Hillicon Valley: Trump administration cracks down further against Huawei chip production, affiliate groups | California ruling against Uber, Lyft threatens to upend gig economy

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Welcome! Follow our cyber reporter, Maggie Miller (@magmill95), and tech reporter, Chris Mills Rodrigo (@chrisismills), for more coverage.

ANOTHER BAD DAY FOR HUAWEI: The Commerce Department’s Bureau of Industry and Security on Monday announced further steps to push back against Chinese telecommunications company Huawei and blacklisted 38 of its affiliate groups.

The moves on Monday expanded a previous decision by the Commerce Department in May to restrict Huawei’s ability to use American software and technology to manufacture semiconductors or chips.

The new announcement is intended to limit Huawei’s access to chips by restricting its ability to purchase those created by a foreign company with the use of American software or technology. 

In addition, 38 Huawei affiliate groups were all added to the Commerce Department’s “entity list” on Monday, banning U.S. firms from doing business with them. 

Huawei was added to the entity list last year, though the full addition had been delayed several times by a temporary general license that expired last week, with the delay intended to help rural telecom groups that had previously relied on Huawei equipment.

The Commerce Department announced Monday that the license would not be extended any further, but created an exception for users sending information on cybersecurity vulnerabilities in Huawei equipment to the Chinese group. 

The 38 Huawei affiliate companies added to the entity list are based in 21 countries, including Huawei Cloud groups in France, Peru, Argentina, Chile, the Netherlands, Russia and Singapore. 

Secretary of Commerce Wilbur Ross said in a statement Monday that “Huawei and its foreign affiliates have extended their efforts to obtain advanced semiconductors developed or produced from U.S. software and technology in order to fulfill the policy objectives of the Chinese Communist Party.”

“As we have restricted its access to U.S. technology, Huawei and its affiliates have worked through third parties to harness U.S. technology in a manner that undermines U.S. national security and foreign policy interests,” Ross added. “This multi-pronged action demonstrates our continuing commitment to impede Huawei’s ability to do so.”

A spokesperson for Huawei did not immediately have a comment on the Commerce Department announcement.

Read more here.

 

GIG ECONOMY IN TROUBLE: The business models for Uber, Lyft and dozens of other gig worker companies that have sprouted up over the last decade are up in the air after a California judge ruled that rideshare drivers must be classified as employees rather than contractors.

Uber and Lyft have until Thursday to appeal the decision. The end result will likely have repercussions well beyond California.

Failure to overturn the ruling would mean the two companies, which already fail to turn a profit, will be unable to operate under their current business structures in a state known for setting nationwide precedents.

San Francisco Superior Court judge Ethan Schulman ruled Monday that Uber and Lyft must classify their drivers as full employees under Assembly Bill 5, a landmark law that establishes a test for determining whether workers can be classified as independent contractors.

Schulman sided with California Attorney General Xavier Becerra (D), who brought the lawsuit after the two ridesharing giants resisted the law when it took effect in January, arguing their core business is technology rather than ride-hailing.

Both companies reacted aggressively to Monday’s court decision, threatening to shut down operations in California if they are forced to provide workers with basic protections like a minimum wage and the right to organize. Those threats have put drivers in a precarious position.

“As deplorable as that is, it’s not surprising, because now that the pandemic has pushed the vast majority of drivers into financial ruin, Uber and Lyft are ready to completely abandon them,” Erica Mighetto, a driver in the San Francisco area and member of Rideshare Drivers United, told The Hill.

After the ruling, both companies filed motions to extend a 10-day stay that Schulman placed on his decision to give Uber and Lyft time to file appeals. He denied their motions, meaning Thursday is still their deadline for appealing.

Legal experts say that while the companies are almost certain to appeal, they’re unlikely to make any new arguments when they do so.

Read more here.

 

THAT’S A NO TO SNOWDEN: The House Armed Services Committee’s top Democrat and Republican on Monday warned President Trump against pardoning Edward Snowden, saying the former National Security Agency (NSA) contractor and whistleblower “did enormous harm” to U.S. national security.

“Edward Snowden did enormous harm to our national security and he must stand trial for his actions,” Chairman Rep. Adam Smith (D-Wash.), and ranking member Mac Thornberry (R-Texas) said in a joint statement. 

“President Trump and [Defense Secretary Mark Esper] have both decried harmful leaks from the Department of Defense and elsewhere in the federal government. To pardon Snowden now would completely undermine this Administration’s position and mock our national security workforce who take immense caution in their work to keep us safe,” they wrote.

Trump at a Saturday press conference at his golf club in New Jersey said that he was looking at pardoning the former NSA contractor, who was charged with espionage in 2013 after he released a trove of classified documents on U.S. surveillance programs.

“I’m not that aware of the Snowden situation, but I’m going to start looking at it,” Trump said.

The president also last week told The New York Post that he’s been thinking of allowing Snowden — who fled the U.S. and gained asylum in Russia — to return to the U.S. without facing jail time.

The recent remarks are an about-face after Trump said in a 2013 interview that he thought Snowden was “a terrible threat” and “traitor.”

Read more here.

 

CALL TO ARMS: Rep. Adam Kinzinger (R-Ill.) called on leaders of his own party to push back against QAnon on Sunday, days after a supporter of the conspiracy theory won a House primary in a deep-red Georgia district. 

“I’d ask every leader to put aside the avoidance of short-term pain to save our country in the long term,” Kinzinger said in a YouTube video published Sunday regarding the conspiracy theory. 

He said it’s important for Republicans to speak out now about QAnon after it made its way into the “mainstream.”

“I think up to maybe about a week ago there wasn’t a reason to denounce it because it didn’t need the attention, but now that it’s made mainstream, we have a candidate that embraces it that won a primary. I supported her primary opponent. The president hasn’t fully denounced it or denounced it at all. Now it’s time for leaders to come out and denounce it,” Kinzinger said Sunday on CNN’s “Reliable Sources” while discussing his video addressing the conspiracy theory. 

Kinzinger last week became the first Republican in Congress to condemn Marjorie Taylor Greene’s support of the QAanon conspiracy theory after Greene won her Georgia primary.

President Trump on Friday dodged a question asking if he agreed with Green’s support for the conspiracy theory after he hailed the candidate as a “future Republican star.” 

The QAnon conspiracy theory posits that Trump and his allies are working together to expose a “deep state” cabal of figures in media, entertainment and politics who control the world. 

Read more here.

 

NEW TIKTOK EXECUTIVE ORDER: President Trump has issued an order calling on Chinese company ByteDance, which owns the popular video app TikTok, to divest from the social media platform’s U.S. operations, citing national security.

“There is credible evidence that leads me to believe that ByteDance Ltd. … might take action that threatens to impair the national security of the United States,” Trump said in the order released Friday night.

The order cites ByteDance’s 2017 acquisition of the social media app Musical.ly, which merged into TikTok, in making the case that the Chinese company poses a national security risk to the U.S.

The order, which invokes the Defense Production Act, demands that ByteDance divest from TikTok’s U.S. operations within 90 days. It is the administration’s latest move against the app.

The order states that “[i]mmediately upon divestment, ByteDance shall certify in writing to [the Treasury Department’s Committee on Foreign Investment in the United States] that all steps necessary to fully and permanently effectuate the actions required … have been completed.”

Trump issued a separate order last week barring any transactions between U.S. companies and ByteDance starting in 45 days, part of an effort to force the company to divest from TikTok or face a ban in the U.S. The president has separately said he backs Microsoft’s talks about potentially buying TikTok.

A TikTok spokesperson told The Hill on Friday in response to Trump’s new order that the app “is a home for entertainment, self-expression, and connection. We’re committed to continuing to bring joy to families and meaningful careers to those who create on our platform for many years to come.”

Read more here.

 

SUSPENDED FROM TWITTER: Conservative pundit Bill Mitchell has been permanently suspended from Twitter, the social media platform confirmed to The Hill on Saturday.

“[Mitchell] has been permanently suspended for violating the Twitter Rules by using one account to evade the suspension of another account,” a Twitter spokesperson said in an email.

Mitchell confirmed the suspension in a post on the social media app Parler, though he asserted he was booted over his stance on wearing a mask amid the coronavirus pandemic.

“Twitter just suspended me for opposing masks. Who knows if I’ll ever be back,” Mitchell said. “I’m sure their decision wasn’t political at all.”

Mitchell, the host of the YouTube program “YourVoice America,” is a vocal supporter of President Trump and has repeatedly garnered attention for pushing far-right QAnon conspiracy theories.

Several of Trump’s closest advisers had followed Mitchell on Twitter, including White House counselor Kellyanne Conway and the president’s two adult sons, Eric Trump and Donald Trump Jr.

Read more here.

Lighter click: Welcome home

An op-ed to chew on: Closing the digital divide requires a coalition on reform of the Universal Service Fund 

NOTABLE LINKS FROM AROUND THE WEB: 

Mark Zuckerberg’s effort to disrupt philanthropy has a race problem (Washington Post / Nitasha Tiku)

The threat to vote by mail isn’t fraud. It’s disinformation and sabotage (CNET / Alfred Ng)

Amazon isn’t even that convenient anymore (OneZero / Simon Pitt)

Cyberattacks targeting CRA, Canadian’s COVID-19 benefits have been brought under control: officials (CBC / Ryan Patrick Jones)