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Data Sheet—Apple's Tim Cook Defends Remarks Praising China's Internet Policies

Apple CEO Tim Cook speaks at the Fortune Global Forum in Guangzhou, China. Photograph by Vivek Prakash/Fortune Photo credit: Vivek Prakash

Greetings again from Guangzhou, China, where security at the magisterial Shangri-la Hotel was intense Wednesday morning surrounding the visit of Vice-Premier Wang Yang, the country’s fourth-ranking government official.

It was a day of subtle messaging, hopefulness about the future, and a show of might by the roaring Chinese economy. Wang, a former governor of Guangdong province, of which Guangzhou is the capital, addressed the Fortune Global Forum and hit notes of trade openness similar to the speech President Xi Jinping gave at Davos in January. It’s an extraordinary and complicated message. On the one hand, China is closed to outsiders when it wants to be. On the other, and despite this, China truly is engaged in the global economy. China’s era of commercial and diplomatic isolation ended years ago.

China’s leading commercial ambassador, Alibaba Executive Chairman Jack Ma, ran through some of his greatest hits of inspirational slogans, including that work should be fun and that he wants to die on the beach, not in the office. A canny communicator capable of minding multiple audiences simultaneously, Ma praised the “stability” of the Chinese government, professed his respect for chief rival Tencent and its CEO, Pony Ma, and suggested that because Alibaba enables the commerce of other merchants it can’t be a monopoly.

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Pony Ma, whom I interviewed a few hours later, didn’t quite return Jack Ma’s praise. (The two aren’t related.) Jack Ma is famously eloquent in English and in Chinese, and Pony Ma is equally famous for his reserve. But Ma, speaking in Chinese through simultaneous translation, wowed the audience with his vision of the future, his explanation of how WeChat became the ubiquitous communication tool it is today in China, and how Tencent innovates. As for Alibaba, Pony Ma suggested his company’s competitor behaves like an all-powerful landlord that can raise the rent any time it wants.

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Tim Cook, speaking for the first time at a Fortune conference, gave a lively review of Apple’s business in China, his faith that iPhones are superior to up-and-coming smartphone competitors here, and reflected on the change he has seen in China since he started visiting regularly 25 years ago. Cook also gave a spirited defense of his decision to appear at a conference earlier in the week hosted by China’s chief censor, invoking Teddy Roosevelt’s preference for being “in the arena” over watching from the sidelines.

Early Wednesday morning, at the conclusion of Brainstorm Tech International, a conference Fortune hosted before the Global Forum began, I interviewed Neil Shen, head of Sequoia Capital China. Shen is a triple threat: a former entrepreneur (he founded travel company Ctrip), a Wall Street banker, and now an investor whose hits include JD.com, Alibaba, drone maker DJI, and e-commerce dynamo Meituan.

Shen thinks that for all the attention Westerners are paying to China, they still haven’t truly accepted that it’s not a copycat technology country anymore. Meituan is a perfect example: Once known as the “Groupon of China,” its innovations have made it a lasting success long after Groupon faded from view.

We’re just midway through a packed and fascinating week. Don’t forget to check out Fortune.com for full coverage of both conferences, including videos of the interviews.

NEWSWORTHY

Captured crook. The hacker behind the infamous botware network known as Andromeda appears to have been arrested in Belarus. Cyber security experts think the arrested man is Sergei Yaretz, better known as the hacker Ar3s, who controlled the network of 1 million malware-infected computers around the world.

Captured customers. Google again pulled its YouTube app off of several devices sold by Amazon, including the popular Fire TV Internet video platform. Google said it made the move because Amazon won’t sell some of its devices, like the Chromecast video streamer and Google Home. Meanwhile, Amazon and Apple began rolling out an Amazon Prime Video app for Apple TV users.

Quick departures. Amazon’s Audible division saw two high-level execs resign amid a company-wide investigation into workplace harassment. Chief Content Officer Andrew Gaies and Chief Revenue Officer Will Lopes are leaving the company abruptly, Bloomberg reported. Audible declined to comment.

We try harder. The Avis of ride summoning services, Lyft, said it raised another $500 million of fresh capital, in addition to pulling in $1 billion of private money in October. That should fuel more competition with controversial market leader Uber. It also gave the startup a private value of $11.5 billion.

No poo for you. The Unicode Consortium that runs the global emoji system announced several changes for a beta of its 2018 update. New emojis under consideration include a teddy bear, mango, and spool of thread. Gone from the latest beta, however, are several other proposed emojis, including a frowning pile of poo.

Surpassed. After years of rapid growth, the amount spent on online advertising overtook TV advertising this year for the first time, market tracker Magna said. Spending online hit $209 billion globally versus $178 billion paid out for television spots.

Still innovating for now. Qualcomm announced several new products, including an update of its flagship chipset for smartphones, called the Snapdragon 845, which will allow downloads at up to 1.2 gigabits per second. The besieged chipmaker also showed off the first Windows laptops running on its chips and a partnership with AMD for connected laptops running AMD chips.

FOOD FOR THOUGHT

Certain demographic groups are under-represented among the ranks of inventors. A new study from the Equal Opportunity Project overseen by Stanford economist Raj Chetty found that the underlying reason for some of the disparities relates to whether people grew up rich or poor (a PDF of the full study is available here). Alana Semuels summarizes the results for the Atlantic under the depressing headline: “America’s Lost Einsteins.” The bottom line is that even poor kids with amazing mathematical abilities face major hurdles in going into scientific fields as adults:

Chetty and his team look at who becomes inventors in the United States, a career path that can contribute to vast improvements in Americans’ standard of living. They find that children from families in the the top 1 percent of income distribution are 10 times as likely to have filed for a patent as those from below-median-income families, and that white children are three times as likely to have filed a patent as black children. This means, they say, that there could be millions of “lost Einsteins”—individuals who might have become inventors and changed the course of American life, had they grown up in different neighborhoods. “There are very large gaps in innovation by income, race, and gender,” Chetty told me. “These gaps don’t seem to be about differences in ability to innovate—they seem directly related to environment.”

IN CASE YOU MISSED IT

Luxury Brands Win a Crucial Victory in Battle Against Amazon Distribution By David Meyer

Why China’s ‘Copycat’ Image Is Beginning to Fade By Polina Marinova

Get the Latest Update on California’s Ventura County Fires From These Google Maps By John Patrick Pullen

Apple Is Now Selling an Unlocked iPhone X By Jonathan Vanian

How This Chinese Fintech Company Is Innovating by Leasing Cows By Lucinda Shen

Robot Developer Warns Artificial Intelligence Developments Could Lead to Catastrophe By Aaron Pressman

John McCain Lost Thousands of Twitter Followers This Week Over Tax Reform By Tom Huddleston Jr.

BEFORE YOU GO

Technology stocks have slumped since the Senate Republicans tax bill passed, but parsing the impact of the bill’s actual provisions isn’t so simple. Due to the haste with which the bill was written and approved, numerous mistakes and contradictions snuck into the text, tax experts say. “The more you read, the more you go, ‘Holy crap, what’s this?’” Greg Jenner, a former tax official in George W. Bush’s Treasury Department, told Politico.

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