Aug 26, 2021

Axios Login

I am finally over the Olympics ... and ready to watch the Paralympics, which kicked off in Tokyo this week. I'm enjoying learning about some sports that are new to me, such as goalball.

Situational awareness: Axel Springer added Politico and tech news site Protocol to its online media portfolio, which also includes Insider, for a reported $1 billion.

Today's newsletter is 1,318 words, a 5-minute read.

1 big thing: The government-industry cyberdefense dance

Illustration: Shoshana Gordon/Axios

After assembling a team of tough-minded regulators to take on big technology companies, the Biden administration on Wednesday called on many of those same companies to work with the federal government to address a growing wave of cyberattacks.

Driving the news: A White House summit between President Biden and tech leaders Wednesday, including the CEOs of Apple, Google, Amazon, Microsoft and IBM, concluded with a raft of announcements of new cybersecurity projects and spending plans, Axios' Scott Rosenberg and I report.

  • Microsoft said it would spend an additional $20 billion over five years on "security by design" and offer $150 million in technical services to federal, state and local governments.
  • Google plans to spend $10 billion over five years on zero-trust programs and other measures to bolster software supply chains and open-source security.
  • Amazon said it would offer the public free access to the same "security awareness training" it provides its employees.
  • IBM said it would train 150,000 people in cybersecurity skills over three years and partner with 20 historically Black colleges and universities to create cybersecurity leadership centers.
  • Apple said it was starting a new program to enhance supply chain security.

Why it matters: Defending the U.S. against cyberattacks and cybercrime is too big a problem for either government or industry to solve on their own.

Yes, but: It's an awkward moment for the White House to be trying to partner with tech companies that the executive branch is also pursuing with antitrust lawsuits and investigations.

Of note: Facebook was the one tech giant without a seat at the White House table Wednesday.

  • The company is fresh off a confrontation with the Biden administration over the spread of COVID-19 misinformation on its platform.
  • But Facebook is also the primary online touchpoint for tens of millions of Americans in their personal lives, and any broad cybersecurity project might benefit from the company's participation.

Between the lines: Some observers saw the White House meeting as a signal from Washington to the industry that it needed to take strong voluntary action or face a new wave of regulatory or legislative mandates.

  • Many in industry believe that baked-in government rules could hamstring companies trying to adapt to a rapidly changing cybersecurity environment.
  • But others view some additional regulation as inevitable.
  • IBM CEO Arvind Krishna told Axios Today he supports new cybersecurity disclosure requirements for private companies. "Disclosures will go a long way because once it's transparent, everyone will improve," he said.

Our thought bubble: This needn't be an either/or scenario. Rules can help set minimum security standards, while direct action against cyberattacks will likely need both the industry's technical prowess and the government's international reach and offensive capabilities.

The summit also covered ways to protect supply chains and critical infrastructure, cyber insurance for businesses, and a pressing shortage of workers in the sector, where "nearly half a million public and private cybersecurity jobs remain unfilled," according to a White House statement.

The bottom line: The most successful cyber defense plans are the ones you don't hear much about, because the attacks and disasters they foil never become news. That's why it will take a while before we know whether this week's announcements have any impact — and the less news you see, the more you can assume they're working.

2. Box hopes solid earnings silence critics

Box CEO Aaron Levie tells Axios that yesterday's earnings report shows that the company can deliver long-term growth, and that last year's slowdown was a hiccup.

Why it matters: The online storage firm is in the midst of a proxy fight with activist investors who want a greater role on the company's board.

"We're firing on all cylinders," Levie said in an interview Wednesday, just after the company reported earnings. Levie noted that the company has 20% operating margins, up from nearly zero a year ago, while sales have shown accelerating growth the past two quarters as well.

All that, he said, adds up to evidence the company can reach its long-term goals of revenue growth in the range of 12% to 16% and its operating margins of around 23% to 27%.

  • Box also points to a report from advisory firm ISS that encourages shareholders to vote for the company's board nominees in the ongoing proxy battle.

Between the lines: The pandemic accelerated the broad shift towards digitization, but many of Box's small and midsize business customers found themselves scrambling in the early days of the pandemic, hurting business for part of last year.

"Businesses have adapted," Levie said, with growth returning even in some of the hardest hit industries.

By the numbers:

  • Q2 revenue: $214.5 million, up 12% from the prior year and slightly ahead of analysts' consensus expectations.
  • Adjusted earnings: 21 cents per share, above consensus estimates of 17 cents per share, per Zacks.

Yes, but: Box shares fell slightly in after-hours trading following the report.

3. OnlyFans halts adult content ban after outcry

Photo: Pavlo Gonchar/SOPA Images/LightRocket via Getty Images

OnlyFans, an online creator platform known for its adult content, announced Wednesday that it has dropped plans to ban sexually explicit content on its platform in October, Axios' Ivana Saric reports.

Why it matters: The move comes after the proposed ban sparked an outcry from sex workers who relied on the platform to safely make a living.

What they're saying: "Thank you to everyone for making your voices heard," the platform tweeted. "We have secured assurances necessary to support our diverse creator community and have suspended the planned October 1 policy change."

  • "OnlyFans stands for inclusion and we will continue to provide a home for all creators."

The big picture: OnlyFans announced the proposed ban on sexually explicit content last week.

  • The company has struggled to attract outside investors, and the ban was an effort to satisfy its banking and payout partners, it said.
  • The move concerned many sex workers who had made long-term financial commitments, including mortgages, based on the assumption that they'd continue posting on the platform.
4. Federal agencies plan more face recognition

Photo: Joan Cros/Corbis via Getty Images

10 federal agencies plan on expanding the use of facial recognition technology by 2023, Axios' Noah Garfinkel reports, citing a Government Accountability Office (GAO) report released Tuesday.

Why it matters: How to use facial recognition ethically and how to regulate such technology are major questions that society hasn't yet answered even as more government agencies begin using it.

Driving the news: The ten agencies cited in the GAO report are the departments of Agriculture, Commerce, Defense, Homeland Security, Health and Human Services, Interior, Justice, State, Treasury and Veterans Affairs.

The big picture: Many tech companies are stalling law enforcement's adoption of this technology.

5. Take note

On Tap

  • Earnings reports include VMWare and printer and computer maker HP Inc.

Trading Places

  • Microsoft has promoted chief product officer Panos Panay to executive VP and added him to CEO Satya Nadella's executive leadership team, per Bloomberg.
  • Bruce H. Andrews, formerly of SoftBank, joins Intel as chief government affairs officer.

ICYMI

  • PC sales in the U.S. were up 17% in the second quarter, as compared to a year ago. (Canalys)
  • Facebook is weighing whether to create another outside advisory group, this one to look at election-related issues. (NYT)
  • The DOJ and SEC have filed charges against Manish Lachwani, the former CEO of Bay Area mobile testing firm HeadSpin, for allegedly defrauding investors. (Reuters)
6. After you Login

I don't think I've ever been sadder to be able to say "Bingo."