Cryptic message: why arrest Telegram’s founder?

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The Economist.

Hello and welcome to the Intelligence from the Economist. I'm your host, Rosie Bloor. Every weekday we provide a fresh perspective on the event shaping your world. What do central bankers do for fun? Our correspondent went to the annual jamboree of monetary policy specialists to find out what counts as small talk when you've got the world's wealth in your coffers and what's keeping at least some of them awake at night. And each week we've been answering your questions about artificial intelligence. Today we have a query about how AI might be able to help people with various types of disability. But first, He's known as Russia's Mark Zuckerberg. Pavel Durov is the founder of Telegram. He left Russia 10 years ago, and he and the social media app he still runs are now based in Dubai. Until recently, he didn't speak to the media much, preferring instead to post shirtless selfies on Instagram. Who needs to talk to the press when you're worth an estimated 15 and a half billion dollars? But all that wealth and influence didn't stop Durov being arrested on Saturday after his private jet landed in Paris. Now he's locked up in a French cell. Later today, judges must decide whether to pursue charges or release him.

Telegram in the west, it's one of the smaller and less well known social media platforms. But in other parts of the world, it's enormous.

Tom Wainwright is our media editor.

In Russia in particular, which is where it was founded, about 3/4 of Internet users use Telegram. It's more or less jointly the most popular social network there. And it's a curious app. It's often described as a messaging platform, and it is that. But it's also a very powerful broadcast medium. Unlike some other apps like say, WhatsApp, you can have chat channels on Telegram, which have many thousands of members. And so it's a way that people, certainly in Russia and various other countries, actually get a lot of their news as well as that it's used by security services in Russia as a secure, in inverted commas messaging platform. It's actually not all that secure compared with some other platforms, but there's a widespread belief that it is. So it's this very curious, very influential platform which is both a major news medium and also a big messaging platform used by both the masses and elites.

And why has Durov been arrested?

Well, this is what everyone's still scratching their heads about. The French prosecutors released a press release a couple of days after they arrested him, outlining their case, saying that it's partly part of an investigation into the spread of child sex abuse material on Telegram. They say it's partly due to infringements of law regarding encryption. They mentioned money laundering. So it's a bit of a grab bag of different things. But the target in this investigation is Telegram, which of course is the platform that Durov founded and is the, the chief executive of.

And what has Durov said in response to this?

Well, Telegram has released a statement saying that this is ridiculous and it's not the first time that they have been accused of being lax on child sex abuse material, for example. And I mean, it's interesting, some people, including Elon Musk, the owner of Twitter, or X as it's now called, have tried to frame this as a free speech issue. And I can understand that there's a lot of argument about free speech online at the moment, but when it comes to the child sex abuse stuff, it's really one of very few areas where there is total consensus. Nobody thinks that that kind of content should be allowed and no country allows it. It's equally illegal everywhere. And that's a category of content that Telegram has been found to be pretty lax about moderating. There was a report last year by the Internet Observatory at Stanford University, which found channels on Telegram with thousands of members sharing child sex abuse imagery and it's been criticized many times in the past for really just not doing enough to stop this. I mean, by comparison, Meta, which is the company that owns Facebook and WhatsApp and Instagram, employs about 40,000 people in safety and security. And Telegram is said to have a staff of about 50. That's 5, 0. So the difference in enforcement level is quite something.

And do we know why he's been arrested now and why in France?

Well, no, in short, but there's plenty of speculation. And one line of speculation surrounds the war between Russia and Ukraine. Telegram has a dual role in this. One is that it's one of very few platforms in Russia through which people can get true information about what's going on in Ukraine. They get lots of misinformation as well on Telegram, but it's one place where news goes relatively uncensored. And as well as that, it's an app that the Russian military uses for its own communications purposes. And so some people are wondering if all governments really have an interest in what's on Telegram at the moment. The Russian government is interested because they want to know what's being said. But Western governments also might be interested to see what the Russian military is planning. There could be a clear operational advantage to being able to see what's being said. So there's all kinds of speculation that that's a motive for this.

Durov left Russia in 2014, so he clearly has something of a conflicted relationship with the Russian state. Where does that all fit in?

Well, he does. I mean, it's very complicated. He founded one social network which, by his account, he was more or less forced to sell it to investors who were friendly to the Kremlin, so that the Russian government could take a look at what people were doing on it. And that was why he left at around the same time he found a telegram. And he has said in the past that he is not willing to hand over any information to the Russian authorities, or indeed to any authorities. Now, there is speculation in Russia that there has been cooperation between Telegram and the government. Telegram's ongoing lack of end to end encryption, which is the most secure type that you get on social networks, has led many to wonder if there's a reason for that. Is it actually quite convenient for some people that these messages are not fully encrypted? Telegram denies ever handing over any information of any sort. But there have been cases in Russia recently where the government has managed to discover the identity of previously anonymous moderators of Telegram channels and prosecutions have followed as a result of that. Now, how the government got its hands on that information. We don't know whether it was able to hack in or whether it got the information with cooperation from somebody inside Telegram. But it's a very conflicted relationship in which Mr. Durov has been highly critical of the Russian authorities, but in which he also runs a platform many see as being potentially quite useful to them.

What could this mean for other messaging services?

It's hard to say what this means for other messaging platforms, really, until we know exactly what's going on in this French case. But I think that insofar as it concerns Telegram's failure to police child sex abuse content, I don't think the ramifications for other platforms are necessarily all that great, because this is something that most platforms are already putting pretty serious resources into doing. Meta claims that it spent more than $20 billion on precisely this in recent years. So the impact there might not be so great. But I think that further down the line, you are likely to see this incident cited by other governments as a kind of evidence that cracking down on social networks is something that rich Western countries do, too. And there are plenty of examples of not so liberal countries like Turkey being one, Russia itself being another, which have passed laws, which have become known as hostage laws, requiring social networks to have their own executives present in the country. The idea being that if those countries governments want to put pressure on those social networks, they can threaten their executives with arrest. We've seen this recently, actually, in Brazil. X has recently announced that it's going to be closing its offices in Brazil because a Brazilian court threatened an executive there with arrest. And so I wonder if in future we're going to see more governments saying, well, look, France has done it. France arrested the chief executive of a global top 10 social media platform. Why can't we do the same? So I think that other chief executives of social networks, they may think that they're on firmer ground than Telegram was because most of them probably feel that they're doing a better job of policing legal content. But nonetheless, I think that they would consider this a somewhat worrying precedent that the head of a social platform has been detained over something related to content moderation.

Tom, thank you so much. Great to talk to you.

You too. Thank you.

I'm just back from Jackson Hole, Wyoming, where each year at the scenic Jackson Lake Lodge, the world's central bankers and top monetary economists assemble for a mix of research and recreation.

Henry Kerr is our economics editor.

The event is held amid spectacular views of mountains and wildlife, with a group of central bankers and economists. I went on a lovely lakeside hike, though I was told in 2023 it was hit by a rainstorm, soaking some economists to the bone. A year ago, inflation was still too high and investors were increasingly betting that interest rates would have to stay higher for longer. This time, though, the outlook appears brighter. Inflation seems largely to be subdued and central banks are starting to cut interest rates. The weather on this year's hike wasn't bad either, in case you were wondering.

Henry, a jamboree of economists and central bankers. Is it fun?

It's fun for a couple of reasons. One is that that's unusual at an event filled with these kind of very important people to have people let their hair down a little bit. And two, the flip side of that informality is a greater degree of intimacy and which means that this is where the really important issues in this world are discussed.

A set piece event at Jackson Hole is a speech by the chair of the Federal Reserve. And he came as close as he's come, didn't he, to declaring victory over inflation? Did that spark scenes of jubilation amongst the central bankers there?

There was this general sense of everybody being very happy. I think there's an enormous sense of relief because of course it's not just that inflation's come down, it's. It's that it's come down without a recession. Because even when they recognized the problem and raised interest rates a lot, central bankers feared that to get inflation under control, they were going to have to drive their economies into recession. And that hadn't happened. So I'd say yes, there was a really optimistic feel in the air. But if you look closely at the events of Jackson Hole, particularly at one research paper that was presented and some of the comments that were being made here and there by central bankers, you could actually see this cloud on the horizon which is to do with government debt and irresponsible fiscal policy and spending and taxation by politicians.

And what was the real concern that people were actually talking about?

The research paper that was presented by Hanno Lustig of Stanford University claimed that in the pandemic, American government debt, which is normally supposed to be the world's safe asset, we think of this as the ultimate safe asset, really, where you park your cash if you don't want to lose it. He said that it entered a risky debt regime because inflation, which everyone knows about, has pushed up prices an awful lot. But if you're a member of the public and you're earning a wage, wages went up an awful lot as well, but if you are a bondholder, if you own this public debt that's supposed to be really safe, you lost in two ways. You lost because inflation eroded the real value of that debt. And you lost because when interest rates go up, which is what had to happen because of inflation, when interest rates go up, that debt falls in value. And what happened is that during the pandemic cycle, if you will, the real terms value of a portfolio of treasury bonds fell by 26%, which is a lot for an asset that's supposed to be safe. And the implications of government debt being a more risky investment are quite profound and have implications for the central bankers.

And you say that this concern about the safety of American Treasuries was expressed in a research paper. How unique was that view? Or did others share in the room?

The author of this paper was given quite a grilling. I'd say there was a decent amount of skepticism, including from the discussant of the paper, the person who's tasked with responding to it, there was a fair amount of skepticism. But if you look at what some of the world's other central bankers were saying, elements of this concern did come through. So, for example, at his lunchtime address and the Q and A on the Friday, Andrew Baillie, the governor of the bank of England, was talking about quantitative easing, which is the purchasing of government debts by the central bank. And that is in some contexts thought of as textbook central banking, either to control interest rates or support the financial system. Central banks are always transacting in government debt. But if that government debt is actually risky because fiscal policy is irresponsible or because inflation threatens it, then it changes the nature of what you're doing. And Andrew Bailey used this particular term. He said that QE had been tarnished because, of course, what's happened is that central banks everywhere who bought bonds have taken big losses on those bonds as a result of interest rates going up. So that's one thing. Another thing that happened is that in the panel at the end of the second day, the central bank governor of Brazil made this warning that he thought that central banks were going to have to think a lot more about fiscal policy. And Brazil is somewhere that's very familiar with this problem of fiscal and monetary policy being in conflict, where the central bank puts up interest rates, and then all that happens is the deficit gets bigger because the government has a budget that's more strained as a result of having to pay more to service its debts. So although the paper took a bit of a beating, there were these hints from the central bankers here and there, that fiscal policy was at least on the horizon. And I think also analytically, if you look at the trajectory certainly of America's borrowing, which is enormous, it can't go on like that. And if it does, eventually you would end up in a situation like Brazil. So I definitely think that although this short term optimism on the part of the central bankers is justified, it's not the case that they've got nothing to worry about.

What does all that mean for bondholders if in fact the situation is more risky than it appears at the moment?

My takeaway from this research and from generally covering the world economy in the last few years is that it's been a learning experience. We know that if you're hit by a big shock like the pandemic, a big crisis, that governments are going to spend a lot and that you'll probably get some inflation afterwards. And the Lustig paper said this, after wars, for example, you typically get a burst of inflation. Now, what's going on around the world at the moment, we have a lot of geopolitical tension. We have conflict, we have some conflicts that are getting worse. And also the pandemic's not going to be the last pandemic. So if I were holding a long term bond, I would at least want to consider the possibility that at some point the government's going to do all this again. And although people might not make the exact same mistakes they did last time, the potential that you have, these episodes where there are bursts of inflation and and you do enter this risky debt regime, it seems like a serious possibility to me. And so I find it curious that there's absolutely no sign in bond markets of investors worrying about this, because perhaps they should be.

Henry, thank you so much.

Thanks, Rosie.

Every year the Economist publishes Schools Briefs, simple guide to some of the most important ideas of the day. This summer, our focus is on artificial intelligence. We've also invited you to write in with some of your questions about AI. And don't worry, I'm not going to try and answer them. But we've got various Economist correspondents on standby to do so. One person who's been in touch is listener Gaurav. He left us this voice note.

Hi, this is Gaurav Bachchandani from Dubai. As I suffer from a vision disability called Stargardt's disease, my question today is about AI and accessibility. What is the role AI is currently playing or is likely to play in the coming years to improve the lives of people with various forms of disabilities? And help them be more independent.

It's a great question. It's one that goes to the heart of how AI can help and augment human ability and hopefully also do something good for people with disabilities.

Emily Steinmark is a science correspondent at the Economist.

Now, our listener Gaurav has Star Goth's disease, which is a genetic condition where the center of their vision gradually fails and goes dark or hazy. And that can really be difficult when you want to read or do a lot of the sort of things that sighted people are used to doing. Let's start with how AI can help people with visual impairments. Screen readers have been an important tool for decades, since the 70s. And what they do is that they turn text into speech, but AI is really helping it become better. One of the things that we do in modern working is that we navigate websites and we look at images and we see all of this stuff. It's not just text on a page or text in a book. And AI is really helping people to navigate complex things on screen. The screen reader is coming off screen, so it's becoming a screen reader for real life. There's a number of different apps that do this. I've got one on my phone, it's called Seeing AI. And in front of me here I have a copy of the Economist. So if I open up the app, it should be able to tell me what's on the front page.

The Economist, our US election forecast model, new nuclear threats, what Ukraine can gain in Kursk, does the brain learn like Al, Footloose and Fancy Degree.

So we got most of that alright. I think the only thing I might have tripped it up was the AI sounding like Al, but that's a mistake your eyes can make too. So I think that was pretty good. There's another app called Be My AI which is in beta testing at the moment, started last year. It's come out of this company called Be My Eyes, where there's an app, you can phone up a person and use the camera on your phone to see where you are. And so in this situation, they've just replaced this other person, this stranger, with an AI and it allows visually impaired people to use their phone to take a picture of what's in front of them and then ask the AI model questions about it. So they can be standing in front of their fridge and they can go, what's in my fridge? And what could I make with it? And the AI model will reply. They can take a picture in a shop and say, on which shelf is the shampoo that I use to wash my hair and the AI will help them. So that's really a way in which this kind of technology can help people with visual impairments. The next natural step is really to put this technology into a pair of glasses so that people don't have to fumble around with their phones. And listeners might remember the mid 2010s phenomenon, cuckoo glass. It's that kind of idea.

Okay, Glass, take a picture.

And there is my picture of Buckingham Palace.

Google has stopped making them because they flopped commercially. But the technology lives. Envision Glasses uses that technology, as well as the Internet to reach ChatGPT out in the wild. So those glasses could then read text and interpret objects in people's environment from images sent from the glasses. It can tell them, wait, there's a road that's a canal you don't want to walk into, that you can even recognize people that these people will be interacting with. So it can say to them, oh, that's Dave from marketing. So people aren't caught out by not being able to see people and recognize them. AI is not just helping people with visual disabilities. Other cool things are happening as well for people with other kinds of disabilities, AI, for example, is improving hearing aids by making speech stand out in noisy environments. The smart ear uses artificial intelligence to fill in the gaps produced by years of hearing loss. And it could even help you prioritize voices, like the voice of your friend or your spouse. If you're in a busy restaurant and there are lots of different voices all over the place, but you actually just want to focus in on the conversation that you're having. You can also get apps that translate speech into sign language. So say if you're sitting in a lecture and you're trying to hear what your professor is saying, you can get an app that actually on your screen translates that in near real time in sign language. For people with mobility disabilities, AI is also moving wheelchairs towards something a bit more like self driving wheelchairs. So that means navigating around objects rather than just going into them. Now, those things are still in development. In future, you'd imagine wheelchairs to be much smarter than they are today. Some companies and researchers are even working on wearable robots, smart exoskeletons that let people get out and above their wheelchairs and move about using AI. Such exoskeletons can be taught how to walk in a normal, smooth way, if that's what's wanted, or to adjust to people's different abilities and bodies. So will AI be a big equalizer? Well, that really depends. It seems inevitable to me that AI will help people with disabilities in ways that will improve their lives. And I mean it already is doing that. But much of the difficulty of being disabled or differently abled comes from living in a world that's designed for able bodied people. So as AI becomes a bigger part of able bodied society, it needs to not make those differences bigger or worse for people with disabilities. For example, Alexa, the voice assistant, is not that good at understanding people with speech impediments, even though it could be and often is a great help to people with disabilities because it's basically an assistant you can tell to do stuff. Someone had to specifically go and make a separate app that recognizes speech of people with speech impediments and then integrates with Alexa. So that had to come after a few years of frustration from this group that it wasn't actually as helpful as it could be. And so that means that if companies that are making these new technological solutions aren't thinking about people with disabilities from the get go, those people could be playing catch up. And so it's really important that gap doesn't become bigger. So there's definitely plenty of potential for this to work, but it needs to be done right.

If you've got any questions about artificial intelligence, please do send them our way to podcastconomist.com no question is too silly or too weird. We'll do our best to answer as many as possible. That's all for this episode of the Intelligence. And if you're a subscriber, you can listen to the Intelligence and all our shows ad free on the Economist app. Let us know what you think of the show. You can get in touch@podcastconomist.com we'll see you back here tomorrow.