Jul 16, 2019

Axios Login

By Ina Fried
Ina Fried

I have only words of love for you, my readers. 1,306 of them, in fact (~5 min read).

1 big thing: Peter Thiel amps up Google attack

Peter Thiel. Photo: Alex Wong/Getty Images

Investor Peter Thiel's charge Sunday that Google is in bed with China apparently wasn't a one-off attack. As Scott Rosenberg, Joe Uchill and I report, it's increasingly looking like the first shot on a new front in the war between Trump's Washington and Silicon Valley.

Why it matters: Tech companies are already defending themselves against charges of privacy invasion, political bias and monopoly power. Now, they're being accused of being unpatriotic.

Driving the news: This morning, President Trump tweeted that his administration will "take a look" at Thiel's claims.

  • Thiel, a billionaire who sits on Facebook's board and is Silicon Valley's highest-profile Trump supporter, appeared Monday on Fox News' "Tucker Carlson Tonight." He expanded on charges — including "seemingly treasonous" behavior — that he first leveled at a conservative conclave Sunday.
  • Thiel asked: "How many foreign intelligence agencies have infiltrated Google? Have the Chinese, in particular, infiltrated?  And why are you working with Communist China and not the U.S.?" He also called on the FBI and CIA to investigate Google.
  • Separately, Joe Lonsdale, a co-founder with Thiel of Palantir, called Google "not patriotic" in a CNBC appearance.

Yes, but: Neither Thiel nor anyone else has backed up these charges with evidence, and Google denies them.

  • By raising the issues as questions, the accusers get to spread suspicions without being accountable.

The big picture: Thiel threw his bombshell only days after Trump gathered conservative social media stars at the White House to gripe about tech-platform "censorship" — and just ahead of another round of congressional hearings on Big Tech.

  • A version of Thiel's questions may turn up on the notepads of GOP members of Congress at those hearings.

Between the lines: Thiel claims that "Google is working with Communist China, but not with the U.S. military, on its breakthrough A.I. technology."

  • But Google pulled its search service out of China in 2010 rather than submit to censorship. That’s in contrast to Microsoft, which operates a search engine in China subject to government censorship, and other major tech companies that do business in China, including Apple.
  • More recently, Google has explored ways of returning to the giant Chinese market, and has prototyped a version of its search engine that would be compatible with Chinese censorship.
  • Last year, Google withdrew from an AI contract with the U.S. military after worker protests.

Threat level: China is widely believed to engage in extensive intellectual property theft, and Lonsdale claimed that Google's open, "academic" culture leaves it easy prey to China.

  • Under Thiel and Lonsdale's argument, every Chinese citizen is essentially a government spy. "In working in China, you have to work for the government. Everything in China is the government," Lonsdale told CNBC.
  • But China's influence strategy is less about infiltration and more a matter of working the free market system in its favor, says Robert Spalding, a Hudson Institute senior fellow and former senior director for strategy to Trump.

What they're saying: Inside Google, sources tell Axios that Thiel’s accusations were met with little concern over their merits — and with renewed annoyance toward an already disliked figure within the company.

2. Congress to question Facebook's Libra coin

Illustration: Aïda Amer/Axios

Facebook’s cryptocurrency plans will face scrutiny in 2 congressional hearings this week, Axios' Kia Kokalitcheva reports. Facebook is sending exec David Marcus in an attempt to abate lawmakers’ concerns.

The big picture: Facebook’s foray into cryptocurrency has caught the attention of Congress like no previous cryptocurrency. As Fed chairman Jerome Powell said last week, any problems with Libra "would arise to systemically important levels just because of the mere size of the Facebook network."

On the docket: Facebook will testify in front of the Senate Banking Committee later today and before the House Financial Services Committee on Wednesday.

What to watch: There’s no shortage of questions for lawmakers to delve into this week, but a few topics will likely emerge as priorities during the hearings...

  • Privacy: Facebook’s string of privacy scandals over the last couple of years is sure to raise a lot of questions on the topic from lawmakers.
  • What is Libra and who should regulate it: Is it a security, an exchange-traded fund, or something else? (In prepared remarks, Marcus says Libra’s governing body will register with FinCEN as a money services business, in addition to oversight from various regulators in Switzerland, where it’s based.)
  • Financial and monetary risks: As Powell hinted, because of Facebook’s scale (it has more than 2 billion users globally), Libra could have huge implications.
  • Consumer protections: Facebook’s subsidiary, Calibra, is developing a digital wallet for Libra tokens that can interact with their bank accounts.

What they’re saying: “Facebook will not offer the Libra digital currency until we have fully addressed regulatory concerns and received appropriate approvals,” Marcus says in his prepared testimony for the Senate hearing.

  • Over the weekend, The Block obtained a draft bill that would effectively ban Facebook and other tech companies with over $25 billion in annual global revenue from creating digital currencies.
  • Sources tells Axios that the bill came from House Financial Services Committee chair Maxine Waters' staff, but is intended as a starting point for discussion with stakeholders.
  • Some experts believe it's simply a way to make a strong point to Facebook and not a serious piece of legislation.

What’s next: Don’t be surprised if Congress schedules more hearings about Libra, especially since there are 27 other companies and organizations involved in the project, including major payments providers like Visa and Mastercard.

Go deeper: Facebook spoils the cryptocurrency party

3. David Bell joins Flipboard's board

David Bell. Photo: Flipboard

Flipboard is adding advertising veteran David Bell to its board, the company tells Axios' Sara Fischer and me. Bell will replace venture capitalist Danny Rimer, who has been on Flipboard's 3-person board for a decade, but recently moved to London.

Why it matters: The shakeup comes as the news reader app company prepares to transition more of its advertising business from display advertising to native advertising. Bell is considered a titan of the ad industry and could help Flipboard as it tries to get more serious about making money.

Details: Bell, the former chairman of ad agency Interpublic Group, joins Flipboard founder and CEO Mike McCue and Kleiner Perkins chairman John Doerr on the board.

The big picture: Flipboard has been close to profitability for a few years, per McCue. The company has long put most of its energy toward content and technology, but is increasingly focused on the business side, starting with a renewed push for native advertising.

  • "In the coming months, we'll be putting more and more energy into enabling companies — big and small — on our platform to drive traffic towards their brands through native ads," McCue says.
  • "Flipboard's platform and technology is the ideal place for the future of the native advertising space. I don't think there's another place where native ads can work better or harder," Bell tells Axios.
4. Twitter opts not to flag Trump's racist "go back" tweets

Illustration: Lazaro Gamio/Axios

Twitter apparently decided that a weekend tweet from Trump telling 4 Democratic congresswomen to "go back" to where they came from (3 of them were born in the U.S.) didn't warrant any sort of warning notice.

Why it matters: Twitter has come under frequent criticism for not enforcing its terms of service when it comes to hate speech.

The big picture: Twitter announced last month that it would start labeling — but not banning — certain tweets from political figures who violate its rules. Twitter won't say whether the tweet in question did or didn't violate its rules.

Meanwhile, Twitter did unveil a new version of its web interface yesterday, but there's still no edit button.

5. Take Note

On Tap

  • Microsoft's partner conference, Aspire, continues through Thursday in Las Vegas.
  • Fortune's Brainstorm Tech conference continues in Aspen.
  • Representatives from Google, Facebook, Amazon and Apple will appear before the House Judiciary Committee's antitrust subcommittee as part of its investigation into their market power. (Preview is here.)
  • The Senate Judiciary Committee will hold a subcommittee hearing, chaired by Sen. Ted Cruz, on "Google and Censorship through Search Engines," with Google exec Karan Bhatia testifying. It's expected to be yet another airing of yet-to-be-backed-up allegations of systemic anti-conservative bias on the major tech platforms.

Trading Places

  • Vine co-founder Jason Toff is joining Facebook's newly established New Product Experimentation unit, working to create what he says is a "two pizza" team to tackle an unspecified project.
  • Biometric security firm Clear has hired Rod Allison, formerly acting deputy administrator at the TSA, as VP of operational security.


  • Sources say acquisition talks between Broadcom and Symantec have broken down over valuation issues. (CNBC)
  • Meredith Whittaker, one of the Google employees who led worker protests, is leaving the company. (Bloomberg)
  • Blackstone is buying adtech startup Vungle and has settled a wrongful termination lawsuit with the company's founder. (Axios)
6. After you Login

The governor of the Bank of England, Mark Carney, reveals Alan Turing as the new figure to be depicted on the 50-pound note. Photo: Christopher Furlong/Getty Images

The Bank of England is putting mathematician and computing pioneer Alan Turing on its new 50-pound note.

Ina Fried