Jul 22, 2019

Axios Login

Ina Fried

Situational awareness: Data giant Equifax agreed to a settlement with 150 million victims of its massive data breach.

Smart Brevity count: 1,224 words (< 5 min read)

1 big thing: U.S. takes stand on kids' net privacy

Illustration: Aïda Amer/Axios

Although the U.S. government is still struggling to define regulations for the broader tech industry, it's finding ways to take action over the growing portion of the internet used by kids, Axios' Sara Fischer and Kim Hart write.

Why it matters: An increase in federal penalties against tech companies for violating kids' privacy rules is shaping new expectations for how the internet will be governed.

Driving the news: The Federal Trade Commission has reportedly approved a settlement with Google over kids' privacy violations on YouTube, per the Washington Post.

  • The company is expected to pay a multimillion-dollar fine for neglecting to protect the data of children under the age of 13 — a violation of the Children's Online Privacy Protection Act (COPPA).
  • The COPPA law requires websites and online businesses serving children 12 years old and younger to comply with privacy standards for collecting and using kids' data.
  • The news comes just weeks after Bloomberg reported that the FTC was considering asking YouTube to disable kids' advertising on its main app.

"This fine and the various debates about COPPA 2.0 are inevitably going to take children's digital protections to a much more comprehensive place," Dylan Collins, CEO of kids' tech platform SuperAwesome, tells Axios.

  • Collins argues laws that previously only covered self-declared kids' content ought to be applied more widely, to any platform accessible by kids.

The big picture: Tech companies in general, and YouTube in particular, are facing increased scrutiny regarding how privacy tools are built to protect the most vulnerable group of internet users.

  • In February, TikTok, a Chinese-owned karaoke app, agreed to a $5.7 million settlement with the FTC for illegally collecting personal data from children, making it the largest settlement from a violation of COPPA in the law's 20+ year history.

Be smart: A shift towards broader kids' privacy laws is important, because platforms built and designed for kids online are often neglected by the very kids they're built for.

  • A new study from Kids Insights finds that children in the U.S. begin avoiding the YouTube Kids app in favor of the main app once they reach 6 years old.

By the numbers: According to a new kids' digital media report from SuperAwesome and PwC, 62 million kids globally went online for the first time in 2018, which accounted for more than 40% of the total net new internet users in 2018.

What's next: In light of increasing calls for action around YouTube's child privacy practices, the FTC is weighing updates to COPPA that would define how the law applies to websites and platforms that aren't designed for kids but are widely used by them.

  • In March, Sens. Ed Markey (D-Mass.) and Josh Hawley (R-Mo.) introduced legislation to extend COPPA privacy protections to 13–15 year olds. It would also ban ads targeted to kids.

The bottom line: The internet was originally built for adults, and the industry has never taken full responsibility for how kids use it. That could finally begin to change if policymakers and regulators ratchet up the pressure.

Listen to Sara and Kim discuss the state of kids' content on the #kidtech podcast.

Go deeper:

2. White House convenes tech meeting for Monday

The Trump administration is planning another meeting with tech leaders today, this time bringing together the heads of some of the country's biggest chipmakers to meet with White House economic adviser Larry Kudlow.

What's happening: A source tells Axios that the companies were told the meeting's agenda was simply "economic issues."

  • However, given the invite list, the discussion is expected to focus on tariffs and China broadly, and the topic of Huawei and the administration's ban on its products is expected to be at the top of the list.
  • Among those on the invite list are Qualcomm and Intel, both of whom do significant business in China and with Huawei, specifically.

Why it matters: Several U.S. companies say the broad ban on business with Huawei, especially in the unit that makes phones and laptops, is hurting American companies without protecting national security.

  • In June, President Trump announced he would lift many of the restrictions, but left details unclear.

The bottom line: If nothing else, perhaps the companies will leave with a better understanding of the Trump administration's moving-target rules.

Go deeper: Mnuchin, Kudlow invite U.S. tech giants to discuss Huawei ban (Bloomberg)

3. How Amazon Prime came to be

Photo: Amazon

Amazon Prime has more than 100 million subscribers globally.

Behind the scenes: But the program started out as an experiment, unveiled by Jeff Bezos to top lieutenants at a Saturday morning meeting at his house during the holiday shopping season of 2004.

  • The concept, initially code-named Futurama, was not universally embraced, with one engineer fretting it would take down the company.

That story is the subject of the first episode of "Land of the Giants," a new podcast from Vox Media hosted by longtime Amazon reporter (and my former Recode colleague) Jason Del Rey.

"There was a lot of pushback," Vijay Ravindran, then head of ordering at Amazon, says on the podcast. "Very prominent people who are at Amazon today and in high positions told me 'You shouldn't be allowing Jeff to do this. This is setting a bad example for the company.'"

Why it matters: Prime has been a boon for Amazon, prompting its best customers to spend more and creating, as Bezos hoped, a moat that makes it harder for Amazon's e-commerce rivals to compete.

  • The show is a look behind the curtain at the biggest names in tech, with the first season exploring Amazon. It debuts Tuesday, with Login getting an exclusive early listen.

Details: In this first episode, Del Rey takes us deep on Prime, including...

  • How the seeds for Prime were actually planted 3 years ahead of the 2005 launch of the program, as Amazon reduced the amount of time the retailer needed to process and ship an order from 24 hours to 3 hours by 2002.
  • How Bezos felt it should be priced: "The price needed to be high enough that people thought about it on an ongoing basis, rather than something trivial that they didn't think about. But it needed to be low enough that they would try it out," Ravindran recalls. Amazon Prime launched at $79 per year — a prime number.
  • How it began as free shipping and then expanded to Whole Foods, streaming media and more.
4. Hackers nab Russian state data

Hackers nabbed 7.5 terabytes of data from a contractor to Russia’s Federal Security Service (FSB) and then leaked it to journalists, Axios' Joe Uchill reports.

Why it matters: The hacked materials provide a window into some projects that Russian security has undertaken in the past decade and confirm others.

Driving the news: Hackers stole files from 2009 on and replaced the contractor's home page with a smirking “yoba face,” a Russian symbol for trolling.

  • That first group of hackers dispatched the files to a second group of hackers known for an earlier breach of the FSB. The second group distributed the files to the media.

Between the lines: The FSB project getting the most media coverage was one Russia was caught operationalizing.

  • That project (dubbed “Nautilus-S”) was to subvert traffic over the anonymous Tor network — something a Russia-linked actor was caught doing in 2014.
  • Other projects included corporate email surveillance tools, a secure network to store information on Russian federal employees, and a project to determine how Russia’s internet could operate independently from the global internet — something Russia is still interested in today.
5. Take Note

On Tap

ICYMI

  • Tinder became the latest mobile service to go around Google's Play Store in an effort to avoid giving the company a cut. (Bloomberg)
  • Google is paying $11 million to settle a suit over age bias in hiring and agreed to better train employees on the law. (Bloomberg)
  • Lyft is adding New York subway and bus directions to its app. (The Verge)
6. After you Login

And, speaking of New York, check out these monsters taking over the city.

Ina Fried