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Facebook and Twitter Dodge a 2016 Repeat, and Ignite a 2020 Firestorm

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Since 2016, when Russian hackers and WikiLeaks injected stolen emails from the Hillary Clinton campaign into the closing weeks of the presidential race, politicians and pundits have called on tech companies to do more to fight the threat of foreign interference.

On Wednesday, less than a month from another election, we saw what “doing more” looks like.

Early Wednesday morning, the New York Post published a splashy front-page article about supposedly incriminating photos and emails found on a laptop belonging to Hunter Biden, the son of Joseph R. Biden Jr. To many Democrats, the unsubstantiated article — which included a bizarre set of details involving a Delaware computer repair shop, the F.B.I. and Rudy Giuliani, the president’s personal lawyer — smelled suspiciously like the result of a hack-and-leak operation.

To be clear, there is no evidence tying the Post’s report to a foreign disinformation campaign. Many questions remain about how the paper obtained the emails and whether they were authentic. Even so, the social media companies were taking no chances.

Within hours, Twitter banned all links to the Post’s article, and locked the accounts of people, including some journalists and the White House press secretary, Kayleigh McEnany, who tweeted it. The company said it made the move because the article contained images showing private personal information, and because it viewed the article as a violation of its rules against distributing hacked material.

Facebook took a less nuclear approach. It said that it would reduce the visibility of the article on its service until it could be fact-checked by a third party, a policy it has applied to other sensitive posts. (The move did not seem to damage the article’s prospects; by Wednesday night, stories about Hunter Biden’s emails were among the most-engaged posts on Facebook.)

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Both decisions angered a chorus of Republicans, who called for Facebook and Twitter to be sued, stripped of their legal protections, or forced to account for their choices. Senator Josh Hawley, Republican of Missouri, called in a tweet for Twitter and Facebook to be subpoenaed by Congress to testify about censorship, accusing them of trying to “hijack American democracy by censoring the news & controlling the expression of Americans.”

A few caveats: There is still a lot we still don’t know about the Post article. We don’t know if the emails it describes are authentic, fake or some combination of both, or if the events they purport to describe actually happened. Mr. Biden’s campaign denied the central claims in the article, and a Biden campaign surrogate lashed out against the Post on Wednesday, calling the article “Russian disinformation.”

Even if the emails are authentic, we don’t know how they were obtained, or how they ended up in the possession of Rudy Giuliani, the president’s lawyer, who has been spearheading efforts to paint Mr. Biden and his family as corrupt. The owner of the Delaware computer shop who reportedly turned over the laptop to investigators gave several conflicting accounts to reporters about the laptop’s chain of custody on Wednesday.

Critics on all sides can quibble with the decisions these companies made, or how they communicated them. Even Jack Dorsey, Twitter’s chief executive, said the company had mishandled the original explanation for the ban.

But the truth is less salacious than a Silicon Valley election-rigging attempt. Since 2016, lawmakers, researchers and journalists have pressured these companies to take more and faster action to prevent false or misleading information from spreading on their services. The companies have also created new policies governing the distribution of hacked material, in order to prevent a repeat of 2016’s debacle.

It’s true that banning links to a story published by a 200-year-old American newspaper — albeit one that is now a Rupert Murdoch-owned tabloid — is a more dramatic step than cutting off WikiLeaks or some lesser-known misinformation purveyor. Still, it’s clear that what Facebook and Twitter were actually trying to prevent was not free expression, but a bad actor using their services as a conduit for a damaging cyberattack or misinformation.

These decisions get made quickly, in the heat of the moment, and it’s possible that more contemplation and debate would produce more satisfying choices. But time is a luxury these platforms don’t always have. In the past, they have been slow to label or remove dangerous misinformation about Covid-19, mail-in voting and more, and have only taken action after the bad posts have gone viral, defeating the purpose.

That left the companies with three options, none of them great. Option A: They could treat the Post’s article as part of a hack-and-leak operation, and risk a backlash if it turned out to be more innocent. Option B: They could limit the article’s reach, allowing it to stay up but choosing not to amplify it until more facts emerged. Or, Option C: They could do nothing, and risk getting played again by a foreign actor seeking to disrupt an American election.

Twitter chose Option A. Facebook chose Option B. Given the pressures they have been under for the last four years, it’s no surprise that neither company chose Option C. (Although YouTube, which made no public statement about the Post’s story, seems to be keeping its head down and hoping the controversy passes.)

ImageSenator Josh Hawley, Republican of Missouri, accused the tech companies of trying to “hijack American democracy by censoring the news & controlling the expression of Americans.”
Credit…Hilary Swift for The New York Times

Since the companies made those decisions, Republican officials began using the actions as an example of Silicon Valley censorship run amok. On Wednesday, several prominent Republicans, including Mr. Trump, repeated their calls for Congress to repeal Section 230 of the Communications Decency Act, a law that shields tech platforms from many lawsuits over user-generated content.

That leaves the companies in a precarious spot. They are criticized when they allow misinformation to spread. They are also criticized when they try to prevent it.

Perhaps the strangest idea to emerge in the past couple of days, though, is that these services are only now beginning to exert control over what we see. Representative Doug Collins, Republican of Georgia, made this point in a letter to Mark Zuckerberg, the chief executive of Facebook, in which he derided the social network for using “its monopoly to control what news Americans have access to.”

The truth, of course, is that tech platforms have been controlling our information diets for years, whether we realized it or not. Their decisions were often buried in obscure “community standards” updates, or hidden in tweaks to the black-box algorithms that govern which posts users see. But make no mistake: These apps have never been neutral, hands-off conduits for news and information. Their leaders have always been editors masquerading as engineers.

What’s happening now is simply that, as these companies move to rid their platforms of bad behavior, their influence is being made more visible. Rather than letting their algorithms run amok (which is an editorial choice in itself), they’re making high-stakes decisions about flammable political misinformation in full public view, with human decision makers who can be debated and held accountable for their choices. That’s a positive step for transparency and accountability, even if it feels like censorship to those who are used to getting their way.

After years of inaction, Facebook and Twitter are finally starting to clean up their messes. And in the process, they’re enraging the powerful people who have thrived under the old system.

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The Trump campaign celebrated a growth record that Democrats downplayed.

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The White House celebrated economic growth numbers for the third quarter released on Thursday, even as Joseph R. Biden Jr.’s presidential campaign sought to throw cold water on the report — the last major data release leading up to the Nov. 3 election — and warned that the economic recovery was losing steam.

The economy grew at a record pace last quarter, but the upswing was a partial bounce-back after an enormous decline and left the economy smaller than it was before the pandemic. The White House took no notice of those glum caveats.

“This record economic growth is absolute validation of President Trump’s policies, which create jobs and opportunities for Americans in every corner of the country,” Mr. Trump’s re-election campaign said in a statement, highlighting a rebound of 33.1 percent at an annualized rate. Mr. Trump heralded the data on Twitter, posting that he was “so glad” that the number had come out before Election Day.

The annualized rate that the White House emphasized extrapolates growth numbers as if the current pace held up for a year, and risks overstating big swings. Because the economy’s growth has been so volatile amid the pandemic, economists have urged focusing on quarterly numbers.

Those showed a 7.4 percent gain in the third quarter. That rebound, by far the biggest since reliable statistics began after World War II, still leaves the economy short of its pre-pandemic levels. The pace of recovery has also slowed, and now coronavirus cases are rising again across much of the United States, raising the prospect of further pullback.

“The recovery is stalling out, thanks to Trump’s refusal to have a serious plan to deal with Covid or to pass a new economic relief plan for workers, small businesses and communities,” Mr. Biden’s campaign said in a release ahead of Thursday’s report. The rebound was widely expected, and the campaign characterized it as “a partial return from a catastrophic hit.”

Economists have warned that the recovery could face serious roadblocks ahead. Temporary measures meant to shore up households and businesses — including unemployment insurance supplements and forgivable loans — have run dry. Swaths of the service sector remain shut down as the virus continues to spread, and job losses that were temporary are increasingly turning permanent.

“With coronavirus infections hitting a record high in recent days and any additional fiscal stimulus unlikely to arrive until, at the earliest, the start of next year, further progress will be much slower,” Paul Ashworth, chief United States economist at Capital Economics, wrote in a note following the report.

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Black and Hispanic workers, especially women, lag in the U.S. economic recovery.

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The surge in economic output in the third quarter set a record, but the recovery isn’t reaching everyone.

Economists have long warned that aggregate statistics like gross domestic product can obscure important differences beneath the surface. In the aftermath of the last recession, for example, G.D.P. returned to its previous level in early 2011, even as poverty rates remained high and the unemployment rate for Black Americans was above 15 percent.

Aggregate statistics could be even more misleading during the current crisis. The job losses in the initial months of the pandemic disproportionately struck low-wage service workers, many of them Black and Hispanic women. Service-sector jobs have been slow to return, while school closings are keeping many parents, especially mothers, from returning to work. Nearly half a million Hispanic women have left the labor force over the last three months.

“If we’re thinking that the economy is recovering completely and uniformly, that is simply not the case,” said Michelle Holder, an economist at John Jay College in New York. “This rebound is unevenly distributed along racial and gender lines.”

The G.D.P. report released Thursday doesn’t break down the data by race, sex or income. But other sources make the disparities clear. A pair of studies by researchers at the Urban Institute released this week found that Black and Hispanic adults were more likely to have lost jobs or income since March, and were twice as likely as white adults to experience food insecurity in September.

The financial impact of the pandemic hit many of the families that were least able to afford it, even as white-collar workers were largely spared, said Michael Karpman, an Urban Institute researcher and one of the studies’ authors.

“A lot of people who were already in a precarious position before the pandemic are now in worse shape, whereas people who were better off have generally been faring better financially,” he said.

Federal relief programs, such as expanded unemployment benefits, helped offset the damage for many families in the first months of the pandemic. But those programs have mostly ended, and talks to revive them have stalled in Washington. With virus cases surging in much of the country, Mr. Karpman warned, the economic toll could increase.

“There could be a lot more hardship coming up this winter if there’s not more relief from Congress, with the impact falling disproportionately on Black and Hispanic workers and their families,” he said.

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Ant Challenged Beijing and Prospered. Now It Toes the Line.

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As Jack Ma of Alibaba helped turn China into the world’s biggest e-commerce market over the past two decades, he was also vowing to pull off a more audacious transformation.

“If the banks don’t change, we’ll change the banks,” he said in 2008, decrying how hard it was for small businesses in China to borrow from government-run lenders.

“The financial industry needs disrupters,” he told People’s Daily, the official Communist Party newspaper, a few years later. His goal, he said, was to make banks and other state-owned enterprises “feel unwell.”

The scope of Mr. Ma’s success is becoming clearer. The vehicle for his financial-technology ambitions, an Alibaba spinoff called Ant Group, is preparing for the largest initial public offering on record. Ant is set to raise $34 billion by selling its shares to the public in Hong Kong and Shanghai, according to stock exchange documents released on Monday. After the listing, Ant would be worth around $310 billion, much more than many global banks.

The company is going public not as a scrappy upstart, but as a leviathan deeply dependent on the good will of the government Mr. Ma once relished prodding.

More than 730 million people use Ant’s Alipay app every month to pay for lunch, invest their savings and shop on credit. Yet Alipay’s size and importance have made it an inevitable target for China’s regulators, which have already brought its business to heel in certain areas.

These days, Ant talks mostly about creating partnerships with big banks, not disrupting or supplanting them. Several government-owned funds and institutions are Ant shareholders and stand to profit handsomely from the public offering.

The question now is how much higher Ant can fly without provoking the Chinese authorities into clipping its wings further.

Excitable investors see Ant as a buzzy internet innovator. The risk is that it becomes more like a heavily regulated “financial digital utility,” said Fraser Howie, the co-author of “Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise.”

“Utility stocks, as far as I remember, were not the ones to be seen as the most exciting,” Mr. Howie said.

Ant declined to comment, citing the quiet period demanded by regulators before its share sale.

The company has played give-and-take with Beijing for years. As smartphone payments became ubiquitous in China, Ant found itself managing huge piles of money in Alipay users’ virtual wallets. The central bank made it park those funds in special accounts where they would earn minimal interest.

After people piled into an easy-to-use investment fund inside Alipay, the government forced the fund to shed risk and lower returns. Regulators curbed a plan to use Alipay data as the basis for a credit-scoring system akin to Americans’ FICO scores.

China’s Supreme Court this summer capped interest rates for consumer loans, though it was unclear how the ceiling would apply to Ant. The central bank is preparing a new virtual currency that could compete against Alipay and another digital wallet, the messaging app WeChat, as an everyday payment tool.

Ant has learned ways of keeping the authorities on its side. Mr. Ma once boasted at the World Economic Forum in Davos, Switzerland, about never taking money from the Chinese government. Today, funds associated with China’s social security system, its sovereign wealth fund, a state-owned life insurance company and the national postal carrier hold stakes in Ant. The I.P.O. is likely to increase the value of their holdings considerably.

“That’s how the state gets its payoff,” Mr. Howie said. With Ant, he said, “the line between state-owned enterprise and private enterprise is highly, highly blurred.”

China, in less than two generations, went from having a state-planned financial system to being at the global vanguard of internet finance, with trillions of dollars in transactions being made on mobile devices each year. Alipay had a lot to do with it.

Alibaba created the service in the early 2000s to hold payments for online purchases in escrow. Its broader usefulness quickly became clear in a country that mostly missed out on the credit card era. Features were added and users piled in. It became impossible for regulators and banks not to see the app as a threat.

ImageAnt Group’s headquarters in Hangzhou, China.
Credit…Alex Plavevski/EPA, via Shutterstock

A big test came when Ant began making an offer to Alipay users: Park your money in a section of the app called Yu’ebao, which means “leftover treasure,” and we will pay you more than the low rates fixed by the government at banks.

People could invest as much or as little as they wanted, making them feel like they were putting their pocket change to use. Yu’ebao was a hit, becoming one of the world’s largest money market funds.

The banks were terrified. One commentator for a state broadcaster called the fund a “vampire” and a “parasite.”

Still, “all the main regulators remained unanimous in saying that this was a positive thing for the Chinese financial system,” said Martin Chorzempa, a research fellow at the Peterson Institute for International Economics in Washington.

“If you can’t actually reform the banks,” Mr. Chorzempa said, “you can inject more competition.”

But then came worries about shadowy, unregulated corners of finance and the dangers they posed to the wider economy. Today, Chinese regulators are tightening supervision of financial holding companies, Ant included. Beijing has kept close watch on the financial instruments that small lenders create out of their consumer loans and sell to investors. Such securities help Ant fund some of its lending. But they also amplify the blowup if too many of those loans aren’t repaid.

“Those kinds of derivative products are something the government is really concerned about,” said Tian X. Hou, founder of the research firm TH Data Capital. Given Ant’s size, she said, “the government should be concerned.”

The broader worry for China is about growing levels of household debt. Beijing wants to cultivate a consumer economy, but excessive borrowing could eventually weigh on people’s spending power. The names of two of Alipay’s popular credit functions, Huabei and Jiebei, are jaunty invitations to spend and borrow.

Huang Ling, 22, started using Huabei when she was in high school. At the time, she didn’t qualify for a credit card. With Huabei’s help, she bought a drone, a scooter, a laptop and more.

The credit line made her feel rich. It also made her realize that if she actually wanted to be rich, she had to get busy.

“Living beyond my means forced me to work harder,” Ms. Huang said.

First, she opened a clothing shop in her hometown, Nanchang, in southeastern China. Then she started an advertising company in the inland metropolis of Chongqing. When the business needed cash, she borrowed from Jiebei.

Online shopping became a way to soothe daily anxieties, and Ms. Huang sometimes racked up thousands of dollars in Huabei bills, which only made her even more anxious. When the pandemic slammed her business, she started falling behind on her payments. That cast her into a deep depression.

Finally, early this month, with her parents’ help, she paid off her debts and closed her Huabei and Jiebei accounts. She felt “elated,” she said.

China’s recent troubles with freewheeling online loan platforms have put the government under pressure to protect ordinary borrowers.

Ant is helped by the fact that its business lines up with many of the Chinese leadership’s priorities: encouraging entrepreneurship and financial inclusion, and expanding the middle class. This year, the company helped the eastern city of Hangzhou, where it is based, set up an early version of the government’s app-based system for dictating coronavirus quarantines.

Such coziness is bound to raise hackles overseas. In Washington, Chinese tech companies that are seen as close to the government are radioactive.

In January 2017, Eric Jing, then Ant’s chief executive, said the company aimed to be serving two billion users worldwide within a decade. Shortly after, Ant announced that it was acquiring the money transfer company MoneyGram to increase its U.S. footprint. By the following January, the deal was dead, thwarted by data security concerns.

More recently, top officials in the Trump administration have discussed whether to place Ant Group on the so-called entity list, which prohibits foreign companies from purchasing American products. Officials from the State Department have suggested that an interagency committee, which also includes officials from the departments of defense, commerce and energy, review Ant for the potential entity listing, according to three people familiar with the matter.

Ant does not talk much anymore about expanding in the United States.

Ana Swanson contributed reporting.

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