Feb 12, 2020

Axios Login

By Ina Fried
Ina Fried

The Axios tech team had its all-day retreat yesterday, so thanks to everyone in tech who avoided making any big news in tech. Oh wait, that was, like, two of you? To everyone else, thanks for making me multitask for eight hours straight yesterday.

Meanwhile, today's Login is 1,475 words, a 5-minute read.

1 big thing: T-Mobile-Sprint advances as FTC reviews tech deals

Photo: Mladen Antonov/AFP via Getty Images

Just hours after the giant T-Mobile-Sprint deal moved closer to reality, the Federal Trade Commission announced it plans to look at a decades' worth of smaller acquisitions by tech's big five firms, Axios' Margaret Harding McGill and I report.

Why it matters: Tech giants have amassed their empires in part by buying up promising startups without any regulatory resistance, a method that's now under the microscope — though the T-Mobile/Sprint victory underscores just how hard it is for regulators to prevail on even conventional antitrust cases.

Driving the news:

While antitrust regulators can block transactions of any size, they typically focus their attention (and data-gathering policies) on larger deals.

  •  The current threshold requires companies to report to the government for review any acquisition valued at more than $94 million, although there are exceptions.
  • The FTC will use its authority to conduct studies outside of law enforcement investigations to help understand whether the agency is getting adequate notice of deals that might be anticompetitive, Chairman Joe Simons told reporters Tuesday. While the study is not part of an investigation, it could lead to the agency seeking to unwind an anticompetitive deal, he said.

What they're saying: "The big tech companies have made literally hundreds of acquisitions that were too small to be reported to the agencies for pre-merger review. Most were almost certainly benign. But there are concerns that some or maybe many have been anticompetitive — that they have been about nipping a potential competitive threat in the bud instead of allowing it to flourish and challenge the acquiring firm in some way," said Doug Melamed, Stanford Law professor and former DOJ antitrust official

The big picture: There's already a high bar to proving in court that a merger will or has hurt competition, as Tuesday's ruling reflects. The FTC has a tall order ahead of it if it looks to build an enforcement case around the competition that might have been. The launch of the inquiry is just the latest sign that there's increasing anxiety over the power of big technology companies, but little clear indication of what should be done and how.

2. Huawei's backdoors denounced, CIA's exposed

Illustration: Sarah Grillo/Axios

In the second big juxtaposition of the day, U.S. officials went to the Wall Street Journal claiming Huawei has the ability to spy on wireless networks through backdoors in its equipment. On the same day, the Washington Post disclosed details of a decades-long CIA spying operation run through a front company that sold commercial encryption services.

Why it matters: Attorney General William Barr has called for tech companies to give law enforcement agencies backdoors so they can access encrypted communications — the same practice the U.S. decries when it comes to Huawei and China.

Driving the news:

  • The Washington Post broke a doozy of a story Tuesday morning on how Crypto AG, a Swiss encryption firm that dates back to World War II, was secretly owned and operated by the CIA, in conjunction with German intelligence. Over decades the company sold technology to everyone from Iran to the Vatican.
  • The Wall Street Journal posted a story later in the day saying that Huawei has long had access to customer data via backdoors in its products. "We have evidence that Huawei has the capability secretly to access sensitive and personal information in systems it maintains and sells around the world,” national security adviser Robert O'Brien told the Journal.

Huawei, for its part, says the charges leveled by U.S. officials are "baseless."

  • "There is no evidence for this and, again, none produced," Huawei U.S. vice president Glenn Schloss said in a statement. "Some sections of the US Government keep peddling, recycling it over and over. They should put up or shut down this rhetoric. Show the evidence."

The big picture: There's a huge debate over encryption and very little clear middle ground. Most security experts say the backdoors you put in for the "good guys" will invariably be exploited by the "bad guys" — and not everyone even agrees who the good guys are. One person's lawful order is another person's authoritarian dictate.

Governments tend to be mixed, with domestic law enforcement prone to wanting a backdoor and national security agencies frequently favoring strong encryption.

  • That said, those same agencies are often happy to find flaws in the encryption others are using (or, apparently for the CIA, to have been in the business of selling flawed encryption for its own surveillance purposes).

Our thought bubble: You either have strong encryption or you have backdoors. And apparently, even if you think you have strong encryption, you might still be sharing your secrets with the CIA.

3. Even more companies to skip Mobile World Congress

Photo: Pau Barrena/AFP via Getty Images

More large companies are skipping Mobile World Congress amid concerns over the coronavirus outbreak. Among the latest to pull out are AT&T, BT, Cisco, Deutsche Telekom, Facebook, Intel, Nokia and Vodafone, who join Ericsson, Sony and LG among large companies pulling out of the annual Barcelona trade show.

Why it matters: MWC is the traditional gathering place of mobile companies from all over the world — and that's the concern.

The board of the GSMA, the trade group that puts on Mobile World Congress, plans to meet Friday to discuss the impact of all of the departures, according to Bloomberg.

The group has already implemented a number of new safety precautions, including rules on who from China can attend.

What they're saying:

  • Facebook: "Out of an abundance of caution, Facebook employees won't be attending this year's Mobile World Congress due to the evolving public health risks related to coronavirus. We will continue to collaborate with the GSMA and our partners and thank them for their efforts."
  • Intel: "The safety and wellbeing of all our employees and partners is our top priority, and we have withdrawn from this year's Mobile World Congress out of an abundance of caution. We are grateful to the GSMA for their understanding and look forward to attending and supporting future Mobile World Congress events."
  • Cisco: "We have made the difficult decision to withdraw from participating in Mobile World Congress ... due to concerns about the current outbreak of Coronavirus."

Our thought bubble: Once Ericsson — one of the largest exhibitors — announced plans to withdraw, it gave everyone else cover to do so as well.

4. Samsung aims for Kodak moment with Galaxy S20

Photo: Courtesy of Samsung

In launching the Galaxy S20 line on Tuesday, Samsung zoomed in on the improved picture-taking abilities of its latest flagship smartphones.

Why it matters: The move is an acknowledgment that the camera is the biggest thing that helps spur consumers to buy a new smartphone.

The camera enhancements are a mix of software and hardware changes.

  • On the software side, a new Single Take mode lets people easily capture a combination of videos and stills of key moments. The company also added support for Google Duo video chat directly into the phone's dialer app.
  • On the hardware side, the S20 and S20+ have 64-megapixel main rear cameras, while the S20 Ultra has a 108-megapixel main camera. The S20 will also support 8K video capture. It's using a mix of hardware, AI and cropping to offer a wide range of zoom options.

Details: The S20 will come in three versions, all of which include 5G capabilities in the U.S.

  • The entry-level S20 will sell for $999 and come with a 6.2-inch screen. It includes support for only low-band flavors of 5G.
  • The S20+ includes a 6.7-inch screen, supports both low-band and millimeter-wave 5G networks, and starts at $1,199.
  • The S20 Ultra has a 6.9-inch screen and adds a nifty 4x optical zoom lens and starts at $1,399.

All models will be available for pre-order on Feb. 21 and arrive in stores March 6.

Meanwhile: The company also detailed a new foldable device, dubbed the Galaxy Z Flip, which it teased in an Oscars commercial on Sunday. The clamshell device will cost around $1,400 and go on sale Feb. 14.

5. Take Note

On Tap

  • The Goldman Sachs Technology and Internet Conference continues in San Francisco.
  • Cisco reports earnings after the markets close.

Trading Places

  • Jessica Rich, former director of the FTC's consumer protection bureau, is joining Georgetown Law's Institute for Technology Law and Policy as a distinguished fellow.
  • Afterpay named former Airbnb marketing executive Geoff Seeley as its first global marketing chief.

ICYMI

  • Airbnb, which is hoping to go public, saw a loss for the first nine months of last year as compared to a profit in the same period a year earlier. (WSJ)
  • Lyft reported higher revenue and a narrower-than-expected quarterly loss but its shares fell, possibly because it didn't give any insight into when it expects to be profitable. (CNBC)
  • Flipboard announced it is moving into subscription video with Flipboard TV, a paid service. It will initially be exclusive to the Samsung S20. (CNET)
  • Pages from an old notebook of Mark Zuckerberg's offer a rare direct glimpse into his thinking in the early days of Facebook. (Wired)
6. After you Login

After a long day, just what I needed was Margaret Atwood riding an electric scooter. Hope you enjoy it too.

Ina Fried