Sep 12, 2018

Axios Login

Yes, there is indeed an Apple event today and I'll be there. I'll be covering it live for Axios starting around 10 a.m. PT and will share some more thoughts in tomorrow's Login.

I'll also be doing a Reddit AMA tomorrow covering the new iPhones and whatever else Apple announces. (Feel free to send questions to me directly, too.)

Situational awareness: E.U. lawmakers approved a new copyright law that could require automated filtering for rights violations and payments for news aggregation.

1 big thing: Pressure builds on Google

Photo: Josh Edelson/AFP/Getty Images

Google’s strategy of keeping its head down in Washington while lawmakers brutalize Facebook and Twitter — one that until now has been successful — is facing new tests as pressures mount from federal legislators and state authorities.

The big picture: While the other Silicon Valley giants are likely happy for a break from the spotlight, the fates of all of the online platforms have always been intertwined.

Regulation for one could be regulation for all, and scrutiny of individual companies' privacy practices or moderation failures in the past has drawn attention to industrywide issues.

Driving the news: Tuesday brought Google a cascade of new troubles, Axios' David McCabe reports.

  • The Washington Post broke the story Tuesday morning that Arizona’s Republican attorney general, Mark Brnovich, was investigating the search giant’s handling of consumer data.
  • By early evening, Brnovich’s spokesperson Katie Conner was out with a statement:
Our office has been working on this civil investigation for quite some time. While we cannot confirm the company or companies at the center of this probe, we decided to move forward and retain outside counsel after a series of troubling news reports, including a recent story that highlighted Google’s alleged tracking of consumer movements even if consumers attempt to opt out of such services.
  • On Capitol Hill, Republican House Majority Leader Kevin McCarthy indicated that Google would be asked to testify, less than a week after the company frustrated lawmakers who wanted to see its CEO testify at a Senate hearing. In a tweet, McCarthy said that an “invite will be on its way.”

The context:

  • Privacy: The recent report that Google mobile services can continue to track users when they think they've turned location tracking off has breathed new life into privacy concerns about the company.
  • Bias: Unproven allegations of anti-conservative bias leveled by President Trump and others on the right are fanning Republican legislators' ire.
  • Monopoly: Fears that the company has too much market power have driven antitrust actions in Europe and widened conversation about U.S. tech monopolies.
  • China: Reports that Google is working to get back into China have wrangled politicians on both sides of the aisle — as well as Google's own employees.

Yes, but: Scrutiny of Facebook and Twitter will continue as well — and they share with Google many of the same issues that have drawn criticism and inquiries.

  • State attorneys general who have active investigations into the major internet companies will brief Attorney General Jeff Sessions at a Sept. 25 meeting, potentially sparking a federal probe, per Bloomberg.
  • Brnovich’s spokesperson also added that he's raised concerns about Facebook as well.
2. FCC: More time needed for T-Mobile-Sprint

Illustration: Lazaro Gamio/Axios

Federal regulators want more time to examine the proposed merger between Sprint and T-Mobile, which was first announced back in April. They have paused the so-called "shot clock," a non-binding, 180-day review period.

The FCC writes in a letter to the companies:

Additional time is necessary to allow for thorough staff and third-party review of newly submitted and anticipated modeling relied on by the Applicants.

Meanwhile, the companies responded with a joint statement...

The additional review time is common to FCC merger reviews and we recently supplied a large amount of data to the FCC that they want sufficient time to assess. We are confident that this transaction is pro-competitive, good for the country and good for American consumers, and we look forward to continuing to work with the FCC as they evaluate our plans.

Why it matters: This deal — which came together after previous starts and stops — would combine the country's third- and fourth-largest cellphone service providers, helping them better compete with market leaders Verizon and AT&T.

3. FTC takes first steps to police Big Tech

Illustration: Sarah Grillo/Axios

The FTC this week kicks off the first broad examination of competition in the technology industry in more than two decades — a sign that the tech giants could be in for stronger public oversight.

Why it matters: The FTC's public hearings, the first of which happens Thursday, will provide the first structured conversation about realistic policy tools that federal regulators need to police the internet economy, Axios' Kim Hart reports.

The Big Tech debate over the past year has focused on using antitrust measures to, for example, clamp down on the treasure troves of data controlled by Google, Facebook and Amazon — and to prevent them from getting any bigger with new acquisitions.

  • But antitrust law can only go so far in curbing anticompetitive behavior. And under the current administration — and an increasingly conservative Supreme Court — a broader reading of today's antitrust rules is highly unlikely.
  • By looking at realistic regulatory tools, the hearings will set the stage for how strictly the FTC will enforce its existing rules in the near future, and whether it will ask Congress for new authority.

Joe Simons, the relatively new FTC chairman, is aiming for a constructive conversation — but it runs the risk of becoming politically charged in the current environment.

  • A common concern has been that the FTC and other agencies aren't equipped to deal with the unique internet economy. The FTC will likely say it needs more resources to stay on top of the issues.
  • A study of how consumer data impacts competition, price and behavior is another possible outcome, sources say. The FTC's subpoena power allows it to gather confidential information about data use.
  • A year ago, calls for a sector-specific regulator to oversee the internet ecosystem seemed far-fetched. After data scandals and election interference, it's now beginning to look like a more reasonable idea.

The backstory: The last time the FTC held a series of public hearings on an issue was in 1995, when then-chairman Robert Pitofsky convened experts to discuss competition in still-nascent areas such as "marketing in cyberspace" and "interactive television." Those hearings culminated in a series of reports that recommended ways for the FTC to promote competition.

The bottom line: The ambition of this fall's hearings are to "chart a course forward in the same way," said an FTC staffer. "I think they have the potential to set the agency on a path for the next decade."

4. Cellphone industry talks 5G

5G talk is expected to dominate Mobile World Congress in LA this week. Ahead of the event, CTIA's Meredith Baker (the wireless industry’s top lobbyist) talked to Axios' Kim Hart about the industry's progress.

  • A year from now, she says, there will be more than 50 5G cities.
  • In terms of investment, the U.S. ranks 1st globally. But more mid-band spectrum is still needed.
  • It took 30 years to erect 150,000 cell towers for 4G. But 5G networks will need five times that many in the next few years.

The industry says Wall Street is warming up to the amount of capital expenditure 5G networks will take. As Verizon Wireless' EVP Ronan Dunne told Sara Fischer at the show:

"Wall Street wasn’t sure 12 months ago about it, but it's now clear that the conversation has moved from "what will work?" to "how quickly will it start to impact the numbers?"
— Ronan Dunne, Verizon Wireless

What's next: The FCC is set to vote this month on an order that would limit the fees cities can charge wireless companies to deploy small cell equipment on city property. It would establish a "shot clock" for that approval, with the goal of speeding up the 5G deployment process.

  • Showdown with cities: Wireless companies say streamlining this process is crucial to staying ahead on 5G deployment. Cities, however, aren't happy. The City of Austin, for one, says the move would "cripple local government authority to manage valuable public property."
5. Blockchain companies form D.C. trade group

Amid growing interest from legislators — and continued regulatory uncertainty — the crypto-asset and blockchain industry is forming its own DC-based lobbying group: the Blockchain Association.

Why it matters: U.S. regulators like the Securities and Exchange Commission and the Commodity Futures Trading Commission have made few pronouncements about the laws that govern crypto-assets. And yet an industry servicing investors and traders continues to grow, notes Axios' Kia Kokalitcheva.

  • So far, SEC chairman Jay Clayton has said that all initial coin offerings he’s seen looks like securities to him, and on Tuesday, a federal judge ruled that a criminal fraud case against an ICO issuer may proceed under securities law (though a jury would still have to ultimately decide the case), which could set a strong precedent. The commission has also issued enforcement actions against a number of ICOs, primarily for fraud.
  • And yet, an SEC commissioner and the agency’s director of corporation finance have said that some digital tokens can be something other than a security, such as Ether.

Another one? The Blockchain Association isn’t the only organization in D.C. focused on these topics—Coin Center has been around since 2014. But as Coin Center executive director Jerry Brito said about the news, his group is focused on “your right to build and use cryptocurrency and open blockchain networks,” while the Blockchain Association represents the industry’s interests.

  • Its initial members include Coinbase, Protocol Labs, and Circle, and investors such as Digital Currency Group and Polychain Capital.
6. Take Note

On Tap

  • Apple's big iPhone event takes place at company HQ in Cupertino.
  • Mobile World Congress Americas kicks off in Los Angeles.

Trading Places

  • Instacart named Mark Schaaf as CTO.
  • Self-driving car startup plans to replace CEO George Hotz, according to the only member of its board — the same George Hotz. The company is expected to reveal its new CEO on Friday, per TechCrunch.


7. After you Login

A Domino's franchisee in Russia promised free pizza to anyone who got a tattoo of the company's logo in a visible place. Turns out too many people said yes.