May 13, 2022
I went to an in-person dinner last night and I will have more to say soon on the future of work and related topics. But, I will say this: In person matters.
Today's newsletter is 1,291 words, a 5-minute read.
1 big thing: Musk's "on hold" stunner
Elon Musk tweeted early Friday morning that his $44 billion deal to buy Twitter is "temporarily on hold," Axios' Sara Fischer and Dan Primack report.
What's happening: Musk said he's seeking more details on the platform's new estimate that spam and fake accounts make up less than 5% of users and remains "committed" to acquiring the social media platform. But his vague announcement will likely ignite further havoc inside the company and across the tech and financial worlds.
Why it matters: There's been speculation for weeks that Musk would walk away from the deal, and he just took a giant first step.
The tweet: "Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users," he said.
- Musk later added in a separate tweet that he is "still committed to acquisition."
- The company's shares plunged more than 17% in pre-market trading in response to the news. Tesla's shares rose about 5%.
The "bot" question: On Musk's Twitter agenda is a campaign to eliminate bots and fake accounts.
- So it's fair to assume that he's already explored the question of Twitter account integrity.
- That makes it hard to imagine that his concern over the company's "less than 5%" bots statistic is the only reason he's putting the deal on ice.
The big picture: Musk's takeover bid has been wrought with so many twists and turns that Wall Street is increasingly skeptical that it will even happen.
- For Musk to liquidate a significant amount of his Tesla stake and to wrangle bankers into giving him billions of dollars in financing, only to backtrack due to a single article, shows how manic the entire takeover process has been.
- Most acquirers go through a thorough due diligence process to address these types of concerns before submitting a formal bid.
Be smart: The tweet comes a day after Twitter's CEO ousted two of the company's top execs and paused hiring.
- While sources say the changes were made outside of Musk's purview, there's no question that a looming takeover bid is adding pressure on the company to become more innovative and profitable.
- Sources tell Axios that internally, employees are exasperated by the whole process.
- The potential sale already caused a lot of concern about job security, and morale has been low. A pivot away from a sale would’ve been a relief, but the bait and switch is just exhausting.
Our thought bubble: Musk likes to operate casually and in public, flouting rules and putting adversaries off guard. That's great for creating drama but lousy for inspiring confidence from investors, partners, employees and the public.
2. "Less is more" comes to big data
The likely demise of Roe v. Wade is putting a new spotlight on privacy rights and personal data. But even as some Big Tech companies are beginning to try to limit how much data their existing products collect, the industry keeps rolling out new waves of devices and services that scoop up even more personal info.
Why it matters: Any trove of data will sooner or later end up at the other end of a request, or order, to be shared with law enforcement. The newest generation of gear, including autonomous vehicles and always-on cameras, could provide the state with a persistent and omnipresent method of surveillance.
The big picture: "Data minimization" is an ethical guideline, encoded in the EU's GDPR privacy framework and other regulations, urging organizations to collect only the data they actually need and to keep it only as long as they need it.
- Google has taken a number of steps in this direction, including processing more data on devices rather than in the cloud and allowing users to set information to be deleted automatically.
- Apple has made data privacy a core principle, encrypting messaging data and limiting access to some other types of data so that only the user with the device can access it.
Be smart: Broader shifts in computing threaten to overshadow those efforts with new classes of products that depend on massive collection of data.
- One big trend is building devices around sensors and cameras that are always recording, such as doorbell cameras and autonomous vehicles.
- The machine learning algorithms that underlie everything from search engines to speech recognition only work when trained on mountains of data, creating another incentive for companies to build info stockpiles.
- "Not only will more data be collected but exponentially more," says Evan Greer, deputy director of Fight for the Future. "It's inevitable that mountain of additional data being collected will be abused."
Driving the news: This week, Vice reported details of the San Francisco Police Department seeking footage from GM-owned Cruise, one of several autonomous car companies whose vehicles are constantly riding around the streets of the city.
- The SFPD acknowledged to Axios that it makes requests for footage to investigate specific crimes, but denied it wants to use them for ongoing surveillance.
Civil rights groups say the stakes of collecting such data have also increased, especially in the U.S.
- "Those data sources have long been vulnerable to government demands," says Matt Cagle, a staff attorney at the ACLU of Northern California, However, the rise of AI is "pouring fuel" on the fire, Cagle said, "particularly in this moment when states are criminalizing abortion and gender affirming care."
3. Democrats split on Big Tech bills in Congress
Lawmakers are considering a slate of antitrust legislation in Congress ahead of the 2022 midterms. But conversations with Reps. Pramila Jayapal (D-Wash.) and Eric Swalwell (D-Calif.) at an Axios event Thursday signaled disagreement even among Democrats on the impact of those bills, Axios' Fadel Allassan reports.
State of play: Lawmakers are working against the clock on bipartisan efforts to broadly reshape the Big Tech landscape. Insiders told Axios the outlook is bleak for the proposals if they're not put for votes ahead of Congress' August recess.
What he's saying: Swalwell told Axios' Margaret Talev Thursday he's concerned the reforms "would throw the baby out with the bathwater" and put U.S. national security at risk for the sake of reining in Big Tech.
The legislation could embolden the Chinese government's efforts at currency manipulation, intellectual property theft and espionage, Swalwell said.
- Swalwell said he's concerned the reforms would allow "sideloading" — letting users download apps from unofficial platforms or the open internet.
- "You would allow the Chinese to flood these [app] stores with almost no regulation, with apps that could pipe U.S. consumer information — potentially national security information — back to China," Swalwell said.
The other side: Concerns that the tech legislation will hurt national security are "a red herring," Jayapal told Axios' Ashley Gold during a conversation that followed Swalwell's.
- Jayapal said national security experts have told her the bigger risk is "for us to not have the competition that pushes the right kinds of innovation forward."
- "Our national security is really affected when consumers have no choices, when small businesses can't thrive," Jayapal added.
4. Take note
- SandboxAQ, a quantum computing spinoff from Google has hired Nadia Carlsten, previously head of product at Amazon's quantum computing center.
- Kittch, a live streaming community for foodies, hired Spotify, Apple and Microsoft veteran Ed Suwanjindar is its first chief marketing officer.
- Workers at gaming giant Nintendo of America say the company's reliance on temporary workers is exploitative and that efforts to bring about change have been stymied by fear of reprisal. (Axios)
- I don't tend to cover a lot of crypto here, but cryptocurrencies are cratering and, if you want more on this, we have a whole newsletter devoted to it. (Axios)
- That said, Crypto's new bear market may not be as bad as the 2018 "winter" that devastated the industry. (Axios)