Nearly a decade ago, the United States began naming and shaming China for an onslaught of online espionage, the bulk of it conducted using low-level phishing emails against American companies for intellectual property theft.
On Monday, the United States again accused China of cyberattacks. But these attacks were highly aggressive, and they reveal that China has transformed into a far more sophisticated and mature digital adversary than the one that flummoxed U.S. officials a decade ago.
The Biden administration’s indictment for the cyberattacks, along with interviews with dozens of current and former American officials, shows that China has reorganized its hacking operations in the intervening years. While it once conducted relatively unsophisticated hacks of foreign companies, think tanks and government agencies, China is now perpetrating stealthy, decentralized digital assaults of American companies and interests around the world.
Hacks that were conducted via sloppily worded spearphishing emails by units of the People’s Liberation Army are now carried out by an elite satellite network of contractors at front companies and universities that work at the direction of China’s Ministry of State Security, according to U.S. officials and the indictment.
like Microsoft’s Exchange email service and Pulse VPN security devices, which are harder to defend against and allow China’s hackers to operate undetected for longer periods.
“What we’ve seen over the past two or three years is an upleveling” by China, said George Kurtz, the chief executive of the cybersecurity firm CrowdStrike. “They operate more like a professional intelligence service than the smash-and-grab operators we saw in the past.”
China has long been one of the biggest digital threats to the United States. In a 2009 classified National Intelligence Estimate, a document that represents the consensus of all 16 U.S. intelligence agencies, China and Russia topped the list of America’s online adversaries. But China was deemed the more immediate threat because of the volume of its industrial trade theft.
But that threat is even more troubling now because of China’s revamping of its hacking operations. Furthermore, the Biden administration has turned cyberattacks — including ransomware attacks — into a major diplomatic front with superpowers like Russia, and U.S. relations with China have steadily deteriorated over issues including trade and tech supremacy.
China’s prominence in hacking first came to the fore in 2010 with attacks on Google and RSA, the security company, and again in 2013 with a hack of The New York Times.
breach of the U.S. Office of Personnel Management. In that attack, Chinese hackers made off with sensitive personal information, including more than 20 million fingerprints, for Americans who had been granted a security clearance.
White House officials soon struck a deal that China would cease its hacking of American companies and interests for its industrial benefit. For 18 months during the Obama administration, security researchers and intelligence officials observed a notable drop in Chinese hacking.
After President Donald J. Trump took office and accelerated trade conflicts and other tensions with China, the hacking resumed. By 2018, U.S. intelligence officials had noted a shift: People’s Liberation Army hackers had stood down and been replaced by operatives working at the behest of the Ministry of State Security, which handles China’s intelligence, security and secret police.
Hacks of intellectual property, that benefited China’s economic plans, originated not from the P.L.A. but from a looser network of front companies and contractors, including engineers who worked for some of the country’s leading technology companies, according to intelligence officials and researchers.
It was unclear how exactly China worked with these loosely affiliated hackers. Some cybersecurity experts speculated that the engineers were paid cash to moonlight for the state, while others said those in the network had no choice but to do whatever the state asked. In 2013, a classified U.S. National Security Agency memo said, “The exact affiliation with Chinese government entities is not known, but their activities indicate a probable intelligence requirement feed from China’s Ministry of State Security.”
announced a new policy requiring Chinese security researchers to notify the state within two days when they found security holes, such as the “zero-days” that the country relied on in the breach of Microsoft Exchange systems.
arrested its founder. Two years later, Chinese police announced that they would start enforcing laws banning the “unauthorized disclosure” of vulnerabilities. That same year, Chinese hackers, who were a regular presence at big Western hacking conventions, stopped showing up, on state orders.
“If they continue to maintain this level of access, with the control that they have, their intelligence community is going to benefit,” Mr. Kurtz said of China. “It’s an arms race in cyber.”
Internet infrastructure operators like Didi must now prove their political and legal legitimacy to the government, Ma Changbo, an online media start-up founder, wrote on his WeChat social media account.
“This is the second half of the U.S.-China decoupling,” he wrote. “In the capital market, the model of playing both sides of the fence is coming to an end.”
Didi, Ms. Liu and Mr. Liu didn’t immediately respond to requests for comment.
China’s internet companies have benefited from the best of two worlds since the 1990s. Many received foreign venture funding — Alibaba, the e-commerce giant, was funded by Yahoo and SoftBank, while Tencent, another internet titan, was backed by South Africa’s Naspers. They also copied their business models from Silicon Valley companies.
The Chinese companies gained further advantages when Beijing blocked almost all big American internet companies from its domestic market, giving its home players plenty of room to grow. Many Chinese internet firms later went public in New York, where investors have a bigger appetite for innovative and risky start-ups than in Shanghai or Hong Kong. So far this year, more than 35 Chinese companies have gone public in the United States.
Let Us Help You Protect Your Digital Life
Now the Didi crackdown is changing the calculations for many in China’s tech industry. One entrepreneur who has set her sights on a listing in New York for her enterprise software start-up said it would be harder to go public in Hong Kong with a high valuation because what her company did — software as a service — was a relatively new idea in China.
A venture capitalist in Beijing added that because of China’s data security requirements, it was now unlikely that start-ups in artificial intelligence and software as a service would consider going public in New York. Few people were willing to speak on the record for fear of retaliation by Beijing.
At the same time, the United States has become more hostile to Chinese tech companies and investors. As Washington has ramped up its scrutiny of deals that involve sensitive technologies, it has become almost impossible for Chinese venture firms to invest in Silicon Valley start-ups, several investors said.
SAN FRANCISCO — President Biden and many lawmakers in Washington are worried these days about computer chips and China’s ambitions with the foundational technology.
But a massive machine sold by a Dutch company has emerged as a key lever for policymakers — and illustrates how any country’s hopes of building a completely self-sufficient supply chain in semiconductor technology are unrealistic.
The machine is made by ASML Holding, based in Veldhoven. Its system uses a different kind of light to define ultrasmall circuitry on chips, packing more performance into the small slices of silicon. The tool, which took decades to develop and was introduced for high-volume manufacturing in 2017, costs more than $150 million. Shipping it to customers requires 40 shipping containers, 20 trucks and three Boeing 747s.
The complex machine is widely acknowledged as necessary for making the most advanced chips, an ability with geopolitical implications. The Trump administration successfully lobbied the Dutch government to block shipments of such a machine to China in 2019, and the Biden administration has shown no signs of reversing that stance.
Congress is debating plans to spend more than $50 billion to reduce reliance on foreign chip manufacturers. Many branches of the federal government, particularly the Pentagon, have been worried about the U.S. dependence on Taiwan’s leading chip manufacturer and the island’s proximity to China.
A study this spring by Boston Consulting Group and the Semiconductor Industry Association estimated that creating a self-sufficient chip supply chain would take at least $1 trillion and sharply increase prices for chips and products made with them.
Moore’s Law, named after Gordon Moore, a co-founder of the chip giant Intel.
In 1997, ASML began studying a shift to usingextreme ultraviolet, or EUV, light. Such light has ultrasmall wavelengths that can create much tinier circuitry than is possible with conventional lithography. The company later decided to make machines based on the technology, an effort that has cost $8 billion since the late 1990s.
The development process quickly went global. ASML now assembles the advanced machines using mirrors from Germany and hardware developed in San Diego that generates light by blasting tin droplets with a laser. Key chemicals and components come from Japan.
a final report to Congress and Mr. Biden in March, the National Security Commission on Artificial Intelligence proposed extending export controls to some other advanced ASMLmachines as well. The group, funded by Congress, seeks to limit artificial intelligence advances with military applications.
Mr. Hunt and other policy experts argued that since China was already using those machines, blocking additional sales would hurt ASML without much strategic benefit. So does the company.
“I hope common sense will prevail,” Mr. van den Brink said.
Mr. Buser declined to comment on February’s changes.
Amazon also unveiled a cloud service, Luna, in September. It is so far available only to invitees, who pay $6 a month to play the 85 games on the platform. The games can be streamed from the cloud to phones, computers and Amazon’s Fire TV.
Like Google, Amazon has struggled to assemble a vast library of appealing games, though it does offer games from the French publisher Ubisoft for an added fee. Amazon has also had trouble developing its own games, which Mr. van Dreunen said showed that the creative artistry necessary to make enticing games was at odds with the more corporate style of the tech giants.
“They may have an interesting technological solution, but it totally lacks personality,” he said.
Amazon said it remained dedicated to game development: It opened a game studio in Montreal in March and, after a long delay, is releasing a game called New World this summer.
Even console makers have jumped into cloud gaming. Microsoft, which makes the Xbox console, released a cloud offering, xCloud or Xbox Cloud Gaming, last fall. For a $15 monthly subscription, users can play more than 200 games on various devices.
Sony also has a cloud gaming service, PlayStation Now, where games can be streamed to PlayStation consoles and computers.
Satya Nadella, Microsoft’s chief executive, said in an interview last month that he did not think it was possible to be a gaming company “with any level of big ambition” without cloud gaming. Sony declined to comment.
Other companies have waded in, too. Nvidia, the chip maker that produces gaming hardware, has a $10-a-month cloud program, GeForce Now.
WASHINGTON — When the nation’s antitrust laws were created more than a century ago, they were aimed at taking on industries such as Big Oil.
But technology giants like Amazon, Facebook, Google and Apple, which dominate e-commerce, social networks, online advertising and search, have risen in ways unforeseen by the laws. In recent decades, the courts have also interpreted the rules more narrowly.
On Monday, a pair of rulings dismissing federal and state antitrust lawsuits against Facebook renewed questions about whether the laws were suited to taking on tech power. A federal judge threw out the federal suit because, he said, the Federal Trade Commission had not supported its claims that Facebook holds a dominant market share, and he said the states had waited too long to make their case.
The decisions underlined how cautious and conservative courts could slow an increasingly aggressive push by lawmakers, regulators and the White House to restrain the tech companies, fueling calls for Congress to revamp the rules and provide regulators with more legal tools to take on the tech firms.
David Cicilline, a Democrat of Rhode Island, said the country needed a “massive overhaul of our antitrust laws and significant updates to our competition system” to police the biggest technology companies.
Moments later, Representative Ken Buck, a Colorado Republican, agreed. He called for lawmakers to adapt antitrust laws to fit the business models of Silicon Valley companies.
This week’s rulings have now put the pressure on lawmakers to push through a recently proposed package of legislation that would rewrite key aspects of monopoly laws to make some of the tech giants’ business practices illegal.
“This is going to strengthen the case for legislation,” said Herbert Hovenkamp, an antitrust expert at the University of Pennsylvania Law School. “It seems to be proof that the antitrust laws are not up to the challenge.”
introduced this month and passed the House Judiciary Committee last week. The bills would make it harder for the major tech companies to buy nascent competitors and to give preference to their own services on their platforms, and ban them from using their dominance in one business to gain the upper hand in another.
including Lina Khan, a scholar whom President Biden named this month to run the F.T.C. — have argued that a broader definition of consumer welfare, beyond prices, should be applied. Consumer harm, they have said, can also be evident in reduced product quality, like Facebook users suffering a loss of privacy when their personal data is harvested and used for targeted ads.
In one of his rulings on Monday, Judge James E. Boasberg of U.S. District Court for the District of Columbia said Facebook’s business model had made it especially difficult for the government to meet the standard for going forward with the case.
The government, Judge Boasberg said, had not presented enough evidence that Facebook held monopoly power. Among the difficulties he highlighted was that Facebook did not charge its users for access to its site, meaning its market share could not be assessed through revenue. The government had not found a good alternative measure to make its case, he said.
He also ruled against another part of the F.T.C.’s lawsuit, concerning how Facebook polices the use of data generated by its product, while citing the kind of conservative antitrust doctrine that critics say is out of step with the technology industry’s business practices.
The F.T.C., which brought the federal antitrust suit against Facebook in December, can file a new complaint that addresses the judge’s concerns within 30 days. State attorneys general can appeal Judge Boasberg’s second ruling dismissing a similar case.
fined Facebook $5 billion in 2019 for privacy violations, there were few significant changes to how the company’s products operate. And Facebook continues to grow: More than 3.45 billion people use one or more of its apps — including WhatsApp, Instagram or Messenger — every month.
The decisions were particularly deflating after actions to rein in tech power in Washington had gathered steam. Ms. Khan’s appointment to the F.T.C. this month followed that of Tim Wu, another lawyer who has been critical of the industry, to the National Economic Council. Bruce Reed, the president’s deputy chief of staff, has called for new privacy regulation.
Mr. Biden has yet to name anyone to permanently lead the Justice Department’s antitrust division, which last year filed a lawsuit arguing Google had illegally protected its monopoly over online search.
The White House is also expected to issue an executive order this week targeting corporate consolidation in tech and other areas of the economy. A spokesman for the White House did not respond to requests for comment about the executive order or Judge Boasberg’s rulings.
Activists and lawmakers said this week that Congress should not wait to give regulators more tools, money and legal red lines to use against the tech giants. Mr. Cicilline, along with Representative Jerrold Nadler of New York, the chairman of the House Judiciary Committee, said in a statement that the judge’s decisions on Facebook show “the dire need to modernize our antitrust laws to address anticompetitive mergers and abusive conduct in the digital economy.”
Senator Amy Klobuchar, a Democrat of Minnesota who chairs the Senate Judiciary Committee’s subcommittee on antitrust, echoed their call.
“After decades of binding Supreme Court decisions that have weakened our antitrust policies, we cannot rely on our courts to keep our markets competitive, open and fair,” she said in a statement. “We urgently need to rejuvenate our antitrust laws to meet the challenges of the modern digital economy.”
But the six bills to update monopoly laws have a long way to go. They still need to pass the full House, where they will likely face criticism from moderate Democrats and libertarian Republicans. In the Senate, Republican support is necessary for them to overcome the legislative filibuster.
The bills may also not go as far in altering antitrust laws as some hope. The House Judiciary Committee amended one last week to reinforce the standard around consumer welfare.
Even so, Monday’s rulings have given the proposals a boost. Bill Baer, who led the Justice Department antitrust division during the Obama administration, said it “gives tremendous impetus to those in Congress who believe that the courts are too conservative in addressing monopoly power.”
Facebook and the tech platforms might like the judge’s decisions, he said, “but they might not like what happens in the Congress.”
Also in late February, Blueacorn and Womply got an unexpected tailwind from a major rule change by the Small Business Administration, which oversaw the loan program. Concerned that women and minority-led businesses were being disproportionately left out, the Biden administration overhauled the loan formula to award sole proprietors — a group that includes contractors and gig workers — loans based on their reported revenue rather than profit. Overnight, millions more qualified for help. Drawn in by the marketing campaigns, they stampeded toward the two companies.
By early March, “we were overrun with demand,” said Blueacorn’s Mr. Calhoun, a private equity veteran who joined the company that month to help manage its growth. “We had a 24-hour period where we went from 15,000 new customer service tickets to 27,000,” he recalled. “Those are Amazon-like levels.”
Blueacorn rented call centers and trained hundreds of temporary workers to troubleshoot. Womply redeployed nearly all of its 200 employees to work on loan issues. Both companies still struggled to keep up. On Reddit groups and social media sites, thousands of borrowers complained about delays, poor communication and problems resolving errors.
Louis Glatthorn, an Uber driver in Boone, N.C., who goes by Bob, applied on Womply’s website on April 7 and signed the paperwork two weeks later for a $7,818 loan. But the money — which is listed in government records as approved — has not been paid by Benworth Capital, one of Womply’s partners. Mr. Glatthorn’s attempts to reach Womply for help have been unsuccessful.
“You can never talk to a person or actually make contact,” he said. A Womply representative declined to comment on Mr. Glatthorn’s experience.
Others had a smoother run. Dan Bourque, an Uber driver in San Francisco, saw Womply’s ads and applied for a loan in mid-April. Seventeen days later, he had a $10,477 deposit — funded by Fountainhead SBF, another of Womply’s partner lenders — in his bank account. For that loan, the process “was flawless,” he said.
The Money Pours In
The millions of tiny loans the two tech companies enabled, coupled with Congress’s decision to make small loans more lucrative, led to gigantic payouts for small lenders. Last year, Prestamos made $1.3 million for its lending. This year, it will collect nearly $1.2 billion, according to a New York Times calculation of lenders’ fees based on government data.
OAKLAND, Calif. — The seeds of a company’s downfall, it is often said in the business world, are sown when everything is going great.
It is hard to argue that things aren’t going great for Google. Revenue and profits are charting new highs every three months. Google’s parent company, Alphabet, is worth $1.6 trillion. Google has rooted itself deeper and deeper into the lives of everyday Americans.
But a restive class of Google executives worry that the company is showing cracks. They say Google’s work force is increasingly outspoken. Personnel problems are spilling into the public. Decisive leadership and big ideas have given way to risk aversion and incrementalism. And some of those executives are leaving and letting everyone know exactly why.
“I keep getting asked why did I leave now? I think the better question is why did I stay for so long?” Noam Bardin, who joined Google in 2013 when the company acquired mapping service Waze, wrote in a blog post two weeks after leaving the company in February.
Sundar Pichai, the company’s affable, low-key chief executive.
Fifteen current and former Google executives, speaking on the condition of anonymity for fear of angering Google and Mr. Pichai, told The New York Times that Google was suffering from many of the pitfalls of a large, maturing company — a paralyzing bureaucracy, a bias toward inaction and a fixation on public perception.
The executives, some of whom regularly interacted with Mr. Pichai, said Google did not move quickly on key business and personnel moves because he chewed over decisions and delayed action. They said that Google continued to be rocked by workplace culture fights, and that Mr. Pichai’s attempts to lower the temperature had the opposite effect — allowing problems to fester while avoiding tough and sometimes unpopular positions.
A Google spokesman said internal surveys about Mr. Pichai’s leadership were positive. The company declined to make Mr. Pichai, 49, available for comment, but it arranged interviews with nine current and former executives to offer a different perspective on his leadership.
“Would I be happier if he made decisions faster? Yes,” said Caesar Sengupta, a former vice president who worked closely with Mr. Pichai during his 15 years at Google. He left in March. “But am I happy that he gets nearly all of his decisions right? Yes.”
a fixture at congressional hearings. Even his critics say he has so far managed to navigate those hearings without ruffling the feathers of lawmakers or providing more ammunition to his company’s foes.
The Google executives complaining about Mr. Pichai’s leadership acknowledge that, and say he is a thoughtful and caring leader. They say Google is more disciplined and organized these days — a bigger, more professionally run company than the one Mr. Pichai inherited six years ago.
challenge Amazon in online commerce a few years ago. Mr. Pichai rejected the idea because he thought Shopify was too expensive, two people familiar with the discussions said.
to select Halimah DeLaine Prado, a longtime deputy in the company’s legal team.
Ms. Prado was at the top of an initial list of candidates provided to Mr. Pichai, who asked to see more names, several people familiar with the search said. The exhaustive search took so long, they said, that it became a running joke among industry headhunters.
Mr. Pichai’s reluctance to take decisive measures on Google’s volatile work force has been noticeable.
vowing to restore lost trust, while continuing to push Google’s view that Dr. Gebru was not fired. But it fell short of an apology, she said, and came across as public-relations pandering to some employees.
David Baker, a former director of engineering at Google’s trust and safety group who resigned in protest of Dr. Gebru’s dismissal, said Google should admit that it had made a mistake instead of trying to save face.
“Google’s lack of courage with its diversity problem is ultimately what evaporated my passion for the job,” said Mr. Baker, who worked at the company for 16 years. “The more secure Google has become financially, the more risk averse it has become.”
Some critiques of Mr. Pichai can be attributed to the challenge of maintaining Google’s outspoken culture among a work force that is far larger than it once was, said the Google executives whom the company asked to speak to The Times.
“I don’t think anyone else could manage these issues as well as Sundar,” said Luiz Barroso, one of the company’s most senior technical executives.
acquire the activity tracker Fitbit, which closed in January, took about a year as Mr. Pichai wrestled with aspects of the deal, including how to integrate the company, its product plans and how it intended to protect user data, said Sameer Samat, a Google vice president. Mr. Samat, who was pushing for the deal, said Mr. Pichai had identified potential problems that he had not fully considered.
“I could see how those multiple discussions could make somebody feel like we’re slow to make decisions,” Mr. Samat said. “The reality is that these are very large decisions.”
President Biden named Lina Khan, a prominent critic of Big Tech, as the chair of the Federal Trade Commission, according to two people with knowledge of the decision, a move that signals that the agency is likely to crack down further on the industry’s giants.
A public announcement of the decision is expected Tuesday, one of the people said.
Earlier in the day, the Senate voted 69 to 28 to confirm Ms. Khan, 32, to a seat at the agency. The commission investigates antitrust violations, deceptive trade practices and data privacy lapses in Silicon Valley.
Ms. Khan did not immediately respond to a request for comment.
In her new role, Ms. Khan will help regulate the kind of behavior highlighted for years by critics of Amazon, Facebook, Google and Apple. She told a Senate committee in April that she was worried about the way tech companies could use their power to dominate new markets. She first attracted notice as a critic of Amazon. The agency is investigating the retail giant and filed an antitrust lawsuit against Facebook last year.
Her appointment was a victory for progressive activists who want Mr. Biden to take a hard line against big companies. He also gave a White House job to Tim Wu, a law professor who has criticized the power of the tech giants.
But Mr. Biden has yet to fill another key positions tasked with regulating the industry: someone to lead the Department of Justice’s antitrust division.
This is a developing story. Check back for updates.
A few years ago, while on a work trip in Los Angeles, I hailed an Uber for a crosstown ride during rush hour. I knew it would be a long trip, and I steeled myself to fork over $60 or $70.
Instead, the app spit out a price that made my jaw drop: $16.
Experiences like these were common during the golden era of the Millennial Lifestyle Subsidy, which is what I like to call the period from roughly 2012 through early 2020, when many of the daily activities of big-city 20- and 30-somethings were being quietly underwritten by Silicon Valley venture capitalists.
For years, these subsidies allowed us to live Balenciaga lifestyles on Banana Republic budgets. Collectively, we took millions of cheap Uber and Lyft rides, shuttling ourselves around like bourgeois royalty while splitting the bill with those companies’ investors. We plunged MoviePass into bankruptcy by taking advantage of its $9.95-a-month, all-you-can-watch movie ticket deal, and took so many subsidized spin classes that ClassPass was forced to cancel its $99-a-month unlimited plan. We filled graveyards with the carcasses of food delivery start-ups — Maple, Sprig, SpoonRocket, Munchery — just by accepting their offers of underpriced gourmet meals.
tweeted, along with a screenshot of a receipt that showed he had spent nearly $250 on a ride to the airport.
“Airbnb got too much dip on they chip,” another Twitter user complained. “No one is gonna continue to pay $500 to stay in an apartment for two days when they can pay $300 for a hotel stay that has a pool, room service, free breakfast & cleaning everyday. Like get real lol.”
Some of these companies have been tightening their belts for years. But the pandemic seems to have emptied what was left of the bargain bin. The average Uber and Lyft ride costs 40 percent more than it did a year ago, according to Rakuten Intelligence, and food delivery apps like DoorDash and Grubhub have been steadily increasing their fees over the past year. The average daily rate of an Airbnb rental increased 35 percent in the first quarter of 2021, compared with the same quarter the year before, according to the company’s financial filings.
set up a $250 million “driver stimulus” fund — or doing away with them altogether.
I’ll confess that I gleefully took part in this subsidized economy for years. (My colleague Kara Swisher memorably called it “assisted living for millennials.”) I got my laundry delivered by Washio, my house cleaned by Homejoy and my car valet-parked by Luxe — all start-ups that promised cheap, revolutionary on-demand services but shut down after failing to turn a profit. I even bought a used car through a venture-backed start-up called Beepi, which offered white-glove service and mysteriously low prices, and which delivered the car to me wrapped in a giant bow, like you see in TV commercials. (Unsurprisingly, Beepi shut down in 2017, after burning through $150 million in venture capital.)
These subsidies don’t always end badly for investors. Some venture-backed companies, like Uber and DoorDash, have been able to grit it out until their I.P.O.s, making good on their promise that investors would eventually see a return on their money. Other companies have been acquired or been able to successfully raise their prices without scaring customers away.
Uber, which raised nearly $20 billion in venture capital before going public, may be the best-known example of an investor-subsidized service. During a stretch of 2015, the company was burning $1 million a week in driver and rider incentives in San Francisco alone, according to reporting by BuzzFeed News.
But the clearest example of a jarring pivot to profitability might be the electric scooter business.
Remember scooters? Before the pandemic, you couldn’t walk down the sidewalk of a major American city without seeing one. Part of the reason they took off so quickly is that they were ludicrously cheap. Bird, the largest scooter start-up, charged $1 to start a ride, and then 15 cents a minute. For short trips, renting a scooter was often cheaper than taking the bus.
But those fees didn’t represent anything close to the true cost of a Bird ride. The scooters broke frequently and needed constant replacing, and the company was shoveling money out the door just to keep its service going. As of 2019, Bird was losing $9.66 for every $10 it made on rides, according to a recent investor presentation. That is a shocking number, and the kind of sustained losses that are possible only for a Silicon Valley start-up with extremely patient investors. (Imagine a deli that charged $10 for a sandwich whose ingredients cost $19.66, and then imagine how long that deli would stay in business.)
Pandemic-related losses, coupled with the pressure to turn a profit, forced Bird to trim its sails. It raised its prices — a Bird now costs as much as $1 plus 42 cents a minute in some cities — built more durable scooters and revamped its fleet management system. During the second half of 2020, the company made $1.43 in profit for every $10 ride.
“DoorDash and Pizza Arbitrage,” about the time he realized that DoorDash was selling pizzas from his friend’s restaurant for $16 while paying the restaurant $24 per pizza, and proceeded to order dozens of pizzas from the restaurant while pocketing the $8 difference, stands as a classic of the genre.)
But it’s hard to fault these investors for wanting their companies to turn a profit. And, at a broader level, it’s probably good to find more efficient uses for capital than giving discounts to affluent urbanites.
Back in 2018, I wrote that the entire economy was starting to resemble MoviePass, the subscription service whose irresistible, deeply unprofitable offer of daily movie tickets for a flat $9.95 subscription fee paved the way for its decline. Companies like MoviePass, I thought, were trying to defy the laws of gravity with business models that assumed that if they achieved enormous scale, they’d be able to flip a switch and start making money at some point down the line. (This philosophy, which was more or less invented by Amazon, is now known in tech circles as “blitzscaling.”)
There is still plenty of irrationality in the market, and some start-ups still burn huge piles of money in search of growth. But as these companies mature, they seem to be discovering the benefits of financial discipline. Uber lost only $108 million in the first quarter of 2021 — a change partly attributable to the sale of its autonomous driving unit, and a vast improvement, believe it or not, over the same quarter last year, when it lost $3 billion. Both Uber and Lyft have pledged to become profitable on an adjusted basis this year. Lime, Bird’s main electric scooter competitor, turned its first quarterly profit last year, and Bird — which recently filed to go public through a SPAC at a $2.3 billion valuation — has projected better economics in the years ahead.
Profits are good for investors, of course. And while it’s painful to pay subsidy-free prices for our extravagances, there’s also a certain justice to it. Hiring a private driver to shuttle you across Los Angeles during rush hour should cost more than $16, if everyone in that transaction is being fairly compensated. Getting someone to clean your house, do your laundry or deliver your dinner should be a luxury, if there’s no exploitation involved. The fact that some high-end services are no longer easily affordable by the merely semi-affluent may seem like a worrying development, but maybe it’s a sign of progress.
SAN FRANCISCO — When India’s government ordered Facebook and other tech companies to take down posts critical of its handling of the coronavirus pandemic in April, the social network complied on some posts.
But once it did, its employees flocked to online chat rooms to ask why Facebook had helped Prime Minister Narendra Modi of India stifle dissent. In one internal post, which was reviewed by The New York Times, an employee with family in India accused Facebook of “being afraid” that Mr. Modi would ban the company from doing business in the country. “We can’t act or make decisions out of fear,” he wrote.
Weeks later, when clashes broke out in Israel between Israelis and Palestinians, Facebook removed posts from prominent Palestinian activists and briefly banned hashtags related to the violence. Facebook employees again took to the message boards to ask why their company now appeared to be censoring pro-Palestinian content.
“It just feels like, once again, we are erring on the side of a populist government and making decisions due to politics, not policies,” one worker wrote in an internal message that was reviewed by The Times.
inflammatory posts from former President Donald J. Trump. But since Mr. Trump left office in January, attention has shifted to Facebook’s global policies and what employees said was the company’s acquiescence to governments so that it could continue profiting in those countries.
“There’s a feeling among people at Facebook that this is a systematic approach, one which favors strong government leaders over the principles of doing what is right and correct,” said Ashraf Zeitoon, Facebook’s former head of policy for the Middle East and North Africa region, who left in 2017.
Facebook is increasingly caught in a vise. In India, Russia and elsewhere, governments are pressuring it to remove content as they try to corral the platform’s power over online speech. But when Facebook complies with the takedown orders, it has upset its own employees, who say the social network has helped authoritarian leaders and repressive regimes quash activists and silence marginalized communities.
BuzzFeed News and the Financial Times earlier reported on some of the employee dissatisfaction at Facebook over Israeli and Palestinian content.
A divide between Facebook’s employees and the global policy team, which is composed of roughly 1,000 employees, has existed for years, current and former workers said. The policy team reports to Sheryl Sandberg, the chief operating officer.
many tricky international situations over the years, including in Russia, Vietnam and Myanmar, where it has had to consider whether it would be shut down if it did not work with governments. That has led to the employee dissent, which has begun spilling into public view.
That became evident with India. In April, as Covid-19 cases soared in the country, Mr. Modi’s government called for roughly 100 social media posts on Facebook, Instagram and Twitter to be pulled down. Many of the posts included critiques of the government from opposition politicians and calls for Mr. Modi’s resignation.
Facebook removed some of the posts and briefly blocked a hashtag, #ResignModi. The company later said the hashtag had been banned by mistake and was not part of a government request.
But internally, the damage was done. In online chat rooms dedicated to human rights issues and global policy, employees described how disappointed they were with Facebook’s actions. Some shared stories of family members in India who were worried they were being censored.
Last month, when violence broke out between Israelis and Palestinians, reports surfaced that Facebook had erased content from Palestinian activists. Facebook’s Instagram app also briefly banned the #AlAqsa hashtag, a reference to Al Aqsa Mosque, one of Islam’s holiest sites. Facebook later explained that it had confused the #AlAqsa hashtag with a Palestinian militant group called Al Aqsa Martyrs Brigade.
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Employees bristled. “We are responding to people’s protests about censoring with more censoring?” one wrote in an internal message, which was reviewed by The Times.
Nick Clegg, who leads public affairs, to explain the company’s role in removing content tied to the Israeli-Palestinian conflict, according to attendees. The employee called the situation in Israel “fraught” and asked how Facebook was going “to get it right” with content moderation.
Mr. Clegg ran through a list of policy rules and plans going forward, and assured staff that moderation would be treated with fairness and responsibility, two people familiar with the meeting said. The discussion was cordial, one of the people said, and comments in the chat box beside Mr. Clegg’s response were largely positive.
But some employees were dissatisfied, the people said. As Mr. Clegg spoke, they broke off into private chats and workplace groups, known as Tribes, to discuss what to do.
Dozens of employees later formed a group to flag the Palestinian content that they said had been suppressed to internal content moderation teams, said two employees. The goal was to have the posts reinstated online, they said.
Members of Facebook’s policy team have tried calming the tensions. In an internal memo in mid-May, which was reviewed by The Times, two policy team members wrote to other employees that they hoped “that Facebook’s internal community will resist succumbing to the division and demonization of the other side that is so brutally playing itself out offline and online.”
One of them was Muslim, and the other was Jewish, they said.
“We don’t always agree,” they wrote. “However, we do some of our best work when we assume good intent and recognize that we are on the same side trying to serve our community in the best possible way.”