May 13, 2019

Axios Login

By Ina Fried
Ina Fried

There was a "Game of Thrones" episode last night and people had strong feelings.

1 big thing: Calls to break up Facebook get louder

Illustration: Sarah Grillo/Axios

As the Federal Trade Commission weighs new regulatory action against Facebook, pressure is mounting in political circles and among company alumni for a tougher remedy — breaking up the social network giant.

Driving the news:

  • Sen. Kamala Harris is the latest to lend credence to the idea, saying Facebook is a utility that has gone unregulated and that a breakup is an idea worth exploring. “I think we have to seriously take a look at that, yes,” Harris, who's a Democratic presidential hopeful, told CNN's Jake Tapper.
  • Sen. Elizabeth Warren, also a presidential candidate, has been calling since March for Big Tech firms to be split up, including Facebook, Amazon and Google. With Facebook, she suggested reversing the company's WhatsApp and Instagram acquisitions.
  • Facebook co-founder Chris Hughes wrote an op-ed in the New York Times saying "It's Time to Break Up Facebook."
  • Among other things, Hughes' call means that "anti-Facebook sentiment is now a mainstream view among the core of Facebook’s founding team," writes Casey Newton in The Verge

Between the lines: There are lots of ideas on the table for regulators in D.C., including imposing new restrictions, adding more oversight, and other suggestions. But the good news for Facebook is that breaking up the company hasn't yet made it to the table, and it's almost certainly not on the FTC agenda.

The most likely outcome at the FTC is a settlement.

  • Facebook has already reserved $3 billion in anticipation of a cash fine in the range of $3 billion to $5 billion.
  • Also reportedly on the table are tighter privacy conditions and perhaps installing an outside monitor at the company or holding CEO Mark Zuckerberg personally liable for future violations.

Yes, but: People are still talking about the idea of a breakup. Things have to reach a certain crescendo before that kind of talk becomes part of candidates' stump speeches.

What they're saying: Speaking on CNN's "Reliable Sources" on Sunday, Facebook top policy executive Nick Clegg rejected the breakup talk.

  • "It’s a very American tradition to start penalizing success," Clegg said. "That is not what antitrust law is used for. I don’t believe Facebook is a monopoly.”

The bottom line: It typically takes a major antitrust lawsuit for a breakup to become a serious possibility, and most of Facebook's current issues are about its substantial privacy liabilities rather than concerns about monopolistic behavior. And, as Bloomberg notes, breaking up companies is hard to do.

Go deeper:

2. SF votes tomorrow on face recognition ban

Illustration: Sarah Grillo/Axios

San Francisco supervisors are set to vote Tuesday on a first-of-its-kind effort to ban city agencies, including police, from using facial recognition on its residents, per the Associated Press.

Why it matters: Other cities and states are looking at how to regulate use of technology.

  • Some tech companies, including Microsoft, say it's time for Congress to set rules on how the powerful technology can lawfully be used, including by governments.
  • Facial recognition technology can have powerful uses in preventing and prosecuting crime, but critics worry that it can also lead to Big Brother oversight and targeting of minorities.
3. China Mobile protests after FCC bars it from U.S.

China Mobile isn't hiding its frustration after the Federal Communications Commission denied the wireless firm's bid to operate in the U.S.

What's happening: "After 7 years and 8 months of application, FCC now denies (China Mobile's) bid to operate in the U.S. without apparent reasons and basis," it said in a statement.

  • The company accused the U.S. government of "putting unreasonable pressure on Chinese companies."

The bottom line: U.S.-China tensions seem to only be growing, despite the deep interconnections between the two countries.

4. Uber's perfect storm

Illustration: Sarah Grillo/Axios

For those still trying to digest how one of the most anticipated IPOs of the decade landed with a thud, I recommend this piece from Axios' Dan Primack.

Dan calls it a "perfect storm," combining a weak day for the market with geopolitical concerns, fear about a trade war with China, and a range of Uber-specific concerns.

Yes, but: Let's not underestimate the role of Uber's own issues — for one thing, it loses a ton of money.

  • Plus, the arrival of autonomous robotaxis could take years to make a meaningful difference in Uber's economics.
  • Even then, the project could prove costlier than expected and/or lose out to competitors.
5. Take Note

On Tap

Trading Places

  • Reuters says Liu Young, the head of Foxconn's chip business is most likely to take over as the company's chairman while current head Terry Gou pursues a bid for Taiwan's presidency.

ICYMI

6. After you Login

This is pretty trippy.

Ina Fried