November 8, 2020: Due Process and Procedural Justice

Hello Interconnected Readers:

I want to start off by citing a phrase from Matthew Prince, the CEO of Cloudflare:

I, personally, believe in strong Freedom of Speech protections, but I also acknowledge that it is a very American idea that is not shared globally. On the other hand, the concept of Due Process is close to universal.

He wrote this as part of a blog post in 2018 explaining why Cloudflare banned a right-wing website called, the Daily Stormer.

[If you’d like to skip ahead to the six news stories and commentaries – three from English language sources, three from Chinese language sources -- here are this issue’s items:

• “What Biden’s Victory Means for Tech” (English Source: The Information)
• “Clouded Judgement” (English Source: The Wire China)
• “How billionaire Jack Ma fell to earth and took Ant's mega IPO with him” (English Source: Reuters)
• “Jack Ma is still Jack Ma” (Chinese Source: Sina Finance News)
• “Kuaishou Submits IPO Prospectus to Hong Kong Stock Exchange: Morgan Stanley, Bank of America and China Renaissance as Joint Underwriters, May Become China's First ‘Short Video Stock’” (Chinese Source: iponews)
• “ASML China's President: Company remains open to exporting lithography equipment to China” (Chinese Source: Pengpai News)]

Procedural justice, as expressed by Due Process, is perhaps the most universal value that human beings can agree on, regardless of culture, language, and tradition. Putting it more plainly, an outcome is only as good as the process that produced it.

I’ve thought and wrote a lot about procedural justice this year, in the context of Facebook and Twitter’s content moderation controversies, the TikTok “ban”, and regulatory grift. Procedural justice played out in real life during this last week, as ballot counting proceeded throughout the United States to elect its next president. The speed of counting and reporting may have frustrated a lot of people (especially in Nevada where I am doing volunteer work right now), but that’s exactly how a system with procedural justice and Due Process should play out -- unflappably progressing at its own pace based on agreed-upon rules to produce an outcome. Only when a process is played out, openly and transparently, does the outcome it produces have credibility, not just to the people who like the outcome, but especially to the people who don’t.

Procedural justice isn’t just important for large, weighty decisions like picking a president. It permeates all facets of our lives.

Whenever your boss at work makes a decision that you have to do, if the process was open and well-reasoned, you would feel good showing up to work, even if you don’t like the decision (“disagree and commit”, as Bezos would say). If the process is shoddy and arbitrary, you become demoralized and dejected; that’s how companies lose talent.

Whenever your parents tell you to do something, whether you are a child or an adult, you would love and respect your parents more if that “something” had at least some well-reasoned process behind it. Instead, if all you got was an edict by someone who assumed authority just because they were your parents, you become equally demoralized and dejected; that’s how familial bonds deteriorate and Thanksgiving (or Lunar New Year) dinners become more stressful than joyful.

The American election process is still not over -- each state must certify its own results after every vote is counted, and electors of the Electoral College will meet on December 14 to officially cast their choice for president on behalf of the states they represent. In the meantime, lawsuits will happen, controversies will ensue, and conspiracy theories will not stop popping up. But that’s ok. The American democratic system -- with all its problems and foibles -- has been resilient, because Due Process is respected and the procedure is just.

An outcome is only as good as the process that produced it.

Kevin

The summary below covers the period between November 3 - 8, 2020 of six news stories – three from English language sources, three from Chinese language sources. Disclaimer: all translated article titles are done by me, not official translations from the media outlets.

Before you go on, please check out last week's deep dive post: "Some Bearish Thoughts on RISC-V"

“What Biden’s Victory Means for Tech” (English Source: The Information)

My Thoughts: With a Biden presidency becoming more or less certain, how a new administration’s policies will impact the tech sector has become an active source of speculation. This article identified five major areas: antitrust, Section 230, immigration, taxes, trade (in the US-China trade war sense). Generally, I agree that these five areas are important, but would like to add another: advanced manufacturing. Biden’s tech policy must not only look backward (i.e. regulate what has been happening), but look forward, by boosting American competitiveness and patching gaping holes in its advanced manufacturing capabilities. On the US-China front, pigeon-holing the technology discussion into the trade war, as this article framed, is also near-sighted. The trade war must be dealt with, but the impact of technology is far greater and needs its own separate bilateral dialogue, where both policymakers and technologists are part of the conversation.

“Clouded Judgement” (English Source: The Wire China)

My Thoughts: Long time Interconnected readers know I write a lot about the cloud industry -- on both specific platforms and its implications to geopolitical relationships around the world. I enjoyed reading this piece, because it does a good job of encapsulating the overall dynamic of the struggle that American cloud platforms are having in China. When it comes to cloud computing, China is much more of a walled-garden than even other tech sectors, because cloud is considered strategically important. Market access was supposed to be on the table for discussion during the so-called Phase Two of the trade war, but with an incoming Biden presidency, the whole conversation will likely be completely reset and re-prioritized. I don’t see new trade discussions changing the current market dynamic for American cloud platforms trying to enter China or for Chinese cloud platforms seeking to do business in the US. Each side will comfortably reside on their home turf and, as I’ve noted in “Southeast Asia and the Pacific Light Cable Network”, compete in other parts of the world.

“How billionaire Jack Ma fell to earth and took Ant's mega IPO with him” (English Source: Reuters)

My Thoughts: The scuttled Ant Group IPO was big news and would’ve been bigger if it didn’t coincide with the American election. I highlight this article in particular, because its title and reporting is representative of the overall, rather simplistic narrative around this story. There is much more to it all than “Jack Ma spoke out of turn, angered government regulators, and is now in the dog house and lost billions of dollars from the canceled IPO”. I will write a deep dive on this topic next week. For now, it’s suffice to say: Jack Ma knew what he was doing and got exactly what he wanted.

“Jack Ma is still Jack Ma” (Chinese Source: Sina Finance News)

My thoughts: For those who can read Chinese, this is a good techlore piece that balances out some of the Western media coverage on Ma’s Bund Summit speech and the subsequent Ant IPO cancellation. While it is difficult to verify all the anecdotes in this article, they are plausible given Ma’s consistently outspoken nature and political astuteness in knowing which buttons to push and when. One anecdote stood out to me: in 2004, Ma called his team from Davos to begin building what would later become AliPay right away and told everyone that “if someone needs to go to prison, I will go.” Since then, AliPay has become ubiquitous in China, Ant has become a fintech behemoth, and Ma has become several billions richer. Yet, China’s regulatory framework has largely stood still, while P2P lending scandals have harmed millions of people. Like I said, Ma knows which buttons to push and when.

“Kuaishou Submits IPO Prospectus to Hong Kong Stock Exchange: Morgan Stanley, Bank of America and China Renaissance as Joint Underwriters, May Become China's First ‘Short Video Stock’” (Chinese Source: iponews)

My thoughts: This Kuaishou IPO in Hong Kong is long anticipated. Given everything that ByteDance has gone through, and is still going through, in the US, a New York public listing was probably never seriously considered. And as I noted in last week’s Interconnected Weekly, the Hong Kong exchange has been doing pretty well too! Some top line numbers from Kuaishou’s prospectus worth noting: MAUs are 776 million, DAUs are 302 million. Besides advertisement, it also has revenue streams from livestreaming e-commerce, gaming, and virtual goods gifting. In fact, it claims to have the most paying users of virtual goods gifting in the world.

“ASML China's President: Company remains open to exporting lithography equipment to China” (Chinese Source: Pengpai News)

My thoughts: This interview given by the head of ASML’s China operation is official and diplomatic, but important to note nonetheless. ASML, as a company, would of course love to do more business in China as the country’s semiconductor industry balloons; it does not want to be seen as biased in any way. However, its most advanced EUV equipment -- the one everyone needs to make advanced chips as small as 5nm -- is waiting for licensing permission from the Dutch Government to be sold to China. The Dutch government has acquiesced to the Trump administration’s pressure before, intervening ASML orders from going to Mainland China. If and how US influence will change under a Biden administration abroad, which promises more alliances and less isolation, will certainly impact how ASML does business in China in a big way.

If you like what you've read, please SUBSCRIBE to the Interconnected email list. To read all previous posts, please check out the Archive section. New content will be delivered to your inbox (twice per week). Follow and interact with me on: Twitter, LinkedIn.