Eric Schmidt, Pentagon AI whisperer

Are the U.S. and China really in an AI race?

It’s tough to miss the hype. Media is hooked on it. Lawmakers on both sides of the aisle have bought into the national security-led urgency. And – shocker! – the promises of AI moonshots and massive government AI investments look like dollar signs to tech vendors and venture capitalists. Sputnik moment tropes and cold war panic are driving the “AI race” narrative.

I'm Kate Kaye, Protocol's senior reporter for AI & data, and earlier this year, I wanted to understand what was really happening and how we got here from a technical and business perspective. I’ll admit, although I cover AI and data, as someone who was a teen during the Reagan era, talk of a tech battle with the same country whose military attacked and killed civil rights demonstrators in 1989 — as kids like me watched on tiny analog TVs here in the U.S. – the subject hit home in ways that spoke to me on a level way beyond my journalistic beat.

In Protocol’s new series, "Are the U.S. and China really in an AI race?," I explain how, even though an AI-dominant China poses real threats, the AI race paradigm fails to recognize the global collaborations that have sparked AI discovery and how AI tech actually has been built. And I highlight the longtime partnerships that could be upended by a weaponized AI competition against China.

• Today we kick off the series (as you’ll see below) with a deeply reported investigation of former Google CEO-turned-Pentagon AI whisperer Eric Schmidt, and his efforts to influence government AI funding using a cold war-inspired, anti-China playbook.
• Look out for other stories in the coming days that dive into U.S.-China collaboration, the effects of nationalism on the development of AI, and Big Tech's role in all of it.

My reporting may ruffle some feathers as much as it illuminates some of the realities of AI technology built in the U.S. and China. Either way, I can’t wait to hear what you think. Please reach out on LinkedIn, Twitter, or reply to this newsletter to let us know.

Eric Schmidt the hype master

Eric Schmidt, AI tech investor and former Google CEO, wants the government to implement his sweeping blueprint to fight what he perceives as an existential threat posed by China’s AI plans. And he’s managed to convince a cadre of influential insiders to assist in disseminating his ideas, Protocol’s Kate Kaye reports.

Schmidt is sowing Cold War-inspired seeds of fear. He has the ears of high-up officials like Deputy Secretary of Defense Kathleen Hicks, Deputy Secretary of State Wendy Sherman, Speaker of the House Nancy Pelosi, and Senate Majority Leader Chuck Schumer.

• Along with implying that any AI developed in China is ethically flawed, he has pushed for billions more in AI funding by the government.
• Meanwhile, he has argued that any regulation of domestic AI would impede progress in the face of China’s competition.

This all raises some ethical concerns. Schmidt’s venture capital firm, Innovation Endeavors, has invested in companies that have received multimillion-dollar contracts from federal agencies.

• Kate found that some of those investments and contracts were granted between 2016 and 2021 while Schmidt chaired two influential government initiatives, the Pentagon’s Defense Innovation Board and the National Security Commission on Artificial Intelligence.
• Work that Schmidt carried out while heading up the NSCAI heavily influenced legislation. That includes the 2023 National Defense Authorization Act, which would fund the activities of the new chief digital and artificial intelligence officer, Craig Martell.
• Martell has publicly said that Schmidt all but hand-picked him for the role.
• Schmidt's representatives declined requests for him to be interviewed as part of this investigation.

“You have a number of people who are doing the revolving door between private and public sector,” Merve Hickok, research director and chairwoman of the board for the Center for AI and Digital Policy, told Kate. “If you’re using that as the revolving door to establish and deepen the relationship for future contracts, for future engagement, then it’s a huge ethics, conflict-of-interest, and accountability issue.”

Read more: Inside Eric Schmidt’s push to profit from an AI cold war with China

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Lyft giveth, and Lyft taketh away

Lyft rescued California’s Proposition 30, spending more than $45 million on the campaign after two public transit advocates failed to raise enough funding for it last year. But by saving the proposition, Lyft essentially shot itself in the foot, Protocol’s Issie Lapowsky reports.

Joining the Yes campaign promised huge upside for Lyft, given the Clean Miles Standard adopted last year, which requires California rideshare companies to ensure EVs account for 90% of miles traveled by 2030.

• Prop. 30 would raise taxes by 1.75% on about 35,000 Californians whose annual income is over $2 million, using the majority of the money to offer rebates for new EV purchases and to invest in charging infrastructure.

But Lyft’s funding may have doomed the measure as well as buoying it. Because of Lyft’s heavy involvement with Prop. 30, opponents — including California Gov. Gavin Newsom himself — cast the measure as a self-serving plot “devised” by Lyft.

• The aggressive campaign is working. Since Newsom cut an ad in September calling Prop. 30 a “Trojan Horse” for Lyft, support for the measure has fallen precipitously from 63% in July to 41% in a poll released this week.
• Though the yes campaign isn’t disputing Lyft’s financial support, it is disputing the idea that the measure was “devised” by Lyft. “[The opposition] is saying that it was a scheme devised by a single corporation. That’s the difference between misinformation and information,” Stuart Cohen, one of the measure’s original authors, told Issie.

Critics argue that Newsom’s actions might be self-serving, too. Prop. 30 supporters accuse him of spreading misinformation about the measure’s origins and opposing it to appease his biggest donors.

• Major supporters of the No campaign include a long list of tech billionaires — including Netflix’s Reed Hastings, Zynga founder Mark Pincus, and Activision Blizzard CEO Bobby Kotick — who would likely be among those taxed if the measure passes.

The measure has divided the tech industry’s allegiances and has put Newsom on the opposite side of many of his allies. And as it stands, the No campaign is managing to win over voters by the day, turning the cash infusion from Lyft — once Prop. 30’s salvation — into its biggest threat.

Read more: Lyft money saved a California climate measure. It could kill it too.

People are talking

European Commissioner Thierry Breton warned Elon Musk that Twitter must stay compliant with EU regulations:

• “In Europe, the bird will fly by our rules.”

Telegram CEO Pavel Durov accused Apple of ruining entrepreneurship with its App Store rules:

• “This is just another example of how a trillion-dollar monopoly abuses its market dominance at the expense of millions of users who are trying to monetize their own content."

Protocol Live: AI and chips

This virtual event hosted by Protocol will bring together tech and policy experts to discuss the future of AI-related partnerships existing among tech businesses, developers and AI researchers in the U.S. and China. Join us at 10:30 a.m. PT on Nov. 3. RSVP here.

Making moves

Earnings season is in full swing. Airbnb, Sony, and Uber report tomorrow, Qualcomm on Wednesday, and CloudFlare on Thursday.

SF Tech Week starts tomorrow and runs until Saturday.

OSDC West, an AI developers conference, starts tomorrow and runs through Thursday both in person in San Francisco and virtually.

Web Summit 2022 starts tomorrow in Lisbon.

The Twilio Signal conference, for customers and developers, starts Wednesday and will be fully virtual.

The White House will host a cybersecurity meeting involving officials from 37 countries this week.

In other news

Twitter has outlined plans for layoffs that are now under consideration by Elon Musk, the WSJ reported, and the WaPo added that there's a target of shedding 25% of employees. The FT reported that Musk "wants to fire those who do not support him as leader."

One of Musk's first ideas to generate revenue at Twitter is reportedly to charge for verification.

Meanwhile, Twitter may benefit from Binance’s new team, which will explore on-chain solutions to address issues like bot accounts on the social media platform.

TuSimple is being investigated by the FBI and SEC, according to the WSJ. The self-driving trucking company may have broken securities laws.

Lawmakers are urging tech leaders to help Iranians stay connected to the internet amid ongoing protests

Snapchat is cutting payments for Spotlight content following the company’s less-than-stellar earnings report.

India is revamping its internet rules to include an appeals panel for social media grievances.

Panasonic will start building a new battery plant in Kansas next month. It should be producing batteries by March 2025.

Where have all the CHROs gone? There's a shortage of talented HR leaders, and it's leaving companies scrambling.

Electric feel

Engineers are attacking the next frontier of innovation: robots that can feel how fuzzy a teddy bear is. This tech has important uses spanning industries: It could be used to help robots handle delicate items in a warehouse, for example, or to provide touch-sensitive electronic skin for artificial limbs’ performance. “Touch is crucial to be able to react to an unpredictable world,” one expert told The Wall Street Journal. But advancement in this field could take a while. Touch is a complex sense, and it’s way harder to teach a computer to feel something than it is to, say, see.

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