Feb 13, 2020

Axios Login

By Ina Fried
Ina Fried

Another slow news day ... may come some day but not today.

Today's Login is 1,391 words, a 5-minute read.

1 big thing: Canceling Mobile World Congress leaves a giant hole

Illustration: Eniola Odetunde/Axios

Given how many large companies were already planning to skip Mobile World Congress over coronavirus concerns, it's not a surprise the organizers canceled this year's event, as they announced yesterday. But the move does leave a big hole for this year and raises questions for the future.

Why it matters: The wireless industry is widely distributed. Key infrastructure players are based in Finland and Sweden, some of the largest phone makers are in South Korea and China, and key software and chip makers are based in the U.S. Barcelona is the one place everyone shows up together.

The state of play: For the short term, the whole industry is scrambling to cancel hotel and plane reservations, find alternative means of announcing new products and examine their contracts to see who is on the hook for what.

  • I've already started to get invitations for embargoed webinars to go over news that was to be announced later this month in Barcelona.

The large companies, of course, can get the audiences they need with reporters and travel to key vendors and clients. It's smaller companies that rely on Mobile World Congress who are more likely to get hurt by the cancellation — and have a tougher time absorbing any losses.

The big picture: This year's Mobile World Congress was to be a key launch pad for 5G networks and devices which are just beginning to roll out around the world. Plenty of phones were set to debut and, importantly, lots of carriers, device makers and other vendors were set to put pen to paper on their next deals.

  • The event is the key funding source for the GSMA, the European cell phone trade group. It remains to be seen how much of the losses it absorbs, and how much exhibitors or insurance companies take on.
  • "The likely gaping hole in their balance sheet as a result will prove challenging for the association in 2020 and will probably be felt beyond this year, unless they can reclaim losses through insurance," said Stephen Mears, a research analyst with Futuresource.

What's next: The big questions are around next year and beyond. Giant trade shows are uniquely susceptible to momentum swings. (Comdex, anyone?) Their critical mass is a key selling point. It's what makes people put up with long lines, overpriced hotels and other inconveniences. A show's fall can start with the first loss of confidence and be tough to reverse.

  • In my career I've seen the demise of MacWorld Expo, CeBit and the aforementioned Comdex, to name a few.

Meanwhile, the GSMA says plans are already well underway for the 2021 event in Barcelona. And a global industry does need a place to meet, especially at a time when geopolitical tensions are running so high.

2. Why tons of cash wasn't enough for Essential

Andy Rubin. Photo: Brian Ach/Getty Images for Wired

The narrative of Android's founder launching his own phone company was an irresistible one, but from its debut, it seemed like Essential was going to have a tough time living up to its name. On Wednesday, Andy Rubin's hardware company officially announced it was shutting down.

Why it matters: The startup reinforced the industry maxim that "hardware is hard," even when you raise hundreds of millions of dollars.

Context: Essential began with Andy Rubin debuting its phone at the 2017 Code Conference (promising attendees a free device). A filing that came out that night revealing tons of funding — seemingly enough to support Rubin’s vision of launching a whole new consumer electronics brand.

  • However, from the start it was also clear that Essential faced a tough market with little to set it apart from other powerful, well-designed Android phones. It launched with only Sprint carrying the device in stores and appeared to sell poorly despite a substantial marketing push.

Between the lines: Essential's slow start from the gate was exacerbated by continuing revelations about Rubin's past, including a giant payout he received when leaving Google, despite claims of sexual harassment.

My thought bubble: Essential always wanted to be more than a phone company. But by starting with phones, it had to succeed there first — and it never did.

Go deeper:

3. Gillibrand proposes new Data Protection Agency

Sen. Kirsten Gillibrand. Photo: Samuel Corum/Getty Images

Sen. Kirsten Gillibrand (D-N.Y.) is introducing a bill that would create the Data Protection Agency, a new federal agency with the authority to ensure businesses are transparent about data collection and the power to take enforcement action against violations .

Why it matters: The U.S. has fallen behind Europe and California in regulating data and privacy issues, with responsibility split among several agencies, including the FCC, FTC and DOJ.

Details: In a statement, Gillibrand said that the agency would:

  • Have a director appointed by the president and confirmed by the Senate
  • Be able to "investigate, subpoena for testimony or documents, and issue civil investigative demands"
  • Set rules, issue orders and represent the U.S. in global efforts.

At the same time, Gillibrand said "the authority of state agencies and state attorneys general are preserved."

Between the lines: The move comes amid a global dialogue on privacy and just as the U.K. hands its communications regulator more authority over internet content.

Reality check: Gillibrand isn't alone in her desire. A pair of California Democrats introduced legislation last year that would also establish a new digital regulator. 

  • But it remains a fairly fringe idea. Neither the bipartisan staff draft on privacy in the House nor the dueling Democratic and Republican takes on privacy by the leaders of the Senate Commerce Committee include the creation of a new agency.

What they're saying:

  • Gillibrand: "As the data privacy crisis looms larger over the everyday lives of Americans, the government has a responsibility to step forward and give Americans meaningful protection over their data and how it’s being used."
  • Robert Weissman, president, Public Citizen: "Along with new privacy laws that protect individual access to courts and don’t scuttle the importance of the states, having a DPA is necessary to protect consumers in the digital age." 
  • Katharina Kopp, deputy director, Center for Digital Democracy: "The FTC has totally failed to protect the public for many years — regardless of which party has been in power. We applaud Senator Gillibrand's proposal, which if enacted, could help ensure that our digital rights are protected in the U.S."

Separately: A new bill from Sen. Jeff Merkley and Sen. Cory Booker would set limits on federal government use of facial recognition, absent a warrant. The ACLU called it "a good first step" but said the bill has too many exceptions and "fails to fully account for the realities of this mass surveillance tool."

Editor's note: This item has been corrected to report that the senator proposing facial recognition legislation is Jeff Merkley (D-Oregon), not, as we incorrectly first reported, Ed Markey (D-Mass.).

4. What the CIA's 50-year Crypto front means today

A Swiss company called Crypto AG sold encryption systems to governments around the world operated as a CIA front and enabled the U.S. to monitor those governments' secret communications for nearly 50 years, a remarkable Washington Post investigation revealed Tuesday.

Greg Miller, author of the Post story, says it's likely that there are other companies that are similarly compromised. Miller talked with Axios' Dan Primack for his Pro Rata podcast.

  • Dan Primack: "There's all sorts of rumors about what the Russian government's access is to Kaspersky, or Huawei and China .... Do you believe that there is some other company that we know about that is involved in cybersecurity as a privately held business right now that the U.S. government has a secret piece of?"
  • Greg Miller: "The short answer is yes. You just used a word here, 'rumors' about Huawei, rumors about Kaspersky. And that was the word we used about Crypto for many years. And the company would say look those are just rumors, baseless rumors. And now we know that they weren't just rumors. I think that it's inevitable that we'll look back on this moment at some point in the future and be confronted with evidence that companies or devices that we assumed were secure were not, they were penetrated and compromised by someone."

Our thought bubble: The Crypto AG revelations cut two ways.

  • They make the U.S. government look hypocritical for expressing outrage at alleged back doors operated by other governments through companies in their countries.
  • That said, they could also give more weight to suspicions that those governments and companies are doing what the U.S. claims.

Go deeper: Listen to Miller on the Pro Rata podcast.

5. Take Note

On Tap

  • Qualcomm's appeal in its antitrust case is due to be heard in San Francisco by the Ninth Circuit Court of Appeals.
  • Nvidia and Roku are slated to report earnings.

Trading Places

  • HR platform Culture Amp named diversity, equity, and inclusion veteran Aubrey Blanche as its global head of equitable design and impact.

ICYMI

  • Facebook is delaying the planned launch of its dating service in Europe after Irish regulators searched the company's offices. (CNN)
  • Cisco shares fell slightly even as the network gear maker reported quarterly numbers that beat expectations. (CNBC)
  • Unity Technologies has reached a settlement over charges it allowed the targeting of children with ads. (MediaPost)
  • Lambda School, which offers deferred tuition to its online coding school students, partnered with a firm to monetize the students' debt upfront, raising questions about its claim that its success is tied to that of its students. (The Verge)
  • Larry Ellison plans to host a fundraiser for Donald Trump, albeit outside of Silicon Valley. (Vox)
6. After you Login

Just because there won't be a Mobile World Congress in Barcelona doesn't mean you can't enjoy a cool new smartphone design.

Ina Fried