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Hello from Washington, D.C., where I am in town for one of our semi-regular gatherings of Axios folks. It's the start of two weeks of travel for Login, as we travel from here to Munich for DLD this weekend and then Davos next week for the World Economic Forum.

Today's Login is 1,441 words, a 5-minute read.

1 big thing: How tech giants are ducking California's new laws

Illustration: Eniola Odetunde/Axios

California has two new laws on the books aimed at reining in tech giants. Some of the biggest companies they're aimed at plan to dodge them, Axios technology editor Kyle Daly reports.

Why it matters: Powerful, moneyed tech firms are always going to have the will and the resources to try to evade regulation. That puts the onus on legislators to craft smarter, tighter laws with fewer loopholes.

Details:

  • California's Assembly Bill 5 (AB5) codifies a 2018 California Supreme Court ruling making it harder for companies to treat their workers as independent contractors rather than employees.
  • The California Consumer Privacy Act (CCPA) lets Californians find out what data certain companies have collected about them and even ask for it to be deleted.
  • Both took effect with the new year.

Yes, but: Some of the companies that stand to be most affected by each of the laws are looking to get around fully complying with them.

The other coast: Regulators in D.C. are carefully watching the moves in California.

  • Federal lawmakers trying to craft broad federal privacy legislation could learn from the gaps in California's rules that companies are exploiting, said Michelle Richardson, director of the Privacy and Data Project at the Center for Democracy and Technology (CDT).
  • "You don't want to just put the decision making on whether [data] is sold to a third party, but apply it to the sharing, collection and use of data," she told Axios. "That's how you're going to get the giant companies."

The big picture: Flouting or finding loopholes in laws is nothing new for Silicon Valley. Uber, Lyft and Airbnb all grew huge by sidestepping laws and ordinances that might have kept them out of some lucrative markets.

  • In those cases, tech companies were finding workarounds to laws written for a pre-internet age. Now, they're angling to pull off the same trick with laws written for them.

What's next: These conflicts may come to a head this summer.

  • That's when Wedbush Securities analyst Daniel Ives told Axios he expects the Uber-Postmates litigation over AB5 to end up in California's Supreme Court.
  • And it's when California officially starts enforcing CCPA. Attorney General Xavier Becerra will then have to decide whether to bless or penalize practices like Facebook's handling of web tracking.

Go deeper:

2. Drummond exits at Alphabet

Photo: Eric Piermont/AFP via Getty Images

The only surprise in the departure of David Drummond from Alphabet/Google on Friday was that it took so long to happen, despite the list of allegations facing the company's longtime legal chief.

Why it matters: Drummond has long been the subject of allegations and speculation involving sexual impropriety and acknowledged fathering a child with a woman who worked in Google's legal department, but has denied other wrongdoing. Drummond's continued employment made it hard for many people to take seriously the company's commitment to a workplace free from sexual harassment.

Driving the news: Word of Drummond's exit came via a memo to employees, first reported by Forbes. The company confirmed to Axios he was not getting an exit package.

The strongest response came from former Google Ventures chief Bill Maris, who told Axios that it was Drummond's behavior that led him to leave the company.

"The news of David Drummond leaving Google today brings to mind a quote from one of my most favorite creatures. 'At an end, your rule is. And not short enough, it was.' I had been asked in the past why I left Google in 2016, and I have never really commented on that. David Drummond is the reason I left Google. I simply could not work with him any longer. It's that simple. We have very, very different ideas about how to treat people, and this was a long time coming."
— Bill Maris

It's unclear whether his departure was the result of pressure from the board or Alphabet CEO Sundar Pichai. But either way, it is good news for Pichai as he tries to distance himself from a "bro"-style culture that has long defined Google's executive suite.

What's next: Google still faces lots of challenges on the workplace front, including employees desire for a say in taking on controversial government work, the company's treatment of vendors and contractors, and allegations that it retaliates against whistleblowers.

  • Alphabet also has an ongoing investigation related to its past handling of sexual harassment.
3. Regulators offer new guide to vertical mergers

The Trump administration is telling companies what they're up against with the Justice Department and Federal Trade Commission if they embark on a merger similar to the AT&T-Time Warner deal, under new draft guidelines for so-called vertical mergers proposed Friday.

Why it matters: These new guidelines seek, for the first time since 1984, to formally lay out how regulators consider whether a vertical merger will hurt competition and should therefore be blocked, Axios' Margaret Harding McGill reports.

  • The agencies have lengthy standards for reviewing horizontal mergers, in which a company buys a direct competitor.
  • The rules covering vertical mergers, where a company buys a supplier — such as a pay-TV provider buying a network — are shorter and haven't been updated in decades.

Details: Under the guidelines, a would-be vertical merger could be deemed harmful if there's evidence that it would help the buyer raise costs for competitors, shut rivals out of markets or access sensitive information that would give it a competitive edge.

Yes, but: The standards that the agencies are looking to codify with the new guidelines include some of the very factors the Justice Department used in trying to block the merger between distributor AT&T and content provider Time Warner. That case failed to convince a federal judge, and the companies closed their deal.

What they're saying: The FTC's two Democratic commissioners both said they're in favor of updating the vertical merger guidelines, but couldn't support the proposal as written.

  • Commissioner Rebecca Kelly Slaughter said in a statement that her "biggest concern" involves a note in the guidelines that regulators are unlikely to challenge mergers proposed by companies that control less than 20% of the market in which they operate.
  • Fellow Democrat Rohit Chopra said the proposed rules "clearly fall short" and should have included more metrics for weighing if a merger will hurt competition.

Between the lines: The cooperation between the two agencies comes at a time of some tension over the antitrust investigations of the major tech platforms and the Justice Department's weighing in against the FTC's case against Qualcomm. 

What’s next: The agencies are taking comments on the guidelines until Feb. 11. After that, they can move toward finalizing and adopting them.

4. Fitness trackers are more popular with women

About one-in-five American adults use a smart watch or fitness tracker, with women more likely than men to use a fitness device, according to new research from Pew.

Why it matters: The category is still in its early days, and understanding who uses the products and who doesn't could help the industry improve its products and broaden their appeal.

By the numbers: Pew says 21% of Americans report using a smart watch or fitness tracker. Here's how that breaks down:

  • 18% of men and 25% of women.
  • 20% of whites, 23% of blacks and 26% of Hispanics.
  • 25% of those 18-49, and 17% of those over 50.
  • 31% of those who make $75,000 or more, 20% of those who make between $30,000 and $74,999 and 12% of those who make less than $30,000.

Meanwhile: Respondents were also asked whether it is acceptable for device makers to share user data with medical researchers. About 41% said that it is acceptable and 35% said it isn't, with 22% saying they were unsure.

5. Take Note

On Tap

  • NRF 2020, the retail industry's biggest annual gathering, runs through Tuesday in New York.
  • Citrix Summit runs today through Wednesday in Orlando.

Trading Places

  • Dave Abel, president of prison tech firm Aventiv Technologies, has been named the company’s CEO. The move comes with a promise to lower prison call rates and be more transparent under the leadership of Abel, a former IBM and PwC executive.
  • The Business Software Association has hired Tom Foulkes as senior director, state advocacy. The BSA, like other tech trade groups, is stepping up its work at the state level as key policy battles shift that direction.

ICYMI

  • Don't miss Steven Sinofsky's annual CES review. It's not Smart Brevity, but it is smart, as always.
  • Leaked photos offer new details on Samsung's next flagship phone, ahead of next month's launch. (XDA Developers)
  • Amazon fired a number of workers for leaking customer emails and other information. (TechCrunch)
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