Jan 22, 2019

Axios Login

By Ina Fried
Ina Fried

Just your periodic reminder that we love scoop-y news tips. You can hit reply to the newsletter or drop a note to ina@axios.com.

1 big thing: EU's Google fine is privacy law's first big test

Illustration: Lazaro Gamio/Axios

In leveling a $57 million fine against Google, French regulators are offering the first real hint of just how much change Europe's sweeping new privacy rules will force at U.S.-based tech giants, Axios' David McCabe reports.

Why it matters: While $57 million alone isn't a giant amount (parent company Alphabet brought in more than $33 billion in revenue in its last reported quarter), the new European law has the potential for significantly larger fines — up to 4% of worldwide annual revenue, or 20 million euros, whichever is larger.

The big picture: The European General Data Protection Regulation (GDPR) has sparked an urgent effort to pass a national online privacy law in Washington. And state lawmakers are attempting to create their own regulations, too.

Details: The French data regulator CNIL accused Google of 2 violations, stemming from an investigation of aspects of its Android mobile operating system...

  1. Not being transparent with users about how their data is being used.
  2. Not getting adequate consent from users to monetize their data.

What they're saying: A Google spokesperson said in a statement that the firm is "deeply committed" to "the consent requirements of the GDPR" and is figuring out what steps to take next.

The other side: Tech allies were quick to argue that France's fine was the product of bad enforcement and unclear rules.

  • Alex Stamos, former Facebook chief security officer for Facebook, tweeted:
"[I]f CNIL doesn't fine any EU-based ad networks in the coming months we know GDPR is about competition policy, not privacy."
  • Daniel Castro, who leads the Center for Data Innovation, said in a statement that the GDPR "requires companies to follow a complex and ambiguous set of rules" and is "fundamentally not a viable model for regulating the digital economy."

GDPR also raises concerns for Facebook and other social platforms operating in the EU.

  • Facebook COO Sheryl Sandberg told attendees at the Digital-Life-Design (DLD) conference in Germany on Sunday that the company needs "to stop abuse more quickly and we need to do better to protect people's data."
  • Of note: Not everyone there bought into her speech.

What we're watching: How Google's EU fine will influence the Capitol Hill debate over privacy, as lawmakers try to write rules before a new privacy law goes into effect in California next year.

  • The Federal Trade Commission is also weighing the possibility of leveling a major fine on Facebook for violating user privacy, according to multiple reports.

Our thought bubble: Monday's fine makes it clearer than ever that Europe, not Washington, is setting the pace when it comes to building guardrails for Silicon Valley firms.

2. Galloway's 2019 predictions

Scott Galloway speaking at the 2016 DLD. Photo: Tobias Hase/picture alliance via Getty Images

Also at DLD, NYU business professor Scott Galloway offered up his annual list of predictions — including one stating that Amazon will split out its AWS unit as Big Tech takes on health care, David writes.

Why it matters: With his skeptical view of tech giants, Galloway has become a widely quoted and sought-after speaker. His 2017 book "The Four" will be on the syllabus of any future courses about the techlash, and he cohosts a podcast, "Pivot," with Recode editor-at-large Kara Swisher.

His 2019 predictions:

  1. Amazon splits off Amazon Web Services into its own entity.
  2. More retail businesses will buckle under Amazon's weight.
  3. Tech giants will take on incumbent players in health care. "The biggest news story in 2019 will be Big Health," Galloway said.
  4. Companies that can double down on recurring revenue models like Amazon Prime will do so.
  5. More brands will be "going woke," Galloway said, by branding themselves around progressive political or social positions.
  6. Galloway said that his "optimistic" prediction was that "2019 will be the year of immunities kicking in against kleptocracies and the tyranny of technology that has run unfettered."

Meanwhile, here's a look at his 2018 predictions:

  • Amazon would pass Apple in value and reach $1 trillion in market cap. (It did pass Apple, but didn't quite reach $1 trillion.)
  • Amazon would buy Nordstrom or Carrefour. (Not yet.)
  • Facebook's stock would peak as Mark Zuckerberg "burnishes his reputation as the most tone-deaf CEO in tech." (TBD on the first one, and the second is subject to interpretation.)
3. Exclusive: NBCU stations sign with Comscore

Photo: Gary Hershorn/Getty Images

The NBCUniversal Owned Television Stations (OTS) division has signed a multi-year contract with Comscore to provide measurement for its 40 local broadcast networks owned and operated by NBC and Telemundo, Axios' Sara Fischer reports.

Why it matters: It's the latest local broadcast deal to close with Comscore amid pressure to explore new types of TV measurement that extends beyond linear TV consumption that has been traditionally measured by Nielsen.

  • Gray, Nexstar and Scripps have all also signed with Comscore in the past few months.

Yes, but: NBCUniversal, the parent company to the OTS division, isn't ditching Nielsen entirely. It uses Nielsen data to power both its measurement suite called CFlight and its digital TV consortium called Open AP. OTS will use both vendors to paint a better picture of how its content is being consumed.

Read more of Sara's story here.

Separately, in another exclusive report, Sara writes that Vox Media is acquiring The Coral Project, an open-source system used by roughly 50 newsrooms to manage their online comments section. The Coral Project had been housed within the Mozilla Foundation and terms were not disclosed, although it will continue to be an open-source effort.

Quick take: If you're not getting Sara's weekly Axios Media Trends newsletter, you should (sign up here). It's chock full of good stories like these.

4. Gamer raises $340,000 for transgender youth

Upset by anti-transgender rhetoric from Irish comedian Graham Linehan, professional gamer and YouTube star Harry Brewis (better known as Hbomberguy) went on a Donkey Kong-playing spree, playing Donkey Kong 64 from start to finish and soliciting donations.

Brewis ended up raising roughly $340,000 for Mermaids, a British charity for transgender youth. Even Rep. Alexandria Ocasio-Cortez dropped in on the Twitch livestream.

The bottom line: Mermaids CEO Susie Green told Broadly that while the money raised was astonishing, "the love and support that has been generated by this wonderful human being is the real win, as transgender children and young people have seen this and know that they are not alone."

5. Last meal for startup Munchery
Rosemary salmon quinoa bowl. Photo: Munchery

Munchery, an 8-year-old San Francisco meal delivery startup, announced its shutdown on Monday, becoming the latest to succumb to the harsh realities of the business, Axios' Kia Kokalitcheva reports.

The bigger picture: A number of companies have attempted to cook and deliver their own meals (or meal kits), but many have shuttered or struggled. That includes SpoonRocket, Sprig, Chef'd, Maple and Ando.

  • Munchery, founded by Tri Tran and Conrad Chu, was optimistic about its ability to cook, sell, and deliver high-quality meals to consumers, but signs of trouble appeared years ago.
  • In 2015, the company added meal kits to its business, signing up high-profile restaurateurs as launch partners. However, just 5 months later, San Francisco baker and La Boulange founder Pascal Rigo, who had joined as chief customer experience officer, left the company.
  • Shortly after, the company rolled out a "membership" model, an attempt to stabilize its order forecasting and revenue.
  • But by the end of 2016, the company had replaced co-founder Tri Tran with a new CEO, and Bloomberg reported it struggled with overproduction of food. Last year, it shut down service in all cities except San Francisco and laid off 30% of its workforce.
  • Investors had put in $124 million, per Pitchbook.

Meanwhile, some meal kit startups like Plated and Home Chef are selling to large grocers as a way to survive. Presumably, this enables them to tap into their parent companies' supply chains and larger customer reach.

  • Blue Apron, which chose to go public in 2017 and is currently trading at around $1.32 per share, replaced its co-founder with a new CEO in late 2017.

The bottom line: Shuttling meals from restaurants to customers' doors is no easy business (as a slew of companies are finding out), but preparing food and getting it to customers comes with a whole host of additional challenges — often much more than startups can handle.

6. Take Note

On Tap

Trading Places

  • Mobility app Transit named David Block-Schachter as its chief business officer.

ICYMI

  • President Trump's official Facebook feed has reportedly been altering its previously published photos by thinning his face and lengthening his fingers. (Gizmodo)
  • Twitter has suspended an account that was central in making a brief video of a confrontation between a Native American elder and a group of Kentucky high school students in MAGA hats go viral. (CNN)
  • Microsoft Surface unit head Panos Panay seized the moment after New England Patriots coach spiked his league-issued Surface tablet on Sunday. Don't worry about the Surface Pro, he tweeted, "we quality test for this exact scenario."
  • Prolific gadget sniffer-outer Evan Blass posted what he says are images of the forthcoming Galaxy S10 family of devices. (The Verge)
  • A new survey finds that businesses are collecting more data than ever on their workers but only 32% of CEOs reported being "very confident" they were using the data responsibly. (Accenture)
7. After you Login

Attention nature photographer: You might want to turn around.

Ina Fried