July 27, 2021
The forecast for this tech earnings week is lots of very big numbers.
But here at Axios, we aim for low totals! Today's newsletter is a sleek 1,290 words, a 5-minute read.
1 big thing: Tech's massive money shield
The tech industry's leading giants are floating on a cushion of record profits in lakes of reserve cash, and all that money makes them just about unsinkable.
Driving the news: Tech's big five — Google, Apple, Amazon, Facebook and Microsoft — all report their earnings between Tuesday and Thursday this week. Recent quarters have delivered blowout results for these companies, and many observers expect the same again.
As David Streitfeld writes in the New York Times: "Silicon Valley, still the world headquarters for tech start-ups, has never seen so much loot."
- That's saying a lot, considering that the industry's last boom during the '90s dot-com era was dubbed "the largest legal creation of wealth in the history of the planet" by one of its leading investors, John Doerr.
Money creates possibilities. Here are some of the strategies you can adopt when your company is a geyser of profit:
1. Take enormous fines in stride as a cost of doing business.
- As of last year, the EU had fined Google roughly $10 billion for antitrust violations. France added nearly another $1 billion this year.
- In 2019, the FTC entered a $5 billion fine against Facebook for privacy violations, the largest in the agency's history.
- For other companies, such staggering penalties might have caused CEOs to resign or stocks to crash.
- But Google and Facebook are both riding an enormous wave of online advertising profits. Facebook paid the FTC fine, while Google is still challenging the EU's penalties. Both companies, barely scuffed, have gotten on with their charmed lives.
2. Out-lawyer the government.
- The threats to these companies from antitrust action by the Department of Justice and the Federal Trade Commission are real. The government has something they don't: legal authority and the power to compel action.
- But these firms also have something the government lacks: nearly unlimited legal budgets.
- Regulatory agencies are hamstrung by public-sector pay scales and staffing limits, and funding from Congress in recent decades has starved them of resources.
- Private corporations can buy as much legal firepower as they want, and for Big Tech that means almost any adverse outcome can easily be delayed and often be overturned.
3. Spend fortunes on "transparency."
- Big companies tend to spend freely on PR, but tech giants have taken the strategy to a new level, creating new departments (and even an entirely independent organization) intended to demonstrate their willingness to share data and accept accountability.
- When Facebook established its independent Oversight Board, it plowed $130 million into a trust to fund it.
- Facebook and some of its peers have built teams to provide quarterly transparency reports in areas like political advertising, content moderation, security issues and human rights.
- Yes, but: The companies' reports tend to pick and choose statistics that demonstrate they're taking action against big problems like misinformation. They're unenthusiastic about giving outsiders access to tools that let anyone pry into their closely held data.
Between the lines: The sheer magnitude of tech's financial power also makes these companies a target for critics' outrage and government regulation — but little of that has made an impact to date.
The bottom line: Big Tech companies may not be totally invulnerable, but their cash hoards get them awfully close.
2. Facebook creates new unit to build a "metaverse"
Facebook announced Monday it was forming a new Metaverse product group to advance its efforts to build a 3D social space using virtual and augmented reality tech.
The big picture: In an interview with journalist Casey Newton, Facebook CEO Mark Zuckerberg said he sees the metaverse — a term widely used in both tech and science fiction to describe broadly shared, open virtual environments — as "the successor to the mobile internet." Zuckerberg also said it was "not something that any one company is going to build."
Details: Facebook's new Metaverse product group will report to Andrew Bosworth, Facebook's vice president of virtual and augmented reality, who announced the new organization in a Facebook post.
What they're saying: Facebook's Oculus and Portal products have been first steps toward the new vision, Bosworth wrote, "but to achieve our full vision of the Metaverse, we also need to build the connective tissue between these spaces — so you can remove the limitations of physics and move between them with the same ease as moving from one room in your home to the next."
- Leading the new team will be Instagram product head Vishal Shah and Facebook Gaming's Vivek Sharma and Jason Rubin.
Of note: Bosworth's announcement linked to a Facebook hiring page for AR/VR jobs that lists more than 700 openings.
3. Snopes raises $1.7M to fight lawsuits
Snopes, one of the oldest fact-checking websites online, has raised more than $1.7 million from more than 44,400 supporters to help the company fight a series of lawsuits from a former tech vendor, Axios' Sara Fischer reports.
Why it matters: It's a massive legal battle for a site that employs 20 people. Snopes founder and CEO David Mikkelson says the legal fees account for roughly 20-30% of Snopes' revenues each year.
By the numbers: Mikkelson says that the site has been hit with over $4 million in lawsuits in four years, all from the same litigant, Proper Media and its owners, Sovrn Holdings Inc.
The legal fight — a complex dispute over ownership of Snopes' parent company, rooted in a fight for control of shares formerly owned by Mikkelson's ex-wife — came to a head in mid-2017, when Snopes says Proper Media blocked its access to its own website and email accounts. A court order gave Snopes access to its site and emails.
- Mikkelson says the lawsuit is a form of corporate bullying, and that no legal outcome will give Proper Media what they want.
- Sovrn Holdings did not comment.
Driving the news: Snopes is now launching its latest fundraising campaign, Save Our Snopes, to raise money for its next major trial that will begin later this year.
- In the first three days of the campaign, the company has raised over $250,000, mostly on GoFundMe.
Catch up quick: Snopes is an independent publication launched in 1994 to help fact-check claims made on the web, making money mostly from advertising and memberships.
4. Exclusive: Facebook partnership tackles health misinfo
Facebook is partnering with a global tech nonprofit called Meedan to give its 80+ fact-checking partner organizations access to training from experts in how to handle health and vaccine misinformation, a spokesperson tells Sara.
The big picture: It's part of an expanded effort by Facebook to reduce health misinformation on its platform. The tech giant is facing increasing criticism from the Biden administration and others that it isn't doing enough to curb misinformation about COVID-19 vaccines.
Details: Meedan will host a series of virtual training sessions between its team of doctors, scientists and other health experts and Facebook’s third-party fact-checkers on how to better spot and fact-check misinformation.
- Meedan’s Digital Health Lab compiles research-based evidence from experts to address digital health information misinformation.
- The partnership will give Facebook's fact-checking partners access to Meedan’s health experts whenever they need immediate help with health-related fact-checks.
By the numbers: Facebook has spent $84 million on programs supporting its fact-checking efforts through the Facebook Journalism Project in the past five years.
5. Take note
- Lots of earnings, like we said yesterday — for today, it's Apple, Alphabet/Google and Microsoft.
- The FTC is holding a one-day virtual event called PrivacyCon.
- Intel said its foundry service will start making chips for Qualcomm and Amazon. The U.S. chip giant says it aims to catch up to rival Taiwan Semiconductor by 2025. (Reuters)
- Samsung's lineup for an Aug. 11 product event will not include a new Note phone. (The Verge)
- Google is said to take legal action over Germany's expanded hate-speech law. (Reuters)
6. After you Login
Today, from Tokyo, Ina writes about the uncertain Olympic future for one of her favorite sports — softball.