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June 30, 2021

Just a reminder, you can still join me today at 12:30pm ET for a virtual event on the Equality Act in Congress and the wave of anti-trans bills around the country.

  • I'll interview Rep. Sean Patrick Maloney (D-N.Y.), National LGBTQ Task Force executive director Kierra Johnson, and the GenderCool Project's Stella Keating
  • Register here.

Today's newsletter is 1,309 words, a 5-minute read.

1 big thing: Get ready for years of new tech regulations

Illustration of group of people pulling down a large cursor
Illustration: Eniola Odetunde/Axios

Facebook, Google and Apple take note: Microsoft is spending a fortune to bulk up its legal staff in anticipation of years of new tech regulations around the globe. And Microsoft isn't even the company in most regulators' crosshairs.

Driving the news: As first reported by Axios, Microsoft plans to increase the size of its corporate and legal affairs team by 20%.

The big picture: It's not just antitrust actions that are coming, Microsoft president Brad Smith said in an interview. He sees new laws coming on everything from privacy and AI to cybersecurity and sustainability.

  • "As I sometimes put it inside the company, the 2020s will bring to tech what the 1930s brought to financial services," Smith says, noting that era brought a wave of new U.S. laws that created multiple new oversight agencies.

Between the lines: Smith sees opportunity in all the new laws, especially because they won't just affect tech giants, but also all the companies who rely on the tech giants' services.

  • Retailers who use facial recognition, for example, will have to comply with laws pertaining to use of AI systems.
  • "So many of these regulations apply not only to the company that creates the technology but the companies that deploy it," Smith said.

Our thought bubble: Smith speaks from experience. He spent years dealing with regulators around the world as Microsoft fended off charges, in both the U.S. and Europe, of abusing its monopoly in PC operating systems.

  • "One of the key things we've learned over the years is, if you need to adapt tech to regulation, it is much easier if you start early," Smith said.

Smith says he isn't just drawing on lessons of what Microsoft did wrong more than a decade ago, but also from what has worked in recent years, including proactively applying the EU's GDPR privacy protections across the globe.

"We thought that served us fairly well," Smith said.

  • When it comes to app stores, for example, Smith said Microsoft is doing much of what regulators want to see from Apple and Google, including allowing access to rival stores and payment methods.

Yes, but: Even if companies want to follow Microsoft's lead, they will be in an intense war for legal and compliance talent. As the New York Times reported Tuesday, there is already a shortage of lawyers with expertise in antitrust issues. That's likely to spill over to other tech-related legal specialties as well.

  • Nor does Smith think Microsoft will be immune from many new laws, even if they are being written in response to the actions of other tech companies. "As I like to say to our folks internally, 'When Congress passed banking laws in the '30s, they didn't create exemptions for companies they liked.'"

2. GAO calls for closer eye on face recognition

An illustration of facial recognition technology in action
Illustration: Sarah Grillo/Axios

The Government Accountability Office said in a new report Tuesday that federal law enforcement agencies need to track use of facial recognition technology more closely to better protect privacy, Axios' Margaret Harding McGill reports.

Why it matters: Use of face-recognition tech is becoming more widespread within the federal government, with 20 out of 42 federal agencies that employ law enforcement officers using it.

By the numbers: 10 of the agencies, including the U.S. Postal Inspection Service, reported using Clearview AI, a controversial private facial recognition provider. According to the GAO, the Postal Service used Clearview to help identify people suspected of stealing mail, opening mail, burglarizing buildings and setting fire during protests.

  • U.S. Capitol Police said they used Clearview to help "generate investigative leads" following Jan. 6 the attack on the Capitol.

What's next: The GAO found that 13 agencies don't track the non-federal facial recognition systems their employees are using.

  • "These agencies have therefore not fully assessed the potential risks of using these systems, such as risks related to privacy and accuracy," the GAO said.
  • The report recommends that the agencies develop a mechanism for tracking use of non-federal systems so they will "have better visibility into the technologies they rely upon to conduct criminal investigations."

Go deeper: Clearview brings privacy concerns from facial recognition into focus

3. Facebook looks to move into Substack's turf

A photo illustration of the Facebook logo on a smartphone.
Photo: Nikolas Kokovlis/NurPhoto via Getty Images

Facebook CEO Mark Zuckerberg on Tuesday unveiled the company's newest product, an independent writing platform called Bulletin.

Why it matters: Axios' Sara Fischer reports that it's the latest feature Facebook has built to go after independent creators, as well as move into turf now held by Substack, Patreon, YouTube and others. It could also help Facebook's user base stay better connected to its platform.

Details: Bulletin is a standalone feature that includes tools for journalists to write and send newsletters they can share across the web and on Facebook. It also allows journalists to build websites.

  • Zuckerberg, speaking to the press in an event in Facebook's new Live Audio Room platform, said the tool is different from other newsletter services because it offers writers more multimedia opportunities to connect with their audiences and more distribution opportunities across Facebook's ecosystem.
  • Zuckerberg said that unlike some newsletter platforms, Facebook will not take a cut of writers' revenue and it will let writers keep access to their content and lists.

Facebook debuted the new tool alongside a slew of prominent partners, including NFL sportscaster Erin Andrews, award-winning cookbook author Dorie Greenspan and organizational psychologist Adam Grant.

  • "A bunch of local newsletter writers" will also be joining the platform, Zuckerberg said, as part of "a real investment in local news."
  • Facebook has paid some creators an advance to jump-start their presence on the platform, but it didn't say which creators were receiving the cash.

The big picture: The long-awaited newsletter feature brings Facebook even closer to the publishing world — an industry that for years the company tried to stay separate from. But because journalists and writers are central to the creator economy, Facebook has no choice but to lean into ways it can support them.

My thought bubble: Facebook used to have two main ways of moving into new areas: buying startups or copying their features. With the first door all but shut, Facebook is doing plenty of the second.

  • Consider this: Facebook used a visit by Zuckerberg to its Clubhouse clone to announce its Substack rival.

4. Scoop: $250M for DataRobot's enterprise AI

Illustration of people with megaphones yelling over an AI robot.
Illustration: Aïda Amer/Axios

DataRobot, a Boston-based enterprise AI company, has quietly raised around $250 million in new funding led by existing investors Altimeter Capital Management and Tiger Global at around a $6 billion pre-money valuation, Axios' Dan Primack scooped yesterday.

Why it matters: This is all about the promise of automated insights, allowing companies to build predictive models based on their reams of data.

  • DataRobot previously raised about $750 million, most recently at a valuation just shy of $3 billion.

Our thought bubble: This investment is another indication that it's still early days in the adoption of AI for general-purpose business use — and a sign that, though tech giants like Google and Facebook have a lead in the field, they won't be the only players or winners.

5. Take note

On Tap

Trading Places

  • Twitter said Matthew Derella is leaving his post as consumer lead, effective Aug. 6. Derella will be replaced by Sarah Personette.
  • Cris Turner will be joining Google as VP of government affairs and public policy for consumer products reporting to Karan Bhatia. Turner previously served as VP and head of government affairs at Micron.
  • Autonomous delivery startup Nuro has hired James Owens, former acting administrator of NHTSA, as the company's new head of regulatory issues.


6. After you Login

A Beluga whale at Mystic Aquarium in Connecticut
Photo: Mike from D.C.

Yesterday's Beluga pictures spurred happy memories from reader Mike in D.C., who sent me this picture of his three kids enjoying a smile with a Beluga at Mystic Aquarium in Connecticut.