Jul 20, 2018

Axios Login

By Ina Fried
Ina Fried

Do not operate heavy machinery while reading Login. Contact a physician if it takes you more than four hours to read. Side effects may include being moderately better informed and occasional laughter.

1 big thing: Silicon Valley's latest excuse — China is worse

Illustration: Rebecca Zisser/Axios

Silicon Valley's tech companies have a new argument in the unfolding debate over their size and power: We're better than the Chinese competition.

Why it matters: Washington is concerned about both China's rise and Big Tech's power. Now, Axios' David McCabe reports, the companies are trying to use the former to defuse the latter, as Facebook CEO Mark Zuckerberg did this week.

What they're saying:

  • “So I think you have this question from a policy perspective, which is, do we want American companies to be exporting across the world?” said Zuckerberg in an interview with Recode published Wednesday. “Because I think that the alternative, frankly, is going to be the Chinese companies.” His comment was in response to a question on if he fears the calls to break up Facebook.
  • “I think this is worthy of some debate,” top Senate Intelligence Committee Democrat Mark Warner said last month to Axios, speaking about breaking up Facebook and other large tech players. “One of my hesitancies, though, would be if we kneecapped American companies and they were simply replaced by Chinese tech companies. These are global companies now with global reach and we should tread softly.”

My thought bubble: As much as companies are holding out China as the boogeyman publicly, they are doing it even more behind closed doors. Several times in the past month, as I have talked to big tech companies, they've explained their unwillingness to set limits or halt work with the government by noting that "You know, the Chinese aren't having this debate."

The big picture: Major Chinese internet companies like Tencent, Alibaba, Baidu and JD.com are growing fast.

  • In the hardware business, supply chains are global and U.S. and Chinese interests are often interconnected.
  • In the software and social media worlds, China has formed its own homegrown alternatives to Western powerhouses like Google and Facebook, keeping the industries more separated.
  • “[Y]ou couldn't do this in China, right? Or, what you did in 10 years,” Sen. Dan Sullivan (R-Ak.) asked Zuckerberg earlier this year about his development of Facebook. Zuckerberg replied: “[W]ell, senator, there are...some very strong Chinese Internet companies.”

Yes, but: Chinese tech companies could struggle to succeed globally — even without American competition — because there is so little trust that they'll keep customer data private from the government.

  • “It’s probably right that you don’t want to create the opportunity for them, but they have significant obstacles to penetrating a global market,” said Jim Lewis, a former State Department official who's now a SVP at the Center for Strategic and International Studies.

Go deeper: NYT's Farhad Manjoo argued Wednesday that the way for the U.S. to meet the challenge from China is for the government to fund more research.

2. AT&T announces more cities for 5G launch
Photo: AT&T

AT&T is announcing today that Charlotte, Raleigh and Oklahoma City will be among the dozen cities that will get 5G service this year.

Why it matters: There's a big marketing battle shaping up over the race to 5G with all four major carriers saying they will be first in one way or another. Eventually 5G will pave the way for connecting whole new types of devices, but the first use will be for faster internet service.

  • Verizon says it will be first with 5G, because it will offer fixed broadband this year.
  • AT&T says it will be first with mobile 5G, offering a 5G portable hotspot by December.
  • Sprint says it will be first with a nationwide 5G network drawing on its existing 2.5GHz spectrum it got via its Clearwire acquisition.
  • T-Mobile says it will be among the first with 5G smartphones early next year.
3. How Disney-Fox will take on Netflix

Illustration: Rebecca Zisser/Axios

After a months-long battle, Comcast said Thursday it would no longer pursue the acquisition of 21st Century Fox's entertainment assets, nearly guaranteeing that Disney will acquire most of Fox barring any regulatory concerns.

The bottom line: As Axios' Sara Fischer notes, the combined company will nearly double Disney's size, giving it enough content and international assets to take on Netflix, which has quickly become a dominant force in the American entertainment industry.

Some other metrics:

  • The combined company will own 7 of the 10 highest-grossing films of all time.
  • Last year, Fox and Disney collectively brought in roughly one third of movie studio revenue.
  • On the TV side, the deal will also give Disney access to a slew of new cable channels, like National Geographic and FX, that can be used to populate its own streaming service. Disney already owns several cable channels, like ESPN, Disney and Freeform.
  • Disney and Fox are also part owners of Hulu, though Disney has been reportedly willing to divest its stake in the streaming service, if necessary, to win regulatory approval.

Go deeper: Sara has more here.

4. Immigration group rejects Salesforce donation

One of the nonprofits leading the fight against the Trump administration's immigration policies has declined a donation from Salesforce after the business software company refused to end its contract with the U.S. border patrol.

Salesforce has maintained that it “isn’t working with CBP regarding the separation of families at the border,” but the group, known as RAICES, rejected the logic, along with the donation. RAICES stated:

Your software provides an operational backbone for the agency, and thus does directly support CBP in implementing its inhumane and immoral policies. There is no way around this, and there is no room for hair splitting when children are being brutally torn away from parents, when a mother attempts suicide in an effort to get her children released, and when an 18 month old baby is separated from their mother in detention.

The context: By taking strong positions on other social issues, Salesforce has won many fans on the left, but it also means that it gets held accountable when people feel it has made any kind of compromise. That said, employees at other tech companies, including Microsoft, have also questioned their companies' work with U.S. immigration agencies.

5. How DOJ will send alerts on foreign influence

If you are curious how exactly the Justice Department plans to publicize foreign influence attempts like election meddling, Axios' Joe Uchill has a deep dive on the process.

How it works: The notification policy will apply to four groups of victims, all of which are now pretty familiar. Had the policy been in place in 2016, it could have been used to notify:

  • Facebook, that a foreign actor was using its business to distribute propaganda.
  • The Democratic National Committee, that a foreign hacker was trying to hack its systems.
  • The Trump campaign, that Russia was trying to aid its cause.
  • The general public, if “federal or national interests…outweigh any countervailing considerations.”

Why it matters: We’re two years removed from the last massive election tampering campaign, less than a week removed from a suspected Russian operative being arrested for trying to infiltrate and influence conservative circles, and three months away from the next election.

Go deeper: Read the rest of Joe's story here.

6. Take Note

On Tap

  • Whatever it is, I'll take a pint of it. Been another long week.

Trading Places

  • Uber's top finance executive, Prabir Adarkar, is headed to DoorDash to be that company's CFO. It's a big loss for Uber, as Bloomberg notes, given the company has been without a CFO for years.
  • Twitter added former Nigerian Finance Minister Ngozi Okonjo-Iweala and former Goldman Sachs executive Robert Zoellick to its board. Meanwhile, Marjorie Scardino is leaving the board at year's end.

ICYMI

  • The Washington Post tested more than 100 people using smart speakers to see how the technology often failed those with accents. Non-native English speakers suffered the most, but even those with southern or midwestern accents saw less accurate results than those from the West Coast or East Coast.
  • WhatsApp is limiting how many times a message can be forwarded in an effort to stop the spread of fake news that has led to mob violence in India and Myanmar.
  • Microsoft turned in an upbeat earnings report, topping $100 billion in revenue for the fiscal year, with strong results across the board, VentureBeat reports.
  • It turns out Apple added more than just sound-dampening technology to its new MacBook Pro keyboards, per Wired.
7. After you Login

Looking for a more artistic alternative to Bitcoin? Check out these Blockchain-inspired textiles. (Or you could just take Vint Cerf's advice.)

Ina Fried