NASA once again makes moonshot history. Plus, the space agency’s astronauts take a stroll, and a piece of tragic space history found by accident. VOA’s Arash Arabasadi brings us The Week in Space.  
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Taiwan’s envoy to a gathering of Asia-Pacific leaders is the 91-year-old billionaire founder of a computer chip manufacturing giant that operated behind the scenes for decades before being thrust into the center of U.S.-Chinese tension over technology and security.

Morris Chang’s hybrid role highlights the clash between Taiwan’s status as one of China’s top tech suppliers and Beijing’s threats to attack the self-ruled island democracy of 22 million people, which the mainland’s ruling Communist Party says it part of its territory.

Taiwan’s decision to send Chang instead of a political leader to the Asia-Pacific Economic Cooperation summit in Thailand reflects the island’s unusual status. The United States and other governments have agreed to Chinese demands not to have official relations with Taiwan or have their leaders meet its president.

Chang transformed the semiconductor industry when he founded Taiwan Semiconductor Manufacturing Corp. in 1987 as the first foundry to produce chips only for customers without designing its own. That allowed smaller designers to compete with industry giants without spending billions of dollars to build a factory.

TSMC has grown into the biggest chip producer, supplying Apple Inc., Qualcomm Inc. and other customers and turning Taiwan into a global tech center. TSMC-produced chips are in millions of smartphones, automobiles and high-end computers.

Despite that, TSMC ranks high on any list of the biggest companies that are unknown outside their industries.

Chang, a Texas Instruments Inc. veteran who served as TSMC chairman until 2018, represented then-President Chen Shui-bian at the Asia-Pacific Economic Cooperation meeting in 2006. He was re-appointed to the same job in 2018, 2019 and 2020 by President Tsai Ing-wen.

“Taiwan’s semiconductor industry, especially TSMC, plays a pivotal role in the domestic and even the world economy,” Tsai told reporters on Oct. 20. “At this important moment, Chang is an irreplaceable candidate to serve as the representative of our country’s APEC leaders.”

Britain’s trade minister, Greg Hands, said London wants closer cooperation with Taiwan on semiconductors during a visit this month. Britain is home to Arm, a leading chip designer.

Taiwan is in a “very challenging environment” and APEC is the “most important international conference venue for Taiwan,” Chang said at the Oct. 20 briefing with Tsai.

“Taiwan needs to build a secure and resilient supply chain with trusted partners, especially in the electronics sector,” he said.

Last year, Chang warned support was eroding for globalization and free markets that helped TSMC prosper.

“Globalization seems to be a bad word and ‘free market economy’ is beginning to carry conditions,” Chang said while accepting an award from the Asia Society.

“Many companies in Asia and America face challenges as to how to operate in the new environment,” Chang said. “Still, I’m confident that solutions will be found.”

TSMC was thrust into geopolitics in 2020 when then U.S. President Donald Trump blocked the company and other vendors from using U.S. technology to make chips for Chinese tech giant Huawei Technologies Ltd., which produces smartphones and network gear for phone and internet carriers. American officials say Huawei is a security threat and might enable Chinese spying, an accusation the company denies.

Most of the world’s smartphones and other consumer electronics are assembled in Chinese factories. But they need components and technology from the United States, Europe and Asian suppliers — especially Taiwan, the biggest chip exporter.

Huawei, China’s first global tech brand, designs chips but needs TSMC and other contractors to make them. Their foundries need American manufacturing technology, which gives Washington leverage to disrupt Chinese high-tech industry.

Processor chips are China’s biggest import at $300 billion a year, ahead of oil. The ruling Communist Party sees that as a strategic weakness and is spending heavily to create its own chip producers, but they are generations behind TSMC and other global leaders.

Trump’s successor, Joe Biden, left Trump’s curbs in place and imposed more restrictions that extend to other Chinese companies.

TSMC, headquartered in Hsinchu, adjacent to the Taiwan capital, Taipei, says it made 12,302 different products last year for 535 customers. The company reported an $18.7 billion profit last year on $49.8 billion in revenue.

Chang was born in Ningbo, south of Shanghai, and moved to Hong Kong after a civil war on the mainland ended with the Communist Party taking power in 1949.

The mainland’s former ruling Nationalist Party fled to Taiwan. The two sides have been ruled separately since then. They have no official relations but are linked by billions of dollars of trade and investment.

Chang studied at Harvard University and the Massachusetts Institute of Technology before receiving a Ph.D. in electrical engineering from Stanford University in 1964.

Chang spent a quarter-century at Texas Instruments, rising to become a vice president in charge of its semiconductor business, before being invited to Taiwan in the 1980s to lead a technology research institute.

In 1988, TSMC became Taiwan’s first company traded on the New York Stock Exchange. Chang’s stake in the company is worth $1.6 billion.
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With Twitter’s human rights team eliminated, legal experts voice alarm about what it could mean for users around the world. Tina Trinh reports. Camera: Daniel Brody.
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NASA is kicking off its new moon program with a test flight of a brand-new rocket and capsule.

Liftoff was slated for early Wednesday from Kennedy Space Center in Florida. The test flight aims to send an empty crew capsule into a far-flung lunar orbit, 50 years after NASA’s famed Apollo moonshots.

The project is years late and billions over budget. The price tag for the test flight: more than $4 billion.

A rundown of the new rocket and capsule, part of NASA’s Artemis program, named after Apollo’s mythological twin sister:

Rocket power

At 322 feet (98 meters), the new rocket is shorter and slimmer than the Saturn V rockets that hurled 24 Apollo astronauts to the moon a half-century ago. But it’s mightier, packing 8.8 million pounds (4 million kilograms) of thrust. It’s called the Space Launch System rocket, SLS for short, although a less clunky name is under discussion. Unlike the streamlined Saturn V, the new rocket has a pair of side boosters refashioned from NASA’s space shuttles. The boosters peel away after two minutes, just like the shuttle boosters. The core stage keeps firing before crashing into the Pacific. Less than two hours after liftoff, an upper stage sends the capsule, Orion, racing toward the moon.

Moonship

NASA’s high-tech, automated Orion capsule is named after the constellation, among the night sky’s brightest. At 11 feet (3 meters) tall, it’s roomier than Apollo’s capsule, seating four astronauts instead of three. For the test flight, a full-size dummy in an orange flight suit occupies the commander’s seat, rigged with vibration and acceleration sensors. Two other mannequins made of material simulating human tissue — heads and female torsos, but no limbs — measure cosmic radiation, one of the biggest risks of spaceflight. Unlike the rocket, Orion has launched before, making two laps around Earth in 2014. For the test flight, the European Space Agency’s service module was attached for propulsion and solar power via four wings.

Flight plan

Orion’s flight is set to last 25 days from its Florida liftoff to Pacific splashdown, about the same as astronaut trips. It takes nearly a week to reach the moon. After whipping closely around the moon, the capsule enters a distant orbit with a far point of close to 40,000 miles (64,000 kilometers). That would put Orion about 270,000 miles (435,000) from Earth, farther than Apollo. The big test comes at mission’s end, as Orion hits the atmosphere at 25,000 mph (40,000 kph) on its way to a splashdown in the Pacific. The heat shield uses the same material as the Apollo capsules to withstand reentry temperatures of 5,000 degrees Fahrenheit (2,750 degrees Celsius). But the advanced design anticipates the faster, hotter returns by future Mars crews.

Hitchhikers

Besides three test dummies, the test flight includes a slew of stowaways for deep space research. Ten shoebox-size satellites pop off once Orion is hurtling toward the moon. NASA expects some to fail, given the low-cost, high-risk nature of these mini satellites. In a back-to-the-future salute, Orion carries a few slivers of moon rocks collected by Apollo 11’s Neil Armstrong and Buzz Aldrin in 1969, and a bolt from one of their rocket engines, salvaged from the sea a decade ago.

Apollo vs. Artemis

More than 50 years later, Apollo still stands as NASA’s greatest achievement. Using 1960s technology, NASA took just eight years to go from launching its first astronaut, Alan Shepard, and landing Armstrong and Aldrin on the moon. By contrast, Artemis already has dragged on for more than a decade, despite building on the short-lived moon exploration program Constellation. Twelve Apollo astronauts walked on the moon from 1969 through 1972, staying no longer than three days at a time. For Artemis, NASA will draw from a diverse astronaut pool and is extending the time crews spend on the moon to at least a week. The goal is to create a long-term lunar presence that will grease the skids for sending people to Mars.

What’s next

There’s a lot more to be done before astronauts step on the moon again. A second test flight will send four astronauts around the moon and back, perhaps as early as 2024. A year or so later, NASA aims to send another four up, with two of them touching down at the lunar south pole. Orion doesn’t come with its own lunar lander like the Apollo spacecraft did, so NASA has hired Elon Musk’s SpaceX to provide its Starship spacecraft for the first Artemis moon landing. Two other private companies are developing moonwalking suits. The sci-fi-looking Starship would link up with Orion at the moon and take a pair of astronauts to the surface and back to the capsule for the ride home. So far, Starship has only soared six miles (10 kilometers).
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FBI Director Christopher Wray said on Tuesday that the bureau has “national security concerns” about popular short-form video hosting app TikTok as the Chinese-owned company seeks U.S. government approval to continue operating in the country.

Speaking during a U.S. House of Representatives Homeland Security Committee hearing on “worldwide threats to the homeland,” Wray said the FBI’s concerns about TikTok include “the possibility that the Chinese government could use it to control data collection on millions of users.”

There is also concern, Wray said in response to a question, that the Chinese government could “control the recommendation algorithm, which could be used for influence operations … or to control software on millions of devices, which gives the opportunity to potentially technically compromise personal devices.”

In written testimony, Wray called the foreign intelligence and economic threat from China “the greatest long-term threat to our nation’s ideas, innovation, and economic security.”

But he declined to answer in an open session a lawmaker’s question about whether the Chinese government has been leveraging TikTok to collect data about U.S. citizens.

Concerns about ties to Chinese government

TikTok’s ties to the Chinese government have been a flashpoint among U.S. lawmakers and officials for years. The app grew in popularity in recent years after its parent company, ByteDance, a China-based company with suspected ties to the Chinese government, bought and later absorbed Musical.ly, which allowed users to create and share lip-sync videos.

Citing national security concerns, then-President Donald Trump issued an executive order in 2020 that would effectively ban TikTok in the United States. But the social platform sued to block Trump’s executive order.

Last year President Joe Biden revoked the Trump directive, asking the Treasury Department to examine security concerns associated with the app.

The Committee on Foreign Investment in the United States (CFIUS), an interagency body headed by the Treasury Department that reviews the national security implications of foreign investments in U.S. companies, has been examining TikTok’s proposal to continue to remain active in the U.S. market and the risks associated with it.

Noting that the FBI’s foreign investment unit is part of the CFIUS review process, Wray said that “our input would be taken into account in any agreements that might be made to address the issue.”

U.S. lawmakers question how data used

Although TikTok has denied having ties to China’s ruling Communist Party, U.S. lawmakers have long expressed concern about the Chinese government’s ability to access U.S. user data collected by the app.

Questioning Wray during Tuesday’s hearing, Republican Representative Diana Harshbarger cited a recent Forbes article that reported ByteDance “planned to use the TikTok app to track the physical location of specific American citizens.”

TikTok later dismissed the allegation raised in the article, saying in a statement it “does not collect precise GPS location information from U.S. users.”

In a June letter, TikTok sought to reassure U.S. lawmakers about its data security, writing that it now stores “100% of US user data, by default, in the Oracle cloud environment.”

‘Spinach’ vs. ‘opium’ versions

Last week, the U.S. TV news magazine “60 Minutes” reported that TikTok has two versions — a limited, educational “spinach version” for Chinese consumers, and an addictive “opium version” for the rest of the world.

While the version used in the West “has kids hooked for hours at a time,” in China, children under 14 years can use TikTok for only 40 minutes per day and view only videos about science experiments, museum exhibits, patriotic videos and educational videos, according to “60 Minutes.”

Wray said the online “threat to our youth is something we’re always concerned about.” The FBI is just as concerned about the way the Chinese government uses its laws as “an aggressive weapon against companies, both U.S. companies and Chinese companies,” he said.

“Under Chinese law, Chinese companies are required to essentially — and I’m going to shorthand here — basically do what the Chinese government wants them to do, in terms of sharing information or serving as a tool of the Chinese government,” Wray said. “And so, that’s plenty of reason by itself to be concerned.”

Beijing has denied similar allegations in the past.
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Search giant Google has agreed to a $391.5 million settlement with 40 states to resolve an investigation into how the company tracked users’ locations, state attorneys general announced Monday. 

The states’ investigation was sparked by a 2018 Associated Press story, which found that Google continued to track people’s location data even after they opted out of such tracking by disabling a feature the company called “location history.” 

The attorneys general called the settlement a historic win for consumers, and the largest multistate settlement in U.S history dealing with privacy. 

It comes at a time of mounting unease over privacy and surveillance by tech companies that has drawn growing outrage from politicians and scrutiny by regulators. The Supreme Court’s ruling in June ending the constitutional protections for abortion raised potential privacy concerns for women seeking the procedure or related information online. 

“This $391.5 million settlement is a historic win for consumers in an era of increasing reliance on technology,” Connecticut Attorney General William Tong said in a statement. “Location data is among the most sensitive and valuable personal information Google collects, and there are so many reasons why a consumer may opt-out of tracking.” 

Google, based in Mountain View, California, said it fixed the problems several years ago. 

“Consistent with improvements we’ve made in recent years, we have settled this investigation, which was based on outdated product policies that we changed years ago,” company spokesperson Jose Castaneda said in a statement. 

Location tracking can help tech companies sell digital ads to marketers looking to connect with consumers within their vicinity. It’s another tool in a data-gathering toolkit that generates more than $200 billion in annual ad revenue for Google, accounting for most of the profits pouring into the coffers of its corporate parent, Alphabet — which has a market value of $1.2 trillion. 

In its 2018 story, the AP reported that many Google services on Android devices and iPhones store users’ location data even if they’ve used a privacy setting that says it will prevent Google from doing so. Computer-science researchers at Princeton confirmed these findings at the AP’s request. 

Storing such data carries privacy risks and has been used by police to determine the location of suspects. 

The AP reported that the privacy issue with location tracking affected some 2 billion users of devices that run Google’s Android operating software and hundreds of millions of worldwide iPhone users who rely on Google for maps or search. 

The attorneys general who investigated Google said a key part of the company’s digital advertising business is location data, which they called the most sensitive and valuable personal data the company collects. Even a small amount of location data can reveal a person’s identity and routines, they said. 

Google uses the location information to target consumers with ads by its customers, the state officials said. 

The attorneys general said Google misled users about its location tracking practices since at least 2014, violating state consumer protection laws. 

As part of the settlement, Google also agreed to make those practices more transparent to users. That includes showing them more information when they turn location account settings on and off and keeping a webpage that gives users information about the data Google collects. 

The shadowy surveillance brought to light by the AP troubled even some Google engineers, who recognized the company might be confronting a massive legal headache after the story was published, according to internal documents that have subsequently surfaced in consumer-fraud lawsuits. 

Arizona Attorney General Mark Brnovich filed the first state action against Google in May 2020, alleging that the company had defrauded its users by misleading them into believing they could keep their whereabouts private by turning off location tracking in the settings of their software. 

Arizona settled its case with Google for $85 million last month, but by then attorneys general in several other states and the District of Columbia had also pounced on the company with their own lawsuits seeking to hold Google accountable for its alleged deception. 

 
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It’s not easy being Elon Musk.

That was the message the new Twitter owner and billionaire head of Tesla and SpaceX had for younger people who might seek to emulate his entrepreneurial success.

“Be careful what you wish for,” Musk told a business forum in Bali on Monday when asked what an up-and-coming “Elon Musk of the East” should focus on.

“I’m not sure how many people would actually like to be me. They would like to be what they imagine being me, which is not the same,” he continued. “I mean, the amount that I torture myself, is the next level, frankly.”

Musk was speaking at the B-20 business forum ahead of a summit of the Group of 20 leading economies taking place on the Indonesian resort island. He joined the conference by video link weeks after completing his heavily scrutinized takeover of Twitter.

He had been expected to attend the event in person, but Indonesian government minister Luhut Binsar Pandjaitan, who’s responsible for coordinating preparations for the summit, said Musk could not attend because he’s preparing for a court case later in the week.

He’s got plenty else to keep himself busy.

“My workload has recently increased quite a lot,” he said with a chuckle in an apparent reference to the Twitter deal. “I mean, oh, man. I have too much work on my plate, that is for sure.”

The businessman appeared in a darkened room, saying there had been a power cut just before he connected.

His face, projected on a large screen over the summit hall, appeared to glow red as it was reflected in what he said was candlelight – a visage he noted was “so bizarre.”

While Musk was among the most anticipated speakers at the business forum, his remarks broke little new ground. Only the moderator was able to ask questions.

The Tesla chief executive said the electric carmaker would consider making a much cheaper model when asked about lower-cost options for developing countries like India and G-20 host Indonesia. 

“We do think that making a much more affordable vehicle would make a lot of sense and we should do something,” he said.

Musk also reiterated a desire to significantly boost the amount and length of Twitter’s video offerings, and share revenue with people producing the content, though he didn’t provide specifics.

He bought Twitter for $44 billion last month and quickly dismissed the company’s board of directors and top executives.

He laid off much of the rest of the company’s full-time workforce by email on Nov. 4 and is now eliminating the jobs of outsourced contractors who are tasked with fighting misinformation and other harmful content.

Musk has vowed to ease restrictions on what users can say on the platform.

He’s reaped a heap of complaints — much on Twitter itself — and has tried to reassure companies that advertise on the platform and others that it won’t damage their brands by associating them with harmful content.

In his appearance Monday, Musk acknowledged the criticism.

“There’s no way to make everyone happy, that’s for sure,” he said.
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Twitter’s new owner Elon Musk is further gutting the teams that battle misinformation on the social media platform as outsourced moderators learned over the weekend they were out of a job.

Twitter and other big social media firms have relied heavily on contractors to track hate and enforce rules against harmful content.

But many of those content watchdogs have now headed out the door, first when Twitter fired much of its full-time workforce by email on Nov. 4 and now as it moves to eliminate an untold number of contract jobs.

Melissa Ingle, who worked at Twitter as a contractor for more than a year, was one of a number of contractors who said they were terminated Saturday. She said she’s concerned that there’s going to be an increase in abuse on Twitter with the number of workers leaving.

“I love the platform and I really enjoyed working at the company and trying to make it better. And I’m just really fearful of what’s going to slip through the cracks,” she said Sunday.

Ingle, a data scientist, said she worked on the data and monitoring arm of Twitter’s civic integrity team. Her job involved writing algorithms to find political misinformation on the platform in countries such as the U.S., Brazil, Japan, Argentina and elsewhere.

Ingle said she was “pretty sure I was done for” when she couldn’t access her work email Saturday. The notification from the contracting company she’d been hired by came two hours later.

“I’ll just be putting my resumes out there and talking to people,” she said. “I have two children. And I’m worried about being able to give them a nice Christmas, you know, and just mundane things like that, that are important. I just think it’s particularly heartless to do this at this time.”

Content-moderation expert Sarah Roberts, an associate professor at the University of California, Los Angeles who worked as a staff researcher at Twitter earlier this year, said she believes at least 3,000 contract workers were fired Saturday night.

Twitter hasn’t said how many contract workers it cut. The company hasn’t responded to media requests for information since Musk took over.

At Twitter’s San Francisco headquarters and other offices, contract workers wore green badges while full-time workers wore blue badges. Contractors did a number of jobs to help keep Twitter running, including engineering and marketing, Roberts said. But it was the huge force of contracted moderators that was “mission critical” to the platform, said Roberts.

Cutting them will have a “tangible impact on the experience of the platform,” she said.

Musk promised to loosen speech restrictions when he took over Twitter. But in the early days after Musk bought Twitter for $44 billion in late October and dismissed its board of directors and top executives, the billionaire Tesla CEO sought to assure civil rights groups and advertisers that the platform could continue tamping down hate and hate-fueled violence.

That message was reiterated by Twitter’s then-head of content moderation, Yoel Roth, who tweeted that the Nov. 4 layoffs only affected “15% of our Trust & Safety organization (as opposed to approximately 50% cuts company-wide), with our front-line moderation staff experiencing the least impact.”

Roth has since resigned from the company, joining an exodus of high-level leaders who were tasked with privacy protection, cybersecurity and complying with regulations.
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Australian researchers have identified 1,500 additional locations across the country that could be used as pumped storage hydropower facilities. They have said it should reduce Australia’s reliance on fossil fuels.

Academics at the Australian National University have said pumped storage hydropower is a “low-cost, mass storage option” that could help Australia reach its emissions reduction targets.

Emeritus Professor Andrew Blakers at the university’s College of Engineering, Computing and Cybernetics told VOA the process involves transferring water between two reservoirs or lakes at different elevations.

He said water is pumped to the higher reservoir when there are plentiful supplies of wind and solar energy. The water is then released at night, or at other times when it is not windy or sunny, maximizing the use of the stored energy in the reservoirs.

“We have two reservoirs; one at the top of a hill and the other down in a valley connected with a pipe or tunnel,” he said. “On sunny and windy days, the pump turbine pumps water uphill to the upper reservoir and then in the middle of the night the water is allowed to come back down through the turbine to recover the energy that was stored. So, the same water goes up and down between the two reservoirs for 100 years. So, if you want large-scale storage, you go to pumped hydro.”

Researchers studied the area near every reservoir in Australia looking for a potential site for another reservoir that could be used as pumped storage hydropower.

They identified 1,500 locations that could help Australia store the energy it generates from wind and solar projects.

Blakers says Australia is becoming a world leader in the field.

“All Australian governments and companies are focused on very rapid construction of solar and wind, and equally rapid construction of new transmission to bring the new power to the cities, and pumped hydro and battery storage to balance the variable solar and wind. Australia is the global pathfinder. We are leading in every department,” he said.

Australia has a target of producing 82% of its electricity from renewable sources by 2030.

Because of the country’s heavy reliance on coal and natural gas, it has been one of the world’s worst emitters of greenhouse gases, per capita.

Those fossil fuels continue to generate much of Australia’s electricity, but researchers believe that the country’s path toward a cleaner energy future is well underway.

The Australian National University study released Friday follows the team’s identification of 530,000 potential pumped-storage hydro sites across the world.
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Twitter paused its recently announced $8 blue check subscription service Friday as fake accounts mushroomed and new owner Elon Musk brought back the “official” badge to some users of the social media platform.

The coveted blue check mark was previously reserved for verified accounts of politicians, famous personalities, journalists and other public figures. But a subscription option, open to anyone prepared to pay, was rolled out earlier this week to help Twitter grow revenue as Musk fights to retain advertisers.

The flip-flop is part of a chaotic two weeks at Twitter since Musk completed his $44 billion acquisition. Musk has fired nearly half of Twitter’s workforce, removed its board and senior executives, and raised the prospect of Twitter’s bankruptcy. The U.S. Federal Trade Commission said Thursday it was watching Twitter with “deep concern.”

Several users reported Friday that the new subscription option for the blue verification check mark had disappeared, while a source told Reuters the offering has been dropped.

Twitter did not reply to a request for comment.

Fake accounts purporting to be big brands have popped up with the blue check since the new roll-out, including Musk’s Tesla TSLA.O and SpaceX, as well as Roblox, Nestle NESN.S and Lockheed Martin LMT.N.

“To combat impersonation, we’ve added an ‘Official’ label to some accounts,” Twitter’s support account – which has the “official” tag – tweeted on Friday.

The label was originally introduced Wednesday, but “killed” by Musk just hours later.

Drugmaker Eli Lilly and Co LLY.N issued an apology after an impostor account tweeted that insulin would be free, amid the political backlash and scrutiny of the high prices of the medicine.

“We apologize to those who have been served a misleading message from a fake Lilly account,” the company said, reiterating the name of its Twitter handle.

A number of misleading tweets about Tesla from a verified account with the same profile picture as the company’s official account were also being circulated on the platform.

“Twitter has over the past several years worked to try to improve that (misinformation). And it seems like Elon Musk has unraveled it within a matter of weeks,” said A.J. Bauer, a professor at the University of Alabama.

Musk had said Twitter users engaging in impersonation without clearly specifying it as a “parody” account would be permanently suspended without a warning. Several fake brand accounts, including those of Nintendo 7974.T and BP BP.L, have been suspended.

On Thursday, in his first company-wide email, Musk warned that Twitter would not be able to “survive the upcoming economic downturn” if it failed to boost subscription revenue to offset falling advertising income, three people who saw the message told Reuters.

Many companies, including General Motors GM.N and United Airlines UAL.O, have paused or pulled back from advertising on the platform since Musk took over. In response, the billionaire said Wednesday he aimed to turn Twitter into a force for truth and stop fake accounts.
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Crypto exchange FTX filed for U.S. bankruptcy proceedings on Friday and founder Sam Bankman-Fried stepped down as CEO, in a stunning downfall that has sent shock waves through markets and drawn calls for better regulation of the digital industry.

The distressed crypto trading platform had been struggling to raise billions in funds to stave off collapse after traders rushed to withdraw $6 billion from the platform in just 72 hours and rival exchange Binance abandoned a proposed rescue deal.

The company said in a statement shared on Twitter on Friday that FTX, its affiliated crypto trading firm Alameda Research and about 130 other companies have commenced voluntary Chapter 11 bankruptcy proceedings in Delaware.

FTX had raised $400 million from investors in January, valuing the company at $32 billion. It attracted money from investors such as Singapore state investor Temasek and the Ontario Teachers’ Pension Plan as well as celebrities and sports stars.

Bankman-Fried, 30, known for his trademark shorts and T-shirt attire, has morphed from being the poster child of crypto’s successes to the protagonist of the industry’s highest-profile blowup.

“The shock was that this guy was the face of the crypto industry, and it turned out that the emperor had no clothes,” said Thomas Hayes, managing member at Great Hill Capital LLC in New York.

The week’s turmoil hit already-struggling cryptocurrency markets, sending bitcoin to two-year lows. Bitcoin dropped after FTX’s announcement and was down 4.3% at $16,803 on Friday afternoon.

Shares of cryptocurrency and blockchain-related firms also dropped on the news.

FTX’s token FTT plunged 30% on Friday to $2.57, facing an 88% weekly loss.

Bankman-Fried, whose net worth was estimated as high as $26.5 billion by Forbes a year ago, repeatedly apologized.

“I’m really sorry, again, that we ended up here,” he said in a series of tweets.

Bankman-Fried did not respond to requests for comment.

Possible contagion effect

In its bankruptcy petition, FTX Trading said it has $10 billion to $50 billion in assets, $10 billion to $50 billion in liabilities, and more than 100,000 creditors. John J. Ray III, a restructuring expert, has been appointed to take over as CEO.

“The next question is how wide of a contagion effect this is going to have on other exchanges and where the next potential losses can occur,” said John Griffin, founder of Integra FEC, which consults on financial fraud investigations.

FTX was scrambling to raise about $9.4 billion from investors and rivals, Reuters reported, citing sources as the exchange sought to save itself after customer withdrawals.

“The Chapter 11 filing is a necessary step to allow the company to assess the situation and develop plans to move forward for the benefit of stakeholders,” Ray said in a Slack memo to FTX staff seen by Reuters.

Ray, 63, oversaw the liquidation of Enron after its bankruptcy filing and served as the senior officer of what became Enron Creditors Recovery Corp. He also oversaw the bankruptcy restructuring at Nortel Networks.

He did not respond to a request for comment.

Some investors, including Sequoia and SoftBank, had already marked FTX investments to zero. SkyBridge Capital is working to buy back its FTX stake, the alternative investment firm’s founder, Anthony Scaramucci, said in an interview with CNBC on Friday.

The reverberation went beyond the financial markets where the exchange has a significant presence, with the Mercedes Formula One team suspending its partnership agreement ahead of the season’s penultimate race in Brazil.

‘The writing was on the wall’

As FTX’s troubles mounted, regulators around the world stepped in.

FTX is under investigation by the U.S. Securities and Exchange Commission, the U.S. Justice Department and the Commodity Futures Trading Commission, according to a source familiar with the investigations.

“Once Binance walked away from buying FTX after only 24 hours of due diligence the writing was on the wall for FTX,” said Antoni Trenchev, co-founder of crypto lender Nexo.

“Now we enter the next phase of the fallout, where we witness the second order effects and discover which entities were exposed to FTX and Alameda.”
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The widespread retrenchment in the U.S. technology industry has thrown thousands of workers in Silicon Valley out of work, a trend greatly amplified on Wednesday by Meta Platforms, the parent company of Facebook, which announced it would eliminate 13% of its workforce, amounting to more than 11,000 jobs.

The announcement followed on the heels of major layoffs at other tech firms, most recently Twitter, which is restructuring in the aftermath of its takeover by Tesla founder Elon Musk, and also business software firm Salesforce and social media giant Snap, Inc.

Other major tech firms, including Apple, Amazon and Alphabet, the parent company of Google, have said that they will slow or curtail new hiring.

Announcing the job cuts, Facebook founder and Meta CEO Mark Zuckerberg admitted he had made an error in judgment by assuming the sharp growth in online commerce that coincided with the beginning of the COVID-19 pandemic signaled a permanent change in consumer habits.

“I want to take accountability for these decisions and for how we got here,” Zuckerberg said in a statement released Wednesday. “I know this is tough for everyone, and I’m especially sorry to those impacted.”

Market reacts

The move by Meta to cut costs was applauded by many investors, some of whom have been calling on the company to pay more attention to its bottom line.

Brad Gerstner, founder of Altimeter Capital and a vocal proponent of change at Meta, used Twitter to voice his approval of Zuckerberg’s announcement on Wednesday morning.

Calling the move an “important first step,” he wrote, “Innovation wins when companies are healthy and fit. The cultural mindset shift from the dangerous era of excess/free money will define the next [generation] of winners.”

Meta’s share price, which had plunged from more than $345 last November to below $89 last week, got a boost from the news. After closing at $96.48 on Tuesday, Meta shares opened the day above $100, and closed up 5% at $101.47.

Other layoffs

Employees leaving Meta and seeking other employment in the tech sector will enter a challenging environment, given the sudden layoffs of thousands of their fellow workers across the sector.

Last week, Twitter announced it would lay off about 3,700 people, or approximately half of its workforce. The layoffs occurred in Twitter offices around the world but were concentrated in the United States. The company has reportedly asked some of the workers originally let go to return, but the overwhelming majority are expected to remain separated from the company.

San Francisco-based Salesforce announced Monday it would lay off approximately 2,500 people. That revelation came just weeks after the company’s largest competitor, software giant Microsoft, eliminated nearly 1,000 jobs in October.

This continues a trend that has been accelerating since early this year as a parade of other tech firms, including Seagate, Snap, Intel, Netflix, Shopify, Lyft and others have either cut jobs or restricted hiring.

Some perspective

Representative Ro Khanna, the Democratic member of Congress who represents a district including large segments of Silicon Valley, was asked during an interview with Bloomberg Television on Monday whether he thought the region would be able to “survive” the economic shock of the thousands of layoffs.

Khanna said some perspective was in order, noting that his district alone is home to companies with $10 trillion in market value and would be able to bounce back, though perhaps not without a broader economic recovery.

“I think we’re a leading indicator of some of the slowing in the economy,” Khanna said. “But I have no doubt that these companies are very resilient and we’ll come back.”

Visa holders

The impact of the layoffs will be particularly harsh on immigrants working at U.S. tech firms. Many hold H-1B visas, which means their ability to remain in the U.S. is dependent on continued employment by a company willing to sponsor their visa applications.

H-1B visa holders, in general, face a 60-day deadline to find a new job. If they fail to do so, they are required to leave the country.

According to data compiled by the United States Citizenship and Immigration Services, the overwhelming majority of H-1B visa holders work in the technology field. In 2019, the agency reported that of the 387,492 H-1B visa holders in the country whose occupations were known, 256,226, or 66%, worked in “computer-related fields.”

H-1B visas are disproportionately issued to citizens of India, who held 71.7% of outstanding visas in 2019. The next largest recipient are citizens of China, who held 13% of H-1B visas in 2019. Canada came in third at 1.2% and no other country’s citizens held more than 1% of the total.

In his public statement, Zuckerberg acknowledged that “this [workforce reduction] is especially difficult if you’re here on a visa.” He said Meta would have dedicated immigration specialists available “to help guide you based on what you and your family need.”

Global impact

The layoffs in Silicon Valley-based tech firms have also echoed around the world, particularly at Twitter, where staff at several international offices were let go en masse.

Bloomberg News reported that Twitter laid off some 90% of its employees in India, the majority in the company’s product and engineering teams. In Ghana, the site of the company’s only office on the African continent, nearly all of the company’s 20 employees received termination notices.

Meta has several hundred employees in India, spread across Facebook and Instagram and WhatsApp, two other social media companies it owns. It was unclear Wednesday how the layoffs would affect staff there.
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