Jul 6, 2020

Axios Login

By Ina Fried
Ina Fried

Welcome back. I hope you had some socially distanced patriotic fun over the weekend. And, if you are still in a mood to celebrate, fret not: There will probably be more fireworks tonight.

Situational awareness: Uber has agreed to acquire food delivery company Postmates for $2.65 billion in an all-stock deal.

Today's Login is 1,270 words, a 5-minute read.

1 big thing: Broadband's underused lifeline for low-income users

Illustration: Eniola Odetunde/Axios

The federal government's main program to keep lower income people connected is only serving one-fifth of the people it could help, even during a pandemic that has forced school and work online, Axios' Margaret Harding McGill reports.

Why it matters: Millions of Americans still lack access to the high-speed internet service that's become vital as people remain stuck at home and reopenings reverse.

How it works: The Lifeline program, administered by the Federal Communications Commission, provides a $9.25 monthly subsidy (more on tribal lands) to companies that provide phone or broadband service to low-income consumers, generally at no out-of-pocket cost to the customer.

  • Yes, but: Less than a fifth of the 38 million households that qualify for the program are actually enrolled. And despite a recent uptick, enrollment remains down sharply from the Obama era.
  • "It's very clear that the program is needed now more than ever," Democratic FCC commissioner Geoffrey Starks told Axios. "It's a program that is severely underutilized, and it has got to really meet the moment here."

The intrigue: Starks and other critics lay the low participation rate at the feet of FCC chairman Ajit Pai, a Republican appointed by President Trump in 2017 to lead the commission. They highlight two factors in particular as contributing to anemic enrollment:

  1. Pai rolled back an Obama-era change that let the federal government approve internet service providers to participate in the program nationally, instead leaving that determination up to the states. That means any provider looking to take part in the program has to take it up with every state where they operate.
  2. A database to determine who's eligible for subsidized service envisioned during the Obama administration stumbled out of the gate and isn't fully operational yet. That could make it harder to sign up new participants.

Another problem: The subsidy is too low to cover the cost of broadband, argues Gigi Sohn, who advised former FCC chairman Tom Wheeler, a Democrat.

  • "$9.25 gets you a cheap mobile phone and 2 GB of data, and that’s basically it," Sohn told Axios. "It's a tiny amount — it's certainly not enough to do your homework on or telework on."

The other side: Pai has overseen changes and enforcement actions aimed at curbing waste and fraud in Lifeline, which also brought recorded enrollment numbers down.

The FCC has made temporary changes to Lifeline, an agency spokesperson noted, including waiving certain usage and income documentation requirements to make it easier for people to join and stay in the program during the pandemic.

By the numbers: Enrollment has climbed slightly during the pandemic.

  • Although it's still well below the roughly 12.5 million subscribers Lifeline served in 2016, the program went from about 6.7 million subscribers in February to about 7.2 million in May, according to figures from Lifeline compliance firm CGM compiled using disbursement data from the Universal Service Administrative Company, which oversees Lifeline.

The bottom line: Without new legislation that passes both houses and gets the president's signature, only existing programs like Lifeline can help with the affordability gaps that contribute to the digital divide.

  • "Lifeline is more essential than ever for millions of Americans, and we've got to do better by them," said Starks.

Margaret has more here.

2. India-China tech battle heats up

Muslim activists hold placards and shout slogans against China during a protest in Mumbai, India, last month. Photo: Himanshu Bhatt/NurPhoto via Getty Images

China's tech rivalry with the U.S. has taken the spotlight lately, but China is also in another major dispute with India — one that has significant implications for the tech landscape in both countries.

Why it matters: China and India are the first and second most populous nations on the planet and constitute two of the most important emerging markets for buying tech products. Both countries also want to become more significant tech producers as well.

  • As with the U.S.-China dispute, India and China's economies are also interdependent in many ways.

Driving the news:

  • India last week banned 59 Chinese apps, including TikTok, citing both privacy and national security concerns.
  • Indian food delivery app Zomato has been unable to access promised funding from China's Ant Financial due to tensions between the countries, per the Financial Times, highlighting the challenges for companies with business interests in both countries.

Between the lines: Unlike the U.S. dispute, which is focused largely on trade, China's conflict with India appears to be tied to border confrontations between the two countries over a disputed Himalayan site. A recent clash there left 20 Indian soldiers dead.

The bottom line: In the short term, India's Chinese app bans have meant an increase in demand for homegrown apps, including some local TikTok rivals.

  • One of those video sharing sites, Roposo, said it added 22 million users in two days amid the dispute, per Reuters.
3. Instacart raises another $100 million

Illustration: Sarah Grillo/Axios Visuals

Grocery delivery company Instacart has raised $100 million in new funding on top of the $225 million it announced last month, the company told Axios' Dan Primack on Friday. The latest investment round values the company at $13.8 billion.

Why it matters: This funding comes at what could be an inflection point for Instacart, as customers it acquired during coronavirus lockdowns decide whether they want to continue with the service or resume in-person grocery shopping.

Investors: T. Rowe Price provided the new funding. The earlier infusion was co-led by DST Global and General Catalyst, with D1 Capital also participating.

  • Andrew Davis, T. Rowe Price's director of private investments, said in a statement: "As online adoption of grocery shopping grows, we believe that Instacart will continue to lead e-commerce capabilities in this important part of the consumer economy."

The bottom line: Instacart has raised over $2.2 billion since its 2012 inception and says it's accessible to over 85% of U.S. households in all 50 states and more than 70% of Canadian households.

4. An exec's road from Silicon Valley to Omaha

Mark Johnson. Photo: GrainBridge

In 2011, Mark Johnson sold his startup Zite to CNN for $20 million (it was later acquired by Flipboard). Three years later, he moved to New Mexico, where he ran Descartes Labs, which makes sense of satellite imagery.

In May, Johnson made another big move — relocating to Omaha to run GrainBridge, an agriculture tech company that is a joint venture between Cargill and ADM.

Why it matters: Tech is seen as vitally important for the global agriculture industry, which faces the stresses of climate change and predictions of a significant increase in food demand with roughly the same amount of land devoted to farming.

How it works: GrainBridge's software helps farmers figure out the best time to sell their crops. With crop prices in constant flux, farmers' timing of their sales is critical to their bottom lines.

What they're saying: Johnson said he became fascinated by agriculture during his time at Descartes Labs.

  • "We did a lot of work on understanding sustainability from space, looking at global crop productions, trying to understand demand factors, and understanding global shipping," Johnson told Axios. "If we're going to both feed a growing population and do so more sustainably over the next few decades, technology is key."

The big picture: Johnson notes that while many U.S. farms are multimillion-dollar businesses, few have the sophisticated software tools they need. And, he said, that challenge is compounded by a trade war with China and supply chain disruptions brought on by COVID-19.

As for Omaha, Johnson said he continues to believe there are lots of places outside of Silicon Valley that are filled with talent.

Go deeper: John Deere quietly opens tech office in San Francisco

5. Take Note

On Tap

  • Fortune's Brainstorm Health takes place Tuesday and Wednesday online.
  • This is the final week of the Ted2020 online conference. Speaking today is Zoom CEO Eric Yuan.

Trading Places

  • Ubisoft, responding to allegations of misconduct and harassment, named Lidwine Sauer as head of workplace culture. According to Bloomberg, Ubisoft has also placed two executives on leave as it investigates the allegations.
  • Colin Huang has stepped down as CEO of Pinduoduo, China's third-largest e-commerce site.

ICYMI

  • The Wall Street Journal has an in-depth look at Wirecard's overnight transformation from one of Europe's hottest financial tech firms to bankruptcy. (Wall Street Journal)
  • A Google VP has pulled out of the Black Hat conference, calling on the security industry to replace the terms "black hat" and "white hat" to describe bad hackers and good hackers, respectively. (ZDNet)
  • Facebook has paused handling user data requests from Hong Kong police after China imposed a national-security law on the city. (Wall Street Journal)
6. After you Login

Did you ever wonder what happens to particle accelerators when they retire? Well, wonder no longer.

Ina Fried