How Self-Driving Truck Startup TuSimple Siphoned Trade Secrets to China
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Welcome to Tech News Briefing. It's Wednesday, May 28th. I'm Victoria Craig for The Wall Street Journal. Finding an affordable apartment in a big city can be like spotting a needle in a haystack. But what happens when you add in artificial intelligence, algorithmic pricing systems, even legal battles? Then, one of America's biggest self-driving truck startups shared sensitive data with China. We'll tell you how that's shaping the Trump administration's foreign investment rules.

But first, using AI to crunch confidential data to set apartment rental prices has become a controversial topic in cities from Philadelphia to San Francisco. It's even led to dozens of lawsuits. But the tax bill that cleared the U.S. House last week could throw companies like RealPage a lifeline, as WSJ reporter Rebecca Picciotto has been finding out.

Rebecca, before we get into that, just help us understand how companies like RealPage work. Yes. RealPage is a software firm that has a bunch of data about rentals all across the U.S. and compiles that data into an automated algorithm to show landlords how certain rental prices affect rental demand and in doing so offers suggestions to landlords on how to set their prices. And the real issue with this is the

Yes. So federal, state, and private plaintiffs have accused RealPage's algorithm of using proprietary data and crunching all of those numbers to help landlords basically collude on prices, see how their competitors are pricing, and then increase their rents.

RealPage denies any allegations of antitrust or consumer protection violations. They say that their pricing recommendations are just that, suggestions, and so landlords don't have to take them and in turn that doesn't qualify as price fixing or collusion.

The tax bill that was passed by the House could actually throw a lifeline to RealPage. How would that work? Yeah. So tucked away in what Trump is calling his big, beautiful bill is a provision that House Republicans added to essentially ban state and local officials from regulating tax.

AI models and automated algorithms for 10 years. So that would essentially gut some of the local and state efforts to ban rent-setting algorithms like RealPage across the U.S. And the thing is, when you read your story, it's a little bit whiplash-inducing because there are all kinds of lawsuits that are already going on in local jurisdictions. This House bill could help RealPage, but then also

state and local governments have plans in the works to fight back against what that bill may do. So how does all that work? What kind of efforts are these local jurisdictions preparing for?

The House provision specifically will make unenforceable the local ordinances banning RealPage. But the provision likely will not affect ongoing lawsuits based on antitrust and consumer protection violations that are against RealPage. So RealPage is facing up to $73 billion in monetary damages across those lawsuits, and that will still be fair game even if the provision is passed.

That said, local and state officials' first line of defense would be to sue the federal government if this tax provision is passed. And another consequence might be that if officials can't regulate rent-setting algorithms like RealPage, they'll turn to other tenant protection laws like upping rent control and leaning harder into other means of tenant protection. And what does this mean for the future viability of RealPage's business and its ability to continue operating? Because you mentioned...

some of those lawsuits and the damages that it could cause for the company. Yeah, they're facing monetary damages. The DOJ wants to specifically adjust how RealPage's algorithm functions. Some landlords are already trying to create their own internal data systems away from RealPage. You know, I spoke to one landlord who said that everyone he knows is scared to use RealPage. So it's already affecting the business. That said, RealPage could definitely

breathe a sigh of relief if they're able to function in markets that they've been essentially banned from. That was Rebecca Picciotto, who covers the residential rental market and housing policy for The Journal. Coming up, a U.S.-based company shared its best-in-class autonomous driving system with China and became an example of Washington's shortcomings in keeping hold of critical technologies. We'll delve into some exclusive WSJ reporting after the break.

Marketers, you know that feeling when your content just works? When you crush a viral trend before 10 a.m.? That's Contentful. Dynamic content made blissfully simple. Contentful helps you create and launch personalized experiences instantly across any digital channel. No limits. No stress. Only possibilities. Come get the feels at Contentful.com.

In 2021, the San Diego-based company TuSimple set a record when its truck traveled 80 miles in Arizona without a human driver. But within a couple of years, the company voluntarily shut down its U.S. operations, auctioned off its trucks, and delisted from the Nasdaq.

WSJ reporter Heather Somerville has obtained exclusive details that show two simple, siphoned trade secrets to Chinese companies becoming the poster child for Washington's shortcomings in trying to keep critical tech and know-how in America.

Heather, you spoke to former employees and you've reviewed hundreds of pages of documents about how that transfer happened. Just walk us through the scale of what you found. Two Simple shared with Chinese companies what amounted to a full autonomous driving stack. So this included the source code that would be effectively the brains of an autonomous truck.

as well as numerous aspects of the design, the hardware, the integration of all of these systems. It's pretty difficult to just sort of slap an autonomous driving system onto a truck and make it work. All of these parts have to work together. You need a truck that is designed to accept everything.

a self-driving system. And so in this data that Two Simple transferred included all of these components for this Chinese trucking company called Photon to build a self-driving truck using Two Simple's

autonomous system, which was developed by engineers in the United States. Now, TuSimple did sign a national security agreement with the U.S. government at one point. What did that mean for its ability to share information with Chinese companies? That agreement, which was signed in February 2022, required that TuSimple separate its business and all its technology from China-based employees'

and China partners with a variety of firewalls and governance controls. It was also required not to share any intellectual property, such as source code. This was enforced by the Committee on Foreign Investment in the United States, or CFIUS, which is an interagency national security panel. But it was just about a week after signing that agreement that TuSimple transferred a trove of data

to a Beijing-owned firm. And what we reviewed in documents is that the sharing of technology continued between when TuSimple signed the national security agreement and its deadline to comply with that agreement six months later. And what's been the response from TuSimple to your reporting? TuSimple co-founder Xiaodi Hao, who left TuSimple in 2023, said,

told us that no information prohibited by the company's national security agreement was ever shared with anyone. A CFIUS investigation ultimately determined that TuSimple's technology sharing hadn't violated the national security agreement, but it did fine the company for other infractions. That's according to a person familiar with the events. TuSimple ended up paying $6 million in a settlement to CFIUS without admitting fault.

And you point out in your story that company leadership was referred to the Justice Department for possible theft of trade secrets and espionage charges. The FBI, the SEC, the Commerce Department also all opened their own investigations. What came of all of these probes into the company and its dealings? Not very much. Many of the sources I spoke to were

who are aware of what TuSimple did and have worked deeply on national security issues, are both flummoxed and really mad that things have played out this way. And ultimately what we know so far is that the company paid $6 million to CFIUS for certain infractions.

We don't know the precise status of other investigations, but when it effectively dissolved, its leadership moved on to do other things. One of the co-founders has another self-driving trucking company operating in Texas with Chinese investment. And other leaders have moved over to China where they're building an AI for animation company. Heather, the U.S. considers autonomous vehicle technology as a matter of national security importance.

And this whole story has really frustrated current and former government officials, as you point out in your story, because it's shown the weakness of U.S. laws that are in place. So what has the U.S. government done to try to close some of those loopholes, can we call them, or problems in the laws? It is top of mind for a lot of people in the Trump administration. Technology is integral to U.S. national security.

Because it's important to our competition with China. It's important to our economic security. And we have this realm of export controls, which tell companies they can't share or sell their technology to places like China.

And we have this huge array of other technology that isn't really covered by laws or regulation. We know it's important. Autonomous driving is one of these technologies. And a couple of things that are happening right now is there is an office inside of the Commerce Department that was set up actually under the first Trump administration that has taken a much more aggressive approach to outright prohibiting

Chinese technology from certain companies or certain types of technology that comes from China from being sold in the United States. That was WSJ reporter Heather Somerville. And that's it for Tech News Briefing. Today's show was produced by Julie Chang with Deputy Editor Chris Inslee. I'm Victoria Craig for The Wall Street Journal. We'll be back this afternoon with TNB Tech Minute. Thanks for listening.

Marketers, you know that feeling when your content just works? When you crush a viral trend before 10 a.m.? That's Contentful. Dynamic content made blissfully simple. Contentful helps you create and launch personalized experiences instantly across any digital channel. No limits. No stress. Only possibilities. Come get the feels at Contentful.com.