The European Commission will examine whether the big tech companies are preventing developers from steering customers away from controlled app stores, which could be anti-competitive.

The investigation comes under powers introduced in the Digital Markets Act (DMA) which was a landmark piece of legislation aimed at curbing the power of big tech and the commission is accusing companies of non-compliance with the act and a failure to provide a fairer and more open digital space for European citizens and businesses.

Should the investigation conclude that there is lack of full compliance with the DMA, gatekeeper companies could face heavy fines.

Designated as ‘gatekeepers’ by the DMA, Google owner Alphabet, Amazon, Apple, TikTok owner ByteDance, Meta and Microsoft have special responsibilities because of their dominance of key mobile technologies.

These companies are accused of steering developers away from competitor platforms and imposing various restrictions and limitations on their use.

The big tech companies are facing a growing legal backlash and last month Apple was fined over its iOS ecosystem and business practices by the EU.

Whether this case succeeds of not, it’s interesting to note the growing willingness of the authorities to take these tech giants to court.

About time, according to some critics.

Source: New Electronic

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The U.S. and British governments on Monday announced sanctions against a company and two people linked to the Chinese government over a string of malicious cyberactivity targeting the U.K.’s election watchdog and lawmakers in both countries.

Officials said those sanctioned are responsible for a hack that may have gained access to information on tens of millions of U.K. voters held by the Electoral Commission, as well as for cyberespionage targeting lawmakers who have been outspoken about the China threat.

The Foreign Office said the hack of the election registers “has not had an impact on electoral processes, has not affected the rights or access to the democratic process of any individual, nor has it affected electoral registration.”

The Electoral Commission said in August that it identified a breach of its system in October 2022, though it added that “hostile actors” had first been able to access its servers since 2021.

At the time, the watchdog said the data included the names and addresses of registered voters. But it said that much of the information was already in the public domain.

In Washington, the Treasury Department said it sanctioned Wuhan Xiaoruizhi Science and Technology Company Ltd., which it calls a Chinese Ministry of State Security front company that has “served as cover for multiple malicious cyberoperations.”

It named two Chinese nationals, Zhao Guangzong and Ni Gaobin, affiliated with the Wuhan company, for cyberoperations that targeted U.S. critical infrastructure sectors, “directly endangering U.S. national security.”

Zhao, Ni and five other Chinese nationals were hit with federal charges Monday. An indictment brought by federal prosecutors in Brooklyn alleges that the seven men were Chinese intelligence officers who engaged in a yearslong campaign targeting top White House officials, U.S. senators and the spouses of high-ranking members of the Justice Department, among others. 

The suspects are accused of sending tracking emails purported to be from prominent U.S. journalists, which contained legitimate news articles from publications like CNN and VOX. The emails also contained embedded hyperlinks that, when opened, would transmit information about the recipients to a server controlled by the suspects, the indictment says.

One of the group’s alleged campaigns took place from June to September 2018 when they sent more than 10,000 messages to a wide range of targets including Democratic and Republican senators from more than 10 states and the spouses of various government administrators including a high-ranking Department of Justice official, high-ranking White House officials and multiple United States senators.

“These allegations pull back the curtain on China’s vast illegal hacking operation that targeted sensitive data from U.S. elected and government officials, journalists and academics; valuable information from American companies; and political dissidents in America and abroad,” U.S. Attorney Breon Peace said in a statement.

Chinese Embassy spokesperson Liu Pengyu said her government “firmly opposes and cracks down on all forms of cyberattacks in accordance with law.”

“Without valid evidence, the U.S. jumped to an unwarranted conclusion and made groundless accusations against China,” Liu added. “It is extremely irresponsible and is a complete distortion of facts.”

Separately, British cybersecurity officials said that Chinese government-affiliated hackers “conducted reconnaissance activity” against British parliamentarians who are critical of Beijing in 2021. They said no parliamentary accounts were successfully compromised.

Three lawmakers, including former Conservative Party leader Iain Duncan Smith, told reporters Monday they have been “subjected to harassment, impersonation and attempted hacking from China for some time.” Duncan Smith said in one example, hackers impersonating him used fake email addresses to write to his contacts.

The politicians are members of the Inter-Parliamentary Alliance on China, an international pressure group focused on countering Beijing’s growing influence and calling out alleged rights abuses by the Chinese government.

Ahead of that announcement, Prime Minister Rishi Sunak reiterated that China is “behaving in an increasingly assertive way abroad” and is “the greatest state-based threat to our economic security.”

“It’s right that we take measures to protect ourselves, which is what we are doing,” he said, without providing details.

China critics including Duncan Smith have long called for Sunak to take a tougher stance on China and label the country a threat — rather than a “challenge” — to the U.K., but the government has refrained from using such critical language.

Responding to the reports, China’s Ministry of Foreign Affairs said countries should base their claims on evidence rather than “smear” others without factual basis.

“Cybersecurity issues should not be politicized,” ministry spokesperson Lin Jian said. “We hope all parties will stop spreading false information, take a responsible attitude, and work together to maintain peace and security in cyberspace.”

Source: NBC News

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The case was jointly filed by the Justice Department, 16 States, and the District of Columbia, in the U.S. District Court for the District of New Jersey.

This isn’t something out of the blue, as we have previously reported, the U.S. Department of Justice has been preparing an antitrust case against the Electronics giant over the past few months. It had held discussions with the company before finalizing the lawsuit.

Apple ran into legal trouble at the end of 2023, when the U.S. International Trade Commission banned the company from importing and selling the Apple Watch Series 9 and Ultra 2 in the U.S. The Commission found Apple guilty of violating patents related to the SpO2 sensor (pulse oximeter), which belonged to Masimo. The ban however was short-lived, as Apple was allowed to sell the wearables once again, with a catch, it had to disable the SpO2 sensor’s functionality, so you couldn’t use it to measure blood oxygen levels, even though the hardware for the feature existed.

The tech mogul’s troubles were just beginning, as it had to open up the iOS ecosystem to third-party app marketplaces in the European Union region. However, the company’s compliance with the Digital Markets Act has come under scrutiny due to several limitations that it has imposed for app developers, and third-party app stores.

US Justice Department sues Apple in antitrust case

Now, the US Govt has claimed that Apple has selectively imposed restrictions that prevent users from switching from its devices. It also says that there are limitations for the functionality of third-party apps, which gives Apple’s own apps an unfair advantage over the competition. The complaint alleges that Apple has undermined messaging across operating systems by excluding its own apps from rival platforms, and that this makes it less secure and less innovative for users.

This is seen as one of the reasons that the company has made it hard for users to leave iPhone, as many iOS apps are not available on Android. The lawsuit alleges that Apple is in violation of Section 2 of the Sherman Act, and users its monopoly power to extract high prices from consumers, developers, etc.

The antitrust case also points out that Apple blocks cloud-streaming apps that allow users to stream apps and games. To be fair to Apple, it did open up the market recently to allow cloud-gaming platforms, so services like Xbox’s Game Pass Ultimate and Nvidia’s GeForce Now can be used on iPhone and iPad.

Apple’s failure to provide tap-to-pay (Apple Pay) functionality for third-party digital wallets is also being scrutinized. The lawsuit points out that Apple’s restrictions also affect web browsers, video communication, location services, advertising and other services.

Another argument made by the Justice department targets Apple’s restrictions for third-party smartwatches. Apple does not allow other OEMs to access the APIs required for a watch to read/write fitness data like the Apple Watch can, third-parties have limited access to the data. This is an unfair restriction that stifles the competition.

The company has reportedly claimed that it tried to make the Apple Watch compatible with Android phones, but failed to find a way to do so. I don’t buy this argument. Apple has an Android app for Apple Music, which as you know is a subscription-based service. It shows that the company can, and will provide an app for Android devices, if there is an incentive for it. So, why didn’t Apple create Android apps for Apple Watch and Health? Well, you could argue that if it had done so, Android users would buy the wearable, but they won’t buy an iPhone. By keeping the Watch exclusively compatible with iPhones, it has created an artificial market for the wearable and the iPhone, which is a monopoly.

Source: ghacks

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TikTok is undertaking a rapid expansion of its U.S. office footprint as it toughens its return to office mandate on workers.

The Chinese-owned social media giant is shopping for what could be more than 600K SF in San Jose, Seattle and Nashville, rapidly expanding an office footprint that now encompasses space in New York, Los Angeles, San Francisco and Austin.

TikTok is using a customized app to monitor its tougher return-to-office policy, which requires its U.S. workforce of 7,000 to be in the physical office at least three days a week, with an unspecified number of workers required to come in five days a week.

The app, which TikTok calls My RTO, tracks badge swipes to determine if employees are fulfilling the RTO mandate.

TikTok is in talks to occupy 100K SF of the newly built 16-story Moore Building on Music Row in Nashville. Los Angeles-based TikTok has been leasing three floors encompassing about 50K SF at One Nashville, anchoring a WeWork space, according to a report in CoStar.

TikTok parent ByteDance is negotiating a sublease agreement that will expand its footprint at the former Roku complex in San Jose from 660K SF to more than 1M SF, the report said.

ByteDance currently subleases two buildings on Coleman Avenue that Roku decided to vacate in its Coleman Highline portfolio last year. Roku is still seeking a tenant for two other buildings at the Coleman complex.

TikTok also is finalizing plans to double its space at the Lincoln Square North Tower in Bellevue, WA, where it currently leases about 132K SF, taking space that was offloaded by Microsoft last year. TikTok occupies 100K SF in the Key Center, about a block away from the Lincoln Square tower, the report said.

TikTok won’t have any trouble locating available tech space in West Coast locations as many opportunities exist in space listed for sublease by tech companies that have been downsizing their footprints.

Analysts are predicting that TikTok’s U.S. revenue will increase by more than 25% in 2024 to $11B, an amount equal to 3.5% of the total digital ad spend in the country.

Source: Globest

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For keepsies: Making an online return? You may end up not having to return it at all. This year, 59% of retailers offer “keep it” policies for such products, up from 26% last year, according to returns services firm goTRG, Reuters reports. The firm surveyed 500 executives at 21 major retailers, among them Amazon and Walmart. As retailers adopt tech to root out excess costs, more are embracing returnless policies for certain online purchases — a trend that obviously retailers do want out there. Online grocery, in some ways, has a similar policy in place. Get the wrong item in your Instacart order? You can report it and get a credit, but in many cases you end up keeping the item anyway. Will consumers start to abuse these systems? Time will tell. —Chloe Riley 

A chicken conundrum: When it comes to rotisserie chickens, it takes a lot to keep ahead of the game. And sometimes it’s a losing battle, according to a deli worker at Costco who explained on Reddit why sometimes the warmer is empty at stores. The main reason is that Costco requires workers to determine how many chickens will be needed for a two-hour span in order to avoid dried out chicken. The employee says the formula is far from scientific, and often the demand is too heavy and the labor power is just not there. Another reason is that there is no limit to how many shoppers can purchase, which sometimes leads to chickens being stacked 40 or 50 high. (That has to be some kind of safety hazard.) Some Reddit readers could relate to the rotisserie circus. One said they “worked chickens for over four years” and it was one of the hardest jobs in the warehouse. It appears chickens are not the only things getting cooked behind that counter. —Bill Wilson

An apple a day keeps the hunger at bay: There was an apple surplus this year, attributable to a couple of different factors. Bumper crops have kept domestic supply high, and exports declined 21% over the past decade, a symptom of retaliatory tariffs from India. Weather also played a role this year, with hail leaving a significant share of apples cosmetically unsuitable for the fresh market. In West Virginia, rather than leaving the apples to rot, the USDA ended up paying for the apples produced by growers. This apple relief program purchased $10 million worth of apples from a dozen growers — which were then donated to hunger-fighting charities across the country from South Carolina and Michigan all the way out to The Navajo Nation. Talk about avoiding food waste. —CR

A killer strategy: Dave’s Killer Bread has a pretty killer story attached to it. After 15-plus years in prison, founder Dave Dahl found his true calling: to make organic, whole-grain bread. This six-minute video from HubSpot examines how Dave’s Killer Bread nailed its target market and leaned into social to tell its story. Dahl wasn’t ashamed of his criminal past, but his advisors begged him not to mention it…So he fired them and became a champion of second-chance employment.That strategy, along with a national rollout following a 2015 acquisition by Flowers Foods, would eventually lead to 50% brand growth within a purpose-driven brand identity. The morale of the story? It pays to be on purpose. —CR

Self-checkout, now even faster: Checkout scanners are far from perfect, and when you add those not trained to work the technology the whole process can become a shopping cart full of frustration. British grocer Tesco, however, is taking that approval beep out of the equation in the self-checkout area. The retailer now has scan-free kiosks at one of its stores. The tech allows the transaction to be completed without scanning a single item. According to a recent survey by retail data supplier PYMNTS, 28% of merchants, including grocers, are investing in in-app scan-and-go capabilities. Surprisingly, shoppers are not jumping in line to take advantage of the fancy gadgets. Another PYMNTS study revealed only one-in-three consumers wanted to take advantage of the store tech. If you’ve ever had to wait for a worker to come help you in self-checkout, you might just think another thought. —BW

Source : Supermarket News

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A substantial 26% of cyber incidents in businesses over the last two years have been found to be the result of intentional security protocol violations by employees. This figure closely rivals the 20% attributed to external hacking attempts.

The findings come from Kaspersky’s latest study, which explained that, contrary to prevailing beliefs that human error is the primary cause of cybersecurity incidents, the reality is more nuanced. 

Seeking insights from IT security professionals in SMEs and enterprises globally, the research aimed to understand the diverse impact of various individuals on a company’s cybersecurity posture. 

It discovered that intentional policy violations by employees, spanning both IT and non-IT staff, played a significant role in cyber incidents. Notably, IT security officers, other IT professionals and non-IT colleagues were identified as sources of breaches, contributing to 13%, 12% and 4% of incidents, respectively.

Examining individual employee behavior, the study revealed that 22% of incidents resulted from the deliberate use of weak passwords or failing to change them promptly. Additionally, 18% were linked to staff visiting unsecured websites, while 25% occurred due to neglecting system software or application updates.

Unsolicited services or devices were identified as significant contributors to intentional policy violations, with 14% of companies experiencing incidents due to unauthorized systems for data sharing. Particularly concerning was the finding that 20% of malicious actions were committed by employees for personal gain, with the financial services sector notably reporting 34% of such incidents.

Highlighting the necessity of a comprehensive cybersecurity strategy, Alexey Vovk, who leads information security at Kaspersky, emphasized the significance of fostering a culture of cybersecurity within companies.

“As the numbers are alarming, it is necessary to create a cybersecurity culture in an organization from the get-go by developing and enforcing security policies, as well as raising cybersecurity awareness among employees,” Vovk explained. 

“Thus, the staff will approach the rules more responsibly and clearly understand the possible consequences of their violations.”

Source : Info Security

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Startups can be at the forefront of economic recovery, job creation, and a more sustainable future. They are the most innovative actors in the economy and an economic force to be reckoned with. However, while they are the giants of the future, they are more often than not overlooked in policymaking. 

In the last five years alone, startups have been met with a tidal wave of digital regulation. While well-intentioned, overregulation often creates a hostile environment for innovative businesses by implementing market barriers and imposing additional operating and compliance costs.

The 2024 European Union Elections offer an opportunity to reverse this trend by ensuring that startups have a seat at the policy table so that Europe can build smart regulations and at the vanguard of startup innovation.  

Allied for Startups and its Members have published its EU Election Startup Manifesto, a standard with which startup communities and leaders will evaluate the success of any candidate, party, or group seeking a leading role in a democratic Europe in 2024.

While these policy prescriptions are a baseline of the needs of the growing entrepreneurial communities of Europe, support for these entrepreneurs and job creators must be aligned with an acknowledgment of the need for further investment in diversity, equity, and inclusion.

This integrated approach is likely the most effective pathway toward ensuring Europe’s continued growth and economic success.

What do startups need from policymakers?

Policymakers must embrace strategies and initiatives that will foster a growth-oriented environment for startups to deliver on the digital and green transitions as promised.

Hence, we propose a variety of actions, including:

Appointing a dedicated Commissioner for Digital Entrepreneurship, in order to simplify and harmonise all regulation that affects startups in a single place.

Introducing a startup and scale-up test for legislation, essential to creating regulatory frameworks that startups can not only comply with but thrive under.

Streamlining talent acquisition through an efficient EU-wide startup visa and simplifying regulatory processes with an EU company status.

Startups advocate for a harmonised level-playing field that allows them to innovate, emphasizing the importance of safeguarding net neutrality, fortifying the Digital Single Market, and strong research, investment and digital skills framework to nurture a competitive and thriving ecosystem.

What are startups’ expectations across EU institutions?

Startups’ expectations across EU institutions extend to the creation of dedicated groups and teams within the institutions, integrating startup perspectives into relevant deliberations, nominating counterparts, and emphasizing startups and SMEs in official titles.

Effectively, having a seat at every policy table.

While a new Parliament is on the ballot next year, startups recognize the importance of and positive outlook for all EU institutions to build a sustainable, lucrative future for European startups.

Prioritising startups’ needs during this election season holds the potential to transform Europe into an environment where innovation thrives, startups prosper, and Europe secures a prominent role in the global entrepreneurial landscape.

With these 10 items at the forefront of voter outreach and discussion, Europe can re-emphasise its commitment to building a strong startup community and lead the global economy.

Source : Tech EU

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Momentum behind carbon capture, utilisation and storage (CCUS) is reaching unprecedented levels, but implementation continues to lag behind, a new IEA report finds.

With over 400 new carbon capture, utilisation and storage (CCUS) projects announced globally in the past three years in more than 45 countries, the IEA’s new toolkit sets out the policies that can turn developer ambitions into reality.

The report, CCUS Policies and Business Models – Building a Commercial Market, finds that new business models for CCUS are emerging, driven by new players entering the market. This is reshaping the framework for future CCUS projects and can open the door to investment opportunities. Still, many challenges remain on the path for CCUS to contribute to global efforts to reach net zero emissions at the level envisaged in the IEA’s Net Zero Roadmap.

CCUS deployment in this decade will be critical to get it on track for its role in enabling the global energy sector to reach net zero emissions by mid-century. When world leaders gather for the COP28 climate conference that begins this week in Dubai, there will not only be an opportunity for governments to raise their ambitions on CCUS – the meeting will also be an important opening for the oil and gas industry to demonstrate a meaningful commitment to curbing emissions and moving beyond the status quo. CCUS can play an important role in these discussions.

Existing CCUS policies – commonly aimed at reducing costs – have helped move early projects into operation, but they have also skewed deployment toward low-cost applications. These types of policies alone are not sufficient to scale up CCUS across other applications. Governments around the world are now taking different policy approaches, drawing from lessons in other parts of the energy system to adapt to these new business models.

Many early CCUS projects have been characterised by a full-chain business model, with a single project framework across the CCUS value chain from CO2 capture to transport and storage. The oil and gas industry has led these efforts, thanks to its expertise in operating large-scale projects and knowledge of the geological subsurface. However, the industry’s historical focus has been on using the captured CO2 to extract more oil. This needs to shift to a focus on dedicated CO2 storage.

Today, new “part-chain” business models are emerging, with separate entities specialising in different parts of the CCUS value chain. While the oil and gas sector continues to play a role, the market entrance of new specialised players can facilitate access to the expertise and infrastructure needed to support decarbonisation, as well as bolster innovation and reduce costs across the value chain.

And innovation in CCUS projects is urgently needed: Around three-quarters of capture capacity by 2050 envisaged in the IEA’s Net Zero Roadmap relies on technologies and applications that are still at demonstration or prototype scale. There’s also a need to reduce energy use and costs for CCUS applications, which are still high compared with unabated technologies for most applications. Long lead times can further impede progress, particularly for CO2 storage. While new business models can mitigate some of these challenges, by reducing costs and lead times, they also bring new complexities, creating a need for governments to coordinate across the value chain.

The IEA’s new report and policy toolkit aims to provide useful guidance to governments seeking to create the conditions necessary to attract long-term private investment in CCUS, and to address the overarching economic, lead time, innovation and complexity challenges to deployment.

Source : IEA

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Baristas and shift supervisors at Ottawa’s Bridgehead coffeehouses who just got minimum wage boosts are being unfairly punished by a new policy that adds managers to their tip pools, a local labour group says.

Sean McKenny, president of the Ottawa & District Labour Council, said the tip-sharing change — which Bridgehead confirmed to CBC — takes away from the gains recently made by minimum wage workers.

The Ontario government hiked the minimum wage by just over a dollar, to $16.55 an hour, on Oct. 1.

“It really is hard to understand,” said McKenny of Bridgehead’s decision. “Especially at a time when those minimum wage workers need that increase in wages.”

Bridgehead, which began as an Ottawa-owned company and was acquired by Toronto-based Aegis Brands in 2019, declined to be interviewed.

In an emailed statement, Bridgehead president Paul Pascal said managers were added to the pool in October “to acknowledge their contributions.”

“Our coffeehouse managers have always been an integral part of the team, actively contributing to the exceptional guest experience we strive to provide,” Pascal said. 

The inclusion of front-line managers in tip-sharing is not new, with workers at a restaurant in Niagara Falls, Ont., going on strike partly over that issue in 2019.

Change might be ‘distressing,’ company warns

Bridgehead operates 21 cafés in Ottawa, according to its website.

According to a staff note sent to employees at one downtown location, the minimum wage hike affected the hourly pay of baristas and supervisors, and “instead of increasing the managers’ salary accordingly, Bridgehead has decided to include managers in tips as their raise” as of Oct. 9.

“Since all our tips are divided equally by the hours worked at our store,” the note continued, “adding another person’s hours to this will impact the amount of money each of you can expect to receive in tips.”

The note acknowledged the change “may be distressing.” Coffeehouse staff were consulted about the change, Pascal added in his statement to CBC.

McKenny said it was “absolutely ridiculous” Bridgehead was using tips meant for their “lowest-paid workers” to boost managers’ pay.

“It just doesn’t make any sense,” he said.

Staff resent change, says barista

A barista who works at a different downtown location told CBC the minimum wage increase “was effectively [made] moot by the decrease in tips.” 

CBC has agreed not to name her because she’s worried about losing her job. 

The salaried managers’ raise came to the detriment of “our take-home income and not at the expense of the company,” she said via email.

Staff have met the news with a mix of annoyance and resentment, she added.

In an interview, she said that while she’s not personally opposed to managers sharing in tips, she’s worried the new system might incentivize them to schedule themselves for more floor hours, which could take hours away from baristas and supervisors.

The staff note at the other location said there is a limit on how many hours managers can claim for tips. It also encouraged employees to talk to a supervisor if they thought a manager was “claiming more than what they are owed in tips.”

The barista said she’s worried about how that process would work.

She also said staff at her coffeehouse were informed about the change just a few days before it took effect, and that she wasn’t consulted beforehand. 

Source : CBC

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Time can make a huge difference. This is certainly true of the US’ stance on industrial policy. Just a few years ago, “industrial policy” was a derogatory term that Washington reserved almost exclusively for China as if it had forgotten that it was a pioneer of the practice.

In the 1980s, the Reagan administration set annual ceilings for Japan’s car exports to the US, and forced Tokyo to accept rules that limited Japanese chip exports while extracting improved US access to the Japanese market.

With the US emerging victorious from the Cold War, Washington saw a reduced need for industrial policy. Meanwhile, it frowned on the countries that adopted the practice, blasting China’s industrial policy as “non-market”.

Some 30 years on, industrial policy is back in fashion in the US. While continuing to censure China, Washington passed the Inflation Reduction Act and the Chips and Science Act in 2022.

Industrial policy is commonly defined as measures taken by a government to shape the economy by targeting specific industries, firms or economic activities through tax incentives, subsidies, protective regulations and research and development support.

China was a latecomer on the scene. Taking its cue from the East Asian countries that transformed their economies through industrial policy, Beijing put in place something of its own in 1986.

China’s industrial policy is similar to that of Japan, South Korea and the European Union, albeit more pervasive. For this reason, it has withstood challenges the US brought before the World Trade Organization.

In contrast, US industrial policy is one of a kind. What sets it apart from the pack is, first and foremost, its purpose. Conventional industrial policy is internally focused, aimed at developing national capacity. However, US industrial policy has, as well as investing in American workers and science, an important additional goal: suppressing competitors, especially those perceived to be narrowing the gap with the US.

The Reagan administration’s “managed trade”, since outlawed, was intended to clamp down on Japanese automobile and semiconductor industries. The exercise was hugely successful, and contributed in no small part to Japan’s three lost decades.

Washington’s industrial policy for semiconductors today is designed to cripple Chinese competition or to ensure the US maintains, as National Security Adviser Jake Sullivan put it, “as large of a lead as possible”.

US industry policy distinguishes itself in another important aspect: approach. The Biden administration says its industrial policy is rooted in national security concerns, and maintains that there is no room for compromise on such matters.

It is easy to see why Washington links its industrial policy with national security: to justify the measures it wishes to take. Consequently, US industrial policy includes extreme measures outside the realm of conventional industrial policy.

The US’ “high fence” around its semiconductor sector, for example, includes export bans, investment curbs and blacklists of competing companies.

On top of an arsenal already swollen with trade, the Swift global payments system and the dollar, Washington is now using industry policy as a weapon to achieve its geopolitical objectives – not unlike an unscrupulous sportsman tripping up a competitor to win a race.

While conventional industrial policy operates behind the border, America’s industrial policy extends its reach beyond US territory, adversely affecting foreign governments and companies. Foreign companies deemed to have violated US sanctions are subject to heavy fines, while foreign nationals on the wrong side of US rules face prison terms.

In an aberration from conventional industrial policy, the US calls for allies and like-minded economies to align against its competitors. The Biden administration has formed a “ Chip 4” alliance with South Korea, Japan and Taiwan, and seeks to set up a “critical minerals buyers club” with the European Union and the Group of 7.

It pressured Japan and the Netherlands into enforcing semiconductor export curbs against China, while prohibiting funding recipients under the Chips and Science Act from expanding capacity there. Moreover, the US is pushing “friend-shoring” to isolate China.

In addition, US industrial policy is likely to have contravened global trade rules. China has filed a suit with the WTO over the US’ chip export bans. Some in the EU have threatened WTO action against the US over an Inflation Reduction Act subsidy scheme that excludes electric vehicles made outside North America.

To allay similar Japanese concerns about the implementation of the Inflation Reduction Act, the Biden administration concluded an agreement with Tokyo on critical minerals for electric vehicle batteries, which was presented as a sort of free-trade agreement. But such narrow sectors “do not count as a free trade area”, according to Inu Manak, a trade policy expert at the Council on Foreign Relations.

Washington’s industrial policy has serious consequences for the world. It is creating new trade barriers. Market distortion at its worst, it threatens to dismantle the current global supply chains, which would lead to substantial inefficiency and loss of economic output.

Some of the effects of US industrial policy are already evident in the semiconductor sector, where it is no longer possible to freely source or sell raw materials, products, manufacturing machines or technology. As Taiwan Semiconductor Manufacturing Company (TSMC) founder Morris Chang put it, “in the chip sector, globalisation is dead”.

President Joe Biden has stressed on numerous occasions the necessity of US global leadership. However, on industrial policy at least, the world would be much better off without it.

Source : SCMP

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