At a Glance.
- Worries about potential conflict between China and Taiwan prompt new legislation.
- Major Tech companies face EU probes over new regulations.
Worries about potential conflict between China and Taiwan create new state legislation.
The News.
As fears grow about potential conflict starting in the Taiwan Strait, state legislators across the United States (US) are creating new legislation to identify potential areas that could be impacted if conflict began and what migration strategies each state could implement. Several states, including Arizona, Nebraska, and Illinois, have introduced similar legislation that would mandate checklists be used that will assess potential local vulnerabilities in supply chains and infrastructure security. These checklists will be used to assess want vulnerabilities need to be addressed if conflict arises between Taiwan and China.
The most recent bill was introduced last Wednesday to the Arizona House of Representatives and would obligate the state government to create new strategies aimed at reducing risks to the state if conflict breaks out. Additionally, the bill would also require the state government to examine potential cyber vulnerabilities and the associated implications of any potential disruption or complete severing of supply chains between the state and its Pacific-based partners. The bills in both Nebraska and Illinois mimic the language found within this Arizona bill.
The Knowledge.
These new state bills come after tensions between China and the US have continued to grow over intense debates surrounding Taiwan’s right to independence. Both nations have long coveted the region due to Taiwan’s geopolitical importance in the South China Sea as well as its economic power, especially within the semiconductor industry. These tensions have seemingly reached new heights notably after Taiwan’s most recent January election where the Democratic Progressive Party (DPP) candidate, Lai Ching-Te, won. This DPP has long advocated and supported Taiwan’s right to independent sovereignty, which has continued to increase tensions within the region.
With tensions rising, it is not surprising that states across the US are beginning to evaluate their supply chain vulnerabilities as it is estimated that a war between Taiwan and China would wipe out roughly 6.7% of the US economy in the first year alone. While these bills reflect legislators' concerns related to potential attacks and disruptions from the Chinese government, they are not new. Earlier this month, a similar bill was introduced into the Arizona state legislature; however, this bill did not pass.
The Impact.
While conflict in the South China Sea is not expected to occur presently, US officials are rapidly pivoting their attention to the region and looking at methods that could be used to secure the US from both supply chain disruptions and cyber attacks. While no new legislation has been passed at this time, US citizens located in these states should monitor this legislation to see if any of these bills pass over the coming days or weeks. While these bills would not create any immediate disruptions or have any noticeable impacts on the average resident, people involved in supply chains or cybersecurity may notice increased state governmental involvement. Additionally, residents across the US should expect both federal and state legislators to begin considering similar bills or initiatives to ensure that the US’s supply chains and infrastructures are properly protected and secure.
For businesses that rely on supply chains tied to either Taiwan or China, stakeholders should take measures to properly investigate their infrastructure to ensure that any potential disruptions are as minimally impactful as possible.
Major Tech Giants facing EU probes due to new regulations.
The News.
The European Union (EU) has announced that it is launching several new investigations into Meta, Google, and Apple. These investigations are going to be used to determine if the technology companies comply with the EU’s regulations. These new regulations were implemented to break up big tech companies’ dominance in the digital market. Specifically, these investigations will focus on whether these companies comply with the Digital Markets Act (DMA). The DMA was a law that fully went into effect earlier this month and was designed to regulate large tech companies designated as “gatekeepers.”
In September 2023, the DMA named six “gatekeepers”, which included Meta, Google, Apple, TikTok, Microsoft, and Amazon. Gatekeeper status was determined by each company's annual turnover and number of monthly active users. Gatekeeper investigations were designed to take up to twelve months and could lead to fines of up to ten percent of their total worldwide annual turnover if they were found to have violated the law. Fines up to twenty percent can also be applied in cases of repeated violations.
The Knowledge.
With these investigations, the EU is looking to assess these “gatekeepers” to determine if their platforms are violating DMA regulations. While each of these investigations has only just begun, the EU has already signaled that it is aiming to potentially open more investigations into other gatekeepers as they announced that they are already gathering facts to see if an investigation is needed to assess if Amazon is self-preferencing its brand products in its online stores.
For context, the DMA was originally passed in November of 2022 with the majority of its regulations coming into effect in May 2023. While the act itself is not new, the “gatekeeper” term was officially applied to major tech companies in September 2023 and gave each gatekeeper til March 2024 to comply with additional regulations. With this act, the EU was aiming to create a fair, transparent, and competitive digital market while also supporting consumer privacy rights. For companies designated as “gatekeepers,” these new regulations were designed to eliminate anti-competitive and unfair practices, allow consumers access to collected data, ensure interoperability between various services, and eliminate companies favoring their own functionalities and services over potential competitors on their platforms.
The Impact.
While these investigations have only just begun, the potential financial impacts that could result from “gatekeepers” found violating the DMA could be significant. As mentioned previously, “gatekeepers” found violating DMA regulations can face a fine of up to ten percent of their global annual turnover whereas repeat offenders could see fines up to twenty percent of that same figure.
Spokespersons from Meta, Apple, and Google have released statements reaffirming their commitments to work cooperatively with the European Commission to come into compliance with existing regulations. While these investigations will take some time, EU citizens should expect their outcomes to result in these large service platforms becoming more consumer-friendly. For other “gatekeepers” operating within the EU, internal audits should be conducted to assess if the company complies with DMA regulations to avoid unwanted attention from the European Commission.
Other Noteworthy Stories.
NTIA Pushes for Independent Audits of AI Systems.
What: The Biden administration calls for mandatory auditing into high-risk artificial intelligence (AI) systems.
Why: With a report published Wednesday by the National Telecommunications and Information Administration (NTIA), the administration is now calling for increased accountability when assessing potential vulnerabilities in AI supply chains. The report cited that “to achieve real accountability and harness all of AI’s benefits, the US…needs new and more widely available accountability tools and information, an ecosystem of independent AI system evaluation, and consequences for those who fail to deliver on commitments or manage risks properly.” NTIA’s new recommendations also went on to discuss how they believe the federal government should work with the private sector to improve information disclosure by creating new concepts, like the “AI nutrition label” to disclose critical information similar to how a food label works. Additionally, recommendations also included strengthening the federal government’s ability to address cross-sectional risks related to AI tools, a reporting database for AI-related incidents, and developing a registry of high-risk AI deployments.
Senators call for declassifying information surrounding TikTok’s risks.
What: US Senators Richard Blumenthal and Marsha Blackburn have called on the Director of National Intelligence to declassify information related to TikTok’s national security risks.
Why: Last Thursday, these US Senators released a letter to Director Avril Haines after several classified briefings to Congress requesting that this information be declassified. Blumenthal and Blackburn hope that by releasing this information to the American people it will help US citizens understand the national security issues related to the social media application.
This announcement comes a week after the US House of Representatives overwhelmingly passed legislation to force the sale of the application. That bill is currently resting in the Senate.
DeSantis signs bill banning social media accounts for kids under fourteen.
What: Florida Governor Ron DeSantis signed a new bill that will ban children younger than fourteen from being able to own social media accounts.
Why: On Monday, Governor DeSantis signed a new bill into law that bans children thirteen and under from having a social media account as well as requires children ages fourteen and fifteen to obtain explicit parental approval to own a social media account if the platform uses algorithms that have “certain addictive features.” This new bill comes after a few weeks ago the Florida State legislature passed a more restrictive social media ban bill that was eventually vetoed by the Governor citing that the previous iteration was too restrictive.
US and UK accuse China of cyberespionage that hit millions of people.
What: Both US and British officials have filed charges, levied sanctions, and accused the Chinese government of a massive cyberespionage campaign that targeted millions of people.
Why: On Monday, both the US and the United Kingdom (UK) targeted hacking group APT 31 with sanctions, labeling the group as an arm of China’s Ministry of State Security. Both nations allege that this hacking group targeted a variety of high-level targets including White House officials, US senators, British parliament members, and other government officials as well as engaging in spying efforts against various defense, steel, and energy firms.
Chinese officials in both Britain and the US have dismissed these allegations as unwarranted and stated that these charges are "completely fabricated and [are] malicious slanders."