But a recent study conducted by Kantar on behalf of the Family Online Safety Institute (FOSI) found that both parents and teens are not only aware of GAI but also mostly optimistic about its impact. The study included teens (13-17) and their parents completing an online survey with 1,000 participants in each of three countries: The U.S., Japan and Germany. I’ll focus mostly on the U.S. responses, which, for the most part, were similar to those from the two other countries.

Familiarity and use

When it comes to awareness, U.S. teens (69%) and parents (74%) are mostly familiar with GAI with 25% of parents saying they “know a lot,” compared with 22% of teens, which itself is different from most other tech issues where teens tend to be more aware than their parents. But what’s most surprising is that 45% of U.S. teens agreed that their parents know more than they do about GAI while only about a third (32%) of teens said that they know more. Parents concurred, with the same percentage saying their teen knows more compared with 43% saying “I know more than my teen.”

The report didn’t speculate why parents feel more clued-in than teens, but I’m guessing it has something to do with extensive news coverage of GAI and the fact that parents are more likely to consume mainstream news than are teens. Teens are more likely to get their news from digital sources, including social media.

Even though parents are more likely to say they are aware of GAI, U.S. teens are slightly more likely (67%) than parents (64%) to “have used or tried using genAI.”

Nearly three-quarters (73%) of U.S. parents and 63% of teens say they mostly use GAI for its analytical tools while 67% of parents and 61% of teens have used it for creative tasks. The report said that teens are more likely (74% vs. 59%) to use GAI “to be more efficient at tasks including proofreading and creating synopses of longer works.”

Only about a third (34%) of American parents feel that they “don’t have enough information and education about genAI,” compared with 47% in Germany and 73% in Japan.

Top concerns

Respondents were asked to rate their top concerns, and both parents and teens picked job loss as No. 1, followed by the spread of false information. Parents picked “loss of critical thinking skills” as No. 3, while teens were more likely to worry about “AI surpassing humans.” The teens picked “new forms of harassment” as their fourth concern, but that didn’t make it on the parents’ top 5 list. Both groups rated “growing dependency on genAI” as No. 5.

“Teens,” said the report “are acutely aware of the potential for genAI to be used for more sophisticated means of bullying, or to create new or intensified forms of harassment. From parents’ perspective, many express trepidation that their teens will lose opportunities to engage in deep analysis, original ideas and meaningful thinking.”

Parents were asked if they need more information to help them guide their teens, and 55% of U.S. parents said they wanted to know more about the potential risks vs. the benefits. Just under half (49%) picked benefits. Fortunately, these are not mutually exclusive. ConnectSafely is currently working on a parents guide to GAI which will focus on both risks and benefits.

Perceived vs. actual risks

It’s important to remember that a survey measures perceived risks, not necessarily actual ones. GAI is still very new, and we don’t yet know what the real risks are. It’s not yet clear, for example, whether GAI will result in a net loss or a net gain in jobs, though it’s likely to have a negative impact on some job categories. We know that GAI can result in misinformation, but there are efforts in place to use it to help combat that very scourge. The same can be said for bullying and harassment. Time will tell, and we might be surprised to find that some of our fears don’t turn into major problems, while other problems may emerge that we are not thinking about right now. I know this from personal experience as the author of the1994 booklet, “Child Safety on the Information Highway,” which was written before there was a lot of research and well before some problems emerged that I wasn’t able to anticipate nearly 30 years ago.

Generally positive perceptions of GAI

Despite concerns and plenty of negative press, parents do feel positive about their teens’ use of GAI. Two-thirds (66%) of U.S. parents said they felt positive, compared with 70% in Germany and 59% in Japan.

About two-third of parents (66%) and teens (65%) agreed that “Using genAI tools will be a vital skill to have to remain competitive in school or career. About 60% of both groups also feel that “GenAI will augment or supplement humans, but we’ll still need human creativity,” vs. “it will surpass human capabilities and take over many tasks,” while 55% of parents and 57% of teens say it “will make it easier to stay connected with others,” vs. “it will make it harder to stay connected with others.”

Trying it out

Although this survey sheds light on how adults and teens are using GAI and paints a reasonably optimistic picture of how it’s perceived, the best way for you to learn about GAI is to try it. Google Bard, Microsoft Bing and ChatGPT all offer free access to GAI services that make it easy for anyone to ask questions or create content. I find it fascinating to try out different scenarios on these services and have used them in my work to generate ideas and recently used ChatGPT’s Dalle2 image-generation tool to create artwork to accompany some of my blog posts. I understand that it can make mistakes, so I never rely on it without verifying information. I also have an ethical responsibility to do my own work in my own words, so I use it mainly for ideas and research rather than a shortcut to wordsmithing. But, just as I can’t imagine going back to my old typewriter, it’s now hard to imagine doing creative work without getting at least a little help from Generative AI.

Larry Magid is a tech journalist and internet safety activist. Contact him at larry@larrymagid.com.

Blackstone Inc. Chief Executive Officer Steve Schwarzman and Visa Inc. CEO Ryan McInerney will also join them at the soiree in San Francisco, according to people briefed on the matter. Pfizer Inc. CEO Albert Bourla earlier confirmed he would attend the event, as he spoke on the sidelines of a summit that’s part of this week’s Asia-Pacific Economic Cooperation leaders’ meetings.

Technology CEOs including Qualcomm Inc.’s Cristiano Amon and Broadcom Inc.’s Hock Tan are also on the guest list, said the people, who asked not to be identified sharing details of a private event.

Xi will have the chance to talk up China’s economy to some of the world’s most-powerful foreign investors at the event, after a post-pandemic reopening expected to spur global growth failed to deliver. The Chinese leader will go into the dinner after wrapping an afternoon of talks with US President Joe Biden, aimed at stabilizing a tumultuous bilateral relationship that’s also troubled investors.

China is a major market for consumer electronics, accounting for about one-fifth of sales for Cupertino, California-based Apple. Qualcomm and Broadcom are among the world’s largest makers of chips for mobile phones, and their components are used in millions of handsets sold across China. Representatives of Apple, Qualcomm and Broadcom either declined to comment or didn’t respond to requests for comment.

China sees investment by international companies as key to upgrading its faltering economy and has stepped up efforts to attract foreign investors this year. Its tightening of national security controls and messaging that foreign actors pose spy risks, along with years of policy crackdowns, have left some skeptical of that message.

“The Chinese economy is clearly weakening. There’s no question,” said Derek Scissors, senior fellow at the American Enterprise Institute. “But if you need to stay in China, and you’re worried about your position because of Chinese government behavior, it’s even more important to be able to talk to Xi.”

Details around the dinner have been closely guarded. Its hosts, the National Committee on U.S.–China Relations and the US-China Business Council, had in recent days remained silent even over which Chinese leader would attend the event, as well as its location.

Shortly before the event — being held at a San Francisco hotel where crowds gathered in support and in protest of China — the official program was available to attendees: Xi would address the dinner following an introduction from Chubb Ltd. CEO Evan Greenberg, chair of the committee.

Representative Mike Gallagher, a Wisconsin Republican who chairs the House Select Committee on the Chinese Communist Party, claimed at an anti-CCP rally on Saturday that attendees were paying $40,000 to sit at Xi’s table. The Chinese leader is also expected to deliver an address to the dinner.

A group of Xi’s “old friends” from Iowa have also been invited to the dinner, Bloomberg earlier reported. The group hosted Xi during a visit to the US to learn about agricultural practices some 38 years ago, when he was a little-known Chinese Communist Party official.

–With assistance from Fran Wang, Gabrielle Coppola, Aisha Counts, Dawn Lim, Silla Brush, Mark Gurman and Ian King.

(Adds details on program starting in ninth paragraph.)

More stories like this are available on bloomberg.com

©2023 Bloomberg L.P.

Former President Donald Trump’s social media venture Truth Social is burning cash and piling up losses so rapidly that accountants warn it might not survive unless it soon completes a long-delayed merger, according to corporate filings.

Trump Media & Technology Group (TMTG), which is chaired by the former president, has lost $31.6 million since the company launched in early 2021, SEC filings released Monday show.

Truth Social launched in early 2022 as an alternative to Twitter, which is now known as X and is owned by billionaire Elon Musk. At the time, Trump had been banned from what was then Twitter for breaking the platform’s rules on promoting violence during the January 6 riot. His account has since been reinstated.

But Trump’s social media platform has struggled to gain popularity, with its 861,000 monthly active users on iOS and Android as of October amounting to barely 1% of those on X, according to Similarweb.

With cash levels dwindling, Trump Media’s management and accountants are warning there is no guarantee the company will stay afloat.

“TMTG has suffered negative cash flows and recurring losses from operations that raise substantial doubt about its ability to continue as a going concern,” the filing said, citing an assessment from an independent accounting firm and financial statements.

Trump Media’s management believes capital raised from the merger will be “sufficient” to retire debt and fund operations, the filing said.

Still, as of the end of June management had “substantial doubt” that the company will have “sufficient funds to meet its liabilities as they fall due,” according to a filing.

Trump Media’s management indicated that having sufficient funds is “directly conditional” on completing its merger by the end of this year and added that additional bridge funding “may be required” before then. Trump Media executives are also in talks with investors about extending debt maturity dates and raising new funds through convertible debt, the filings say.

Trump Media and Digital World said the filing of the financial documents on Monday mark a key step forward towards finalizing their merger.

“We believe that today marks a monumental milestone toward completing the Business Combination, and we look forward to working with the SEC to bring this deal to a close as quickly as possible,” Trump Media CEO Devin Nunes said in a statement. “Truth Social aims to be more than a social media platform—we aspire to become the centerpiece of a movement, as well as a method for Americans to invest in their freedom.”

Trump, whose companies have a long history of bankruptcy, announced plans in 2021 to launch a new social media platform that would “stand up to the tyranny of Big Tech.”

But Trump Media’s plan to go public by merging with a blank-check company known as a SPAC, or special purpose acquisition company, has been delayed by a series of investigations into the controversial deal. That merger is key for the survival of Trump Media as it would unlock hundreds of millions of dollars in funding.

“Based on the financials, I’d expect they want to get the deal done ASAP,” said Matthew Kennedy, principal analyst at Renaissance Capital, a provider of pre-IPO research and IPO-focused ETFs. “TMTG is currently not able to fund itself through operations.”

Kennedy said the “substantial doubt” warning is a “good reminder to investors that it’s a very real possibility that TMTG could shut down, given its operating losses and cash-on-hand.”

However, Kennedy added that this concern would be eased if Trump Media is able to raise cash through the merger.

The SEC filings indicate Trump Media lost $59.1 million in 2021 before posting a net profit of $50.5 million in 2022. Trump Media incurred $23 million of losses during the first six months of this year, the filings say.

Trump Media burned through $7.4 million of cash through the first six months of this year alone, according to filings. It was sitting on just $2.4 million of cash as of the end of June, down from $9.8 million at the end of 2022 and $18.7 million at the end of 2021.

Matthew Tuttle, CEO of Tuttle Capital Management, said the filings make it look like Trump Media “may be circling the drain.”

The company acknowledges it “may not be successful in its efforts to grow and monetize Truth Social” and it faces “significant competition” for ad dollars.

To preserve cash, Trump Media previously paused hiring; this past March it eliminated “several” positions, according to the filings. The company has also cut spending on travel, rent, consulting fees and professional services.

Still, Digital World, the blank-check firm seeking to merge with Trump Media, is bullish on the venture.

Digital World’s board believes that if Trump Media is “properly capitalized,” it is “very well positioned to grow a user base at an accelerated base,” the SEC filings say. Citing Trump’s massive social media following, the board argued Trump Media is “positioned to exceed” the blockbuster growth of Facebook when it went from 1 million users to 10 million in three years.

The SPAC deal to bring Trump Media public has been clouded by legal issues.

Earlier this year, federal prosecutors leveled insider trading charges against three investors, alleging they made more than $22 million by illegally trading on nonpublic knowledge of the Trump Media secret merger plan. There is no allegation that Donald Trump had any involvement at all in the alleged insider trading.

Digital World settled charges in July from the Securities and Exchange Commission that alleged the company violated anti-fraud laws by failing to disclose it was actively pursuing a deal with Trump Media before news went public.

There are also risks related to Trump himself, of course.

The SEC filings note that Trump Media’s success depends in part on the “reputation and popularity of its Chairman, President Donald J. Trump.”

“The value of TMTG’s brand may diminish if the popularity of President Trump were to suffer,” the filing said. Already, according to the filing, “several potential third-party partners have expressed an unwillingness or reluctance to work on TMTG’s products or provide services for reasons including TMTG’s connection with President Trump.”

Another risk, according to Trump Media, is if Trump were to “cease to be able to devote substantial time to Truth Social,” a development that would “adversely” impact the business.

Trump is the frontrunner for the 2024 GOP nomination for president. He has also been indicted on federal and state charges in four separate cases. He denies all wrongdoing.

CNN’s Chris Isidore contributed to this report.

Long hidden in a dark hangar at Moffett Field, the remarkable Pathfinder 1 — a gigantic white cigar-shaped airship — was rolled out into the bright Bay Area sunshine for some quick exercise last week, then rolled back in.

The behemoth aircraft, the brainchild of Google co-founder Sergey Brin and aviation innovator Alan Weston, behaved exactly as intended.

It didn’t float, because it was securely tethered by ropes held by ground crew. That’s planned for next time, probably within several weeks. Its initial maneuvers will be around Moffett Field, which Google leases from NASA Ames. Over the next year, it will fly several FAA-approved missions at an altitude below 1500 feet over the waters of the South Bay, including the Dumbarton Bridge.

But, as hoped, Pathfinder “superheated” when its skin was warmed by the sun, causing it to expand and lighten. When propelled by small electric motors, it swung one direction, then another.

“It performed really well,” said Weston, chief executive officer of maker LTA Research and former director of programs at NASA’s Ames Research Center, where he led more than 50 spacecraft, rocket, interceptor and air vehicle missions that revolutionized space science.

The Pathfinder is not a blimp, like the familiar balloons that drift over football stadiums. Blimps have no internal structure so can lose their shape, and deflate. The Pathfinder is an dirigible, with a rigid framework of 10,000 carbon-fiber reinforced tubes and 3,000 titanium hubs to form a protective skeleton around the gas cells, surrounded by a lightweight synthetic Tedlar skin.

The airship is about 400 feet long. By comparison, the traditional Goodyear blimp is 250 feet long.

Pathfinder 1 will be the largest aircraft to take to the skies since the ill-fated Hindenburg dirigible of the 1930s, a major air disaster that was broadcast to people all over the world.

A towering example of technological prowess, the Hindenburg was nearing the end of a three-day voyage across the Atlantic Ocean from Germany when flames erupted from its skin. In one horrifying minute, 36 people died.

But unlike the Hindenburg, Pathfinder is not filled with flammable hydrogen. Instead it is filled with stable helium, which is much safer — and creates lift without burning fuel. The helium is held in 13 giant rip-stop nylon cells and monitored by lidar laser systems.

The goal of this week’s Pathfinder outing was to study how the vehicle’s internal helium and polymer skin responded to sunshine, and whether its propeller motors, four on each side, could redirect its weathervane-like tendencies.

“Everybody’s super happy with the data we gathered” from the airship’s first outing in daylight, Weston said. “We gained an understanding of ‘how does it work?’ ”

Until now, Pathfinder has undergone only in-hangar testing. Three months ago, it was wheeled out in darkness to see how it handled the world outside, without the influence of the hot sun.

For most of aviation history, lighter-than-air vehicles (or LTAs) have never been particularly popular, because they’re big and comparatively slow

But technological advancements such as improved motors, solar cells, fly-by-wire controls and lidar sensing could help make such air travel feasible — and someday, perhaps, commercially viable.

LTA, which stands for “Lighter Than Air,” was founded in 2016 but has operated largely under the radar. It now has 250 employees.

The company devised a rotisserie system, called “the roller coaster,” where the entire airship sits in a cradle and rolls, so fabrication and assembly teams can work at ground level.

“Initially, it was just a crazy idea. Now it’s not a crazy idea — it’s a revolutionary idea,” boosting accuracy and speeding up the manufacturing process by ten-fold, said Weston, “It’s faster, better, cheaper, safer.”

Pathfinder’s outing has offered a vision of what aviation could look like years from now — one in which aircraft don’t emit dangerous greenhouse gases.

“I believe that airships can perform a complementary function,” in addition to other efforts, “to provide humanitarian aid and disaster relief,” said Weston.

Brin, worth an estimated $105 billion according to the Bloomberg Billionaires Index, also funds a disaster charity called Global Support and Development,  which provides rapid response aid after volcanic eruptions, earthquakes and storms.

Airships could also play a role in the reduction of carbon footprint of transportation, said Weston.

“They’re not going to eliminate airplanes,” he added.  “But I see a path to decarbonisation.”

LTA is one of many companies working on electric aviation. A French company called Flying Whales is building an airship, also lifted by helium, that could carry up to 60 tons of cargo. Hybrid Air Vehicles, a British company, has developed a helium-based “Airlander 10” aircraft to transport people in rural regions. The New Mexico startup Sceye is making a helium-powered aircraft that could hover high in the stratosphere, perhaps offering a new tool for telecommunications.

Pathfinder 1 is just the first in what could be a family of airships, according to Weston.

Even as this prototype learns how to reliably fly in real-world conditions, LTA is starting construction of another and much larger airship, called Pathfinder 3, in the same Akron, Ohio, hangar where Goodyear built the U.S. Navy’s rigid airships of the 1930s.

That aircraft, one-third bigger than Pathfinder 1, could be ready for flight later this year.

Sanchez tells a writer for Vogue that the “10,000-Year-Clock” offers her and her future husband, the second richest man in the world, a way of “thinking about the future.”

The irrepressible Sanchez opened up about the 10,000-Year Clock while flying the Vogue writer on a helicopter tour of Bezos’ West Texas ranch, one of the more than half a dozen luxury properties in his estimated $500 million real estate portfolio, as the New York Post also reported. 

In a new exclusive interview, Lauren Sánchez discusses going to space, giving back, and her high-flying romance with Jeff Bezos. Read the full profile here: https://t.co/qXtkaXgN1C pic.twitter.com/rz2CPDCF27

— Vogue Magazine (@voguemagazine) November 13, 2023

At the ranch, Bezos and Sanchez host holiday gatherings for their extended, blended family, and the Amazon founder launches rockets from his Blue Origin space facility, Vogue reported. The West Texas property also includes a family compound, clustered around a two-story main residence and a swimming pool, “made to appear like a pond with rocky banks,” Vogue writer Chloe Malle, who happens to be Candice Bergen’s daughter, reported.

Bezos, in case you missed it, also recently purchased two side-by-side mansions, worth a combined $147 million, on South Florida’s Indian Creek Island, known as “Billionaire Bunker,” Insider reported. There, neighbors will include the recently divorced Tom Brady and the polarizing former White House aides Jared Kushner and Ivanka Trump, the latter of whom Sanchez mingled with at Kim Kardashian’s birthday bash in October. Earlier this month, Bezos, who has an estimated net worth of $160 billion, announced on Instagram that he was leaving his longtime residence of Seattle so that he and Sanchez could make Miami their new home base, Insider reported.

Sanchez, though, can continue to regard herself as the face of philanthropy in Los Angeles, Vogue said. That’s because the former TV newscaster and Bezos also have a $165 million Tudor mansion in Beverly Hills, the New York Post said. This past weekend, their good friends Barry Diller and Diane von Furstenberg, hosted a second, star-studded engagement party for them at their Beverly Hills mansion. Sanchez’s longtime friend, Kris Jenner, and her daughters Kim and Khloe Kardashian, were among the celebrity guests.

Back in West Texas, Sanchez and Bezos posed for glamour images for Vogue’s December cover story, shot by celebrity photographer Annie Leibovitz. One photo shows Sanchez and Bezos, in a cowboy hat, sitting cheek-to-cheek in a pickup truck. Another shows Sanchez in a red-sequined, body-hugging Dolce and Gabbana gown, descending a spiral staircase into the subterranean complex that houses the 10,000-Year Clock.

The Daily Beast’s “wealth and power reporter” Noah Kirsch said that the clock, located 500 feet underground, seems to be “a somewhat confusing initiative.” Kirsch also said that the Vogue cover story about Sanchez and her conspicuous consumption with Bezos almost seemed intended to inflame the “eat the rich crowd.”

Malle described how Sanchez landed the helicopter, on the side of the Sierra Diablo mountains, so that the two could descend into the mouth of a cliff to explore the clock. Sanchez insisted that they go all the way to the bottom, to get a better sense of “the engineering feat envisioned with next generations in mind.”

For the website for the 10,000-Year Clock, Bezos said he was working with the its “father,” inventor, entrepreneur and computer scientist Danny Hillis, who pioneered parallel computers and their use in artificial intelligence. Other partners in the endeavor include the San Francisco-based Long Now Foundation, which was created to foster “long-term” thinking with this “Clock of the Long Now,” “an immense, mechanical monument.”

Malle reported that it took over a year to drill 500 feet into solid limestone and quartz to create the space for the clock, and two years for a diamond-cutting robot to slice stairs into the stone. Inside, enormous titanium and stainless gears look like parts to the inside of a giant wristwatch and showcase a 10,000 pound bronze-cased concrete pendulum, Malle reported.

What if we kissed inside the 10,00 Year Clock, a subterranean project in West Texas backed by Lauren Sánchez’s fiancé, Jeff Bezos? pic.twitter.com/bHTBLn9jTL

— Lydia Tárt (@hannahtindle) November 13, 2023

Sanchez tried to explain the concept of the clock, telling Malle that there are five metal anniversary displays that will function like traditional cuckoo clocks chiming at one year, 10 years, 100 years, 1,000 years, and 10,000 years. Bezos probably explained it a bit better by saying that the clock will tick once a year, with its century hand advancing once every 100 years. The clock should keep time for the next 10,000 years, becoming “a symbol” and “an icon for long-term thinking,” Bezos said.

If the concept remains “a bit confusing,” as the Daily Beast reported, Sanchez suggested a more immediate use for the clock, one that could include a visit by the Kardashians and her other celebrity friends. She told the Vogue writer: “Wouldn’t it be cool to have a Halloween party here?”

The APEC Economic Leaders’ Week, which runs through Friday, is being promoted as the largest gathering of world leaders in the city since 1945. Heads of state from member countries, including President Joe Biden and Chinese President Xi Jinping, are set to attend, with about 1,200 CEOs and nearly 30,000 delegates from governments and organizations expected for the summits.

The influx, with security measures including road closures and checkpoints, will restrict movement within the city and is expected to snarl traffic.

The complementary CEO Summit running Tuesday through Thursday will provide the Bay Area with rare opportunities to boost investment and trade between the region’s businesses and companies overseas, said Sean Randolph, senior director of the Bay Area Council Economic Institute.

“We’ve been a major hub for the United States, a major connecting point with Asia for a long time,” Randolph said. “Our companies here invest heavily throughout the world, and there’s a lot of investment from companies around the world in the Bay Area and a large diplomatic presence. A lot of that presence is about technology and connecting those economies to our economy.”

APEC countries — which range from Australia to Vietnam — make up almost 40% of the world’s population, nearly half of global trade, and are seven of the top U.S. trading partners, according to APEC.

The San Jose metropolitan area exported $15 billion in goods to APEC countries last year, and the San Francisco metropolitan area exported $21 billion, according to the U.S. Department of Commerce. California exports about $125 billion in goods a year to APEC nations, and imports about $400 billion, according to the department.

Established in 1989, APEC is dedicated to economic growth and regional political and business integration. Like other free-trade groups, it has become a flashpoint for protests against governments and powerful corporations. The CEO Summit features a who’s-who of controversial figures, from ExxonMobil CEO Darren Woods, whom a congresswoman accused in 2021 of lying to Congress about climate science, to Dara Khosrowshahi of Uber, which agreed this month to a $290 million settlement over alleged systemic theft from its drivers, to Peruvian President Dina Boluarte, whose administration was accused last month by the UN of human rights abuses, to President Yoon Suk-yeol of South Korea, who has attacked feminism and whose government is seeking to scrap its gender-equality ministry.

The focus of APEC events “is entirely on enriching businesses within member countries,” said Nik Evasco of the No to APEC Coalition, a Bay Area-led alliance of several dozen activist groups. Thousands of protesters are expected to hit the streets in San Francisco for a major march Sunday, with demonstrations throughout the week. Activists are targeting the CEO Summit for another big protest Wednesday, Evasco said.

“We’re really here to shut down the negotiations between the CEOs and the world leaders,” Evasco said. “Success for us is disrupting that conference between those leaders and CEOS to the point that it’s near chaos.”

Evasco said activists will also protest APEC-adjacent meetings Monday and Tuesday in San Francisco for the Indo-Pacific Economic Framework for Prosperity, a Biden initiative to promote economic growth among 14 nations, most of them APEC members.

Singmay Chou, an adjunct professor of business at San Jose State University, said over its three decades, APEC has boosted trade among members, especially between the U.S., China, Japan, Korea and Taiwan, but that’s changing.

“There has been a redirection of U.S. trade within APEC away from China and toward Vietnam, Malaysia and Indonesia,” Chou said. “The overall growth among APEC countries will likely decline as a percent of global trade. Countries outside of APEC, primarily India, and several countries of Africa, are among the world’s fastest-growing economies and more global trade will flow to those areas.”

The gathering in San Francisco comes at a time of fraught geopolitical affairs, with Russia’s invasion of Ukraine and the war between Hamas and Israel destabilizing APEC relationships, Chou said. Tighter relations between China and Russia could lead the U.S. and China to impose conflicting demands on APEC countries, creating a thorny problem for APEC, Chou said.

A Wednesday meeting between presidents Biden and Xi could warm chilled relations between the two nations, which many businesses would welcome, Chou said.

Several Bay Area tech executives are expected to speak at the CEO Summit, including Google CEO Sundar Pichai, Meta’s global affairs chief Nick Clegg, Salesforce CEO Marc Benioff and OpenAI CEO Sam Altman. Silicon Valley giants do substantial business with APEC nations, but relations are not universally smooth: China blocks Google, Facebook and Twitter, while other countries have pushed back against social media companies, with Malaysia this year threatening legal action against Meta over content it considered problematic, and Australia and Canada passing laws to make Google and Facebook pay for news on their sites.

For Bay Area businesses, APEC and several spinoff gatherings will raise potential opportunities, said Russell Hancock, CEO Joint Venture Silicon Valley, a San Jose-based think tank. “The schmoozing will be terrific and they’ll meet a lot of people and it may lead to really productive talks about business deals,” Hancock said.

For San Francisco — its downtown beset with blight, empty offices and vacant storefronts in the wake of the pandemic — APEC provides a potential opportunity to regain some of its shine as “a city just teeming with innovation,” Hancock said.

“It’s really to provide a platform that brings together visitors from APEC and leaders from the business community here that could lead to ongoing relationships,” Randolph said.

Another officially recognized spin-off, called GENERATE and taking place Tuesday at Fort Mason, is also intended to leverage the presence of APEC delegates and U.S. and foreign officials, but for smaller companies.

“Our goal is to bring the voices of small businesses and startups to this event,” said Minda Aguhob, executive director of The Co-Caring Initiative, the nonprofit putting on GENERATE. Organizers have been in touch with the White House and Philippine Consulate in San Francisco, and are hoping their representatives, and others, will join the hundreds of people expected to attend for a series of talks on subjects including small-business finance, education for entrepreneurs, climate change and women’s health care, Aguhob said.

While startups are mostly absent from the main APEC lineup, one with its business office in Palo Alto will take a turn in the limelight, thanks to its fast-growing products and services dedicated to helping feed the planet by boosting the work of honeybees. Omer Davidi of Santa Cruz, CEO of BeeHero, is scheduled to appear with Gov. Gavin Newsom for a “fireside chat” Wednesday at the CEO Summit. BeeHero gives beekeepers “smart-hive” sensor technology to monitor bee colonies’ health using sensors to collect data on bees’ movements, wing-beat frequencies, and other behaviors, and sells data and consulting services to farmers to maximize crop pollination.

Davidi believes BeeHero’s presence on this year’s CNBC “Disruptor 50” list of up-and-coming startups led to the APEC invitation. “It’s very exciting,” Davidi said. “We look forward to establishing more and more relationships with the group and seeing how our technology can support some of the initiatives and goals.”

Staff writer Harriet Rowan contributed to this report. 

Meta CEO Mark Zuckerberg has personally and repeatedly thwarted initiatives meant to improve the well-being of teens on Facebook and Instagram, at times directly overruling some of his most senior lieutenants, according to internal communications made public as part of an ongoing lawsuit against the company.

The newly unsealed communications in the lawsuit — filed originally by Massachusetts last month in a state court — allegedly show how Zuckerberg ignored or shut down top executives, including Instagram CEO Adam Mosseri and President of Global Affairs Nick Clegg, who had asked Zuckerberg to do more to protect the more than 30 million teens who use Instagram in the United States.

The disclosures highlight Zuckerberg’s sway over decisions at Meta that can affect billions of users. And they also shed light on tensions that have occasionally arisen between Zuckerberg and other Meta officials who have pushed to enhance user well-being.

Rejecting safety suggestions

Zuckerberg vetoed a 2019 proposal that would have disabled Instagram’s so-called “beauty filters,” a technology that digitally alters a user’s on-screen appearance and allegedly harms teens’ mental health by promoting unrealistic body image expectations, according to the unredacted version of the complaint filed this week by Massachusetts officials.

After sitting on the proposal for months, Zuckerberg wrote to his deputies in April 2020 asserting that there was “demand” for the filters and that he had seen “no data” suggesting the filters were harmful, according to the complaint.

Despite Zuckerberg’s conclusion, the proposal had enjoyed broad support, the lawsuit said, including from Mosseri; Instagram’s policy chief, Karina Newton; the head of Facebook, Fidji Simo, and Meta’s vice president of product design, Margaret Gould Stewart. (Simo and Mosseri had lamented at other times, according to the lawsuit, that a lack of investment in well-being initiatives meant Meta lacked “a roadmap of work that demonstrates we care about well-being.”)

Stewart had first pitched the idea to disable beauty filters, citing recommendations by academics and Meta’s outside advisors, while Newton wrote an email adding it had strong backing from departments including “comms, marketing [and] policy,” the lawsuit said.

But after Chief Technology Officer Andrew Bosworth brought the matter to Zuckerberg’s attention, Zuckerberg ultimately rejected the plan and the filters were allowed to remain, according to the complaint.

Stewart later wrote to Zuckerberg, fretting that his decision not to disable the filters could come back to haunt the company.

“I respect your call on this and I’ll support it,” Stewart wrote, according to a message cited in the complaint, “but want to just say for the record that I don’t think it’s the right call given the risks…. I just hope that years from now we will look back and feel good about the decision we made here.”

In response to the newly unsealed communications, Meta spokesman Andy Stone said such image filters are commonly used in the industry.

“While filters exist across every major social platform and smartphone camera, Meta bans those that directly promote cosmetic surgery, changes in skin color or extreme weight loss,” Stone said. “We clearly note when a filter is being used and we work to proactively review effects against these rules before they go live.”

Stone added that Meta offers 30 tools to support teens and families, including the ability to set screen-time limits and the option to remove like counts from posts. (In the unredacted portions of the complaint, the Massachusetts suit alleges that the experiment to remove like counts from posts, codenamed Project Daisy, had originally been proposed as an app-wide default but was later downgraded to an opt-in feature that is rarely used.)

At the time of the original Massachusetts lawsuit, which was one of several filed on the same day by multiple state attorneys general, Meta had said it was committed “to providing teens with safe, positive experiences” and that it was disappointed that the states had not worked with Meta to develop industry standards.

Some executives worried about well-being

A year after the beauty filter decision, in August 2021, Clegg pressed Zuckerberg to make “additional investment to strengthen our position on wellbeing across the company,” citing a staff recommendation to address issues of addiction, self-harm and bullying, according to the complaint. By this time, the company was just weeks away from being hit with Facebook whistleblower Frances Haugen’s bombshell allegations that Instagram knew its services could be harmful to teens.

Haugen’s anonymous allegations in September jumpstarted intense scrutiny of Instagram. As Haugen revealed her identity in October, Mosseri wrote to another Meta product executive that same month in reference to Clegg’s proposal, the lawsuit said, saying he was “really worried” about well-being “but have made little progress.”

Zuckerberg allegedly remained silent on Clegg’s proposal throughout this time, prompting Clegg to reiterate his concerns to Zuckerberg in November. Finally, Zuckerberg appeared to respond through Meta’s chief financial officer, Susan Li, who “tersely respond[ed] that staffing was too ‘constrained’ to meet the request,” the lawsuit said.

Li responded similarly on Zuckerberg’s behalf after another product executive, David Ginsberg, emailed Zuckerberg in 2019 highlighting internal and external research suggesting that the company’s services were having a negative impact on people’s well-being. Ginsberg proposed hiring more engineers to build well-being tools to respond to addiction, social comparison and loneliness, but Li “responded that Meta’s leadership team declined to fund this initiative,” according to the complaint.

Bejar, who testified to Instagram’s alleged risks before US lawmakers this week, told CNN on Wednesday he was not a part of the decision-making on beauty filters but had spoken to senior officials and others who had worked on internal research on the matter.

“My understanding was that Mark needed causal data,” Bejar said, “for you to be able to demonstrate that because somebody was using a filter, that that would have an impact on how they perceive themselves.”

“All the people that I’ve talked to internally about this were like… Mark’s level of proof, in order to be able to take the work seriously and act on it, is too high,” Bejar added. “I think it’s an impossible standard to meet.”

On Wednesday, Stone added that Meta has a “robust central team overseeing youth well-being efforts across the company, and have built technology and teams that can move quickly and efficiently to implement new improvements across specific apps.”

Tech advocates pounce

Other newly unveiled allegations in the complaint accuse Meta of exploiting the psychology of adolescent brains and that Zuckerberg personally established goals for the company to increase the amount of time users spend on Instagram.

A 2020 internal presentation discussed in the complaint described how Instagram meets teenagers’ desire for “novelty seeking” with “a dopamine hit” through intermittent notifications about comments, follows and other bids for attention that can convey a sense of “approval and acceptance [that] are huge rewards for teens.”

Technology advocacy groups sharply criticized Zuckerberg on Wednesday after the internal communications came to light.

“These unreacted documents prove that Mark Zuckerberg is not interested in protecting anyone’s privacy or safety. The rot goes all the way to the top,” said Sacha Haworth, executive director of the Tech Oversight Project.

And Zamaan Qureshi, co-chair of Design It For Us, a youth-led coalition pushing for product changes and regulation of social media, said the unsealed documents show that senior Meta executives sometimes confronted the same barriers that concerned rank-and-file employees did.

“Clegg’s comments follow a pattern and practice at Meta where employees repeatedly flagged under-investment in well-being tools, despite having the research,” Qureshi said. “Now we know not even senior leadership could get through to Zuckerberg.”

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The US is getting its first commercial facility to soak up carbon dioxide from the ambient air for permanent storage, a nascent technology that’s been both lauded as crucial in fighting climate change and derided as a distraction that will delay the clean energy transition.

The plant in Tracy, built by Silicon Valley startup Heirloom Carbon Technologies, puts California at the forefront of the emerging carbon removal industry as a handful of so-called direct air capture (DAC) hubs are also slated to get underway. Heirloom’s facility, unveiled Thursday, will be capable of removing and storing as much as 1,000 tons of carbon dioxide each year.

That’s a pittance compared with bigger plants poised to come online in Texas and Louisiana, but it’s enough to serve as a milestone for a technology that’s likely to spawn a significant business. JPMorgan Chase & Co. and Google parent Alphabet Inc. are among the companies that have pledged hundreds of millions to buy carbon removal services, even as critics warn the industry will give oil producers an excuse to keep pumping crude.

Heirloom raised $53 million in a 2022 Series A round from investors including Microsoft’s Climate Innovation Fund and Bill Gates’ Breakthrough Energy Ventures. While Heirloom declined to disclose the price tag to build the California facility, the company aims to operate at a cost of $100 per ton of carbon removed by 2030 — a price point the young industry currently isn’t close to reaching.

The Biden administration is throwing its weight behind the technology, too. In August, the Department of Energy announced the first wave of projects that won some of the $3.5 billion in funding for developing DAC hubs around the US. Though the Tracy facility is not a recipient of those dollars, Heirloom is part of one of those projects and its technology will be deployed at a major hub in Louisiana the government expects will remove 1 million tons of CO2 a year by the end of the decade. Heirloom and other DAC companies can also receive tax credits from the Inflation Reduction Act.

Research shows that gathering billions of tons of the greenhouse gas from the air each year by mid-century — in addition to rapid emissions reductions — will almost certainly be needed to limit global warming to 1.5C. Carbon capture and removal is “positioned to play an important role in decarbonizing the US economy,” according to BloombergNEF. The carbon market could reach $1 trillion by 2037 if rules prioritize high-quality removals, BNEF found in a separate analysis.

DAC, which is still in its infancy, uses vacuum-like machines to pull CO2 out of the atmosphere and store it using a variety of methods. Heirloom’s facility will use an electric-powered kiln to heat crushed limestone, transforming it into a calcium-based paste that’s spread onto stacked trays that act as carbon-absorbing sponges. Once saturated with the CO2, the material returns to the kiln, where the carbon is removed before the process repeats. The Tracy plant will store CO2 in tanks, though Heirloom and other companies plan to inject it deep underground for future projects. Heirloom has partnered with CarbonCure, a green concrete maker, to permanently store captured CO2 in the building material.

“We set out to develop a technology that avoided the typical cost associated with direct air capture,” said Noah McQueen, Heirloom’s head of innovation and co-founder. “That journey eventually led us to limestone. This rock has everything we need to capture millions and eventually billions of tonnes of carbon dioxide from the atmosphere. It’s safe, it’s found almost everywhere on Earth and it’s cheap.”

The facility’s technology differs from a more controversial method called carbon capture, which involves removing CO2 emitted at the smokestack. That technology can help decarbonize heavy industry, but oil companies have deployed it to capture CO2 then inject it underground to help extract more fossil fuels. The practice, known as enhanced oil recovery, has long been scrutinized by environmentalists who fear it could prolong the lifespan of fossil fuels. Occidental Petroleum Corp. — which is leading a DAC hub in Texas — has said sucking CO2 from the air is crucial to its strategy to keep producing oil.

Though Heirloom’s has said it won’t use its technology to perpetuate the fossil fuel industry, many environmentalists and local communities remain opposed to the technology as a whole due to safety concerns over ruptured pipelines and mass asphyxiation from leaks. They also worry state and federal leaders are taking a gamble on a technology that is largely untested and too expensive to operate. For reference, the largest DAC facility in the world, created by Swiss startup Climeworks, removes 4,000 tons of CO2 a year, an amount less than 270 average Americans’ annual carbon footprints.

“We’re very concerned,” said Katie Valenzuela, a policy advocate at the California Environmental Justice Alliance. “Direct air capture still carries all of the same concerns we have with carbon capture and without those safety measures in place, it’s going to have potentially really negative impacts on frontline communities.”

Heirloom has sold a share of its carbon removal credits to various companies, including Microsoft, Stripe and Shopify. But Valenzuela is concerned that the company could participate in the Low Carbon Fuel Standard, a market system that allows carbon-intensive transportation companies to purchase credits instead of taking steps to use cleaner fuels, she said.

“It’s problematic because these credits will be used instead of reducing carbon at fossil fuel operations,” she added.

“Projects like this Heirloom facility are exactly the sort of big and innovative ideas that we’re embracing – using renewable energy to directly remove pollution from our air, all while creating good-paying jobs in the Central Valley,” Governor Gavin Newsom said in a statement.

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The deal announced Thursday resolved a lengthy investigation by the Department of Justice into alleged violations of the Immigration and Nationality Act.

Federal regulators said an inquiry that began in 2019 determined that Apple’s hiring practices discriminated against U.S. candidates for jobs that were awarded to some immigrant workers seeking to be granted permanent resident status in the country. In some instances, Apple also discriminated against non-U.S. residents, according to the settlement.

Apple vehemently denied any wrongdoing in the formal seven-page settlement defended its hiring record in a statement to The Associated Press.

The $25 million represents a paltry amount for Apple, which generated $383 billion in revenue during its last fiscal year ending Sept. 30. Most of the settlement amount — $18.25 million — will be funneled into a fund to compensate victims of Apple’s alleged discrimination. The rest of the money covers the fine that Apple is paying for its hiring practices during the timeframe covered in the settlement.

Five years, $1.2 billion. And a new model for government contracting in the tech-challenged home state of Silicon Valley.

That is what California officials say it will take to overhaul an employment safety net pushed to the brink by record pandemic job losses, widespread fraud and the political panic that followed.

The biggest-ever attempt to reform California’s Employment Development Department, known as “EDDNext,” officially started late last year. A roughly 100-person team is leading the rebuild, and is already signing multi-million-dollar contracts for Salesforce and Amazon technology, according to interviews and records requested by CalMatters.

At the same time, the EDD is quietly making plans to move on from its turbulent relationship with longtime unemployment payment contractor Bank of America. Between now and 2025, the EDD will begin rolling out new benefit debit cards, and eventually, a direct deposit payment option from a different, yet-to-be-named contractor, the agency said in a statement.

Ron Hughes, a former state technology official and consultant who came out of retirement to run EDDNext, said his team is prioritizing “the biggest pain points for the public” — online accounts, call centers, identity verification, benefit applications — as the agency tries to turn the page on an era of mass payment delays and widespread fraud.

“EDD did over 200 technology projects during the pandemic. They were basically putting out fires,” Hughes told CalMatters. “EDDNext is really a way of being proactive about it. We want to solve some of these problems, instead of just putting Band-Aids on.”

Workers still experiencing payment delays, fraud confusion and jammed phone lines are skeptical — especially since the EDD promised many similar changes after the Great Recession around 2009. Business groups, meanwhile, are sounding alarms about the state’s $19 billion in outstanding unemployment debt to the federal government. They are clashing with labor groups who want to expand jobless benefits and increase payments to keep pace with costs of living, instead of relying on fraud-prone emergency programs like those created during the pandemic — a newer version of an old fight about the scope of the safety net.

“There’s a longstanding narrative… like, ‘Look, see, this is a program that people just abuse,’” said Jenna Gerry, a senior staff attorney with the National Employment Law Project. “If people are concerned with actual fraud, then I want to look at what solves it: fundamental reform of the system.”

For Jennifer Pahlka, who co-led Gov. Gavin Newsom’s task force to triage COVID-era problems at the EDD, the challenge ahead is emblematic of difficulties that many government agencies face in adapting to the digital age. As inequality widens and risks like fraud evolve, Pahlka wrote in her book “Recoding America” that the EDD still operates with patchwork computer systems, its staff bound by an 800-page training manual and political dynamics that can leave leadership more beholden to shifting regulatory regimes than real people — fundamental issues that could still undercut EDDNext and its 10-figure budget.

“Do I know how to wave a magic wand and fix California’s unemployment insurance system? No, I don’t,” Pahlka said in an interview. “But I do know that what we’re currently doing doesn’t work, and that other states have some approaches that we should be trying out.

“Start with not burning $1 billion in a parking lot.”

EDD Director Nancy Farias has read Pahlka’s book, and the many state audits that have dissected the agency’s recurring failures. She’s well aware of the “light switch” trap, where a government agency bets it all on one, years-long tech project, then prays it all works when a switch is flipped. To try to avoid that, she and Hughes decided to break EDDNext into dozens of smaller projects through 2028.

“It leaves less room for a big failure,” Farias said. It will only come together, the former labor union executive added, with parallel efforts to simplify the process and alleviate strain on staff: “You can have the best IT in the world, but if you don’t change your policies and procedures, it does not matter.”

The COVID hangover

This past summer, San Diego jewelry maker Phaedra Huebner found herself stuck in a loop that might sound familiar to people who filed for unemployment early in the pandemic.

At 8 a.m. each day, Huebner, 52, said she dialed the EDD right as call centers opened to ask where her benefits were. She used a trick she learned on YouTube to bypass pre-recorded messages, punched in her Social Security Number and tried to get in the queue to talk with a real person. Then came the redialing up to 67 times a day, bouncing between departments and, more often than not, hanging up without answers about when she might see the money she needed to make rent.

The twist: Huebner wasn’t filing for unemployment, but for disability — hinting at how issues with call centers and identity verification continue to ripple across EDD’s multiple large programs. After each day on the phone, Huebner said she wrapped her hands in ice packs to ease the shooting pains in her hands and arms that put her out of work in the first place.

“For six weeks I should have been resting,” Huebner said in early September. “Instead, I’m in pain with no disability income doing all of my own administrative work.”

The EDD’s benefit programs have always been complex and highly individualized. In the majority of cases, the EDD told CalMatters in a statement, people applying for benefits do not encounter major delays. The agency cited its own 2022 survey of several thousand people using its benefit systems, where 69% reported they were “completely or mostly satisfied” with the unemployment application process, and 63% were satisfied with the disability process.

The problem, workers and attorneys say, is that even a portion of the EDD’s customer base amounts to tens of thousands of people — and when things go wrong, they can still go very wrong.

In January 2022, for instance, the EDD froze 345,000 disability accounts, including an unknown number of legitimate ones, amid a wave of suspected fraud involving claims tied to fake doctors. Putting stronger safeguards in place is one of the “lessons learned from the pandemic that we should be applying to every program,” said former California State Auditor Elaine Howle.

“People saw the (unemployment) program was being defrauded left and right,” Howle said, “and it was like, ‘Shoot, if I can do that, what other programs are out there that I can defraud?’”

Mason Wilder, research manager of the Association of Certified Fraud Examiners, said unemployment and disability programs are just two examples of many public and private sector systems being targeted as online fraud gets easier. It now costs as little as 25 cents to buy a Social Security number online, leading to a cycle of large-scale attacks followed by broad fraud crackdowns.

The risk of unsuspecting people getting caught in dragnets is only anticipated to grow, Wilder and other analysts say, as technologies such as artificial intelligence allow scammers to work faster and more easily forge documents. Benefit debit cards used by California’s CalFresh food assistance and CalWorks cash aid programs have also been targeted in recent fraud schemes, along with many similar programs across the country.

“It becomes kind of whack-a-mole,” Wilder said.

That’s not to say that the EDD’s pandemic unemployment problems have been neatly resolved. As of September, more than 130,000 California workers were still fighting long unemployment appeals cases, waiting an average of 137 days for a hearing with a state administrative judge, according to U.S. Labor Department data analyzed by CalMatters.

The EDD’s own data shows that the number of rejected unemployment claims has climbed steadily since the pandemic surge, to more than 1.9 million claims rejected from March 2020 through October 2023. The agency says that reflects the success of anti-fraud measures; advocates see it as evidence that the state also continues to trap legitimate workers, given that federal data shows EDD decisions are overturned almost half of the time on appeal.

“I definitely don’t think anything’s been resolved,” said George Warner, director of the Wage Protection Program at Legal Aid at Work. “A lot of the issues remain the same.”

The EDD stresses that it has implemented changes recommended by the California state auditor — including providing more public data and creating a new plan for future recessions — but the auditor remains unconvinced that several major issues have been remedied. This past summer, the auditor added the EDD to its list of “high-risk” state agencies, unlocking additional resources for potential future audits. Top concerns were poor customer service, high rates of benefit denials overturned on appeal and the agency’s inability to tally pandemic fraud, delaying the state’s two most recent annual financial reports.

“EDD’s mismanagement of the (unemployment) program has resulted in a substantial risk of serious detriment to the state and its residents,” the auditor’s latest report concluded.

EDD Director Farias said that all states face similar challenges, especially when it comes to quantifying fraud that is widely varied and, for obvious reasons, difficult to trace.

“There is no definition of what is fraud… and that’s really the biggest problem,” said Farias, who also sits on the board of the National Association of State Workforce Agencies. “There is Nigerian fraud ring fraud — Fraud with a capital ‘F’ — and then there is, you know, Mary Jo Smith down the street that really didn’t understand what the program was.”

In San Diego, Huebner unexpectedly got an up-close look at how identity verification issues continue to plague the EDD. After she filed for disability, it took a month and a half to get her first check. But then she received a letter in the mail addressed to a woman with a different name and employer in Northern California, which said that her benefits had been discontinued.

When Huebner tried to call to figure out what was going on, she realized that her YouTube trick to get through on the phone no longer worked, throwing her back in benefit limbo while she recovered from a spinal procedure and waited to see if a new EDD debit card showed up.

“They won’t tell you anything,” Huebner said in late October. “Pain is one thing, but helplessness is totally different.”

What next for California unemployment reform?

Before he was hired to fix the state’s pandemic problem-child, EDDNext director Hughes was enjoying retirement on his Sierra foothills ranch dotted with cattle, horses and sheep. He put that on hold and went back to work at the EDD when his former colleague Farias asked him to.

Hughes is quick to note that he wasn’t there for the worst of the pandemic issues. He spends a lot of time talking with other state tech executives who can empathize, such as peers at the DMV.

Even from the outside, it wasn’t hard to see what went wrong at the EDD during the pandemic.

“When you roll out a solution, it needs to work. If it doesn’t work and they call the help desk, you need to answer the phone,” Hughes said. “We didn’t do either of those things very well.”

In June, his team launched a new online portal called “MyEDD,” which uses Salesforce technology for workers to file and track the status of their benefits. Some users reported crashes during the first days of the rollout, but the system stabilized. It will be built out over time, Hughes said, as the agency works through contracts for identity verification and a “claims navigator” to show workers all benefits they are eligible for.

A new call center system using Amazon technology is slated to debut within the year — first for the state’s older disability system at the end of 2023, Hughes said, then for unemployment next summer. The idea is to ultimately go from the five or six systems that EDD agents currently juggle to one system for processing claims.

“Under the new system, there is a single pane of glass,” Hughes said. “As soon as they call in, all the information on their claim will come up.”

It’s not the first time the EDD has tried to streamline its claims system, parts of which date back to the 1980s. Pahlka in her book compares making sense of the patchwork programs to going on an archaeological dig.

After the Great Recession, the state paid Deloitte to upgrade several facets of its operation, including part of its claim management systems, in a series of contracts that ballooned to more than $152 million from 2010 to 2018, copies provided to CalMatters show. That system was one of several that state reports later found buckled during COVID, but Deloitte was awarded another $118 million as the state doled out emergency pandemic funds, according to contracts provided to CalMatters.

The irony, as Pahlka observed in her book, is that the money went to the very vendor “which built the ineffectual systems in the first place.”

U.S. Rep. Katie Porter, a Democrat from Orange County who sits on a U.S. House Oversight Committee that has investigated pandemic unemployment fraud, sighed heavily when asked about the past Deloitte “unemployment modernization” project — a response, she said, to both the contractor in question and a broader lack of oversight on big-budget projects.

“Deloitte has an unfortunate track record of not getting it done here,” Porter said. “If we’re going to contract this and spend our dollars with a private company to do this, we have to hold them accountable for delivering.”

Deloitte defended its work for the EDD in a statement, noting that “many technology constraints highlighted by California elected officials during the pandemic related to functions in EDD systems that Deloitte was not contracted to maintain.”

The company declined to comment on whether it intends to bid on the new EDDNext project.

Hughes said that no vendor is off the table for EDDNext, but that past contract performance will be taken into consideration for all bidders. This time around, Hughes said the plan is structured to include more oversight.

“It’s just way too much work for one vendor to do, and so we’ve split that up,” he said. “We’ve got different vendors doing different solutions. We can manage them much more effectively that way.”

Familiar fights

Another promise of EDDNext, Farias said, is that workers, advocates and front-line staff will have more of a say in how the project is built. The agency has also created a new customer experience arm, which outside observers like Pahlka see as a promising development.

Gerry of the National Employment Law Project was among the worker advocates briefly shown a version of the new EDD online portal before it launched. It will require more sustained effort, she said, to ensure that people relying on the system end up with something easier to use.

The EDD maintains that more visible changes are coming, including a planned redesign of the agency’s 10 most-used forms to cut unnecessary questions, translate them into more languages, and make them easier to understand and access online.

Similar efforts are also underway in many other states, where officials have raised questions about whether the federal government should do more to standardize applications, anti-fraud measures or other elements of the system. Robert Asaro-Angelo, commissioner of the New Jersey Department of Labor and Workforce Development, recently told a U.S. House committee that states and territories that all currently have their own processes could use more guidance to bolster security while ensuring rightful benefits are paid.

“We keep talking as if there’s one unemployment system. There’s 53 different systems,” Asaro-Angelo said. “These fraudsters being able to pick and choose — they couldn’t be happier.”

In California, concerns about the nuts and bolts of the state’s unemployment program are magnified by a more fundamental concern: the financial quicksand beneath the entire system.

The state unemployment fund that pays for benefits is operating in the red, or “structurally insolvent,” as the California Legislative Analyst’s Office put it in a July 2023 report.

Though the state was making progress on paying down its $20 billion-plus pandemic unemployment loan from the federal government, state forecasts now show the debt creeping back up, adding urgency to a fight over whether to change California’s 1980s-era tax system.

Business groups are already pushing Gov. Gavin Newsom to use other state money to pay down the debt, despite California’s current budget deficit. The state has spent more than $680 million in recent years to pay interest on the federal loan.

“California’s vast unemployment insurance system has been under enormous strain since 2020, and employers are paying the price,” the California Chamber of Commerce argued in an August report.

From her vantage point at Sacramento’s Center for Workers’ Rights, labor lawyer Daniela Urban has watched cycles like this play out before. When the economy tanks, everyone — stressed-out workers, angry lawmakers, state watchdogs, the governor — wants to know what’s happening at the EDD.

But as people go back to work, the outside interest and funding wanes: a collective failure to fix the system before the next time things go south.

“Once the watchful eye is gone, I worry that it will be neglected,” Urban said, “and not by the people working there.”