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September 28, 2021

Join Axios' Bryan Walsh tomorrow at 12:30pm ET for a virtual event on how artificial intelligence is revolutionizing systems across industries. Guests include Pittsburgh Mayor William Peduto and Intel's Sameer Sharma.

Today's newsletter is 1,145 words, a 4-minute read.

1 big thing: Behind the Instagram Kids pause

Illustration of a child's handwriting spelling Facebook

Illustration: Annelise Capossela/Axios

Facebook's announcement Monday that it was "pausing development" on Instagram Kids did little to slow a wave of criticism of the project ahead of a Senate hearing Thursday.

Yes, but: There's an argument to be made for building kids' versions of popular apps, even if their adult versions are causing real-world harms.

  • Though not without the occasional glitches, Google's YouTube Kids and Facebook's Messenger Kids have largely fulfilled their promise of providing safer alternatives to their less curated grownup counterparts.
  • The risk, of course, is that even if the kids' versions are safe, they will serve as on-ramps to the larger platforms, which themselves can be dangerous.

Be smart: The kids' apps may do a solid job of protecting privacy, but their limits also make them unpopular with their target audience — so much so that kids would rather sneak onto Messenger or the full YouTube than use the youth versions.

  • For this reason, companies like TikTok have built specific experiences within its main app for users under 13 that limit certain activities, like video posting or private messaging.

The big picture: Facebook's move to pause work on Instagram Kids follows a slew of negative revelations in a Wall Street Journal series, including internal research showing that Instagram is having a negative impact on girls' self-image. (Facebook on Sunday pushed back on the way the research has been characterized.)

What to watch: The COVID-19 pandemic saw kids spending more time online, and left overwhelmed parents feeling largely helpless in their ability to regulate screen time, even after lockdowns subsided.

  • That's another reason efforts to introduce new digital apps for kids — even when they might be better alternatives to existing products — encounter skepticism.

What they're saying:

  • Head of Instagram Adam Mosseri, in a post: "We firmly believe that it's better for parents to have the option to give their children access to a version of Instagram that is designed for them — where parents can supervise and control their experience — than relying on an app's ability to verify the age of kids who are too young to have an ID."
  • Common Sense CEO Jim Steyer, in a statement: "Make no mistake that they are still going to try to build it. ... The only thing they care about is hooking kids when they are most vulnerable, keeping them on the platform and getting access to as much of their personal data as possible."

2. Facebook to move slowly on metaverse

Illustration of a poster with the Facebook logo that says, "Keep calm and carry on".

Illustration: Aïda Amer/Axios

In another move to forestall criticism of new products, Facebook on Monday said it will invest $50 million over two years in global research and program partners to ensure its metaverse products "are developed responsibly," Axios' Sara Fischer reports.

Why it matters: "It's almost the opposite of that now long-abandoned slogan of 'move fast and break things,'" Facebook's VP of global affairs Nick Clegg told Axios in an interview at The Atlantic Festival Monday.

Details: In the funding announcement, Clegg and Facebook's newly-appointed chief technology officer Andrew Bosworth said they hope to work with experts in government, industry and academia "to think through issues and opportunities in the metaverse."

  • "The metaverse" is a label Facebook and others in the industry are increasingly using to describe a next-generation online work-and-play environment — "a set of virtual spaces where you can create and explore with other people who aren't in the same physical space as you," as the Facebook announcement puts it.

The big picture: In its formative years, Facebook aimed to unleash new products quickly and refine them based on user feedback and government pressure in real-time.

  • But now that the regulatory landscape has become so much tougher, the company is shifting its strategy to incorporate more feedback from policymakers, academics and advocacy groups upfront in order to avoid later blowback.

3. Activision settles harassment suit

The Activision logo on a company building

Photo: Smith Collection/Gado/Getty Images

Activision Blizzard announced plans Monday to settle a sexual harassment and discrimination lawsuit from the Equal Employment Opportunity Commission hours after it was filed, Axios' Stephen Totilo reports.

Why it matters: This is Activision's most visible acknowledgment of problems at the company, in the wake of a series of workplace misconduct lawsuits, complaints and investigations initiated against the "Call of Duty" and "World of Warcraft" maker since the summer.

  • In a 49-page consent decree, the company technically denied any wrongdoing but agreed to a three-year period of extensive oversight.
  • According to the agreement, which is subject to a judge's approval, Activision Blizzard will establish "an $18 million fund to compensate and make amends to eligible claimants."

Between the lines: The EEOC lawsuit from earlier today said the agency investigated Activision for over two years and found that employees were "subjected [to] sexual harassment" and that the company, when notified, "failed to take corrective and preventative measures."

  • It also alleged that the company discriminated against pregnant employees and retaliated against workers who took issue with the aforementioned behaviors.

4. Quick takes from Day 1 of Code Conference

1. Netflix has no plans to get into live sports. Co-CEO Ted Sarandos said he thinks developing more original entertainment content remains a better use of $10 billion, which is what he says it would cost to get into big league sports.

Why it matters: Other streaming players, including Amazon and Facebook, have paid big bucks to add at least a modicum of live sports. But Sarandos notes that broadcast is actually well suited to such events, which have a big initial audience and little value afterwards.

2. Microsoft CEO Satya Nadella praised predecessor Steve Ballmer for placing the bets that led to its cloud success. But he acknowledged that "at some point Microsoft was doing things out of envy [versus] things we were meant to do."

Between the lines: For those not in the know, that's a stinging indictment of projects like Zune and Windows Phone that aimed to chase an already dominant Apple. Nadella has changed course on a number of fronts, pushing Microsoft towards a less sexy, but eminently profitable path.

3. Former U.S. cybersecurity chief Chris Krebs was the latest to sound the alarm over the threat posed to U.S. democracy by the combination of misinformation and willful ignorance on the part of those benefiting from said misinformation. "We're at a potentially catastrophic [moment] right now in terms of American democracy," Krebs said Monday. 

What's next: Tesla and SpaceX chief Elon Musk is among the speakers set to address Code Conference on Tuesday.

5. Take note

On Tap

  • Code Conference continues in Beverly Hills, Grace Hopper Celebration continues online and Amazon is slated to unveil a slew of new devices at an event this morning.

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