Oct 23, 2020

Axios Login

Congrats, it's almost the weekend. Or, The Weeknd, as the kids say.

Today's Login, meanwhile, is 1,477 words, a 6-minute read.

1 big thing: Tech finds out everything is politics

Illustration: Aïda Amer/Axios

It's one political minefield after another for tech companies this year as the industry faces a rash of concerns including antitrust pressure, rampant misinformation and a pre-election tightening of screws from the Trump administration, Axios' Kyle Daly and I report.

Why it matters: For much of Silicon Valley, politics has, over the past decade, gone from a non-consideration to a nagging occasional distraction to an all-consuming force that threatens some companies' very existence. New products and features, meanwhile, have gone from being all the buzz to largely an afterthought.

Driving the news: Just recently...

Google was hit with an antitrust lawsuit from the Justice Department over tactics prosecutors contend it uses to smother would-be competition in online search.

  • The case steers clear of overtly political issues like claims of anti-conservative bias, but it still illustrates Google's inability to fend off Washington scrutiny — and Big Tech's fallen fortunes with both political parties.
  • Many progressives have come out in support of the suit, and Democratic state attorneys general are likely to introduce some antitrust accusations of their own. (Facebook is also under antitrust investigation at the Federal Trade Commission, which may be drawing closer to a decision on whether to file suit, per Thursday reports from the Washington Post and New York Times.)
  • Google separately caught flak over a newly revealed cloud contract supporting the Trump administration's monitoring of the U.S.-Mexico border.

Uber faced a new lawsuit from a group of drivers who say the company is trying to exert political influence over them with in-app messages pushing a California ballot measure that would ensure gig-economy companies can classify their workers as independent contractors and not employees.

  • Uber and other firms have poured nearly $200 million into a campaign to promote the ballot initiative, which would override state standards, established judicially and codified in a new law, that make it hard for companies to avoid treating their workers as employees.
  • Having to comply with the law could upend the business models of companies like Uber and Lyft, which have been battling in court for months to avoid reclassifying their drivers. Polling from late last month showed Californians split on the ballot measure.

Facebook and Twitter wrestled with what to do about questionably sourced stories from conservative media outlets that appear to be based on files stolen from Hunter Biden.

  • Their initial calls to limit the reach of the first story on the matter, from the New York Post, ignited fury from conservatives, prompting Senate Judiciary Committee Republicans to vote Thursday to authorize subpoenas to force Facebook CEO Mark Zuckerberg and Twitter CEO Jack Dorsey to testify before the panel before the election unless they do so willingly.

Microsoft heard from Trump's Labor Department, which said it was looking into whether Microsoft's pledge to double the number of Black people it employs in leadership by 2025 constitutes unlawful racial discrimination.

  • Microsoft, which says it's confident it is complying with all employment laws, is one of many tech firms also grappling with Trump's recent executive order aimed at eliminating certain diversity trainings.

Expensify CEO David Barrett sent an exceptionally strongly worded e-mail to his company's customers on Thursday, saying that "anything less than a vote for Biden is a vote against democracy."

  • "I know you don’t want to hear this from me. And I guarantee I don’t want to say it. But we are facing an unprecedented attack on the foundations of democracy itself."

The big picture: It's a lot. And it's crowding out business as usual.

  • Apple's first 5G iPhones hit stores on Friday. Sony and Microsoft are both out next month with the PlayStation 5 and Xbox Series X consoles.
  • That's the sort of flagship next-gen hardware that would have caught most of the tech world's (or at least tech media's) attention just a few years ago. Now, it barely registers.

Yes, but: Some companies are dealing with the politically supercharged times by trying to disengage.

  • Twitter dissolved its political action committee, telling Business Insider in a statement Thursday the move is "in line with our belief that political influence should be earned, not bought."
  • Cryptocurrency software firm Coinbase early this month said that it would no longer take any political stances not directly related to its core business and would bar employees from talking politics among each other.
2. The FCC is now ready to fight Section 230

FCC Chairman Ajit Pai. Photo: Chip Somodevilla/Getty Images

The Federal Communications Commission is making its case this week for why it should go ahead and write rules to curtail tech's broad protections against lawsuits over both moderation decisions and material that internet users post online, as Kyle reports.

Why it matters: The agency's GOP chairman was a longtime champion of the FCC hewing closely to the powers Congress has explicitly given it and to staying out of rewriting policy beyond its traditional jurisdiction. He now seems to have a very different view of FCC authority.

Driving the news: FCC Chairman Ajit Pai said during a virtual event Thursday that the agency is acting under a provision in the Communications Act that gives it general authority to write rules as it sees fit to enforce that act, the FCC's founding charter from 1934.

  • The immunity shield, Section 230 of the Communications Decency Act, is part of the Communications Act because it entered U.S. law bundled under an expansive 1996 update to the then-62-year-old statute.

Pai's comments followed a Wednesday blog post from Tom Johnson, the FCC's general counsel, arguing that legal precedent holds that the FCC has every right to craft rules stemming from any part of the Communications Act.

Between the lines: The FCC is acting on an executive order from President Trump aimed at making it harder for Facebook and Twitter to crack down on conservatives.

Flashback: While in the GOP minority during the Obama administration and while working to unwind certain Obama-era rules after Trump took office and elevated him to chairman, Pai seemed to see the FCC's role differently.

  • "I know that this is an area of great public interest, but the right way to channel that public debate is through Congress, to let our elected officials tell us what the rules of the road in the digital world are going to be," Pai said of net neutrality back in 2017.

Our thought bubble: Even anodyne FCC orders often end up in court. If the agency completes the rulemaking process and delivers a final order narrowing Section 230 protections, it's guaranteed to face legal challenges.

  • That looming court battle may be by design. Supreme Court Justice Clarence Thomas recently wrote that he wants the high court to hear a case that gives it the chance to rein in Section 230.

Yes, but: If Trump loses re-election next month, any project to have the FCC chip away at Section 230 — or use that attempt as a vehicle to have the Supreme Court do it — is dead in the water.

3. Appeals court: Uber, Lyft must make California drivers employees

A California appeals court Thursday said Uber and Lyft have to reclassify their drivers in the state as employees, affirming a lower court's ruling, Axios' Kia Kokalitcheva reports.

Why it matters: As we told you above, the companies are fighting in court and on the November ballot to escape a California law that could either upend their business model or prompt them to pull out of their home state altogether.

Background: California's attorney general, along with city attorneys for San Francisco, Los Angeles and San Diego, sued Uber and Lyft in May for classifying their drivers as independent contractors instead of employees.

  • California's new law, known as AB5, went into effect in January. It codifies a state supreme court decision from 2018.
4. FBI: Russian hackers stole data after targeting local governments

FBI headquarters. Photo: Mark Wilson/Getty Images

Energetic Bear, a Russian state-sponsored hacking group, has stolen data from two servers after targeting state and federal government networks in the U.S., officials said Thursday, as Axios' Orion Rummler reports.

Between the lines: This comes a day after Director of National Intelligence John Ratcliffe said Iran and Russia had obtained voter registration information that could be used to undermine confidence in the U.S. election system.

  • The FBI and Cybersecurity and Infrastructure Security Agency said Thursday they do not have evidence that Energetic Bear compromised elections data or government operations.
  • In at least one compromise of a state or local government server, Energetic Bear accessed documents related to sensitive passwords, vendors, and printing access badges, the agencies said.

Yes, but: "[T]he actor may be seeking access to obtain future disruption options, to influence U.S. policies and actions, or to delegitimize [state, local, territorial, and tribal] government entities," the agencies said.

Between the lines: While Ratcliffe focused his Wednesday night press briefing primarily on the Iran findings, many intelligence officials remain "far more concerned about Russia, which in recent days has hacked into state and local computer networks in breaches that could allow Moscow broader access to American voting infrastructure," the New York Times reports.

5. Take Note

On Tap

  • The iPhone 12 and iPhone 12 Pro officially go on sale.

Trading Places

  • Former Windows boss Terry Myerson is now CEO of Truveta, a health care startup that came out of stealth on Thursday.

ICYMI

  • Intel shares fell as much as 10% despite the company issuing a generally upbeat earnings report. (Axios)
  • Quibi's shutdown looks like it will take effect in early December. (TechCrunch)
  • Twitter and the White House both deny a Dutch white-hat hacker's claim that he broke into the president's Twitter account. (The Verge)
  • The Facebook Oversight Board started accepting appeals from Facebook and Instagram users who think the company acted against them wrongly. (Axios)
  • Huawei's revenue growth slowed considerably amid the U.S. campaign to push its gear out of global telecom networks. (CNBC)
6. After you Login

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