Yesterday was another long week. Here's what you need to know...
1 big thing: The shadow over tech's good day in D.C.
A surprise Justice Department announcement yesterday punctured the relative calm of Sheryl Sandberg and Jack Dorsey's hearings on Capitol Hill about content bias and election interference issues.
Why it matters: The combination of policy concerns about competition with the politically contentious allegations of online censorship — not long after President Trump spent a week hammering social media companies — is already raising alarm bells for some.
Driving the news: Attorney General Jeff Sessions will meet with state attorneys general this month "to discuss a growing concern that these companies may be hurting competition and intentionally stifling the free exchange of ideas on their platforms."
Between the lines: A boring day in Washington is a good one for Silicon Valley, notes Axios' David McCabe.
- Lawmakers didn't appear to be close to taking any particular action and several senators even acknowledged the work Facebook and Twitter have done to address the problems they've encountered over the past year.
- Indeed, some of the harshest criticisms were reserved for the empty chair where senators had hoped to hear from Google CEO Sundar Pichai or Alphabet CEO Larry Page, both of whom declined to appear.
- “If you’re not at the table, you’re on the menu, and Congress looks hungry,” lobbyist Adam Goldberg told Bloomberg.
Despite the relative calm of the hearings, the unexpected DOJ statement raises the prospect of antitrust or other action against the companies. The Washington Post reported that the Sept. 25 meeting was planned before Wednesday.
- House Energy and Commerce Chairman Greg Walden declined to comment on the announcement, but said he had questions about the “enormous market share and power” of web giants.
- “I’m not going to speak to the Justice Department angle but it is something we’re serious about and we’re trying to work our way through to see what’s the appropriate balance here,” he said shortly after the 5-hour House hearing with Dorsey.
What they're saying: “This is an enormous assertion of investigatory powers, in a highly charged political environment,” said Public Knowledge’s Gene Kimmelman, who served in the Justice Department’s antitrust division during the Obama administration. “I worry that this takes legitimate competition concerns into a dangerous realm of excessive governmental intrusion in the marketplace of ideas.”
2. Slack looks to widen its moat
While office communications is what brings businesses to Slack, the real secret to the company's success is the business processes that are also handled within the service.
What's new: There are now 1,500 apps for Slack and 94% of customers are using at least one of them. It's those integrations, not the company's market share, that represent its real moat against competition, Slack product chief April Underwood said in an interview before her talk at a Slack conference today.
Why it matters: There are a host of companies that would dearly like to eat Slack's lunch, ranging from startups to giants like Microsoft and Salesforce. While they can compete with some of the chat features, replicating the ecosystem is a harder task.
- Underwood said the long-term goal is to see more work get done in Slack, but she isn't explicitly trying to get workers to spend more time in the app.
- "We’re not going for minutes on site," Underwood said, referring to the kinds of metrics used by social networks.
On recent outages: "This is an area where we have room for improvement," Underwood said. "No question about it."
- Underwood notes that the company has grown very quickly over the past four years and that its uptime is in the same ballpark as other enterprise services that share such stats.
- But, she said, "None of that matters because people are relying on Slack as their lifeline to work."
On adoption of threaded messaging, a long-requested feature: "Millions of people use threads every week," she said. As for whether that is more or less than the company had anticipated, Underwood said it doesn't really matter and isn't something she is losing sleep over.
3. Americans: Tech won't stop election interference
Just 4 out of 10 Americans trust tech companies to prevent foreign interference in the 2018 midterm elections — a significant loss of confidence from both parties since a February survey, according to a new Axios/SurveyMonkey poll.
Between the lines: Democrats have lost more trust than Republicans. That's notable since Democrats have generally been bigger defenders of the platforms, which have been sharply criticized for exhibiting anti-conservative bias in moderating content
You can find more on the survey and its methodology here.
4. Big GOP majority fears bias in search engines
In another of our Axios/SurveyMonkey poll questions, two-thirds of Republicans believe the results of internet searches are skewed to the left — a shift that's driving significant public distrust in search engines.
Why it matters: The survey shows that tech companies will have a hard time convincing the public that their algorithms aren't built to favor any point of view, regardless of the reality. The distrust is driven largely by the right, but a significant minority of independents believe the results are biased toward the left, too. (The poll was conducted before Wednesday's congressional testimony by Facebook and Twitter executives.)
You can find more results here.
5. Silicon Valley no longer mandatory for startups
Investors haven't totally lost their infatuation with Silicon Valley as the heart of tech innovation, but skyrocketing costs of living and competition for talent have definitely cooled the affair. That was the message from several speakers at TechCrunch's Disrupt conference on Wednesday, Axios' Kia Kokalitcheva reports.
Why it matters: As technology and engineering jobs have spread into other industries and locations, more startup founders are questioning whether they need to be in Silicon Valley, though many still acknowledge the region's unique strengths.
What we're hearing: The Bay Area’s cost of living and intense competition for employees have become unsustainable, according to some investors.
- "I used to believe that if you wanted to build a multi-billion dollar company… you have to be here,” Benchmark managing partner Sarah Tavel said. “I’ve stopped giving that speech — it’s amazing how you have to compete for talent here,” she added, especially with deep-pocketed companies like Facebook and Google.
- Cowboy Ventures co-founder Aileen Lee and Spark Capital managing partner Megan Quinn said they increasingly have conversations with their portfolio companies about opening offices outside of the Bay Area. Quinn added they're especially considering cities within a short flight and with a good university.
- Yi Wang, co-founder and CEO of Chinese language app LingoChamp and a former Google employee, also pointed out the Bay Area’s rising costs during a separate panel. There’s now a growing number of Chinese engineers who decide to go back to China found startups instead of staying around Silicon Valley, he said.
But, but, but: While finding talented employees and engineers is no longer limited to Silicon Valley, the region remains unique in other ways.
- “I do still believe that if you want to reach escape velocity, you need people who have been there before,” said Tavel, echoing a common sentiment that experienced startup executives remain scarce and can best be found in Silicon Valley.
- Wang added that he believes the region is still the center of innovation for a number of important technologies.
6. Take Note
- TechCrunch Disrupt continues in San Francisco.
- NLGJA: The LGBT Journalists Association has its annual conference in Palm Springs, Calif., where my colleague David McCabe will be on a Friday panel session and I'll be moderating one on Saturday.
- Siris Capital has hired Cisco SVP Hilton Romanski as a partner on its investing team.
- Nextdoor has hired Mike Doyle as its first CFO. Doyle was previously CFO at Despegar, a Latin American travel agency.
- Public Knowledge has brought on Charlotte Slaiman as a policy counsel focused on competition and digital platforms. Slaiman previously worked at the FTC in its anticompetitive practices division.
- Amazon updated its 8-inch Fire HD tablet with an improved front-facing camera and other modest enhancements. It's also adding a Spanish-language version of its FreeTime Unlimited kids service. (CNET)
- Thomas Kurian, Oracle's president of product development, is taking time away from the company for unspecified reasons. (CNBC)
- Amazon Web Services CEO Andy Jassy is joining an effort to help Seattle land an NHL team. (Seattle Times)
- Lauren Goode has a great behind-the-scenes look at the man-made wave pool that professional surfer Kelly Slater has built in the California desert. (Wired)