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Some US lawmakers call for more scrutiny of news app NewsBreak over Chinese origins

[June 08, 2024] By Alexandra Alper and James Pearson

WASHINGTON/
LONDON (Reuters) -Three U.S. lawmakers have called for more scrutiny of NewsBreak, a popular news aggregation app in the United States after Reuters reported it has Chinese origins and has used artificial intelligence tools to produce erroneous stories.

The Reuters story drew upon previously unreported court documents related to copyright infringement, cease-and-desist emails, and a 2022 company memo registering concerns about "AI-generated stories" to identify at least 40 instances in which NewsBreak's use of AI tools affected the communities it strives to serve.

“The only thing more terrifying than a company that deals in unchecked, artificially-generated news, is one with deep ties to an adversarial foreign government," said Senator Mark Warner, a Democrat who chairs the Intelligence Committee.

"This is yet another example of the serious threat posed by technologies from countries of concern. It’s also a stark reminder that we need a holistic approach to addressing this threat – we simply cannot win the game of whack-a-mole with individual companies," he said.

The lawmakers expressed concerns about NewsBreak's current and historical links to Chinese investors, and the company's presence in China, where many of its engineers are based.

In response to a request from Reuters for comment about the lawmakers' statements, NewsBreak said it was an American company: "NewsBreak is a U.S. company and always has been. Any assertion to the contrary is not true," a spokesperson said.

NewsBreak launched in the U.S. in 2015 as a subsidiary of Yidian, a Chinese news aggregation app. Both companies were founded by Jeff Zheng, the CEO of NewsBreak, and the companies share a U.S. patent registered in 2015 for an "Interest Engine" algorithm, which recommends news content based on a user's interests and location, Reuters reported.

Yidian in 2017 received praise from ruling Communist Party officials in China for its efficiency in disseminating government propaganda. Reuters found no evidence that NewsBreak censored or produced news that was favorable to the Chinese government.

“This report brings to light serious questions about Newsbreak, its historical relationship with an entity that assisted the CCP, and to Chinese state-linked media," said Representative Raja Krishnamoorthi, the top Democrat on the House select committee on China, in a reference to Yidian and its former investor, state-linked media outlet Phoenix New Media.

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U.S. Senator Mark Warner, Democrat of Virginia and Chairman of the Senate Select Committee on Intelligence, holds a hearing about worldwide threats, on Capitol Hill in Washington, DC, U.S., April 14, 2021. Saul Loeb/Pool via REUTERS/File Photo

Americans have the right to "full transparency" about any connections to the CCP from news distributors, Krishnamoorthi added, particularly with regards to the use of "opaque algorithms" and artificial intelligence tools to produce news.

Reuters reported the praise Yidian received from the Communist Party in 2017, but was unable to establish that NewsBreak has any current ties with the Party.

U.S. Representative Elise Stefanik, a Republican, said IDG Capital's backing of NewsBreak indicated the app "deserves increased scrutiny."

"We cannot allow our foreign adversaries access to American citizen's data to weaponize them against America’s interests," she said.

NewsBreak is a privately held start-up, whose primary backers are private equity firms San Francisco-based Francisco Partners, and Beijing-based IDG Capital, Reuters reported. In February, IDG Capital was added to a list of dozens of Chinese companies the Pentagon said were allegedly working with Beijing's military.

IDG Capital told Bloomberg in February that it has no association with the Chinese military and does not belong on that list. IDG did not immediately respond to a request for comment on the lawmaker's reaction.

A spokesperson for Francisco Partners, which has previously declined to answer questions from Reuters on their investment in NewsBreak, described the story as "false and misleading," but declined to provide details beyond saying the description of them as a "primary backer" of NewsBreak was incorrect because their investment was less than 10%.

They did not provide documentation to prove the size of the holding. NewsBreak has told Reuters as recently as May 13 that Francisco Partners is NewsBreak's primary investor. NewsBreak did not respond to two requests late Friday asking for documentation supporting the assertion.

(Reporting by Alexandra Alper in Washington and James Pearson in London; Additional reporting by Karen Freifeld in New York; Editing by Anna Driver and Chris Sanders)

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