July 5, 2020: Lasso, Antitrust, Linux, India, New Infrastructure, IPO

Note: This issue of Interconnected Weekly covers the period between June 29-July 4, 2020, with six news stories – three from English language sources, three from Chinese language sources – hand-picked by your humble author to further our exploration of the interconnections between technology, business, investment, and geopolitics. All translated article titles are done by me; they are not official translations from the media outlets.

“Facebook is shutting down Lasso, its TikTok clone” (English Source: TechCrunch)

My Thoughts: Instead of highlighting the many, many (many) news items that covered the Indian government’s ban of 59 China-made apps, I believe the shutting down of Lasso needs a bit more attention. The shut down came as quite a surprise given the India vs. China context. One would think that the vacuum created by this ban would give a product like Lasso a golden opportunity to grow and get more resources from Facebook, especially given its $5.7 billion USD strategic investment in Jio Platforms (one of India’s largest telcos) earlier this year. Of course, this organizational move may simply be motivated by a need to consolidate engineering and product resources to focus on Instagram Reels, a younger TikTok clone launched in late 2019. Cloning of products and features are now happening in both directions, not just Chinese companies of their American counterparts. Taking a step back, products from big tech companies, either American or Chinese, will be seen as the new vehicles for proxy influence campaigns in geopolitical relationships, even though all these companies want to do is sell ads.

“Apple, Google, Amazon and Facebook CEOs agree to testify before House committee” (English Source: CNBC)

My Thoughts: The U.S. government’s antitrust investigation into big tech companies is approaching a high point and possibly a conclusion. The high point, at least from a media standpoint, would be this congressional testimony by the CEOs of the four most valuable tech companies in the world. To be clear, this congressional hearing, which may produce legislative actions, is a somewhat separate effort from the ongoing investigations by both the Justice Department and the Federal Communications Commission. Both of these agencies can fine and regulate these tech companies without congressional involvement. How will U.S. antitrust regulators decide will also affect these four companies’ competitiveness and influence outside of the U.S. This is an important angle to watch as it relates to the Chinese tech giants’ relative influence abroad, none of whom are subjected to antitrust regulation in China. In the meantime, let’s just hope that the quality of the questions from these legislators will be better. (When Mark Zuckerberg testified in the Senate in April 2018, Senator Orrin Hatch from Utah had no basic understanding of Facebook’s business model.)

“Linus Torvalds on the future of Linux kernel developers and development” (English Source: ZDNet )

My Thoughts: The creator of Linux (the ubiquitous open source operating system), Linus Torvalds, shared some wise thoughts on the challenge of generational transition that needs to happen within the Linux community. One challenge that stood out to me is the difficulty in finding “maintainers” -- people who are no less talented than the programmers, but are in charge of the boring yet necessary tasks of managing changes and contributions to the Linux codebase and community. The world is full of shiny new objects for people to chase after. But as the global coronavirus pandemic has exposed, the basic essential infrastructures of our society are shaky and need more “maintainers”. As Linus noted, Linux is boring, as it should be. Many infrastructures we take for granted in the modern world are boring, as they should be. But we still need talented, committed people to be their “maintainers”. Oftentimes in companies, people who do the boring but necessary work of infrastructure maintenance or back office operations receive little praise, while both attention and reward go to developers working on new features or top sales people. The same skewed incentive structure exists in all kinds of other organizations. How can we incentivize more talented people to become “maintainers”?

“India prohibits Chinese technology: half of India’s unicorns are backed by Chinese capital, half of its smartphones are made by Chinese manufacturers” (Chinese Source: AI Frontline)

My thoughts: The Indian government’s ban of China-made apps is no doubt getting a lot of attention inside China. While this article’s headline comes at this issue from an investment and manufacturing angle to illustrate India’s reliance on China, a big portion of the piece is also devoted to India’s own tech talent brain drain to the U.S. The article cites the various Indian-American CEOs at the top American tech companies -- Sundar Pichai of Alphabet, Satya Nadella of Microsoft, among many others -- as evidence of the brain drain. This trend is rather similar to China’s own tech talent brain drain to the U.S. in the 1990s and 2010s, until the flow of talent started to reverse recently, as China’s economy and tech companies become more wealthy. Thus, India’s leverage over China is still relatively weak, despite these headline-grabbing bans; it’ll be quite some time before India can build enough wealth and incentives to reverse its own brain drain.

“Tencent’s Liu Shengyi at the UN: New Infrastructure will help build a more resilient society” (Chinese Source: Tencent Tech News)

My thoughts: This news item is fascinating, because of its setting: a Tencent senior executive giving a talk at the UN Department of Economic and Social Affairs about China’s “New Infrastructure” plan, where the topic of discussion is on how Africa can better deal with the COVID-19 pandemic. Even though details around “New Infrastructure” have just begun to emerge in the last few months, as I noted in “RISC-V, China, Nightingales”, it has already been presented abroad as part of a “China plan” to stimulate the economy post-COVID-19 for other regions to model after. Interestingly, this effort is led by tech executives -- a notable difference to the “wolf warrior diplomacy” campaign led by aggressive government diplomats.

“Source: Li Auto will IPO in the U.S. as early as July. Can the next "Tesla" story be told with the blessing of Meituan?” (Chinese Source: iponews)

My thoughts: Lixiang Motors’s plan to IPO in the U.S. capital market is remarkable for two reasons. First, it is the latest indication that despite overall anti-China sentiment and pending legislative action to more strongly regulate Chinese companies publicly listed in the U.S., Chinese companies continue to see New York as the best place to IPO. Some recent success cases, like Agora and Dada, serve as further encouragement. Second, from a technology and product perspective, Lixiang is not a pure electric-powered car, but uses a gas-powered electric engine for its vehicles as hybrids. It sounds more like Prius than Model S, yet the company believes it can ride the tailwind of Tesla’s recent stock price rise to raise money for itself at a good valuation. Will this logic work for American investors? This IPO is slated to happen sometime this summer, so we will have an answer soon enough.

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