the decision in a tweet:

The four trade groups that had filed the lawsuit — the American Cable Association, CTIA, the National Cable and Telecommunications Association and USTelecom said they would review the court's decision, potentially setting the stage for an appeal. 

“A state-by-state approach to Internet regulation will confuse consumers and deter innovation, just as the importance of broadband for all has never been more apparent,” they said in a joint statement. “We agree with the Court that a piecemeal approach is untenable and that Congress should codify rules for an open Internet.”

Researchers say QAnon spread on YouTube despite a company crackdown.

YouTube channels with QAnon posts racked up 900 million views in 2020, up 38 percent from 2019, according to a report by Pendulum, a company that tracks misinformation in online videos. The videos continued to gain widespread traction even after YouTube announced two years ago that it would reduce the distribution of conspiracy theories and other “borderline” content in an attempt to quell misinformation, Daisuke Wakabayashi reports for the New York Times

In October, YouTube directly cracked down on QAnon channels and content. But according to Pendulum, alternative platforms such as BitChute and Rumble saw a boost in views to QAnon-linked channels, with views surging after the Jan. 6 insurrection at the Capitol.

The report comes as YouTube, which is owned by Google parent Alphabet, and other tech companies face questions in Washington about their role in radicalizing Internet users. Congress plans to grill Google CEO Sundar Pichai and the leaders of Facebook and Twitter next month.

YouTube pushed back on the report, telling the Times that Pendulum's sample was not comprehensive and did not accurately reflect what was watched on YouTube.

“While we welcome more peer-reviewed research, our data contradicts Pendulum’s findings, and just over the past months alone, we have terminated many prominent QAnon channels and removed thousands of videos for violating our policies,” Farshad Shadloo, a YouTube spokesman, said in a statement to the Times. 

Republican donor Rebekah Mercer is trying to resurrect Parler.

Mercer, a founding Parler investor, increasingly is pulling the strings at the social network that has positioned itself as the conservative alternative to Twitter, Rachel Lerman reports. Mercer’s rising involvement in the company comes as it struggles to faces scrutiny from members of Congress, who are investigating its policies and role in the Jan. 6 insurrection at the Capitol.

As of early this month, Mercer, who invested in data company Cambridge Analytica and right-wing news site Breitbart, controlled two of three board seats at the company. Mercer backs the company’s current CEO, former Tea Party Patriots leader Mark Meckler, and ousted his predecessor, John Matze, who co-founded the site. 

Parler executives and Mercer did not respond to requests for comment.

Inside the industry

Competition watch

Tim Cook pushed back on antitrust scrutiny of Apple's App Store. 

The Apple CEO blasted the allegations that the company has an anti-competitive market dominance, saying they “fall apart after a reasonable examination of the facts,” Bloomberg News’s Mark Gurman reports. Congress and regulators around the world have scrutinized Apple's impact on competition, and several other tech companies, including Epic Games, have brought antitrust lawsuits against the smartphone giant.  

“Apple doesn’t have a dominant position in any market we compete in, not in any product category, not in any service category, and not in software or apps, Cook said. “This competitive marketplace pushes all of us to be better. 

Cook's comments came at the company's annual shareholder meeting, where he fielded questions on topics ranging from environmental goals to the company's supply chain. Cook said the company is on track to meet its environmental commitments, including becoming carbon neutral by 2030. He also said the company bought almost 100 smaller businesses over the past six years, making a deal about every three to four weeks.

French regulators blasted Google.

Investigators said the tech giant didn't comply with orders from France's competition authority on how to negotiate with news publishers, Reuters reports. Investigators wrote in the 93-page report that the company — which according to the investigators did not comply with requests to begin negotiating with publishers within three months and provide them with enough data — was extremely serious.

French regulators’ record penalty for a tech company stands at $1.34 billion against Apple for anti-competitive behavior. It can impose fines of up to 10 percent of a company’s sales.

 “Our priority is to comply with the law, and to continue to negotiate with publishers in good faith, as evidenced by the agreements we have made with publishers in the past few months,” the company said. “We will now review the statement of objections, and will work closely with the French competition authority.” A spokeswoman for the competition authority declined to comment.

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Mentions

  • Amazon executive Jeff Blackburn is leaving the company after taking a sabbatical.

Daybook

  • Ranking Digital Rights launches its 2020 Corporate Accountability Index at a New America event today at 11 a.m.
  • Sen. Todd C. Young (R-Ind.) and Rep. Suzan DelBene (D-Wash.) speak at an event on augmented and virtual reality hosted by the Bipartisan Policy Center today at 2 p.m.
  • FCC commissioner Nathan Simington speaks at an event hosted by the Lincoln Network on Thursday at 11 a.m.
  • Airbnb and DoorDash hold investor calls to discuss their fourth-quarter earnings at 5 p.m.
  • The Center for Strategic and International Studies hosts an event on quantum computing on March 3 at 1 p.m.

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