Feb 12, 2019

Axios Login

D.C. Readers: You're invited to Innovating the American Metropolis, this Wednesday at 8am ET. 

  • Axios' Kim Hart will unpack the policies, innovations and businesses transforming cities across the country with: Sen. John Thune, Rep. Yvette Clarke, CTA CEO Gary Shapiro, and Chattanooga Mayor Andy Berke. 
  • RSVP here
1 big thing: Amazon buys Eero as a key to smart home market

Illustration: Sarah Grillo/Axios

Amazon's purchase of hardware startup Eero isn't hard to explain: The company's smart home ambitions depend on fast, reliable Wi-Fi throughout the home, and Eero's mesh routers help deliver that.

Why it matters: Amazon is putting all the pieces together for a comprehensive smart home system, with Alexa's voice presiding over constellations of Echo speakers, Blink home security systems, and Ring smart doorbells.

  • ICYMI: Amazon spent on the order of $1 billion last year to acquire Ring.
  • The home router itself could prove a useful point of integration for Alexa or other services.

Our thought bubble: Not only is this a strategic move for Amazon, it's a good time for Eero to give up trying to go it alone in the increasingly competitive market for networking hardware.

  • The company had hoped to move into subscription services, such as security, but that always seemed a tough way to make a buck long term for a company that got its start solving a big hardware problem.

The big picture: Although this deal alone isn't likely to raise significant antitrust scrutiny, it's yet another example of Amazon expanding its reach into new areas.

  • Some Eero customers also expressed dismay that the details of their home network setups, previously in the hands of a small startup, could be used for broader purposes by Amazon.
  • The company said in a tweet that it "does not track customers’ internet activity and this policy will not change with the acquisition."

History lesson: Amazon previously invested in Eero rival Luma though its Alexa Fund.

What they're saying:

  • Quartz's Mike Murphy: "My parents’ house has @geteero, @ring, and @amazonecho in it. They have a Prime account and shop at Whole Foods on occasion. Jeff Bezos controls suburbia now."
  • The Verge's Dieter Bohn: "I am glad Eero will get more resources, but I kind of loved having at least one important gadget in my life not made by Apple/Google/Amazon/Microsoft or captured in their ecosystems."

The bottom line: Whatever Amazon paid (and it's not saying), it will profit not just by selling Eero's networking gear but also by providing customers with the reliable networks they need to use other Amazon products and services.

2. Russian internet prepares to go solo

Russia is planning to sever itself temporarily from the global internet, ostensibly to prepare the country to deal with a digital attack that would leave it cut off, Axios' Joe Uchill writes.

Why it matters: That's Russia's stated intent, but experts believe the goal is actually to wrest more control over the country's domestic internet — and take the first steps toward building an "Iron Firewall" to block dissent, à la China.

Russia's test will take place before an April 1 deadline to submit amendments, according to the Russian outlet RBC, which first reported the story, and ZDNet, which first brought it to English.

Yes, but: Though the government of Russia has publicly expressed concern that other nations may cut it off from the internet, experts are skeptical.

  • "As a technical matter, I have a hard time imagining how a group of nations could isolate Russia completely," said Michael Daniel, former White House cybersecurity coordinator and current president and CEO of the Cyber Threat Alliance. "The distributed nature of the internet makes that prospect really challenging."
  • While the U.S. has threatened stronger actions to deal with hostile foreign cyber powers, removing a country from the internet goes a step beyond any known plans.

Between the lines: "Really, this move would be about Russia wanting to have the same capabilities that China does — in essence, to be able to control the flow of information into and out of the country," Daniel said.

Go deeper: Read Joe's full story here and subscribe to Codebook, Axios' cybersecurity newsletter, here.

3. McCormick using AI to develop new spices

Photo: DeAgostini/Getty

For years, McCormick has relied on its own culinary experts to come up with new and creative ways to blend its spices. Now, Axios' Shannon Vavra reports, it is looking to artificial intelligence to create new combinations.

What's happening: McCormick, the world’s largest spice company, has begun working with IBM Research to create new spices that humans might not consider. Among its latest concoctions — the cumin pizza, says Richard Goodwin, principal research scientist at IBM.

Why it matters: AI is starting to change our palates and not just when it comes to food. As we've previously reported, AI is introducing novelty and creativity into food, in addition to fashion, art, cocktails, and dance.

  • "The computer doesn’t have some of the same biases we have," Goodwin tells Axios.

How it works: The system, which is still in the testing phase, pulls from decades’ worth of data on spices to identify a base formula for a flavor category (such as a BBQ sauce).

  • Then it incorporates new and sometimes surprising ingredients, plus sales and trend forecasts to make sure the new flavors will likely perform well.
  • The algorithm can cut spice development time down by two-thirds, CNN reports.
  • The IBM system can examine hundreds of thousands of formulations that have been tried in the past, involving some 5,000 ingredients. "A person just can’t deal with that," Goodwin says.

At the end, humans make the decision. A consumer taste-test follows the AI process. "There's always going to be a need for humans to taste," Bob Doyle, VP of the Robotics Industries Association, tells Axios.

4. What surprises Bill Gates

Bill and Melinda Gates used their annual letter to reflect on a number of "surprises" they've encountered in recent years.

Details: It's a list that includes inaction and denial over climate change, the struggle to grasp that AI algorithms can be as biased as humans, and a lack of global commitment to vaccines.

"The world looking backward from today is very different from what we pictured a couple years ago," the pair wrote in the letter, published today. "A benefit of surprises is that they’re often a prod to action. It can gnaw at people to realize that the realities of the world don’t match their expectations for it."

Yes, but: Not all the surprises have been bad, they note. Melinda points to the effect smartphones have had in empowering poor women.

In the end, the letter sounds an optimistic note, as anyone who knows Bill and Melinda would expect.

"When we’re feeling overwhelmed by negative headlines, we remind ourselves that none of us has the right to sit back and expect that the world is going to keep getting better. We have a responsibility to do everything we can to push it in that direction."
"In that way, we’ve found that optimism can be a powerful call to action. And it has a multiplier effect: The more optimists there are working for a better future, the more reasons there are to be optimistic."
— Bill and Melinda Gates

The pair dedicated the letter to Paul Allen, the Microsoft co-founder who died last year.

5. Verizon wants consumers to do its bidding on 5G

Aiming to convince cities to move faster on 5G, Verizon is enlisting its consumers, Kim reports.

What's new: The company launched a website on Monday where consumers and businesses can petition their local governments to support the deployment of new networking gear, known as small cells, needed to deliver the next generation of cellular technology,

The purpose is two-fold: Getting customers to engage with public officials in favor of 5G, and spotting groundswells of interest as an indicator of demand.

  • Translated: Verizon is leveraging its customers for local lobbying — although Verizon says it's fully transparent that it's behind the effort — while also mapping out its footprint.
  • “We want to build networks and services on those networks, and to do that we need constituents who want those services," a Verizon spokesperson tells Axios.

Why it matters: A major hurdle for telecom companies wanting to roll out 5G is getting each municipal government to approve all the permitting requests to install hundreds of thousands of small-cell antennas all over town.

Verizon is also taking a page out of the playbook used by tech companies when expanding to new areas.

  • For example, Google and Amazon asked cities to pitch them on bringing high-speed fiber internet service and HQ2, respectively, to their areas.
  • Yes, but: Google Fiber was selling the promise of fast fiber, which at the time (2011) was rare and enticing. Amazon HQ was selling jobs, jobs, jobs. Verizon, on the other hand, is selling a technology whose applications don't yet exist.

Our thought bubble: Motivating the masses to shout loudly that they want 5G faster could be tough. Despite the industry hype around 5G, many consumers still have no idea what it is or why they should care. For many, their current 4G LTE service allows them to stream movies and browse the web just fine.

6. Take Note

On Tap

  • Square and Twitter CEO Jack Dorsey is doing an online interview with Recode's Kara Swisher. Dorsey said he will answer anything he is asked but, staying on brand, it will be a text interview on Twitter.
  • IBM's Think conference kicks off in San Francisco.
  • Goldman Sachs' invite-only tech conference runs today through Thursday in San Francisco.

Trading Places

  • Frank Casanova, a longtime Apple executive, is now heading marketing efforts for AR, Bloomberg reports.
  • Sony has promoted Jim Ryan to head its PlayStation unit, with current boss John Kodera taking Ryan's old post as deputy president of Sony Interactive Entertainment.


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