Mar 28, 2019

Axios Login

By Ina Fried
Ina Fried

This morning's news storm...

  • HUD filed charges against Facebook this morning for violating the Fair Housing Act by encouraging, enabling and causing housing discrimination through the company’s advertising platform, Axios' Sara Fischer reports.
  • A U.K. agency found "serious and systematic defects" in Huawei's overall cybersecurity practices, although not on grounds of espionage, which U.S. authorities have feared, Axios' Joe Uchill writes.
1 big thing: Why Huawei is America's 5G boogeyman

Illustration: Sarah Grillo/Axios

Chinese telecom giant Huawei is poised to claim close to half of the 5G market, nudging the technological center of gravity away from western telecom vendors and sounding alarms about China's ability to spy on Americans, Axios' Kim Hart, Alison Snyder, and Sara write.

Why it matters: 5G has one global standard that makes networks interoperable regardless of the equipment vendor. The security risk posed by Huawei is debated but if it ends up dominating 5G networks, authority to set standards for future network technologies — such as 6G, which is already under development — will shift toward China.

  • "Commercial power almost directly translates to standard setting power ... and if you dominate the standards, you dominate the products. Your early developments will be faster and work better than others," says Henning Schulzrinne, computer science professor at Columbia University.
  • "This is a fundamental strategic competition for who builds the platform for the next round of the internet. That is just as important — if not more — than who builds the state-of-the-art harbors, railways and highways over the next 20 years," says Janice Stein, political science professor at the University of Toronto.

Where things stand: The U.S. and China are locked in a race over whose preferred technology will underly 5G networks that will connect devices and machines at lightning speed.

  • The U.S. prefers European equipment makers Nokia and Ericsson, and it has shunned Chinese telecom giant Huawei due to fears of espionage.
  • The U.S. doesn't make its own 5G equipment but is using its military, security and intelligence heft to pressure allies not to use China's technology.
  • The U.K. and Germany, however, haven't outright rejected Huawei.
  • Huawei already has contracts to install its 5G equipment, which tends to be cheaper than its rivals, in dozens of countries.

Huawei claims nearly a third of the global 4G market, and it may get closer to half the market in a 5G world, according to Andrew Entwistle, an analyst with New Street Research in London.

  • Crossing that threshold of market share makes it harder for other equipment vendors to catch up, wireless industry sources say.

Threat level: Fears are mounting that a 5G equipment market dominated by China will give the authoritarian regime greater access to the explosion of data that will flow across 5G networks.

  • "It’s going to be far more pervasive in terms of what data aggregators know about you and how they can influence your lives," says Rob Spalding, senior fellow at the Hudson Institute. "Today it’s Amazon, Google, Facebook. Tomorrow it’s Baidu, Alibaba, Tencent, and the Chinese communist party."

The other side: While many countries are nervous about China's growth, not everyone is convinced Chinese vendors are using their telecom gear to spy. (Huawei denies it, too.)

The bottom line: China's lead in building the next-generation network is seen as a sign of a decline of U.S. tech leadership in the mobile internet, and as a symbolic point of no return for Chinese economic supremacy.

Go deeper:

2. Drake invests in esports startup Players' Lounge

Illustration: Aïda Amer/Axios

Drake — along with media and tech heavyweights Marissa Mayer, Strauss Zelnick and others — is investing $3 million into the seed funding round for Players’ Lounge, an esports platform where gamers can play their favorite video games against others for prizes straight from their living room.

Why it matters: It's the latest example of a celebrity investing in esports, Sara writes. NBA superstar Chris Bosh joined esports franchise Gen.G as a player management adviser last year. Other big names, from Michael Jordan to Steph Curry, are investing in professional esports teams.

Details: Players' Lounge allows gamers to compete in skill-based esports competitions for cash prizes. Its mission is to create a social platform for casual gamers to connect, get matched, and compete without having to be a pro.

  • This is different from platforms like Twitch or YouTube gaming that focus on streaming tournaments.
  • Like Instagram, Players' Lounge is hoping to give average people a platform to compete and win money on esports games.
  • Players can compete on PS4, Xbox One or PC devices.
  • Once the scores are verified, the winner receives the prize money from the pool players invested in upfront. These are usually small sums that players can compete for incrementally, although the company does also host bigger tournaments.
  • Players' Lounge says it gives out millions of dollars worth of cash prizes each month.

The big picture: Players' Lounge is making it easy for casual gamers to earn cash from esports. Otherwise, the only way to make money in esports is to go pro, which takes a lot of time and resources, or to become a streamer via Twitch or YouTube, which focuses more on personality than gaming skills.

"It's kind of like the intramural network for esports. There's a huge community potential."
— Austin Woolridge, co-founder and CEO, Players' Lounge

The bottom line: Esports is still a fledgling industry compared to professional sports, but big names are investing in it because it's growing so fast. Celebrities, and especially celebrity athletes, see this as a way to connect with hyper-engaged sports fans, who may not have the appetite to participate in real sports but still want to compete with peers and develop a community around game play.

3. LGBT rights group suspends Google from index

Human Rights Campaign suspended Google from this year's Corporate Equality Index after the company failed to pull a controversial app that the LGBT rights group says equates to conversion therapy, Axios' Ina Fried reports.

Why it matters: HRC's annual rankings are often touted by tech companies and have served as a valuable recruiting tool.

What's happening: In a footnote to this year's company ratings, HRC said it became aware of the app, from Living Hope Ministries, which it says "supports the practice of so-called 'conversion therapy.' "

"Such practices have been rejected by every mainstream medical and mental health organization for decades. Minors are especially vulnerable, and conversion therapy can lead to depression, anxiety, drug use, homelessness, and suicide. Pending remedial steps by the company to address this app that can cause harm to the LGBTQ community the CEI rating is suspended."
Human Rights Campaign

Context: Apple, Microsoft and Amazon all pulled the Living Hope Ministries app from their app stores, while Google refused to do so.

  • Axios first reported last week that HRC was considering whether Google's actions should affect its ranking in the index.
  • HRC and other groups had also been seeking a meeting with CEO Sundar Pichai, but the requests went unanswered. (There had been discussions at the staff level between the groups and Google.)

Meanwhile, many other tech companies received a perfect 100 score in the annual ranking, released Thursday.

4. GOP senator: Google CEO must address China issue

Sen. Josh Hawley. Photo: Alex Wong/Getty Images

Sen. Josh Hawley (R-Mo.) called Thursday for Pichai to further publicly address the company’s reported work in China, Axios' David McCabe reports.

Why it matters: Hawley has been aggressive in ramping up pressure on Big Tech from the right, including through allegations of anti-conservative bias at major web platforms.

What he's saying: Hawley told Pichai in the letter to address "publicly the work your company does in China, the benefits it may provide to the Chinese government and military, and your reluctance to partner or aid the Armed Forces of the United States."

  • "It is worth asking what Google stands to gain from partnering with a country that routinely violates basic human liberties, including maintaining detention facilities for nearly a million Uyghur Muslims, banning freedom of speech and the press, and repressing its Christian, Tibetan Buddhist and other religious communities," Hawley said.

The big picture: Google has come under fire for its work in China, including its reported plans last year to build a censored version of its search engine. It also drew some criticism from the right for its decision not to renew a Pentagon contract after protests from its employees.

  • Earlier this month, Gen. Joseph Dunford, chairman of the Joint Chiefs of Staff, said at a hearing that Google's work in the country was "indirectly benefiting the Chinese military."
  • Pichai met with Dunford on Wednesday, when President Trump tweeted that he'd met with the Google CEO.
  • Trump said Pichai had "stated strongly that he is totally committed to the U.S. Military, not the Chinese Military" and "discussed political fairness and various things that [Google] can do for our Country."

The bottom line: Google's plans for China in an era of tumult for U.S.-China relations will continue to dog the company.

5. Take note

Trading Places

  • Snap hired Twitter veteran David Roter as a VP to handle relationships with ad agencies. (Business Insider Prime)


  • Facebook, which already banned white supremacist content, also banned posts promoting white nationalism and white separatism. (Axios)
  • Salesforce was sued by a group of women who said the company assisted in trafficking. The classified ad site's founders were indicted last year on charges of facilitating prostitution. (Axios)
  • The Chinese owner of Grindr, the gay-focused hookup app, says it wants to sell the app after a U.S. government agency declared that its Chinese ownership constitutes a national security risk. (Reuters)
  • Silicon Valley venture capitalist Chris Schaepe is out at Lightspeed Venture Partners, after telling his partners he hired college admissions "coach" Rick Singer to help his son. (Axios)
  • Microsoft urged employees to refrain from April Fools' pranks. (Ars Technica)
  • The FTC says it shut down 4 big robocalling operations. (The Verge)
6. After you Login

Modern gaming engines like Unreal 4 are capable of generating video in realtime that is almost impossible to distinguish from spectacular film footage. This example is breathtaking.

Ina Fried