Wednesday, October 23, 2019

Data Sheet: Facebook's raising China fears

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October 23, 2019

Good morning from Hong Kong.


Facebook CEO Mark Zuckerberg will play the China card (again) on Capitol Hill today in an effort to galvanize political support for Libra, the ambitious Facebook-led plan to create a global cryptocurrency.


The Facebook founder will open by arguing that if U.S. lawmakers thwart Libra, tech companies in other nations, particularly China, will seize the opportunity. “While we debate these issues, the rest of the world isn’t waiting,” Zuckerberg will warn the committee, according to a prepared text of Zuckerberg’s remarks. “China is moving quickly to launch similar ideas in the coming months. Libra will be backed mostly by dollars and I believe it will extend America’s financial leadership as well as our democratic values and oversight around the world.”


China is a potent bogeyman in Washington these days. But so far, regulators and lawmakers seem more spooked by Libra.


President Trump, Federal Reserve Chairman Jerome Powell, and Rep. Maxine Waters, the Democratic chairwoman of the House Financial Services Committee, have all decried the proposal. In recent weeks, as criticism mounted, a host of high-profile partners, including Visa, MasterCard, and PayPal, have bailed out of the project.


David Marcus, the Facebook executive leading the company’s Libra initiative, has already sounded the China alarm in Washington. “The future in five years, if we don’t have good answers, is basically China re-wiring” a large part of the world “with a digital reminbi running on their controlled blockchain,” he told Bloomberg Television. Marcus conjured the specter of “having a whole part of the world completely blocked from U.S. sanctions and protected from U.S. sanctions and having a new digital reserve currency with no alternative.”


The “if Libra loses, China wins” premise is undercut by the fact that Zuckerberg himself has sought so assiduously to curry China’s favor over the years.


Meanwhile, details of China’s digital currency plan remain shrouded in mystery. The People’s Bank of China started a cryptocurrency research group as far back as 2014. Lately, it looks like existing Chinese payment apps such as AliPay and WeChatPay could serve as the main conduits, RBC Capital Markets analysts Mark Mahaney and Zachary Schwartzman speculate in a recent report. A digital currency run by China’s central bank “may be strategically positioned to become the de-facto global digital currency in emerging economies," they note.


Fortune colleague Jen Wieczner says it’s a valid fear. Her verdict: “If American regulators are really playing the long game with China and the global innovation race, perhaps they shouldn't dismiss Libra so quickly.”


Clay Chandler


On Twitter: @claychandler


Email: clay.chandler@fortune.com


This edition of Data Sheet was curated by Aaron Pressman.


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NEWSWORTHY


I wish I was joking. "You've got to be kidding me." No, sorry anonymous We Co. employee quoted by Bloomberg, none of this is a joke. The company formerly known as WeWork on Tuesday agreed to a bailout package from SoftBank that includes buying out much of former CEO Adam Neumann's stake in the company. Ahead of massive layoffs at the company, Neumann may exit with another $1.2 billion.


The end of the beginning. A month after its research leaked, Google made it official on Wednesday and declared that it had achieved "quantum supremacy." In a paper published in Nature, Google said its quantum computer has performed calculations no ordinary computer can complete. CEO Sundar Pichai called the event "the 'hello world' moment we've been waiting for."


I'm a very manly muppet. Just a tiny fraction of the Starlink satellite constellation planned by SpaceX to provide global Internet coverage from space has been launched so far. But SpaceX CEO Elon Musk knows a good opportunity for publicity when he sees it. "Sending this tweet through space via Starlink satellite," Musk tweeted on Tuesday. SpaceX also said on Tuesday that it will start offering service to consumers by the middle of next year.


On the shoulders of giants. In the streaming TV wars, Disney's incipient Disney+ offering got a boost on Tuesday, striking a deal with Verizon. The carrier's unlimited wireless subscribers and some home Internet customers will get "free" Disney+ accounts (with Verizon picking up the tab, obviously). That gives the brand new service an estimated 17+ million potential customers from the get go, analysts at UBS estimated. In another segment of the streaming wars, Roku put its highly valued stock (plus some cash) to work and acquired digital ad platform Dataxu for $150 million.


Musical chairs, Fortune 500 edition. Former eBay CEO and longtime Nike board member John Donahoe will mash up those two titles and become the surprise next CEO of Nike in 2020. Current Nike CEO Mark Parker shuffles over to become executive chairman. Donahoe had been serving as CEO of ServiceNow. It named former SAP CEO Bill McDermott to replace him. Got it?


Did you watch my story? On Wall Street, Snap reported reaching 210 million daily active users, up 13% on the year. Its stock price, already up 154% on the year, gained another 2% in premarket trading on Wednesday. Lyft said it expects to be profitable on an adjusted basis by the end of 2021, which sent its stock up 7%. Now it's only down 40% from its March IPO price.


FOOD FOR THOUGHT


Reducing human bias is among the popular use cases cited for artificial intelligence apps in the realm of hiring. But popular employer applicant A.I. assessment tool HireVue is under fire for possibly bringing more bias into the process. Washington Post reporter Drew Harwell reviews the criticism of HireVue, which is already in use at companies including Hilton, Unilever and Goldman Sachs.


"It's a profoundly disturbing development that we have proprietary technology that claims to differentiate between a productive worker and a worker who isn't fit, based on their facial movements, their tone of voice, their mannerisms," said Meredith Whittaker, a co-founder of the AI Now Institute, a research center in New York. "It's pseudoscience. It's a license to discriminate," she added...


Loren Larsen, HireVue's chief technology officer, said that such criticism is uninformed and that "most AI researchers have a limited understanding" of the psychology behind how workers think and behave. Larsen compared algorithms' ability to boost hiring outcomes with medicine's improvement of health outcomes and said the science backed him up.


IN CASE YOU MISSED IT


Tesla Chair Robyn Denholm on Musk: 'I Don't Expect Normalcy in That Environment' By Erika Fry


Apple Pay Tops the Mobile Pay Market For the First Time By Aaron Pressman


In the Midst of a Trade War, One Tech CEO Has a Message: Stay Agile By Anne Sraders


Cloudflare Co-Founder Michelle Zatlyn: 'Somebody Should' Decide What to Delete Online By Alyssa Newcomb


Online Anonymity Is Increasingly Under Threat in Europe By David Meyer


China's Silicon Valley Is No Longer Its 'Best-Performing' City By Eamon Barrett


U.S. CTO: How America Achieved 'Quantum Supremacy' By Michael Kratsios



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BEFORE YOU GO


After a four month, $450 million expansion project, the Museum of Modern Art, or MoMA, reopened in New York City this week. The reviews are super-positive and we should all make an effort to stop by. But there's another fascinating museum exhibition opening in the city this week, not at MoMA but at MoMath, the National Museum of Mathematics on East 26th Street. The exhibit focuses on the mathematical aspects of origami and the art looks simply amazing . I may have to check out MoMath before I revisit MoMA.


Aaron Pressman


On Twitter:@ampressman


Email: aaron.pressman@fortune.com


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