Jan 22, 2020

Axios Login

By Ina Fried
Ina Fried

Breaking from Davos: President Trump met with three dozen tech leaders in Davos this morning for about a half-hour. Topics included education and the economy, with Apple CEO Tim Cook and IBM CEO Ginni Rometty both giving brief remarks.

  • It seems the Apple-Trump encryption feud hasn't totally spoiled the relationship, as everyone was cordial, at least publicly, one attendee tells me.
  • That said, Cook stuck to friendly turf, talking about expanding access to skills training — an area that unites tech and the White House.

And yes, today's Login is coming to you again from Davos, but you don't have to be a head of state or muckety-muck to read it. That said, hello to the muckety-mucks as well.

No matter who you are, today's Login is 1,228 words, a 5-minute read.

1 big thing: Europe feels the squeeze over Huawei

Photo: Artur Widak/NurPhoto via Getty Images

European countries are caught in the middle of dueling pressure campaigns from the U.S. and China over whether to let equipment made by Chinese manufacturer Huawei into their 5G networks.

Why it matters: It's a "damned if you do, damned if you don't" choice that could leave Europe alienating a major trading partner either way.

Driving the news:

  • Germany is equivocating, with China threatening to close off a key market for German auto exports if the country blocks out Huawei, while the U.S. is exerting pressure of its own. A German decision is expected soon, but for now, Germany and others in Europe are offering highly ambiguous statements.
  • Rep. Jim Banks (R-Ind.) on Tuesday introduced a bill that would prevent U.S. intelligence-sharing with any country that uses Huawei gear to help build its 5G network.
  • Huawei CEO Ren Zhengfei spoke in Davos on Tuesday, aiming to downplay the threat his company poses and, at the same time, insist that the company is fully prepared to withstand any further U.S. "attacks" on its business.
  • The company is already largely prohibited from doing new business in the U.S. and faces severe limits on using U.S. components and services.

Background: Huawei is in the spotlight for a variety of reasons.

  • First, security insiders and industry experts are concerned that Huawei equipment might be compromised by the Chinese government.
  • Second, Huawei has become a flashpoint in the broader U.S.-China trade talks, as both sides seek a favorable deal.
  • Huawei executives have urged the U.S. not to conflate the two issues and to mitigate any security risks through a set of rules.

What they're saying: Even as it's been drawn into broader political battles, Huawei has made considerable technical progress, according to one tech executive.

  • Siemens CEO Joe Kaeser said at a Davos panel this week that his company had tested gear from all the 5G equipment vendors and found Huawei had a technological edge: "Whether we like it or not, they are a year or two ahead."
  • That's a bold finding. Historically, Huawei's strength has been offering telecom gear at a lower cost than comparable rivals.
  • But Ericsson CTO Erik Ekudden in an interview with Axios touted his own company as far ahead of the competition when it comes to pure 5G technology.

Yes, but: Ekudden said that, regardless of who's winning the tech race on 5G, uncertainty over the rules of the 5G road has harmed business.

  • "One thing people may not realize is that, in some cases, the geopolitics are just slowing down 5G development as a whole, unfortunately," he said.

The big picture: U.S.-China tensions and the emergence of 5G have been key topics at this week's World Economic Forum. Both issues affect nearly every country and company.

Meanwhile: A key court hearing is taking place this week in Canada, from which the U.S. is seeking to have Huawei CFO Meng Wanzhou (the daughter of CEO Zhengfei) extradited to face charges.

Go deeper: Axios special report: The next tech wave rides on 5G

2. Cruise touts savings from self-driving van

Cruise Origin, a driverless EV that Cruise plans to use for ride-sharing. Photo: courtesy of Cruise

Cruise unveiled a six-passenger, electric, driverless vehicle in San Francisco Tuesday night. As Joann Muller reports, the GM-controlled company heralded it as the start of a new era of low-cost, shared transportation that will save the average household $5,000 a year.

Why it matters: With no steering wheel, pedals or gasoline engine, the boxy Cruise Origin, co-developed with Honda, represents "the transportation system you’d build if you could start from scratch," according to Cruise CEO Dan Ammann.

Yes, but: It's not clear how Cruise — which scrubbed plans to launch a robo-taxi service in San Francisco in 2019 — would turn that vision into reality, much less a viable business.

  • Pressed for details later, Ammann said Cruise would scale up a ride-sharing business by offering "a better experience at a lower price than what you pay to get around today."
  • A typical Uber or Lyft ride costs about $2 per mile, he said, while a personally owned vehicle costs about $1 per mile. Cruise's goal is to offer shared rides that are even cheaper, causing people to gravitate toward its service to save as much as $5,000 a year.

The math is a bit fuzzy, Joann reports. She has more here.

3. Battle intensifies over .org registry ownership

The effort to block a sale of the entity that controls the .org internet top-level domain is intensifying as more political leaders and tech leaders are speaking out against the deal.

Why it matters: The Internet Society, which gets much of its funding from .org, stands to earn more than $1 billion from handing control to a venture capital-backed private entity. Critics say that will put cash-strapped nonprofits at risk of exploitation.

The latest:

  • A new open letter is being released in Davos with leaders from 700 nonprofits calling on the Internet Society and ICANN, the global domain name regulator, to block the deal.
  • Protests are scheduled for an ICANN board meeting on Friday.
  • Presidential candidate Elizabeth Warren and a number of other Democratic senators and representatives have spoken out against the deal, as have two key UN officials.

Speaking to a group of reporters in Davos, nonprofit leaders including Human Rights Watch executive director Kenneth Roth pointed out long-term problems that could arise from putting .org in private hands. Ethos Capital could later decide to sell control of .org again, and there are plenty of ways private ownership could compromise groups that use .org.

  • "A private equity firm inevitably is going to have substantial economic interests in countries like China or Russia that will have no qualms about threatening those interests if censorship is not imposed on .org groups," Roth said. "That is the beginning of the end of the civic space that the .org domain has made possible."

Yes, but: Internet pioneer Vint Cerf and others have come out in favor of the deal, as noted on a website put up by the deal's backers.

Go deeper: Esther Dyson fights .org privatization

4. Senators sport Apple Watches, seemingly flouting device ban

Senators from both parties were seen wearing Apple Watches during the Senate impeachment trial on Tuesday, seemingly in violation of the chamber's ban on electronic devices, as Ursula Perano reports.

Why it matters: The no-phones rule in the decorum guidelines is meant to cut off access to the outside world. The latest versions of Apple Watches have cellular capabilities, meaning lawmakers and their staffers could text, call and surf the web even if they leave their other devices outside the room.

What we know: Per Roll Call, which first reported on the issue, lawmakers seen in the Senate chamber with watches on their wrists were:

  • Sen. Mike Lee (R-Utah)
  • Sen. John Thune (R-S.D.)
  • Sen. Jerry Moran (R-Kan.)
  • Sen. John Barrasso (R-Wyo.)
  • Sen. John Cornyn (R-Texas)
  • Sen. Tim Scott (R-S.C.)
  • Sen. Patty Murray (D-Wash.)

Go deeper: Live updates: Senators debate rules of Trump impeachment trial

5. Take note

On tap

  • Business and political leaders from around the globe continue to convene in Davos for the World Economic Forum's annual meeting.

Trading places

  • Airbnb has hired Jesse Stein as global head of real estate, reporting to co-founder and strategy chief Nathan Blecharczyk. Stein was previously at KHP Capital, a real estate private equity firm specializing in hotels.
  • Intel named Omar Ishrak to succeed Andy Bryant as chairman of the board, with Bryant remaining on the board until the company's next annual meeting. Also, Square's Alyssa Henry is joining the Intel board.

ICYMI

  • After Saudi Crown Prince MBS was reportedly implicated in hacking Jeff Bezos’ phone, the UN is calling for an investigation. (Axios/CNBC)
  • Vodafone became the latest company to pull out of Facebook's Libra cryptocurrency project. (CNBC)
  • Netflix shares fell after the company's domestic subscribers missed expectations. (Axios)
  • Apple is set to begin production next month of a new low-cost phone similar to the iPhone 8 but with the latest processor and a 4.7-inch screen. Meanwhile, the company is planning to create podcasts to promote some of its Apple TV+ programming. (Bloomberg)
  • IBM reported strong earnings, buoyed by continued cloud growth, posting its first year-over-year revenue growth in more than a year. (Marketwatch)
  • Quibi CEO Meg Whitman reportedly attacked the media at a company meeting, comparing reporters to sexual predators. (The Information)
6. After you Login

Ever wonder why fancy hotels have telephones in the bathroom?

Ina Fried