Mar 11, 2020

Axios Login

By Ina Fried
Ina Fried

Reminder: Just because you are "working from home" doesn’t mean you should skip your daily newsletter reading. OK, now you can go back to whatever you were binge-watching.

Today's Login is only 1,267 words, a 5-minute read.

1 big thing: Coronavirus dents tech's supply chain

Illustration: Sarah Grillo/Axios

The novel coronavirus has just begun to shut down offices and public gatherings across the U.S., but its impact on hardware and components production in China started weeks ago, and the flow of goods out of China's factories has been slow to recover.

Why it matters: The global tech economy's just-in-time supply chain has never faced a disruption quite like this one. And while many observers are guardedly optimistic, no one knows for sure yet how this crisis will play out or what sorts of shortages the industry might still face.

The big picture: Facebook says it remains short on Oculus VR headsets. Apple is reportedly short of replacement parts for iPhones, while also warning of other constraints.

  • In a regulatory filing, Salesforce cautioned that "the ongoing coronavirus epidemic could potentially disrupt the supply chain of hardware needed to maintain these third-party systems or to run our business."
  • Logitech told Axios that its Suzhou, China, factory is operational, as are many of its supplier factories. However, it said in a statement that "due to the availability of labor and varying timing of component supply recovery, there is potential for delays to new product introductions."
  • Qualcomm's CFO said last month that the company sees "significant uncertainty" from coronavirus' impact on the supply chain, while Intel has painted a mixed picture. Uncertain demand has helped the company catch up a bit after struggling to meet PC makers' demand for chips. While that's good news for Intel, it indicates there may be supply and/or demand issues in other parts of the computer business.

Yes, but: Even as the virus spreads to more parts of Europe and the U.S., the situation in China appears to have stabilized. Apple CEO Tim Cook noted the improvements in a Fox Business interview two weeks ago, but he said they were coming more slowly than Apple had hoped, hence the company's need to lower its financial outlook.

  • "It feels to me that China is getting the coronavirus under control," Cook said. "You look at the numbers, they're coming down day by day by day. And so I'm very optimistic there."
  • Logitech told Axios it expects supply to reach "near-normal conditions by the end of March or April, barring a worsening coronavirus situation."

What's next: Industry insiders emphasized that the situation remains fluid, with companies having teams of people monitoring supply chain issues around the clock. "Anything can still happen," said a source at one big tech company.

  • Shipping and delivery could become a new choke point in the industry's operations, especially if more regions end up in lockdowns like Italy's.

The bottom line: If China's measures against the virus continue to be effective, the supply chain might resume near-normal capacity just as demand drops, thanks to a virus-induced economic slowdown that dampens consumer and business spending.

2. Google sends employees home

Photo: Google

Google issued a sweeping cautionary edict Tuesday, recommending that all its employees in North America work from home until at least April 10 amid the novel coronavirus outbreak.

Why it matters: The move comes as tech companies hope to limit the spread of COVID-19 both among their employees and the community at large. Apple, Amazon, Cisco, Facebook, IBM, Microsoft and others have also encouraged employees to work from home, albeit in most cases not as broadly as Google.

Driving the news: A Google representative confirmed to Axios it has asked all employees in the U.S. and Canada to work from home, assuming their roles allow it. The move was reported earlier Tuesday by Business Insider.

"Contributing to social distancing, if you are able to, helps [limit] the overall community spread and most importantly, will help offset the peak loads through critical healthcare systems and also saves it for people in need."
— Google CEO Sundar Pichai said in a tweet, linking to Axios' story

The company is also setting up a fund to ensure sick leave for hourly and temporary workers globally, as well as for its previously announced plan to pay those whose services may not be fully needed while full-time employees work from home.

Meanwhile, in other virus-related tech news:

  • Michael Kratsios, chief technology officer of the U.S., is slated to meet with a mix of tech company representatives and government agency leaders to discuss the coronavirus response, with many attending remotely. Among the tech companies expected to participate are Amazon, Apple, Facebook, Google, Microsoft and Twitter.
  • Two recent attendees of the RSA security conference have tested positive for the virus, one of whom has been hospitalized.
  • Politico reports that a daylong IT crisis in the email system at the Department of Health and Human Services further hampered the agency's effort to deal with the coronavirus.
  • Steve Case, who has been traveling around the country to foster tech initiatives in more cities, said he is postponing this year's Rise of the Rest tour.
  • E3, the video game industry’s huge annual show originally slated for June, has reportedly been cancelled.
3. Match Group to back anti-online child abuse bill

Illustration: Sarah Grillo/Axios

Online dating company Match Group plans to publicly support the EARN IT Act, a controversial bipartisan Senate bill to combat online child sexual exploitation, as my colleagues Dan Primack and Margaret Harding McGill scooped yesterday.

Why it matters: Match, the parent company of major dating platforms such as Tinder, is breaking with the internet industry's leading trade group, which worries the bill could open a wedge for law enforcement to gain access to encrypted systems, threatening user privacy.

Context: EARN IT would require tech platforms to comply with government-developed best practices to prevent online child sexual exploitation. If they don't, they would lose some of the liability protections they have under Section 230 of the 1996 Communications Decent Act. The Senate Judiciary is holding a hearing on the bill this morning featuring testimony from Match.

  • Axios obtained an internal memo from Match Group CEO Shar Dubey explaining the decision. You can read the memo and more here.

Yes, but: Groups including the Internet Association have a variety of c0ncerns, including worries that the bill could eventually lead to limits on the use of end-to-end encryption.

  • In a letter to the Senate Judiciary Committee, industry group TechNet says requiring companies to "earn" their liability protection could have unintended consequences and actually make the fight against child exploitati0n harder. Plus, it says the potential for limiting encryption "could jeopardize the cybersecurity and privacy of millions of consumers."
  • In prepared testimony for the Judiciary Committee, the Internet Association adds that the bill, as written, poses constitutional problems. The group says it could be challenged on First Amendment grounds, while also allowing defendants whose online content is obtained to claim that their Fourth Amendment rights had been violated.
4. TikTok plans LA "transparency center" to assuage critics

TikTok said Tuesday that it plans to open a "transparency center" in Los Angeles where experts can observe the Chinese-owned platform's moderation processes.

Why it matters: Critics have worried over the degree to which China might influence TikTok's content policies and practices, now or in the future.

Details: While the move is clearly aimed at providing insight into the company's operations, TikTok is expected to be selective about who it lets in the door.

  • Also, the center, part of the company's Culver City offices, won't necessarily be where TikTok's content review decisions are made, but rather provide a window onto them for outsiders.

The big picture: Opening the center is just the first phase of the company's effort to be more transparent, TikTok said.

"Later, we will expand the Center to include insight into our source code, and our efforts around data privacy and security," the company said in a statement.

  • This second phase, TikTok said, will be led by Roland Cloutier, who starts next month as the company's chief information security officer.
5. Take Note

On Tap

  • Several companies are reporting earnings on Thursday, including Adobe, Oracle and Slack. (Correction: This was originally incorrectly reported as the companies were delivering their earnings reports today.)
  • The Justice Department and Federal Trade Commission are hosting workshops all day on whether to tweak federal guidelines for reviewing vertical mergers.

Trading Places

  • The Center for Democracy & Technology named Alexandra Reeve Givens as its next CEO, effective May 11. Givens was the founding executive director of Georgetown Law's Institute for Technology Law & Policy.

ICYMI

  • The Trump administration finalized a rule that would make it easier for patients to share their health data with apps, hospitals and doctors. (Axios)
  • Cloudera shares rose 10% as revenue exceeded expectations. (ZDNet)
6. After you Login

I'm not sure what Lego and Super Mario are up to, but any collaboration is likely to be a hit.

Ina Fried