This is story of two parallel universes. Over in the western one, neoliberal capitalism rules. In the other – the Chinese universe – a different system presides. In both universes, government concern over the growing power of giant tech companies has been growing for a while, but there the similarities end.
In the west, governments and legislatures were asleep at the wheel as the tech companies zoomed along their rapid growth paths. But in the past few years, democratic institutions have belatedly lumbered into action, or at any rate into a semblance of activity. Since 2010, for example, Europe has launched more than 36 regulatory probes against big tech, including 10 from the European commission and 26 from individual European countries. I keep a spreadsheet of these actions, which, in addition to the EU suits, currently lists seven major actions by US authorities, three by the UK Competition and Markets Authority and two by the German federal cartel office. And it seems that there are about 70 such actions in progress across the world.
The kindest thing one could say about this flurry of regulatory activity is that it lacks coherence and consistency. In July, for example, two antitrust suits against Facebook filed by some US states and the Federal Trade Commission were summarily thrown out by the judge for what, legally speaking, are elementary schoolboy mistakes, such as failing to provide facts that would support the claim that Facebook had a monopoly in social networking.
As for consistency, well, one can only wonder what goes through regulators’ minds. As Frederic Filloux, an experienced observer of these things, puts it: “Ask any expert, they will tell you that Facebook is the most dangerous player in the digital world. The social network’s business model is based on fracturing society, spreading false information ranging from the ‘stolen’ election of 2020 to anti-vax propaganda. As for Amazon, its behaviour is a textbook model of levelling the competitive field of e-commerce, such as imposing its will on the merchants who joined its marketplace by forcing them to buy ads if they want to be visible… Amazon might not be a monopoly in the traditional sense… but the company is a rare collection of near-perfect predatory practices.”
Why then, Filloux asks, does regulatory activity – at least in Europe – not correlate with toxicity? Why do Facebook and Amazon attract only about half of the antitrust probes that Google does? Good question. And although the purpose of antitrust prosecution is to restructure markets, so far its only outcomes in the west have been supposedly whopping fines (small change for tech giants) and years and years of interminable legal processes.
How different things are over in the Chinese universe. There, the country’s tech giants have lost their swagger and some of their hitherto-esteemed leaders have disappeared from public view. A few of them are in jail. A huge industry has been brought to heel. All transactions involving “unapproved” cryptocurrencies are now illegal. “At China’s annual World Internet Conference last week,” reports the New York Times, “an official signalled that efforts to rein in internet giants were not over, warning against the ‘disorderly expansion of capital’. Once a showcase for the might of China’s entrepreneurs, this year’s conference became a platform for pledging fealty to state efforts to spread the wealth.”
Whenever Chinese tech giants became too big for their boots, they belatedly learned that no one in China is bigger than the Communist party. Just to emphasise that point, regulators brutally torpedoed the huge stock market listing of Ant Group. And when Didi Chuxing (the ride-hailing company that bought Uber China) had the temerity to proceed with a flotation in the US, its software was banned from app stores in China. Everyone else got the message.
None of this should be taken as an endorsement of the Chinese regime, but to raise two serious questions.
The first is an exam question: does the contrast between western feebleness in reining in our tech giants and Chinese effectiveness at controlling theirs imply that only authoritarian regimes can bring swaggering corporations to heel? Discuss. Do not write on both sides of the paper.
The other question is whether Xi Jinping and co understand something that we seem unwilling to accept – that social media companies, no matter how large and apparently powerful, are ultimately disposable. What really matters is what the west still has and China lacks, namely the ability to create (and modernise) the technological infrastructure that underpins companies that, basically, are just doing tricks with old technology such as the web. The Trump tech boycott, which Biden has retained, has made Xi and his colleagues resolved to eliminate that deficit.
I’m sure they will succeed in that endeavour, but one of the first things they will need is a world-leading semiconductor design and manufacturing company. It just so happens that TSMC, the company that best fits that description, is right on their doorstep. It’s just across the Formosa strait, in a place called Taiwan.
Rocket Lab has taken delivery of NASA’s CAPSTONE spacecraft at its New Zealand launch pad ahead of a mission to the Moon.
It’s been quite a journey for CAPSTONE [Cislunar Autonomous Positioning System Technology Operations and Navigation Experiment], which was originally supposed to launch from Rocket Lab’s US launchpad at Wallops Island in Virginia.
The pad, Launch Complex 2, has been completed for a while now. However, delays in certifying Rocket Lab’s Autonomous Flight Termination System (AFTS) pushed the move to Launch Complex 1 in Mahia, New Zealand.
The wet dress rehearsal for the launch was completed last night, prompting CEO Peter Beck to say: “Next stop…the Moon!”
“I always wanted to say that,” he added. Beck has long dreamed of sending his rockets beyond Low Earth Orbit (LEO) and is planning a mission to Venus in 2023. However, the Moon is than the company has sent its rockets to date.
CAPSTONE is to be sent to a Near Rectilinear Halo Orbit (NRHO) around the Moon, a location planned for the NASA, ESA, and CSA Gateway. CAPSTONE’s primary mission is to verify simulations that the interaction gravity of the Earth and Moon will make for a stable orbit.
The milestone was hit as Rocket Lab announced its first quarter 2022 results. Overall, the company made a net loss of $26.7 million, down from the $15.9 million loss of the same period last year, but revenues jumped to $40.7 million from $18.2 million. Most interesting was the make-up of that revenue. Space Systems (the company’s Photon spacecraft and the components it sells) accounted for a whopping 84 percent of Q1 revenue. Actual Electron rockets fared less well; during a call with analysts, CFO Adam Spice said that launches contributed just $6.6 million.
Going forward, the company expects second quarter revenues to be between $51 million and $54 million. It is including three dedicated launches in that figure (of which CAPSTONE is one). Two have already happened, and there is potential for a fourth, but the company has opted to take a prudent path and not include it in the figures.
As for CAPSTONE, it will be integrated with the Electron rocket and Photon spacecraft bus ahead of the launch window opening on May 31. The Electron will launch the spacecraft into LEO and the Photon will take care of the ballistic lunar transfer via multiple orbit raisings. A final burn of Photon’s engine will occur on the sixth day, enough to escape Earth orbit and send CAPSTONE on a course for the Moon. ®
A DCU Alpha spin-out, UrbanVolt says it sells power generated from solar energy at up to 30pc lower rates than traditional suppliers.
UrbanVolt, a Dublin-based clean energy company, has secured €36m in financing to expand its solar panel business in Ireland and the UK.
The funding includes a €30m asset-backed seven-year loan from Swedish credit fund PCP and €6m from existing funding partners, BVP and Beach Point Capital.
Founded in 2015 by Kevin Maughan, Graham Deane and Declan Barrett, UrbanVolt finances and installs solar panels on the rooftops of commercial and industrial businesses, selling the solar electricity generated to the businesses at up to 30pc lower rate than traditional suppliers.
The company said it also guarantees the price for up to 30 years, protecting businesses against rising energy costs for decades to come, with no minimum amount payable or standing charges – meaning that customers pay proportionate to their consumption.
“This is a transformational deal, which will allow us to scale at pace to meet the significant demand in the market while also streamlining the process of installing solar panels for our customers’ benefit,” said Maughan, who is also the CEO of the DCU Alpha spin-out.
“This first funding facility from PCP will see our project output grow by 20x over the coming years. It is also happening at a time when the demand for renewable energy is rising significantly given climate and geopolitical crises.”
The loan facility will be used to fund the installation of solar panels and related equipment on UrbanVolt’s primary target of commercial and industrial client sites in both Ireland and the UK.
It started supplying solar-generated electricity directly to businesses in Ireland last summer, since when it has agreed contracts with more than 60 companies and completed seven installations.
Maughan sad that there is “simply no compelling reason” for commercial and industrial operators to opt for traditional energy sources anymore, adding that UrbanVolt offers “unparalleled” price security and clean energy.
“By incorporating an ‘as a service’ business model, our customers only pay for the energy they use without a standing charge, and the cost of our equipment and its maintenance is kept off their balance sheet.”
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Digital investors have withdrawn savings in the “stablecoin” tether worth $7.6bn (£6.2bn) since the cryptocurrency crisis began last week, suggesting the company has paid out a sum almost twice its total cash holdings to spooked depositors.
Stablecoins are supposed to have a fixed value matched to a real-world asset, in most cases $1 a token. However, faith in the concept was rocked last Tuesday when another big player, terra, broke its peg to the dollar. That has fuelled a wider sell-off across the crypto sector, which relies on stablecoins for much of its financial engineering.
Tether, the third biggest cryptocurrency by “market cap”, experienced a short-lived crisis on Thursday when its value dropped from $1 to 95¢ as savers feared it would follow its fellow stablecoin terra and collapse. However, the token, which is controlled by a private company with close links to the crypto exchange Bitfinex, has since largely restored its dollar peg by honouring a promise to allow savers to always withdraw $1 for every tether they give back to the company.
The company only allows direct withdrawals of at least $100,000 for each request, and charges a fee of 0.1% on redemptions. Anyone with less tether than that minimum can only turn their money into dollars by finding someone to buy it from them – a disparity that fuelled the temporary collapse in value.
Despite the difficulties, according to public blockchain data, $7.6bn of tether has been reallocated in this way since Thursday. That is almost twice the cash that Tether had in its reserves at the end of last year, according to accounts published on its website.
Most of the rest of its reserves are held in “cash-like” assets, the majority of which are $35bn of US government debt and $25bn of corporate bonds. However, the company has refused to share any further details of the investments, with its chief technology officer, Paolo Ardoino, telling the Financial Times: “We don’t want to give our secret sauce.”
There have long been fears as to Tether’s ability to honour all redemptions. The company had once said it backed its currency with “US dollars”, a claim the New York attorney general said in 2021 “was a lie”. Now, it simply claims its currency is “backed 100% by Tether’s reserves”.
By contrast, terra was backed by a complex algorithm that required the value of a sister cryptocurrency, luna, to constantly rise in order to maintain the dollar peg. When the crash hit last week, the system went into a “death spiral”, automatically printing more luna, which crashed the price further, until luna lost 99.9995% of its value in a matter of days and terra was left languishing at $0.11.
The charismatic founder of the Terra project, Do Kwon, has said he wants to relaunch the currency. In a proposal posted to the project’s message board on Friday, he suggested wiping all ownership of luna, and redistributing 1bn new tokens, with most going to those who hold the stablecoin, or who held luna before last week’s crash.
“It is a hard balance – and no easy answers in redistributing value within the network,” Kwon wrote. “But value must be distributed to allow the ecosystem to survive, and in its current state it will not.”
Kwon also faces questions about how the vast sums of bitcoin that his project had amassed to back terra were spent. According to a breakdown shared by the organisation, it sold more than 80,000 bitcoins, worth more than $2.4bn, to unnamed parties in exchange for terra valued at $1 – at a time when the public price of the currency was under 75¢.
The jitters around stablecoins have combined with a general slump in tech stocks and the wider US downturn to trigger a wider crisis of confidence across the crypto sector. Bitcoin and ethereum, the two biggest cryptocurrencies, are down more than 10% over the last seven days, with ethereum dropping 17% to less than $2,000. Smaller currencies have, as always, been more volatile, with dogecoin falling 26% over the week.
Even some of the most vocal backers of digital currencies are now querying the promises of the sector. The founder of the crypto exchange FTX, Sam Bankman-Fried, said in an interview with the Financial Times that bitcoin has no future as a payments network because of the inherent inefficiencies of its blockchain, the public digital register that records its transactions. Instead, he argued, it could only function as a gold-like store of long-term value.