Brace yourself. This is the last issue of Login for 2018. We'll be back in the new year — Jan. 3, to be specific. In the meantime, you can always get the latest news, tech and otherwise, at Axios.com.
1 big thing: Congress' next privacy challenge
In crafting new privacy laws to cover tech giants' vast appetite for user data, lawmakers are finding that they're having to draw up new rules for the old-fashioned brick-and-mortar world, too.
Why it matters: Consumer data is now the most valuable asset for nearly all companies — not just digital ones, David McCabe reports. Most large businesses operate simultaneously in both realms, and the boundaries between data's use online and offline have blurred.
The big picture: Consumers understand that Google and Facebook track them, but the same kind of profiling increasingly happens in the physical world — from facial recognition at Taylor Swift concerts to Amazon's cashier-less convenience store. Any new privacy law will have to reckon with questions about transparency and consumer choice not only in apps and on websites but as we walk through stores and drive down streets.
By the numbers: Companies across the economy gather data on consumers in the physical world for a wide range of business purposes.
- Euclid, which tracks customers who go to physical stores by connecting with their smartphones, announced this summer that its database had crossed the 120 million active devices mark.
- Over the next 3 years, Amazon is considering building as many as 3,000 of its Amazon Go convenience stores, which use hundreds of cameras to let customers take items off the shelf and buy them without ever interacting with a cashier, per Bloomberg. (The company reportedly doesn't use facial recognition software to run the stores.)
- Relentless Recovery, a company featured in a Washington Post article earlier this year, reportedly used scanner technology to read 28 million license plates in 2017 as it looked for vehicles to repossess.
Offline data collection can then be merged with online targeting — and nowhere is this more evident than with location data.
- “It’s not a coincidence that when you’re in Walmart they’re showing you a Dove ad," said Serge Matta, the president of location tracking firm GroundTruth, at an Axios event earlier this year.
- “A lot of people, admittedly so, will think this is a bit creepy," he said later.
Why you'll hear about this again: Federal lawmakers are under pressure to write a national privacy law, spurred on by data scandals at Facebook and Google.
- Industry also hopes that Congress will supersede a new California privacy law before it goes into effect in 2020. Other states are expected to write their own rules, too.
David has more here.
2. The drone nightmare is here
We still know very little about the drones that shut down Gatwick, the U.K.'s second busiest airport, but their example is a painful reminder of our transportation system's vulnerabilities, Kim Hart and Justin Green report.
The big picture: This is why drone manufacturers want rules to prevent incidents like this that significantly damage trust in the nascent industry. In the U.S., the Federal Aviation Administration was expected to craft regulations this year. That didn’t happen, and drone companies aren’t happy.
Catch up quick:
- A pair of drones were spotted flying over a runway at Gatwick, grounding flights as police furiously search for the perpetrator(s), BBC reports.
- It left thousands stranded, hundreds of flights canceled and even the military being brought in to try to help.
- "[T]he drone intrusion that shut the airport was 'highly targeted' and designed to cause 'maximum disruption' just before Christmas," AP reports.
Between the lines: These kinds of events give public safety and law enforcement agencies ammunition to say, “This is why drones are a safety and national security threat.” They have a point.
- Law enforcement will struggle with handling stray drones. (U.K. police feared shooting the Gatwick ones because of concerns about stray bullets.)
- In the U.S., "lawmakers have given law enforcement new powers to hack or even shoot down drones that may pose security threats. Advances in drone technology, however, make it more difficult for law enforcement to identify communication signals between drones and ground operators," WSJ reports.
- Drones can be innocuous. They could also be outfitted with bombs.
- Elon Musk, in an "Axios on HBO" interview, warned of "assassin drones" that would use facial recognition to track and kill targets.
In addition to increased interest in recreational drones, tech companies like Google, Amazon and Intel have invested in developing the technologies for their own business purposes, such as package delivery.
What to watch: To help appease security concerns, drone makers support remote identification standards so officials can spot drones operated by potential hostile actors.
- But there’s some disagreement on how to do that technologically. The drone industry most wants the FAA to establish rules that allow operators to fly drones beyond their line of sight and over people.
- Without standards around those activities, the industry is stuck in a holding pattern.
Be smart, via Axios' Andrew Freedman: Gatwick is uniquely susceptible since it's a small, single-runway airport (not small in impact but in area).
- Doing this at Atlanta or Denver or Chicago would be really hard, more like half an airport shutdown, as the drone operators would have to cover a massive distance.
- The flip side: If they can't defend a single runway airport from this, what can they defend from a drone attack?
3. Apple pulls some iPhone models from German stores
Apple said Thursday it would temporarily stop selling the iPhone 7 and iPhone 8 in its stores in Germany after a court there issued an injunction in a Qualcomm-related lawsuit.
Details: The ruling applies to iPhones that infringe on a Qualcomm patent related to power management, specifically those with an Intel modem and a chip from Qorvo.
Apple said it will appeal the decision and, in the meantime, continue to sell the iPhone XR, XS and XS Max in its 15 stores, adding that the older models remain available from carriers and retailers.
In order to have the injunction enforced, Qualcomm is required to post a hefty bond in case the decision is later overturned. Qualcomm said it plans to do so in a matter of days.
The context: The ruling follows a separate injunction issued recently in China over different patents. Apple issued a software update and continues to sell all iPhone models there.
Apple and its allies, meanwhile, are readying for an FTC trial against Qualcomm over its business practices, which is slated to start Jan. 4.
What they're saying:
- Apple: "Qualcomm’s campaign is a desperate attempt to distract from the real issues between our companies. Their tactics, in the courts and in their everyday business, are harming innovation and harming consumers. Qualcomm insists on charging exorbitant fees based on work they didn’t do and they are being investigated by governments all around the world for their behavior."
- Qualcomm: "Two respected courts in two different jurisdictions just in the past two weeks have now confirmed the value of Qualcomm's patents and declared Apple an infringer, ordering a ban on iPhones in the important markets of Germany and China."
- Intel: "Qualcomm's goal is not to vindicate its intellectual property rights, but rather to drive competition out of the market for premium modem chips, and to defend a business model that ultimately harms consumers."
- Qorvo: "We believe our envelope tracking chip does not infringe the patent, and the court would have come to a different conclusion if it had considered all the evidence. We're disappointed that the inventor and designer of our chip, who attended the hearing, wasn't given the opportunity to testify."
Bottom line: This case was already one of the biggest legal battles in tech, and the latest rulings have only increased the stakes.
4. The global scale of cyber-insecurity
Thursday's news was chock full of reasons to believe that technology is making our world less secure.
Among the developments:
- Two Android apps used by the military in combat had vulnerabilities so severe that enemies could have gotten details on troop movements.
- Hackers working on behalf of China reportedly breached the networks of IBM and Hewlett-Packard Enterprise and then used the access to attack key clients, Reuters reported. The DOJ indicted two Chinese hackers in conjunction with the attacks, saying information was stolen from at least 45 businesses and government entities.
- Meanwhile, the Wall Street Journal reports that Russian operatives posed as a Los Angeles-based social media management firm looking to help small businesses improve their digital presence.
Bottom line: Technology opens many doors. Unfortunately, those doors are also open to bad actors.
5. Take Note
- The Friday before Christmas is one of the final really good news dump days of the year. I expect at least one tech company will take advantage, rather than wait for next week.
- Apple has added John Giannandrea, the machine learning expert hired from Google earlier this year, to its executive team.
- Corel, the venerable publisher of WordPerfect and CorelDraw, is buying virtualization software maker Parallels for an undisclosed amount. (TechCrunch)
- Snapchat won't be giving cash bonuses again this holidays after a tough year that saw a number of executive departures. (Cheddar)
- A test of smart speaker "IQ" found Google Assistant understood 88% of commands properly, compared with around 75% for Alexa and Siri, with Microsoft's Cortana getting fewer than two-thirds correct. (Loup Ventures)
- A pair of U.S. representatives introduced a bill that would clarify laws governing initial coin offerings and change how cryptocurrencies are taxed. (Axios)
- Facebook-owned WhatsApp is being widely used to spread child pornography, according to reports from two Israeli organizations. (TechCrunch)
- Twitter shares fell more than 11% Thursday after a report from short seller Citron Research called the firm "toxic" and said it "has become the Harvey Weinstein of Social Media.” (Reuters)
After you Login
- The women's field hockey team at the University of the Pacific is on the chopping block, but its alumnae and their supporters aren't giving up without a fight.
- I saw my favorite version of "West Side Story" last night. In this version, the Sharks are from San Jose and the Jets from Winnipeg. That said, I didn't care for the ending.