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From the Valley to D.C., Big Tech players like Facebook, Google and Amazon are under more scrutiny than ever as new technology develops and privacy and antitrust concerns grow in lockstep with companies’ ambitions.

Technology

Axios Media Trends

Data: Axios research; Infographic: Alli Torban/Axios

Donald Trump's "big lie" playbook — the collection of falsehoods alleging that the 2020 election was stolen through voting fraud — mirrors the tactics used by sophisticated spreaders of disinformation. 

The big picture: Research from the Harvard Kennedy School Shorenstein Center shows there's a typical cycle that people use to manipulate the media and spread disinformation. Trump's dissemination of false claims of a stolen election demonstrates how the cycle works.

How it works: Disinformation spreaders typically start by planning their narratives early and seeding their lies online, where they can spread quickly, reaching people faster than critics can counter the disinformation. 

That's what happened when Trump planted the seeds of his voting fraud claims early — well before the general election — and spread them through interviews and social media.

Information gatekeepers like journalists, TV networks and tech platforms then try to mitigate the problem, as they did by banning Trump's accounts after the Jan. 6 insurrection.

The former president adapted by creating other channels to get out his message, such as a new blog, which ultimately shut down, and most recently a plan to launch a social media network called "Truth Social," which has filed to go public via a SPAC.

"The main and most effective way the cycle gets broken is in that they never jump from Stage 2 to Stage 3" and "something just sputters out in Stage 2," says Emily Dreyfuss, senior editor at the Shorenstein Center. 

"When that happens, which is all the time, the campaign never gets much attention and so most people never know it existed in the first place."

Go deeper: Trump stokes fears of election-night mail voting fraud

How the "big lie" spread

The playbook mirrors the tactics used by sophisticated spreaders of disinformation.

Deep Dive - Voting and Democracy

President Biden has made the COVID-19 crisis and a post-Trump return to national unity and traditional democratic ideals his top priorities. From vaccinations to stimulus to schools, Biden is seeking bipartisan compromise while showing a willingness to use executive authority and bare Democratic majorities in the U.S. House and Senate to implement his policies. Republican leaders are navigating deep party divisions over if and how to move beyond former President Trump.

Politics & Policy

Crypto venture capital is a different game than traditional venture capital, which isn't something that every participating firm has yet to fully appreciate.

Why it matters: The key is matching the asset class in which you're investing.

Registered investment advisers: Venture funds are exempt from registering as investment advisers, but only 20% of their holdings can be in “non-qualifying investments” like digital tokens. So it’s no surprise that a growing number of firms are registering with the SEC. Complying with custody and other requirements also makes limited partners feel more at ease.

Tokens + equity: While some crypto investments are best done at the company level, others’ value is in the tokens (or eventual tokens). For example, about 75% of Andreessen Horowitz's current crypto fund’s capital is invested in tokens, partner Katie Haun said at an event last week. Some firms even manage more hedge fund-like vehicles that trade tokens, given the liquidity of many of these assets. 

Multi-stage: Paradigm, which just raised a $2.5 billion fund, describes itself as an early-stage investor, but co-founder Matt Huang admits the firm won’t always catch every great investment in its earliest days, so it’s used to writing checks across all stages. It participated in crypto exchange FTX’s $900 million July round, for example. 

Research: Hiring smart tech researchers is all the rage among crypto funds, in part to build up their credibility with entrepreneurs and to keep them abreast of the latest trends and advances. “[Our research team’s] core work is to be on the frontier,” Huang tells Axios. 

Services: Crypto startups have some of the same help needs as other tech businesses (e.g., hiring, marketing, etc.), but they also have unique challenges. Navigating the fuzzy regulatory landscape and attracting quality contributors to their projects are among them. 

What they’re saying: “In the normal world, there’s existing software, or vendors or providers. In crypto, a lot of these solutions don’t exist,” says Huang, adding that his firm (and its peers) must build many of the tools it users to manage its own operations.

The bottom line: “You can’t get away with being just signal,” says CoinFund founder and CEO Jake Brukhman. “I think they have to be active participants [in the ecosystem].” 

Meet the modern crypto venture capital

It's a different game than traditional venture capital, which isn't something that every firm has yet to fully appreciate.

Illustration of connected "bitcoins" with a college of rectangles and money in the background

Cryptocurrencies

Stock market

After a record economic expansion, the coronavirus pandemic sent the U.S. economy into a recession as unemployment soared to staggering heights. The country now faces urgent questions about how much stimulus is needed for reeling consumers and businesses, and what a recovery might look like.

Economy & Business

Taking the stand to close out the first day of her trial’s defense, ex-Theranos CEO Elizabeth Holmes highlighted to jurors some of the due diligence her early investors performed. 

Why it matters: Though Holmes was included on her defense’s list of potential witnesses, it was unclear whether she would actually testify. 

What she’s saying: "We worked for years with teams of scientists and engineers to miniaturize all of the technologies in a lab. The core part of that was a formula for being able to run tests on small samples….By 2009-2010 we had a breakthrough," Holmes testified, per ABC's Miles G. Cohen in the courtroom.  

Details: During her testimony on Friday, according to journalists in the courtroom, Holmes began by describing her upbringing and the start of Theranos.  

She talked about going to college at Stanford University where she did research and filed a patent for a pill that can test and release drugs.  

Holmes dropped out in 2004 to set up her company, initially called "Real Time Cures," and financed it in part with the money her parents had set aside for her college education; she hired two people she worked with at Stanford and two from IBM. 

After speaking to many people in the pharma industry, the feedback was that people were interested in a tabletop device, so Theranos shifted to developing one. 

She went out to raise a Series B round from late 2005 to early 2006 after building a prototype, and she met with VC Don Lucas, whom she was introduced to by someone who went to college with her father. His due diligence included hiring a law firm to review patents, Theranos' contracts and audited financials. He invested and was board chairman until 2013.  

Another Series B investor, Peter Thomas, also asked for the audited documents and patents. Holmes introduced him to David Lester at Pfizer. Investor Chris Lucas (who testified earlier as a victim of her fraud), however, did not ask for those documents. 

Theranos eventually signed agreements with GSK in September 2006 and Pfizer in Nov. 2006. It also spoke with Novartis, Bristol Myers Squibb, and others. 

The company did its first live demo in Switzerland for Novartis. Holmes sent employees an email after the demo telling them it went well based on her impression of the meeting and an email from Theranos' R&D head John Howard saying he thought it went well.

Soon after, she set out to fundraise again and met with Larry Ellison, who invested, along with other investors like the Carlyle Group's Bob Grady, and Greg Hall. 

What's next: Holmes' testimony will resume on Monday.  

Go deeper: Theranos trial reveals investors' questionable due diligence 

Ex-Theranos CEO Elizabeth Holmes testifies in her own fraud trial

Though she was included on her defense’s list of potential witnesses, it was unclear whether she would actually testify.

Elizabeth Holmes. Photo: Yichuan Cao/NurPhoto via Getty Images

Theranos

Axios Events

Axios Capital

The story of a group of cryptocurrency traders failing to buy a copy of the Constitution shows just how much of a gulf there still is between the real world and the crypto world.

Driving the news: Hedge fund billionaire Ken Griffin outbid a group of 17,437 donors in an auction at Sotheby's last night, promising to pay $47.4 million for the document. 

Because he had promised Sotheby's he would bid on the work, using something called an "irrevocable bid," or third-party guarantee, he was entitled to a $4.2 million rebate, bringing his net price down to $43.2 million.

Why it matters: As crypto adoption spreads, the asset class is going to be increasingly enmeshed with systems that have existed for centuries, like 277-year-old Sotheby's. The shenanigans show that players fluent in the old ways still have a narrow edge in the game.

Catch up quick: ConstitutionDAO this week raised about $47 million to bid on the document.

Think of ConstitutionDAO as a more pseudonymous, crypto-centric version of a GoFundMe or Kickstarter project, as Axios' Scott Rosenberg and Peter Allen Clark write.

Between the lines: The DAO wasn't legally allowed to bid on the Constitution. Instead, an old-fashioned LLC had to be constructed to make the bid, with extremely opaque governance ties between the DAO and the LLC. 

The bottom line: Memes have become powerful enough to propel crypto participants into areas they barely understand. 

But Griffin, a noted crypto skeptic, knew exactly how much money his opponents had and, therefore, exactly what he needed to bid to win the document.

A billionaire's crypto win

As crypto adoption spreads, the shenanigans show that players fluent in the old ways still have a narrow edge in the game.

Photo of people taking pictures of the U.S. Constitution on their phones

People take pictures of a copy of the U.S. Constitution during an auction at Sotheby's last night. Photo: Yuki Iwamura/AFP via Getty Images

Axios Gaming

Paul Reiche, the former head of Activision studio Toys for Bob, is questioning the path forward for current Activision leadership, amid calls for CEO Bobby Kotick to resign.

Why it matters: Activision's current studio heads have not commented on this week's explosive allegations in the Wall Street Journal that Kotick knew of sexual misconduct at the company.

"If the new stories I have read are true, I can't see how Activision can continue its success without new leadership," Reiche told Axios.

"How far down that goes depends on what we learn about the behavior of those leaders," he added.

The big picture: Nearly 1,600 employees have signed a petition calling for Kotick to step down, but the company's board has stood by him.

Reiche is no longer at Activision. He sold the studio he co-founded to Activision in 2005 and ran it through its heyday, overseeing the "Skylanders" franchise. But he left the company last year. 

What he's saying: "It’s pretty clear that the only forces that can create change at Activision are its customers (whose money is the ultimate corporate goal), its investors and the employees whose talent makes Activision’s games worth buying." 

"Then you need brave and visionary individuals within the company and investors to stand up, speak out and become the fulcrum for the power in all the other employees and customers."

"I believe these ingredients for change exist at Activision."

Former Activision studio chief questions leadership's future

Activision's current studio heads have not commented on allegations that Kotick knew of sexual misconduct at the company.

Paul Reiche, former head of Toys for Bob. Photo: Robin Marchant/Getty Images

Activision

Gaming

The developers of the much-delayed "Halo Infinite" spent an unexpected extra year polishing their game ahead of its December 2021 launch, but restrained themselves from making massive changes.

Why it matters: In an era of games that are rushed to release, the team for "Halo Infinite" got to explore what happens when the publisher hits the brakes.

The sci-fi shooter game featuring iconic Xbox hero Master Chief was supposed to come out last November, alongside the new Xbox Series consoles.

Instead, a poor public showing with unimpressive graphics in mid-2020 triggered a one-year delay.

What they’re saying: “The natural tendency is that, [if] you get more time, you're like, ‘We've got to have more stuff,’” the game’s character director, Steve Dyck told Axios. 

“And it's like, ‘No, we didn't. We didn't do that.’”

“The game is the same game we were going to ship a year ago,”  associate creative director Paul Crocker said, “obviously more polished because we had more time.”

The team used that time to focus on pacing and making selective additions to better introduce some enemies. They also “cleared some space,” Dyck said, to set up big moments in the adventure.

The big picture: Game designers usually get very little time to experience their game as a whole prior to release. 

Big-budget video games are made by teams of hundreds of people and constructed in parts.

That leads to developers often discover only last minute which system don’t work well or, at times, how big their games actually are.

Not so for “Infinite” studio 343 Industries, thanks to the delay. "The biggest benefit of that time was time spent with a nearly finished game,” Dyck said.

What’s next: The true benefits of the added year will be clear closer to the Dec. 8 release, when reviewers are able to assess the full experience.

Previews released today have praised the early part of the “Infinite” campaign for being fun and feeling polished.

But previewers caution that they can’t yet size up the full adventure, which takes the normally linear approach to “Halo” games and sets it in a more open world where players can explore in all directions. 

"Halo Infinite" developers used 1-year delay for polish, not expansion

In an era of games that are rushed, the team for "Halo Infinite" got to explore what happens when the publisher hits the brakes.

Video games

Axios Generate

Bloomberg has fresh reporting on Apple's secretive plans to develop an autonomous electric car.

Driving the news: Apple plans to "accelerate development" and is "refocusing the project around full self-driving capabilities."

The target launch date is 2025, but could easily slip, they report in the story attributed to anonymous sources familiar with the effort.

Why it matters: If the plan ever comes to fruition, it would mark a major new entrant in the auto space, given Apple's brand recognition, balance sheet and track record.

Yes, but: Apple keeps its cards close to the vest, and the effort has long been a moving target.

What they're saying: Wedbush Securities analysts said Bloomberg's reporting matches their view that an Apple car — probably in partnership with another company — will likely arrive mid-decade.

"We would assign the chances of Apple unveiling its own standalone car by 2025 as 60%-65%," they said in a note.

Apple car buzz gets loud again

Apple plans to "accelerate development" and is "refocusing the project around full self-driving capabilities."

Autonomous vehicles

Automation and AI

Electric vehicles

Ominous forecasts about the impact of climate change serve as the backdrop for the world — led by U.S. lawmakers and companies — to debate big action on the problem, which could upend energy systems and our way of life.

Energy & Environment

Big Tech giants and their adversaries are both trying to enlist a powerful constituency in their battle over looming antitrust legislation: small businesses.

Why it matters: Small businesses can have outsize sway with Washington lawmakers, and the fight for their support will shape the fate of Congress' crusade to limit tech power.

What's happening: The package of House bills under consideration, and companion legislation in the Senate, would prohibit the major tech platforms from unfairly favoring their own products and create barriers to new acquisitions.

Amazon has warned third-party sellers that the legislation could jeopardize its ability to host third-party sellers on its platform completely.

Meanwhile, Google has been notifying its small business customers that the legislation could make it harder for users to find business listings in Google Search or Maps results, and hurt the effectiveness of digital marketing.

Mike Blumenthal, a consultant who helps companies with local marketing efforts, says he was stunned by Google's messaging. He worries small businesses "might just lap this up" because owners tend to believe regulation for somebody will be bad for them.

"It’s so strange to me monopolies are trying to leverage small businesses to make their case," Blumenthal told Axios. 

Connected Commerce Council, a small business group that receives funding from Amazon and Google, coordinated virtual meetings last month between business owners and over a dozen lawmaker offices to discuss the legislation and their concerns, executive director Rob Retzlaff told Axios.

"We felt the need for elected officials to hear from their own constituents to discuss the issues that are really important to them," Retzlaff said.

The other side: Rep. Ken Buck, (R-Colo.), ranking member of the House Judiciary antitrust subcommittee and the leading Republican on the bills, says Big Tech's outreach to small businesses shows "desperation." He was initially skeptical of the committee's Big Tech investigation until he heard first-hand from companies struggling with the platforms.

A former prosecutor, Buck said stories shared during a field hearing in his home state in 2020 struck him as cases he would prosecute. "They just steal a product, and then crush the competition because they have a monopoly platform."

"[Big Tech companies] know that these bills will create competition in the marketplace," Buck told Axios. His message to small businesses is: "the cavalry is on the way. You're going to have a choice of platforms to deal with in the future and you're going to be so much stronger as a result."

 During a virtual roundtable with small businesses, Sen. Amy Klobuchar, who leads the Senate's antitrust bills, said: "I love the scare tactics, like we somehow want these platforms to completely go away or that Amazon prime will go away. It's just a total lie."

A tale of two Amazon sellers: Doug Mrdeza, who owned a Michigan college town barber shop, shifted to selling products on Amazon in 2014 when he realized he could sell more online in the summer months.

Mrdeza grew a business reselling products on the platform, but said he  eventually struggled with Amazon's fees, rule changes and cost discrepancies, filing bankruptcy this fall.

"The reason why I'm paying all these costs is because in the future there's going to be bigger opportunities — that's the pipe dream I was sold,"  said Mrdeza, who has shared his story with the Institute for Local Self Reliance, an anti-monopoly group in support of the antitrust bills. "But it didn't pan out. [N]ot only were the sales not coming in at the velocity they once were, but the cost of sales had increased."

Alfred Mai launched his tabletop games company, ASM Games, four years ago, and uses Amazon's fulfillment services to handle shipping, now selling in seven countries.

"The one thing that I'm most concerned about, and I think any marketplace seller should be concerned about, is will this bill create an environment where it makes it almost not viable for Amazon to continue having third party marketplace sellers," said Mai, who has appeared in a webinar hosted by Connected Commerce Council. "[T]hat would be disastrous for someone like me."

"Even if Congress smashes Amazon into a million pieces, Jeff Bezos will be fine. But we might not be."

Small business holds key to tech's antitrust fate

Small businesses can have outsize sway in Washington on potential legislation.

Illustration of four small cursor hands holding up a large metal key

Congress

Big Tech

Residential broadband penetration of U.S. occupied housing units

Data: S&P Global; Chart: Danielle Alberti/Axios

A new report from Kagan, the media research unit of S&P Global, shows that broadband subscriber growth has "cooled significantly in the third quarter," stalling in growth for the first time in three years. 

Why it matters: The decline can be attributed to "a difficult comparison with the booming gains of 2020," the report says. 

Ian Olgeirson, a research director at Kagan, says that an increase in the adoption of 5G alternatives, such as mobile hotspots and fixed wireless plans, may have also contributed to the slowed growth of broadband subscriptions.

Be smart: While broadband subscriber growth has slowed, each household's broadband use is expected to stay high.

Earlier this year, experts said they expected increased broadband usage to continue after the pandemic. 

Olgeirson says remote work and school forced households to prioritize broadband connectivity during the pandemic, and "subscriptions surged during that period."

What to watch: The Federal Communications Commission in May launched a program to help low-income households pay for internet service by offering a $50 a month discount to their monthly broadband bills.

The Emergency Broadband Benefit program has enrolled more than 7.6 million households so far. But it's not clear if those households previously had internet service or if the program is paying for new connections.

The data indicates that nearly 68% of program subscribers are using the benefit to pay for mobile broadband, while slightly less than 32% are using it for cable, fiber or other home internet service.

John Horrigan, a senior fellow at the Benton Institute for Broadband & Society, told Axios he thinks the program is getting new households online based on survey data out of Philadelphia.

"I think it is having an impact on groups that have been way behind on broadband adoption — namely low-income households and communities of color," Horrigan told Axios.

What's next: The newly-passed infrastructure bill includes $65 billion to improve high-speed internet access and affordability.

$14.2 billion of that funding will be used to provide a $30-a-month voucher to low-income Americans to pay for internet service. That will replace the current $50-a-month program, offering less money monthly but widening the pool of those eligible.

Broadband subscriber growth stalls after pandemic gains

Each household's consumption of broadband remains high, a new report finds.

Broadband

Line graph showing growth in residential broadband in recent quarters

NW Arkansas

Axios Northwest Arkansas

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A Zipline drone takes off with Walmart products from a Neighborhood Market in Pea Ridge, Arkansas. Photo: Worth Sparkman/Axios

Starting today, drones shaped like miniature airplanes will drop packages of 4 pounds or less in customers' yards when they order from a Walmart Neighborhood Market in Northwest Arkansas.

Why it matters: The era of ubiquitous delivery by drone is inching forward, with scattered pilot programs involving pizzas and other light shipments — and the imprimatur of Walmart on this service is a big deal.

Driving the news: Walmart and its partner, the drone-maker Zipline, announced their new service Thursday. It will operate from a 25-foot takeoff and landing platform behind a Neighborhood Market in rural Pea Ridge, Arkansas, about 20 minutes from the retailer's home office.

The companies will use the results of the trial program to figure out how — or if — to expand the service to other markets. 

The big picture: Customers increasingly expect to have their orders delivered as soon as possible, and the "last mile" persists as the thorniest issue. According to Deloitte, delivery-by-drone is estimated to become a $115 billion industry by 2035.

Zipline says its cute little aircraft can loft packages of about 4 pounds, and can get them to customers within 30 minutes of an order.

How it works: Customers within the service area place and schedule an online order — for now, nonprescription drugstore items and some types of (lightweight) food are allowed. A Walmart employee bundles it up and hands it off to a Zipline staffer. 

Zipline preps and launches the drone, which drops the package with a biodegradable parachute. The drone returns to the platform for another order. 

Officials told Axios that packages consistently land in an area the size of two parking spots.  

A Zipline drone drops a package. Photo: Courtesy Zipline 

The intrigue: The Zipline drones do all the flying on their own, with no cameras or remote human pilots.

The drone will circle its target to determine wind direction, then approach the drop zone from the best angle so the package lands nearest the target.  

The drone's 11-foot wings are equipped with proprietary sensors to ensure that it doesn't go where it's not supposed to. 

What they're saying: Zipline COO Liam O'Connor told Axios that it could launch a drone from the platform every 90 seconds, potentially making hundreds of deliveries a day. 

He acknowledged the market is competitive, with companies like Alphabet and Amazon racing for primacy.

He said Zipline's track record of delivering medicine in Rwanda and Ghana gives it an edge. 

What we're watching: The drones are operating under a waiver from the Federal Aviation Administration that permits flight within limited airspace and only during daylight. Eventually, Zipline could operate within a 50-mile radius of its home Walmart store. 

Walmart says it's working with the FAA to expand delivery to even more customers in Northwest Arkansas, but had no timeline. 

Editor's note: Reporter Worth Sparkman is a Walmart shareholder. 

A milestone in delivery by drone

A Walmart pilot drops 4-pound packages in people's yards

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