Jun 6, 2018

Axios Login

By Ina Fried
Ina Fried

D.C. readers, it's your last chance to take part in a busy week of Axios events. Tomorrow, Mike Allen and Bob Herman host a conversation on the cost of innovation in the health care ecosystem. RSVP here.

1 big thing: Facebook and D.C. still don't get each other

Photo: Johannes Eisele/AFP/Getty Images

If the latest scandal over Facebook and data sharing shows anything, it's how little Facebook and Washington, D.C., understand about the way the other works.

The issue: Facebook had deals with device makers that gave them broad access to create their own Facebook-powered experiences within their devices. Facebook confirmed on Tuesday that among the device makers were four Chinese firms including Huawei, which has been accused of sharing information with the Chinese government.

What D.C. doesn't get: The partnerships Facebook had were pretty much standard at the time as phone makers looked to build support for services from Facebook, Twitter, Google and others into their devices. Nor were they a secret.

  • Phone makers assemble components, buying chips from one company and getting screens from another. And they also make deals on the software and services side.
  • The ones Facebook struck were common for the time, and a close look at Twitter might well find similar types of deals.
  • The Verge's Casey Newton sums up the perspective of many in Silicon Valley, writing in his newsletter:
"I’m willing to hear more, but if the data never left the devices, I don’t understand what the security risk is here."

What Facebook doesn't get: The company has very little credibility in D.C., especially when the topic is sharing data with others.

  • At an Axios event yesterday, Sen. Mark Warner (D-Va.) said he feels he has given the company the benefit of the doubt "more than once" and now it's time for Facebook to "come clean with the whole story."
  • What's worse, some of the companies that make phones are Chinese, making the issue even more politically toxic. Throw Huawei's name in the mix and things go from toxic to radioactive.
  • Politicians are seeing things the way they have been cast by the Washington Post and others: that Facebook gave "special access" to customer data to Huawei and others. This tweet from Sen. Marco Rubio sums up the height of the fear:
"This could be a very big problem. If @facebook granted Huawei special access to social data of Americans this might as well have given it directly to the government of #China".

Not helping its case: Facebook didn't do itself any favors on this question by refusing for more than a day to say which Chinese firms it had deals with.

The bottom line: Facebook may not even have done anything wrong this time, but its tone-deafness has it in hot water once again.

Go deeper: Read my full piece and check out Mike Allen's story on how Facebook is playing with fire.

2. Warner not ready to break up Facebook

Sen. Mark Warner. Photo: Chip Somodevilla/Getty Images

Mark Warner may be one of Facebook's loudest critics on Capitol Hill, but the Virgina Democrat isn't ready to call for the breakup of the social network or any other Big Tech company.

The bottom line: It’s growing more common among the industry’s critics on the left to call for the breakup of Big Tech — not unlike how AT&T was handled decades ago — but that's still far from the mainstream thinking among policymakers.

The most important antitrust question regarding Facebook is whether it's possible for newcomers to enter the market, Warner said after the Axios event yesterday. He added:

  • "If I think about the folks I know from the venture business, new companies coming in who’ve got a killer app, their option generally is not to go public at this point, but is to sell to Google or Facebook or one of the larger enterprises,” he said. “I think this is worthy of some debate.”
  • “If you think about it, and move into machine learning and artificial intelligence, they have already got so much aggregate data, how can somebody else who’s a [new company] come in and ever get to their mass?”
  • More broadly, he said he was “reserving judgment” on how best to deal with increased concentration in tech, “other than there ought to be a fulsome debate.”

Yes, but: Echoing comments he made at Code Conference last week, Warner said that he’s worried that regulations on American tech companies might simply clear a path for their Chinese counterparts to dominate markets.

Go deeper: David McCabe has more here.

3. Video: How kids should talk to Alexa

Photo: Axios Visuals

Amazon’s new Magic Word feature rewards kids who are polite to Alexa.

Why? There's a good reason to teach them manners, app developer Ken Yarmosh tells Axios: When kids bark orders at digital assistants, that behavior could easily transfer to real human relationships.

The big picture: Digital assistants, while useful, also raise big ethical questions about what role they should play in our current and future homes, especially for the nearly 40 million Americans who already use smart speakers.

Watch more: Learn more via this fun video from my Axios colleagues.

Separately: Amazon announced Tuesday that Alexa and the Echo are now available in France.

4. WWDC's Apple news that flew under the radar

You'd think that with a keynote that stretched more than two hours Monday at its Worldwide Developers Conference, Apple would have been able to touch on all the big news. But, as is often the case, some announcements, either inadvertently or deliberately, didn't make it into the first news cycle.

Worth noting:

  • macOS Mojave will be the last version of the operating system to support older 32-bit apps, 9to5Mac reports.
  • Starting with iOS 12, developers will be able to access digital health records stored on the iPhone, with permission.
  • Apple's AirPods are getting a "live listen" feature that lets them transmit sound from a nearby iPhone. Apple already had such a feature for certain hearing aids. TechCrunch has more here.

Separately, I spoke with Molly Wood at Marketplace about Apple's moves around privacy and digital wellbeing. You can listen to the audio here, or read about it here.

Plus: Lauren Goode at Wired got a couple more details from Apple's software exec Craig Federighi on the company's plan to eventually allow iOS apps to run on the Mac.

5. Stripe plans to issue transparency reports

Stripe co-founder and CEO Patrick Collison. Photo: AOP.Press/Corbis via Getty Images

As I scooped yesterday, payment processor Stripe plans to soon begin detailing the requests it gets from government agencies to hand over customer data.

Why it matters: The move follows a call by the Electronic Frontier Foundation for the company and its rivals to issue such transparency reports.

"We've supported the mission of the EFF for years and have been working since 2012 to increase transparency in the payments industry. We intend to build on this and publish a Stripe transparency report in the near future."
— Stripe statement to Axios

What's next: Neither PayPal nor Coinbase, which were also called out by the EFF, said they had any plans to begin releasing transparency reports.

6. Take Note

On Tap

  • Computex continues in Taipei, Taiwan.
  • Apple's WWDC continues in San Jose, Calif.

Trading Places

ICYMI

  • 5G is "very, very close" to impacting retail — through 5G, mall stores could pinpoint customers' location, even while they are offline, via constant pinging in the network, according to Serge Matta, president of global tech platform GroundTruth, who was speaking at an Axios event this morning.
  • The Federal Communications Commission misled news organizations last year with claims about a cyberattack to explain away technical troubles with its comment system, according to a report by Gizmodo based on its review of internal emails.
  • DNA analysis service MyHeritage suffered a breach potentially affecting the data of its 92 million members. While the leak affected email addresses and hashed passwords, it's not a good day when a company trusted with DNA has a breach.
  • The malware VPNFilter, which led the FBI to recommend everyone reboot their router, affects more brands of routers than originally thought, according to Cisco.
7. After you Login

Congrats to the Florida St. softball team, which won the Women's College World Series last night. And check out this amazing catch and double play from FSU's Jessie Warren.

Ina Fried