Jul 24, 2020

Axios Login

By Ina Fried
Ina Fried

It's always a delight to fill in for Ina — even if she did take a day off on a day when the news very much did not. She'll be back Monday.

Today's Login is 1,261 words, a 5-minute read.

1 big thing: Twitter's torrent of woes

Illustration: Aïda Amer/Axios

Twitter, a company well-acquainted with choppy waters, is having an especially rough moment. First, there was last week's brutal hack of high-profile accounts. Then, there was today's disappointing earnings report, along with the company's admission that it needs new sources of revenue, including subscriptions, Axios' Sara Fischer and I report.

The big picture: Twitter has only grown in its importance to politics and culture in the U.S. even as the company's business fortunes have stagnated.

Driving the news: Twitter said Thursday that it's considering a subscription product offering to help offset losses in advertising during the pandemic.

  • CEO Jack Dorsey told analysts on the company's earnings call that they can expect to see Twitter experiment with some approaches this year, but he didn't specify further. 

Twitter continues to increase its user base even as advertising suffers.

  • The company added 20 million new daily active users in the second quarter, an increase of 34% year-over-year — but its ad revenue was down 23% over the same period.

Yes, but: Dorsey made it clear that he doesn't want any new subscription business to interfere with the company's ability to sell and serve ads. 

  • Many big media companies, from streaming companies to newspapers, have taken similar approaches recently, to help offset advertising losses. 
  • The advertising market, which tends to grow at roughly the same rate as the GDP, also usually shrinks during economic downturns. 

Meanwhile, Twitter continues to deal with fallout from being hacked last week.

  • As of earlier this year, more than 1,000 Twitter employees had access to the kind of administrative controls that hackers hijacked last week to take over accounts for Bill Gates, Joe Biden, President Obama, Michael Bloomberg and others, according to a Reuters report.
  • That's despite the company's settlement with the Federal Trade Commission over a similar problem nearly a decade ago.

In the middle of all this, Twitter CEO Jack Dorsey also got hit with letters from House Judiciary Committee's ranking Republican member, Rep. Jim Jordan, demanding that he join the CEOs of Google, Apple, Amazon and Facebook at the antitrust hearing planned for Monday (and now likely postponed — see below).

  • There's no sign Dorsey has any intention of showing up. No one has ever accused Twitter of holding a monopoly over anything.
  • But the sideshow was a reminder of how out-of-place Twitter would be in that genuinely rich and powerful company.

Our thought bubble: Facebook, Apple, Google and Amazon have all, in different ways, figured out how to reap enormous profits from the digital revolution. Twitter has not. If anything, it less resembles those Big Tech behemoths than the smaller, struggling media companies whose employees find its service so mesmerizing.

The bottom line: Twitter's greatest strength has been its ability to serve as an open commons. Even though it has often failed to keep it a safe and civil environment, that openness is what makes it valuable for journalists, politicians and engaged citizens. A subscription model could bolster the company's finances but limit its public value.

2. Tech CEOs' Congress hearing likely put on hold

We've been telling you all week about that big House Judiciary antitrust hearing with Jeff Bezos, Mark Zuckerberg, Tim Cook and Sundar Pichai scheduled for Monday.

But Thursday night news broke that the event is almost certainly being postponed so members of Congress can attend a memorial service for the late Rep. John Lewis scheduled at the same time, Axios’ Margaret Harding McGill and Ashley Gold report.

The hearing will most likely be rescheduled to Aug. 3 or later that week, according to sources familiar with the deliberations.

Why it matters: The hearing will represent the first time that CEOs of Silicon Valley's biggest firms have appeared together to answer lawmakers' criticisms and charges of monopolistic behavior.

What's next: The committee is tentatively looking to hold the hearing sometime in the week of Aug. 3, sources said.

Go deeper:

3. Apple faces multi-state consumer protection probe

Illustration: Aïda Amer/Axios

Multiple states are investigating Apple for potentially deceiving consumers, according to a March document uncovered by a tech watchdog group, Margaret reports.

The big picture: Apple is already facing antitrust investigations from House lawmakers and the EU. Meanwhile, states have stepped up their scrutiny of Big Tech, including through multi-state antitrust probes of Facebook and Google.

Details: The Texas attorney general may sue Apple for violating the state's deceptive trade practices law in connection with a multi-state investigation, according to the document, obtained by the Tech Transparency Project through a public records request and shared with Axios Thursday.

  • The Texas AG's Consumer Protection Division "initiated this investigation for enforcement purposes. If violations are uncovered, CPD will initiate enforcement proceedings. Accordingly, the OAG anticipates litigation in this matter," the document reads.
  • The state's consumer protection law polices practices deemed false, deceptive or misleading.

It's not clear what specific practices Texas or any other states are looking into or the current status of the investigation. The document doesn't describe the investigation in detail or identify the other states involved.

  • The Tech Transparency Project, a critic of Big Tech's power and the research arm of the Campaign for Accountability, received the document in response to a March request for communications related to Apple or its employees or representatives .

What they're saying: A spokesperson for Texas Attorney General Ken Paxton said it is "long-standing OAG policy" not to "comment on, confirm or deny any pending or potential investigations." (Nevertheless, Texas has been public about its role in investigating Google.)

  • Apple declined comment.
4. What we're reading: Facebook's dark mirror

We heard a couple months ago about Facebook researchers' parallel-world version of Facebook — a simulation of the entirety of the social network designed to help the company anticipate and forestall new forms of online mischief and scams.

Details:

  • WW uses a copy of Facebook's actual codebase but its users are all bots.
  • There's no opportunity for real users to stumble into this mirror world, or for the bots to escape into the wild. (Unless, maybe, one finds a ... portal?)
  • The simulation app is "headless" — that is, there's no front-end user interface, no pages to read, just data interacting with other data to produce more data.
  • Facebook's goal is to run experiments to learn how to discourage bad behavior in the "real" Facebook — like city planners simulating traffic flow so they can know where best to place speed bumps.
  • The researchers say they haven't yet produced findings that have been used to improve the "real" Facebook's defenses, but they expect that to happen by the end of the year.

The big picture: Simulation is one of the most fundamental and oldest tricks a computer system can perform.

  • Facebook itself is a single world-sized system that users interact with.
  • Now the company has a second version of the system to help it find new ways to get users in the first one to do what it wants them to do.

Our thought bubble: You could look at this as an ingenious and well-intentioned effort on the part of Facebook's engineers to deter bad behavior on the scale of the world's largest digital platform.

  • But you could also conclude that Facebook is a colossal Skinner box, and we are 2.6 billion rats.
5. Take Note

On Tap

  • Pokemon Go Fest takes place Saturday and Sunday. Unlike past years, it's not in one physical location but open to any players willing to part with $14.99. Ina has agreed to play all weekend, just, you know, so she can fully report back to you how it went.

Trading Places

  • Dave Young, senior vice president for CenturyLink’s public sector  unit, was recently promoted to also head up the company’s global hyperscaler business.

ICYMI

6. After you Login

If things are getting a little too hot for you this summer, you might want to check out Sony's new personal air conditioner.

Ina Fried