In this week's edition: Germany leads NATO's largest-ever air exercise; tensions escalate in US-China cyberspace; China's tech lead prompts AUKUS collaboration calls; US Senate seeks AI education ahead of regulation; and OpenAI CEO cautions against AI hype. Additionally, North Korean hackers are linked to crypto hack; cyber attacks target Ukrainian emergency services; Miami aims to become an AI hub; and Google launches News Showcase in the US.
Industrial Policy & International Security
NATO plans show of strength with biggest ever air exercise | Financial Times
Germany will lead NATO’s largest-ever air exercise, Air Defender, which aims to demonstrate the alliance's ability to respond quickly to potential aggression. NATO began planning Air Defender in 2018, after Russia’s annexation of Crimea but before their invasion of Ukraine. The exercise will involve 10,000 troops and 250 aircraft from twenty-three NATO member states, as well as Sweden and Japan, and will last for ten days. It will be conducted from three hubs in Germany and feature various aircraft, including the F-35, Eurofighter, Tornado, and Gripen jets, as well as drones, helicopters, cargo aircraft, and tankers. The operation is significant, with Germany taking the lead in organizing and commanding the exercise; German chancellor Olaf Scholz sees the exercise as a demonstration of Germany’s more assertive security posture in Europe. Around 100 of the participating aircraft will be from the US. Air Defender will run from June 12th to June 23rd with most of the 2,000 planned military flights over the North and Baltic seas.
Cyberspace plays key role in growing US-China tension | The Hill
The escalating tensions between the US and China have led to increased activity in cyberspace, which is a growing domain of modern warfare. A recent joint advisory by US intelligence agencies, based on a Microsoft report, revealed that a Chinese state-sponsored cyber actor known as Volt Typhoon has been targeting critical infrastructure organizations in the US, including Guam. Lawmakers expressed concern over the malicious activity, emphasizing the heightened risk to US military interests. China responded by dismissing the allegations as a disinformation campaign. Experts note that China's persistence and patience in cyberspace are worrisome, as they possess sophisticated capabilities embedded within critical infrastructure worldwide. US officials are working to address the situation, and NSA director of cybersecurity Rob Joyce called the scope and scale of the cyber activities “unacceptable.” While tensions between the two nations are already high, the recent report is unlikely to further escalate the situation.
China leads tech race, highlighting need for AUKUS sharing, says think-tank | Reuters
China leads research in nineteen out of twenty-three key technologies prioritized by the AUKUS defense partnership between Australia, Britain, and the US, according to the Australian Strategic Policy Institute (ASPI). The research institute analyzed two million top science papers and found that China dominates in areas such as hypersonics, electronic warfare, and undersea drones. ASPI highlighted the importance of pooling research results among Western allies to counter China's lead. While the AUKUS partnership aims to boost collaboration in areas like hypersonic and counter-hypersonic technology, bureaucratic hurdles and US defense technology sharing restrictions pose challenges. One high-profile area of collaboration among AUKUS partners is in nuclear-powered submarine technology, where the US has an advantage; Australia has plans to spend $245 billion in the next decade to acquire attack submarines. The report also mentioned that AUKUS countries collectively lead in certain technologies, including advanced robotics, adversarial AI-reverse engineering, cybersecurity capabilities, and quantum sensors.
US Regulation
The US Senate is working to get up to speed on AI basics ahead of any legislation | CNN
The US Senate is gradually progressing towards regulating AI as they assess the potential impact of tools like ChatGPT on society. While senators have outlined the plan, it will likely take several months to introduce a comprehensive bill that establishes guidelines for the AI industry and subsequently pass it into law. This cautious approach contrasts with the rapid adoption of generative AI by companies and organizations, along with significant investments in the field. The Senate's strategy involves educating lawmakers on the fundamentals of AI during the summer and then considering legislation in the following months. Senate Majority Leader Chuck Schumer has organized a series of senators-only briefings to enhance their understanding of AI, covering topics such as its current capabilities, competition in AI development, and national security implications. The sessions aim to deepen the Senate's expertise on the subject before any legislative action is taken.
Innovation
OpenAI's CEO, Sam Altman, believes that the current AI hype is excessive and that people are focusing too much on short-term novelty rather than long-term potential. While he acknowledges that AI is powerful and capable of bringing about rapid change, Altman thinks it is undervalued in the long run because its full potential is still unknown. He suggests that the world will become wealthier and experience a productivity boom as AI progresses, leading to new opportunities in fields like health and education. Altman also emphasizes the need for regulations to govern the development of AI and has advocated for flexible measures that ensure safeguards. He believes this is a critical moment for global collaboration in getting AI regulation right.
Cyber
North Korean hackers linked to Atomic Wallet crypto hack | TechCrunch
Crypto researcher @ZachXBT suspects that the recent hack on Atomic Wallet users resulted in estimated losses of around $35 million in various cryptocurrencies. Atomic Wallet, an Estonia-based non-custodial decentralized wallet, has over five million users worldwide. Although less than 1 percent of its monthly users, approximately 50,000 individuals, were affected by the hack, one victim reportedly lost nearly 10 percent of the stolen total. Blockchain analysis firm Elliptic attributes the attack to the Lazarus Group, a North Korean state-backed hacking group, with a “high level of confidence.” The group has been previously linked to money laundering activities using crypto mixers such as Sinbad. The root of the compromise, exact number of affected users, and the compensation for losses remain undisclosed. Last month, US officials warned that illicit North Korean IT workers targeted cryptocurrency projects to launder stolen funds back to the North Korean government to finance weapons of mass destruction programs.
Hacks against Ukraine’s emergency response services rise during bombings | Wired
Cloudflare has been providing its free web security service, Project Galileo, for nearly a decade. Over 2,271 websites in 111 countries, including eighty-one Ukrainian organizations, benefit from the service. Project Galileo aims to offer web defenses to organizations that lack such protection against DDoS attacks and other common malicious activity. Many Ukrainian users include emergency response services, human rights groups, and independent media and journalism organizations. Cloudflare's recent report on attack trends revealed that Project Galileo users in Ukrainian cities face spikes in malicious traffic during Russian bombings or during moments of international controversy. David Belson, Cloudflare’s head of data insight, noted the company has not attributed the attacks but remarked that the correlation with Russian attacks shows the “actor is trying to prevent [Ukrainians] from getting access to the sites that provide emergency resources on the digital side.” Between July 2022 and May 2023, Cloudflare mitigated 20 billion attacks against Project Galileo participants.
State & Local Tech Ecosystems
Watch out, Silicon Valley: Miami is vying to become America’s AI hub | Fox Business
Miami is positioning itself as a thriving destination for AI startups and tech firms, attracting companies looking to escape declining and unsafe areas like San Francisco. Valentin Saitarli, co-founder of AI company PRAI, moved his business to Miami in 2021 due to factors such as favorable business conditions, lower taxes, safety, and the city's tech-friendly environment. Miami Dade College (MDC), which has established itself as a leading institution in AI education and research, has played a crucial role in supporting the tech ecosystem. MDC's partnerships with companies like Google and PRAI have helped create opportunities for students and foster innovation. Saitarli believes Miami's positive energy, safety, and focus on economic development will attract more companies and investors, potentially rivaling Silicon Valley's status as a technology hub. The city's growing tech sector has already seen 278 percent investment growth from 2020 to 2022 and the migration of several tech companies from Silicon Valley to Miami.
McKinsey’s little-known role in the collapse of Silicon Valley Bank | The Washington Post
Silicon Valley Bank (SVB) hired McKinsey & Co. as a consultant to identify gaps in its capital and risk management programs as it approached $100 billion in assets. According to McKinsey’s website, the consulting firm works with 60 percent of the world’s 100 largest banks. However, McKinsey's work for SVB in 2020 and 2021 was sharply criticized by the Federal Reserve in its report on the bank's collapse. The Fed found that McKinsey had "failed to design an effective program" and produced a report filled with weaknesses. McKinsey denied contributing to the collapse and stated that it provided a targeted assessment, not a comprehensive risk assessment. Consultants from McKinsey and other firms, including Cruinos, were heavily involved at SVB during a period of rapid growth. SVB executives were criticized for their reliance on consultants and lack of internal staff. The bank ultimately failed, was taken over by the Federal Deposit Insurance Corporation, and sold to First Citizens Bank & Trust.
Democracy Online
Google to launch News Showcase product in US | Axios
Google announced that it will finally launch its News Showcase product in the United States this summer after initially introducing it in other countries including Brazil, Germany, Australia, and more than twenty others. The delayed launch coincides with discussions among US lawmakers regarding legislation that would require tech giants like Google and Meta to pay news publishers. Google's News Showcase is designed to provide features and dedicated spaces within its search products to promote high-quality news content and drive traffic to participating publishers' websites. As part of the launch, Google will offer training and funding to 150 news publishers across 39 states, with a focus on regional and local outlets. The company has already struck deals with various publishers, including The Wall Street Journal, The New York Times, and Reuters. Meta, on the other hand, has expressed its intention to withdraw from the news sector and has threatened to remove news links on platforms like Instagram and Facebook in California.
These activists distrust voting machines. Just don’t call them election deniers. | The New York Times
Lulu Friesdat, an advocate for election integrity, and her organization Smart Elections, have found themselves in a difficult position due to the politicization of voting machines. Former President Donald J. Trump's false claims about the 2020 election being rigged, partly due to electronic voting machines, have amplified concerns among election activists. While Friesdat and others push for election security, they sometimes find themselves unintentionally aligned with conspiracy theorists from the "Stop the Steal" movement. The overlapping arguments of legitimate election security concerns and conspiracy theories have raised doubts about the integrity of American elections. This situation has made it challenging for activists like Friesdat to collaborate with allies, as their work risks being associated with conspiracy theories. The controversy surrounding voting machines has become a national debate, with activists and officials voicing opposing views on their security and potential for hacking.
