technology

Tax-Free Status of Movie, Music and Games Traded Online Is on Table as WTO Nations Meet in Abu Dhabi

Geneva — Since late last century and the early days of the web, providers of digital media like Netflix and Spotify have had a free pass when it comes to international taxes on films, video games and music that are shipped across borders through the internet.

But now, a global consensus on the issue may be starting to crack.

As the World Trade Organization opens its latest biannual meeting of government ministers Monday, its longtime moratorium on duties on e-commerce products — which has been renewed almost automatically since 1998 — is coming under pressure as never before.

This week in Abu Dhabi, the WTO’s 164 member countries will take up a number of key issues: Subsidies that encourage overfishing. Reforms to make agricultural markets fairer and more eco-friendly. And efforts to revive the Geneva-based trade body’s system of resolving disputes among countries.

All of those are tall orders, but the moratorium on e-commerce duties is perhaps the matter most in play. It centers on “electronic transmissions” — music, movies, video games and the like — more than on physical goods. But the rulebook isn’t clear on the entire array of products affected.

“This is so important to millions of businesses, especially small- and medium-sized businesses,” WTO Director-General Ngozi Okonjo-Iweala said. “Some members believe that this should be extended and made permanent. Others believe … there are reasons why it should not.” 

“That’s why there’s been a debate and hopefully — because it touches on lives of many people — we hope that ministers would be able to make the appropriate decision,” she told reporters recently.

Under WTO’s rules, major decisions require consensus. The e-commerce moratorium can’t just sail through automatically. Countries must actively vote in favor for the extension to take effect.

Four proposals are on the table: Two would extend the suspension of duties. Two — separately presented by South Africa and India, two countries that have been pushing their interests hard at the WTO — would not.

Proponents say the moratorium benefits consumers by helping keep costs down and promotes the wider rollout of digital services in countries both rich and poor.

Critics say it deprives debt-burdened governments in developing countries of tax revenue, though there’s debate over just how much state coffers would stand to gain.

The WTO itself says that on average, the potential loss would be less than one-third of 1% of total government revenue.

The stakes are high. A WTO report published in December said the value of “digitally delivered services” exports grew by more than 8% from 2005 to 2022 — higher than goods exports (5.6%) and other-services exports (4.2%).

Growth has been uneven, though. Most developing countries don’t have digital networks as extensive as those in the rich world. Those countries see less need to extend the moratorium — and might reap needed tax revenue if it ends.

South Africa’s proposal, which seeks to end the moratorium, calls for the creation of a fund to receive voluntary contributions to bridge the “digital divide.” It also wants to require “leading platforms” to boost the promotion of “historically disadvantaged” small- and medium-sized enterprises.

Industry, at least in the United States, is pushing hard to extend the moratorium. In a Feb. 13 letter to Biden administration officials, nearly two dozen industry groups, including the Motion Picture Association, the U.S. Chamber of Commerce and the Entertainment Software Association — a video-game industry group — urged the United States to give its “full support” to a renewal.

“Accepting anything short of a multilateral extension of the moratorium that applies to all WTO members would open the door to the introduction of new customs duties and related cross-border restrictions that would hurt U.S. workers in industries across the entire economy,” the letter said.

A collapse would deal a “major blow to the credibility and durability” of the WTO and would mark the first time that its members “changed the rules to make it substantially harder to conduct trade,” wrote the groups, which said their members include companies that combined employ over 100 million workers. 

Productivity Surge Helps Explain US Economy’s Surprising Resilience 

Washington — Trying to keep up with customer demand, Batesville Tool & Die began seeking 70 people to hire last year. It wasn’t easy. Attracting factory workers to a community of 7,300 in the Indiana countryside was a tough sell, especially having to compete with big-name manufacturers nearby like Honda and Cummins Engine. 

Job seekers were scarce. 

“You could count on one hand how many people in the town were unemployed,” said Jody Fledderman, the CEO. “It was just crazy.” 

Batesville Tool & Die managed to fill just 40 of its vacancies. 

Enter the robots. The company invested in machines that could mimic human workers and in vision systems, which helped its robots “see” what they were doing. 

The Batesville experience has been replicated countlessly across the United States the past couple of years. Worker shortages have led many companies to invest in machines. They’ve also been training the workers they do have to use advanced technology so they can produce more with less. 

The result has been an unexpected productivity boom, which helps explain a great economic mystery: How has the world’s largest economy stayed so healthy, with brisk growth and low unemployment, despite brutally high interest rates that are intended to tame inflation but that typically cause a recession? 

To economists, strong productivity growth provides an almost magical elixir. When companies roll out more efficient technology, their workers can become more productive: They increase their output per hour. A result is that companies can often boost profits and raise pay without having to jack up prices. Inflation can remain in check. 

The Fed’s aggressive streak of rate hikes — 11 of them starting in March 2022 — managed to bring inflation from a four-decade high of 9.1% to 3.1%. But, to the surprise to the economists who’d forecast a recession, the higher borrowing costs have caused little economic hardship. 

Perhaps the likeliest explanation is the greater efficiencies that companies like Batesville Tool & Die have managed to achieve. Before productivity began its resurgent growth last year, a rule of thumb was that average hourly pay could rise no more than 3.5% annually for inflation to stay within the Fed’s 2% target. That would mean that today’s roughly 4% average annual pay growth would have to shrink. Higher productivity means there’s now more leeway for wage growth to stay elevated without igniting inflation. 

The productivity boom marks a shift from the pre-pandemic years, when annual productivity growth averaged a tepid 1.5%. Everything changed as the economy rocketed out of the 2020 pandemic recession with unexpected vigor, and businesses struggled to re-hire the many workers they had shed. 

The resulting worker shortage sent wages surging. Inflation jumped, too, as factories and ports buckled under the strain of rising consumer orders. 

Desperate, many companies turned to automation. The efficiency payoff began to arrive almost a year ago. Labor productivity rose at a 3.6% annual pace from last April through June, 4.9% from July through September and 3.2% from October through December. 

At Reata Engineering & Machine Works, “efficiency was kind of forced on us,” CEO Grady Cope said. With the job market roaring, the company, based in Englewood, Colorado, couldn’t hire fast enough. Meantime, its customers were starting to balk at paying higher prices. 

So Reata installed robots and other technology. Software allowed it to automate the delivery of price quotes to customers. That process used to require two weeks. Now, it can be done in 24 hours. 

Many economists and business people say they’re hopeful that the productivity boom can continue. Artificial intelligence, they note, is only beginning to penetrate factory floors, warehouses, stores and offices and could accelerate efficiency gains. 

Automation raises fears that machines will replace human workers, killing jobs. Some workers supplanted by robots do often struggle to find new work and end up settling for lower pay. 

Yet history suggests that in the long run, technological improvements actually create more jobs than they destroy. People are needed to build, upgrade, repair and operate sophisticated machines. Some displaced workers are trained to shift into such jobs. And that transition is likely to be eased this time by the retirement of the vast baby boom generation, which is causing labor shortages. 

Some of today’s productivity gains may be coming not just from advanced technology but also from more satisfied workers. The tight labor markets of the past three years allowed Americans to change jobs and find others that pay better and make them happier and more productive. 

Justin Thompson, of Kalamazoo, Michigan, felt burned out by his job as a police officer, with its 16-hour workdays .”I was literally running myself into the ground,” he said. 

Thompson’s wife saw a job posting for operations manager at a charter airline. Even without airline experience, his wife felt he could use skills he gains as a Marine Corps infantryman — handling logistics for missions — during tours in Iraq and Afghanistan. 

She was right. Omni Air International hired him in 2019. 

Thompson, 43, loves the new job, which allows him to work from home when he’s not traveling. And his Marine experience — which included developing ways to improve efficiency — has proved invaluable. 

Other workers have switched from low-skill jobs to those that allow them to be more productive. 

At Reata Engineering, staffers were trained to use new sophisticated equipment. 

“The whole point is not to lay people off,” said Cope, the CEO of Reata Engineering. “The point is to make people do jobs that are more interesting” — and pay better, too. 

Chip Giant TSMC Shifts From Hotspot Taiwan With Japan Plant

TOKYO — Chip giant Taiwan Semiconductor Manufacturing Co. opened its first semiconductor plant in Japan Saturday as part of its ongoing global expansion.

“We are deeply grateful for the seamless support provided by you at every step,” TSMC Chairman Mark Liu said after thanking the Japanese government, local community and business partners, including electronic giant Sony and auto-parts maker Denso. The company’s founder, Morris Chang, was also present at the ceremony in Kikuyo.

This comes as Japan is trying to regain its presence in the chip production industry.

Japan Advanced Semiconductor Manufacturing, or JASM, is set to be up and running later this year. TSMC also announced plans for a second plant in Japan earlier this month, with production expected to start in about three years. Private sector investment totals $20 billion for both plants. Both plants are in the Kumamoto region, southwestern Japan.

Prime Minister Fumio Kishida sent a congratulatory video message, calling the plant’s opening “a giant first step.” He stressed Japan’s friendly relations with Taiwan and the importance of cutting-edge semiconductor technology.

Japan had previously promised TSMC 476 billion yen ($3 billion) in government funding to encourage the semiconductor giant to invest. Kishida confirmed a second package, raising Japan’s support to more than 1 trillion yen ($7 billion).

Although TSMC is building its second plant in the U.S. and has announced a plan for its first in Europe, Japan could prove an attractive option.

Closer to Taiwan geographically, Japan is an important U.S. ally. Neighboring China claims the self-governing island as its own territory and says it must come under Beijing’s control. The long-running divide is a flashpoint in U.S.-China relations.

The move is also important for Japan, which has recently earmarked about 5 trillion yen ($33 billion) to revive its chips industry.

Four decades ago, Japan dominated in chips, headlined by Toshiba Corp. and NEC controlling half the world’s production. That’s declined lately to under 10%, due to competition from South Korean, U.S. and European manufacturers, as well as from TSMC.

The coronavirus pandemic negatively affected the supply of electronic chips, stalling plants, including automakers, with Japan almost entirely dependent on chip imports. This pushed Japan to seek chip production in pursuit of self-sufficiency.

Sony Semiconductor Solutions Corporation, Denso Corporation and top automaker Toyota Motor Corporation are investing in TSMC’s Japan plant, with the Taiwanese giant retaining an 86.5% ownership of JASM.

Once the two plants are up and running, they’re expected to create 3,400 high-tech jobs directly, according to TSMC.

Ensuring access to an ample supply of the most advanced chips is vital with the growing popularity of electric vehicles and artificial intelligence. Some analysts note Japan still leads in crucial aspects of the industry, as seen in Tokyo Electron, which manufactures the machinery used to produce chips.

Still, it’s clear the Japanese government is intent on playing catchup. Tokyo is supporting various semiconductor projects nationwide, such as those involving Western Digital and Micron of the U.S., and Japanese companies such as Renesas Electronics, Canon and Sumitomo.

Head of Boeing’s 737 MAX Program Leaves After Midair Incident

WASHINGTON — Boeing said on Wednesday it was replacing the head of its troubled 737 MAX program effective immediately, the first major executive departure since the January 5 midair panel blowout of a new Alaska Airlines MAX 9. 

Ed Clark, who had been with the plane-maker for nearly 18 years, departed as Boeing has been dealing with its latest crisis and has vowed to ramp up quality efforts. 

Regulators have curbed the plane-maker’s production, and lawmakers and customers have been scrutinizing production and safety measures.  

Boeing has scrambled to explain and strengthen safety procedures after a door panel detached during flight on a new Alaska Airlines 737 MAX 9, forcing pilots to make an emergency landing while passengers were exposed to a gaping hole 16,000 feet above the ground.  

Clark’s departure came after Boeing’s board met this week and approved the changes, according to sources familiar with the matter. He oversaw the company’s production facility in Renton, Washington, where the plane involved in the accident was completed. 

Clark was previously chief mechanic and engineer for the 737 before being named head of the program in 2021. He was the fifth person in four years to run the 737 program. 

Katie Ringgold is replacing him as vice president and general manager of the 737 program, according to a memo seen by Reuters sent to staff by Boeing Commercial Airplanes CEO Stan Deal, who said the plane-maker was working to ensure “that every airplane we deliver meets or exceeds all quality and safety requirements. Our customers demand, and deserve, nothing less.” 

The latest mishap occurred as Boeing was still working to rebuild its reputation following the 20-month grounding of the 737 MAX following two fatal crashes that killed a total of 346 people. That grounding was lifted in November 2020.  

Airline industry executives have expressed frustration with Boeing’s quality control. The only other major manufacturer of commercial aircraft is France’s Airbus. 

The memo was first reported by the Seattle Times. 

The FAA grounded the MAX 9 for several weeks in January and has capped Boeing’s production of the MAX while it audits the plane-maker’s manufacturing process, which has suffered a string of quality issues in recent years. 

The door panel that flew off the MAX 9 appeared to be missing four key bolts, according to a preliminary report from the U.S. National Safety Transportation Board in early February. The panel is a plug-in placed on some 737 MAX 9s instead of an additional emergency exit.  

According to the report, the door plug in question was removed to repair rivet damage, but the NTSB has not found evidence the bolts were reinstalled. 

The disclosure has prompted anger among Boeing’s airline customers. Some, including Alaska Airlines, announced they would conduct enhanced quality oversight of planes before they leave the Boeing factory. 

Commercial Spaceship Set for Lunar Touchdown, in Test for US Industry

WASHINGTON — A company from Texas is poised to attempt a feat that until now has only been accomplished by a handful of national space agencies but could soon become commonplace for the private sector: landing on the moon.

If all goes to plan, Houston-based Intuitive Machines will guide its spaceship named Odysseus to a gentle touchdown near the lunar south pole on Thursday at 2249 GMT, then run experiments for NASA that will help pave the way for the return of astronauts later this decade.

A previous effort by another U.S. company last month ended in failure, raising the stakes to demonstrate private industry has what it takes to put an American lander on Earth’s cosmic companion for the first time since the Apollo era.

“Accepting risk was a challenge posed by the United States to the commercial business sector,” Intuitive Machines CEO Steve Altemus said ahead of launch. “Our collective aim is to return to the moon for the first time in 52 years.”

The company plans to run a live stream on its website, with flight controllers expected to confirm landing around 15 seconds after the milestone is achieved, because of the time it takes for radio signals to return.

As it approaches the surface, Odysseus will shoot out an external “EagleCam” that captures images of the lander in the final seconds of its descent.

About the size of a big golf cart, Odysseus is hexagon-shaped and stands on six legs.

It launched on Feb. 15 atop a SpaceX Falcon 9 rocket, and boasts a new type of supercooled liquid oxygen, liquid methane propulsion system that allowed it to race through space in quick time, snapping pictures of our planet along the way.

Its destination, Malapert A, is an impact crater 300 kilometers (180 miles) from the lunar south pole.

NASA hopes to eventually build a long-term presence and harvest ice there for both drinking water and rocket fuel under Artemis, its flagship Moon-to-Mars program.

The U.S. space agency paid Intuitive Machines $118 million to ship science hardware to better understand and mitigate environmental risks for astronauts, the first of whom are scheduled to land no sooner than 2026.

Instruments include cameras to investigate how the lunar surface changes as a result of the engine plume from a spaceship, and a device to analyze clouds of charged dust particles that hang over the surface at twilight as a result of solar radiation.

The rest of the cargo was paid for by Intuitive Machines’ private clients and includes 125 stainless steel mini moons by the artist Jeff Koons.

After touchdown, the experiments are expected to run for roughly seven days before lunar night sets in on the south pole, with the lack of solar power rendering Odysseus inoperable.

Dubbed IM-1, the mission is the second under a NASA initiative called Commercial Lunar Payload Services (CLPS), which it created to delegate cargo services to the private sector to achieve savings and stimulate a wider lunar economy.

Four more CLPS launches are expected this year, which would make 2024 among the busiest ever for moon landings.

The first, by Pittsburgh-based Astrobotic, launched in January, but its Peregrine spacecraft sprung a fuel leak and it was eventually brought back to burn up in Earth’s atmosphere.

Spaceships landing on the moon have to navigate treacherous boulders and craters and, absent an atmosphere to support parachutes, must rely on thrusters to control their descent. Roughly half of the more than 50 attempts have failed.

The Soviet Union was the first country to achieve a survivable landing on a celestial body when its Luna 9 spaceship touched down and transmitted pictures back from the moon in February 1966.

Next came the United States, which is still the only country to also put people on the surface.

In America’s long absence, China has landed three times since 2013. India reached the moon in 2023, and Japan was the latest, last month.

Britain, US, EU, Allies Take Down Lockbit Cybercrime Gang

LONDON — Lockbit, a notorious cybercrime gang that holds its victims’ data for ransom, has been disrupted in a rare international law enforcement operation by Britain’s National Crime Agency, the U.S. Federal Bureau of Investigation, Europol and a coalition of international police agencies, according to a post on the gang’s extortion website on Monday.

“This site is now under the control of the National Crime Agency of the UK, working in close cooperation with the FBI and the international law enforcement task force, ‘Operation Cronos,’” the post said.

An NCA spokesperson confirmed that the agency had disrupted the gang and said the operation was “ongoing and developing.”

A representative for Lockbit did not respond to messages from Reuters seeking comment but did post messages on an encrypted messaging app saying it had backup servers not affected by the law enforcement action.

The U.S. Department of Justice and the FBI did not immediately respond to requests for comment.

The post named other international police organizations from France, Japan, Switzerland, Canada, Australia, Sweden, the Netherlands, Finland and Germany.

Lockbit and its affiliates have hacked some of the world’s largest organizations in recent months. The gang makes money by stealing sensitive data and threatening to leak it if victims fail to pay an extortionate ransom. Its affiliates are like-minded criminal groups that are recruited by the group to wage attacks using Lockbit’s digital extortion tools.

Ransomware is malicious software that encrypts data. Lockbit makes money by coercing its targets into paying ransom to decrypt or unlock that data with a digital key.

Lockbit was discovered in 2020 when its eponymous malicious software was found on Russian-language cybercrime forums, leading some security analysts to believe the gang is based in Russia.

The gang has not professed support for any government, however, and no government has formally attributed it to a nation-state. On its now-defunct dark web site, the group said it was “located in the Netherlands, completely apolitical and only interested in money.”

“They are the Walmart of ransomware groups, they run it like a business — that’s what makes them different,” said Jon DiMaggio, chief security strategist at Analyst1, a U.S.-based cybersecurity firm. “They are arguably the biggest ransomware crew today.”

Officials in the United States, where Lockbit has hit more than 1,700 organizations in nearly every industry from financial services and food to schools, transportation and government departments, have described the group as the world’s top ransomware threat.

In November of last year, Lockbit published internal data from Boeing, one of the world’s largest defense and space contractors. In early 2023, Britain’s Royal Mail faced severe disruption after an attack by the group.

According to vx-underground, a cybersecurity research website, Lockbit said in a statement in Russian and shared on Tox, an encrypted messaging app, that the FBI hit its servers that run on the programming language PHP. The statement, which Reuters could not verify independently, added that it has backup servers without PHP that “are not touched.”

On X, formerly known as Twitter, vx-underground shared screenshots showing the control panel used by Lockbit’s affiliates to launch attacks had been replaced with a message from law enforcement: “We have source code, details of the victims you have attacked, the amount of money extorted, the data stolen, chats, and much, much more,” it said.

“We may be in touch with you very soon” it added. “Have a nice day.”

Before it was taken down, Lockbit’s website displayed an ever-growing gallery of victim organizations that was updated nearly daily. Next to their names were digital clocks that showed the number of days left to the deadline given to each organization to provide ransom payment.

On Monday, Lockbit’s site displayed a similar countdown, but from the law enforcement agencies who hacked the hackers: “Return here for more information at: 11:30 GMT on Tuesday 20th Feb.” the post said.

Don Smith, vice president of Secureworks, an arm of Dell Technologies, said Lockbit was the most prolific and dominant ransomware operator in a highly competitive underground market.

“To put today’s takedown into context, based on leak site data, Lockbit had a 25% share of the ransomware market. Their nearest rival was Blackcat at around 8.5%, and after that it really starts to fragment,” Smith said.

“Lockbit dwarfed all other groups and today’s action is highly significant.”

Media Creators Worry About New AI-Video Tool by Maker of ChatGPT

paris — A new artificial intelligence tool that promises to create short videos from simple text commands has raised concerns along with questions from artists and media professionals. 

OpenAI, the creator of ChatGPT and image generator DALL-E, said Thursday it was testing a text-to-video model called “Sora” that can allow users to create realistic videos with simple prompts. 

The San Francisco-based startup says Sora can “generate complex scenes with multiple characters, specific types of motion, and accurate details of the subject and background,” but admits it still has limitations, such as possibly “mixing up left and right.” 

Here are early reactions from industries that could be affected by the new generative artificial intelligence (AI) tool:   

Examples of Sora-created clips on OpenAI’s website range widely in style and subject, from seemingly real drone footage above a crowded market to an animated bunny-like creature bouncing through a forest. 

Thomas Bellenger, founder and art director of Cutback Productions, has been carefully watching the evolution of generative AI image generation.   

“There were those who felt that it was an unstoppable groundswell that was progressing at an astonishing rate, and those who just didn’t want to see it,” said Bellenger, whose France-based company has created large scale visual effects for such touring musicians as Stromae and Justice. 

He said the development of generative AI has “created a lot of debate internally” at the company and “a lot of sometimes visceral reactions.” 

Bellenger noted that Sora has yet to be released, so its capabilities have yet to be tested by the public. 

“What is certain is that no one expected such a technological leap forward in just a few weeks,” Bellenger said. “It’s unheard of.” 

He said whatever the future holds, they’ll “find ways to create differently.” 

Mixed reaction among creators

Video game creators are equally likely to be impacted by the new invention, with reaction among the sector divided between those open to embracing a new tool and those fearing it might replace them. 

French video game giant Ubisoft hailed the OpenAI announcement as a “quantum leap forward” with the potential to let players and development teams express their imaginations. 

“We’ve been exploring this potential for a long time,” a Ubisoft spokesperson told AFP. 

Alain Puget, chief of Nantes-based studio Alkemi, said he won’t replace any artists with AI tools, which “only reproduce things done by humans.” 

Nevertheless, Puget noted, this “visually impressive” tool could be used by small studios to produce more professionally rendered images. 

While video “cut scenes” that play out occasionally to advance game storylines are different from player-controlled action, Puget expects tools like Sora to eventually be able to replace “the way we do things.”   

‘A terrifying leap’

Basile Simon, a former journalist and current Stanford University researcher, thinks there has been “a terrifying leap forward in the last year” when it comes to generative AI allowing realistic-looking fabrications to be rapidly produced. 

He dreads the idea of how such tools will be abused during elections and fears the public will “no longer know what to believe”. 

Julien Pain of French TV channel France Info’s fact-checking program “Vrai ou Faux” (True or False) says he’s also worried about abuse of AI tools. 

“Until now, it was easy enough to spot fake images, for example by noticing the repetitive faces in the background,” Pain said. “What this new software does seems to be on another level.” 

While OpenAI and U.S. tech titans may promote safety tools, such as industry-wide watermarks that reveal AI-created imagery, “what about tomorrow’s competitors in China and Russia?” he posited. 

The Fred & Farid agency, which has collaborated with the Longchamp and Budweiser brands and where a studio dedicated to AI was opened in early January, anticipates that “80 percent of brand content will be generated by artificial intelligence.” 

“Creative genius” will no longer be limited by production skills thanks to generative AI tools, one enthusiast contended.   

Stephanie Laporte, chief executive and founder of the OTTA advertising and influencer agency, believes the technology will “force the industry to evolve.” 

She also anticipates ad companies with lean budgets will resort to AI tools to save money on workers. 

A possible exception, she believes, is the luxury segment, where brands are “very sensitive to authenticity” and “will probably use AI sparingly.” 

Japan’s New Flagship H3 Rocket Reaches Orbit in Key Test

TOKYO — Japan’s flagship H3 rocket reached orbit and released two small observation satellites in a key second test following a failed debut launch last year, buoying hope for the country in the global space race.

The H3 rocket blasted off from the Tanegashima Space Center on time Saturday morning, two days after its originally scheduled liftoff was delayed by bad weather.

The rocket successfully reached orbit at an altitude of about 670 kilometers (about 420 miles) and released two satellites, said the Japan Aerospace Exploration Agency, or JAXA.

“We feel so relieved to be able to announce the good results,” JAXA President Hiroshi Yamakawa told a news conference.

The H3’s main missions are to secure independent access to space and be competitive as international demand for satellite launches grows. “We made a big first step today toward achieving that goal,” Yamakawa said.

The launch is a boost for Japan’s space program following a recent streak of successes, including a historic precision touchdown on the moon of an unmanned spacecraft last month.

The liftoff was closely watched as a test for Japan’s space development after H3, in its debut flight last March, failed to ignite the second-stage engine. JAXA and its main contractor, Mitsubishi Heavy Industries, have been developing H3 as a successor to its current mainstay, H-2A, which is set to retire after two more flights.

JAXA H3 project manager Masashi Okada called the result “perfect,” saying H3 cleared all missions set for Saturday’s flight. “After a long wait, the newborn H3 finally had its first cry.”

At 57 meters (187 feet) long, the H3 is designed to carry larger payloads than H-2A at much lower costs of about 50 billion yen ($330 million).

US Justice Department Says It Disrupted Russian Intelligence Hacking Network

Washington — The U.S. Justice Department said on Thursday it disrupted a Russian intelligence hacking network.

“For the second time in two months, we’ve disrupted state-sponsored hackers from launching cyber-attacks behind the cover of compromised U.S. routers,” U.S. Deputy Attorney General Lisa Monaco said in a statement.

The Justice Department said that a January 2024 court-authorized operation neutralized the network of hundreds of small office/home office (SOHO) routers controlled by Russian intelligence and used “to conceal and otherwise enable a variety of crimes.”  

“In this case, Russian intelligence services turned to criminal groups to help them target home and office routers, but the Justice Department disabled their scheme,” Attorney General Merrick Garland added.

Garland said the Justice Department was accelerating efforts to disrupt the Russian government’s cyber campaigns against the United States and its partners, including Ukraine.

China’s VPN Usage Nearly Doubles Amid Internet Censorship

WASHINGTON — Last year, VPN usage in China nearly doubled, according to data from IT education news outlet Techopedia, this despite the country’s strict regime of internet controls of everything from overseas websites to online games.

China’s “Great Firewall” is one of the world’s most comprehensive internet censorship regimes, preventing citizens from accessing websites like Instagram, Wikipedia and YouTube, as well most major news organizations including VOA.

VPNs are outlawed in China because they allow users to jump the “Great Firewall” and securely connect to the internet outside the country while blocking their IP address.

Rob Binns, a journalist with Techopedia, said China’s increasingly strict censorship policies may explain the rise in VPN usage there.

“Looking at VPN usage versus what it’s combating, which is online censorship, we are seeing online censorship in a range of countries, particularly China, becoming more strategic and more surgical,” Binns told VOA in an interview. 

In 2021, Chinese regulators limited teenagers’ access to video games to three hours per week — from 8 to 9 p.m. on Fridays, Saturdays and Sundays — before unveiling more severe restrictions last December which set spending limits on video game platforms and banned incentives for daily logins.

Binns said these regulations on minors may particularly motivate Chinese usage of VPNs.

“With that younger demographic, which is traditionally, extremely, highly tech-literate demographic, they’re always going to be looking for ways to kind of circumvent that top-down pressure from governments and find ways to get around that,” Binns said. “And if that means turning to VPNs to circumvent that, then that’s certainly what we’re seeing.”

Analysts say VPNs empower Chinese internet users to discuss major political issues on the internet without facing governmental blowback.

“Circumvention tools like VPNs can enable people in China to access the global internet, including spaces where they can express themselves freely without fear of censorship,” Kian Vesteinsson, a senior research analyst for technology and democracy at the nonprofit Freedom House, which advocates for political freedom, told VOA in an emailed response. “During unprecedented nationwide protests in late 2022, many Chinese people used VPNs to sidestep the Great Firewall and share their views on otherwise-inaccessible social media platforms.”

Vesteinsson said access to a free, open internet potentially threatens the ruling Chinese Communist Party — hence the government’s crackdowns on internet usage.

“Circumvention technology helped produce one of the most open challenges to CCP rule in decades,” Vesteinsson told VOA. “CCP authorities responded to the 2022 protests in part by scrubbing references to VPNs from the Chinese internet.”

“People face severe consequences for using prohibited VPNs, particularly if they belong to a marginalized ethnic or religious minority or try to access content censored by the authorities,” Vesteinsson added. “The government even removes discussion of VPNs from China-based social media platforms, preventing people from learning about circumvention technology.”

Analysts expect further crackdowns could lead either to additional upticks in VPN usage or a reluctance to use VPNs, depending on how China chooses to further enhance its censorship regime.

“The exact nature of the crackdown, as well as accompanying measures are what decides which effects it is likely to have,” Antonia Hmaidi, a senior analyst at the Berlin-based think tank Mercator Institute for China Studies, told VOA in an email. “China has been so successful in managing its internet partly through making the Great Firewall work not only with fear, but also friction and flooding.”

Hmaidi adds that instead of cracking down, China could also slow the speed of all connections outside the country, which would make it more inconvenient to use VPNs, and maintain an approved list of fast connections for companies.

Biden is on TikTok Despite Security Concerns

In an effort to connect to younger voters, the Biden campaign has joined TikTok. But while many users have welcomed the move, security experts and even legislators have expressed disapproval amid long-standing privacy concerns surrounding the use of the Chinese-owned app. VOA’s Veronica Balderas Iglesias has details from Washington. (Produced by: Veronica Balderas Iglesias)

Biden Campaign Joins TikTok, Despite Security Concerns 

washington — President Joe Biden’s reelection campaign Monday defended its new TikTok account as a vital way to boost its appeal with young voters, even as his administration continued to raise security concerns about whether the popular social media app might be sharing user data with China’s communist government.

The campaign’s inaugural post featured the president being quizzed on Sunday’s Super Bowl — and included a reference to the latest political conspiracy theory centering on pop superstar Taylor Swift.

“The president’s TikTok debut last night — with more than 5 million views and counting — is proof positive of both our commitment and success in finding new, innovative ways to reach voters in an evolving, fragmented and increasingly personalized media environment,” Biden reelection deputy campaign manager Rob Flaherty said in a statement.

At the White House, though, national security communications adviser John Kirby said that “there are still national security concerns about the use of TikTok on government devices, and there’s been no change to our policy not to allow that.”

Kirby referred most questions about TikTok to the Biden campaign and ducked a more general query about whether it was wise to use the app at all. He said the potential security issues “have to do with concerns about the preservation of data and potential misuse of that data and privacy information by foreign actors.”

Both the FBI and the Federal Communications Commission have warned that TikTok’s Chinese owner, ByteDance, could share user data — such as browsing history, location and biometric identifiers — with that country’s authoritarian government. Biden in 2022 signed legislation banning the use of TikTok by the federal government’s nearly 4 million employees on devices owned by its agencies, with limited exceptions for law enforcement, national security and security research purposes.

Separately, the secretive and powerful Committee on Foreign Investment in the United States has been reviewing the app for years while trying unsuccessfully to force TikTok ownership to divest from its parent company. The White House said Monday the review was continuing.

With 150 million U.S. users, TikTok is best known for quick snippets of viral dance routines. But Senator Josh Hawley, a Missouri Republican, posted on X that Biden’s campaign is “bragging about using a Chinese spy app even though Biden signed a law banning it on all federal devices.”

The Biden campaign said it had been mulling establishing a TikTok account for months and had ultimately done so at the urging of youth activists and organizations, who argued that the app was key to reaching young voters.

The campaign said it was using a separate cellphone to engage on TikTok to isolate the app from other work streams and communications, including emails. The campaign said it was taking additional steps but declined to name them, citing security concerns.

White House press secretary Karine Jean-Pierre said she wasn’t in contact with the campaign and had no advance warning that its TikTok account was going live.

Oversight Board Urges Meta to Rethink Policy on Manipulated Media

NEW YORK — An oversight board is criticizing Facebook owner Meta’s policies regarding manipulated media as “incoherent” and insufficient to address the flood of online disinformation that already has begun to target elections across the globe this year. 

The quasi-independent board on Monday said its review of an altered video of President Joe Biden that spread on Facebook exposed gaps in the policy. The board said Meta should expand the policy to focus not only on videos generated with artificial intelligence, but on media regardless of how it was created. That includes fake audio recordings, which already have convincingly impersonated political candidates in the U.S. and elsewhere. 

It also said Meta should clarify the harm it is trying to prevent and should label images, videos and audio clips as manipulated instead of removing the posts altogether. 

The board’s feedback reflects the intense scrutiny that is facing many tech companies for their handling of election falsehoods in a year when voters in more than 50 countries will go to the polls. As both generative artificial intelligence deepfakes and lower-quality “cheap fakes” on social media threaten to mislead voters, the platforms are trying to catch up and respond to false posts while protecting users’ rights to free speech. 

“As it stands, the policy makes little sense,” oversight board co-chair Michael McConnell said of Meta’s policy in a statement on Monday. He said the company should close gaps in the policy while ensuring political speech is “unwaveringly protected.” 

Meta said it is reviewing the oversight board’s guidance and will respond publicly to the recommendations within 60 days. 

Spokesperson Corey Chambliss said while audio deepfakes aren’t mentioned in the company’s manipulated media policy, they are eligible to be fact-checked and will be labeled or down-ranked if fact-checkers rate them as false or altered. The company also takes action against any type of content if it violates Facebook’s Community Standards, he said. 

Facebook, which turned 20 this week, remains the most popular social media site for Americans to get their news, according to Pew. But other social media sites, among them Meta’s Instagram, WhatsApp and Threads, as well as X, YouTube and TikTok, also are potential hubs where deceptive media can spread and fool voters. 

Meta created its oversight board in 2020 to serve as a referee for content on its platforms. Its current recommendations come after it reviewed an altered clip of Biden and his adult granddaughter that was misleading but didn’t violate the company’s policies because it didn’t misrepresent anything he said. 

The original footage showed Biden placing an “I Voted” sticker high on his granddaughter’s chest, at her instruction, then kissing her on the cheek. The version that appeared on Facebook was altered to remove the important context, making it seem as if he touched her inappropriately. 

The board’s ruling on Monday upheld Meta’s 2023 decision to leave the seven-second clip up on Facebook, since it didn’t violate the company’s existing manipulated media policy. Meta’s current policy says it will remove videos created using artificial intelligence tools that misrepresent someone’s speech. 

“Since the video in this post was not altered using AI and it shows President Biden doing something he did not do (not something he didn’t say), it does not violate the existing policy,” the ruling read. 

The board advised the company to update the policy and label similar videos as manipulated in the future. It argued that to protect users’ rights to freedom of expression, Meta should label content as manipulated rather than removing it from the platform if it doesn’t violate any other policies. 

The board also noted that some forms of manipulated media are made for humor, parody or satire and should be protected. Instead of focusing on how a distorted image, video or audio clip was created, the company’s policy should focus on the harm manipulated posts can cause, such as disrupting the election process, the ruling said. 

Meta said on its website that it welcomes the Oversight Board’s ruling on the Biden post and will update the post after reviewing the board’s recommendations. 

Meta is required to heed the oversight board’s rulings on specific content decisions, though it’s under no obligation to follow the board’s broader recommendations. Still, the board has gotten the company to make some changes over the years, including making messages to users who violate its policies more specific to explain to them what they did wrong. 

Jen Golbeck, a professor in the University of Maryland’s College of Information Studies, said Meta is big enough to be a leader in labeling manipulated content, but follow-through is just as important as changing policy. 

“Will they implement those changes and then enforce them in the face of political pressure from the people who want to do bad things? That’s the real question,” she said. “If they do make those changes and don’t enforce them, it kind of further contributes to this destruction of trust that comes with misinformation.” 

Deepfake Scam Video Cost Company $26 Million, Hong Kong Police Says

Hong Kong — Scammers tricked a multinational firm out of some $26 million by impersonating senior executives using deepfake technology, Hong Kong police said Sunday, in one of the first cases of its kind in the city.

Law enforcement agencies are scrambling to keep up with generative artificial intelligence, which experts say holds potential for disinformation and misuse — such as deepfake images showing people mouthing things they never said.

A company employee in the Chinese finance hub received “video conference calls from someone posing as senior officers of the company requesting to transfer money to designated bank accounts,” police told AFP.

Police received a report of the incident on January 29, at which point some HK$200 million ($26 million) had already been lost via 15 transfers.

“Investigations are still ongoing and no arrest has been made so far,” police said, without disclosing the company’s name.

The victim was working in the finance department, and the scammers pretended to be the firm’s U.K.-based chief financial officer, according to Hong Kong media reports.

Acting Senior Superintendent Baron Chan said the video conference call involved multiple participants, but all except the victim were impersonated.

“Scammers found publicly available video and audio of the impersonation targets via YouTube, then used deepfake technology to emulate their voices… to lure the victim to follow their instructions,” Chan told reporters.

The deepfake videos were pre-recorded and did not involve dialogue or interaction with the victim, he added.