Apr 27, 2018

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1 big thing: Revenge of the PC giants

Illustration: Lazaro Gamio/Axios

As evidence continues to mount that the smartphone market is in the midst of its first big slump, the two companies synonymous with the PC era both posted strong quarterly earnings on Thursday.

What's happening: Microsoft and Intel both delivered sales and earnings well ahead of Wall Street expectations. However, in both cases it was the data center business — not PCs — that fueled the results.

  • And both companies suggested they see overall business as strong in the coming months, despite a PC market that continues to languish.
  • The continued vitality of these venerable companies suggests that tech giants can often remain significant players even after the end of the eras of their world-shaking dominance. (Think IBM.)

One down note: Intel did say on its analyst call that it's having yield problems with its next-generation 10-nanometer manufacturing. It represents the next phase of Intel's decades-long, and increasingly difficult, march to make chips smaller and faster.

Intel also counts on the billions it invests in its own factories to give it an edge over rivals that rely on outside foundries to make their chips.

2. Facebook's deserted island

Illustration: Sarah Grillo/Axios

Facebook is used to being the cool kid. But now it’s eating lunch alone: Companies are trying to figure out how to be as un-Facebook-like as possible, Kim Hart reports.

What’s happening: Several tech companies, including Apple, IBM and Salesforce, have publicly differentiated themselves from Facebook. Now that lawmakers are getting more interested in regulating tech, other companies are considering launching their own campaigns to stay as far away as possible from Facebook's privacy drama, D.C. tech lobbyists tell Axios.

  • A new era of distrust: For years, policymakers were reluctant to take action if tech lobbyists warned it would “break” the internet or “kill” innovation.
  • Regulatory risk: Even though there’s no imminent threat of tough bills coming from Congress, Facebook CEO Mark Zuckerberg’s openness to regulation in the recent hearings rubbed some rivals the wrong way.

Go deeper: Kim has more here.

3. Facebook had a tough day almost everywhere

Schroepfer in London. Photo: Daniel Leal-Olivas/AFP/Getty Images

In a new ad campaign that debuted on Thursday, Facebook tries to paint itself as in control of the problems that face it. However, hearings in Congress and the U.K. Parliament show that others may yet have more to say.

In the U.K.: Facebook CTO Mike Schroepfer testified before Britain's Parliament, but lawmakers there said they didn't get what they wanted and still want to hear from CEO Mark Zuckerberg.

  • One thing that Schroepfer did reveal is that Facebook is looking into whether surveillance and data analytics company Palantir misused any of its customer data.

On Capitol Hill: A congressional hearing featuring pro-trump video bloggers Diamond and Silk quickly devolved into a tug-of-war between Democrats concerned about Russian election interference and Republicans who wanted to debate ideologically driven censorship on Facebook.

But, but but: Facebook had a good day in another place: Wall Street. Facebook shares were up more than $14 apiece on Thursday, or more than 9%. As Axios' Dan Primack notes, its stock has now regained two-thirds of what it lost in the wake of the Cambridge Analytica revelations.

4. Amazon's latest on-demand service: profits

Amazon delivered a monster earnings report on Thursday, showing yet again that the retail giant is capable of significant profits when it makes that a priority.

However, the company most typically chooses to plow back most of its profits into conquering new territory and has cautioned investors it will likely continue to do so.

Flexing its muscles: "From time to time Amazon will flex its gross margins to remind investors of the model's leverage potential," Loup Ventures' Gene Munster said in a research note. "Going forward we expect margins to dip lower as the company continues its aggressive investment pace into fulfillment, lower AWS pricing, and content."

5. Moffett: Big Tech "one crisis away" from regs

Moffett during a 2017 appearance on C-SPAN. Screenshot: C-SPAN

The tech industry is "one crisis away" from seeing significant privacy legislation out of Congress, well-known media and telecom analyst Craig Moffett tells Kim.

Why it matters: Moffett, founding partner of MoffettNathanson Research, said lawmakers aren't yet motivated enough to act, despite Facebook's data scandal.

"If there's another crisis, all bets are off," he said. "I think it's easy to imagine there will be one eventually. But right now, I don't think we're there yet."

Speaking to Axios in an interview on C-SPAN's "The Communicators" program, Moffett said the right path for Congress is still far from clear:

"I think people conceptually agree that customers should own their own data, but when you get down to it, does that mean a customer should have a portable social graph, and you really try to operationalize that? That's very tough, and I think that's probably well beyond what you can expect Congress to be able to come to an agreement on."

Go deeper: Kim has more here.

6. Take Note

On Tap

Trading Places

  • Advisory and consulting firm Delta Partners has hired former Verizon executive Roy Chestnutt as a non-executive partner.
  • The Senate confirmed by voice vote all five nominees to the Federal Trade Commission on Thursday, the Washington Post's Tony Romm tweeted.


7. After you Login

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