May 18, 2020

Axios Login

By Ina Fried
Ina Fried

You did it! Whether "it" was a 3-mile run or a daring drive to the grocery store, you made it through the weekend.

  • And, as a reward, here is today's Login, all 1,476 words (a 5.5-minute read).

Situational awareness: Alibaba co-founder Jack Ma is resigning from the board of embattled Japanese tech giant SoftBank.

1 big thing: Antitrust clouds gather over emboldened tech giants

Illustration: Aïda Amer/Axios

Despite a deadly pandemic that has made tech a lifeline for people stuck at home, 2020 could see major confrontations between Big Tech and government after all, Axios' Kyle Daly and Margaret Harding McGill report.

Driving the news: A new report Friday that the Justice Department and 50 state attorneys general are moving closer toward suing Google reminded the tech industry that the coronavirus only hit "pause" on the ongoing techlash.

  • Facebook's announcement of a major acquisition the same day reminded Washington that tech companies intend to keep augmenting their power. Its $400 million bid for animated image repository Giphy marks one of Big Tech's highest-profile deals since the pandemic reset the dynamics of the industry's public image.

What's happening: Today, tech philanthropy group the Omidyar Network is unveiling what authors call a "roadmap" for an antitrust case against Google.

  • Drawing on findings that U.K. competition regulators made public in December, the report argues that Google has used its products to shut out competing online advertisers and limit the amount of revenue flowing to online publishers.

What they're saying: "[T]here is significant reason for concern that Google has violated U.S. antitrust law," write the report's authors, Omidyar's David Dinielli and Yale's Fiona Scott Morton, who both served in the DOJ's antitrust division during the Obama administration.

  • They argue that just looking at Google's percentage of the display and video ad markets may vastly understate the actual power it wields there, thanks to the ubiquity and dominance in digital video of Google-owned YouTube.
  • "[I]n the digital advertising market, virtually all roads lead through Google," they write.
  • "Using the insurmountable data advantage it derives from its search engine and other properties as well as contract and design choices, Google has made it nearly impossible for publishers and advertisers to do business with each other except through Google."

The other side: Google has long denied engaging in anti-competitive behavior, noting in a blog post last year that the ad tech sector is "famously crowded" and that the average online advertiser uses three to four platforms to reach users.

  • Google also sought to rebut some of the U.K. findings underpinning today's report in a recent filing.

Meanwhile, Facebook's purchase of Giphy could raise antitrust questions for the social network at a time when it is already under intense scrutiny.

  • The Federal Trade Commission is already in the process of reviewing similar deals dating back to 2010.
  • While sources familiar with the deal say it is not subject to mandatory federal review, regulators could investigate it anyway, given the spotlight on the company's data collection practices and privacy record.
  • “Just like Google purchased DoubleClick because of its widespread presence on the internet and ability to collect data, Facebook wants Giphy so it can collect even more data on us," GOP Sen. Josh Hawley, who tends to be a tech critic, said in a statement.
  • "Facebook shouldn’t be acquiring any companies while it is under antitrust investigation for its past purchases."

The bottom line: As companies edge back toward business as usual and revive their merger pipeline in a friendlier public atmosphere than they enjoyed before the pandemic, each step they take will test regulators' appetite for challenging them.

Go deeper: Facebook's Giphy acquisition invites antitrust attention

2. The pandemic downturn might yield a new startup wave

Illustration: Aïda Amer/Axios

The American economy is in a dark period right now, but some in Silicon Valley are optimistic it could spawn a generation of startups, Axios' Kia Kokalitcheva reports.

Why it matters: It may sound counterintuitive to launch new businesses in the middle of an economic crash, but it's worked during past downturns, and Silicon Valley's founders and investors remain willing, so far, to keep rolling the dice.

The big picture: Y Combinator, the famed startup accelerator program, is seeing 15%–20% more applicants for its summer program, admissions chief Dalton Caldwell tells Axios — a sign that some entrepreneurs want to forge ahead both with new ideas and with companies they’ve already been working on.

  • Y Combinator’s free, online Startup School is also seeing increased interest. “More than 600 founders have signed up for our course every week since March, and in recent weeks, we've seen that number spike to over 1000,” per a statement.
  • “In a week, we’ve had 500+ Future Founders join from companies like Stripe, Uber, Lyft, Robinhood, Airbnb & Opendoor,” Chapter One managing partner Jeff Morris Jr. tweeted last month about the list of aspiring entrepreneurs he’s put together.
  • Investors are also creating ways for startups to pitch them online, and programs like On Deck continue to help would-be founders year-round.

What’s happening: Initiatives like Cleo Capital’s Chrysalis and Chapter One’s Future Founders list are hoping to help newly unemployed tech workers explore starting new companies, while accelerator programs are seeing an uptick in interest.

  • “For the first time in a decade, product people and engineers are open to looking at new jobs,” Cleo Capital managing partner Sarah Kunst tells Axios.
  • Layoffs have been swelling at startups, larger pre-IPO tech companies, and publicly traded firms like Uber and Lyft.
  • Some are choosing to take new jobs, but many likely have the financial resources to step back and consider another route.

How it works: Kunst’s program, dubbed Chrysalis, will select about 100 applicants from a pool of experienced tech professionals who are not currently employed and connect them online via Slack, the work chat app, in the hopes they find others interested in pursuing similar startup ideas.

  • “It’s more like a writer’s retreat. … You’re there because of the community and accountability,” Kunst says.

What's next: It's too early to know what these new companies look like, how will they function, and what will they build.

  • Some categories require in-person work, like robotics or other physical products that can’t be developed online remotely the way software can.
  • Caldwell notes an uptick in startups in delivery, logistics, health care, e-commerce tools, and virtual alternatives to in-person industries.

Yes, but: Not all the startup signals are bullish. Notably, equity management company Carta recently laid off 16% of its staff in response to lowered expectations about new startups being formed in the near future.

Flashback: Recessions have often triggered startup baby booms. After the dotcom bust in the early 2000s, a wave of small companies emerged to build "Web 2.0." And many of today's industry leaders got started during the Great Recession of 2008–2009.

3. Tech firms pledge to support working parents during crisis

Courtesy of Cleo

A coalition of tech companies has signed a pledge to find ways to support working parents at their firms through the coronavirus crisis, thereby setting examples for other employers.

Why it matters: Many parents face the taxing challenge of having to homeschool their kids while also working from home during the pandemic.

Details: The "Invest in Parents" initiative involves several nonprofits and is being coordinated by Cleo, a startup that provides services to new parents as an employer-paid benefit.

  • Organizers of the pledge include PL+US, Happiest Baby, and The Mom Project.
  • The coalition includes Salesforce, Uber, Snap, Box, Pinterest, Niantic and Zoom.
  • Other signatories include PepsiCo, Okta, Pure Storage, UrbanSitter, Winnie, Cloudflare, The Wing, Cora, and the Detox Market as well as VC firms GV, NEA and Greylock.

What's happening: "Working parents aren't OK," Cleo CEO Sarahjane Sacchetti tells Axios.

  • The effort is designed to build pressure among companies to provide resources and support for both parents and their managers.
  • In a survey, 20% of parents say they or their partner are considering leaving the workforce over childcare concerns, while many others are considering moving closer to family. Roughly half of parents said they had no childcare.
  • Early reports also suggest the burden is falling heaviest on women, threatening to reverse gains made in recent years by the tech industry.

"Working mothers are being pushed even further to the brink," Sacchetti adds. "We don’t want to see diversity and inclusion fall apart."

Editor's note: This story has been corrected from an earlier version that listed Slack as one of the companies signing the working parents pledge.

4. Report: Nigerian scam targets unemployment checks

The Secret Service warns that an organized scam ring from Nigeria has been using stolen personal information to apply for unemployment benefits in various states, Krebs on Security reported over the weekend.

Why it matters: States were already struggling with a deluge of claims and trying to speed up the process. Defending against scammers could prompt governments to instill stricter security measures, potentially delaying payment to the millions who have recently lost their jobs.

What's happening: The Secret Service memo was circulated last week, per Krebs, and warns that the scammers appear to have a large database of personal information they are using to apply for benefits.

  • Washington State has been the biggest target, with claims also apparently submitted in North Carolina, Massachusetts, Rhode Island, Oklahoma, Wyoming and Florida.
  • The scheme is similar to another, already prevalent attack, in which scammers use stolen Social Security numbers to file fraudulent federal income tax returns and collect other people's refunds.
5. Take Note

On Tap

  • Microsoft's Build conference, originally slated for Seattle, will take place online Tuesday through Thursday.

Trading Places

  • Former Xbox executive J Allard is joining Intellivision Entertainment, which is aiming to release the $249 Amico family game console this year.

ICYMI

  • The Trump administration has added another rule intended to cut Chinese telecom gear maker Huawei off from U.S. businesses. (New York Times)
  • Amazon said it will send an executive to testify before a congressional antitrust panel but stopped short of promising CEO Jeff Bezos, as had been requested. (Politico)
  • Following Facebook, General Atlantic is investing $870 million into India's Jio Platforms. (Axios)
  • Apple says 100 of its stores have reopened globally. (Bloomberg)
  • A new survey of corporate tech leaders predicts that IT spending this year will drop 8% due to pandemic-related spending cuts. (Gartner)
6. After you Login

We try to teach Harvey not to play with his food. That said, hats off to this artist who uses food as their medium.

Ina Fried