Aug 11, 2020

Axios Login

Well, hi there. It's good to be back, though at-home Lego camp was pretty fun. More on that in a future Login, though. Thanks to Scott Rosenberg, Kyle Daly and the Axios tech crew for keeping you in the loop while I was gone.

Meanwhile, you can join Axios' Erica Pandey tomorrow at 12:30pm ET for a conversation on how the coronavirus has accelerated a nationwide shift to e-commerce with Ellevest co-founder and CEO Sallie Krawcheck and Kroger chairman and CEO Rodney McMullen.

Today's Login is 1,481 words, a 6-minute read.

1 big thing: The not-so-World Wide Web

Illustration: Aïda Amer/Axios

Governments around the world, prompted by nationalism, authoritarianism and other forces, are threatening the notion of a single, universal computer network — long the defining characteristic of the internet.

The big picture: Most countries want the internet and the economic and cultural benefits that come with it. Increasingly, though, they want to add their own rules — the internet with an asterisk, if you will. The question is just how many local rules you can make before the network's universality disappears.

Driving the news:

Meanwhile: It's not just efforts to control what's shown on the web, but also the infrastructure and networks that power the internet, as well as where data is stored.

The U.S. and Europe are at odds over where European users' data is stored.

  • Europe's highest court last month struck down Privacy Shield, the agreement that has allowed most data transfers between the EU and the U.S. to proceed.
  • The move signals that the EU's top judges don’t have faith that Europeans' data will be protected once it crosses the Atlantic.
  • The Commerce Department said Monday it's in talks with the European Commission on potentially crafting a replacement agreement.

The Trump administration, meanwhile, proposed what it called the "Clean Network" initiative to blunt China's expanding influence in networks and digital markets around the world.

  • The push includes plans to shove even more Chinese apps out of the U.S. and keep Chinese devices from running American-made apps, as well as a call for other countries not to use China's undersea cables that connect countries to each other and the global internet.

More governments are demanding that large online platforms store their data locally, where those governments can try to access it.

  • Turkey's recent moves also included a requirement that large online platforms store their data inside the country.
  • Civil rights groups and tech companies, including Facebook, have warned that data localization rules can allow authoritarian regimes to misuse citizens' digital information, in addition to making it harder for global tech companies to conduct business.

Yes, but: China erected its "Great Firewall" some time ago, and while that's harmed freedom of information inside its borders in countless ways, it hasn't meant the end of the internet for the rest of the world.

  • Europe, meanwhile, has privacy-focused rules like its "right to be forgotten" that has forced certain information off the web in that region without fundamentally cutting Europe off from the internet.

The bottom line: We still don't know exactly how much local control the internet can handle without splitting into a variety of smaller, regional networks. By the time we learn the answer that question, it will probably be too late to put the network back together.

2. Adobe: E-commerce growth slows as stores reopen

E-commerce sales are still way up compared to a year ago in the U.S., but growth moderated in July as more traditional stores reopened, according to fresh data from Adobe.

Why it matters: Undoubtedly some of the shifts to online shopping will be permanent, but the numbers suggest that consumers want to do a certain amount of their buying in-person, provided they can.

  • U.S. online shopping in July totaled $66.3 billion, according to the Adobe Digital Economy Index. That's up 55% from a year ago — but lower than the bump in June, when spending was $73.2 billion, up 76% year-over-year.

By the numbers:

  • The pandemic has resulted in $94 billion in extra spending online since March, Adobe said.
  • At current growth levels, 2020 online shopping will exceed all of 2019 by Oct. 5. 
  • States that already reopened saw an 8% smaller year-over-year increases in online sales in July as compared to states that still had stay-at-home orders at the beginning of the month.

What they're saying: Adobe senior digital insights manager Vivek Pandya attributed e-commerce's retraction from record highs in July to both reopenings and "spending levels dropp[ing] as households tightened their belts due to falling employment levels and looming cutbacks in unemployment benefits."

Go deeper: What Americans are buying online during the coronavirus outbreak

3. Tech critics' quest to cap food delivery fees

Illustration: Aïda Amer/Axios

A group known for taking on Big Tech is biting into its next target: food delivery apps like Grubhub, UberEats, Postmates and DoorDash, Axios' Ashley Gold reports.

Driving the news: The Economic Liberties Project, in a new campaign it calls "Protect our Restaurants" launching Tuesday, encourages restaurants to lobby for local laws that cap the commissions these apps can collect.

Context: Restaurants that can no longer serve most diners during the pandemic have turned to partnerships with food delivery apps. But in many cases, these apps charge the restaurants roughly 30% of every transaction.

  • Now that many restaurants' whole business is takeout and delivery, they're being devastated by the fees, Katy Connors, executive director of the Independent Restaurant Alliance of Oregon, told Axios.
  • "There is value within these companies," she said. "What we need is for them to get on the same page as us."

Details: The Economic Liberties Project is providing restaurants with an organizing guide with tips on contacting local legislators and encouraging them to sign a letter to the Federal Trade Commission urging the agency to investigate GrubHub, DoorDash, UberEats and Postmates.

  • According to the group's tracking, at least 15 major cities in the U.S., and the state of New Jersey, have implemented delivery fee caps of anywhere from 5 to 20%, and dozens more are considering legislation. Many of these caps are set to end whenever the pandemic does.

The other side: Food delivery apps generally defend their commissions by noting that the fees are their main source of revenue and pointing to the many services they provide their restaurant partners.

  • Those services include "things like paying and providing benefits to delivery couriers, marketing, customer service, courier support, exposure to new customers, and insurance," as Ashley De Smeth, Postmates' head of public affairs, told Axios in statement.
4. Using WiFi and 5G to let the bands play on

A band plays together online using Elk's Aloha technology. Image: Elk

Swedish startup Elk is debuting a hardware/software combination today named Aloha that allows musicians and bands separated by distance to perform together online using traditional wired internet connections and, eventually, over 5G wireless networks.

Why it matters: In the works before the COVID-19 pandemic, such technology has become increasingly needed in an era where many bands are unable to get together in person.

Be smart: The big issue with collaborating musically over the internet isn't total bandwidth, but rather the delay, or latency, of the connection. Latency comes from both the network (and depends on the connection as well as the physical distance being traveled) and from the device processing the sound on each end.

What they're saying: CEO Michele Benincaso says that traditional video conferencing software can have a delay of up to 500 milliseconds (half a second). Just using a PC adds 15 milliseconds of delay on each end. But for musicians to perform remotely requires 20 milliseconds or less total delay.

How it works:

  • Elk's technology uses an optimized version of Linux to create a device that can send musical signals over the internet with far less delay than would be the case with a traditional PC.
  • Musicians attach their instruments to an Apple TV-sized box that contains audio input and output jacks as well as an Ethernet port.
  • On the software side, Elk offers a video chat app that also contains advanced sound controls. (You can see Aloha in a promotional video here.)

Aloha won't be entering an empty field — other products, including JamKazam, provide software and some hardware options for real-time music collaboration.

What's next: Elk is planning an October public beta for Aloha, with commercial availability in the second quarter of next year. The company also sees opportunities in integrating video, including virtual reality, with music down the road.

5. Take Note

Trading Places

  • Facebook has reorganized its payments units under executive David Marcus, who also leads the company's Libra cryptocurrency effort. Former Upwork CEO Stephane Kasriel has also joined Facebook as a VP, reporting to Marcus.
  • Coinbase has hired former Lyft VP Manish Gupta as executive VP of engineering.


6. After you Login

Need a little love? Check out this statue located in Batumi, a city in the republic of Georgia.