The kings of the internet expand their dominance - Axios
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The kings of the internet expand their dominance

Lazaro Gamio / Axios

Earnings calls and industry reports this week show that Google and Facebook, the two largest advertising companies in the digital ecosystem, are thriving, despite controversies that have raised questioned about how safe their platforms are for advertisers.

  • Google's ad revenue grew 18.8% to $21.41 billion last quarter, mostly due to YouTube video ads and mobile search ads
  • Facebook revenue beat expectations for the first quarter, with, $7.86 billion in ad revenue, up 51% from the prior year, which is especially positive since the company has continually warned investors that ad revenue would "come down meaningfully" beginning in the middle of this year due to Newsfeed ad saturation.
  • Google and Facebook took 89% of all digital ad growth in 2016, according to the Interactive Advertising Bureau (IAB)

Why it matters: Despite controversial content on their platforms upsetting users, these numbers suggest marketers are willing to take a risk on using imperfect technologies to market their brands, because it's convenient and effective.

Here's why buyers say they aren't deterred: Axios spoke with several ad buyers and agency executives, most of which offered similar thoughts on how Google and Facebook can be useful and necessary, despite some of the risks.

  • Users aren't dropping, so ad potential is still there: "At the end of the day, if brand marketers choose to opt out, their competitors won't, and this creates an interesting dynamic," Unified CEO Jason Beckerman said. "As we just saw with Facebook earnings, the audience's attention on these platforms is only growing, so even if there is fake news, there are folks who are reading it who also have disposable income and make purchases. Brands cannot overlook that."
  • The platforms drive results: "Google captures individuals actively searching for keywords and phrases relevant to a specific topic or issue, which is handy for intercepting someone looking for the information, product or service a brand has to offer," says Christi Burnum, VP and Group Manager, Digital Paid Media at Ketchum. "Regarding Facebook, there is an expectation from consumers nowadays that they can have a relationship with their favorite brands, and social media is where this engagement is taking place."
  • Clients aren't as concerned as you'd think: "We tell our clients that Facebook in-stream advertising and YouTube pre-roll is at the top of the digital advertising pyramid," says Brian Donahue, CEO of CRAFT Digital in DC. "Despite recent controversies, there's been no decline in audiences and engagements. The era of advertisers having great concern over adjacent content is behind us."
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Here's the new Graham-Cassidy bill

Sens. Bill Cassidy and Lindsey Graham are set to introduce a new version of their health care bill (AP Photo/Pablo Martinez Monsivais, File)

Sens. Lindsey Graham and Bill Cassidy have revised their health-care bill, allowing states to loosen more of the Affordable Care Act's regulations while diverting more money to the states whose senators hold the deciding votes on the legislation. They will formally release the revised measure tomorrow.

The bill

Why it matters: The deadline to pass a bill with just 50 votes is Saturday. The Congressional Budget Office is expected to release preliminary estimates this week of the initial — and now outdated — version of the bill. With the clock ticking and little time for independent economic analyses, Graham and Cassidy are making a last-minute play for senators who have been critical not only of the bill's contents, but of the rushed process, too.

What's different: According to Graham and Cassidy's analysis, the revised bill would direct more money to Alaska, Arizona, Kentucky and Maine, compared with earlier versions. But it would still reduce overall federal funding to those states — whose Republican senators are, for now, opposed to the bill or undecided.

  • Although the state-by-state numbers being circulated show these states faring well, the Kaiser Family Foundation's Larry Levitt called them "pretty misleading," as they don't take into account the per-person cap on federal Medicaid funding. They also add state savings to the block grants under the bill, but don't include them in the current law baseline, meaning the comparison isn't apples to apples.

The revisions also ramped up some of the regulatory rollbacks needed to help win conservative votes. Sen. Ted Cruz said earlier today that he's not yet on board with the legislation.

For Alaska:

  • Funding carve outs for low-density states
  • Increased Medicaid federal match rate for high-poverty states, aka Alaska and Hawaii

Regulatory changes:

  • Allows "multiple risk pools," which could separate sick and healthy people and thus drive up premiums for people with pre-existing conditions.
  • Allows states to change the federal cap on out-of-pocket costs for enrollees.
  • Allows states to decide how much insurers can charge people with pre-existing conditions, the benefits plans must offer and how cost-sharing is structured.
  • States only have to describe their plans; they don't have to submit waivers of insurance rules.
  • "If there was any question about Graham-Cassidy's removal of federal protections for pre-existing conditions, this new draft is quite clear," Levitt tweeted.
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Trump's new travel ban

Photo: Evan Vucci / AP

President Trump has declared new bans or restrictions on travel from eight countries, effectively replacing the existing travel ban that is due to expire. The returning countries: Iran, Libya, Somalia, Syria, and Yemen. The new additions: North Korea, Chad and Venezuela. With the exception of Venezuela, which faces lighter restrictions, nearly all nationals of these countries will be banned indefinitely.

One obvious change is that, after the earlier policy was labeled a Muslim ban, the Trump administration has added countries that are not majority-Muslim. The policy will take effect October 18, and officials said countries will be added and removed from the list based on security conditions. The Supreme Court is still set to rule on the constitutionality of the prior ban next month.

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The fights ahead on health care, tax reform

Ryan, Trump and McConnell at the White House. Photo: Evan Vucci / AP

Here's how top sources in the White House and on Capitol Hill expect this week's major legislative items to play out:

1. Health care: Over the past 48 hours, I've spoken to more than half a dozen senior administration officials and Republican leadership sources about health care. Not one of them said they were optimistic about the chances of passing the GOP's last-ditch Graham-Cassidy bill to repeal and replace the Affordable Care Act.

It's telling — and not in a good way — that President Trump is pinning a good deal of his hopes on his last-ditch attempt to flip Rand Paul, who is perennially the toughest vote in the conference, from a hard no to a reluctant yes.

The political chessboard, per sources close to the process:

  • John McCain has already said he's voting against it, and nobody thinks there's a snowball's chance in hell of persuading him to change his mind. They can only lose one more vote.
  • Susan Collins signaled she's almost certainly voting against the bill. The administration plans to release new figures on Monday they say will show that Collins' state of Maine gets significantly more resources under the GOP health care bill, but nobody I've spoken to believes that argument will work on her. The way one source put it: Collins' political brand is built on being bipartisan and her incentives are to oppose any bill that's Republican-only.
  • Lisa Murkowski leans heavily towards no, and McCain has given her political cover to vote against the bill. (Oh, and bonus! Ted Cruz said today they don't have his vote yet. He wants the bill to tackle more regulations. Oh, and Mike Lee hasn't committed to the bill, either.)
  • The opposition: Progressives are well organized against the key Republican senators leading up to the health care vote, which is expected to happen as early as Wednesday. Progressive groups are running high-pressured ads, and have planned protests and rallies this week in Alaska, Ohio, West Virginia, Colorado, Florida, and Nevada.
  • X factor: Republican leaders are hoping that the realization sinks in among their reluctant colleagues that repeal will either happen this week or never. If Republicans don't repeal-and-replace the Affordable Care Act this week, forget it. The road ahead is clear: working with Democrats to strengthen President Obama's signature domestic achievement.

2. Tax reform: Republican leaders were frustrated when Axios and the Washington Post reported leaked details of the "Big Six" tax plan that's been hashed out for months in immense secrecy among Republican leaders and administration officials Gary Cohn and Steven Mnuchin. These leaks, which began circulating around Capitol Hill on Friday night, put GOP leaders under pressure from their members, who are anxious for the details.

Overall, however, leaders and administration officials feel far more optimistic about tax reform than they have about health care:

  • Tax reform is a natural issue for a lot of Republicans. When most Republican lawmakers wake up in the morning they don't think about refashioning the health care system; but most do think about cutting taxes.
  • They've had a pretty good run up to tax reform; they're going to have vigorous hearings, a lot of negotiation. The pay off — reduced tax rates, goosing the GDP, money in voters' pockets — is more tangible than it ever was with health care.
  • Senior officials on Capitol Hill and inside the administration told me this weekend that they fully expect Trump to embrace the Big Six tax plan. He won't be selling the framework as a finished product; it's the starting point of a process that will be long and have lots of give and take as it wends its way through the House and Senate.
  • The opposition: Following Axios' scoop about Republicans' planned cut to the top income tax rate, Democratic Senate leader Chuck Schumer said: "Democrats have strongly and firmly stood for the position that not one penny of tax cuts should go to the top 1%."
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First look: Alabama poll

Roy Moore prepares for a debate. Photo: Brynn Anderson / AP

The data analytics firm 0ptimus has been running surveys in the lead up to Tuesday's Alabama special election. Their latest poll — taken on Friday and Saturday — has anti-establishment candidate Roy Moore at 55.4 percent and the Trump/McConnell-backed candidate Luther Strange at 44.6 percent.

  • 0ptimus partner Scott Tranter says he was struck by this statistic: "80% of those surveyed and 86% of primary voters know Trump endorsed Strange, which is up 5% since Tuesday and 15% since last week. Moore has maintained similar leads throughout this period."
  • The RealClearPolitics average of recent polls for the Alabama Senate race has Moore ahead by 8.6 percentage points, which is within the margin of error of the 0ptimus survey.

(Methodology: Tranter says they've been running automated telephone surveys for two weeks in Alabama. This latest sample of 1,035 modeled likely voters has a margin of error of 2.9 percentage points, according to Tranter.)

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McCain on 60 Minutes: 6 key quotes

Screengrab via 60 Minutes

Sen. John McCain kicked off 60 Minutes' 50th anniversary season Sunday night with a candid interview about his brain cancer, his career and his relationship with President Trump. Here are 6 key quotes from the senator:

The big one: "I want, when I leave, that the ceremony is at the Naval Academy. And we just have a couple of people that stand up and say, 'This guy, he served his country.'"

  • On working after his diagnosis: "I am more energetic and more engaged as a result of this because I know that I've got to do everything I can to serve this country while I can."
  • On speaking with doctors about his brain cancer: "They said that it's very serious ... Some say 3%, some say 14%. You know, it's — it's a very poor prognosis. So I just said, 'I understand. Now we're going to do what we can, get the best doctors we can find and do the best we can.'"
  • On Trump's attacks against him: "If I took offense at everybody who has said something about me, or disparaged me or something like that — life is too short. You've got to move on."
  • On Trump's fitness for office: "The American people selected Donald Trump to be President of the United States. We have to respect that ... He has a very strong national security team around him who I know has significant influence over him."
  • On late Sen. Ted Kennedy, who also had brain cancer: "I think about Ted a lot. Ted stayed at his job, kept working. Kept going even when he was in a wheelchair."
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Trump allies go on offense over NFL controversy

Screengrab via America First Policies

Amid the controversy surrounding NFL protests, and President Trump's call for players who join in to be fired or suspended, the pro-Trump outside group America First Policies released an ad calling on supporters to boycott the NFL.

"Turn off the NFL ... #TakeAStandNotAKnee" the ad reads. Here's who else has backed up Trump's comments:

Trump administration officials and allies played defense for the president on TV Sunday:

And some congressional Republicans echoed Trump's sentiment, but did not openly condone the president's remarks:
  • Sen. John Cornyn: It's "profoundly ungrateful given the sacrifice of our military ... not to demonstrate respect for the flag."
  • Sen. Ted Cruz: "I, for one, am not a fan of rich, spoiled athletes disrespecting the flag."
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The NFL's day of protest

New England Patriots players kneel during the national anthem. Photo: Michael Dwyer / AP

Beginning with the early game in London where several players from both the Ravens and Jaguars knelt during the national anthem, and heading into the first full slate of games when the Steelers declined to take the field for the anthem and teams across the league locked arms in solidarity, the NFL is showing collective resistance today to President Trump's comments about players who protest during the anthem.

Before the games, Trump tweeted that those who refuse to stand should be fired or suspended. After the much-expanded protests, Trump followed up: "Great solidarity for our National Anthem and for our Country. Standing with locked arms is good, kneeling is not acceptable. Bad ratings!" He later told reporters the situation had "nothing to do with race."

Go deeper: The Great Divider, What Trump/NFL are thinking, the conversation, Trump on NFL/race.

  • One more Trump tweet: "Courageous Patriots have fought and died for our great American Flag --- we MUST honor and respect it! MAKE AMERICA GREAT AGAIN!"
  • The Pittsburgh Steelers didn't take the field for the anthem. Coach Mike Tomlin said he didn't want the players to have to choose whether to protest or not. Tackle Alejandro Villanueva, a former Army ranger, stood alone and sang along.
  • Patriots owner Robert Kraft, a friend and donor of Trump's, said he was "deeply disappointed" by the president's remarks.
  • Shahid Khan, the Jaguars owner who gave $1 million to Trump's inaugural committee, linked arms with his players in a show of solidarity.
  • Rex Ryan, the former Bills coach who once introduced Trump at a rally, said he was "pissed off" by Trump's descriptions of protesting players.
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Trump says his criticism of anthem protests "nothing to do with race"

Baltimore Ravens players kneel in protest. Photo: AP / Matt Dunham

At a brief impromptu press conference from Bedminister, N.J., President Trump said his demand that NFL players who kneel during the national anthem has "nothing to do with race," per Abby Phillip of the Washington Post. The quotes:

  • "This has nothing to do with race. I've never said anything about race."
  • "I think the owners should do something about it. it's very disrespectful to our flag and our country."

The backstory: Colin Kaepernick, the ex-49ers QB who started the protest, said it was about the treatment of minorities as second class citizens in the U.S., and nearly all of those who have elected to kneel are black.

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Kushner used private email for White House matters

Kushner, accompanied by his lawyer, arrives to meet with the House Intelligence Committee. Photo: Jacquelyn Martin / AP

Senior White House adviser Jared Kushner used a private email account for White House business, per Politco's Josh Dawsey. He used the personal account, set up during the transition in December, to correspond with former Chief of Staff Reince Priebus, former chief strategist Steve Bannon, economic adviser Gary Cohn and spokesman Josh Raffel.

Why it matters: Trump repeatedly, and effectively, slammed Hillary Clinton during the campaign over her use of a private email server while serving as Secretary of State.

Kushner's lawyer, Abbe Lowell, said: "Mr. Kushner uses his White House email address to conduct White House business. Fewer than 100 emails from January through August were either sent to or returned by Mr. Kushner to colleagues in the White House from his personal email account. These usually forwarded news articles or political commentary and most often occurred when someone initiated the exchange by sending an email to his personal rather than his White House address."

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Puerto Rico's hurricane recovery will take years

A line to buy bread in Yabucoa, Puerto Rico after Hurricane Maria passed through the island. Photo: Carlos Giusti / AP

Last week, Hurricane Maria, which came right on the heels of Hurricane Irma, ripped through Puerto Rico, killing at least 13 people and wiping out electricity on the entire island. Strapped for resources, Puerto Rico now faces a steep recovery and officials say residents may not have power for 4 to 6 months.

The bottom line: Hit by back-to-back hurricanes and $73 billion in debt, Puerto Rico is dealing with a crisis of historic proportions. The U.S. federal government will have to take a significant role in the recovery process to give the U.S. territory a chance at bouncing back.

  • The state-run power company in Puerto Rico is broke, along with several other government agencies, due to the debt crisis.
  • President Trump has pledged the full support of the U.S. government in Puerto Rico's recovery and said he will visit the island.
  • The port of San Juan is open and accepting shipments of food, water and generators.
  • Puerto Rico's federal control board has authorized $1 billion for hurricane relief, but Gov. Ricardo Rossello has said he will ask for more. The damage could top $30 billion, per MarketWatch.
  • FEMA response teams have already been landing in Puerto Rico and begun search and rescue missions. FEMA also said it would bring satellite phones to towns and cities to use while the telephone and power lines are repaired.
  • 70,000 people were evacuated from areas downstream of the Guajataca Dam, which officials said had cracked.