Jul 22, 2020

Axios Login

By Ina Fried
Ina Fried

Join Axios Media Trends author Sara Fischer tomorrow at 12:30pm ET with Colorado Gov. Jared Polis and Coffee at The Point owner Ryan Cobbins for a conversation on the state of small businesses during the coronavirus outbreak.

Today's Login is 1,599 words, a 6-minute read.

1 big thing: D.C.'s assault on tech will crest at CEO hearing

Illustration: Annelise Capossela/Axios

Lawmakers' grilling of the CEOs of Facebook, Apple, Amazon and Google on Monday will culminate a years-in-the-making transformation in the relationship between Washington and Silicon Valley from cooperation to confrontation, Axios' Margaret Harding McGill and Ashley Gold report.

The big picture: The proceedings will focus on questions of monopolistic behavior, but the event will be fueled by a longer list of beefs from both parties about misinformation, censorship, consumer privacy, China and more.

Why it matters: Mark Zuckerberg, Tim Cook, Jeff Bezos and Sundar Pichai will be forced to answer questions about their businesses as the world watches.

  • It's the most high-profile antitrust hearing since the feds went after Bill Gates and Microsoft in the 1990s, and it happens as state attorneys general, the Justice Department and the Federal Trade Commission circle the companies as well.

1. The antitrust agenda

Lawmakers plan to drill down with each CEO on ways their companies may have acted to limit competition.

  • Facebook: The social network's snapping up of WhatsApp and Instagram has drawn questions over whether the acquisitions were aimed at squelching potential competitors. Committee staff have also sought details on any efforts by Facebook to cut off companies from its social graph.
  • Google: The search giant’s ad-tech business has drawn the attention of the Justice Department, with publishers complaining about the stranglehold Google has on digital advertising dollars and online advertising competitors saying they are shut out. The company also faces complaints that it gives itself an advantage in search results, and the committee has sought details on how Google's algorithm ranks Google content or services against those of competitors.
  • Amazon: Bezos will be grilled over whether the company uses data from third-party sellers to develop its own competing products. The committee demanded Bezos testify after a Wall Street Journal report appeared to contradict previous testimony from an Amazon lawyer who said the company doesn’t use individual third-party sellers' data to develop products that competed directly with the sellers. Amazon has also faced questions from committee staff on how it ranks products, including its own.
  • Apple: The EU last month announced antitrust investigations into Apple for forcing app developers to use its proprietary system to offer in-app subscriptions and for blocking developers from informing users of ways they can pay for in-app content that don't go through Apple. Committee staff also have questioned Apple on the removal or restriction of screen-time and parental control apps from its App Store.

2. Misinformation

Since the 2016 election, tech platforms, especially Facebook, have struggled with how to address misinformation about everything from voting to vaccines, balancing efforts to remove false information against freedom of speech.

  • With the 2020 election coming up, lawmakers — especially Democrats — are sure to press the platforms on how they're controlling misinformation on both paid advertisements and people’s posts online.

3. Content moderation

Lawmakers, along with President Trump, have been calling into question whether tech companies that host third-party content should continue to be protected under Section 230 of the Communications Decency Act for years now.

  • Expect Democrats to ask why Section 230 should stand if tech companies can’t control hate speech on their platforms — and for Republicans to accuse the companies of using the law to perpetuate bias against conservatives.

4. China

The Trump administration has taken a hard line against China, recently going so far as to threaten to ban Chinese-owned video app TikTok.

  • At the same time, Attorney General Bill Barr has criticized Apple for what he sees as acquiescing to the Chinese government by taking down apps in its App Store and manufacturing many of its phones in China.
  • Facebook does not operate in China, while Google has been criticized for considering establishing a censored search engine there.

5. Privacy

Central to many lawmakers’ distrust of the tech giants is how they collect, share and use consumers’ data.

  • That data allowed Google and Facebook to become digital advertising heavyweights, prompting calls for regulation of data collection and targeted advertising.

The bottom line: Washington once turned to the tech industry for ideas, economic growth, and signs of hope that the U.S. could innovate its way past its problems. Today, the capital is instead viewing tech as a generator of countless problems and threats demanding government action.

2. What each CEO will tell Congress

Illustration: Annelise Capossela/Axios

The big four tech CEOs testifying at Monday's antitrust hearing will each offer up a key point to defend their firms and deflect lawmakers' wrath, Axios' Kyle Daly reports.

Why it matters: No corporate leader wants to see their industry heavily regulated or their company broken up. Monday's hearing gives Zuckerberg, Cook, Bezos and Pichai a big platform to try to prevent that from happening.

Facebook CEO Mark Zuckerberg: Congress should pass better laws. Let's work together and do that!

  • Zuckerberg will likely argue that it's Congress' job to write laws to bolster election security and establish consistent nationwide online privacy standards.
  • Facebook's goal is to see such laws written carefully and applied consistently.
  • He'll also point to progress Facebook has made in cracking down on misinformation and hate speech.

Google CEO Sundar Pichai: We won search by doing it well — why punish us for that?

  • Google doesn't dispute its clear dominance in search, nor of certain corners of the online advertising market.
  • But it has long maintained in both cases that this is just a natural outgrowth of delivering value.
  • It contends that digital advertising is in fact wildly competitive and that each individual advertising-technology service it offers faces a raft of rivals.

Amazon CEO Jeff Bezos: We're big because we've always given users what they want — fast delivery, wide selection and good prices.

  • Bezos is likely to point to Amazon's ability to get goods to Americans' homes during the pandemic as a public service.
  • He will also need to defend the company against criticism of how it runs its third-party marketplace.

Apple CEO Tim Cook: Our App Store creates opportunity for countless developers — and Google's Android controls more of the smartphone market, anyway.

  • The company says its tightly controlled approach keeps iPhone apps safe, maintains their quality, and protects users' privacy.
  • Expect Cook to cite the size and vitality of the app market and the continued enthusiasm of Apple's customers.

Kyle has more here.

3. Bay Area tech workers fear layoffs, consider moving
Chart: Hired

More than half of tech workers in the Bay Area are concerned or very concerned about being laid off or furloughed in the next six months, according to a new report from jobs site Hired. The study also found that a significant number of tech workers are concerned their salaries will be flat or down in the coming year.

Why it matters: The tech industry has generally fared better than other sectors in the pandemic downturn, offering more chances to work from home and fewer layoffs. However, there are concerns that companies won't be willing to pay Bay Area salaries if remote workers decide to relocate to less expensive areas.

Other findings:

  • Older workers and parents were most likely to be interested in working from home.
  • A majority of those surveyed said they would not be willing to take a lower salary, even if it meant they could work remotely permanently. That held true for men and women, as well as for both parents and non-parents.
  • However, if allowed to work from home permanently, many said they would consider moving to a less expensive location, including 42% of those in the Bay Area and 40% of those in New York, compared to just a third of those in the U.K.
4. AI security and ethics startup lands $13 million

Photo: CalypsoAI

CalypsoAI, a machine learning startup with its roots in the defense industry, has raised $13 million to help make government and corporate AI systems more secure and free of bias.

Why it matters: Making AI systems that are free from bias, secure and explainable are all key goals as the technology gets used for increasingly important tasks.

Details:

  • Calypso, which has 17 employees, has had paying customers for about a year, with a focus on the federal government and financial services sectors.
  • The company aims to help businesses and government agencies figure out how they want to use AI while also ensuring their approach is bias-free and secure against attacks.
  • The financing round was led by Paladin Capital Group. Other investors included Lockheed Martin Ventures, 8VC, Frontline Ventures, Lightspeed Venture Partners, Manta Ray Ventures and Pallas Ventures.

Our thought bubble: From its team photo, Calypso appears to be overwhelmingly male and white. Experts say a diverse team is important to spotting bias in AI systems.

What they're saying: "CalypsoAI is working on the issue of diversity like the rest of the tech community as they continue to scale," Calypso said in response to Axios' question about the number of women and non-white employees.

  • The company said it is in the process of hiring a woman for a senior leadership position and noted that two of the general partners participating in this Series A are women.
5. Take Note

On Tap

  • Shares are expected to begin trading in Jamf, a Minnesota company that specializes in helping businesses manage Apple gear. The stock priced at $26 per share in its initial public offering on Tuesday.
  • Earnings reports include Microsoft.

Trading Places

  • Intel named Al Thompson as VP of U.S. government relations. Thompson was previously head of the government relations team for Raytheon's commercial aerospace and space businesses.

ICYMI

  • Twitter announced a sweeping crackdown against accounts pushing content related to far-right conspiracy theory movement QAnon. (Axios)
  • A group of ByteDance's U.S. investors are looking at ways to take a majority stake in ByteDance-owned TikTok. (The Information)
  • Bloomberg took an in-depth look at the harassment allegations swirling around French gamemaker Ubisoft. (Bloomberg)
  • OnePlus debuted new products including a new lower-cost Nord smartphone and $79 AirPods-like wireless earbuds. (The Verge)
  • Salesforce is getting rid of its Einstein Voice Assistant. (VentureBeat)
  • Facebook is reportedly creating new teams to study and potentially combat racial bias on its core platform and Instagram. (Wall Street Journal)
6. After you Login
Screenshot: Be The Change Coloring Co.

Aiming to come up with a good business idea during the pandemic, a group of high-school students designed a coloring book to help younger kids understand the pandemic. They ended up turning the idea into reality, publishing the book, which you can buy here.

Ina Fried