National

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

Virtual meetings have become so commonplace for Marvel Studios that some editors and directors never meet in person during production.

Driving the news: "Moon Knight" director Mohamed Diab told Axios after the Marvel show's finale that he never met one of the show's editors in person even though production for the show lasted three years.

Diab told Axios that the Marvel television project spent six months of pre-production and six months of post-production using Zoom and he never physically met "Moon Knight" editor Joan Sobel.

And, despite the virtual workflow, the show had the least amount of reshoots in Marvel production history, Diab said.

Zoom out: "Doctor Strange in the Multiverse of Madness," which premiered on May 6, earned an estimated $185 million in ticket sales for its first weekend, per the Associated Press.

The film had the biggest opening of 2022, finishing ahead of “The Batman" ($134 million) and “Spider-Man: Far From Home” ($260.1 million).

The "Doctor Strange" sequel was mostly produced and edited through Zoom too, director Sam Raimi said in the global press conference for the film.

He said editing and audio mixing scenes would happen virtually.

What he said: "I could speak to, you know, 10s of crew members at once," Raimi told reporters. "We could show a storyboard from an artist, the editor can bring up a piece of the cut. We really had great communication, audiovisual.”

"You were able to speak to 100 people at once. It's fantastic."

Raimi — who directed the "Spider-Man" trilogy from the early 2000s starring Tobey Maguire — has seen Marvel's shift in production since the pandemic started.

He said that the recent move to Zoom meetings was a "technological difference that really enabled me to work on this movie."

"The technology has changed and it's just become a lot easier," he said.

Hollywood productions didn't completely come to a standstill when the COVID-19 pandemic shut everything down. 

Many television and movie productions shifted to virtual apps for production to limit the spread of the novel coronavirus.

Grant Curtis, an executive producer for Marvel's "Moon Knight," told Axios that his team learned lessons on how to work virtually from other shows like "WandaVision" (premiered in January 2021) and "The Falcon and the Winter Soldier" (debuted in March 2021).

These shows were forced into virtual production by the pandemic.

"Zoom became a way of working on this," Curtis said of "Moon Knight."

"Virtually prepping stuff became a way of working."

The bottom line: Hollywood (including Marvel) is shifting its workplace to Zoom, much like the rest of us. And it doesn't seem to be slowing down the success of even the biggest studios, such as Marvel.

Zoom takes over movie production

"Doctor Strange" director Sam Raimi used Zoom for editing.

The Walt Disney Studios executive Vice President of theatrical distribution Tony Chambers speaks about the upcoming Marvel Studios movie "Doctor Strange in the Multiverse of Madness."

Tony Chambers, Walt Disney Studios' executive vice president of theatrical distribution, speaks about the Marvel Studios movie, "Doctor Strange in the Multiverse of Madness." Photo: Gabe Ginsberg/WireImage

Movies

Crypto

Axios Crypto

The Terra blockchain was halted for almost two hours today amid widespread turmoil in the cryptocurrency market, with investors challenging the presumed 1-to-1 pegs that underpin stablecoins.

Driving the news: The blockchain runs the algorithmic stablecoin Terra USD, alongside its partner Luna, the governance token. Both coins have crashed in a dramatic fashion in the last few days, while another called Tether has also come under pressure.

Why it matters: Blockchains are intended to be decentralized, meaning that lots of people run them. It means that with many people across multiple locations, it's hard for those running them to even communicate. The chain stopping this suddenly, and without warning, suggests a high level of coordination. 

Underpinning blockchains is a notion of "trustlessness" enabled by decentralization. Bitcoin was built so people could transact without ever worrying about trusting anyone, even knowing that there are many sketchy actors on the network. 

A screenshot from the official Terra Twitter account, announcing a blockchain stoppage. 

The latest: The official Terra Twitter account said that stoppage was opted for to prevent "governance attacks." 

Terra is governed by those who hold the Luna token. 

As of this writing, Luna is trading at around one penny, which puts the overall market cap at just under $60 million. That's down from around $30 billion at the start of May (yes, billion — not a typo). 

In other words, it's theoretically quite cheap to buy up lots of Luna, and then influence decisions on the platform. 

If someone really tried to buy half the supply of Luna, it would drive the price way up. Still, with the price that low, it's much easier to get a meaningful position.

Once the chain fully restarts, Luna holders will no longer be able to make new delegations of their coins. This means that the validators who were running the blockchain before it was halted should remain in that position, until delegations are reenabled.

It essentially locks in the people that are in charge.  

What they're saying: "Not sure it matters at this point either way," Michael Arrington of Arrington Capital, a fund that has both backed Terra and multiple applications built on the blockchain, told Axios via text message. 

Of note: Staying live is crucial for decentralized finance applications. Most of them stay solvent by liquidating bad debt as soon as collateral loses value. With the blockchain shut down, it can't do that.  

Our thought bubble: Such a chain stoppage will be hard to justify in the minds of most people in crypto. It is likely to be a cure much, much worse than the disease.

That said, it probably won't be the end of Terra. EOS, an older blockchain that went live in 2018, has always been controlled by a small and well coordinated set of validators, and it has persisted. 

What we're watching:  Tokens on an exchange from a halted blockchain are sort of like a man in an international airport terminal whose country just evaporated. 

Even with the chain restarted, users might not have much faith in the coins any longer.

Terraform Labs, the company that built the Terra blockchain, was not immediately available for comment. 

Terra briefly halts blockchain amid stablecoin uproar

investors are challenging the presumed 1-to-1 pegs that underpin stablecoins.

Illustration of an index finger emoji wagging back and forth.

Cryptocurrencies

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

Four congressional Democrats sent a formal request to the CEOs of YouTube, TikTok, Twitter and Facebook's parent company Thursday to archive any content of alleged Russian war crimes.

Why it matters: Social media users have posted graphic images and videos throughout Russia's unprovoked invasion of Ukraine. The content could be valuable to investigators, who have said they will seek to hold perpetrators accountable.

Driving the news: Social media companies YouTube, TikTok, Twitter and Facebook's parent company, Meta, were asked in the letter “to flag or mark content as containing potential evidence of war crimes and other atrocities."

“If verified as authentic, this content could provide the U.S. government and international human rights investigators with a trove of evidence that would help substantiate allegations of war crimes and other atrocities committed by Russian forces against the people of Ukraine," the letter said.

“Social media platforms routinely remove graphic content that glorifies violence or human suffering or could lead to further perpetrations of violence, and have rightfully implemented graphic content policies to protect their users,” the letter read.  

Deleting the graphic content could "result in the unintentional removal and permanent deletion of content that could be used as evidence of potential human rights violations such as war crimes, crimes against humanity, and genocide," the letter stated.

The four Democrats who signed the letter are Reps. Carolyn Maloney, Gregory Meeks, Stephen Lynch and William Keating.

The big picture: The International Criminal Court in the Netherlands said in February it would investigate alleged war crimes in Ukraine.

What they're saying: “Capturing social media from Ukraine is an incredible source of evidence,” Alex Whiting, deputy prosecutor at the Kosovo Specialist Prosecutor’s Office in the Hague, told WIRED in April.

Go deeper:  Live updates: Russian invasion of Ukraine

Democrats want TikTok and Facebook to save graphic posts of possible war crimes in Ukraine

Four Congressional Democrats made a formal request for content that could be used in war crimes investigations.

Photo: Fernando Gutierrez-Juarez via Getty Images

Ukraine

Russia

China is becoming the most formidable rival America has faced, and the risk of confrontation with Russia, North Korea or Iran still looms. Authoritarians are rising, the chaotic Afghanistan exit revealed the limits of U.S. power, and the pandemic, climate change and other critical challenges continue to pose grave threats.

World

Markets

Axios Markets

A stablecoin called TerraUSD (UST) imploded this week, causing billions of dollars in losses and raising the question of why any cryptocurrency — or even a government-issued fiat currency, for that matter — would ever want to have its value pegged to some other currency. 

Why it matters: Nowadays, most currencies float freely against each other. Historically, however, that's something of an anomaly. Indeed, as recently as 1971, even the U.S. was part of the Bretton Woods system that pegged all currencies to a gold standard.

The big picture: Pegs get introduced when market forces generate a level of volatility that makes planning and industry needlessly difficult. 

Countries implement pegs to ensure stable prices, both for their citizens and for any industries that export or import goods. Certainty and predictability are good things. 

Then, if the peg ends up too far from fundamentals, it can become harmful and brittle, and eventually break. In the case of UST, there were no fundamentals, so it was prone to break at any time. In the end, UST lasted less than 20 months. 

A peg that's stood the test of time: The Hong Kong dollar weakened dramatically in the summer of 1983, causing panic selling of the currency, and panic buying of supermarket goods. 

The solution: The local currency was pegged to the U.S. dollar at a rate of 7.8 to 1 on Oct. 13 of that year. It's stayed at that level ever since — more than 14,000 days and counting. (Since 2005, the exchange rate has been allowed to fluctuate within a narrow band, from 7.75 to 7.85.)

How it works: The Hong Kong Monetary Authority (HKMA) has a $466 billion Exchange Fund, which it uses to buy unlimited Hong Kong dollars at the 7.85 level. Conversely, the HKMA will sell unlimited Hong Kong dollars at 7.75. 

The dollar peg means that the HKMA can't set its own monetary policy. Whatever interest rate the Fed sets is perforce the overnight interest rate in Hong Kong, too. 

The bottom line: It's highly improbable that financial speculators could break the Hong Kong peg. China's leadership, on the other hand, could do so at any time, if Sino-American relations deteriorate further. 

Why currency pegs crack

The case of TerraUSD raises the question of why any cryptocurrency would want to have its value pegged to some other currency.

Stock market

Media Trends

Axios Media Trends

Twitter is pausing most hiring and backfills, except for business critical roles, a spokesperson on Thursday confirmed to Axios. It's also pulling back on non-labor costs "to ensure we are being responsible and efficient."

Why it matters: The decisions were made by Twitter CEO Parag Agrawal, a source told Axios. They come as Twitter faces a complicated takeover bid from billionaire Elon Musk. 

Details: On Thursday, Twitter's head of consumer Kayvon Beykpour announced he would be leaving the company after more than seven years. He said that "Parag asked me to leave after letting me know that he wants to take the team in a different direction."

Beykpour joined Twitter in 2015 after Twitter acquired the live video streaming platform Periscope that Beykpour co-founded and led as CEO.

Twitter also confirmed that its revenue product lead, Bruce Falck, will be leaving the company.

Jay Sullivan, head of consumer products at Twitter, will become Twitter's new general manager of Bluebird, its product team, and the interim general manager of Goldbird, Twitter's revenue team.

Bloomberg reported that the company has also rescinded some new offers out to employees amid the cutbacks.

The big picture: Inside Twitter, the Musk drama has been wearing on employees, who don't understand how the takeover bid will play out and how it will impact jobs. Cuts and hiring freezes could put a continued strain on Twitter's workforce at an already stressful time.

Twitter freezes hiring, rescinds some offers as top execs depart

The announcement comes as Twitter faces a complicated takeover bid from Elon Musk.

Twitter

Media

Elon Musk

Lawmakers could consider a slate of antitrust legislation in Congress ahead of the 2022 midterms. But conversations with Reps. Pramila Jayapal (D-Wash.) and Eric Swalwell (D-Calif.) at an Axios event Thursday signaled disagreement even among Democrats on the impact of those bills. 

State of play: Lawmakers are working against the clock on bipartisan efforts to broadly reshape the Big Tech landscape. Insiders told Axios the outlook is bleak for the proposals if they're not put for votes ahead of Congress's August recess.

What he's saying: Swalwell told Axios' Margaret Talev Thursday he's concerned the reforms "would throw the baby out with the bathwater" and put U.S. national security at risk for the sake of reining in Big Tech. 

The legislation could embolden the Chinese government's efforts at currency manipulation, intellectual property theft and espionage, Swalwell said.

Swalwell said he's concerned the reforms would allow "sideloading" — letting users download apps from unofficial platforms or the open internet. 

"You would allow the Chinese to flood these stores with almost no regulation, with apps that could pipe U.S. consumer information — potentially national security information — back to China," Swalwell said. 

The bottom line: "That is primarily my concern — to not give China a backdoor to U.S. persons' data without any protection," he said.

Swalwell said he'd welcome addressing his concerns through an amendment to one of the bills. He said hearings at Congress's judiciary or intelligence panels with the FBI, NSA and CIA "about what risks there are with this legislation" would also assuage his concerns. 

Members of the New Democratic Coalition led by Rep. Suzan DelBene (D-Wash.) have also expressed concerns about the antitrust bills.

The other side: Concerns that the tech legislation will hurt national security are "a red herring," Jayapal told Axios' Ashley Gold during a conversation that followed Swalwell's.

Jayapal said national security experts have told her the bigger risk is "for us to not have the competition that pushes the right kinds of innovation forward."

"Our national security is really affected when consumers have no choices, when small businesses can't thrive," Jayapal added.

Tech antitrust bills' big foe: the calendar

Democrats split on Big Tech measures in Congress

There's disagreement even among Democrats on the impact of legislation moving through Congress.

Illustration of the Capitol dome with police tape in front featuring binary code

Big Tech regulation

Policymaking

Big Tech

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

Axios Events

Gaming

Axios Gaming

Workers at gaming giant Nintendo of America say the company’s reliance on temporary workers is exploitative and that efforts to bring about change have been stymied by fear of reprisal.

Driving the news: Current and former Nintendo contractors have been speaking up over the past three weeks, since Axios first reported a complaint filed with the National Labor Relations Board against Nintendo and a contracting firm.

What they’re saying: “I loved what I did. I hated how I was treated,” a former contractor named Ash, who asked that their last name be kept private, tells Axios.

They worked in Nintendo’s customer service center for several years through 2015. Strict time-off rules for contractors and limited pathways to full-time employment added to stress that contractors could be dropped at any moment. That pressure, they said, aggravated a heart condition.

Ash says their moment of disillusionment came when their grandpa died: “I was told if I went to his funeral, I wouldn’t have a job when I came back.”

State of play: Ash’s story echoed those shared by seven other current and former contractors who spoke with Axios about their time at Nintendo.

Their accounts square with those published by gaming news sites Kotaku and IGN. Those outlets cited interviews with dozens of workers who say Nintendo treats its large contingent of contractors, technically employed by staffing firms, as second-class citizens.

These contractors fume about a status quo they believe was established to avoid violating labor laws: cycles of 10- or 11-month contracts that can be quickly cut short and are followed by two-month breaks, with expectations they’ll come right back. 

They describe employees who log three, five, even 10 years of these cycles, without many of the benefits of full-timers, but are never converted to full-time.

The contractors’ stories center on Nintendo of America, the U.S. subsidiary of the Kyoto-based maker of Mario, Zelda and the Switch. 

NoA, headquartered in Redmond, Washington, has for more than a decade supplemented its full-time labor force with hundreds of contractors, one longtime contractor estimates, who largely work in its customer service and product-testing divisions. 

Even in the company’s vaunted Treehouse, where games are translated from Japanese and localized for America, Nintendo uses contractors for nearly half of its team, two sources say, keeping them in that status for years at a time. 

“It goes up to every level,” one current localization contractor told Axios under the condition of anonymity. “It even affects the people writing the games you love.”

Nintendo hasn’t commented publicly about the uproar from its workforce and did not reply to questions from Axios. A few days after contractors began speaking out, NoA president Doug Bowser sent an internal message to employees regarding “stories appearing in some media today about alleged working conditions at Nintendo.”

“Like many of you, the executive leadership team and I find many of these points troubling, and we are closely reviewing the content,” he wrote. 

The message reiterated Nintendo’s “zero-tolerance for inappropriate conduct, including harassment, discrimination or intimidation.” 

A current contractor in product testing told Axios they found the message disappointing, as it didn’t mention the contractor issue core to so many accounts.

(Kotaku had cited four sources saying the NLRB complaint stemmed from a worker being fired after asking about unionization, which Nintendo, in a public statement, denied.)

Between the lines: Nintendo of America’s use of contractors is somewhat typical of game companies and the wider tech industry.

But contractors are disappointed with Nintendo, a wealthy company that markets its penchant for putting smiles on faces.

“Maybe it’s just because on some level I expected better,” the current testing contractor said. “These companies rely on a contract workforce with no stability.”

Former Nintendo of America president Reggie Fils-Aimé, who worked in senior positions at the company from 2013-19, told Axios that “what’s being described is not the NoA I knew.”

He said the company hired “a significant number” of contractors, or associates, into full-time roles during his tenure but added that he “truly understands” the frustration of those who haven’t been.

He attributed the company’s use of contractors to the seasonality of Nintendo’s business, where it would generate 60% of its annual revenue around the holidays. “You can’t run a business at that scale without utilizing associate labor to get you there.”

Stymied activism: Contractors who spoke to Axios said they and their peers largely avoided pushing back against management, but two recalled a mid-2014 effort when a group of Nintendo customer service workers began meeting offsite to discuss ways to force change and possible unionization.

Those meetings ceased after their management at Nintendo-affiliated Parker Staffing found out about them. Two sources recalled getting an email from a Parker manager encouraging them and their colleagues to think of the company as a family and that organizing wasn’t necessary.

“It was union-bustering without technically being union-bustering,” a former contractor recalled.

Current contractors say union talk at the company is rare.

What’s next: Former Nintendo contractors hope recent revelations bring change. “If any change is going to happen, it’s going to have to be a bad publicity thing,” says one current contractor.

Workers have usually only vented more privately, including in a recently shuttered Facebook group called the Nintendo Recovery Center. 

Former contractor Ash, who moderated the group, said it had a few hundred members but that they shut it down out of fear of drawing management’s attention. 

“There’s a really strange and shared trauma between all of us,” they said.

Call of Duty workers say they plan to unionize

Sign up for the new Axios Gaming newsletter here.

A worker reckoning at Nintendo

Contractors are disappointed with company response.

Animated GIF of a fist emerging from a green Super Mario pipe

Video games

Animated illustration of Mario’s fist coming out of a warp pipe.

Pro Rata

Axios Pro Rata

Coinbase on Wednesday for the first time detailed what would happen to user assets were the company to go bankrupt, a disclosure that helped drive Coinbase’s share price to new lows.

Behind the scenes: Coinbase CFO Alesia Haas tells Axios that the disclosure was prompted by new SEC guidance, not because of any solvency concerns at Coinbase.

She acknowledges the company could have done a better job communicating the reason for the disclosure, particularly given that it showed up as a "risk factor" in the midst of a crypto market rout. 

Haas added that there are no plans to amend the disclosure's language.

The crypto exec didn't take the bait on questions about stock buybacks or take-private considerations, even though Coinbase clearly believes its shares are now undervalued. Were there to be a takeover effort, it's worth remembering that CEO Brian Armstrong holds voting control.

Coinbase CFO says "bankruptcy" note was about regulation, not solvency

Alesia Haas tells Axios that Coinbase was just responding to SEC guidance.

Coinbase CFO Alesia Haas. Photo: Alex Wong/Getty Images.

Rep. Pramila Jayapal (D-Wash.), at an Axios event on antitrust legislation Thursday, called on the Federal Trade Commission to "look ... very closely" into the merger of Amazon and MGM.

The big picture: Nearly a year into her tenure, FTC chair Lina Khan now has a chance to move through her agenda after the confirmation of privacy expert Alvaro Bedoya on Wednesday secured a Democratic majority on the commission.

What she's saying: "I think with Bedoya there, there is a real chance for them to pursue some of the most recent mergers that have been announced," Jayapal told Axios' Ashley Gold on Thursday. "We know that she didn't take the Facebook lawsuit further — let's see what she does there." 

"I think there are a number of things she'll be looking at and I don't know which one's going to be first but I think she's got a comprehensive view of the problem."

The majority will give Khan a chance to be proactive and "look at mergers much earlier," Jayapal said. 

"One of the problems with mergers is you're always looking at what is going to be the impact of this today. You're not looking at what the impact is going to be five years down, or 10 years down." 

"I think there needs to be a different way of looking at mergers and the burden of proof needs to be in a different place." 

Go deeper: Lina Khan's to-do list on Big Tech

Jayapal: New FTC majority should look into Amazon-MGM deal

"[T]here is a real chance for them to pursue some of the most recent mergers that have been announced."

Federal Trade Commission (FTC)

Microsoft-owed Bethesda Games is delaying two huge games that were expected to be marquee releases this fall.

Driving the news: Vampire-hunting adventure Redfall and sci-fi role-playing game Starfield will miss their 2022 release windows, sliding to the first half of 2023.

Microsoft and Bethesda announced a Nov. 11, 2022, release date for Starfield last year, an unusually early timeframe to set a date.

What they're saying: "The teams at Arkane Austin (Redfall) and Bethesda Game Studios (Starfield) have incredible ambitions for their games, and we want to ensure that you receive the best, most polished versions of them," Bethesda said in a tweet this morning.

Between the lines: Starfield is the next game from Bethesda's core team, which is responsible for 2011's The Elder Scrolls V: Skyrim, one of the best-reviewed and best-selling role-playing games of all time.

Microsoft completed its $7.5 billion acquisition of Bethesda last year, with the intent to use Bethesda's acclaimed studios to bolster its Game Pass subscription service.

Exclusives like Starfield are available to Game Pass subscribers on release day at no added cost, a competitive difference from PlayStation and Nintendo consoles, which do not offer new releases as part of subscriptions.

The big picture: Delays of big games are common, given the complexities of development.

Nintendo also recently announced a big delay of its own until 2023, postponing its Switch sequel to 2017 blockbuster The Legend of Zelda: Breath of the Wild out of its expected holiday release window.

Xbox's biggest upcoming game, Starfield, delayed to 2023

Concept art showing a futuristic train station

Tech Policy

Federal Trade Commission chair Lina Khan has a chance to work her way down her Big Tech to-do list, nearly a year into her tenure, now that she has a Democratic majority in hand.

Driving the news: The Senate voted 51-50 Wednesday afternoon — with Vice President Kamala Harris breaking a tie — to confirm privacy expert Alvaro Bedoya to the FTC.

Lina Khan's to-do list on Big Tech

With a key spot on the FTC now filled, the commissioner has a chance to pursue a bigger agenda.

Thursday's technology stories