Jul 23, 2020

Axios Login

By Ina Fried
Ina Fried

I'm taking tomorrow off, but my editor, Scott Rosenberg, has graciously agreed to fill in so you won't miss a beat. The only question now is which room in my house I will explore during my day off.

Situational awareness: Twitter and AT&T both reported second-quarter earnings Thursday morning. Both firms saw revenue contract as brands trimmed their ad budgets and the pandemic weighed more broadly on the economy. AT&T also announced its 5G network is now available nationwide.

Today's Login, meanwhile, is 1,458 words, a 6-minute read.

1 big thing: Tech's big four are a study in contrasts

Illustration: Sarah Grillo/Axios

Four firms — Facebook, Google, Amazon and Apple — now form the de facto roster of Big Tech, thanks to Congress' decision to interrogate their CEOs together at a landmark antitrust hearing Monday, Scott reports. (Sorry, Microsoft, but maybe it's for the best.)

The big four share enormous power, massive resources, high ideals and, more recently, troubled public images. But there are enormous differences among them, too — and their leaders will be leaning on those contrasts as lawmakers grill them.

Why it matters: These differences will shape how each firm fares in the court of public opinion and the labyrinth of regulatory action as they try to counter lawmakers' charges of monopolistic practices, privacy violations, censorship, and tolerance of misinformation.

What they do:

  • Facebook's mission is to "bring the world closer together" through its social network: it connects people with other people.
  • Google, whose mission is "to organize the world's information and make it universally accessible and useful," connects people with information.
  • Amazon's aim is "to continually raise the bar of the customer experience." Let's just say it connects people with goods.
  • Apple's mission, "to make great products," might be described as giving people the best devices to make all of the above possible.

How they make money:

  • Both Facebook and Google sell ads. Together, they're predicted to collect roughly 52% of all U.S. digital ad dollars this year (per eMarketer).
  • Amazon is a retailer that also runs a marketplace for other merchants. It also has a huge cloud services business ($75 billion in revenue for the first quarter of 2020).
  • Apple sells hardware. It's also building revenue from services — more than $13 billion in the most recent reported quarter, making that line bigger than its Mac and iPad businesses.

How they're structured:

  • Facebook acquired Instagram in 2012 and WhatsApp in 2014 and, though it has moved to integrate them technically, it still operates both as distinct services. That gives lawmakers a potential way to think about breaking up the company.
  • Google's acquisition of DoubleClick in 2007 set up its dominant position in the digital-ad market. YouTube, its vast video platform, also operates independently.
  • Amazon's hugely successful Web Services cloud service operates relatively separately from the company's main business, and some critics have called for the two to be separated.
  • Apple has rarely grown through big acquisitions and offers regulators few obvious fissures to cleave. If they wanted to consider somehow splitting it up, they'd likely explore breaking the App Store off from the iPhone's operating system and Apple's control.

Yes, but: The fact that there are four tech superpowers to begin with suggests there's still plenty of competition that opponents of antitrust action can cite.

These companies are all in one another's businesses.

  • Apple and Google offer competing smartphone operating systems (iOS and Android).
  • Facebook and Google's huge ad businesses are in competition with each other, and Amazon competes here too, with its roughly 10% share of the digital ad market growing.
  • Amazon Web Services faces competition from Google as well as Microsoft, IBM, Oracle and smaller players.
  • Google and Amazon both make devices that compete with Apple, and even Facebook has gotten into the act (with Portal and Oculus).
  • Each company has deep investments in AI products and research, and each has a voice assistant (Facebook's long-rumored entrant is still in development).
  • Microsoft remains a strong competitor in many areas, too.

Our thought bubble: Antitrust is all about defining markets. You can't have a monopoly unless it's clear what the monopoly is on.

  • In tech's big previous antitrust epics, cases against IBM and Microsoft, the government took aim at single dominant firms, and labored mightily to make its case.
  • Going after four companies at once will make the job even harder.

Go deeper: Tech giants' life cycles shape their crisis responses

2. Enterprise Apple helper sees soaring IPO

Jamf CEO Dean Hager, alone in the company's Minnesota offices on IPO day. Photo: Ina Fried/Axios

Jamf, a Minneapolis company that helps business manage their employees use Apple devices, had a blockbuster first day of trading Wednesday, with shares up nearly 40% in an initial offering that raised $468 million for the firm.

CEO Dean Hager told me in an interview he has "absolutely no regrets" that money was left on the table, calling Wednesday "about as energizing a day as we've had in Jamf's history."

Why it matters: Apple, which has traditionally put most of its energy on the consumer market, is a growing force inside businesses. But it leaves a lot of the integration and management tasks to other companies, like Jamf.

Hager isn't concerned that Jamf needs to diversify beyond supporting Apple products, saying that's a $10 billion market growing more than 17% a year. Hager added that research shows 70% of millennials and Generation Z prefer iOS to Android, and Mac to PC, when given the choice.

"That means we are at the beginning of this transformation, not nearing the end," Hager said.

Between the lines: Hager also brushed off concerns that Apple could some day take over its business.

History lesson: Jamf started in 2002, long before the iPhone and at a time when Apple was still early in its recovery from years of struggle. In 2017, Vista purchased a controlling interest in Jamf for a reported $733 million — a stake that is now worth billions, with the company's valuation at the end of the IPO day at over $5 billion.

3. The continuing problem of AI bias
Data: Language Models are Few-Shot Learners; Table: Axios Visuals

While the new GPT-3 AI text generator has earned ecstatic reviews from many experts for its capabilities, some critics have pointed out clear issues around bias, as Axios Future's Bryan Walsh reports.

Why it matters: As AI becomes more powerful and more integrated into daily life, it becomes even more important to root out the persistent problem of bias and fairness.

What's happening: Researchers at OpenAI noted in the paper introducing GPT-3 that "internet-trained models have internet-scale biases." A model trained on the internet like GPT-3 will share the biases of the internet, including stereotypes around gender, race and religion.

  • As the table above from the paper shows, females were more often described with appearance-associated adjectives, while males were more often described with adjectives that spanned a wider spectrum of descriptions.
  • The paper also found that GPT-3 associated different races with different degrees of sentiment, with Black ranking consistently low.

In a Twitter thread, Facebook AI head Jerome Pesenti raised concerns that GPT-3 can "easily output toxic language that propagates harmful biases."

  • OpenAI CEO Sam Altman responded that he shared those concerns, and he argued that part of the reason the nonprofit was starting off GPT-3 in a closed beta was to do safety reviews before it went fully live.
  • He noted that OpenAI had introduced a new toxicity filter that was on by default.
  • The original paper also found that GPT-3 seemed less prone to bias than earlier, smaller models, offering some preliminary hope that size could help minimize the problem.

What to watch: A system that can generate near-human quality writing could be used for misinformation, phishing and other hacking efforts. And while malicious humans already do all of those things, GPT-3 and future AI systems could effectively scale those efforts up.

The bottom line: If AI produces racist or sexist content, it's because the system learned it by watching us. That puts the onus on programmers to curb their creations.

Go deeper: Rooting out AI bias

4. Twitter: Hackers accessed 36 accounts' DMs

Illustration: Sarah Grillo/Axios

Twitter announced yesterday that hackers were able to access the direct messages of 36 of 130 targeted accounts, including an elected official in the Netherlands, as part of a mass hack that targeted notable figures on July 15, Axios' Rashaan Ayesh and I report.

Why it matters: Wednesday's revelation shows that hackers retrieved sensitive information from more than the eight accounts that had their full information downloaded. Twitter said it is still unsure whether more accounts' direct messages were accessed.

Twitter declined to comment to Axios on how many verified users, if any, were among the 36 people whose messages were accessed. It previously said no verified accounts were among those that had their full information downloaded.

Our thought bubble: As Brianna Wu points out, it would be nice if Twitter offered an option to encrypt direct messages so that they were better protected in the event of future attacks.

5. Take Note

On Tap

  • Today's earnings reports include Intel.

Trading Places

  • Twilio will announce today Michelle Grover as its first CIO. Grover was previously SVP of software development at SAP Concur and is on the board of Techtonica, a nonprofit that helps guide women and non-binary individuals into the technology industry.
  • Verily, the health unit of Google parent Alphabet, named Cynthia Patton as general counsel. Patton was previously chief compliance officer for Amgen.
  • STEM toymaker GoldieBlox announced several executive hires including Melissa Schneider as chief content officer, former Tinder marketing chief Ferrell McDonald as chief marketing officer and Tim Erickson as executive VP of operations and partnerships.
  • A federal appeals court temporarily blocked the Trump administration's attempt to purge the leadership at the Open Technology Fund, which urges global internet freedom. (Politico)

ICYMI

  • Slack filed an antitrust complaint against Microsoft with the European Commission. (Axios)
  • The personal information from hundreds of thousands of Instacart accounts is being sold online. (BuzzFeed News)
  • Microsoft saw sales growth in its Azure cloud unit dip below 50% for the first time, while its overall corporate bookings remained roughly flat from the prior quarter and ahead of expectations. (Reuters)
6. After you Login

Check out this back and forth between Velveeta and Microsoft MVP Chris Pietschmann, where the fake cheese gets in some good digs at Zune and Windows Vista.

Ina Fried