Mar 6, 2020

Axios Login

By Ina Fried
Ina Fried

Good morning.

📺 This week on "Axios on HBO:" A peek into Biden's secret governing plan, Housing Secretary Ben Carson on cutting housing programs and why Trump should tweet less (clip); tennis great Billie Jean King and more top women athletes on leveling the playing field. Watch Sunday 6pm ET/PT on all HBO platforms.

Today's Login is 1,432 words, a healthy, 5-minute read.

1 big thing: D.C. fight pits protecting children vs. encryption

Illustration: Sarah Grillo/Axios

Washington is amping up pressure on Big Tech to fight online child sexual exploitation, while critics and some companies fear the real aim is to force the industry to bend to the government's will on encryption, Axios' Margaret Harding McGill reports.

The big picture: Separate measures from the Trump administration and a bipartisan group of Senate leaders Thursday offer the industry a broad set of general principles for fighting child sexual exploitation, while also threatening to withhold longstanding liability protection from companies that fail to meet government-approved standards.

Driving the news:

  • Attorney General Bill Barr highlighted tech industry support for a global initiative outlining 11 voluntary principles meant to establish a baseline for companies to deter the use of the internet to exploit children.
  • Meanwhile, legislation introduced by Sens. Lindsey Graham (R-S.C.) and Richard Blumenthal (D-Conn.) seeks to chip away at tech's prized shield from lawsuits over user-generated content, and raises the possibility of a Justice Department end-run against strong encryption.

Details: The legislation — the Eliminating Abusive and Rampant Neglect of Interactive Technologies (EARN IT) Act — would require tech platforms to comply with government-developed best practices to prevent online child sexual exploitation. If they don't, they would lose some of the liability protection they have under Section 230 of the 1996 Communications Decency Act.

  • A 19-member commission would set the best-practices criteria, and include the heads of the Justice Department, Federal Trade Commission and Department of Homeland Security, along with others appointed by congressional leadership.
  • The legislation is backed by 10 lawmakers, including Sens. Josh Hawley (R-Mo.) and Dianne Feinstein (D-Calif.).

Context: Barr welcomed policy experts for a session on Section 230 at the Justice Department last month, and said the department is concerned about the "expansive reach" of the law.

  • Barr has also pushed tech platforms to build back doors into their encrypted systems to allow law enforcement access.
  • At the event announcing the voluntary principles Thursday, Barr called out the role encryption plays in online child exploitation.
  • "They also communicate using virtually unbreakable encryption," Barr said of online predators. "As the survivors of our roundtable this morning implored, predators’ supposed privacy interests should not outweigh our children’s privacy and security. There's too much at stake.”

What they're saying: While EARN IT Act proponents note support from 70 groups, including the National Center for Missing & Exploited Children, there are plenty of critics across the industry and the political spectrum.

Sen. Ron Wyden (D-Ore.), an author of Section 230, called EARN IT a "deeply flawed and counterproductive bill" and said he will offer his own legislation on fighting child predation.

The other side: In an interview, Blumenthal argued the legislation has "no impact on encryption."

  • He acknowledged the concerns about the power Barr could wield, but said the commission determining best practices would include tech-industry representatives and require a 14-member vote for approval, limiting the power of any one member.

What's next: Graham, the chairman of the Senate Judiciary Committee, scheduled a March 11 hearing on the legislation.

2. Sequoia calls virus "the black swan of 2020"

Photo: Alfio Giannotti/REDA&CO/Universal Images Group via Getty Images

Top Silicon Valley investment firm Sequoia Capital today sent a dire warning to portfolio company CEOs about the business impacts of coronavirus, suggesting that they "question every assumption" about their businesses, including cash runway, headcount, and sales forecasts, Axios' Kia Kokalitcheva reports.

Why it matters: The last time Sequoia did something similar was in October 2008, at the peak of the financial crisis, via its famed "RIP Good Times" slide deck. The firm is known for placing early bets on such companies as Airbnb, Google, and WhatsApp.

The full memo is worth a read.

Meanwhile, in other virus-related news:

  • Microsoft, Google, Facebook and Twitter all said they will continue to pay hourly workers in places where they are encouraging employees to work from home.
  • The giant HIMSS health technology trade show is the latest big gathering to be scrapped amid concerns over the coronavirus outbreak.
  • WarnerMedia joined the large list of companies pulling out of this month's SXSW, which organizers reiterated will continue despite the withdrawals and a petition that has topped 50,000 signatures.
  • Traffic in Seattle dropped significantly Thursday after Microsoft, Amazon and others pushed employees to work from home.
  • The coronavirus put quite a dent in February revenue at contract manufacturing giant Foxconn.
3. Jack Dorsey rethinks Africa plan

Speaking at an investor conference on Thursday, Twitter CEO Jack Dorsey said he was reevaluating his plan to spend several months in Africa this year.

Between the lines: Dorsey specifically blamed COVID-19, though his decision also comes as Twitter struggles with tough content and business issues and as an activist investor, Elliott Management, is seeking his ouster.

Of note: Bloomberg reporter Kurt Wagner noted that despite being interviewed on stage for 40 minutes, Dorsey was not asked a direct question about Elliott's move to have him replaced as CEO.

Still, many of Dorsey's comments seemed aimed at addressing criticisms lobbed by Elliott and others.

What he's saying:

  • On misinformation: "Misleading information is an entirely new vector. And the challenge here is that the technology to create misleading information content is moving much faster than the technology to detect it."
  • On boosting revenue: "We've been talking about rebuilding our core ad server. We made a ton of progress in 2019 and starting in this year. And we should be complete with the work to rebuild the ad server by the first half of this year."
  • On Twitter's ability to innovate: "We get a lot of critique about how the pace of development at Twitter is slow. And I think the expectation is that more changes on the surface. But the most impactful changes are the things that happen under the surface."
  • You can read the full transcript here.

The bottom line: Dorsey may not have addressed Elliott by name, but he was speaking to its attack on his leadership.

4. Facebook takes down Trump "census" ads

After initially indicating it would not take action against campaign ads from President Trump that encouraged people to "take the Official 2020 Congressional District Census today," Facebook said Thursday it would take the messages down.

Why it matters: Facebook has generally subjected political advertising to few rules, but had said it would take a tough stand against any posts designed to mislead people about the census. In this case, the company only took action after the problem was reported and civil rights groups spoke out.

Details: The ads also included a logo touting a "2020 Census," in an apparent effort to encourage supporters to provide the campaign with personal information.

  • Judd Legum at Popular Information reported early Thursday about the ads and said that Facebook was not taking action.
  • That drew an outcry from the Leadership Conference Education Fund and other civil rights groups, and Facebook eventually reversed its decision, citing a further review of the ads.

What they're saying:

  • Facebook, in a statement to Axios: "There are policies in place to prevent confusion around the official U.S. Census and this is an example of those being enforced."
  • Vanita Gupta, CEO of the Leadership Conference Education Fund: "While we're gratified that Facebook shut down Trump's attempt to sow confusion about how and when to participate in the 2020 Census, it's disturbing that the ads weren't immediately removed."
  • Sen. Mark Warner: "The Trump campaign's bogus 'official census' Facebook ads are deceptive and undermine public confidence in the census process. I'm glad Facebook heeded calls by @vanitaguptaCR and @juddlegum to take them down."
  • The New York Times' Charlie Warzel offered a "reminder that Facebook essentially relies on independent journalists like Judd to act as unpaid content moderators."

Separately: Facebook also told CNBC it would take down any political ads that contain misinformation related to the coronavirus.

5. Take Note

On Tap

  • Samsung's Galaxy S20 line officially goes on sale from all the major carriers.
  • Sunday is International Women's Day.

Trading Places

  • TikTok hired ADP security executive Roland Cloutier as its chief information security officer. Cloutier spent over a decade in government service, including with the U.S. Air Force and the departments of Defense and Veterans Affairs.
  • Cisco executive David Goeckeler was hired as CEO of hard drive maker Western Digital, with Cisco naming Todd Nightingale to lead a new enterprise networking unit, CRN reported.
  • Checkr hired former Amazon VP Tim Craycroft as its first chief product officer.


  • How U.S. bans could make Huawei stronger. (Axios)
  • Sonos is reversing course on a program that required customers to "brick" their older devices before taking advantage of an upgrade program. (Engadget)
  • Reddit is partnering with Crisis Text Line to provide a more direct connection to mental health services (TechCrunch)
  • The Chinese company that bought Grindr in 2016 is selling it under pressure from U.S. regulators. (Reuters)
  • Apple, Samsung and Lenovo are reportedly among the tech giants with supply chains that go back to Uighur labor camps in China. (AP)
  • Developers say Apple is rejecting their coronavirus-centric apps that don't come from governments or health organizations. (CNBC)
6. After you Login

Dish has a new contest that will pay one lucky winner $1,000 to watch hours and hours of The Office. Huh, I do that every week for free.

Ina Fried