Oct 8, 2019

Axios Login

By Ina Fried
Ina Fried

Situational Awareness: 📷 "Axios on HBO" Season 2 returns 6pm ET/PT Sunday, Oct. 20 on all HBO platforms. New episodes will air Oct. 20 and 27, Nov. 3 and 10. And that's not all, we're excited to announce that "Axios on HBO" renewed for 2020 and 2021.

Today's Login is 1,510 words, a 5-minute read.

1 big thing: Police deals with Amazon's Ring under fire

Illustration: Sarah Grillo/Axios

A chorus of civil rights and privacy groups is calling on U.S. cities to end partnerships with Amazon's Ring camera unit, saying the deals raise a range of privacy, discrimination and other concerns.

Why it matters: Per the Washington Post, more than 400 agencies have deals with the Amazon subsidiary.

Driving the news: More than 30 civil rights and privacy groups have signed an open letter calling for an end to such deals, saying the partnerships "threaten civil liberties, privacy and civil rights, and exist without oversight or accountability." "The letter calls for future deals to involve "community engagement" and approval by elected offiicials."

"To that end, we call on mayors and city councils to require police departments to cancel any and all existing Amazon Ring partnerships, and to pass surveillance oversight ordinances that will deter police departments from entering into such agreements in the future."
— Open letter from 30+ civil rights groups

How it works:

  • Ring has been striking deals with cities that give their police agencies access to a map of Ring cameras from which they can request footage. Per Vice, Ring often gets the agencies involved in the marketing of the Amazon security cameras, either directly or indirectly.
  • Concerns with the deals include everything from a lack of transparency, to the fact that taxpayer money is sometimes used to buy or subsidize devices to the potential for racial profiling and discrimination.
  • You can see a map of some of the cities with Ring deals here.

The big picture: Alliances between law enforcement and tech companies, such as Palantir's contracts with local police departments, have a history of raising hackles, and rising concerns in the U.S. over privacy have put some consumers on edge about tech that tracks their moves.

  • Meanwhile, authoritarian governments around the world — from China to the Middle East — are racing to deploy advanced technology like facial recognition combined with video surveillance to cow dissent.

What they're saying:

  • Evan Greer, deputy director, Fight for the Future: "Amazon is building a for-profit surveillance empire that completely skirts the democratic process. These partnerships are spreading extremely fast."
  • Alex Marthews, national chair of Restore The Fourth, in a statement: “This isn't about fighting actual crime. This is about the paranoid and mostly white notion that owners of homes and businesses aren't safe unless the police are pro-actively watching every square inch of public space."
  • Amazon: "Ring's mission is to help make neighborhoods safer. We work towards this mission in a number of ways, including providing a free tool that can help build stronger relationships between communities and their local law enforcement agencies. We have taken care to design these features in a way that keeps users in control and protects their privacy. "
2. FCC chair lunched with Trump after net neutrality win

President Trump with FCC chairman Ajit Pai in April. Photo: Tom Brenner/Getty Images

President Trump and FCC chairman Ajit Pai had lunch at the White House the day the FCC won a major legal battle over its repeal of net neutrality regulations, according to two people familiar with the gathering, Axios' Margaret Harding McGill reports.

Why it matters: Interactions between FCC leaders and the White House have drawn intense scrutiny because the FCC is an independent agency. Both people described the gathering as a "family" event.

Details: The timing of the Oct. 1 lunch was a coincidence, both people said. The D.C. Circuit Court of Appeals that morning upheld most of the FCC's repeal of the Obama-era net neutrality rules, in a victory for Pai and the telecom industry.

  • Trump on Monday publicly praised Pai and the FCC for having "Just WON the big court case on Net Neutrality Rules!"
  • The federal appeals court also overruled the FCC's attempt to broadly override state net neutrality regulations, which means many more legal battles ahead for the policy. Net neutrality advocates claimed victory for this part of the judgment.

What they're saying:

"The mere fact that he's meeting with the chairman is not nefarious, but if the president — who has been known to direct his agency heads to do various and sundry things — directed the chairman to do something and the chairman does it, that's very troublesome."
— Gigi Sohn, a distinguished fellow at Georgetown Law and former FCC official
  • An FCC spokesman declined comment and the White House did not immediately respond to a request for comment.
3. Media mergers highlight arbitrary private valuations
Expand chart
Data: Axios Research; Table: Axios Visuals

A slew of digital media acquisitions over the past few weeks shows how unreliable private valuations can be, Sara Fischer and Kia Kokalitcheva write. The lesson from the media world applies more broadly to tech as well.

Why it matters: The only way for anyone to really know how much any private company is worth is if it sells in an all-cash deal. When privately-held companies sell via all-stock transactions or via a mix of cash and stock, dealmakers can essentially make up the value of the assets they are looking to purchase.

Driving the news: Group Nine Media said Monday that it has reached a definitive agreement to acquire PopSugar, a lifestyle digital media company that caters to millennial women, in an all-stock transaction.

  • The acquisition values PopSugar at $300 million and the combined company at $1 billion, per the Wall Street Journal.
  • Even if we assume that these figures are correct, we don't know what lies behind them.

The big picture: The Group Nine/PopSugar deal was the third major media deal that happened in the last month, signaling that consolidation is afoot.

Between the lines: Digital media execs and investors have privately told Axios that the combined valuation of Vice Media and Refinery29 should be much lower than the total $4 billion figure that has been reported.

Be smart: Private company valuations are set by a small number of investors, not markets. There's no guarantee an acquirer will agree with those figures, and "headline" valuations might mask all sort of structural mechanisms that protect investors at the expense of stock-holding employees, per Axios' Dan Primack.

4. DOJ's latest argument against encryption: Protect kids

The Justice Department's latest arguments against encryption, presented at a summit in Washington Friday, focus on child predators and take aim at only certain kinds of data, Joe Uchill reports.

Why it matters: This isn't the first salvo in the encryption debate — it wasn't even the first last week — but it does show how Attorney General William Barr plans to make the case for "back doors" in encryption, a case law enforcement agencies have tried and failed to win since the 1990s.

Driving the news: Law enforcement officials have long argued that when tech firms use secure encryption methods, police and intelligence agencies can't access potential evidence even when they have a warrant.

  • Cryptographers and security experts note that there's no way to weaken encryption for the FBI without weakening it for everyone else — including hackers, thieves and foreign spies.

The arguments made at the Friday summit offer some new twists to the debate.

Child exploitation is the new terrorism: Under former FBI director James Comey, the last DOJ official in charge of making the case against encryption, the main argument was that encryption enabled terrorism. Friday's summit shifted the argument to child predators.

  • Multiple officials noted that 90% of submissions to a child exploitation tip line, used by tech companies to notify authorities of misuse of their platforms, came from Facebook. If Facebook began to use strong encryption practices, authorities would lose some of that visibility.

Changing the debate: Barr is explicitly narrowing his case for limiting encryption to chat apps and data at rest (i.e. data sitting on a hard drive). But encryption is also important for "data in transit" — it's what prevents eavesdroppers from capturing banking or e-commerce transactions.

  • Focusing on data at rest and messages is an implicit admission by the government that implementing workarounds to encryption is inherently dangerous — and not needed when there's an alternative, like sending a warrant to a bank or retailer.
5. Take Note

On Tap

Trading Places

  • San Francisco manufacturing company Tempo Automation is naming board member and veteran tech executive Joy Weiss as chief executive, with founding CEO Jeff McAlvay taking on the role of chief process officer and remaining on the company's board.
  • Online brokerage Robinhood added former SEC commissioner Dan Gallagher as its first independent director.

ICYMI

6. After you Login

Wired tech writer Lauren Goode asked for some tips for her upcoming trip to New York. I suggested she might want to skip the touristy Empire State Building and check out this little-known area called "Times Square."

But the best part was the Empire State Building tweeting back.

Ina Fried