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Category: Technology

  • Role-play Exercise: Silverlake in China: Investor Responsibility for State Surveillance in Xinjiang

    *This exercise is to be used for educational purposes. If you wish to copy components of this exercise please reach out to Victoria Anderson: va29@stern.nyu.edu, or cite the NYU Stern, Center for Business and Human Rights. Thank you. (Nov 2020)*

     

    Silverlake in China

    Investor Responsibility for State Surveillance in Xinjiang

    The allure of doing business in and with China is obvious. According to the World Bank, the Chinese consumer market is now the third-biggest in the world after the US and the EU. China also continues to be the largest global manufacturer of electronics, apparel, toys, and many other products. Given these economic realities, global companies will continue to look for opportunities to do business in China. An important factor fueling this growth has been the government’s embrace of a market-based system and its move away from the economic orthodoxy of its past. Unfortunately, the Chinese government has refused to show a concomitant willingness to reform its political system. The gross abuses of human rights we see today against the Uyghurs in Xinjiang and the efforts to crush democratic freedoms in Hong Kong are two striking examples of this resistance. Since Xi Jinping came to power, the human rights situation in China has grown worse, and in some ways dramatically so.

    The 11 million Uyghurs in Xinjiang have faced systematic discrimination and persecution by the Chinese government for many years. Recently, the scope and scale of these violations have escalated dramatically. The imprisonment of more than a million Uyghurs today makes it the most egregious example of arbitrary detention anywhere in the world. Thousands more endure forced labor, and virtually everyone in that community is subject to pervasive surveillance and isolation from the outside world.

    The Chinese government continues to use advanced technology to stifle dissent and to intrude on the privacy of its people. Chinese authorities have attempted to justify this mass surveillance as a tool to fight terrorism, but most of what the system tracks has no relationship to threats of terrorism or extremism. A recent Human Rights Watch report about the Chinese government’s “Strike Hard Campaign” in Xinjiang highlights the risks. In that region, the government has used what it calls the Integrated Joint Operations Platform (IJOP) to perform sweeping surveillance of the Uyghurs and other members of the Turkic Muslim minority. This app collects huge amounts of personal information, including blood type and other physical characteristics, education level, and religious and political affiliations. The IJOP also reports on activities the government deems suspicious, such as the use of encrypted communication tools like WhatsApp and Viber. The IJOP surveils and collects data on every person in Xinjiang, tracking their movements by monitoring the location of their phones, ID cards, and vehicles.  Information collected through the IJOP system is used as a basis for house arrest or more formal detention. Failure to carry a smartphone can itself be a basis for detention.

    In some recently reported cases, US companies and investors have played a role in this system. US investor ties to SenseTime provide one example. SenseTime is a Chinese company focused on artificial intelligence and facial recognition. The company’s valuation surpassed $7.5 billion according to SenseTime CEO Xu Li, making it the world’s highest valued artificial intelligence company. In February 2018, MIT announced a wide-ranging partnership with SenseTime as part of its MIT Intelligence Quest initiative, aimed at advancing research into human and machine intelligence. In May, 2018, the company raised $620 million in new funds, led by Silver Lake and  others. Silver Lake is an American private equity firm focused on leveraged buyout and growth capital investments in technology, technology-enabled and related industries. According to one report, among US-based institutions with stakes in SenseTime, “public pension funds are the largest committers of capital.” The Florida Retirement System is one such public pension fund which is an indirect investor in SenseTime through Silver Lake.

    On October 1st, the US Commerce Department added SenseTime and seven other Chinese technology companies to its  Entity List, which prevents US companies from selling their products without government approval. According to the Commerce Department, the entities were added to the list because they are “implicated in human rights violations and abuses in China’s campaign targeting Uyghurs and other predominantly Muslim ethnic minorities” in Xinjiang, and more specifically, in “China’s campaign of repression, mass arbitrary detention, and high-technology surveillance.”

    Our broad question is: how should US companies and investors respond when SenseTime and other technology firms are added to the Entity List? What affirmative responsibilities, if any, do US companies and investors bear for addressing privacy rights and for declining to invest in or have commercial relationships with Chinese firms like SenseTime that are assisting the mass surveillance efforts in  Xinjiang.

    As you follow the prompt for your role, please keep in mind these overarching questions:

    • Given that SenseTime is involved in providing technology used by the Chinese government in surveillance operations in Xinjiang, do US or other international investors bear responsibility for addressing SenseTime’s behavior?

    • Does this obligation differ depending on whether an investor is direct, like Silver Lake, indirect, like the Florida Retirement System, or directed towards innovation more broadly, like MIT?

    • What responsibility does Silver Lake bear to its limited partners?

    • What are the responsibilities of the US government in this instance? How does it compare to the responsibility of a private equity firm, a major research institution, and a public pension fund?

     

    You will be divided into five groups:

    1. Silver Lake’s C-Suite

    2. Silver Lake’s Fundraising & Investor Relations Team

    3. Massachusetts Institute of Technology Intelligence Quest Oversight Team

    4. Florida State Board of Administration

    5. Congressional-Executive Commission on China

     

    Role: Silver Lake’s C-Suite

    Task: You are responsible for determining Silver Lake’s investment portfolio. You must decide whether to continue investing in SenseTime, and craft a policy for making such determinations in the future.

    • Silver Lake Partners describes its strategy as seeking to achieve risk-adjusted returns by pursuing large-scale investments in companies within the technology, technology-enabled and related growth industries.

    • Silver Lake Partners’ current portfolio includes e-commerce, fintech, fixed satellite services, cybersecurity, and artificial intelligence companies, among others. The Silver Lake website describes SenseTime as a leading artificial intelligence company that develops computer vision and deep learning technologies.

    • Silver Lake helped SenseTime’s second round of funding in May 2018, which raised $620 million for the artificial intelligence company. Other lead investors included Fidelity International, Hopu Capital, and Tiger Global.

    • Fourteen public pension funds, including the Teacher Retirement System of Texas, the Washington State Investment Board, and public employee pension and retirement plans in Florida, Illinois, Michigan, Minnesota, New York, Ohio, and California, maintain stakes in SenseTime through their positions as limited partners in Silver Lake.

    Role: Silver Lake’s Fundraising & Investor Relations Team

    Task: You are the primary liaison to Silver Lake’s investors. You need to prepare a statement addressing the placement of SenseTime on the Entity List, the continuation or ending of Silver Lake’s relationship with SenseTime, and a description of how Silver Lake addresses human rights concerns in its investment decision-making.

     

    • Silver Lake Partners describes its strategy as seeking to achieve risk-adjusted returns by pursuing large-scale investments in companies within the technology, technology-enabled and related growth industries.

    • Silver Lake Partners’ current portfolio includes e-commerce, fintech, fixed satellite services, cybersecurity, and artificial intelligence companies, among others. The Silver Lake website describes SenseTime as a leading artificial intelligence company that develops computer vision and deep learning technologies.

    • According to some commentators, divestment by US funds, like Silver Lake, could hurt these businesses far more than a shortage of US components resulting from their placement on the Entity List – components for surveillance equipment and servers are relatively low tech, and can easily be sourced elsewhere.

    • Isaac Stone Fish, senior fellow with the Asia Society’s Center on U.S.-China Relations: Placing companies on the Entity List “will make people think twice about working with these companies even if there are no legal reasons preventing them from doing so…Reputational costs will be greater than financial costs.”

    • Senator Jeff Merkely (D-OR) said: “I would encourage any American-run fund to examine their investments and seriously consider divesting from companies whose technologies are being used to commit these abuses.”

    • A U.S. State Department Spokesperson said: “We will continue to urge companies that do business in China to undertake human rights due diligence in line with the UN Guiding Principles on Business and Human Rights and implement safeguards to mitigate the risk that commercial activities are contributing to China’s human rights violations or abuses.”

     

    Role: Massachusetts Institute of Technology Intelligence Quest Oversight Team 

    Task: You oversee the MIT Intelligence Quest. You must decide whether to end the MIT-SenseTime Alliance on Artificial Intelligence, how to address the alliance to the school community, and craft a policy for similar situations in the future.

    • The MIT Intelligence Quest launched in February 2018 and seeks to leverage the Institute’s strengths in brain and cognitive science to advance research into human and machine intelligence in service to all humanity. It intends to apply the fruits of its discoveries to diverse fiends in part by forcing connections with innovative companies.

    • MIT News Announcement, February 28, 2018: “MIT and SenseTime today announced that SenseTime, a leading artificial intelligence (AI) company, is joining MIT’s efforts to define the next frontier of human and machine intelligence. SenseTime was founded by MIT alumnus Xiao-ou Tang PhD ’96 and specialized in computer vision and deep learning technologies. The MIT-SenseTime Alliance on Artificial Intelligence aims to open up new avenues of discover across MIT in areas such as computer vision, human-intelligence-inspired algorithms, medical imaging, and robotics; drive technological breakthroughs in AI that have the potential to confront some of the world’s greatest challenges; and empower MIT faculty and students to pursue interdisciplinary projects at the vanguard of intelligence research.”

    • MIT News Announcement, August 24, 2018: “The MIT-SenseTime Alliance on Artificial Intelligence, a program within the MIT Quest for Intelligence, has announced funding for 27 projects involving about 50 principal investigators from departments and labs within engineering, science, architecture and planning, management, and the humanities and social sciences.”

    • Since the announcement that SenseTime was put on the Entity List, MIT has said it is reviewing the university’s relationship with the company. An MIT spokesperson told Bloomberg that “MIT has long had a robust export controls function that pays careful attention to export control regulations and compliance. MIT will review all existing relationship with organizations added to the U.S. Department of Commerce’s Entity List, and modify any interactions, as necessary.”

     

    Role: Florida State Board of Administration

    Task: You manage the assets of the Florida Retirement System. You must decide whether to divest from Silver Lake, how to address your indirect investment in SenseTime to the Florida public, and craft a policy to guide future investment decisions based on human rights implications.

    •  Based on close review of PitchBook and public financial disclosures dating back to 2010, Buzzfeed News published a report highlighting the involvement of US organizations in SenseTime. The Buzzfeed report identified prominent universities and public pension plans or retirement systems which have an indirect interest in SenseTime through Silver Lake, including the Florida Retirement System.

    • Some of the other largest known investors in Silver Lake include the Teacher Retirement System of Texas and the Washington State Investment Board. Other known limited partners include public employee pension and retirement plans in Illinois, Michigan, Minnesota, New York, Ohio, and California.

    • Senator Marco Rubio (R-FL) is co-chairman of the Congressional-Executive Commission on China, and sponsored the Uyghur Human Rights Act which passed in the Senate. He also told BuzzFeed News, “China uses its growing and unfettered access to America’s over $30 trillion capital markets to help finance its military threats, espionage, and egregious human rights abuses…We must stop this, period.”

     

    Role: Congressional-Executive Commission on China

    Task: You are a Congressional member of this bipartisan commission. You must identify steps you can take to address the situation in Xinjiang, and the ties between US companies and investors and the enforcement of repressive policies against the Uyghur minority by the Chinese government.

    • The Congressional-Executive Commission on China was created by Congress in October 2000 with the legislative mandate to monitor human rights and the development of the rule of law in China, and to submit an annual report to the President and the Congress. The Commission consists of nine Senators, nine Members of the House of Representatives, and five senior Administration officials appointed by the President.

    • The Commission is currently chaired by Representative James McGovern and Senator Marco Rubio. Senator Rubio represents the state of Florida, whose Retirement System is an indirect investor in SenseTime through its positions as a limited partner in Silver Lake. Other members of the Commission also represent states with ties to SenseTime through investment firms.

    • On May 9th of last year, Senator Rubio and Representative Smith sent a letter to the US Commerce Secretary demanding answers about the sale by US companies of surveillance technology used by Chinese security forces.

    • On August 28th of 2018, the chairs sent a bipartisan letter, signed by 17 legislators, urging swift action by the executive branch in response to the systematic discrimination and arbitrary detention of Turkic Muslim minorities.

    • More recently, the Senate passed the Uyghur Human Rights Policy Act of 2019, calling on bodies within the US government to prepare reports on China’s treatment of the Uyghurs. The Uighur Intervention and Global Humanitarian Unified Response Act has also been introduced in the House, relating to sourcing restrictions and export controls.

    • Most recently, the CECC held a hearing on “Forced Labor, Mass Internment, and Social Control in Xinjiang.” Members of the Commission and the four witnesses emphasized the seriousness of the situation in Xinjiang, the entanglements between US businesses and the human rights violations occurring at the hands of the Chinese government, and the need for companies to be more principled in their engagement with China more broadly.

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    This post was originally published on Press and Publicity – NYU Stern Center for Business and Human Rights.

  • Report: Regulating Social Media: The Fight Over Section 230 — and Beyond

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    This post was originally published on Press and Publicity – NYU Stern Center for Business and Human Rights.

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  • Human Rights in the Age of Covid: New Challenges, Old Solutions?

    By Maria O’Sullivan

    In 2020, human rights law is being tested to its limits. 

    As we are now all aware, in March 2020, the World Health Organization declared that an outbreak of the viral disease COVID-19 had reached the level of a global pandemic and called for governments to take urgent action to stop the spread of the virus.

    The role of law in this health emergency has been central. It has permeated all aspects of our lives. In Australia, executive directions have been issued which require the closing of non-essential businesses, placed limitations on public gatherings, and severely restricted the movement of individuals. These measures have serious implications for various human rights protections, including the right to liberty, freedom of association, freedom of movement and the right to privacy. 

    Normally, such restrictions would be unlawful. However, as I have noted elsewhere, a declaration of a state of emergency allows governments to enact restrictive measures in the interest of  protecting public health. For instance,  Victoria’s state of emergency declaration gives state authorities wide powers under its Public Health and Wellbeing Act 2008 to issue directions to restrict people’s movement and regulate public behaviour. This is important because officially declaring a state of emergency allows exceptional powers to be used in exceptional circumstances.

    Because this emergency is testing the limits of our human rights protections in Australia, it represents an opportunity to consider how our legal system functions when society is tested. And, in particular, what the operation of the Covid laws say about how human rights are protected in Australia. 

    In some ways, Covid presents new challenges which can be met by ‘old solutions’, that is, our existing principles and oversight mechanisms. Importantly, however, Covid also presents some new challenges which require human rights law in Australia to adopt new approaches and develop new solutions.

    Here, I wish to highlight one particular aspect of Covid which demonstrates that we require some rethinking about human rights protections in Australia: the recent debates about mobile phone tracing to assist in controlling the Covid outbreak.

    A New Challenge which requires a New Solution – Privacy and Surveillance

    As reported in the media in recent weeks, the Australian government is planning to launch an app which will automate coronavirus contact tracing. Although the exact specifications of the app are still unclear, it appears that it will trace every person who has been in contact with a mobile phone owner who has tested positive for coronavirus in the previous few weeks. It will do so using Bluetooth smart phone connections to record who has been near a person for 15 minutes or more (the period defined as a contact). 

    Obviously, this raises serious concerns for privacy. This is so even if installing the app is to be voluntary rather than mandatory.

    International human rights law is clear that state parties have an obligation to protect everyone against arbitrary or unlawful interference with their privacy, family, or correspondence (Article 17 of the International Covenant on Civil and Political Rights).

    This is where the Covid emergency represents a new challenge which human rights law must meet. 

    Many would probably agree that certain fundamental limits should be put in place to regulate such a surveillance tool. First, any use of data should only be used only for the purpose of responding to the COVID-19 pandemic and cease once the pandemic is over. In this regard, the tracing app raises the issue of “mission creep”: that the government will use it for COVID purposes, but continue to access the data once the pandemic is over. Second,  the data must be properly and safely stored. Here I note that there have been some concerns around how the Australian government is going to protect data privacy, particularly given that the contract for storing the app’s data is going to a US-based company (Amazon). Third, these technologies must address risks in relation to discrimination against racial minorities and marginalised populations.

    But on a more conceptual level, I would argue that we must rethink how privacy and technology interact. This is something which has been highlighted by the Covid emergency, but will remain a problem after that is resolved.

    There are two aspects of concern here which require new legal approaches. First, there is often a lack of transparency in how technology is implemented in Australia. This may be a problem which can be remedied by a public education campaign to ensure that those affected by technology have at least a rudimentary understanding of how data is used by authorities and an understanding of their rights.

    Second, given the nature of the information many people hold on their phones (photos, intimate messages etc) it could be argued that they are an extension of ourselves and are part of our private life, even perhaps part of our identity. This is because they reveal information that is reflective of our personal attributes. For instance, the types of dating apps on a person’s phone will reveal their sexual identity. Other information and apps may reveal  an individual’s political and religious beliefs. Mobile phones are therefore not simply ‘telecommunications devices’. This means that human rights law must reconceptualise the concept of privacy and a ‘private life’ to deal with this societal fact.

    In terms of specific changes to existing regimes, I would highlight that Australia does not have a statutory, legally-enforceable right to privacy. Therefore, as the Castan Centre recommended in a recent submission to the Human Rights Commission’s Inquiry on Human Rights and Technology, a tort for serious invasion for privacy should be adopted. This would allow for better protection against intrusion and misuse of private information and serve as an accountability mechanism for governmental actions in this area.

    Broader Reflections: Implications for human rights in Australia

    I have discussed above a specific example of an area in which Australia needs to reform its protection of human rights, specifically the right to privacy.

    However, I would argue as a more general proposition that Australia relies heavily for its human rights adherence on oversight and accountability mechanisms (such as parliamentary processes). Whilst some of those have continued to operate, it is becoming increasingly clear that we require greater entrenchment of our rights than our legal system currently provides.

    The Castan Centre has long advocated for a federal Human Rights Charter. When we have defeated Covid-19, I would argue that this should happen.

    I also wish to make some broader reflections about the implications for society of the current epidemic. Most people in Australia have never undergone such extensive personal restrictions on our freedoms as we are currently experiencing. It is my hope that this experience may lead  us to have some insight into the plight of others – to deepen our understanding of the human rights abuses that many marginalised and vulnerable people in Australia and elsewhere have faced and continue to face today. The government has said many times that we must come together as a nation. This is true. But we must also reflect on inequality and disadvantage in our society and come together as a nation to ensure our law protects us fairly and equally from those problems. 

    *I wish to acknowledge the excellent editorial assistance and suggestions provided to me by Castan Centre Project Officer, Andrea Olivares-Jones in the preparation of this article.

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    This post was originally published on Castan Centre for Human Rights Law.

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    This post was originally published on Press and Publicity – NYU Stern Center for Business and Human Rights.

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