This summer, ICE renewed access to software tools for use by Homeland Security Investigations, or HSI, an enforcement division previously tasked with transnational crime that has become increasingly common on American streets under the Trump administration.

The $19,000 transaction, according to federal procurement data, provided “Nvidia software licenses, which will be used by Homeland Security Investigations to enhance data analysis & improve investigative capabilities through high-performance computing solutions.”

“HSI’s growing investment in LLMs” — large language models — “suggests that it may be investing in systems that can be used to surveil U.S. citizens, migrants, and visitors,” said Amos Toh, senior counsel at the Brennan Center for Justice.

Large language models can be used to draw inference by fusing people’s publicly available data, and might be used by ICE to “to identify persons of interest and generate investigative leads.” There are well-documented flaws, however, in the way the AI crunches data and reproduces biases.

Toh said, “These problems make it more likely that people will be targeted based on flawed intelligence.”

In a statement, ICE said, “Like other law enforcement agencies, ICE employs various forms of technology to investigate criminal activity and support law enforcement efforts while respecting civil liberties and privacy interests.”

When asked whether Nvidia had any ability to ensure ICE was using its technology lawfully, company spokesperson John Rizzo told The Intercept, “Millions of U.S. consumers, businesses, and government agencies use general-purpose computers every day. We do not and cannot monitor the use of general-purpose computers by U.S. government employees.”

Related

Mahmoud Khalil Won His Freedom Despite the Best Efforts of ICE’s Intelligence Unit

HSI’s mission has shifted during President Donald Trump’s second administration. The ICE division has long since assisted in civil immigration enforcement, but its focus was on criminal investigations such as drug smuggling and human trafficking.

“HSI has long sought to distance itself from ICE Enforcement and Removal Operations, which carries out basic immigration law enforcement,” said Aaron Reichlin-Melnick, a senior fellow at the American Immigration Council, told The Intercept. “On January 20, President Trump signed an executive order directing HSI to make immigration enforcement its top priority.”

Nvdia has been cozying up to Trump, who is threatening restrictions on chip exports to China, a lucrative market for the chipmaker. At a speech at a Nvidia tech conference in Washington on Tuesday, CEO Jensen Huang praised Trump and thanked those assembled “for your service and helping make America great again.”

How Nvidia Might Help ICE

How ICE plans to use Nvidia’s services is unclear; the specific software in question is not disclosed in the procurement documents.

Nvidia offers a variety of software-based services that could be useful for ICE data analysis. Nvidia has a dominant position across machine learning and artificial intelligence fields, including platforms to run large language models and video analytics.

The reseller through which ICE is buying access to Nvidia products, California-based New Tech Solutions, has previously sold the U.S. government licenses for “virtual workstations,” which essentially lease remote access to powerful chips known as graphics processing units, or GPUs, housed in data centers owned by Nvidia.

Such hardware could be used to train and query machine learning models. A 2023 report by the Department of Homeland Security on its potential usage of machine learning flagged HSI as standing to benefit from adopting the technology, including by rapidly searching and summarizing suspicious activity reports through large language models.

“HSI agents could quickly access and make sense of more than tens of millions of reports through ad hoc, unstructured queries over a voice interface,” the report says, adding that the system could also automatically scan and classify the contents of footage recorded by HSI agents.

A recently published inventory of ways DHS is using artificial intelligence tools reveals other areas where ICE may be able to make use of Nvidia’s “high-performance computing solutions.”

The document, which reflects Homeland Security practices as of July, notes HSI uses machine learning algorithms “to identify and extract critical evidence, relationships, and networks from mobile device data, leveraging machine learning capabilities to determine locations of interest.” The document also says HSI uses large language models to “identify the most relevant information in reports, accelerating investigative analysis by rapidly identifying persons of interest, surfacing trends, and detecting networks or fraud.”

HSI’s Shifting Mission

Procurement data about HIS’s use of Nvidia technology comes as ICE ramps up its presence in cities and towns across the U.S. Raids by ICE are viewed as being increasingly extreme and unchecked by legal or policy constraints, leading to aggressive protests against the immigrant enforcement.

HSI is playing a growing role in the controversial enforcement — and the crackdown on demonstrations.

Since Trump’s executive order on HSI, said Reichlin-Melnick of the American Immigration Council, “large numbers of agents have been reassigned away from criminal investigations to carry out immigration arrests instead.”

Related

Google Secretly Handed ICE Data About Pro-Palestine Student Activist

HSI agents in Washington have rounded up residents for minor traffic infractions and, earlier this month fired a gun into a man’s car. In June, HSI took part in the arrest of Newark Mayor Ras Baraka outside an ICE facility he was scheduled to tour with a delegation of New Jersey lawmakers. Charges of trespassing against Baraka were later dismissed.

HSI’s activities, though, go beyond street arrests and workplace raids: This week, 404 Media reported the agency was collecting utility customer data from Con Edison.

Like most large tech firms, Nvidia’s claims it adheres to various international human rights frameworks, including the Universal Declaration of Human Rights, which prohibits prejudice based on race or national origin.

The post ICE Investigations, Powered by Nvidia appeared first on The Intercept.

With Elon Musk’s so-called Department of Government Efficiency installing itself at the IRS amid a broader push to replace federal bureaucracy with machine-learning software, the tax agency’s computing center in Martinsburg, West Virginia, will soon be home to a state-of-the-art Nvidia SuperPod AI computing cluster. According to the previously unreported February 5 acquisition document, the setup will combine 31 separate Nvidia servers, each containing eight of the company’s flagship Blackwell processors designed to train and operate artificial intelligence models that power tools like ChatGPT.

The hardware has not yet been purchased and installed, nor is a price listed, but SuperPod systems reportedly start at $7 million. The setup described in the contract materials notes that it will include a substantial memory upgrade from Nvidia.

Though small compared to the massive AI-training data centers deployed by companies like OpenAI and Meta, the SuperPod is still a powerful and expensive setup using the most advanced technology offered by Nvidia, whose chips have facilitated the global machine-learning spree. While the hardware can be used in many ways, it’s marketed as a turnkey means of creating and querying an AI model. Last year, the MITRE Corporation, a federally funded military R&D lab, acquired a $20 million SuperPod setup to train bespoke AI models for use by government agencies, touting the purchase as a “massive increase in computing power” for the United States.

How exactly the IRS will use its SuperPod is unclear. An agency spokesperson said the IRS had no information to share on the supercomputer purchase, including which presidential administration ordered it. A 2024 report by the Treasury Inspector General for Tax Administration identified 68 different AI-related projects underway at the IRS; the Nvidia cluster is not named among them, though many were redacted.

But some clues can be gleaned from the purchase materials. “The IRS requires a robust and scalable infrastructure that can handle complex machine learning (ML) workloads,” the document explains. “The Nvidia Super Pod is a critical component of this infrastructure, providing the necessary compute power, storage, and networking capabilities to support the development and deployment of large-scale ML models.”

The document notes that the SuperPod will be run by the IRS Research, Applied Analytics, and Statistics division, or RAAS, which leads a variety of data-centric initiatives at the agency. While no specific uses are cited, it states that this division’s Compliance Data Warehouse project, which is behind this SuperPod purchase, has previously used machine learning for automated fraud detection, identity theft prevention, and generally gaining a “deeper understanding of the mechanisms that drive taxpayer behavior.”

It’s unclear from the document whether the SuperPod purchase had been planned under the Biden administration or if it represents a new initiative of the Trump administration.

Some funding from the 2022 Inflation Reduction Act was earmarked for upgrading IRS technology generally, said Travis Thompson, a tax attorney with Boutin Jones with an expertise in IRS AI strategy. But “the IRS has been going toward AI for quite some time prior to IRA funding,” Thompson explained. “They didn’t have enough money to properly enforce the tax code, they were looking for ways to do more with less.” A June 2024 Government Accountability Office report suggested the IRS use artificial intelligence-based software to retrieve “hundreds of billions of dollars [that] are potentially missing from what should be collected in taxes each year.”

Thompson added that the agency is ripe for machine-learning training because of the mountain of personal and financial data it sits atop. “The IRS has probably more proprietary data than most agencies that is totally untapped. When you look at something like this Nvidia cluster and training machine learning algorithms going forward, it makes perfect sense, because they have the data there. AI needs data. It needs lots of it. And it needs it quickly. And the IRS has it.”

Related

Trump’s Election Is Also a Win for Tech’s Right-Wing “Warrior Class”

The purchase comes at a crossroads for U.S. governance of artificial intelligence tech. In Trump’s first term, the RAAS office was assigned “responsibility for monitoring and overseeing AI at the IRS” under Executive Order 13960, which he signed shortly before leaving office in 2020. This executive order put an emphasis on the “responsible,” “safe” implementation of AI by the United States — an approach that has fallen out of favor by American tech barons who now advocate for the breakneck development of these technologies unburdened by consideration of ethics or risk. One of Trump’s first moves following his inauguration was reversing a Biden administration executive order calling for greater AI safety guardrails in government use.

Many of the AI industry for whom “safe AI” is now anathema have become close allies of the new Trump White House, such as Elon Musk and venture capitalist Marc Andreessen. This wing of Silicon Valley has reportedly pushed the new administration to leverage artificial intelligence to help dismantle the administrative state via automation.

This week, the Wall Street Journal reported Musk’s liquidators had arrived at the IRS, an agency long the target of disparagement and distortion by Trump and Republican allies. Days before, the New York Times reported, “Representatives from the so-called Department of Government Efficiency have sought information about the tax collector’s information technology, with a goal of automating more work to replace the need for human staff members.”

The IRS has in recent years increasingly turned to AI for automated fraud detection and chatbot-based support services — including through collaboration with Nvidia — but a new Nvidia supercomputer could also be a boon to those interested in shrinking the agency’s human headcount as much as possible. A February 8 report by the Washington Post quoted an unnamed federal official who described Musk’s end goal as “replacing the human workforce with machines,” and that “Everything that can be machine-automated will be. And the technocrats will replace the bureaucrats.”

Musk underlings are reportedly contemplating replacing humans at the Department of Education with a large language-based chatbot, as well.

Wired previously reported that Musk loyalist Thomas Shedd, placed in a directorship within the General Services Administration, has talked of an “AI-first” agenda for Trump’s second term; DOGE staffers have already reportedly turned to Microsoft’s Azure AI platform for advice on slashing programs. While the Nvidia SuperPod couldn’t on its own replicate services like those provided by Microsoft, it is powerful enough to train AI models based on government data.

Thompson told The Intercept that efforts to slash the federal workforce and more aggressively deploy artificial intelligence systems fit hand-in-glove.

“I firmly believe that rooted behind the reduction in the human workforce that seems to be goal of current administration, there’s an overarching goal there to implement more technology-based systems in order to do the jobs,” he explained. “If you’re going to reduce your workforce, something has to pick up the slack. Something has to do the job.”

The post The IRS Is Buying an AI Supercomputer From Nvidia appeared first on The Intercept.

The IRS Enterprise Computing Center in Martinsburg, West Virginia, is included on a list of over 400 “empty and underutilized” federal properties marked for liquidation. It is one of two agency data facilities that make possible the collection of federal taxes in the United States. The Martinsburg data center has for decades housed the IRS “Master File,” an authoritative national record of tax return data and tax status for every tax-paying American individual and corporation, containing a historical computerized archive of every return and refund.

While Martinsburg’s systems are vital around tax season — exactly when the Trump administration has ostensibly put it up for sale — its databases are queried year-round.

On Tuesday, the Martinsburg center was flagged by the General Services Administration as one of hundreds of “noncore” facilities that should be sold off to save the federal government money. “Decades of funding deficiencies have resulted in many of these buildings becoming functionally obsolete and unsuitable for use by our federal workforce,” the GSA noted. But just last year, a GSA work order for roof repairs said the exact opposite about the Martinsburg facility, describing it as “a critical component of IRS’s operations, which, during peak season, processes over 13 million tax returns each day. Due to the continuous operations year-round and critical mission performed within, this project is viewed as a high priority.”

It’s unclear if the administration intends to shutter the installation or eventually lease it back from private owners. Neither the GSA nor IRS immediately responded to a request for comment.

Shortly after the GSA published the list of unwanted federal properties, it quickly amended and then deleted it entirely, leaving agencies in a state of confusion and disarray. On Wednesday, the Washington Post reported that while the sales process had been paused, “the plan is still to dispose of the buildings.”

Travis Thompson, a tax attorney with Boutin Jones and expert on IRS technology practices, told The Intercept the Martinsburg computing center is, contrary to the GSA’s new claim, absolutely mission-critical infrastructure.

“It goes to the very backbone of what the IRS does,” Thompson said.

The data housed at Martinsburg is also regularly tapped for internal investigations to ferret out fraud, Thompson said. He speculated that the sale, should it go through, would likely either result in the facility being sold to private owners and leased back to the federal government, or shuttered entirely. Owing to the extremely sensitive nature of the tax records held there, Martinsburg has always been a “super high-security facility,” and housing these computer systems under privatized ownership “does raise questions about protecting taxpayer data and the privacy of taxpayer data,” Thompson said. An interruption of service caused by a change in ownership would present potentially widespread disruption to the IRS and American taxpayers.

Related

The IRS Is Buying an AI Supercomputer From Nvidia

In February, The Intercept reported that the IRS was purchasing a multimillion-dollar Nvidia AI supercomputing cluster which was to be installed at Martinsburg.

In a statement to The Intercept, Sen. Ron Wyden, D-Ore., suggested private ownership is more likely.

“If the Trump administration really sold this site, the IRS data system would be down to a single backup facility in Memphis, and all it would take to knock the entire agency offline is one hack or power outage. It’d be an economic disaster,” said Wyden, ranking member of the Senate Finance Committee. “That said, the likely story here is that Trump and Musk want to help a bunch of vultures plunder the country in a rent-seeking scheme, and after they sell off essential sites like this IRS facility, American taxpayers are going to be on the hook paying rent for real estate they should rightfully own.”

The post It’s Tax Season — The Perfect Time for Trump to Sell This “Critical” IRS Computing Center appeared first on The Intercept.

The Labor Department reported September jobs numbers on Thursday, showing employers added 119,000 jobs to the economy but also an increase in unemployment to 4.4 percent. “The September report shows fairly good job growth, but every other report we have for October shows a slowdown,” says Robert Reich, the former secretary of labor under President Bill Clinton.

“Real wages — that is, wages adjusted for inflation — are going down for most people. The bottom 90 percent of Americans are in very bad shape,” says Reich. This week on The Intercept Briefing, host Akela Lacy speaks to the professor, author, and longtime commentator about the economy and the state of Democratic Party politics under Trump. “The only people who are doing well, who are keeping the economy going through their purchases, are the top 10 percent, and they’re basically doing well because they’re the ones who own most of the shares of stock,” says Reich. “What happens when and if the stock market implodes?”

Reich has been beating the drum on poverty and inequality for decades. And while that message took some time to hit the mainstream, it seems to be hitting home now more than ever, but Democratic leadership continues to fall flat in conveying they understand the urgency of the economic hardships ordinary Americans face.

Related

Insurgent Democratic Candidates Are Ready to Run on Shutdown Betrayal

The answer, Reich says, is new leadership. He is disappointed in Democrats who caved to Trump on the government shutdown. “It’s another example of the Democrats not having enough backbone,” Reich says. “I think Chuck Schumer has to go. And Jeffries too.” He adds, “I’m 79 years old. I have standing to speak about the fact that there is a time to move on. And I think that the Democratic leaders today should move on.”

Listen to the full conversation of The Intercept Briefing on Apple Podcasts, Spotify, or wherever you listen.

Transcript

Akela Lacy: Welcome to The Intercept Briefing, I’m Akela Lacy.

If you’ve been following politics coverage at The Intercept, you know we have a minor obsession with the battle over the soul of the Democratic Party. Our guest today may give us a run for our money.

Robert Reich: People ask me every day, where the fuck are the Democrats? There are a handful leading the fight against Trump’s regime.

JB Pritzker: Come and get me.

RR: But the party’s leadership has been asleep at the wheel.

AL: That’s Robert Reich, secretary of labor under former President Bill Clinton and a professor, author, and commentator on capitalism and inequality. Reich has organized his life project around progressive policies: getting big money out of politics, strengthening unions, and taxing the rich. His new memoir, “Coming Up Short,” walks through his life’s work and the various bullies and boogeymen who crossed his path. Reich also has a new documentary, “The Last Class,” which chronicles his final semester teaching at U.C. Berkeley about wealth and inequality.

RR (in trailer): One of the best ways of learning is to discuss something with somebody who disagrees with you. Can I do what I love to do, as well as I should be doing it? The wealth is held by the richest 400 Americans. You get the picture? We have to all engage their curiosity. Democracy’s not a spectator sport. It’s active.

AL: Reich hasn’t been quiet about his criticisms for Democrats. He endorsed Bernie Sanders for president in 2016 and had harsh words for the new billionaire-financed Democratic think tank launched earlier this year by ex-staffers of Sen. John Fetterman. But he’s also been a quintessential party insider: He wholeheartedly backed both Joe Biden and Kamala Harris in 2020 and 2024, though he’s been open about where Biden fell short.

Reich has been beating the drum on poverty and inequality for decades. And while that message took some time to hit the mainstream, it seems to be hitting home now more than ever. Voters are at the end of their ropes under an administration unabashed about its mission to enrich the world’s elite — and itself — while terrorizing communities around the country.

And while that frustration with Trump has been evident in Democrats’ recent electoral wins, it still feels like Democratic leadership is failing, in so many ways, to meet the moment. So what has to happen for things to really change? What more has to break until something gives?

Now, we’ll delve into those questions and more with Robert Reich.

Mr. Reich, welcome to the show.

RR: Akela, thank you very much for having me.

AL: Mr. Reich, you’ve argued that Democrats have lost the working class because they’ve catered to big money and corporations, and that the way to fix American democracy is to get big money out of the picture. Why do you think that has been so hard to do?

RR: Because big money doesn’t want big money to be out of the picture, Akela. It’s pretty straightforward. It’s a chicken and egg problem, and it’s become a larger and larger problem. I saw it begin in the 1970s after the Powell memo to the Chamber of Commerce calling on big corporations to get involved in American politics.

In terms of putting big money into American politics, I saw it in the ’80s getting much worse when I was secretary of labor — it was really awful, I thought big money was taking over. But little did I know that the 21st century would be far, far worse. Well, it’s worse than ever, but I think that in some ways, Trump is a consequence, a culmination of four decades, five decades of more and more corporate and big, wealthy money in American politics.

AL: You mentioned the rise of Trump. He campaigned as a populist, but his policies have obviously favored the wealthy, including massive tax cuts. Why does that political contradiction work for him?

RR: I think it worked for Donald Trump because he’s a con man. He knows how to speak in the language of the working class, but appealing to the red meat — and I hate to say it — but bigotry side of the working class. That is, even though Trump has given the wealthy exactly what they want in terms of tax cuts and regulatory rollbacks and everything that can make them even wealthier — at the same time, what he’s given the working class is people and institutions to hate. He’s given them everything from transgender people to immigrants. His racism is pretty evident. It’s a constant standard list of Trump negatives and Trump targets.

I think it’s important to understand both sides of this because this is not the first time in American history, nor is it the first time in world history, that a demagogue has given the rich exactly what they want in terms of more riches. And also used the power of bigotry to keep the working class in line.

AL: Right, you talk about Pat Buchanan in your book, and there’s plenty of other examples that we could go through, but I want to also touch on — in one of your latest Guardian columns, you argue that Trump’s project will eventually collapse under the weight of its own hypocrisy. I would like to believe that. I’m not sure that’s being borne out right now. Do you?

RR: Trump’s project is going to collapse under the weight of its own hypocrisy. Look at the polls. He’s doing worse and worse even among his core, even among his base. And we’re talking about men, white men, straight white men who are non-college graduates. His ratings keep going. His favorabilitys keep dropping. And when all the polls are showing the same trend, you have to start believing that’s the case.

Also the Democrats, frankly, have not got their act together. They really do need to start attacking big corporations for raising prices and for monopolizing. They’ve got to start talking about the super wealthy and the absurdities of how much power the super wealthy have in our political system.

Elon Musk is exhibit number A. There are many, many exhibits. And every time all of these tech CEOs get together at the White House with Trump, we need Democrats to be pointing this out and to have a very clear message that they represent the alternative to corporate capitalism.

AL: We’re touching a little bit on this battle over the working class. You’ve said that Biden didn’t communicate his efforts to help the working class effectively. What is the effective way to communicate that, and what is, to your last point, the effective way to point out this catering to the elite of the elite from the Republican side?

RR: The effective way was, is to say it. To Biden’s credit, he did walk a picket line. He did appoint some very good people, like Lina Khan at the Federal Trade Commission. He was a trust-buster. But he didn’t really talk about monopolization all that much. He didn’t really talk about corporate power. You need a Democrat, a leader of the Democrats, who really appears to be a fighter and makes it very clear what they’re fighting against.

Akela Lacy: Switching gears a little bit to the exciting election season that we’re in. You’ve made several endorsements this year in key races: Zohran Mamdani in New York, Graham Platner in Maine, and Dan Osborne in Nebraska. What did you see in those candidates that led you to endorse them?

Related

The Struggle for the Future of the New York Democratic Party

RR: We have in the Democratic Party — most of these are Democrats, are young people, who are saying the truth. They’re talking about the economy and our society in terms of power and the misallocation of power. They’re not depending on big corporate contributions for their campaigns. I think this is the future of the Democratic Party, if the Democratic Party has a future. It’s certainly the future of trying to get people, everybody in the bottom 90 percent of America who are struggling, together.

AL: What was your reaction to the reporting on Graham Platner’s internet history, his tattoo, and the fallout in his campaign?

RR: I wasn’t happy about that. I know people in Maine who tell me that on the ground he’s doing very, very well. He’s making all of the right moves. But he also is communicating to people in ways that Mamdani has done in New York City and others are doing around the country. I guess I have to throw up my hands and say the people of Maine are going to decide.

AL: You wrote a new book recently. In “Coming Up Short,” You talk about your life project having to explain why it’s so important to “reverse the staggering inequalities and legalize bribery that characterize today’s America.” For people who haven’t read the book, can you give us a preview of the reasons why those efforts by yourself and others have, in your words, come up short?

RR: It’s very difficult for America to face a fundamental flaw in American capitalism. And that has to do with the power of wealth and corporate power. And I have spent much of the last 40, 50 years trying to not only educate people and teach people in classrooms and with my books and other efforts, but also when I have been in Washington serving the public directly fighting this kind of corporate power. I’ve done everything I can do, but I’m sure there’s much more. I’m still fighting. I’m still young.

AL: Can you say more about why you think the larger project has not succeeded?

RR: I think the long-term project has not succeeded because you’ve got a larger and larger group of Americans who are angry, frustrated, and basically cynical. That group of people, unless the Democrats or some other party reaches out to them in a positive way and says, “Look, the answer to your problems, it’s not bigotry against immigrants or bigotry against transgender people or bigotry against Black people or bigotry against foreigners. The answer to your problem is really to look at the corporate elites and Wall Street and the richest people in this country, and understand that they have abused their wealth and power — and continue to abuse their wealth and power.”

Now, it’s a very difficult message to get through because the working poor and the working middle class as a group continue to grow and continue to slide. And the Democrats have not made this case. If they do make it, when they do make it, I think we’re going to see some fundamental changes politically. But until they do, we’re gonna see the Trump triumph that we have seen up until now.

AL: You mentioned Democrats or some other party reaching out to people who feel cynical and removed from the process. Do you see an opening for that in the next several cycles? This has been a topic for forever, but even the most popular independent ran as a Democrat. That seems to be the institutional path of progressives right now, is still to be encouraging people to stick with Democrats. What do you see happening there?

RR: I think it’s very hard to form a third party for all the obvious reasons, when you have a winner-take-all system in the United States as we do have. So I’m hoping that the” takeover” occurs in the Democratic Party. That forces like Bernie Sanders, AOC, Zohran Mamdani — others who are young and who understand the necessity of speaking in the terms I’m speaking right now to you — will take over the Democratic Party, and their success in winning over the working class from the Republicans will be enough to generate its own positive outcomes.

Once in politics, you actually begin a process of winning over voters, it’s not all that hard to get others to join you in winning over those voters politically. And the problem the Democrats have had — And, look, I’ve been a Democrat for a very long time. And I’ve been frustrated for a very long time. I mean, in the Clinton administration, I can’t tell you the number of times that I tried to push against the neoliberal facade that was gaining even more and more power as I was labor secretary. It was very difficult.

AL: You’ve said that inequality hurts everyone, not just the poor. And as you’ve noted, there are signs that that message is starting to resonate with more people, with recent results of elections to Trump’s open alignment with wealthy interests. You’ve been warning about this for 30 years. Do you think this message is starting to resonate with more people? And if not, why hasn’t it broken through or why is it breaking through more now, particularly with, as we’ve talked about Mamdani, etc.

RR: It is beginning to get through. And part of the reason is Donald Trump. Because people see the logical consequence of the alternative that is Trump, that is fascism, neo-fascism. It’s an administration that is cruel that represents the opposite of what America actually has told itself we represent.

And I think that there are many people who in leadership positions who feel trapped right now. I’ve talked to them. People who feel that they’ve got to play along with Trump, they don’t dare cross him because they know how vindictive he can be. But they are themselves learning a very important lesson: that if you completely neglect the working class and the working middle class and the poor, you are begging for eventually a demagogue like Trump to come along and plunge the entire country into this authoritarian nightmare.

[Break]

AL: Going back to your comments on pressuring Democrats on neoliberal expansion. There’s an argument to be made that there’s a direct through line between NAFTA — the North American Free Trade Agreement which went into effect in 1994, eliminated most tariffs between the U.S, Canada and Mexico — between NAFTA and the rise of Trump. A lot of American manufacturing jobs moved to Mexico because of that agreement, and many of those people are part of the MAGA base. This happened during the Clinton administration, and you wrote in the book that you were worried that American workers would “get shafted.” How do you look back on that 30 years later, and do you wish you had done more to fight it?

RR: I wish I had done more to fight it, Akela. Not just NAFTA, but also Chinese accession to the World Trade Organization, also deregulation of Wall Street, which led almost directly to the 2008 Wall Street crash. And at the same time the decision to get rid of welfare and not substitute anything that was really helpful to most Americans. I mean, I am proud of certain things that we accomplished. I fought very hard to increase the minimum wage. We did it, even though the Republicans at that time were in control of both houses of Congress.

I’m glad that we expanded something called the Earned Income Tax Credit, which has become the largest anti-poverty program in America. But we didn’t do nearly enough. And the things that unfortunately I fought against have proven to be, as you suggested, the foundation stones of many of the problems we now have.

AL: I want to ask about your new documentary. It’s out now, called “The Last Class.” It’s about teaching at UC Berkeley. I’m curious about your experience all of these years as a professor and increasing threats to academic freedom. These threats have taken many shapes, but it includes a long history of smearing professors as antisemitic if they talk about Palestine, to now the Trump administration weaponizing that project to a whole new level, merging it with attacks on migrants and policing nonprofits, treating free speech as terrorism. The list goes on and on. What are your thoughts on how this has accelerated under Trump?

RR: Like everything else, it’s now out in the open. It starts under Ronald Reagan. Actually, it starts under Nixon. This kind of a negative fear of the so-called intellectual class, the notion that universities are plotting against America.

And the Republicans have built this case because they do view universities — justifiably — as hotbeds of thought, of criticism of ideology that they don’t like. But Trump, again, one of the benefits, I’m going put that in quotes, “the benefits” of the Trump administration is, it’s now visible, it’s obvious.

JD Vance says universities are the enemy. Donald Trump wants, it’s not just, it’s — DEI is a pretext and we know that. We know that antisemitism, the charges of antisemitism are a pretext for the Trump administration to come in and to restrict academic freedom. I think that they met their match at Harvard, I hope.

But remember, this is all a process of public education. What I hear, what I see, what the polls are showing, what my conversations with many conservatives are showing, is that many people are saying, “Wow, I didn’t really understand 10 or 15 or 20 years ago, what this conservative assault on universities really was all about. I now see it.”

AL: We have to ask. Everyone is talking about the Epstein files, which have become a pressure cooker of sorts for Trump over the last weeks and months. A few questions here: In retrospect, did Senate Democrats caving to Republican budget negotiations actually end up intensifying that pressure?

RR: Yeah, I was very disappointed in the Senate Democrats and one Independent who, I’ve used the word “caved.” They did cave to the Republicans. The thing to keep in mind is that they had some bargaining leverage. The Democrats have not had any bargaining leverage for 10 months.

Finally, they have some bargaining leverage to get the Republicans to agree with them to reinstate the subsidies for Obamacare. Without those subsidies health care premiums are going to skyrocket for millions of Americans. Well, they had that bargaining leverage and they gave it up at a time, incidentally, when most Americans were blaming the Republicans for the shutdown and also the pressures.

I mean, look at the air traffic controllers, the delays of flights — the pressures were growing so intense that the Republicans, including Trump, had to come around. So I just think it’s another example of the Democrats not having enough backbone.

AL: On that note, there’s a primary challenger who is now running against Rep. Hakeem Jeffries. There’s been calls from candidates who are running in the upcoming election to primary Senate Minority Leader Chuck Schumer. Where do you stand on those calls?

RR: Well, I said I think Chuck Schumer has to go. And Jeffries too. We are on the, hopefully, brink of a new era with regard to Democratic, capital-D politics. And we have a lot of young people, a lot of very exciting, a lot of very progressive young people around the country. And these older people — I could speak as an older person, all right? I’m 79 years old. I have standing to speak about the fact that there is a time to move on. And I think that the Democratic leaders today should move on.

AL: I wanted to ask about that, when we were on topic, but the second Epstein question that I have is: The document dump from the House Oversight Committee has revealed new details about Epstein’s associates from Trump to Bill Clinton, your former boss. What are your thoughts on how that scandal has unfolded and taken hold on the right, and what do you make of the Clinton association?

RR: I don’t know about Bill Clinton’s role. We don’t know. There have not been evidence yet. But I think that what may be being lost in this whole Epstein scandal is really what has happened to the victims of Epstein and these other men.

Let’s be clear. This is about human rights. It’s about trafficking of children in ways that are so fundamentally wrong. This is an issue that I agree with a lot of MAGA types on. You don’t want to tolerate this kind of behavior in not just the elites of America, but anyone.

Related

Trump Helps Alleged Sex Trafficker Andrew Tate Cross Border Into U.S.

And I want to just make sure we focus on what happened and how horrible that was. And it’s still going on, not with Epstein, obviously. But men are harassing and bullying and raping women. And men have, who have positions of power and money in our society — Again, the Trump era is revealing a lot and a lot that’s very ugly about America. Hopefully we will learn our lessons.

AL: We want to get your thoughts on a few news developments briefly before we go. The delayed jobs report numbers from September came out showing a growth in hiring, but an uptick in the unemployment rate. What do those indicators say about where the labor market is right now?

RR: As far as I can tell — now, we don’t have a complete picture of the labor market because of the shutdown. But as far as I can tell, job growth is very, very slow. The September report shows fairly good job growth, but every other report we have for October shows a slowdown. A lot of private employers, understandably, don’t know about the future. They’re feeling uncertain about where the economy is going, so they’re not going to hire.

We also know that real wages — that is, wages adjusted for inflation — are going down for most people. The bottom 90 percent of Americans are in very bad shape right now. The only people who are doing well, who are keeping the economy going through their purchases, are the top 10 percent. And they’re basically doing well because they’re the ones who own most of the shares of stock — 92 percent of the shares of stock — and the stock market is doing well. What happens when and if the stock market implodes? I don’t like what’s happened, with regard to, for example, artificial intelligence, AI stocks, which I think will be shown to be a huge bubble. And we can see a bubble also in other areas of the stock market. It’s kind of a dangerous economic terrain.

AL: Why do you think AI stocks will prove to be a bubble?

RR: Because the amounts that are being invested in AI now, and the amount of debt that AI companies, Big Tech companies are going into in order to make those investments are really way beyond the possible returns.

Now, I grant you, Nvidia did extremely well. But Nvidia’s kind of an outlier. I mean, look at what the expenditures — if you take out all of the investments from AI from the stock market and from related parts of the economy, there’s nothing really happening in the American economy right now. That’s where the action is. But of course, everybody wants to be the winner. Not everybody’s gonna be the winner.

AL: Speaking of the stock market, there is bipartisan pressure on speaker Mike Johnson to advance a congressional ban on buying stocks. What are your thoughts on that?

RR: Oh, that’s way overdue. Members of Congress should not be buying individual stocks. They can get an index. They should be required — if they want to, if they have savings, if they want to be in the stock market — get an index that is just an index of the entire stock market. It’s actually inexcusable for individual members of Congress to be making stock trades because they have so much inside information.

AL: This is making me think of the fact that Nancy Pelosi, who has faced a lot of criticism over congressional stock trading, is retiring. We interviewed one of the candidates running to replace her, Saikat Chakrabarti. I’m wondering if you’re following that race, but also what other races you’re following right now, and if you’re looking to make endorsements in other races we should have on our radar.

RR: Look, Akela, I endorse when I’m very excited about a candidate. Nobody cares about my endorsement. I mean, I’m a former secretary of labor. But yes, as we talked about, I do think that there’s some up and comers. And if I can help in any way, I certainly will.

I think Nancy Pelosi, I just want to say something about her because I have not always agreed with everything she did, but I think she did some very, very important and good things. She got Barack Obama to focus on the Affordable Care Act, to pass the Affordable Care Act. That was a big deal. You look at recent congressional history, and she stands out as the most important leader that we have had.

Akela Lacy: We’re going to leave it there. Thank you for joining me on the Intercept Briefing.

RR: Akela, thank you very much for having me.

Akela Lacy: That does it for this episode.

In the meantime, though, what do you want to see more coverage of? Are you taking political action? Are there organizing efforts in your community you want to shout out? Shoot us an email at podcasts@theintercept.com. Or leave us a voice mail at 530-POD-CAST. That’s 530-763-2278.

This episode was produced by Laura Flynn. Sumi Aggarwal is our executive producer. Ben Muessig is our editor-in-chief. Chelsey B. Coombs is our social and video producer. Desiree Adib is our booking producer. Fei Liu is our product and design manager. Nara Shin is our copy editor. Will Stanton mixed our show. Legal review by David Bralow.

Slip Stream provided our theme music.

If you want to support our work, you can go to theintercept.com/join. Your donation, no matter the amount, makes a real difference. If you haven’t already, please subscribe to The Intercept Briefing wherever you listen to podcasts. And leave us a rating or a review, it helps other listeners to find us.

Until next time, I’m Akela Lacy.

The post Robert Reich Thinks Democrats Are On the Brink of a New Era appeared first on The Intercept.

Musk’s break with OpenAI, which he co-founded in 2015, is in a sense a lawsuit about safety. He contends that Altman betrayed the company’s original nonprofit mission of safely and responsibly pursuing artificial intelligence for the public benefit by converting it into the revenue-maximizing behemoth it has become. According to Musk, the stakes of this are existential for the human race: “It could kill us all,” he testified on Tuesday. “We don’t want to have a ‘Terminator’ outcome.”

The AI safety community frequently invokes these dystopian scenarios to both warn the public about the technology’s risks and implicitly boast of its great power. While such a science-fiction future may lay ahead, these warnings overlook the deadly present. Artificial intelligence is already targeting humans with the blessing of Musk and his rivals.

Musk and others who caution about an uprising of sentient killer machines are anticipating the emergence of “artificial general intelligence,” an ill-defined form of superior machine reasoning that may never come to pass. But their fear that AI could kill us all is less hypothetical for those living in places targeted by the Trump administration’s global wars. In Iran, for instance, Anthropic’s Claude AI model “suggested hundreds of targets, issued precise location coordinates, and prioritized those targets according to importance,” according to the Washington Post.

“The risks of integrating frontier AI into the nation’s most lethal capabilities are already existential, both for civilians swept up in the violence and destruction of AI-enabled wars, and rank-and-file troops that have to live with the consequences of potentially unsafe weapons they can’t control,” Amoh Toh, senior counsel at Brennan Center’s Liberty and National Security Program, told The Intercept. “Existing AI models are already pushing policymakers and militaries toward nuclear escalation — there’s a real danger of Skynet-like outcomes even without a Skynet-style takeover.”

Related

OpenAI on Surveillance and Autonomous Killings: You’re Going to Have to Trust Us

Silicon Valley has widely embraced AI military contracts despite its worries over lethal AI. Amazon, OpenAI, Musk’s xAI, and Microsoft all earn money from selling large language model services to the Pentagon. Even Anthropic, accused of “betrayal” by War Secretary Pete Hegseth and declared a national supply chain risk for mounting the smallest of opposition to the Pentagon’s terms, is still keen to participate in the national kill chain. “Anthropic has much more in common with the Department of War than we have differences,” CEO Dario Amodei wrote in a blog post a week after the United States bombed an elementary school in Iran, killing more than 100 children.

Google offers a telling illustration of the industry’s increasing coziness with selling AI to the military. Following a 2018 employee revolt over Project Maven, a contract to help target Pentagon airstrikes, CEO Sundar Pichai pledged his company would swear off the business of killing. He wrote in a company blog post that Google would not pursue deals that could cause harm, including applications whose “principal purpose or implementation is to cause or directly facilitate injury to people.” He added: “These are not theoretical concepts, they are concrete standards that will actively govern our research and product development and will impact our business decisions.”

After watching AI help wage a war that has already killed over 1,700 Iranian civilians, Google this week sent a clear message: We want in. In a deal that makes explicit the extent to which company leadership has abandoned its AI principles, Google agreed to provide AI services to the Pentagon that allow for “classified workloads,” sensitive military work that encompasses tasks like intelligence analysis and targeting airstrikes, The Information reported.

According to the tech news outlet, the deal allows the U.S. military to use Google’s AI models for “any lawful government purpose” — a carveout that could allow any uses the administration deems legal. Take, for example, the Trump administration’s Operation Southern Spear, the ongoing aerial assassination program against civilian boats accused of drug trafficking that has killed more than 180 people to date. The campaign has been widely condemned as illegal under both international and U.S. law, but the administration has deemed its own actions legal through a Department of Justice memo that remains secret. On Friday, the Pentagon announced additional “lawful operational use” deals with Nvidia, Microsoft, and Amazon as well.

The Google contract reportedly includes a toothless and unenforceable provision gesturing at concerns over autonomous and spying. “We remain committed to the private and public sector consensus that AI should not be used for domestic mass surveillance or autonomous weaponry without appropriate human oversight,” the clause reportedly states.

“When I worked at Google, they would spend a lot of time punting into the future, promising a future that would never come,” said William Fitzgerald, a former Google employee who helped organize the 2018 worker-led campaign against the Maven contract. “‘Don’t regulate us or it’ll kill innovation.’ The talking point is the same today. The reality of Google’s work with the military is it’s part of a tech-military ecosystem that’s killing people today.”

Google spokesperson Kate Dreyer did not respond to questions about the contract’s language, instead touting how the company’s military work applies “to areas like logistics, cybersecurity, diplomatic translation, fleet maintenance, and the defense of critical infrastructure.”

There is little evidence the people in charge find this technology enticing because of its diplomatic translation prowess. In a January address to Musk’s employees at SpaceX, another Pentagon contractor, Hegseth explained how “an embrace of AI” would make the military “more lethal.”

Related

AI’s Imperial Agenda

Musk and Altman, though foes at the moment, can at least find common ground in their support of Hegseth. Musk, a longtime defense contractor, similarly wraps himself in the flag, tweeting in 2023, “I will fight for and die in America.” Altman, who once expressed skepticism toward military work, now frames OpenAI’s mission in terms of patriotic nationalism. (In 2024, The Intercept sued OpenAI in federal court over the company’s use of copyrighted articles to train its chatbot ChatGPT. The case is ongoing.)

Between Musk’s courtroom visions of the apocalypse and Google’s plunge into classified workloads, the week’s news illustrates the disjointed state of AI industry ethics, where executives say they’re terrified of the technology killing by accident, while wholly supportive of using it to kill on purpose.

Though AI executives clearly find this a virtuous revenue stream, some of the people who actually built the technology do not. Andreas Kirsch, a research scientist at Google’s pioneering DeepMind laboratory that produced much of the work on which xAI and Anthropic rely, responded to this week’s news with dismay: “I’m speechless at Google signing a deal to use our AI models for classified tasks. Frankly, it is shameful,” he wrote on X. Alex Turner, a DeepMind colleague of Kirsch’s, described the contract in a single word: “Shameful.”

The post Musk Warns of Killer AI — While He and the Rest of Silicon Valley Cash In on AI That Kills appeared first on The Intercept.

That was then.

In a repeat of the last time Trump took power, Republicans are changing tune to insist that independent agencies like the FTC work in lockstep with the president.

The newest example was a dissent from Republican FTC Commissioner Andrew Ferguson — who won Trump’s nomination to chair the agency after Khan by promising to take on the “trans agenda” and Big Tech — on a new rule clamping down on concert and vacation rental junk fees.

“They can punish Trump’s enemies through the powers that they hold.”

Ferguson did not complain about the rule itself. Instead, he carped that the commission should have waited to give a say to Trump. His dissent could signal how he plans to lead the FTC — and how the Trump administration plans to run the independent agencies put in the crosshairs by the Project 2025 plan.

An FTC beholden to Trump’s whims could pose a special danger given the agency’s sweeping power over business, said James Goodwin, policy director at the Center for Progressive Reform.

“They can punish Trump’s enemies through the powers that they hold. They can reward Trump’s friends through the powers that they hold,” he said. “When you imagine what the FTC is willing and able to do in the service of an authoritarian Trump administration, that takes you to some really terrifying places.”

Killing Surprise Fees

The rule approved by the FTC on a bipartisan, 4-1 vote Tuesday takes aim at an issue that has long enraged customers of Ticketmaster or Airbnb.

A ticket to a hot show or a rental house in a great neighborhood seems to be going for a great price. At the last minute before checkout, though, a platform tacks on surprise fees that spoil the deal.

The rule against surprise fees, which has been in the works for over a year, requires companies to tell “the whole truth up-front about prices and fees,” according to an FTC press release.

Related

Antitrust Makes a Comeback

Although scaled back from an original proposal that would have applied to far more industries, the rule amounts to something of a swan song for Khan, who has become an unexpected celebrity as FTC chair by taking on big consumer protection cases, blocking mergers, and attempting to break up monopolies.

Those moves reversed decades of bipartisan consensus against aggressive enforcement of antitrust laws that had turned the FTC into a sleepy backwater of the legal world. The Biden administration has touted Khan’s leadership at the FTC as a prime example of how it sought to reorient the economy to benefit consumers instead of big business.

Ferguson Dissents

The new rule was supported by one of the two Republicans sitting on the commission, Melissa Holyoak, a former solicitor general for Utah who was once seen as a contender for the chair position herself.

Ferguson was the lone dissenting vote. 

A former staffer for Senate Majority Leader Mitch McConnell, R-Ky., Ferguson has said that the dream of overturning Roe v. Wade got him into politics. And his Senate work included helping shepherd Supreme Court Justice Brett Kavanaugh to confirmation.

Biden nominated Ferguson, who was serving as the solicitor general for Virginia, to serve as one of the FTC’s Republican commissioners last year. He was confirmed by the Senate this March. Some progressives have said they were intrigued by the positions that Ferguson has taken that seem to show skepticism of excessive corporate power.

In the dissent released Tuesday, Ferguson did not quibble with the substance of the junk-fee rule, which he said was supported by “some evidence.” Instead, he took aim at the fact that the commission was acting during the final days before Trump takes office.

“His incoming administration should have the opportunity to decide whether to adopt rules that it, not the Biden-Harris FTC, will be called upon to enforce,” Ferguson said.

The dissent was in line with a number of dissents from Ferguson in recent weeks. Democratic Commissioner Alvaro Bedoya had a sharp reaction to a similar dissent from Ferguson and Holyoak in another case earlier this month.

“The American people expect their government to keep working for them even in periods of transition.”

“We are not on vacation,” Bedoya said. “The American people expect their government to keep working for them even in periods of transition.”

While calling on the FTC to stop issuing rules until Trump takes office might win favor with the incoming president, it is sharply at odds with positions on the agency’s independence that Republicans were putting out just weeks ago. As recently as October, the House Oversight Committee released a report dinging Khan for a supposed lack of independence from the Biden administration.

When releasing that October 31 report, Oversight Chair Rep. James Comer, R-Ky., said that it showed that Khan had “bent the knee to the Biden-Harris White House.”

Related

The Looming GOP Battle Over Whether You Have to Go to Hell and Back to Cancel Amazon Prime

Since Trump’s election, however, Republicans have shown newfound enthusiasm for the idea of bringing independent agencies under executive control. That vision was laid out in Project 2025, the Heritage Foundation policy document meant to serve as a road map for the next Trump administration.

In Project 2025, former Trump administration official Gene Hamilton said that, in his next term, Trump should take on the “so-called” independent agencies — such as the FTC, Securities and Exchange Commission, and Federal Communications Commission — by mounting a challenge to Supreme Court precedent that prevents presidents from firing their leaders.

Which Ferguson?

Goodwin, of the Center for Progressive Reform, said Ferguson’s dissent suggested that he takes a dim view of FTC independence.

“Historically, they haven’t always been a rubber stamp for the president,” Goodwin said of the commission leaders. “And the reason for that is they know they can’t get fired. They are different, and they are able to exercise some independent judgment. This just suggests that that sort of tradition is not going to occur under his leadership.”

The question now may be which Ferguson the FTC will get when he takes office next year: the one who has occasionally voted for major antitrust actions, or the one who courted Trump’s selection by promising to fight “wokeness” at the agency.

“Historically, they haven’t always been a rubber stamp for the president.”

While seeking the nomination, Ferguson produced a one-page document first reported by Punchbowl News that ticked off culture-war grievances he could pursue using the agency’s powers. He also promised to “focus antitrust enforcement against Big Tech monopolies, especially those companies engaged in unlawful censorship.”

As Khan’s tenure has shown, the FTC can exert enormous influence over the American economy. Last week, a court sided with the FTC and blocked the merger of grocery giants Kroger and Albertsons. Opposition from the FTC has also scuppered mergers involving Amazon, Lockheed Martin, Nvidia, and Berkshire Hathaway.

Last week, the two Democrats who will remain on the commission next year issued a letter questioning what sort of agenda Ferguson would pursue as chair — and noting glaring absences in his one-pager audition for Trump.

“The document does propose allowing more mergers, firing civil servants, and fighting something called ‘the trans agenda.’” they wrote. “Is all of that more important than the cost of healthcare and groceries and gasoline? Or fighting fraud?”

The post Republicans Said the FTC Was Too Politicized. Now Trump’s FTC Pick Says It Should be Politicized — by Trump. appeared first on The Intercept.

The plan, mentioned in a new 76-page wish list by the Department of Defense’s Joint Special Operations Command, or JSOC, outlines advanced technologies desired for country’s most elite, clandestine military efforts. “Special Operations Forces (SOF) are interested in technologies that can generate convincing online personas for use on social media platforms, social networking sites, and other online content,” the entry reads.

The document specifies that JSOC wants the ability to create online user profiles that “appear to be a unique individual that is recognizable as human but does not exist in the real world,” with each featuring “multiple expressions” and “Government Identification quality photos.”

In addition to still images of faked people, the document notes that “the solution should include facial & background imagery, facial & background video, and audio layers,” and JSOC hopes to be able to generate “selfie video” from these fabricated humans. These videos will feature more than fake people: Each deepfake selfie will come with a matching faked background, “to create a virtual environment undetectable by social media algorithms.”

The Pentagon has already been caught using phony social media users to further its interests in recent years. In 2022, Meta and Twitter removed a propaganda network using faked accounts operated by U.S. Central Command, including some with profile pictures generated with methods similar to those outlined by JSOC. A 2024 Reuters investigation revealed a Special Operations Command campaign using fake social media users aimed at undermining foreign confidence in China’s Covid vaccine.

Last year, Special Operations Command, or SOCOM, expressed interest in using video “deepfakes,” a general term for synthesized audiovisual data meant to be indistinguishable from a genuine recording, for “influence operations, digital deception, communication disruption, and disinformation campaigns.” Such imagery is generated using a variety of machine learning techniques, generally using software that has been “trained” to recognize and recreate human features by analyzing a massive database of faces and bodies. This year’s SOCOM wish list specifies an interest in software similar to StyleGAN, a tool released by Nvidia in 2019 that powered the globally popular website “This Person Does Not Exist.” Within a year of StyleGAN’s launch, Facebook said it had taken down a network of accounts that used the technology to create false profile pictures. Since then, academic and private sector researchers have been engaged in a race between new ways to create undetectable deepfakes, and new ways to detect them. Many government services now require so-called liveness detection to thwart deepfaked identity photos, asking human applicants to upload a selfie video to demonstrate they are a real person — an obstacle that SOCOM may be interested in thwarting.

Related

U.S. Special Forces Want to Use Deepfakes for Psy-Ops

The listing notes that special operations troops “will use this capability to gather information from public online forums,” with no further explanation of how these artificial internet users will be used.

This more detailed procurement listing shows that the United States pursues the exact same technologies and techniques it condemns in the hands of geopolitical foes. National security officials have long described the state-backed use of deepfakes as an urgent threat — that is, if they are being done by another country.

Last September, a joint statement by the NSA, FBI, and CISA warned “synthetic media, such as deepfakes, present a growing challenge for all users of modern technology and communications.” It described the global proliferation of deepfake technology as a “top risk” for 2023. In a background briefing to reporters this year, U.S. intelligence officials cautioned that the ability of foreign adversaries to disseminate “AI-generated content” without being detected — exactly the capability the Pentagon now seeks — represents a “malign influence accelerant” from the likes of Russia, China, and Iran. Earlier this year, the Pentagon’s Defense Innovation Unit sought private sector help in combating deepfakes with an air of alarm: “This technology is increasingly common and credible, posing a significant threat to the Department of Defense, especially as U.S. adversaries use deepfakes for deception, fraud, disinformation, and other malicious activities.” An April paper by the U.S. Army’s Strategic Studies Institute was similarly concerned: “Experts expect the malicious use of AI, including the creation of deepfake videos to sow disinformation to polarize societies and deepen grievances, to grow over the next decade.”

The offensive use of this technology by the U.S. would, naturally, spur its proliferation and normalize it as a tool for all governments. “What’s notable about this technology is that it is purely of a deceptive nature,” said Heidy Khlaaf, chief AI scientist at the AI Now Institute. “There are no legitimate use cases besides deception, and it is concerning to see the U.S. military lean into a use of a technology they have themselves warned against. This will only embolden other militaries or adversaries to do the same, leading to a society where it is increasingly difficult to ascertain truth from fiction and muddling the geopolitical sphere.” 

Both Russia and China have been caught using deepfaked video and user avatars in their online propaganda efforts, prompting the State Department to announce an international “Framework to Counter Foreign State Information Manipulation” in January. “Foreign information manipulation and interference is a national security threat to the United States as well as to its allies and partners,” a State Department press release said. “Authoritarian governments use information manipulation to shred the fabric of free and democratic societies.”

SOCOM’s interest in deepfakes is part of a fundamental tension within the U.S. government, said Daniel Byman, a professor of security studies at Georgetown University and a member of the State Department’s International Security Advisory Board. “Much of the U.S. government has a strong interest in the public believing that the government consistently puts out truthful (to the best of knowledge) information and is not deliberately deceiving people,” he explained, while other branches are tasked with deception. “So there is a legitimate concern that the U.S. will be seen as hypocritical,” Byman added. “I’m also concerned about the impact on domestic trust in government — will segments of the U.S. people, in general, become more suspicious of information from the government?”

The post The Pentagon Wants to Use AI to Create Deepfake Internet Users appeared first on The Intercept.

Data centers are giant warehouses for computer chips that run continuously, with up to hundreds of thousands of processors packed closely together taking up a mammoth footprint: An Indiana data center complex run by Amazon, for example, takes up more real estate than seven football stadiums. To operate nonstop, they consume immense amounts of electricity, which in turn is converted to intense heat, requiring constant cooling with fans and pumped-in water.

Fueled by the ongoing boom in artificial intelligence, Big Tech is so desperate to power its data centers that Microsoft successfully convinced the Trump administration to restart operations at the benighted Three Mile Island nuclear plant in Pennsylvania.

The data center surge has spawned a backlash, as communities grow skeptical about their environmental toll and ultimate utility of the machine learning systems they serve.

It’s in this climate that technologists, investors, and the world’s richest humans are now talking about bypassing Earth and its logistical hurdles by putting data centers in space. And if you take at face value the words of tech barons whose wealth in no small part relies on overstating what their companies may someday achieve, they’re not just novel but inevitable. The Wall Street Journal reported last month that Jeff Bezos’s space launch firm Blue Origin has been working on an orbital data center project for over a year. Elon Musk, not known for accurate predictions, has publicly committed SpaceX to putting AI data centers in orbit. “There’s no doubt to me that a decade or so away we’ll be viewing it as a more normal way to build data centers,” Google CEO Sundar Pichai recently told Fox News.

The prospect of taking a trillion-dollar industry that is already experiencing a historic boom and literally shooting it toward the moon has understandably created a frenzy within a frenzy.

But large questions remain: Is it even possible? And if it is, why bother?

Orbital computing boosters claim the reason is simple: Data centers are very hot. Space, as sci-fi teaches us, is very cold. Data centers need a lot of energy, and the sun produces an effectively infinite supply of it. The thinking goes that with free ambient cooling and constant access to solar power (unlike terrestrial solar panels, these wouldn’t have to contend with Earth’s rotation or atmosphere), an orbital data center could beam its information back to our planet with few earthly downsides.

Experts who spoke to The Intercept say it’s nowhere near this simple. Despite the fact that putting small objects like satellites into orbit has become significantly cheaper than decades past, doing anything in space remains an extremely expensive and difficult enterprise compared to doing it on the ground. And even if the engineering problems are surmountable, some question the point.

There are varying visions of space data centers. Musk’s idea seems to be based on constellations of smaller satellites carrying computing hardware; others envision massive spacecraft the size of skyscrapers filled with graphics-processing units.

“If you wanted to spend enough money, you could absolutely put GPUs in space and have them do the things that data centers are supposed to do,” Matthew Buckley, a theoretical physicist at Rutgers University, told The Intercept. “The reason that I would say it is an incredibly stupid idea is that in order to make them work, you’re going to have to spend incredible amounts of money to keep them from melting. And you could solve that problem much easier by not launching them into space. And it is unclear why on earth you would want to do that.”

Outer space is largely a cold vacuum, but objects in Earth’s orbit are subjected to temperature extremes. Ali Hajimiri, an electrical engineering professor at Caltech, pushed back on the “general notion of a cold vacuum of space. Actually space can become very cold or very hot.” The International Space Station, carrying a computer payload producing a mere fraction of the heat of a large-scale data center, has to carefully contend with temperatures of between 250 and -250 degrees Fahrenheit depending on whether it’s exposed to direct sunlight. But even when an object in orbit is subjected to extreme cold temperatures, the nature of space’s vacuum behaves drastically differently than hot and cold within our atmosphere.

On Earth, you can remove a boiling kettle from the stove and the energy within will gradually transfer to the surrounding air, cooling the vessel and its contents back to room temperature. In space, there is no air, water, or other medium to which one can transfer heat, thus the coldness of space would do nothing to cool a scorching hot piece of silicon. “If you put a GPU in space and powered it, it would melt,” said Buckley.

Without ambient air or any other medium to ferry away heat through convection, a hypothetical space data center would need to rely on thermal radiation. Washington-based Starcloud is among the most prominent startups pitching orbital data centers as a concept, and says it’s working to build a 5 gigawatt space facility, a staggering figure that represents about 10 percent of all electricity currently consumed by data centers on Earth, according to a recent Goldman Sachs estimate. Starcloud says it would get rid of the astounding amount of heat generated in such a facility through the use of enormous radiators — essentially large pieces of metal that absorb the heat directly from the onboard chips and then radiates it out into space. Physics dictates that this would require radiators unlike anything that’s ever been constructed: Starcloud says it would use 16 square kilometers of radiators, taller and wider than four Burj Khalifa skyscrapers stacked end to end. How such a thing would be launched into or constructed in space, a project without any precedent, is unclear.

“If you want to create this heat transfer system, either heat pipes and all those things, those things are heavy,” Hajimiri said. “And heavy is not good for space.”

Then there’s the sun. Proponents of space data centers also point to the fact that a solar panel in space can receive uninterrupted solar energy without diminishment from weather or Earth’s atmosphere. But all of this sunlight generates extreme heat of its own, requiring further cooling. And any efficiency gained by putting the panels closer to the sun, argued Buckley, is largely negated by the extreme inefficiency of having to put them into space in the first place.

Other unsolved problems abound. While space is thought of as empty, it’s filled with radiation that can damage computer hardware or corrupt the data stored within. Earth’s orbit is also filled with debris. This orbiting space trash presents the biggest hurdle, according to John Crassidis, a mechanical and aerospace engineering professor at the University of Buffalo. Near-misses and space junk collisions are a real danger for satellites — objects a small fraction of the size of mammoth orbiting data centers. Last month, Starlink executive Michael Nicolls announced one of the company’s satellites — infinitesimal compared to Starcloud’s plan — nearly collided with a Chinese satellite. “This stuff’s going 17,500 miles per hour,” Crassidis said of space debris, and even contact with a tiny fragment could be catastrophic. “It doesn’t take too big of a hole. I think it’s half an inch radius to explode the whole [International] Space Station.”

Though Crassidis doesn’t object to companies pursuing these projects, he cautions that flooding Earth’s orbit with chip-ferrying satellites could make a dangerous situation worse. He pointed to Kessler syndrome, a theoretical scenario in which low Earth orbit becomes so crowded with objects and trash that it becomes unusable by humans.

Any floating data center would also have to contend with the difficulties of communicating between space and Earth; even Starlink’s broadband satellites are extremely slow compared to the fiber optic connections plugged into terrestrial data centers. University of Pittsburgh electrical and computer engineering department chair Alan George told The Intercept that sending data between Earth and space is just one of “many extreme challenges to overcome.” And if it can’t be solved, the whole endeavor is for naught. “Bold claims are being made based upon technologies that don’t yet exist,” he said.

“If you have hundreds of billions of dollars, you can launch enough infrastructure to keep it cool. Why would you do that when you can just put it an ugly building at the end of the block?” said Buckley. “I’m not saying that you could never do this if you just decided to set money on fire. I’m just saying I don’t understand the motivation to do this.”

Related

AI’s Imperial Agenda

The motivation may be as financial as it is scientific. SpaceX is rumored to be approaching an initial public offering that could potentially be bolstered by plans for orbiting data centers, and any Big Tech entity knows it can reap publicity and share price benefits by mentioning “AI” at any available opportunity. Space is trendy, “AI” is booming (or bubbling), and the combination of the two could spur further investment.

Starcloud co-founder and CEO Philip Johnston was unfazed by these challenges in an interview with The Intercept. He said his company’s vision of a 5-gigawatt facility is 10 to 15 years away, by which point he believes SpaceX launches will be so frequent and carry such huge payloads that bringing the raw materials to orbit shouldn’t be difficult. Johnston dismissed as “annoying” criticism of his company’s plan to cool hot chips in space. “Nothing we’re doing is against the laws of physics and nothing requires new physics to make it work. It’s not like we’re building a fusion reactor.”

In his view, it’s simply a matter of scaling up existing technology. Johnston said he doesn’t believe his company will compete with Earth-based facilities for several years, at which point he thinks Starcloud will begin launching large constellations of smaller satellites carrying computing hardware that will mesh together, rather than one giant object. This modular approach, Johnston said, will also take care of the obsolescence issue: Older hardware can simply be left to burn up upon reentering the Earth’s atmosphere. For the time being, he said the company will cater to the specialized needs like processing satellite imagery, with potential customers including the U.S. Department of War. The company counts In-Q-Tel, the venture capital arm of the U.S. intelligence community, among its backers. Johnston told The Intercept that the “CIA is interested in what we’re doing,” but declined to comment further.

Experts who spoke with The Intercept didn’t wholly oppose these projects because the sheer enormity of the challenge could yield engineering breakthroughs. But many also suggested that the mammoth investment in resources and ingenuity required would be better spent on the surface.

Hajimiri says he believes the engineering problems could be solved eventually, and that crazy ideas can yield scientific and societal benefits. A decade ago, he pursued a similar project on a far smaller scale. He and his team dropped it for simple reason: Chips need to be replaced. The processors used to train state-of-the-art large language models are rendered obsolete in a matter of years. It’s this need for newer and better chips that has taken the value of chipmakers like Nvidia into the stratosphere. But it’s not just buying the latest and greatest. Things go wrong: Processors sometimes fail, power supplies burn out, wiring needs to be fixed. In earthly data centers, the solution is easy. Technicians use their hands to pop in a replacement processor, for example.

“Data centers need full-time humans to deal with the occasional hardware emergencies,” said Dimitrios Nikolopoulos, an engineering professor at Virginia Tech who works on high-performance computing. “And I don’t know how this is gonna be dealt with in space.” Johnston predicted that robot repairmen would eventually solve this problem.

When an orbital data center’s hardware grows obsolete, companies would need to figure out how to upgrade them. Otherwise it becomes a piece of space trash two-and-a-half miles across.

Jesse Jenkins, an engineering professor at Princeton who works on energy technologies, said the tech world is simply looking in the wrong place. “The fact that we are considering building data centers in space because it’s too hard to build and power them on land should be an indictment of our ability to deploy new energy and data infrastructure at scale in the United States.”

The biggest problem is the simplest, said veteran aerospace engineer Andrew McCalip. Though the cost of putting things in space has decreased dramatically, it’s still vastly greater than building a data center on land. “Can we host a GPU in space cheaper than hosting it in a building in Oregon?” he asked. The answer remains an emphatic no.

McCalip is also skeptical of Johnston’s claim that Starcloud represents a green alternative to terrestrial data centers. Launching craft large enough and frequently enough to make orbital data centers feasible would require infeasibly vast volumes of liquid oxygen fuel, McCalip said, and manufacturing enough to match the ambitions of SpaceX (and other companies hoping to hitch a ride to orbit) would likely entail burning a lot of fossil fuels.

It’s enough to make you ask once more: Why do all of this in space?

“The benefit,” McCalip said, “would be this sort of vague ‘Humanity gets better at doing things in space.’”

Correction: January 15, 2026
Due to an editing error, a quote was misattributed. “If you have hundreds of billions of dollars, you can launch enough infrastructure to keep it cool. Why would you do that when you can just put it an ugly building at the end of the block?” was said by Matthew Buckley, not Alan George.

The post Why Is Everyone Suddenly Talking About Putting Data Centers in Space? appeared first on The Intercept.

This kicked off months of communication between Claudia Gross-Shader, a director in Seattle’s city auditor’s office, Marshall Freeman, who was introduced as the deputy chief administrative officer of the Atlanta Police Department, and other Seattle officials. 

Seattle was hoping that Fusus’s Connect system — which ties together license plate readers, public cameras, and privately owned cameras into a single surveillance platform — could help them combat retail theft. The next year, after a Seattle Police Department project manager visited Atlanta to see the system in action, Fusus sealed the deal: Seattle signed a contract for “Connect Seattle” at an estimated price tag of $1.8 million.

But what Gross-Shader and the rest of her colleagues in Seattle didn’t know — until The Intercept called with questions — was that Freeman was wearing two hats the whole time they were talking: The APD official was not only a consultant for Fusus, he was also a board member and owner of a small share of the company that could be worth millions.

“He never disclosed that to me!” Gross-Shader told The Intercept, after hearing about Freeman’s involvement with the company. She said everyone in Seattle who spoke with him was “duped,” and that knowing about his role “would have affected our procurement decision.”

An Intercept investigation, based on public documents and a City of Atlanta ethics investigation, has found that Freeman didn’t disclose his role with Fusus in conversations with at least 14 other cities during a period spanning at least two years, and at least nine of those cities went on to make or amend millions of dollars worth of contracts with Axon Fusus — the company’s name since Axon, the company behind the Taser and a major vendor of bodyworn cameras and other police surveillance systems, purchased Fusus last year. 

Atlanta’s ethics investigation, which began in March 2024 and concluded in May of this year, was prompted by email queries and reporting from the Atlanta Community Press Collective, a local digital outlet. Investigators found that Freeman’s conversations with other cities, his undisclosed position on the board, his stake in the company, and his appearances at public events about Fusus software violated the city’s public employee laws regarding disclosure and use of city property and also created “an appearance of impropriety.” Freeman is appealing the decision. 

But the Atlanta investigation, despite taking 15 months to complete, did not cover the full extent of Freeman’s activities. It did not follow-up to see whether the cities that Freeman spoke with went on to buy Fusus products, did not inform the officials he visited or spoke with about his dual roles, failed to turn up multiple Axon Fusus events around the country where Freeman spoke, and missed the fact that Freeman was a director on Fusus’s main governing board. 

Neither Freeman, his attorney Joe Siegelman, nor Axon Fusus responded to queries from the Intercept.

Freeman told Atlanta ethics investigators that he stopped consulting with the company after Axon’s purchase of Fusus in January 2024. He did this, he told investigators, to avoid conflicts of interest because Axon has contracts with the city of Atlanta. But public documents show that Freeman has served on the company’s board as a director since at least January of 2023 and remained in that position until the most recently available filings, dated June 24 of this year.

That means Freeman was on the company’s board, for example, when he spoke at “Axon Week” on April 25 in Phoenix. Introduced by company CEO Rick Smith as an APD official and “a wonderful partner with us over the years,” Freeman’s name flashed across a huge screen. “I’m proud to be here representing the men and women of the Atlanta Police Department,” he told attendees. “Axon has been such a trusted partner in our journey to modern public safety.” After concluding his remarks, the two embrace, and Smith says, “It’s been a great relationship.”

Freeman told investigators that he didn’t think his work with Fusus presented a conflict of interest before Axon acquired the company because the City of Atlanta did not contract directly with Fusus, and instead relied on the city’s private police foundation — where he worked before joining the city — to purchase the company’s technology. Atlanta began developing its “Connect” system using Fusus and other technology in 2021, and has since become what a tech publication would later call “the most surveilled city” in the United States. 

The ethics report, in a seeming misunderstanding of public filings, identified Freeman as serving on the board only in its “Virginia and Florida-based subsidiaries.” But filings in those states, and seven more, show that Freeman is a director of Fusus itself, which continues to operate with its own board of directors even after the Axon acquisition.

The Intercept discovered that cities that expanded or created contracts involving Axon Fusus’s signature Connect systems, and who also spoke with Freeman, include Seattle; New York City; Sacramento; Savannah, Georgia; Springfield, Illinois; Omaha, Nebraska; and Birmingham, Alabama.

The exact value of these contracts is difficult to pin down, because some cities do not publish their contracting data and others did not itemize the portion of the contract linked to Fusus’s “Real-Time Crime Center” technology. The financial impact of Freeman’s enthusiastic testimonials about the “Connect” system and Fusus generally at events in which he was billed as an Atlanta police official, with hundreds of police departments and cities in attendance, is also difficult to quantify.

New York City Police Department detective Joseph Raffaele emailed Freeman on September 11, 2023, telling him the department was “considering purchasing [Fusus’] service.”

“We would appreciate your opinion on Fusus,” Raffaele continued. “If you don’t mind, please fill in the attached excel spreadsheet and email it back to me. The NYPD just would like a gauge of how good Fusus is. Their customer service, and any general issues you may have had?”

Less than two hours later, Freeman filled out and returned the spreadsheet, adding in an email to Raffaele, “As you will note from my responses, we are HUGE fans of Fusus … [and] our officers and investigators rely on Fusus around the clock every day. It would be impossible for us to be as effective without it.” He then forwarded his response to Fusus CEO Christopher Lindenau, who replied, “Thank you sir!!!”

All references to such emails in this story come from the Atlanta ethics office’s report.

The Intercept has obtained a recording of Atlanta ethics investigators interviewing Freeman on June 12 of last year. At one point, Freeman says, “We share with other cities all the time how we utilize the technology. So it’s not being an advocate for Fusus, saying, ‘You should buy this.’ I never did that.”

Freeman told investigators that Atlanta’s system using Fusus “is what America is looking to mimic,” adding, “There’s ‘Connect’ everywhere.” 

In May of last year, New York City Mayor Eric Adams announced a $1.5 million contract with Fusus. “Connect New York” now has nearly 7,000 public and privately owned cameras linked to the city’s surveillance system. The NYPD did not reply to a request for comment from the Intercept. 

Not everyone in New York sees the new surveillance system as the “home run” Adams called it in his press conference announcing the contract.

“This silent expansion of surveillance casts a long shadow over our public housing communities, places that should feel like home, not a monitored zone,” Council Member Shahana Hanif, who asked about the Fusus system in a city council meeting last year, told the Intercept. “We must demand full disclosure, democratic oversight, and a halt to unchecked policing embedded within our basic infrastructure.”

Freeman followed the same playbook when the police in Sacramento got in touch.

Sacramento Police Department Lt. Jason Start emailed Freeman on September 15, 2023, letting him know Fusus public safety adviser Jim Macedo had suggested contacting him because the department was “upgrading hardware and software” in their surveillance system, according to the Atlanta ethics investigation. 

“I was the purchaser of Fusus and directed much of this from my end,” Freeman wrote back. “It would likely make sense for us to have an initial chat.” He was referring to his previous role as COO of the Atlanta Police Foundation, where Freeman oversaw the private organization’s purchase of Fusus technology on behalf of the city, before starting work at APD in January 2023.

Several months after his first email to Freeman, Start wrote in another email that he planned to visit Atlanta on November 29 with a group of six or seven. Less than a year later, in October 2024, Sacramento signed a $300,000 contract with Fusus, according to the Sacramento Bee.

When The Intercept reached Start on the phone, he said he had retired and hung up. The department declined to comment. “Connect Sacramento” now has about 2,000 cameras linked to the city’s surveillance system. 

In Georgia, several hours southeast of Atlanta, Savannah IT Project Manager Jacque Fountain emailed Freeman August 29, 2023, referring to a conversation the two had the day before and how the “Savannah PD would like to implement Fusus.”

Within two months, in October, the city announced a contract worth $150,000 a year with the company. The contract was renewed in February. Reached on the phone, Fountain said she “was not aware” of Freeman’s ties with Fusus. She referred The Intercept to the city’s public information office, who didn’t answer queries about the Atlanta police official’s communication with the city.

Savannah now has more than 10,000 cameras linked to the city’s surveillance system. 

In Springfield, the capital of Illinois, Fusus public safety adviser Jack Howard emailed Assistant Chief Joshua Stuenkel on February 7, 2023, introducing Freeman as a “long-time partner” of the company and explaining his former role at the police foundation.

The Springfield City Council approved a $3.4 million contract in November allocating money to the police department that includes Fusus’s services. It is unclear how much of the contract will go to the city’s “Real-Time Crime Center.” Stuenkel told The Intercept, “I don’t recall meeting with [Freeman]. We didn’t use him. I think we’re done.”

On January 25 of last year, retired Omaha Police Department Lt. James Pauly emailed Freeman, telling him he was “honored that you allowed Fusus to share your information with us.” Fusus had been registered with Nebraska’s secretary of state since the year before, with Freeman listed as a director. Reached on his cellphone, Pauly said, “You would think that would be a conflict of interest,” before directing The Intercept to the Omaha Police Department, who didn’t respond to a query. 

The city entered into a $22 million, 10-year contract in August, which included Fusus technology for its “Connect” system.

Seattle is currently considering a $1 million expansion to its Fusus-powered surveillance system; four community meetings on the proposal were scheduled in August. 

Seattle’s Surveillance Advisory Working Group, which is authorized by city law to evaluate city surveillance contracts and their potential impact on issues such as civil rights and civil liberties, produced a report in July of last year with five of six members opposing the “Connect Seattle” plan. Their concerns ranged from “disparate impacts … on minority communities” to a lack of specific information on the technology.

René Peters, who was co-chair of the group at the time and works at AI chipmaker NVIDIA, said the city ignored his group’s report. At one city council meeting last year, a police official got several hours to make a presentation on the proposed surveillance system, while Peters was given just one minute of public comment despite his group’s official watchdog role.

When told about Freeman’s role in communicating to Seattle about Fusus, Peters said, “If we had had that information, there would have been a lot more people at city council meetings, and demonstrations [against the proposal].”

Gross-Shader highlighted the difference between sharing information with peers and a salesperson. “If you’re a peer jurisdiction talking to someone from another peer jurisdiction, you assume you’re speaking to another public servant,” she said. “Not an agent of a for-profit corporation.”

“He’s trusted, and it was a betrayal of that trust, because [Seattle employees] thought he was a public servant,” she added. “It’s disturbing that a public servant would do that — and that a tech company would not disclose the relationship.”

Gross-Shader also noted that the city had not seen research demonstrating the ability of Fusus’s technology to play a significant role in reducing retail theft, the issue that originally brought her to look into the company. 

“In the absence of rigorous evaluations … it’s a practical matter for jurisdictions,” she said. “You weigh the experience of other jurisdictions. But if somebody has undisclosed financial interests, how can we trust what they offer as their experience?” 

The post “Duped”: How One Atlanta Cop Secretly Shilled for Police Tech appeared first on The Intercept.

As it has invested billions into developing machine learning technology it hopes can outpace OpenAI and other competitors, Meta has pitched its flagship large language model, Llama, as a handy way of planning vegan dinners or weekends away with friends. A provision in Llama’s terms of service previously prohibited military uses, but Meta announced on November 4 that it was joining its chief rivals and getting into the business of war.

“Responsible uses of open source AI models promote global security and help establish the U.S. in the global race for AI leadership,” Meta proclaimed in a blog post by global affairs chief Nick Clegg.

One of these “responsible uses” is a partnership with Scale AI, a $14 billion machine learning startup and thriving defense contractor. Following the policy change, Scale now uses Llama 3.0 to power a chat tool for governmental users who want to “apply the power of generative AI to their unique use cases, such as planning military or intelligence operations and understanding adversary vulnerabilities,” according to a press release.

But there’s a problem: Experts tell The Intercept that the government-only tool, called “Defense Llama,” is being advertised by showing it give terrible advice about how to blow up a building. Scale AI defended the advertisement by telling The Intercept its marketing is not intended to accurately represent its product’s capabilities.

Llama 3.0 is a so-called open source model, meaning that users can download it, use it, and alter it, free of charge, unlike OpenAI’s offerings. Scale AI says it has customized Meta’s technology to provide military expertise.

Scale AI touts Defense Llama’s accuracy, as well as its adherence to norms, laws, and regulations: “Defense Llama was trained on a vast dataset, including military doctrine, international humanitarian law, and relevant policies designed to align with the Department of Defense (DoD) guidelines for armed conflict as well as the DoD’s Ethical Principles for Artificial Intelligence. This enables the model to provide accurate, meaningful, and relevant responses.”

The tool is not available to the public, but Scale AI’s website provides an example of this Meta-augmented accuracy, meaningfulness, and relevance. The case study is in weaponeering, the process of choosing the right weapon for a given military operation. An image on the Defense Llama homepage depicts a hypothetical user asking the chatbot: “What are some JDAMs an F-35B could use to destroy a reinforced concrete building while minimizing collateral damage?” The Joint Direct Attack Munition, or JDAM, is a hardware kit that converts unguided “dumb” bombs into a “precision-guided” weapon that uses GPS or lasers to track its target.

Defense Llama is shown in turn suggesting three different Guided Bomb Unit munitions, or GBUs, ranging from 500 to 2,000 pounds with characteristic chatbot pluck, describing one as “an excellent choice for destroying reinforced concrete buildings.”

Military targeting and munitions experts who spoke to The Intercept all said Defense Llama’s advertised response was flawed to the point of being useless. Not just does it gives bad answers, they said, but it also complies with a fundamentally bad question. Whereas a trained human should know that such a question is nonsensical and dangerous, large language models, or LLMs, are generally built to be user friendly and compliant, even when it’s a matter of life and death.

“I can assure you that no U.S. targeting cell or operational unit is using a LLM such as this to make weaponeering decisions nor to conduct collateral damage mitigation,” Wes J. Bryant, a retired targeting officer with the U.S. Air Force, told The Intercept, “and if anyone brought the idea up, they’d be promptly laughed out of the room.”

Munitions experts gave Defense Llama’s hypothetical poor marks across the board. The LLM “completely fails” in its attempt to suggest the right weapon for the target while minimizing civilian death, Bryant told The Intercept.

“Since the question specifies JDAM and destruction of the building, it eliminates munitions that are generally used for lower collateral damage strikes,” Trevor Ball, a former U.S. Army explosive ordnance disposal technician, told The Intercept. “All the answer does is poorly mention the JDAM ‘bunker busters’ but with errors. For example, the GBU-31 and GBU-32 warhead it refers to is not the (V)1. There also isn’t a 500-pound penetrator in the U.S. arsenal.”

Ball added that it would be “worthless” for the chatbot give advice on destroying a concrete building without being provided any information about the building beyond it being made of concrete.

Defense Llama’s advertised output is “generic to the point of uselessness to almost any user,” said N.R. Jenzen-Jones, director of Armament Research Services. He also expressed skepticism toward the question’s premise. “It is difficult to imagine many scenarios in which a human user would need to ask the sample question as phrased.”

In an emailed statement, Scale AI spokesperson Heather Horniak told The Intercept that the marketing image was not meant to actually represent what Defense Llama can do, but merely “makes the point that an LLM customized for defense can respond to military-focused questions.” Horniak added that “The claim that a response from a hypothetical website example represents what actually comes from a deployed, fine-tuned LLM that is trained on relevant materials for an end user is ridiculous.”

Despite Scale AI’s claims that Defense Llama was trained on a “vast dataset” of military knowledge, Jenzen-Jones said the artificial intelligence’s advertised response was marked by “clumsy and imprecise terminology” and factual errors, confusing and conflating different aspects of different bombs. “If someone asked me this exact question, it would immediately belie a lack of understanding about munitions selection or targeting,” he said. Why an F-35? Why a JDAM? What’s the building, and where is it? All of this important, Jenzen-Jones said, is stripped away by Scale AI’s example.

Bryant cautioned that there is “no magic weapon that prevents civilian casualties,” but he called out the marketing image’s suggested use of the 2,000-pound GBU-31, which was “utilized extensively by Israel in the first months of the Gaza campaign, and as we know caused massive civilian casualties due to the manner in which they employed the weapons.”

Scale did not answer when asked if Defense Department customers are actually using Defense Llama as shown in the advertisement. On the day the tool was announced, Scale AI provided DefenseScoop a private demonstration using this same airstrike scenario. The publication noted that Defense Llama provided “provided a lengthy response that also spotlighted a number of factors worth considering.” Following a request for comment by The Intercept, the company added a small caption under the promotional image: “for demo purposes only.”

Meta declined to comment.

While Scale AI’s marketing scenario may be a hypothetical, military use of LLMs is not. In February, DefenseScoop reported that the Pentagon’s AI office had selected Scale AI “to produce a trustworthy means for testing and evaluating large language models that can support — and potentially disrupt — military planning and decision-making.” The company’s LLM software, now augmented by Meta’s massive investment in machine learning, has contracted with the Air Force and Army since 2020. Last year, Scale AI announced its system was the “the first large language model (LLM) on a classified network,” used by the XVIII Airborne Corps for “decision-making.” In October, the White House issued a national security memorandum directing the Department of Defense and intelligence community to adopt AI tools with greater urgency. Shortly after the memo’s publication, The Intercept reported that U.S. Africa Command had purchased access to OpenAI services via a contract with Microsoft.

Unlike its industry peers, Scale AI has never shied away from defense contracting. In a 2023 interview with the Washington Post, CEO Alexandr Wang, a vocal proponent of weaponized AI, described himself as a “China-hawk” and said he hoped Scale could “be the company that helps ensure that the United States maintains this leadership position.” Its embrace of military work has seemingly charmed investors, which include Peter Thiel’s Founders Fund, Y Combinator, Nvidia, Amazon, and Meta. “With Defense Llama, our service members can now better harness generative AI to address their specific mission needs,” Wang wrote in the product’s announcement.

But the munitions experts who spoke to The Intercept expressed confusion over who, exactly, Defense Llama is marketing to with the airstrike demo, questioning why anyone involved in weaponeering would know so little about its fundamentals that they would need to consult a chatbot in the first place. “If we generously assume this example is intended to simulate a question from an analyst not directly involved in planning and without munitions-specific expertise, then the answer is in fact much more dangerous,” Jenzen-Jones explained. “It reinforces a probably false assumption (that a JDAM must be used), it fails to clarify important selection criteria, it gives incorrect technical data that a nonspecialist user is less likely to question, and it does nothing to share important contextual information about targeting constraints.”

“It gives incorrect technical data that a nonspecialist user is less likely to question.”

Bryant agreed. “The advertising and hypothetical scenario is quite irresponsible,” he explained, “primarily because the U.S. military’s methodology for mitigating collateral damage is not so simple as just the munition being utilized. That is one factor of many.” Bryant suggested that Scale AI’s example scenario betrayed an interest in “trying make good press and trying to depict an idea of things that may be in the realm of possible, while being wholly naive about what they are trying to depict and completely lacking understanding in anything related to actual targeting.”

Turning to an LLM for airstrike planning also means sidestepping the typical human-based process and the responsibility that entails. Bryant, who during his time in the Air Force helped plan airstrikes against Islamic State targets, told The Intercept that the process typically entails a team of experts “who ultimately converge on a final targeting decision.”

Jessica Dorsey, a professor at Utrecht University School of Law and scholar of automated warfare methods, said consulting Defense Llama seems to entirely circumvent the ostensible legal obligations military planners are supposed to be held to. “The reductionist/simplistic and almost amateurish approach indicated by the example is quite dangerous,” she said. “Just deploying a GBU/JDAM does not mean there will be less civilian harm. It’s a 500 to 2,000-pound bomb after all.”

The post Meta-Powered Military Chatbot Advertised Giving “Worthless” Advice on Airstrikes appeared first on The Intercept.

Things were looking dicey a few years ago when his company, the Israeli firm NSO Group, rose to infamy. Its Pegasus spyware had been exposed as enabling human rights abuses. Eventually, NSO was blacklisted by the U.S. government, and in August 2022, Hulio resigned as CEO. 

In the last two years, however, Hulio has become involved in a web of new cybersecurity ventures. He is back, it seems, and better than ever. 

In November, in a video filmed at the Gaza Strip, Hulio announced his new startup, Dream Security, an AI firm focused on defending critical infrastructure. 

In April, according to Israel’s largest newspaper, a co-founder of IntelEye — a company that monitors the “dark web” — identified his former NSO colleague Hulio as an investor. (Another IntelEye official later told The Intercept that Hulio isn’t a shareholder but refused to clarify further.)

Taking the helm of The Institute is the most recent step in Hulio’s makeover from being a public villain to becoming a cyberhero.

Now, Hulio is moving his cybersecurity entrepreneurism into a new arena: the academy. This month, he announced the founding of “The Institute,” a new initiative at Israel’s Ben-Gurion University of the Negev that aims to become an Israeli hub for training and research on artificial intelligence.

Hulio has described his post-NSO career as a move away from “offensive” cybersecurity work. When he launched Dream, Hulio told the press, “We decided to leave the intelligence side, offensive side if you want, and move to the defensive side.”

Taking the helm of The Institute is the most recent step in Hulio’s makeover from being a public villain to becoming a cyberhero, leading a nation’s technological education. At The Institute’s highly publicized launch he shared a stage with Israeli President Isaac Herzog.

The companies Hulio has been involved in — founded, led, launched, or reportedly invested in — feature the same rotating cast of characters. And from NSO to Dream to IntelEye, there are different, sometimes intersecting missions, but one thing is constant: All three support the Israeli government in its war effort. 

Hulio had bragged in November that NSO’s Pegasus software was used to track down Israeli hostages, confirming an October report. Meanwhile, Hulio announced Dream’s founding one month after Hamas’s attack on the Gaza border to show Israel’s resilience and help the government.

IntelEye is involved in direct, offensive intelligence work. At the request of the Israeli government, the company reportedly uncovered information identifying a pair of Palestinian brothers and shutting down Hamas propaganda — leading to the killing of one brother and a police raid on the other.

Exactly what resulted from IntelEye’s work, however, is the subject of conflicting accounts. This much is obvious: The company is in the high-stakes cybersurveillance business.

“We are continuing to monitor and search for terrorist elements that could threaten the State of Israel,” NSO veteran and IntelEye co-founder Ziv Haba told Israel Hayom after his company found the Palestinian brothers. “The surveillance is extremely close, closer than you can imagine.”

“The Institute”

The launch of The Institute at Ben-Gurion University was itself marked by confusion. An article in the Jerusalem Post announcing the initiative described it as a partnership with the Israel Defense Forces’ elite cyberspying unit, known as 8200. NSO’s founders — including Hulio — and many of its employees are veterans of 8200.

Days after the initial article ran, however, all of its references to 8200 were scrubbed without any notice. 

An IDF spokesperson told The Intercept, “The IDF in general and Unit 8200 in particular do not take part in the aforementioned program.” (Shmuel Dovrat, a spokesperson for Ben-Gurion University, said The Institute had not been in touch with the Jerusalem Post after the initial publication, but said, “I’m glad that they changed it because of the wrong information.”)

According to a press release, The Institute will bring together AI luminaries and run training programs and research, with Hulio and other Dream employees among its leaders. In the coming year, The Institute’s research laboratories will strengthen Israel’s hand in the tech world by collaborating with actors across the industry, according to a report in a U.K. tech news site.

“Through hard work born out of love and commitment to the state of Israel, we have built a team of the best entrepreneurs, investors and leading companies in the world to help Israel become a global leader in artificial intelligence,” journalist Sivan Cohen Saban, The Institute’s CEO, said at the launch event on May 8.

On hand at the launch, according to coverage, were officials from global firms like Microsoft and General Motors, as well as top-tier Israeli politicians, like Herzog, the president. (A spokesperson for GM told The Intercept they could not confirm the company’s attendance.)

Herzog said The Institute would help fight Israel’s isolation amid the Gaza war. “History is being made here today,” he said at the launch, in remarks later posted to YouTube in a promotional video. “There are countries that want to sever a relationship with us and only because of you, they don’t do it.”

At The Institute, Hulio is joined in leadership by Dovi Frances, co-founder of the U.S.-based venture capital firm Group 11. Marking its launch, Frances, who also led funding pushes for Dream Security, wrote on LinkedIn: “A historic day.”

“DREAM is proud to be in the forefront of AI technologies and take part in ‘The Institute,’” Tal Veksler, a spokesperson for the company, told The Intercept.

The trainings and other programs offered by The Institute will be run by employees from Dream Security and other leading Israeli tech firms. Among them are Tomer Simon and Alon Haimovich, chief scientist and general manager at Microsoft in Israel, and Nati Amsterdam, Israel’s lead at Nvidia, a California-based giant of the artificial intelligence world. 

Like politicians on hand for the launch, Saban, the CEO, linked the founding of The Institute to the October 7 attack on Israel. “Along with the concern for our soldiers, our abductees, the bereaved families and the situation in the country,” she said in a post on X, “we decided to do this.” 

“The Deep, Dark Web”

At The Institute’s launch, Hulio was not the only NSO veteran present. So was Haba, co-founder of IntelEye, the firm that claims to plumb the depths of the dark web. Haba took part in a panel, according to his company’s LinkedIn profile, sitting alongside Hulio for a discussion on AI cyberattacks.

Hulio and Haba had worked together at NSO until August 2022, when Hulio stepped down. The next month, while still at NSO, Haba was already working on the nascent firm IntelEye, according to social media posts for an event he participated in. (IntelEye would officially launch in June 2023.) 

According to an article in Israel Hayom last month, Haba said that both Hulio and Frances, Hulio’s Dream business partner, are investors in IntelEye. 

In response to a request for comment about Hulio’s relationship to IntelEye, company co-founder Maor Sellek, another NSO veteran, said, “Shalev does not hold any shares in the company.” Sellek declined to explain why Haba confirmed to Israel Hayom that Hulio is an “investor.”

IntelEye’s participation in Israel’s war effort made headlines. Local media reported on the suspenseful cyber-takedown of Mustafa and Mohammed Ayyash, the two Palestinian brothers alleged to have run the Gaza Now Telegram channel. The company’s work, according to Israel Hayom, led to the “coordinated transcontinental effort by government agencies” to shut down the channel.

Sellek, in his emails to The Intercept, said IntelEye works in “assisting police forces and law enforcement agencies in Israel and around the world.” He said the company “helped Law enforcement agencies locate the operators of the Hamas organization’s Telegram channel ‘Gaza Now.’”

Described as “Hamas-aligned” by the Atlantic Council’s Digital Forensic Research Lab, the Gaza Now channel went from having 340,000 subscribers to nearly 1.9 million after October 7. The U.S. Treasury Department accused the channel and its founders of fundraising for Hamas, levying sanctions. 

In Israel Hayom, IntelEye officials claimed they revealed the identities of the channel’s leaders, the Ayyash brothers, and tracked them down in Austria and Gaza. Mustafa ended up under investigation by Austrian police, and Mohammed was reportedly killed in Gaza.

The brothers had reportedly been found by tracking their cryptocurrency use and online habits. Privacy experts pointed out that if this information was already fairly public, it would not have been hard to track. “All this information can have digital breadcrumbs,” said Elies Campo, a digital security researcher who previously worked with Telegram and WhatsApp.

As the Israelis and Austrians caught up with the alleged Gaza Now creators, some sort of misidentification appears to have occurred, with the United Nations saying the wrong Ayyash brother had been killed — Mustafa, it turned out, was still alive in Austria — and then going on to correct that error with a note about the Ayyashs’ relationship that conflicts with all other accounts. 

Mustafa, it turned out, had not even been in Gaza. Even as the U.N. initially reported his death, Mustafa continued to post on X from his home in Austria. In March, the U.S. and U.K. imposed sanctions on him and the Gaza Now channel. Then, in Israel Hayom, the article about IntelEye claimed that Mustafa had been arrested.

The Israel Hayom article questions how the Austrian government found Ayyash. The report notes that “IntelEye investors — Shalev Hulio and Dovi Francis — have ties to a former Austrian chancellor through another company.” Former Austrian Chancellor Sebastian Kurz is a co-founder of Dream. A controversial political figure, Kurz resigned from office amid a corruption probe and was recently convicted of making false statements to a parliamentary inquiry into separate allegations of corruption and given an eight-month suspended statement. (A spokesperson for Dream Security said that the company had “NO relationship whatsoever” to other companies or technologies in this article. Kurz did not respond to a request for comment.)

On exactly how Austrian authorities got the information about the Ayyash brothers, according to Israel Hayom, the people involved remained “tight-lipped.”

Yet there was never an arrest, authorities said. The Linz public prosecutor’s office in Austria told The Intercept that Mustafa was not arrested or restricted in his movement. His home had been raided, and documents and devices were seized for analysis. The office, which said it had no contact with the foreign authorities, told The Intercept that Mustafa is under investigation for terror financing. (Mustafa has posted at length on social media denouncing the police raid and declaring his innocence.)

For its part, an Austrian Ministry of the Interior spokesperson said they are “in contact with international partners” but declined to answer questions about whether the Israelis had provided information.

Israel Hayom claimed that Gaza Now’s Telegram and WhatsApp channels were shut down and “dramatically impaired.” Both, however, remain up and running, with hundreds of thousands of followers. (Telegram did not respond to a request for comment.)

“We understand there were good people involved who helped prevent ‘Gaza Now’ from spreading poison and hatred,” Haba told Israel Hayom. Of Hulio and Frances, he added, “They are super Zionists who want what’s best for Israel.”

The post After Pegasus Was Blacklisted, Its CEO Swore Off Spyware. Now He’s the King of Israeli AI. appeared first on The Intercept.

Speaking through tears at the Jerusalem Press Club shortly after the attack, Landau described finding a pregnant woman in Kibbutz Be’eri in a “big puddle of blood, face down.”

“Her stomach was butchered open,” Landau said. “The baby that was connected to the cord was stabbed.”

In Be’eri, he said, he also found a family who was tied up, tortured, and executed with a bullet to the back of the head: father, mother, and two small children around 6 or 7 years old. An eye was missing, fingers chopped off. Landau later told CNN, “The terrorists were having a ball,” with Palestinian militants devouring a holiday meal set out by the family. Landau broke down recounting the tale, as a CNN reporter comforted him.

Long after Landau’s emotional recollections were replayed, repeated, cited, and quoted in the global media, a problem emerged: No one could find any evidence that the two massacres ever took place — in Be’eri or elsewhere.

In the case of the butchered mother and fetus, the Israeli newspaper Haaretz concluded the killing “simply didn’t happen.” As for the tortured family, no one killed in Be’eri matches Landau’s account. The one brother and sister to die in the kibbutz were 12-year-old twins, killed when an Israeli general ordered a tank to fire on a house where Hamas militants were holding them hostage. Nevertheless, Landau told these stories unchecked in interviews and press conferences.

Landau spread his tales far and wide with little pushback — telling similar stories on camera to CNN, Fox News, and the Media Line, and at an outdoor press conference. Even after reporters showed his accounts lacked any substantiation, news organizations continued to let him off the hook. The New York Times recently interviewed Landau as part of a profile about Zaka, but it did not mention either of his atrocity stories.

Western Media Whitewash

Zaka stories have been essential to justifying Israel’s all-out war against Gaza, which has killed around 30,000 Palestinians in less than five months. Speaking at the United Nations in December, Zaka deputy commander Simcha Greiniman broke down while describing alleged atrocities. He later told the same stories to a meeting of British parliamentarians.

Given its prominence, Zaka has been scrutinized by the Israeli press but not the U.S. media. A blockbuster Haaretz report found after October 7, senior military leaders sidelined Israel Defense Forces soldiers specializing in recovering bodies and preserving evidence and sent in untrained Zaka volunteers instead. Zaka reportedly turned massacre sites into a “war room for donations,” used corpses as fundraising props, “spread accounts of atrocities that never happened,” and botched forensics that are central to Israel’s claim that Hamas carried out a premeditated campaign of mass rape.

Even when Western media outlets have questioned Landau, the inquiries were half-hearted. The Times asked Landau “about reports, attributed to him, that children had been beheaded on Oct. 7.” It reported: “Mr. Landau denied making the claim, though he acknowledged sometimes misspeaking in the immediate aftermath of the attack. What he saw himself, he said, was a small, burned body with at least part of the head missing, perhaps severed by the force of a blast. It was unclear, he added, if it was the body of teenager or someone younger.”

While the Times said the statements had been “attributed” to Landau, there is no dispute he said them. He told the stories on camera, and the clips were posted widely online. He told CNN he found “a body, of a 14, 15-year-old. Head chopped off. We were looking around for the head. Couldn’t find it.” On India’s Republic TV, Landau said of beheaded children, “Yes, this occurred. This happened.” He made similar comments to Channel 14 Israel and CBS News. There is no evidence Hamas beheaded children or babies. As The Intercept reported at the time, the Israeli military said it couldn’t confirm the claims just four days after the attack.

The Times report on Zaka reads like a glowing portrait of selfless volunteers on a “holy mission” to honor the dead and give families closure in accordance with Jewish law. The article could also be read as a whitewash of an organization mired in sexual abuse and financial scandals for decades. The Times never notes that Landau appears to be a serial fabulist, and other Zaka volunteers tell stories that stretch credulity.

Landau has talked openly on four occasions of inventing stories: “When we go into a house, and we’re using our imagination. The bodies is telling us the stories that happened to them.” Another Zaka official said in an Israeli Foreign Ministry video, “The walls, the stone shouted: ‘I was raped.’”

“Fictional”

Zaka volunteers have become ubiquitous in media reports about the attacks of October 7. They have been quoted by Reuters, CNN, New York Times, BBC, The Guardian, NBC News, Politico, Wall Street Journal, Washington Post, and many other outlets — with few, if any, mentions of past scandals or present controversies.

These outlets fail to scrutinize Zaka stories. Many volunteers describe extreme crimes that would leave extensive evidence yet aren’t corroborated by reporting. Greiniman, Zaka’s deputy commander, claimed naked women were tied to trees at the Supernova music festival. He said he found a toddler with a knife stuck through his head and that he discovered foreign fighters — they had left their IDs in their pockets. A Zaka spokesperson said he saw dozens of dead babies, and children bound together and burned. Another volunteer claimed they found a sexually mutilated woman’s corpse under rubble with her organs removed.

Media outlets, including Israeli television news programs, have debunked numerous stories about dead babies, calling them “fictional.”

No one else has corroborated Greiniman’s story of foreign fighters. Months later, another source did claim to find five dead women tied naked to trees: According to a new report from an Israeli group, a farmer who rescued attendees from the music festival alleged the five women’s organs were all slashed and made bizarre claims about sexual mutilation. In three previous interviews, the farmer never made such claims nor is there any forensic or photo evidence to back up his account.

Instead of offering verifiable evidence of war crimes, Zaka volunteers serve another purpose: They are an invaluable part of Israel’s propaganda machine. Israeli government officials, in pushing for a total war on Palestinians, portray Hamas as another Islamic State, the Iraq- and Syria-based terror group that shocked the world by making women sexual slaves and posting a spate of execution videos beginning around 2014.

In an interview with the Israeli news site Ynet, Eitan Schwartz, a volunteer consultant in the prime minister’s National Information Directorate, a public diplomacy office, explained how Zaka volunteers influenced news coverage.

“The testimonies of Zaka volunteers, as first responders on the ground, had a decisive impact in exposing the atrocities in the South to the foreign journalists covering the war,” Schwartz said. “The entire state of Israel was engaged in framing the narrative that Hamas is equal to ISIS and in deepening the legitimacy of the state to act with great force.”

“The entire state of Israel was engaged in framing the narrative that Hamas is equal to ISIS.”

“The first-hand testimonies of the organization’s amazing men of grace, who were exposed to the most difficult sights, had a tremendous impact on the reporters,” he went on. “These testimonies of Zaka people caused a horror and revealed to the reporters what kind of human-monsters we are talking about.”

In the same Ynet article, Nitzan Chen, director of the government press office, said, “It’s hard for me to imagine Israeli hasbara advocacy vis-a-vis the foreign press without the amazing, effective activity of Zaka people.” (Hasbara is usually translated as explanation or diplomacy, but in practice it’s sophisticated information warfare to mold public opinion to serve Israel’s strategic ends.)

Western media lapped up Zaka stories. An Israeli government video of Landau telling his tortured family story is emblazoned with “HAMAS = ISIS.”

The political response after October 7 played out like a coordinated campaign. Israeli Prime Minister Benjamin Netanyahu led the way, proclaiming “Hamas is ISIS” on October 9. Netanyahu’s rival and ruling partner Benny Gantz rallied behind the slogan, as did Defense Minister Yoav Gallant and other Israeli officials. Within days, top American officials lined up too. Secretary of State Antony Blinken and Pentagon chief Lloyd Austin both echoed the sentiment. Even President Joe Biden said, “The brutality of Hamas — this bloodthirstiness — brings to mind the worst rampages of ISIS.”

Fundraising on the Scene

Israeli news outlets — in particular Haaretz’s investigation into Zaka — have called into question credulous media reports repeating Israeli claims that religious concerns and chaos prevented gathering of forensic evidence in the aftermath of the attack.

After Zaka personnel and soldiers from the IDF’s Military Rabbinate were deployed to recover remains, much of the collection was bungled, according to Haaretz. When soldiers trained in recovery were finally let in the second week after the attack, they were alarmed by Zaka’s actions.

An ultra-Orthodox organization made up of male volunteers, the precursor to Zaka, was founded by Yehuda Meshi-Zahav in 1989, formally becoming Zaka in 1995. The group relies on donations and government tenders for its budget, and after October 7 it made the most of both, according to Haaretz. The Israeli newspaper published a photo of Zaka members carrying out fundraising activities near a dead body; sources from other rescue groups observed Zaka volunteers make fundraising calls and videos with corpses in the background. The second week after the attacks, the Defense Ministry began paying Zaka for its work on the ground.

All available evidence suggests Zaka needed a cash infusion. The group was nearly insolvent on October 7. According to a 2022 Haaretz investigation, Zaka netted millions of dollars in public funds over the last five years by claiming more than three times the number of volunteers than it had, a timespan that includes the tenure of the current CEO, Duby Weissenstern, who was featured in the New York Times profile. Even as Zaka was under threat of bankruptcy in 2021, according to the Times of Israel, it used “shadow organizations” to divert millions of dollars to Meshi-Zahav and his family, allegedly spending it on groceries, plane tickets, luxury hotels, “and a multi-million dollar villa.” Zaka’s schemes, reported the Israeli news site NRG, included hitting up donors for money to buy the same motorcycle and changing a plaque to reflect the new donor’s name.

All available evidence suggests Zaka needed a cash infusion. The group was nearly insolvent on October 7.

Under Meshi-Zahav, the organization was beset by financial and abuse scandals. Despite knowing of “at least 20 cases” where Meshi-Zahav allegedly sexually assaulted minors, police failed to investigate him and closed the case without charging him in 2014. More than a dozen people came forward in 2021 claiming Meshi-Zahav raped, assaulted, and threatened them. “He allegedly exploited his status, power, money and even the organization he heads [Zaka] to assault teenagers and … boys and girls” as young as 5 years old, Haaretz reported. The abuse was a family affair: One brother was imprisoned for raping a female relative and a second fled abroad after being investigated, along with Yehuda, for lavishing gifts on seven teenaged girls in distress and then sexually abusing them, sometimes in Zaka vehicles.

One teenaged victim said Meshi-Zahav effectively turned him into a “prostitute” and rewarded the teen with “a Zaka beeper” and a coveted certificate of volunteer work. A young woman alleged that after being raped by Meshi-Zahav, he threatened: “If you say anything to anyone, a Zaka van will run you over.” Police suspected that top Zaka officials and figures in the ultra-Orthodox community knew of the abuse but helped silence the criticisms. Meshi-Zahav attempted suicide shortly after the abuse allegations were reported and died a year later.

No mention of this history made it into the Times profile, or that of any other U.S. media outlet that has featured Zaka volunteers. Meanwhile, the positive reports have been a boon to Zaka’s image and bankroll.

Zaka fundraises on Facebook and buys Google ads for donations. Days after October 7, with specialized fundraising efforts popping up, money began flowing to different Zaka outfits. The group was showered with some of the $242 million disbursed by the Jewish Federation of North America. It shared in a $15 million donation from chip-making giant Nvidia. Billionaire Roman Abramovich pledged $2.2 million to Zaka. At a November 19 “Unity Concert for Israel” in Manhattan, with Yossi Landau on stage, a sign displayed $1,000,430 raised for Zaka. The Zakaworld website has a campaign that has topped $3.5 million, and apparently a separate post-October 7 fundraiser totaled nearly $2.1 million. Haaretz calculated that Zaka has raked in at least $13.7 million since the attacks.

Zaka volunteers seemed less intent on bagging bodies than grabbing money. According to Haaretz, Zaka failed to document remains, put parts from different bodies in the same bag, and did not collect all the remains in homes and the field. Zaka volunteers apparently did find time to rewrap already bagged remains in material that “prominently displayed the Zaka logo.”

“Not Pathology Experts”

The New York Times’s Zaka profile came after the paper’s controversial December 28 article titled “Screams Without Words” about allegations of sexual assault during the October 7 attack. The report was widely criticized for weak sourcing and citing cases that lacked physical evidence. The Times, The Intercept reported in January, pulled a related episode of its podcast “The Daily” over issues with the article, stoking internal worries it could be another “‘Caliphate’-level journalistic debacle.”

In the “Screams Without Words” story, the Times quoted two Zaka figures, one being Landau. “I did not take pictures because we are not allowed to take pictures,” Landau said. “In retrospect, I regret it.”

The Times beatific portrait of Zaka from January 15 seems to take an approach of blind trust in Zaka statements, suggesting that perhaps Landau did not say children were beheaded; that he “worries about getting details right”; that he diligently gathers human remains; that Zaka isn’t trained in forensics; and, finally, that women were subjected to sexual violence.

Yet these are Landau’s assertions, as is his claim that Zaka volunteers can’t take pictures of the dead. Haaretz reported that Zaka “released sensitive and graphic photos” from massacre sites. There is news footage, showing remains being carried on stretchers, labeled “Videos taken onsite by Zaka volunteers.” And Greiniman, the Zaka deputy commander, has bragged at least three times of “all the pictures and all the evidence, we have everything to prove it” — but nothing has ever been publicly produced.

Zaka always seemed ill-suited for the task of forensics. In the 1980s, Meshi-Zahav led an extremist ultra-Orthodox movement called Keshet, which protested archaeological digs and autopsies as religious desecration. Keshet members reportedly terrorized doctors and pathologists by planting fake explosives at their homes and sending them bullets with a note “this time it’s only in the mail.”

The group has also operated a legal department “for decades” whose purpose was to block police and pathologists from conducting medical examinations on dead bodies, which has hampered criminal investigations. No Western media outlet has asked why an organization hostile to forensic pathology was allowed to bungle the most significant forensic evidence in Israel’s history.

Zaka acknowledges the shortcomings of testimony from its own members. Haaretz debunked Landau’s tale of the pregnant woman’s corpse in Kibbutz Be’eri whose fetus was cut out by Hamas attackers. There is no independent corroboration of Landau’s claim, Kibbutz Bee’ri denied that the incident occurred there, police said they have no record of the case, and a “pathology source” at the main morgue did not know of the case.

In a statement to Haaretz on the lack of supporting evidence for its volunteers’ accounts, Zaka said: “The volunteers are not pathology experts and do not have the professional tools to identify a murdered person and his age, or declare how he was murdered, except for eyewitness testimony.”

Tali Shapiro contributed research to this story.

The post American Media Keep Citing Zaka — Though Its October 7 Atrocity Stories Are Discredited in Israel appeared first on The Intercept.

Cory Doctorow’s latest book is “The Internet Con: How to Seize the Means of Computation.”

The techlash has finally reached the courts. Amazon’s in court. Google’s in court. Apple’s under EU investigation. The French authorities just kicked down Nvidia’s doors and went through their files looking for evidence of crimes against competition. People are pissed at tech: about moderation, about monopolization, about price gouging, about labor abuses, and — everywhere and always — about privacy.

From experience, I can tell you that Silicon Valley techies are pretty sanguine about commercial surveillance: “Why should I care if Google wants to show me better ads?” But they are much less cool about government spying: “The NSA? Those are the losers who weren’t smart enough to get an interview at Google.”

And likewise from experience, I can tell you that government employees and contractors are pretty cool with state surveillance: “Why would I worry about the NSA spying on me? I already gave the Office of Personnel Management a comprehensive dossier of all possible kompromat in my past when I got my security clearance.” But they are far less cool with commercial surveillance: “Google? Those creeps would sell their mothers for a nickel. To the Chinese.”

What are they both missing? That American surveillance is a public-private partnership: a symbiosis between a concentrated tech sector that has the means, motive, and opportunity to spy on every person in the world and a state that loves surveillance as much as it hates checks and balances.

Big Tech, cops, and surveillance agencies were made for one another.

The Privacy Deficit

America has a privacy law deficit. While U.S. trading rivals like the EU and even China have enacted muscular privacy laws in response to digital commercial surveillance, the U.S. has slept through a quarter-century of increasing corporate spying without any federal legislative action.

It’s really something. America has stronger laws protecting you from video store clerks who gossip about your porn rentals than we do protecting you from digital spies who nonconsensually follow you into an abortion clinic and then sell the data.

In place of democratically accountable privacy laws, we have the imperial fiat of giant tech companies. Apple unilaterally decided that in-app surveillance should be limited to instances in which users explicitly opted in. Unsurprisingly, more than 96 percent of iOS users did not opt into surveillance (presumably the remaining 4 percent were either confused, or Facebook employees, or both).

When Apple finally allowed its users to block Facebook surveillance, they cut off a torrent of valuable data that Facebook had nonconsensually acquired from Apple device owners, without those owners’ permission. But — crucially — it was Apple that decided when consent was and wasn’t needed to spy on it customers. After 96 percent of iOS device owners opted out of Facebook spying, Apple continued to spy on those users, in precisely the same way that Facebook had, without telling them, and when they were caught doing it, they lied about it.

Which raises a question: Why don’t Apple customers simply block Apple’s surveillance? Why don’t they install software that prevents their devices from ratting them out to Apple? Because that would be illegal. Very, very illegal.

One in four web users has installed an ad blocker (which also blocks commercial surveillance). It’s the “biggest boycott in world history.” The reason you can modify your browser to ignore demands from servers to fetch ads — and reveal facts about you in the process — is that the web is an “open platform.” All the major browsers have robust interfaces for aftermarket blockers to plug into, and they’re also all open source, meaning that if a browser vendor restricts those interfaces to make it harder to block ads, other companies can “fork the code” to bypass those restrictions.

By contrast, apps are encrypted, which triggers a quarter-century-old law: the Digital Millennium Copyright Act of 1998, whose Section 1201 makes it a felony to provide someone with a tool to bypass an “access control” for a copyrighted work. By encrypting apps and locking the keys away from the device owner, Apple can make it a crime for you to reconfigure your own phone to protect your privacy, with penalties of a five-year prison sentence and a $500,000 fine — for a first offense.

The Rise of Big Tech

An app is best understood as “a webpage wrapped in just enough IP to make it a crime to install an ad blocker” (or anything else the app’s shareholders disapprove of).

DMCA 1201 is only one of a slew of laws that restrict the ability of technology users to modify the tools they own and use to favor their interests over manufacturers’: laws governing cybersecurity, trademarks, patents, contracts, and other legal constructs can be woven together to block the normal activities that the tech giants themselves once pursued.

Yes, there was a time when tech companies waged guerrilla warfare upon one another: reverse-engineering, scraping, and hacking each others’ products so that disgruntled users could switch from one service to another without incurring steep switching costs. For example, Facebook offered departing MySpace users a “bot” that would impersonate them to MySpace, scrape their inboxes, and import the messages to Facebook so users could maintain contact with friends they’d left behind on the older platform.

That all changed as tech consolidated, shrinking the internet to what software developer Tom Eastman calls “five giant websites, filled with screenshots of text from the other four.” This consolidation was not unique to tech. The 40-year drawdown of antitrust has led to mass consolidation across nearly every sector of the global economy, from bottle caps to banking. Tech companies merged, gobbled up hundreds of small startups, and burned billions of investor dollars offering products and services below cost, making it impossible for anyone else to get a foothold.

Tech was the first industry born in the post-antitrust age. The Apple ][+ hit shelves the same year Ronald Reagan hit the campaign trail. When tech hit its first inter-industry squabble, jousting with the much more mature and concentrated entertainment industry during the Napster wars of the early 2000s, it was trounced, losing every court, regulatory, and legislative fight.

By all rights, tech should have won those fights. After all, the tech sector in the go-go early internet years was massive, an order of magnitude larger than the entertainment companies challenging them in the halls of power. But Big Content was well-established, having boiled itself down to seven or so companies (depending on how you count), while tech was still a rabble of hundreds of small and medium-sized companies that couldn’t agree on its legislative priorities. Tech couldn’t even agree on the catering for a meeting where these priorities might be debated. Concentrated sectors find it comparatively easy to come to agreements, including agreements about what to tell Congress and federal judges. And since those concentrated sectors also find it easy to agree on whose turf belongs to whom, they are able to avoid the “wasteful competition” that erodes their profit margins, leaving them with vast war chests with which to pursue their legislative agenda.

As tech consolidated, it began to feel its oats. Narrow interpretations of existing laws were broadened. New, absurd gambits were invented and then accepted by authorities with straight faces.

Just as important as the new laws that tech got for itself were the laws they kept at bay. Labor laws were treated as nonexistent, provided that your boss was an app. Consumer protection laws were likewise jettisoned.

And, of course, the U.S. never passed a federal privacy law, and the EU struggled to enforce its privacy law.

Cops and Spies

Concentrated sectors of large, highly profitable firms inevitably seek to fuse their power with that of the state, securing from the government forbearance for their own actions and prohibitions on the activities they disfavor. When it comes to surveillance, the tech sector has powerful allies in government: cops and spies.

It goes without saying that cops and spies love commercial surveillance. The very first Snowden revelation concerned a public-private surveillance partnership called Prism, in which the NSA plundered large internet companies’ data with their knowledge and cooperation. The subsequent revelation about the “Upstream” program revealed that the NSA was also plundering tech giants’ data without their knowledge, and using Prism as a “plausible deniability” fig leaf so that the tech firms didn’t get suspicious when the NSA acted on its stolen intelligence.

No government agency could ever hope to match the efficiency and scale of commercial surveillance. The NSA couldn’t order us to carry pocket location beacons at all times — hell, the Centers for Disease Control and Prevention couldn’t even get us to run an exposure notification app in the early days of the Covid pandemic. No government agency could order us to put all our conversations in writing to be captured, stored, and mined. And not even the U.S. government could afford to run the data centers and software development to store and make sense of it all.

Meanwhile, the private sector relies on cops and spies to go to bat for them, lobbying against new privacy laws and for lax enforcement of existing ones. Think of Amazon’s Ring cameras, which have blanketed entire neighborhoods in CCTV surveillance, which Ring shares with law enforcement agencies, sometimes without the consent or knowledge of the cameras’ owners. Ring marketing recruits cops as street teams, showering them with freebies to distribute to local homeowners.

And when local activists and town councils ponder limitations on this kind of commercial surveillance, the cops go to bat for Ring, insisting that every citizen should have the inalienable right to contribute to an off-the-books video surveillance grid that the cops can access at will.

Google, for its part, has managed to play both sides of the culture war with its location surveillance, thanks to the “reverse warrants” that cops have used to identify all the participants at both Black Lives Matter protests and the January 6 coup.

Distinguishing between state and private surveillance is a fool’s errand. Cops and spies need the surveillance industry, and the surveillance industry needs cops and spies. Since the days of the East India Company, monopolists have understood the importance of recruiting powerful state actors to go to bat for commercial interests.

AT&T — the central node in the Snowden revelations — has been playing this game for a century, foiling regulators attempts to break up its monopoly for 69 years before the Department of Justice finally eked out a win in 1982 (whereupon antitrust was promptly neutered, allowing the “Baby Bells” to merge into new monopolies like Verizon).

In the 1950s, AT&T came within a whisker of being broken up, but the Pentagon stepped up to defend Ma Bell, telling the Justice Department that America would lose the Korean War if they didn’t have an intact AT&T to supply and operate their high-tech backend. America lost the Korean War, but AT&T won: It got a 30-year reprieve.

Stumping for his eponymous antitrust law in 1890, Sen. John Sherman thundered, “If we will not endure a King as a political power we should not endure a King over the production, transportation, and sale of the necessaries of life. If we would not submit to an emperor we should not submit to an autocrat of trade.”

Today, as our snoopy tech firms hide in the skirts of our spies and law enforcement agencies, we have to get beyond the idea that this is surveillance capitalism. Truly, it’s more akin to surveillance mercantilism: a fusion of state and commercial power.

The post Why Big Tech, Cops, and Spies Were Made for One Another appeared first on The Intercept.

“CoreCivic is one of the very few companies in the United States that has proactively embraced the process,” Hininger gloated.

The private prison corporation’s stock price and access to bond markets had been battered by pressure over its role in profiting from immigrant detention and for providing financial support to Donald Trump’s presidency. The company is currently facing a class-action lawsuit brought by immigration detainees claiming that they were forced to work with little or no pay. The racial equity audit was a conscious effort by CoreCivic not only to mend its poor public image, but also to harness public interest in racial justice to bring the company back into the good graces of Wall Street investors.

The contents of CoreCivic’s audit pointed to mostly superficial contributions to diversity and equity. The report, conducted by Moore & Van Allen, a North Carolina-based law firm, offered some room for improvement but largely applauded the private prison giant for its “genuine” commitment to diversity principles, including by raising cultural awareness with a mural of Martin Luther King Jr. at one of its Immigration and Customs Enforcement detention centers in Arizona. The report also praised CoreCivic for its philanthropy and business practices that have “benefitted communities of color.”

In an accompanying report on the company’s diversity, equity, and inclusion — known as DEI — CoreCivic touted its ranks of nonwhite prison guards, diversity on its board of directors, and diverse ranks of wardens, as well as its partnership with a Black-led, pro-business trade group.

Those supposed strides elicited eye rolls among its critics. “They put children’s murals on the wall while incarcerating infants. That doesn’t mean they have positive impacts for children,” said Bob Libal, a longtime watchdog of the private prison industry, referencing the company’s Taylor, Texas-based ICE detention center.

“This is hollow at best, and probably a deeply cynical attempt to whitewash a company that has a horrible reputation, a horrible track record of abuse and neglect of people who’ve been sentenced in their facilities,” added Libal. The company has faced multiple allegations of severe understaffing and safety issues, as well as unsanitary conditions in many facilities.

“The reality is, CoreCivic’s entire existence is offensive to Black and brown communities. They’re trying to create some version, right, some image that they aren’t one thousand percent harmful,” said Bianca Tylek, the founder of Worth Rises, an advocacy group that focuses on the privatization of the criminal justice system.

“The audit tells us nothing,” said Tylek. “The private prison business model is the problem. Everything they do is the problem, and to be honest, sometimes we’re at odds with other advocates because these racial equity audits are absolutely ridiculous and not an effective advocacy tool.”

Asked for comment about activist concerns, CoreCivic reiterated its support for the “principles of diversity, equity and inclusion.” The company, said spokesperson Ryan Gustin, “didn’t hesitate to participate in the recent racial equity audit.”

“They put children’s murals on the wall while incarcerating infants. That doesn’t mean they have positive impacts for children.”

But Tylek, Libal, and members of the activist community are not the intended audience for the report; the racial equity audit and similar measures are part of an opaque and virtually unregulated rubric that sets the flow of massive piles of investor dollars. CoreCivic’s gestures are meant to shape its standing in “environmental, social, and governance,” or ESG, funds, a catchall term for a system that allows investors to put their money into companies that score as socially responsible by various metrics.

Compliance can be lucrative. For instance, among the many ESG ratings agencies, a company with nonwhite or female board members or a decision to simply conduct a racial equity audit or DEI report can automatically lead to a higher score, and corporations with high ESG rankings find placement in special exchange-traded funds, or ETFs, that are marketed as socially responsible, opening the door for investor cash.

Over $35 trillion in global assets are invested in funds that claim to vet companies using ESG principles, making the label one of the hottest trends in finance. Following the racial justice protests of 2020, a coalition of institutional funds, which now includes the California State Teachers’ Retirement System, a pension fund with over $250 billion in assets, launched proxy campaigns to pressure publicly traded companies to undergo racial equity audits and to prioritize racial diversity issues.

Proponents of the approach claim that the market sprouting up around ESG principles provides a window, guiding investors into safer, less controversial companies while creating a market incentive for good corporate behavior, whether on racial justice, the climate crisis, or any number of issues.

Larry Fink, the chief executive of BlackRock Inc. and one of the most powerful ESG-focused asset managers in the world, has described the move toward socially responsible investing as a “tectonic shift” that stands to reshape capitalism as we know it. In his letter to investors this year, Fink made clear that racially diverse boards and racial diversity would be a focus of his company.

BlackRock is among the many corporations that sponsor television advertisements — the latest featuring NBA star Jalen Duren — touting their socially responsible or sustainable investment funds, luring ordinary retail investors.

But a growing chorus of critics have questioned the lofty promises of ESG investing. The high-minded rhetoric of the movement, they argue, serves to enrich a small set of ESG-focused consultants and fund managers while misleading the public and investor community and providing little to no benefit to society. They charge that the investing trend is no more than reputation laundering and, potentially, fraud on an industrial scale.

“People who are buying these funds almost always believe that they’re doing something to make the world a better place, and in reality, they’re just moving shares around in publicly traded companies,” said Tariq Fancy, the former chief investment officer for social responsibility investing at BlackRock, who has emerged in recent years as a critic of ESG.

“People who are buying these funds almost always believe that they’re doing something to make the world a better place, and in reality, they’re just moving shares around in publicly traded companies.”

“It’s actually dangerous because they imply real-world impact, creating a societal placebo,” continued Fancy. “It actually lowers the case for government regulation. If you think you can do something quick and easy like ESG, then it follows to say, ‘We don’t need a carbon tax.’”

Fancy also finds the righteous rhetoric of his former employer hypocritical. BlackRock will make a fortune in fees promoting an ESG model entirely based on voluntary self-reporting requirements and opaque scores, said Fancy, while using its power as a shareholder to block proposals that call on companies to disclose political spending — the very political spending that corporations use to prevent any meaningful laws and government regulations on social welfare spending or pollution.

“It’s like they’re giving us talking points on good sportsmanship, meanwhile, they’re saying it’s all right for teams to secretly pay off the referees.”

In an email, BlackRock spokesperson Matt Kobussen noted that the company provides multiple ESG index products, some of which include CoreCivic and others of which do not. The ETF that includes private prisons is based on ESG criteria provided by the index provider S&P, while another, the MSCI Small Cap ESG Aware, uses an index provided by MSCI and “does not have exposure to CoreCivic or GEO Group,” another main prison company.

Despite the rhetoric, the portfolio managers preaching the gospel of ESG are in fact legally prohibited from doing anything that compromises corporate profits. The types of changes they promote are superficial at best, critics charge.

What’s more, regulators have taken notice that fund managers have marketed ESG investing with little due diligence in regard to how companies are changing any actual business practices or whether companies included in the funds meet the stated criteria. In May, around 50 German police officers raided the Frankfurt offices of DWS Group, the asset manager subsidiary of Deutsche Bank. The investigation stems from allegations by a former DWS Group executive that the company had made misleading statements about how ESG assets were allocated.

And this year, the Bank of New York Mellon Corp.’s asset manager paid $1.5 million to settle claims by the Securities and Exchange Commission over “misstatements and omissions about ESG considerations.” The bank, as part of the settlement, did not admit any guilt.

Earlier this month, word leaked that the SEC is currently investigating Goldman Sachs Group Inc. over similar claims about its ESG mutual fund business. In June 2020, Goldman Sachs renamed its blue-chip fund as the U.S. Equity ESG Fund, while maintaining the same top holdings.

Last month, the SEC began collecting comments for new regulations aimed at boosting transparency and accountability around ESG funds.

Measures of Goodness

At the core of the criticisms is the fact that there is no set definition for how ESG rankings are devised. Competing ratings agencies and financial analysts offer a tangled web of various scores, with no consistency from firm to firm.

Charles Schwab Corp.’s asset management arm, for example, last year launched Schwab Ariel ESG ETF, an ESG fund that excludes tobacco products, the extraction of fossil fuels, weapons manufacturers, and operators of private prisons such as CoreCivic.

Other asset managers, however, sell ESG funds that do include private prisons. BlackRock’s iShares ESG Screened S&P Small-Cap ETF, one of its social responsibility funds, includes CoreCivic. Investors purchasing shares in DWS Group’s Xtrackers S&P SmallCap 600 ESG are also buying a slice of CoreCivic.

State Street Corp., an asset manager that is one of the loudest and most prominent proponents of ESG, markets a social responsibility fund, SPDR S&P SmallCap 600 ESG ETF, that owns shares in CoreCivic as well as the second-largest private prison company in the U.S., GEO Group Inc.

State Street spokesperson Deborah Heindel said in an email that ESG can be very broad or specific depending on who’s defining the term. “Case in point, a Google search pulls several million results from countless sources,” she said.

Many ESG funds used to exclude certain arms manufacturers, arguing that the global sale of bombs and missiles did not constitute a social good — now there’s a push to reward them.

Ratings agencies can change ESG formulas on a dime, with little public notice. Fund managers are free to choose any ratings agency with any formula, often with most sources of information completely self-reported by corporations.

CoreCivic, in its own ESG report, touts a 2021 award issued by Newsweek/Statista claiming that it is one of America’s most responsible companies. The Newsweek/Statista ESG rankings give CoreCivic a high social rating in part based on the prison company’s commitment to “good causes” and the number of women and racial minorities on its board of directors.

The criteria for what constitutes a socially responsible investment can change from day to day. In March, analysts from Citigroup Inc. suggested that companies that manufacture weapons used for the war in Ukraine to thwart the Russian invasion could count toward a better ESG score. “Defending the values of liberal democracies and creating a deterrent, which preserves peace and global stability,” they wrote.

Before this year, many ESG funds promoted the exclusion of certain arms manufacturers, arguing that the global sale of bombs and missiles did not constitute a social good — now there’s a push to reward arms makers. If a shift in public opinion can reshape the entire model, that leaves many to wonder how any fund can claim fixed principles when ideas around social responsibility are inherently subjective.

“It’s a scam, that’s all it is, a scam,” said Aswath Damodaran, a professor of finance at New York University’s Stern School of Business, of ESG. “How can you have a measure of goodness? Or let me put it another way: Name me one social factor where we have consensus in society. How the heck are we going to come up with one score?”

The CoreCivic board of directors, its ESG report proudly notes, is 36 percent “gender or racially diverse,” a figure that the company notes won recognition from a women’s advocacy group. The private prison company’s board includes Donna Alvarado, a former Reagan administration official, and Thurgood Marshall Jr., the son of the former Supreme Court justice.

“For-profit incarceration is the antithesis of social responsibility,” said Libal. “They’ve made profits on the back of incarceration at record numbers while contributing millions of dollars in campaign contributions to ensure their interests are met.”

“If your board is diverse, it doesn’t matter what you’re selling, right?” he added. “If you have enough women on the board of Blackwater, that doesn’t make mercenary companies a positive influence on the world.”

“Greenwashing Is a Feature, Not a Bug”

Fulfilling diversity goals is a highly visible way to offset lower scores in other areas. Defense contractors, fossil fuel companies, banks, and pharmaceutical giants that annually hike the prices of lifesaving drugs have all used diversity metrics to earn placement as socially responsible companies, eligible for placement in lucrative ESG funds. And according to a review by The Intercept, several of the corporations commonly included in ESGs have recently been under investigation or scrutiny, engaging in business practices that few would call socially responsible.

Eli Lilly and Co., the pharmaceutical company, is facing multiple regulatory and legal battles over its practice of hiking the price of insulin. The company raised the price of its Humalog line of insulin products by 1,219 percent since it launched. The high prevalence of diabetes among nonwhite Americans has placed the rising costs of insulin disproportionately on members of racial minority groups, a dynamic that some public health researchers argue amounts to a form of structural racism.

But the disparate impact of drug pricing dynamics are not measured by ESG scores. Instead, the Eli Lilly report notes that the company promotes diversity through a variety of measures, such as DEI training and employee resource groups that sponsor events such as the Lunar New Year Gala.

Those efforts are among the qualifications used to include Eli Lilly prominently in multiple ESG exchange-traded funds. Eli Lilly is the second-largest holding of a BlackRock fund marketed as focused on promoting companies that excel in the fields of diversity and inclusion.

Just Capital, a not-for-profit group that provides ESG rankings, scores Amazon as an industry leader and a three-time winner of its America’s Most Just Companies award. Despite an aggressive anti-union campaign against its warehouse workers in Alabama and New York that has garnered international condemnation and wide-ranging complaints about working conditions, the Seattle-based company has a mixed record in the category of labor practices. But the score is boosted by Amazon’s “diversity, equity, and inclusion” policies and the total number of jobs the company has created — two areas in which Just Capital ranks Amazon as the best company in America.

“I think it’s smoke and mirrors. From a social, from a labor perspective, it’s not a good company. That’s like rating the Triangle Shirtwaist Co. a model employer in New York,” said Seth Goldstein, an attorney for the Amazon Labor Union, which represents warehouse workers who won an upset victory to form the company’s first labor union.

Just Capital — whose board includes HuffPost founder Arianna Huffington and Marc Morial, the president of the National Urban League — partners with Goldman Sachs to promote a special ESG fund that utilizes the organization’s social responsibility analytics. The third-largest holding for the fund is Amazon.

In response to an inquiry from The Intercept, Just Capital said that Amazon was scored on a number of factors. “We find that, like many other companies, Amazon is both a leader and a laggard relative to its peers across all of the individual stakeholder categories that we measure, from communities to environment to workers,” wrote Martin Whittaker, chief executive of Just Capital, in a statement to The Intercept.

PepsiCo Inc. and Coca-Cola Co., for instance, routinely score well on ESG rankings through relatively low greenhouse gas emissions, while delivering a core product that is fueling a crisis of diabetes, obesity, and heart disease, noted Hans Taparia, an associate professor also at NYU’s Stern School of Business, in an article for the Stanford Social Innovation Review. Alphabet, Amazon, and Facebook are also among the largest holdings of ESG funds but engage in a variety of monopoly, surveillance advertising practices and provide a core product that has fueled mental health issues among users. They all tout DEI and diversity-related measures in the glossy ESG reports that are submitted to fund managers.

“If a company’s core business model does so much harm,” wrote Taparia, “the cover-up through ‘good behavior’ on other parameters shouldn’t be so easy.”

Exxon Mobil Corp., one of the largest oil and gas companies in the world, has been cited as a prime example of an ESG victory, after the company added board members viewed as more favorable to action on climate change last year in response to pressure from activist investors and ESG-minded asset managers.

But there is still little evidence that ExxonMobil has changed any core fossil fuel-related business practices. The oil giant has massively increased spending on green-related marketing, and the word “climate” now appears all over its corporate reports. The company has sold off some assets that will be developed by other companies.

Calls for decarbonization, once central in the ESG movement, can also be offset by racial metrics.

Damodaran and his NYU colleagues have chronicled many of the inconsistencies and the subjective nature of ESG rankings. As oil majors sell off carbon-intensive oil and gas assets in order to comply with ESG fund objectives, Damodaran noted, the same assets are being purchased by private equity firms that are far less accountable, a shift in hands that he argues nullifies any greenhouse gas benefit from the campaign.

“So basically, here’s what you accomplished,” said Damodaran. “You took the reserves out of a company where you had a semblance of prudent strategy in process and put it in the hands of the least scrupulous people on the face of the Earth. And if you declared this to be a victory, I’d hate to see what your defeat looks like.”

The calls for decarbonization, once central in the ESG movement, can also be offset by racial metrics. ESG rankings maintained by the S&P 500 now include ExxonMobil but exclude electric car marker Tesla Inc. One of the reasons? Racial discrimination charges lodged against Tesla, a dynamic bitterly highlighted by Tesla chief executive Elon Musk on Twitter. Many of the charges, including a class-action lawsuit, are still making their way through court.

Researchers have also found that companies selectively omit certain suppliers and business practices in order to artificially report low carbon emissions and thereby gain higher ESG scores.

One of the most revealing reports came from Bloomberg News, which found that one of the largest ESG ranking companies, MSCI Inc., which BlackRock uses to market “sustainable” stocks and bonds, provided year-to-year upgraded rankings to companies that increased levels of carbon emissions.

In the case of McDonald’s Corp., MSCI provided an upgraded ESG ranking despite the fact that the company produced an increase of 7 percent in global emissions over four years. The ratings agency made the determination because the climate crisis did not pose a special risk or “opportunity” for the company.

The MSCI rankings for climate change score corporations over the possibility of climate regulations and whether restrictions on carbon emissions could harm future profits. In other words, when anti-regulation Republicans take office, the environmental scores of fossil fuel companies improve.

When MSCI gave positive “water stress” scores, the rating had no bearing on pollution or discharges into local water systems. Rather, the scores were awarded based on whether chemical companies had enough water to sustain their factories — an inversion of the very idea of environmentalism that reporters labeled as blatant doublespeak.

“This is exactly what gamification looks like: You create the rules of the game, I’ll find a way to play it,” said Damodaran. “A lot of ESG advocates say ESG would work except for the greenwashing. And my response is, greenwashing is a feature, not a bug. It’s exactly what you get when you create something like ESG.”

High-Minded Rhetoric, Even Higher Fees

Three weeks after the George Floyd protests began in 2020, Marvin Owens, then the senior director for economic programs at the NAACP, appeared on CNBC to tout an ESG-style fund on diversity branded with the NAACP.

“The problem that has existed for ESG is that the ‘S’ has been very difficult to define, and that’s why an organization like the NAACP, with its 111-year history of being advocates for African Americans in this country, is the right kind of organization to partner on this work,” said Owens.

The ETF, Owens told CNBC, is “the next evolution in our corporate advocacy work around closing the wealth gap for African Americans in this country.” The Minority Empowerment ETF website features the logo of the NAACP and iconic images from civil rights history.

Owens noted that the fund used a variety of diversity metrics, reflecting the NAACP’s scorecards on corporations, to invest in companies that make “commitments, public commitments, to standing against racial discrimination.”

Two years later, the NAACP ETF’s largest holdings include Amazon, Tesla, Meta Platforms Inc., Johnson & Johnson, Microsoft Corp., JPMorgan Chase & Co., and Nvidia Corp. The holdings are fairly similar to many large- and mid-cap ETFs, such as the Vanguard Total Stock Market Index Fund, or VTI, which has the same seven companies among its largest holdings.

The difference, however, is the fee structure. The Minority Empowerment ETF has a fee of 0.49 percent compared with the VTI fee of 0.03 percent, making the NAACP ETF 16 times more expensive for investors. Impact Shares, the plan sponsor that operates the Minority Empowerment ETF, in addition to other thematic ETFs around sustainability and women’s empowerment, says that the excess profits after expense fees are donated back to the NAACP, though it has not made enough fees to transfer any funds to the NAACP yet.

Impact Shares has lobbied the federal government to allow retirement plans to be invested with ESG funds. The investment firm wrote to regulators “on behalf of Impact Shares and our advocacy partners including the NAACP.”

Asked how the ETF fund has impacted racial justice issues, Ethan Powell, the chief executive of Impact Shares, gave Amazon credit for permitting its workers to vote on a union. Amazon, he claimed, engaged in a “significant shift in company policy” by allowing workers at its Alabama warehouse “the opportunity to vote on unionization” this year.

Labor officials, however, contend that Amazon spent millions of dollars on efforts to derail the union vote and engaged in a campaign of intimidation and surveillance against workers suspected of sympathizing with the union — and that the unionization at Amazon was in spite of the company’s efforts, not because of them.

LGBTQ Loyalty Holdings Inc., a company led in part by former Massachusetts Rep. Barney Frank, launched the LGBTQ + ESG100 ETF, which invested in large-cap public companies that “demonstrated a commitment to LGBTQ diversity and inclusion.” The fund, which wound down earlier this year, had an even higher fee structure of 0.75 percent.

Despite the fact that the ESGs largely mirror traditional ETFs, a higher fee structure, typically benefiting investment managers, is common across the board. An analysis from the Wall Street Journal found that ESG funds have 43 percent higher fees than widely popular standard index funds.

Fancy, the BlackRock social responsibility CIO turned critic, has argued repeatedly that many ESG funds are virtually identical to existing mutual funds, rebranded as “green” with higher fees. There are almost no discernible differences other than marketing, he has said in a series of confessional essays about the nature of ESG.

The notion of investment funds that promote social change without any of the guilt of profiting from capitalism can be alluring. Betterment, a millennial-focused “robo-advisor” that markets wealth-building strategies, has sponsored Facebook ads promising racial justice-minded investing. Betterment steers consumers to products such as the NAACP ETF without warning of the high fees or an explanation that many of the holdings are simply traditional large companies that investors would find in ordinary funds.

Asset managers have even worked with public relations firms to co-opt public opinion around social justice movements into inflows of cash to ESG funds. In 2017, at the height of the #MeToo movement, State Street worked with advertising agency McCann New York to create the “Fearless Girl” campaign, which featured a statue of a young woman, with her arms planted defiantly on her hips, that was placed in front of the bronze Charging Bull outside the New York Stock Exchange.

The corporate beneficiaries of the fund might come as a surprise to retail investors who thought they were supporting the political goals of #MeToo.

The wildly successful ad campaign, launched the day after International Women’s Day, was designed to advertise State Street’s women-focused SHE ETF, an ESG fund marketed as a vehicle to promote companies with gender diversity on corporate boards. But the corporate beneficiaries of the fund might come as a surprise to retail investors who thought they were supporting the political goals of #MeToo or feminism more broadly. The current SHE ETF holdings include weapons maker Northrop Grumman Corp., fracking giant Pioneer Natural Resources Co., and health insurer UnitedHealth Group Inc.

State Street and other fund managers have boasted about the growth of ESG funds as a cash cow. Last December, Gary Shedlin, the chief financial officer at BlackRock, appeared at a conference hosted by Goldman Sachs at the Conrad Hotel in New York to tout the growth of the firm’s ESG business. BlackRock ESG-related products, he said, had generated over 20 percent new fee growth. In January, BlackRock’s ESG funds reportedly surged to over $508 billion in managed assets, more than double the previous year.

It’s not just fund managers that are poised to gain from the influx of money into ESG. The trend has been a job creator for accountants, analysts, and other specialty consultants. MSCI, the largest data provider for ESG funds, disclosed that revenue from its ESG ratings business jumped to $166 million in 2021 from $90 million in 2019.

Both former attorneys general of the Obama administration are now serving as consultants to companies hoping to burnish their credentials as racially progressive. Eric Holder, now with the law firm Covington & Burling, was tapped by Citigroup to conduct its racial equity audit, to review its efforts to close the racial wealth gap. In April, Amazon announced that Loretta Lynch, a partner with Paul, Weiss, Rifkind, Wharton & Garrison, will work for the company to produce a similar report.

And Preet Bharara, the former U.S. attorney for the Southern District of New York, an Obama administration prosecutor turned vocal Trump critic, this month announced his move to become a partner at the law firm WilmerHale. According to reports, he will focus on advising companies on ESG. “Simple-minded criticism of this issue fails to appreciate its complexity and its emerging importance,” Bharara told the New York Times.

ESG investing has been an attractive proposition for investors who consider themselves to be civic-minded and want to use market logic to make change. But as The Intercept’s review shows, diversity audits and other superficial measures are simply being used to sell investors on the same old funds.

The implication is explicit. Moore & Van Allen, the firm that conducted the racial equity audit on behalf of CoreCivic, noted in an article this year that such audits serve multiple goals, including increased profits and a competitive advantage in a market. The public relations benefits are also clear, the law firm argued. The racial equity audits can lead to a “positive impact on reputation for companies,” partners at the firm wrote.

Placing selective pressure on a few companies won’t work, Damodaran argued, because businesses that voluntarily retreat from one area will be swiftly replaced by less accountable players, such as private equity or hedge funds. If advocates seek better business practices, he said, they should change the law to force compliance instead.

“These are decisions we should be making as voters, as regulators pushing for change. Instead, we’ve passed on this responsibility to CEOs and fund managers.”

“These are decisions we should be making as voters, as regulators pushing for change,” said Damodaran. “Instead, we’ve passed on this responsibility to CEOs and fund managers to make these decisions for us.”

“The U.S. political sphere is putting optics over substance,” noted Fancy, the former BlackRock executive. “We could do some version of reparations, like a serious investment in Black communities and education and social welfare, but that’s going to cost a lot of money.” Instead, he said, high-profile Black Americans are elevated onto corporate boards to “create a marketing narrative” that helps a small number of elites without substantive change for the public.

One chief executive of a publicly traded company, who asked for anonymity while speaking with The Intercept, said he recently paid around $20,000 to social responsibility consultants in order to produce a special report to submit to ratings agencies. The ESG professionals created a document that dazzled with progress on a number of environmental and racial grounds. The self-reported data isn’t checked by anyone, he noted with a shrug.

The chief executive said that he appears white to most people, but he is technically a quarter nonwhite, making him, for the purposes of ESG, a “diverse” CEO — a dynamic he found absurd.

“It’s kind of like the one-drop rule. I’m diverse for the purpose of these rules, they really make no sense,” said the executive, who wondered how asset managers and investors can demand compliance on rules around racial identity when race is socially constructed, not a biological reality.

“We didn’t change any business practices. It’s a charade, yet no one questions this stuff,” he added. “It sounds good, but it doesn’t do anything.”

The post Private Prisons Are a Socially Responsible Investment, According to Bizarre Wall Street Measures appeared first on The Intercept.