David McCabe
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Google is opening an AI center in China

A Google booth at a 2016 internet conference in China. Photo: Andy Wong / AP

Google is setting up an artificial intelligence research facility in China, the company said on Wednesday.

​Why it matters:​ China is looking to become a bigger player in artificial intelligence. And Google — along with other Silicon Valley companies — is looking to gain a foothold in China, where it has had limited operations since 2010. "I believe AI and its benefits have no borders," said Fei-Fei Li, an AI expert who will be one of the leaders of the new center, in a company blog post.

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Thanks for your kind notes yesterday. Ina will be back in your inbox tomorrow morning while I go back to spending my evenings watching The Crown.

Why Cloudflare's CEO took down the Daily Stormer

Cloudflare CEO Matthew Prince. Photo Illustration: Axios Visuals

Cloudflare's network powers internet connections to millions of websites, but most of the 2.8 billion people who use it every month have never heard of the San Francisco company. That is, until last August, when Cloudflare CEO Matthew Prince made the controversial decision to cut off its service to white supremacist website “The Daily Stormer" in the aftermath of the Charlottesville violence, causing the site to go down.

Why it matters: Prince, the son of a journalist and an avid defender of free speech, took heat from some for acting as an internet gatekeeper and was praised by others for taking down neo-Nazi content. His decision fed into the larger debate over whether powerful internet players should have editorial control over how content is distributed online, Axios' Kim Hart reports.

Some highlights from Kim's recent conversation with Prince:

  • He says he'd ditch the "Daily Stormer" again, despite his feeling that his platform should generally stay out of such questions.
  • "We needed to provoke the conversation about what the right role was," he says.
  • FCC Chairman Ajit Pai has argued that big web platforms are more of a threat to speech online than internet providers — but Prince says it's not an either/or situation.
  • "If a company like Cloudflare with 500 employees and market cap two orders of magnitude smaller than Comcast poses a threat, then even larger companies that have a monopoly over the eyeballs and access the internet also pose a threat," he says.

Read more: Catch Kim's whole interview with Prince in the Axios stream.

First in Login: White House tackles electronic medical records

Jared Kushner's Office of American Innovation is convening conversations today related to getting electronic medical records to work together, a White House official tells Login. The goal, the official said, is letting Americans own their health care data.

It's part of a busy Tuesday for tech in D.C.

  • Lawmakers on the House Judiciary Committee are planning to vote on a bill aimed at tackling the debate over whether web platforms should be liable for sex trafficking that takes place online. Victim advocates worry that an amended version of the bill — backed by tech giants including Facebook and Google — would actually make it harder for trafficking victims to sue websites they may think facilitated the crime.
  • The Senate Commerce Committee holds a hearing on artificial intelligence as Washington looks to get a handle on big data.

The SEC takes aim at initial coin offerings

Axios' Kia Kokalitcheva reports: SEC chairman Jay Clayton issued yet another memo to investors yesterday, warning them of the risks of participating in initial coin offerings. That same day, his agency intervened in a token sale by Munchee, a restaurant meal-review app, because it violated securities laws.

Between the lines: Clayton's frustration with careless investors and token sale scams is starting to show. Munchee wasn't the first to violate securities law and the SEC has already published several documents with definitions, resources, and advice on token sales.

  • “[I]f a promoter guarantees returns, if an opportunity sounds too good to be true, or if you are pressured to act quickly, please exercise extreme caution," he says in an obvious warning that sounds like basic investment advice.
  • To be fair, Clayton also outlines some important nuances of this novel and legally complex asset. For example, a token can both be a utility and a security, he explains. Many ICO organizers, including Munchee, have emphasized their tokens' utility characteristics to avoid treating them as securities, which is still illegal.

Won't stop: Companies have already raised $3.67 billion via token sales this year, according to Bloomberg, and the number of ICOs is on track to reach 500 this quarter.

Pay more attention to Section 702

Congress is under the gun to reauthorize a major surveillance law in a debate that has been overshadowed by other major policy fights, like net neutrality and the investigation into online Russian election meddling.

Why it matters: The law — known as Section 702 — expires at the end of the year. The intelligence agencies say it would be catastrophic if it isn't reauthorized. Privacy-minded lawmakers and advocates, however, say that if it is reauthorized without reforms it will perpetuate a sprawling surveillance system that ensnares Americans' information without a warrant.

Get caught up with our Facts Matter explainer in the Axios stream.

You can log out, but you can’t hide

Reproduced from Ghostery; Chart: Axios Visuals

A new study from Ghostery, an anti-tracking tool, shows that an overwhelming majority (79%) of websites globally are tracking visitors' data — with 10% of these sites actually sending user data to 10 companies or more.

Why it matters: Trackers can collect and sell visitor data in ways that aren't always obvious to consumers. Too many trackers can also slow down website load times. As the trade war for data intensifies, companies that collect the most data through trackers will become the biggest targets of data privacy reform.

Axios Media Trends reporter Sara Fischer has more on this here.

Microsoft vet heads to IPO-bound Qualtrics

Longtime Microsoft executive Julie Larson-Green has agreed to join privately-held Qualtrics as its first chief experience officer.

Why it matters: Larson-Green once led Microsoft's Windows group, and once was viewed as a possible CEO successor to Steve Ballmer (the role that eventually went to Satya Nadella). She also held prominent roles in the Office and Microsoft devices units.

Axios' Dan Primack has more in the stream.

Take note

On tap:

  • CBInsight's A-ha! conference starts in San Francisco.
  • The FTC hosts a workshop on informational injury.

Trading places:

  • Former Y Combinator partner Kevin Hale is launching a magazine "that covers the exciting world of speculative fiction."

ICYMI:

  • San Francisco Mayor Ed Lee has died at 65.
  • Kevin Roose writes that he found the alt-right's alternate web services "more pitiful than fear-inspiring" in his NYT column.
  • Ron Conway warned Hillary Clinton's presidential campaign that there were concerns over donor Shervin Pishevar alleged misconduct with women, Forbes says. Clinton spokesperson Nick Merrill responds in the story: "As to these claims of warnings after the fact, if people knew of behavior like this, they shouldn't have gossiped about it, they should have stopped it."
  • Amazon's hiring in Seattle has slowed down, reports the Seattle Times.
  • Netflix got in trouble with its Christmas movie tweet, the Washington Post notes.

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Still looking for something distinctive to wear to the holiday parties this week? Maybe a cryptocurrency sweater would do the trick.

Facts Matter Featured

Congress under pressure to reauthorize surveillance law

The headquarters of the National Security Agency. Photo: Patrick Semansky / AP

Congress is under the gun to reauthorize a major surveillance law in a debate that has been overshadowed by other major policy fights, like net neutrality and the investigation into online Russian election meddling.

Why it matters: The law — known as Section 702 — expires at the end of the year. Intelligence agencies say it would be ultimately catastrophic if it isn't reauthorized. Privacy-minded lawmakers and advocates, however, say that if it is reauthorized without reforms it will perpetuate a sprawling surveillance system that ensnares Americans' information without a warrant.

What the law does

The law is used by the intelligence community to justify the warrantless surveillance of the electronic communications of foreign nationals located abroad.

The debate

Those agencies have pushed aggressively to renew the law without any reforms. But privacy advocates inside and outside of government say that the programs under the law pick up communications belonging to Americans, too.

They've also raised concerns about the way information obtained without a warrant under the law can be used by the FBI in criminal – rather than national security – cases.

What's next?

  • There are several bills in Congress that would keep programs under the law going. Some would make significant changes to surveillance authorized by the law, while others have been met with an apoplectic reaction from privacy advocates and their supporters in tech who say these bills could make things worse.
  • One of those measures could be attached to a must-pass spending bill or move on its own. Lawmakers could also pass a short-term extension to the law and kick the can down the road.
  • Intelligence officials think, however, that they can continue surveillance under the law for some time even if the law doesn't get reauthorized by the end of the year.
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The "Uberization" of the Fortune 500

General Electric is one of the companies adopting this new approach to management. Photo: Richard Drew / AP

More companies are using software to assign tasks to full-time workers similar to the on-demand economy, Sam Schechner writes for the Wall Street Journal. GE and Shell are trying out the approach. Both told the paper they're going to expand those projects in the new year.

Our thought bubble: Axios' Steve LeVine joins me in saying that after decades of shearing off layers of workers at the bottom of the pyramid, automation is bubbling up into management, threatening middle-ranking jobs and, eventually, officers on top of the corporate ladder.

  • The C-suite — CEOs, CTOs and so on — seems highly unlikely to be at risk. But below that, look out.
  • In Washington, the conversation about the implications of algorithms and big data is still in the "policy makers asking lots of questions" phase.

For your calendar: On Tuesday, the Senate Commerce Committee holds a hearing on artificial intelligence.

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Good morning from D.C. I'll be hosting this party for the next 48 hours while Ina and Kim are out of town. As always, you can reply directly to this email and it'll go straight to my inbox. It's Monday and you lead a busy life — so let's get to the news.

How Ajit Pai tore up the rulebook this year

Illustration: Axios Visuals

FCC chairman Ajit Pai has rewritten the rules of the information age so thoroughly that there's no mode of communication under his control where the regulations aren't looser than they were a year ago.

Why it matters: Many top Republican priorities have been stuck in Washington gridlock since Trump took office. Not so at the FCC. They're looking for another win when the FCC votes Thursday on Pai's controversial plan to repeal the net neutrality rules that have been in place since 2015.

While some of these moves were bipartisan, Pai's most aggressive proposals have divided the FCC and the nation. He's actively courted the right — most recently launching a broadside against Silicon Valley that attracted support from Trump backers — and inspired scorn on the left.

At an event last week, Democratic Sen. Elizabeth Warren called him the "point man" for a "corporate takeover of the FCC."

The big question: What impact will Pai's deregulatory spree really have on consumers?

  • His deregulation of the broadcast industry opens the door to more consolidation among the outlets where most Americans get their local news. More people could, for example, end up reading a newspaper in the morning owned by the same company as the station that produces their newscast in the evening.
  • Watch for more zero-rating plays from big broadband providers, where they don't charge for a certain service like streaming, potentially favoring content they produce. That could, however, matter less with so many consumers on unlimited wireless data plans.
  • Internet service providers will be able to offer paid "fast lanes" to edge providers — Netflix, Hulu, etc. That's a cost that could be passed along to consumers. Startups also worry those sorts of arrangements would make it harder to compete with the big players.

Yes, but: Big changes for consumers won't come immediately.

"In five years, we'll probably know whether eliminating the net neutrality rules was a mistake or smart policy, but in 2018 the internet will look exactly the same to consumers regardless of what the FCC does," Paul Gallant of the Cowen Washington Research Group tells Axios.

Go deeper: Flip through our card deck on Pai's biggest deregulatory moves in the Axios stream.

Catch up fast on net neutrality

Gif taken from Axios' Sourced video on YouTube

Axios' Kim Hart joins Sourced with everything you need to know ahead of the big vote. Watch it here.

Asus CEO on his company's advantage over its PC rivals

Photo illustration: Axios Visuals

Asus is known for being willing to try new things. The Taiwanese computer maker first attracted notice in 2007, when it introduced the Eee PC, the first tiny, low-cost "netbook." Since then, it has tried phones that become tablets, tablet-sized phones and other novel designs.

What's happening now: It's not surprising that when Qualcomm and Microsoft came up with the notion of always-connected Windows 10 PCs, Asus was among the first to sign up.

Asus CEO Jerry Shen says such devices play to the company's strengths:

"Almost all the PC players cannot do the smartphone well," Shen told Axios in an interview at last week's Snapdragon Summit in Maui. "We are lucky; we can do both."

Why it matters: Being a PC maker is tough. Being a smaller PC maker is even tougher. Having smartphone chops might just be Asus' ticket to survival in a brutally competitive market.

Read more: Ina's conversation with Shen is here.

1 big idea: The "Uberization" of the Fortune 500

More companies are using software to assign tasks to full-time workers similar to the on-demand economy, Sam Schechner writes for the Wall Street Journal. GE and Shell are trying out the approach. Both told the paper they're going to expand those projects in the new year.

  • "Companies say the new tools make them more efficient and give employees more opportunities to do new kinds of work. ... Researchers say the shift could lead to narrower roles for some managers and displace others," WSJ writes.

Our thought bubble: Axios' Steve LeVine (sign up for his weekly Future of Work newsletter) joins me in saying that after decades of shearing off layers of workers at the bottom of the pyramid, automation is bubbling up into management, threatening middle-ranking jobs and, eventually, officers on top of the corporate ladder.

  • The C-suite — CEOs, CTOs and so on — seems highly unlikely to be at risk. But below that, look out.
  • In Washington, the conversation about the implications of algorithms and big data is still in the "policy makers asking lots of questions" phase.

For your calendar: On Tuesday, the Senate Commerce Committee holds a hearing on artificial intelligence.

Tweet of the weekend

This whole Twitter conversation about Ernest Cline's 2011 thriller seems especially relevant with the book's film adaptation by Steven Spielberg dropping next year. (Warner Bros. just released a new trailer.)

But Ready Player One is also an outlier to a broader trend I've noticed. Earlier this year, Business Insider spoke to 24 "big names in tech" about what books they were reading. The vast majority of them were nonfiction. That was also true of Y Combinator's list of summer reading recommendations.

Earlier this year, FT's Hannah Kuchler floated the idea of creating the "humanities equivalent of coding schools" that would "would give techies a taste of what they missed at college — perhaps even with reading lists themed around the most urgent problems their companies face."

Take note

On tap:

  • Juniper Networks' NXTWORK kicks off in San Francisco.

Trading places:

  • Twitter's Jessica Verrilli, who led corporate development and strategy for the social network, is leaving the company.
  • Former Twitter VP Ameet Ranadive is joining Instagram to lead its "Wellbeing" team.
  • Lumoid founder Aarthi Ramamurthy is going to Facebook's payments team. The gadget rental startup is winding down, Ramamurthy said.
  • Scott Belsky is rejoining Adobe, via Fast Co.Design.
  • Per Reuters, Nokia COO Monika Maurer is leaving the company and will be replaced by Joerg Erlemeier, currently a SVP for Nokia Transformation, effective immediately.

ICYMI:

  • Bitcoin futures hit the market, Bloomberg reports.
  • TechCrunch says Uber settled a lawsuit filed by a rape victim in India whose medical records Uber execs allegedly obtained.
  • Axios' Kia Kokalitcheva looks at the technology behind the Tasty-Walmart deal.
  • Apple is moving toward buying Shazam, per TechCrunch.
  • The Koch brothers are partnering with Silicon Valley-linked groups as they look to become bigger players in tech policy, Politico reports.
  • "Sexism in the tech industry is as old as the tech industry itself," writes WSJ's Chris Mims.

After you Login

This popular 99-cent photo app mimics a disposable camera, right down to the three days you have to wait before you can see your shots.

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How Ajit Pai tore up the rulebook for the information age

FCC Chairman Ajit Pai has rewritten the rules of the information age so thoroughly that there's no mode of communication under his control where the rules aren't looser than they were a year ago. Here's a look at what he's done.


Be smart: While some of his deregulation has been bipartisan, his big-ticket proposals have divided the agency and the nation. He's actively courted fans of President Trump's populist rhetoric and inspired scorn on the left.

Why it matters: Many top Republican priorities have been mired in Washington gridlock since Trump took office. Not so at the FCC. Pai swiftly orchestrated the wholesale deregulation of the networks Americans use every day, which will likely alter the way people experience the internet, broadcast TV and even AM radio. Those changes will play out over years — not immediately.
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Navigation apps directing users toward California wildfires

Photo: Noah Berger / AP

Waze and other mobile navigation apps are sending their users towards the wildfires raging in Southern California, according to multiple reports, because streets near the fires are more clear than unaffected streets.

The details: Waze gave a USA Today reporter directions onto a street blocked off because of the fire, per the paper. And the Los Angeles Times reported that the city's police department was cautioning people about using the programs.

What they're saying: Google, which owns Waze as well as the Google Maps app, said in a statement that to "to provide access to accurate and useful transportation information, we use algorithmic and manual methods to account for everyday and emergency road closures. These road closures also appear on our LA Fire Crisis Map, embedded as part of our SOS Alert on Search." The company says it will continue to update that map — which appears when users search for information about the fire.

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Trial date set for Justice Department's case against AT&T merger

Mark Lennihan / AP

The Justice Department’s case against the $85 billion AT&T-Time Warner will go to trial on March 19. The judge in the case made the decision at a hearing on Thursday attended by top Justice Department antitrust official Makan Delrahim.

The judge also said that he wouldn't rule in the case before the current April 22 deadline for the deal to close. "We understand and appreciate how busy the Court is, and we will promptly discuss the Court’s post-trial schedule with Time Warner," said AT&T General Counsel David McAtee in a statement, adding the company is "committed to this transaction."

Splitting the difference: AT&T wanted the trial to start in February, while the government wanted a May start date.

Go deeper: Bloomberg has a look at the players in this courtroom drama.

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EU regulators threaten legal challenge to U.S. data agreement

An IT specialist works in a German data center. Photo: Jens Meyer / AP

EU regulators threatened to challenge the Privacy Shield pact, a EU-U.S. agreement on the cross-border transfer of personal data, if their concerns and U.S. surveillance practices aren't addressed by next fall, Reuters reports.

Why it matters: The Privacy Shield agreement is sacrosanct to American companies that handle the data of European users, but this threat reflects continued skepticism inside the EU of U.S. privacy practices. It also puts pressure on lawmakers currently vetting the reauthorization of a the Section 702 surveillance law.

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Warren: "No exception in antitrust law for Big Tech"

Sen. Elizabeth Warren. Photo: Carolyn Kaster / AP

Progressive Sen. Elizabeth Warren urged antitrust enforcers on Wednesday to pursue big tech companies, like Google and Facebook, that control giant tranches of consumer data:

“There is no exception in antitrust law for Big Tech. It is time for antitrust enforcers to start looking critically at the ways in which massive amounts of data can be manipulated in ways that choke off competition."

Why it matters: Her comments at an event held by the Open Markets Institute are part of increasing pressure on major tech companies coming from the left, which has typically been supportive of the industry.

Go deeper: Control over data is frequently becoming a major factor in policy fights including on trade issues, as Axios' Sara Fischer and Kim Hart wrote this morning.