The power of the latest generation of AI systems is such that previously impractical applications are not just possible, but scalable. For example, moving beyond basic early AI text translation tools, it is now possible to use live translation to communicate in another language in real time. For many people that will be a real boon, especially when they are traveling. But here’s something that is likely to prove more controversial: real-time rephrasing of profanity within chat. It’s a new AI-powered feature from Roblox that is designed to “keep gameplay fluid while maintaining civility within chat”:
Roblox is leveraging AI to automatically rephrase profanity. Rather than displaying only hashmarks, filtered text will be translated into more respectful language that remains closer to the user’s original intent. For example, a message that violates Roblox’s profanity policies, such as “Hurry TF up!” would previously have appeared as “####” within experience chat. That will now be rephrased to “Hurry up!” This new layer is designed to maintain civility by rephrasing the language and replacing “stop signs” with real-time guidance.
Specifically:
When a message violates Roblox’s profanity policy, everyone in the chat is notified that the text has been rephrased to keep things civil. While rephrasing reduces some of the disruption in the chat, Roblox’s multilayered safety system remains in effect for more serious behavior. Rephrasing is available exclusively for in-experience chat between age-checked users in similar age groups and is supported in all languages currently available through Roblox’s automatic translation tools.
Alongside this new AI-based capability, Roblox is also tweaking its text filtering system:
Early results from Roblox’s testing show significant improvements in detecting leet-speak, or letters replaced with numbers or symbols, and more sophisticated attempts to bypass filters.
Parents may applaud real-time rephrasing as a way for the service to nudge younger users away from bad language in their interaction with others, without stopping them playing altogether. But it creates a dangerous proof of concept that others may build on, particularly in jurisdictions that want stricter controls on what people say online.
It’s easy to imagine situations where Chinese AI systems, for example, rephrase people’s language on social media in real time to promote “social harmony”. Not only the style but even the content’s details could be subtly changed away from controversy towards conformity. It would be possible for rephrasing to be visible only to others, so the person making a comment might not even be aware that their words were being subverted in this way. Something similar is already happening with Chinese AI chatbots that censor their own answers, without acknowledging that fact. As Chinese AI companies become increasingly important players in the online world, this kind of covert rephrasing by them — and others — is another issue people will need to watch out for in our brave new AI world.
You might recall that during the great mass TikTok hyperventilation of 2021-2025, there was no limit of face fanning by Republicans like Brendan Carr about overseas involvement in social media. Carr was so particular on this subject, he scuttled an FCC program aimed at shoring up “smart” home device security standards because one of the testing labs (unsurprisingly) did business in China where this stuff is made.
Fast forward to this year, and Carr curiously has zero problems with significant Saudi and Chinese investments in Larry Ellison and Paramount’s efforts to acquire Warner Brothers. Though Carr’s actual regulatory oversight of the deal is limited given the lack of public broadcast licenses involved, he took to CNBC anyway to insist the massive $111 billion deal should likely fly through regulatory approval:
“If there’s any FCC role at all, it’ll be a pretty minimal role. And I think this is a good deal, and I think it should get through pretty quickly,” Carr added.
Carr told CNBC that Netflix “would have a very difficult path” getting regulatory approval, adding that Paramount’s was “a lot cleaner, does not raise at all the same types of concerns.”
“I think there’s some real consumer benefits that can emerge from it,” he added.
Carr’s (and Republicans’ more generally) gushing excitement comes despite the fact that significant structural overlap between Paramount and Warner Brothers will mean significantly more layoffs than we would have seen during the originally proposed Netflix Warner Brothers tie up. Layoffs that will likely be much worse than past Warner deals due to the absolutely massive debt involved.
This is before you even get to Larry Ellison’s obvious quest to built autocratic-friendly state television, the likes of which coddles authoritarianism and, in countries like Russia and Hungary, ultimately led to the total decimation of serious truth-to-power journalism.
“Before pulling out of the deal, Netflix co-CEO Ted Sarandos – speaking to the BBC in London on the morning after the recent BAFTA Film Awards – called the Gulf sovereign funds backing Paramount’s bid a “bad idea,” noting that they are from “a part of the world that is not very big on the First Amendment.”
“It seems very odd to me with the level of investment that we’re talking about that they’d have no influence or editorial control over media in another country,” Sarandos added.
If you recall the multi-year right wing hysteria campaign about TikTok, it was fixated on the idea that having any overseas involvement in U.S. media was a doomsday scenario (they were not subtle or flexible on this point). Of course Trumpism immediately proceeded (with bumbling Democrat help) to “fix” this problem by offloading the company to Trump’s technofascist friends, while still maintaining a significant investment presence by the Chinese.
When Netflix was planning to buy Warner Brothers, Republicans engaged in no limit of face-fanning, featuring threats of “investigations” by Republican Attorneys General, and a phony Trump DOJ “investigation” into the antitrust concerns raised by the deal. But when a technofascist ally oligarch wants to own a major media property, with Saudi and Chinese help, all of that mysteriously disappears.
It’s almost as if Trump Republicans have no coherent ideology beyond their own power and unchecked wealth accumulation, and all of their posturing on issues like antitrust and national security, routinely propped up by a lazy press, is as hollow as a Dollar Store fake chocolate Easter bunny.
In my previous posts about the use of generative AI tools in the video game industry, I have tried to drive home the point that a nuanced conversation is needed here. Predictably, there were many comments of the sort of stratified opinions that I was specifically attempting to avoid, but I always knew they’d be there. And that’s okay. Where there is novelty, there is disruption and discomfort. And, frankly, some of the dangers here aren’t unfounded.
But in the end, I remain of the opinion that generative AI will be a tool used by game developers generally in the future, if not the present. I also still firmly believe that the conversation we should be having is not whether AI should be used in games, but how it should be used.
And people like the CEO of Shift Up in South Korea sure aren’t helping when they insist on the need to use AI by trotting out the Chinese boogeyman.
Will gen AI be part of Stellar Blade 2‘s development? It doesn’t sound entirely outside the realm of possibility after recent comments from developer Shift Up’s CEO. The South Korean game studio is currently working on a sequel to the 2024 sci-fi action game and its boss thinks AI is the only way to compete with the massive development teams coming out of China.
“We devote around 150 people to a single game, but China puts in between 1,000 to 2,000,” Hyung-tae Kim, who also served as director on Stellar Blade, said during a recent conference briefing according to GameMeca (translated via Automaton). “We lack the capacity to compete, both in terms of quality and volume of content.”
Where do I even begin with this nonsense? First, it’s completely devoid of the nuance I was asking for in these kinds of discussions. This is essentially stating that developers can make up for China’s massive human assets it can throw at game development by using AI to make up the difference. 1 employee using AI, doing the math, can be the equivalent of 100 or so Chinese workers. That sounds like you’re looking to stave off hiring by using AI and you aren’t helping!
It also fails, somehow, to recognize that generative AI can be used in China as well. China isn’t exactly ignoring AI tools, you know, so this arms race makes no real sense.
Finally, it’s just kind of bullshit. Chinese studios have certainly produced some games, some that have been quite successful. But when we think about the major players in the video game industry, especially in terms of quality and revenue, China is but a fairly average player on the world scene. Tencent, NetEase, and MiHoYo all crack the top ten in revenue, but the rest of the longer list is filled with American, Japanese, and South Korean studios, among some other countries. They’re a player in the industry, to be sure. But they aren’t some dominant force that requires special tactics to compete with.
But despite all the above, Shift Up has been both successful and has committed to retaining and treating its staff well.
Was Kim actually worried about rising competition from China, or was he just flexing his geopolitical muscle as Stellar Blade‘s popularity catapults Shift Up into the big time? After all, that game sold millions of copies across console and PC without the help of AI, even as Tencent, Net Ease, and other major Chinese publishers flood the market with AAA free-to-play games.
For now at least, Shift Up employees are being well taken care of. Seoul Economic Daily recently reported that all 300 employees at the studio were given AirPods Max, Apple Watches, and a bonus $3,400 to celebrate the company’s profitable 2025. Why no video game consoles? It already gifted PS5 Pros and Switch 2s last year.
That sure doesn’t read like a studio in dire straits due to the scary Big Red Machine or whatever he’s trying to pitch. How about you keep making good games and all will be fine?
Then we can get back to the real, more nuanced conversation about just what place AI has in video game production.
Late last year, most major U.S. telecoms were the victim of a massive, historic intrusion by Chinese hackers who managed to hack into U.S. communications networks and then spy on public U.S. officials for more than a year completely undetected. The “Salt Typhoon” hack was so severe, the intruders spent another year rooting around the ISP networks even after discovery. AT&T and Verizon, two of the compromised companies, initially didn’t think it was worth informing subscribers this happened.
“The attacks are the latest element of an ongoing cyber campaign against US communication networks by the Ministry of State Security, China’s intelligence service. One person familiar with the attack said it was unclear if the MSS had accessed lawmakers’ emails.”
Which means that they almost definitely had access to confidential lawmakers’ emails, something it will take our Keystone-Cops-esque government another six months to admit.
It can’t be overstated what a complete and massive hack this was. The Chinese government had broad, historic access to the sensitive phone and email conversations of a massive number of sensitive U.S. public and government figures, for years. Thanks, in large part, to big telecoms like AT&T leaving key network access points “secured” with default administrative usernames and passwords.
Last June, NextGov reported that lawyers at big telecoms had started advising their engineers to stop looking for signs of Salt Typhoon intrusion because they were worried about bad press and liability. Due to this coverup and a lack of transparency by the dying U.S. government, it’s likely we still don’t know the full scope of the intrusions.
Meanwhile, the Trump administration has responded by gutting government cybersecurity programs (including a board investigating the Salt Typhoon hack), dismantling the Cyber Safety Review Board (CSRB) (responsible for investigating significant cybersecurity incidents), and firing oodles of folks doing essential work at the Cybersecurity and Infrastructure Security Agency (CISA).
The Chinese hacked into most of our sensitive systems and spied on powerful people, across the entirety of U.S. governance, for years. The companies involved covered it up and the Trump administrations’ “fix” was to destroy our cybersecurity protections and corporate oversight.
The press, with scattered exception, yawned and put the story on page four.
This generational damage to U.S. IT infrastructure will likely take decades to recover from, and we can’t even begin the process of a proper, competent audit (assuming we’re even capable of that) until Trump is removed from office. Even then, course correcting may not be possible without fixing Trump’s domination of the Supreme and 5th and 6th Circuit courts, which have proudly declared all corporate oversight to be illegal.
The same nonsense is playing out again with the Trump FCC’s ban of Chinese drones, which quietly went into effect during the Christmas holiday, intentionally ensuring that a lot of people missed it.
In short, the Trump administration added Chinese drones to its Covered List, which it says are communications equipment and services “deemed to pose an unacceptable risk to the national security of the United States or the security and safety of United States persons.” Soon Americans will no longer be able to buy new drones from some of the most successful and popular companies in the space, like DJI.
“UAS [unmanned aircraft systems] and UAS critical components, including data transmission devices, communications systems, flight controllers, ground control stations, controllers, navigation systems, batteries, smart batteries, and motors produced in a foreign country could enable persistent surveillance, data exfiltration, and destructive operations over US territory, including over World Cup and Olympic venues and other mass gathering events.”
To be clear, you can continue to use DJI drones you already own. And you can buy DJI drones currently approved by the FCC already for sale. But you soon won’t be able to buy new versions of these drones as they’re released. Which is a shame because DJI generally leads the drone field with a 70 percent market share and their drones are very good, very popular, and less expensive than U.S. alternatives.
The ban was imposed with zero transparency after “an Executive Branch interagency body with appropriate national security expertise that was convened by the White House.” Which is gibberish when you consider the Trump administration is stacked to the rafters with odd zealots and unqualified weirdos who are basically just propping up a wide assortment of shady grifts.
You’re supposed to believe this is about protecting Americans from nefarious Chinese drone surveillance. In reality, this is about protecting U.S. drone manufacturers from having to compete with better, more popular technology. But because it’s so easy to get xenophobic lawmakers and our lazy press so ginned up about China, that truth gets buried in news reports and the policy weeds.
I’ll just randomly note here that Donald Trump’s son, Donald Trump Jr., coincidentally owns stock in and advises several aspiring drone startups that have received billions in loans and subsidies from the Pentagon. That’s before you get to the countless other MAGA orbit folks and tech companies with personal investment in military drone and surveillance hardware.
I think in their heads guys like Junior probably think they’re cleverly building functional, domestic alternatives to Chinese tech, but their corruption and incompetence generally blinds them from reality and our broader failures on privacy and national security.
Truly shoring up national security and U.S. privacy requires standing up to domestic corporations first and foremost (with say, data broker regulation and a privacy law that holds execs personally accountable for lax security), which none of them want to actually do. Because in their heads, government should only exist to make them personally richer at other peoples’ expense.
Superficially the Trump administration loves putting on a veneer that it’s protecting U.S. interests and national security, but as we’ve seen elsewhere this is hollow cack. Trumpism is just pay-to-play kakistocracy and a bottomless well of assorted lazy hustles and grifts. These are not serious people.
Some U.S. drone makers asked daddy to protect them from global market competition and he did. Now U.S. consumers have to pay twice as much money for much shittier technology, and instead of translating the proceeds into new jobs, better tech, or lower prices, the executives at the companies responsible will simply pocket the proceeds. All while the New York Times and large corporate media blows smoke up your ass about this being good for national security and American labor.
Although the field of artificial intelligence (AI) goes back more than half century, its latest incarnation — generative AI — is still very new: ChatGPT was launched just three years ago. During that time a wide variety of issues have been raised, ranging from concerns about the impact of AI on copyright, people’s ability to learn or even think, job losses, the flood of AI slop on the Internet, the environmental harms of massive data centers, and whether the creation of a super-intelligent AI will lead to the demise of humanity. Recently, a more mundane worry is that the current superheated generative AI market is a bubble about to pop. In the last few days, Google’s CEO, Sundar Pichai, has admitted that there is some “irrationality” in the current AI boom, while the Bank of England has warned about the risk of a “sharp correction” in the value of major players in the sector.
One element that may not yet be factored in to this situation is the rising sophistication of open source models from China. Back in April, Techdirt wrote about how the release of a single model from the Chinese company DeepSeek had wiped a trillion dollars from US markets. Since then, DeepSeek has not been standing still. It has just launched its V3.2 model, and a review on ZDNet is impressed by the improvements:
the fact that a company — and one based in China, no less — has built an open-source model that can compete with the reasoning capabilities of some of the most advanced proprietary models currently on the market is a huge deal. It reiterates growing evidence that the “performance gap” between open-source and close-sourced models isn’t a fixed and unresolvable fact, but a technical discrepancy that can be bridged through creative approaches to pretraining, attention, and posttraining.
It is not just one open source Chinese model that is close to matching the best of the leading proprietary offerings. An article from NBC News notes that other freely downloadable Chinese models like Alibaba’s Qwen were also “within striking distance of America’s best.” Moreover, these are not merely theoretical options: they are already being put to use by AI startups in the US.
Over the past year, a growing share of America’s hottest AI startups have turned to open Chinese AI models that increasingly rival, and sometimes replace, expensive U.S. systems as the foundation for American AI products.
NBC News spoke to over 15 AI startup founders, machine-learning engineers, industry experts and investors, who said that while models from American companies continue to set the pace of progress at the frontier of AI capabilities, many Chinese systems are cheaper to access, more customizable and have become sufficiently capable for many uses over the past year.
As well as being free to download and completely configurable, these open source models from Chinese companies have another advantages over many of the better-known US products: they can be run locally without needing to pay any fees. This also means no data leaves the local system, which offers enhanced privacy and control over sensitive business data. However, as the NBC article notes, there are still some worries about using Chinese models:
In late September, the U.S. Center for AI Standards and Innovation released a report outlining risks from DeepSeek’s popular models, finding weakened safety protocols and increased pro-Chinese outputs compared to American closed-source models.
And the success of China’s open source models is prompting US efforts to take catch up:
In July, the White House released an AI Action Plan that called for the federal government to “Encourage Open-Source and Open-Weight AI.”
In August, ChatGPT maker OpenAI released its first open-source model in five years. Announcing the model’s release, OpenAI cited the importance of American open-source models, writing that “broad access to these capable open-weights models created in the US helps expand democratic AI.”
And in late November, the Seattle-based Allen Institute released its newest open-source model called Olmo 3, designed to help users “build trustworthy features quickly, whether for research, education, or applications,” according to its launch announcement.
The open source approach to generative AI is evidently growing in importance, driven by enhanced capabilities, low price, customizability, reduced running costs and better privacy. The free availability of these open source and open weight models, whether from China or the US, is bound to call into question the underlying assumption of today’s generative AI companies that there will be a commensurate payback for the trillions of dollars they are currently investing. Maybe it will be the realization that today’s open source models are actually good enough for most applications that finally pops the AI bubble.
After four years of hyperventilation about TikTok’s impact on privacy, propaganda, and national security, and a year after the app was to be banned from app stores via an act of Congress, TikTok remains widely available. The Trump administration insists they hashed out a deal with Bytedance to sell the app to Trump’s billionaire buddies (clearly his goal all along), though that too remains in mysterious limbo.
“…after months of panic over the alleged dangers of TikTok, Congress has spent the year putting up relatively little fuss as Trump repeatedly extended TikTok’s sales timeline in clear violation of the divest-or-ban law.”
The Verge contacted a dozen current and former lawmakers, many of whom were previously incredibly vocal about the dire threat posed by the app, who suddenly don’t much want to talk about it. The only one that was even willing to give a statement, Senate Commerce Committee Ranking Member Maria Cantwell, didn’t really say anything useful:
““Congress is still waiting to get briefed on how the TikTok sale would actually stop Chinese algorithms from causing harm to U.S. citizens, U.S. military, and U.S. interests,” she said. “The lack of transparency has caused concerns for both Democrats and Republicans who are still waiting for secure briefings on how to stop malign actions.”
You might recall that Biden championed the ban, then refused to enforce it on his way out the door. Trump followed this up by promising to fix everything with a deal in 75 days, then extended that deadline when China predictably balked. Repeatedly.
Last September, Trump finally announced that he’d struck a deal with ByteDance to offload 45 percent of the app to Oracle (Trump’s friend Larry Ellison), Silver Lake (Michael Dell is a top investor), and Abu Dhabi’s MGX — as well as possibly Rupert Murdoch.
It’s kind of the worst of all possible outcomes. The deal maintains the app’s supposedly problematic connections to China, but it adds a layer of domestic corruption as Trump offloads control of the app to his billionaire buddies. Including Larry Ellison, who (with the help of his nepobaby son David) is clearly making a play to dominate whatever’s left of establishment U.S. media.
It remains unclear if China actually supports — and will allow — such a deal. Trump has implied that President Xi Jinping has given approval, but there’s been little public forward momentum despite a meeting between Trump and Xi in both June and late October. And even then, it’s not clear such a deal would be aligned with the law, notes The Verge:
“Even if China accepts the deal, it’s not clear the agreement meets the legal requirements for divestiture. Licensing the TikTok algorithm could potentially constitute an ongoing operational relationship between the US entity and ByteDance, which is explicitly barred by the law.”
I’ve noted more times than I can count that the push to ban TikTok was never really about protecting American privacy. If that were true, we would pass a real privacy law and craft serious penalties for all companies and executives that play fast and loose with sensitive American data, be it TikTok or the myriad of super dodgy apps, telecoms, and hardware vendors monetizing your phone usage.
It was never really about propaganda. If that were true, we’d take aim at the extremely well funded authoritarian propaganda machine and engage in content moderation of race-baiting political propaganda that’s filling the brains of young American men with pudding and hate. We’d push for media consolidation limits and education media literacy reforms common in countries like Finland.
TikTok’s Chinese ownership did pose some very real legitimate security, privacy, and NatSec concerns, but the folks “fixing” the problem were never competent or good faith actors, and the push to ban hijack TikTok was always really about ego, money, information control, and protecting Facebook from competition from a foreign company it clearly couldn’t out-innovate.
Now all of the folks who were so breathless about the need for a ban — from Brendan Carr to large cross sections of Congress — are suddenly all weirdly mute as the proposal sits in policy limbo somewhere between Trump’s rank corruption and raw, blistering congressional incompetence.
Last year almost a dozen major U.S. ISPs were the victim of a massive, historic intrusion by Chinese hackers who managed to spy on public U.S. officials for more than a year. The “Salt Typhoon” hack was so severe, the intruders spent much of the last year rooting around the ISP networks even after discovery.
AT&T and Verizon, two of the compromised companies, apparently didn’t think it was worth informing subscribers any of this happened. Many of the attack vectors were based on simple things like telecom administrators failing to change default passwords on sensitive hardware entry points.
“The Federal Communications Commission will vote in November to repeal a ruling that requires telecom providers to secure their networks, acting on a request from the biggest lobby groups representing Internet providers.”
In a folksy Halloween blog post, Carr tries to pretend this somehow improves cybersecurity. According to Carr, ISPs pinky swore that everything is fine now, and frames obvious regulatory capture as the agency being more “agile”:
“Following extensive FCC engagement with carriers, the item announces the substantial steps that providers have taken to strengthen their cybersecurity defenses. In doing so, we will also reverse an eleventh hour CALEA declaratory ruling reached by the prior FCC—a decision that both exceeded the agency’s authority and did not present an effective or agile response to the relevant cybersecurity threats. So, we’re correcting course.”
Let me be clear about something: the Biden rules were the absolute baseline for oversight of telecom, basically requiring that ISPs do the absolute bare minimum when it comes to securing their networks, while being transparent with the public about when there’s been a major hack. This stuff was the bare minimum, and the U.S. is too corrupt to even do that.
This is part of Carr’s effort to destroy whatever was left of flimsy U.S. corporate oversight of regional telecom monopolies so he can ensure he has a cushy post-government job at a telecom-funded think tank or lobbying org. To that end, he’s been taking a hatchet to the very shaky FCC oversight standards that already helped result in the worst hack in U.S. telecom history.
It’s yet another example of how Trump policy is indistinguishable from a foreign attack. In many ways it’s worse, given that at least with Russia, Iran, and China, you’re spared the kind of phony piety and sanctimony coming from inside your own house.
Elon Musk’s SpaceX has taken money directly from Chinese investors, according to previously sealed testimony, raising new questions about foreign ownership interests in one of the United States’ most important military contractors.
The recent testimony, coming from a SpaceX insider during a court case, marks the first time direct Chinese investment in the privately held company has been disclosed. While there is no prohibition on Chinese ownership in U.S. military contractors, such investment is heavily regulated and the issue is treated by the U.S. government as a significant national security concern.
“They obviously have Chinese investors to be honest,” Iqbaljit Kahlon, a major SpaceX investor, said in a deposition last year, adding that some are “directly on the cap table.” “Cap table” refers to the company’s capitalization table, which lists its shareholders.
Kahlon’s testimony does not reveal the scope of Chinese investment in SpaceX or the identities of the investors. Kahlon has long been close with the company’s leadership and runs his own firm that acts as a middleman for wealthy investors looking to buy shares of SpaceX.
SpaceX keeps its full ownership structure secret. It was previously reported that some Chinese investors had bought indirect stakes in SpaceX, investing in middleman funds that in turn owned shares in the rocket company. The new testimony describes direct investments that suggest a closer relationship with SpaceX.
SpaceX has thrived as it snaps up sensitive U.S. government contracts, from building spy satellites for the Pentagon to launching spacecraft for NASA. U.S. embassies and the White House have connected to the company’s Starlink internet service too. Musk’s roughly 42% stake in the company is worth an estimated $168 billion. If he owned nothing else, he’d be one of the 10 richest people in the world.
National security law experts said federal officials would likely be deeply interested in understanding the direct Chinese investment in SpaceX. Whether there was cause for concern would depend on the details, they said, but the U.S. government has asserted that China has a systematic strategy of using investments in sensitive industries to conduct espionage.
If the investors got access to nonpublic information about the company — say, details on its contracts or supply chain — it could be useful to Chinese intelligence, said Sarah Bauerle Danzman, an Indiana University professor who has worked for the State Department scrutinizing foreign investments. That “would create huge risks that, if realized, would have huge consequences for national security,” she said.
SpaceX did not respond to questions for this story. Kahlon declined to comment.
The new court records come from litigation in Delaware between Kahlon and another investor. The testimony was sealed until ProPublica, with the assistance of lawyers at the Reporters Committee for Freedom of the Press and the law firm Shaw Keller, moved in the spring to make it public. SpaceX fought the effort, but a judge ruled that some of the records must be released. Kahlon’s testimony was publicly filed this week.
Buying shares in SpaceX is much more difficult than buying a piece of a publicly traded company like Tesla or Microsoft. SpaceX has control over who can buy stakes in it, and the company’s investors fall into different categories. The most rarefied group is the direct investors, who actually own SpaceX shares. This group includes funds led by Kahlon, Peter Thiel and a handful of other venture capitalists with personal ties to Musk. Then there are the indirect investors, who effectively buy stakes in SpaceX through a middleman like Kahlon. (The indirect investors are actually buying into a fund run by the middleman, typically paying a hefty fee.) All previously known Chinese investors in SpaceX fell into the latter category.
This year, ProPublica reported on an unusual feature of SpaceX’s approach to investment from China. According to testimony from the Delaware case, the company allows Chinese investors to buy stakes in SpaceX so long as the money is routed through the Cayman Islands or other offshore secrecy hubs. Companies only have to proactively report Chinese investments to the government in limited circumstances, and there aren’t hard and fast rules for how much is too much.
After ProPublica’s report, House Democrats sent a letter to Defense Secretary Pete Hegseth raising alarms about the company’s “potential obfuscation.” “In light of the extreme sensitivity of SpaceX’s work for DoD and NASA, this lack of transparency raises serious questions,” they wrote. It’s unclear if any action was taken in response.
Kahlon has turned his access to SpaceX stock into a lucrative business. His investor list reads like an atlas of the world. The investors’ names are redacted in the recently unsealed document, but their addresses span from Chile to Malaysia. One is in Russia. At least two are in mainland China. One is in Qatar. (In one email to SpaceX’s chief financial officer, Kahlon said a Los Angeles-based fund had money from the Qatari royal family and was already invested in SpaceX.)
“You made a big fortune,” a China-based financier wrote to Kahlon four years ago. “Lol something like that. SpaceX has been the gift that keeps on giving,” Kahlon responded. “All thanks to you.”
Kahlon first met with SpaceX when it was a fledgling startup, according to court records. SpaceX’s CFO, Bret Johnsen, who’s been there for 14 years, testified that Kahlon “has been with the company in one form or fashion longer than I have.” Johnsen also testified that SpaceX has no formal policy about accepting investments from countries deemed adversaries by the U.S. government. But he said he asks fund managers to “stay away from Russian, Chinese, Iranian, North Korean ownership interest” because that could make it “more challenging to win government contracts.”
There are indications that by 2021, Kahlon was wary of raising funds from China. The U.S. government had grown increasingly concerned about Chinese investments in tech companies, and that June, Kahlon told an associate he was “being picky” with who he’d let buy into a new SpaceX opportunity. “Only people I want to have a relationship with long term. No one from mainland China,” Kahlon said.
But as he raced to assemble a pool of investors, those concerns appeared to fade away. By November 2021, Kahlon was personally raising money from China to buy SpaceX stakes. He told a Shanghai-based company that if it invested with him, it would get quarterly updates on SpaceX’s business development, “visits to SpaceX, and the opportunities to interview with Space X’s CFO,” court records show.
Long before the great TikTok moral panic of 2021 to 2024, you might recall that numerous members of Congress spent a solid decade freaking about another Chinese company: Chinese telecom equipment maker Huawei.
The argument, made without much in the way of public evidence, was that Huawei was systematically using its network gear to spy on Americans at a massive scale. Congress then proposed a solution: it would require that U.S. telecom operators (large and small) rip out all Huawei equipment from their networks at great expense, then replace it with usually more expensive alternatives.
So in early 2020 Congress passed the Secure And Trusted Communications Act effectively banning Huawei from U.S. telecom networks. Congress doled out $1.9 billion to rip out and replace Huawei gear, but it’s estimated to cost around $5 billion to actually complete the effort. But instead of finishing the job, Congress fell asleep, resulting in huge costs for telecom providers (especially small, rural ones).
The Secure And Trusted Communications Act also set aside $1 billion to try and “invest in Western-based alternatives to Chinese equipment providers Huawei and ZTE.” Five years later and that project is effectively rudderless; the money redirected by the Trump administration to give large tax cuts to rich people and large corporations who already pay very little in taxes.
The project was intended to help establish an alternative technology called open radio access network, or Open RAN. Open RAN is still being developed, and heavily dependent on government funding. Texas Senator Ted Cruz spearheaded shifting that funding over to tax cuts, but it sounds like Republicans aren’t being particularly coherent or consistent on strategy or messaging, even internally:
“That contradictory approach to the issue extends to Capitol Hill as well. Just days after Trump signed the reconciliation law slashing the remaining $850 million in open RAN grants, the House of Representatives unanimously passed a bill directing the government to alert small companies to the benefits of open RAN — even letting them know about how to participate in the program the GOP had just gutted.”
This is, again, highly reflective of the U.S. superficial hyperventilation on national security. There will be several years of consternation and outrage a rotating parade of “Chinese threats,” followed by lots of hand-wringing and costly programs and projects that go nowhere.
Much like the TikTok ban, which was floated for years and even forged via legislation, only to be scuttled because it upset the financial plans of a billionaire Trump ally. Or like the “race to 5G,” which involved giving giant U.S. telecoms bottomless subsidies and tax cuts to “defeat the Chinese,” only for lawmakers to disappear when the efforts resulted in slow, expensive, and patchy U.S. 5G coverage.
It comes down to the fact that the U.S. is generally too corrupt to function, something that usually isn’t included as essential context by U.S. journalists covering the government incompetence. And this is just one aspect of the incompetence; the Trump administration has gutted government cybersecurity programs, including a board investigating the biggest Chinese hack of U.S. telecom networks in history.
These are all dire risks to public safety and national security. But when the press covers the MAGA GOP’s efforts on national and cybersecurity, the stunning lack of competence generally isn’t mentioned. The party curiously never really has to take ownership of bad policy or their bottomless dysfunction. From TikTok to Huawei, the MAGA GOP’s Chinese cybersecurity outrage is routinely just a xenophobic, expensive, self-serving and corrupt performance, usually going nowhere.
