Data Sheet—The Backlash Against Tech ‘Triumphalism’ in China

The U.S.-China trade war has rekindled the old debate about whether China is capable of genuine technological innovation. This time around, though, some of the most strident skeptics of China’s achievements are Chinese.

An early sign of the turnabout came in April, after the Trump administration slapped a ban on U.S. sales to ZTE, China’s second-largest telecommunications manufacturer. To many in China, the ban was a kind of “Sputnik moment” because it revealed that one of China’s proudest tech leaders was almost entirely dependent on American microchips.

In the wake of the ZTE ban, President Xi urged the nation to “abandon illusions and rely on ourselves” for breakthroughs in science and tech. But it was unclear which “illusions” he meant. Was he reproaching those who imagined that China no longer needs foreign technology? Or was he just warning that China could no longer count on buying that technology from overseas?

Xi himself has drawn criticism for China’s technological failures in recent weeks following an viral post on WeChat that stoked public anxieties about a vaccine recall by one of China’s largest drug companies. The post alleged deliberate falsification of health data by a web of unscrupulous executives, scientists and regulators. The government launched a high-profile investigation—and clamped down on online discussion. But the incident sparked nationwide outrage that, for all China’s vaunted advances in science, its citizens live in constant fear of fake vaccines, fake baby formula, toxic food, and foul air and water.

Such outrage helped fuel a vehement attack in social media this month against Hu Angang, director of the center for China Studies at prestigious Tsinghua University and author of China in 2020: A New Type of Superpower. Hu’s critics have denounced him as a “triumphalist” who exaggerates the nation’s economic and technological prowess. Meanwhile, Jack Ma’s South China Morning Post this week published an essay by Zhang Jun, dean of the school of economics in Fudan University, arguing that in sectors like semiconductors, pharmaceuticals, and automobile manufacturing, China is “nowhere near the technological frontier,” and more than 20 years behind South Korea and Japan when it comes to getting results from investments in research and development.

Not everyone has been swept up in the triumphalist backlash. Baidu CEO Robin Li took a moment to taunt Google on his social media account following reports that the U.S. search giant is eying a return to China. Baidu was already trouncing Google in 2010, Li noted, and will be even harder to beat now. We’ll “win again,” he crowed. Robin to Sundar: come at me bro’!

NEWSWORTHY

Keeping it real. In one of his most shocking moves to date, Tesla CEO Elon Musk tweeted Tuesday afternoon that he planned to take the electric car company private at $420 a share. In a subsequent letter to employees, Musk said a final decision on going private has not been made but complained about "wild swings in our stock price that can be a major distraction." Speaking of wild swings, Tesla shares jumped 11% to almost $380. That price reflects some skepticism about the deal on Wall Street. Or as veteran analyst Toni Sacconaghi put it in his headline: “Tesla: Going private? Who knows...does Elon?” Financial Times equities reporter Bryce Elder was a bit more blunt: "It's complete batshit nonsense."

No pressure. YouTube, Facebook, Spotify, and Apple may all have banned content produced by false conspiracy theory spreader Alex Jones but that hasn't swayed Twitter, at least not yet, according to CEO Jack Dorsey. In a series of tweets on Tuesday, Dorsey explained Jones "hasn’t violated our rules” but Twitter will “enforce if he does.”

A lot of pressure. Some reporters who got to try super-hyped startup Magic Leap's first augmented reality product mostly came away impressed but wary (though that may be because expectations were so high). Wall Street Journal reviewer Joanna Stern found the 3D images projected by Magic Leap's goggles to be "so real that they play tricks on your mind" but found the "technically impressive demos to be little more than a novelty." CNBC's Todd Haselton offered more praise: "It's definitely offering a glimpse of the future."

Learning to share. Keith Block, vice chairman and president of cloud software giant Salesforce, was promoted to co-CEO alongside Marc Benioff, Fortune reports. The two men both started working at Oracle in 1986 "so we have known each other forever," Benioff said.

One of these things is not like the other. Congress asked and Apple answered. In a concise five-page letter, CEO Tim Cook spelled out the information Apple and third parties can collect from iPhone users. Apple doesn't keep location tracking data associated with customers and doesn't use location data for ad targeting "unlike other companies," Cook wrote. Meanwhile, Motherboard details the state and local-level lobbying battles over bills to restrict data collection by Internet service providers. In the face of strong telco opposition, not one of 70 has yet passed.

Less chatty. Teen-preferred messaging app Snap reported second quarter revenue rose 44% to $262 million, slightly better than Wall Street expected. But daily active users increased only 8% to 188 million (and down 2% from the first quarter). The company also sold a 2% stake to Prince Al-Waleed Talal at a discount of about 36% to its market value. Snap's stock price, previously down 10% this year, was up 2% in premarket trading on Wednesday.

Squashed. Chinese news and video service Bytedance is looking to go public next year instead of raising more private funding, after a government regulator's criticism of alleged "vulgar" content scared off investors. The startup, last valued at $20 billion, is one of the few major Internet companies in China not backed by either Alibaba or Tencent.

Undo. No, Alex Jones does not have a brother named Akex. You may have noticed a slight typo in the subject line of yesterday's newsletter. Our apologies.

FOOD FOR THOUGHT

West Virginia wants to help its overseas military voters participate in elections, but its chosen technology platform has come in for some criticism. Timothy Lee for Ars Technica rounds up the weaknesses in the smartphone voting system created by startup Voatz that will be available to use instead of traditional absentee ballots. The system relies on encryption and a database ledger sort of like bitcoin's blockchain. That may not be secure enough, Lee notes:

Even if the cryptography itself is perfectly secure and anonymous, the problem is that the system is only as secure as each voter's cryptographic credentials. And a hacker is likely to be able to steal the voter's credentials by compromising either the voter's smartphone or the server the state uses to distribute the credentials in the first place.

And this is far from a theoretical problem. Back in 2010, a group of computer security researchers from the University of Michigan succeeded in hacking into a demonstration online voting system run by Washington, DC. Because the researchers were legitimate researchers, not a foreign intelligence agency, they merely reprogrammed the site to play the University of Michigan fight song. But if the system were used for a genuine election, foreign governments might have been able to use the same vulnerabilities to silently tamper with election results.

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BEFORE YOU GO

If you're going to be out of the big cities this weekend, look to the heavens. The annual Perseid meteor shower hits from August 10–13, and scientists say it will be the brightest display in many years, thanks in part to an almost-dark moon cycle. Space.com has advice on where and when to look.

This edition of Data Sheet was curated by Aaron Pressman. Find past issues, and sign up for other Fortune newsletters.