Jan 8, 2020

Axios Login

By Ina Fried
Ina Fried

Hi from Las Vegas, where I am at CES hanging with my new buddy, Snoring Gorilla. As a reminder, you can catch up on all the CES news in one convenient place, thanks to the Axios tech team.

Today's Login is 1,386 words, a 5-minute read.

1 big thing: Consumer tech giant TCL isn't hiding its Chinese ties

Photo: Ina Fried/Axios

For years, China's TCL sold tons of TVs and phones in the U.S. under other brand labels, like Alcatel and RCA. These days, though, it's looking to make its own moniker into a household name here.

Why it matters: TCL's move comes amid threats from Washington to push at least some Chinese tech out of the U.S. market. And it marks a bit of global brand unity that contrasts with efforts companies like TikTok have made to distance themselves from their China connections.

Driving the news:

  • In addition to the licensed gear, TCL already sells TVs in the U.S. under its own name, playing up the built-in Roku that comes in its sets to put customers at ease with an unfamiliar name. It's now the No. 2 player in the U.S. market by units sold.
  • But this week at CES, the company unveiled TCL-branded phones aimed at the U.S. market, hoping to benefit from the name recognition it's managed to build with its TVs. TCL until now used the Alcatel or BlackBerry brands in the U.S.

What they're saying: TCL marketing executive Stefan Streit said he isn't worried that a strained U.S.-China relationship will hurt the company the way that it has companies like Huawei and ZTE.

  • "Not at all," he said. "We are just doing consumer products. We are not doing networks or infrastructure or chipsets."
  • Tariffs, of course, are another matter, he said. But those affect everyone making products in China.

Yes, but: TCL will still sell devices under the BlackBerry brand it licenses from that company. (Blackberry no longer makes hardware of its own.) TCL will also keep selling lower-end Alcatel devices through carriers.

  • The high-end phones will definitely be sold direct to consumers, but it's not clear if they will also be available through carriers — which remains a key way many Americans buy their phones.

Between the lines: TCL's branding move for its premium phones makes sense, since consumers think of Alcatel as a budget device, analyst Carolina Milanesi of Creative Strategies said. TCL phones will naturally feel to buyers like TCL TVs — "a smart buy, not a compromise buy," as she put it.

What's next: TCL will also look to bring its appliances, like air conditioners, to the U.S. market.

  • At CES, TCL also showed off a concept foldable phone and a prototype head-mounted display.
2. TikTok cracks down on misinformation

Photo: Chesnot/Getty Images

TikTok on Wednesday published a lengthy update to its rules of conduct, sharpening its definition of unacceptable content and its stance towards misinformation, as Axios' Sara Fischer reports.

Why it matters: The move is an acknowledgement that TikTok's previous standards did not adequately address the onslaught of content-related issues that the video-sharing platform is starting to face as it grows.

What's new: Tiktok's updated community standards are three times the length of the old guidelines. The platform has defined 10 issues which its content policies address, ranging from suicide and self-harm, to minors' safety, hate speech and violent content.

Be smart: While TikTok's old guidelines addressed many of these areas, the new rules go into much greater detail.

  • For example, the company published a lengthy list of who it considers to be dangerous individuals and organizations that can't use its app, including groups affiliated with hate, extortion, organ trafficking, cybercrime and extremism. And in doing so, it defined what it considers to be a terrorist organization.
  • It also greatly expanded its policies around minor safety, an issue that TikTok has had to grapple with in the U.S., especially in terms of children's data privacy. The new policies say users must be at least 13 years old (or older in countries or regions that set a higher minimum age for using services like TikTok).
  • The new rules don't ban misinformation outright. But they outright ban misinformation that's created to harm users or the larger public, and that includes misinformation about elections or other civic processes.

The big picture: TikTok's unprecedented rise has rattled U.S. lawmakers, who fear that the Chinese-owned app's ambiguous standards around content, as well as data privacy, could pose security risks to the U.S.

  • The viral video-sharing app owned by Chinese tech company ByteDance says it's making these changes to offer "insight into the philosophy behind our moderation decisions and the framework for making such judgements."

Separately, TikTok patched multiple holes in its security at the end of 2019 that had left the video sharing app's accounts, videos and user information potentially exposed for most of the year, as detailed in a new report from cybersecurity research firm CheckPoint.

Go deeper:

3. Arm CEO: SoftBank deal lets us make less profit

It's rare to hear a CEO talk proudly about bringing profit margins down, but Arm chief Simon Segars says that's just what his company's 2016 acquisition by SoftBank has allowed him to do.

Why it matters: Arm-based chips have found their way into nearly every smartphone. Freed from having to satisfy shareholders with hefty profits, Segars says that under SoftBank, Arm can focus on investing, in hopes of finding similar dominance in the cars and smart devices of the future.

For those not familiar, Arm doesn't make chips, but licenses its processor designs to companies like Qualcomm, Nvidia and Apple that use it as the starting point for their own chips. It was acquired for $32 billion by SoftBank in 2016.

As a public company, Segars said, Arm had roughly 50% percent operating margins. Now those margins are about 10%.

"I don't know of companies that do that successfully in public markets. It would be very hard."
— Segars, in an interview with Axios

It's not about making less money in the long term, of course, Segars said, but rather about investing so that it can gain a bigger foothold in areas like cars.

As Arm doesn't make the actual chips, most of that investment is in people. The company is now around 6,500 employees, up from 4,500 when it was acquired by SoftBank.

What's next: Segars said Arm is focused on the long-term impact 5G will have on businesses and in connecting all manner of devices, as well as making sure its designs are used throughout the connected car.

4. Apple says its software business is booming

Illustration: Rebecca Zisser/Axios

Apple on Wednesday offered fresh details on its fast-growing services business, which had a record year in 2019, as Sara reports.

Why it matters: Apple has been focusing on growing its services business as iPhone growth has stalled.

  • "2019 was the biggest year for Services in Apple's history. We introduced several exciting new experiences for our customers, all while setting the standard for user privacy and security," said Eddy Cue, Apple's senior vice president of Internet Software and Services in a statement.

Backdrop: 2019 was a transformative year for Apple's services business. The tech giant introduced a gaming service called Apple Arcade, a subscription video service called Apple TV+, a subscription news app called Apple News+ and a credit card called Apple Card. It also expanded some of its older software services, like Apple Music and its App Store.

By the numbers: Apple released engagement numbers for several of its services.

  • Apple News has over 100 million monthly active users in the U.S., U.K., Australia and Canada.
  • Apple Music now offers over 60 million songs in 115 countries. 
  • Apple Arcade offers users access to a catalog of 100+ new, exclusive games.
  • Apple Podcasts offers over 800,000 shows in 155 countries.
  • Apple Card and Apple Pay are accepted in more than 150 stadiums, ballparks, arenas and entertainment venues.

Yes, but: The company notably did not offer subscription numbers for some of its newer services like Apple TV+, which launched in November with mixed reviews, and Apple Arcade, which launched in September.

Go deeper: Apple pivots to media as iPhone sales fall

5. Take Note

On Tap

  • Today's CES activities include a presentation from Twitter and keynotes by Transportation Secretary Elaine Chao and Quibi executives Meg Whitman and Jeffrey Katzenberg.

Trading Places

  • FCC commissioner Geoffrey Starks has hired Diane Holland as his new legal adviser. Holland was previously a senior adviser for tech and telecom at the National Urban League. Prior to that, she held several top positions at the FCC.

ICYMI

6. After you Login

Funny or tearjerker? OK, I'm going tearjerker. Check out this viral video of a mom with dementia realizing she is talking with her daughter.

Ina Fried