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

Gaming

Axios Gaming

Tech giant Unity may be a gaming company by heritage, but its overall goal these days is to popularize 3D graphics in every walk of life, Marc Whitten, one of the company’s senior vice presidents, tells Axios.

Why it matters: Unity is already one of the leading creators of tools for making games, and is positioned, through key acquisitions, to make its tech more relevant to the rest of the world.

What they’re saying: “We think real-time 3D is going to reinvent pretty much every industry,” Whitten says.

To be clear, he didn’t mean to use the popular buzz term “metaverse” and its notion of virtual meetup spaces. We checked. “I think ‘metaverse’ is important,” Whitten said, “but I personally think real-time 3D is probably a broader definition.”

“There’s lots of things that are really just about people trying to get their job done — whatever that particular job is — where 3D itself and in particular interactive physics-aware simulation-aware 3D makes that job better.”

An example: Proximie, a company that lets a doctor remotely and virtually interact with a live surgical procedure, showing where to make an incision. Think of the construction and logistics industries too.

Buying spree: Unity has been hoovering up tech and tools companies in the past year, including streaming service Parsec, Hollywood special effects house Weta Digital and machine-learning character creation outfit Ziva Dynamics. 

The common denominator, Whitten says, is enabling more people to more easily create more 3D art.

As more fields embrace real-time 3D, they’ll need to make a lot more art, Whitten says, noting that game companies already have swelling art teams to keep up rendering their virtual worlds.

Between the lines: Unity is already so widely used in gaming and beyond, that the company’s able to turn out eye-popping numbers. 

It boasts that its Operate division, which supports games once they launch with ad and monetization tech, among other services, supported 200,000 launches last year.

Whitten says 15,000 projects are started in Unity each day. 

When game engine company Epic is brought up, Whitten says they’re not viewed as a competitor, since Epic-backed games still use Unity services. He is also ready to share that 70% of mobile games are made on Unity, and 50%+ of PC games are made on Unity.

One bad number for Unity: Its stock dropped 37% this week after reporting increased revenue but a net loss and acknowledging problems with its ad-targeting tech. 

Yes, but: Unity’s ubiquity has raised some concern internally in terms of who the company partners with. A Vice report in August detailed worker concerns about partnerships with the Defense Department.

Unity says it won’t support projects that cause harm to humans or the climate or deprive people of their rights, but critics aren't sure all projects truly adhere.

Whitten says there is “still work to continue to drive around those missions,” and said that in some cases the company needed to be more transparent.

What’s next: Look for many more games and projects made on Unity — plus an adaptation of the tools from Weta and others into products more potential Unity customers can use. 

Sign up for the new Axios Gaming newsletter here.

Unity has goals far beyond gaming

"We think real-time 3D is going to reinvent pretty much every industry."

Photo illustration of Marc Whitten and a pattern of Unity logos. 

Photo illustration: Aïda Amer/Axios. Photo: Unity 

Video games

Pro Rata

Axios Pro Rata

Before dawn on Friday the 13th, Elon Musk may have murdered his Twitter takeover.

Driving the news: The mercurial Musk at 5:44am ET tweeted: "Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users."

He also linked to a Reuters story about that spam estimate, which was from nearly two weeks ago.

At 7:50am, Musk added: "Still committed to acquisition."

If Musk really needs details supporting that calculation, then why not privately ask the management team with which he's barely had any contact? Or the board? And then, if the numbers don't check out, walk away. Maybe he'd even have been able to get out of his $1 billion breakup fee, arguing that Twitter misrepresented user metrics.

He also could have conducted due diligence before agreeing to buy the company, which sources say is something acquirers sometimes do.

Instead, this only intensifies speculation that Musk has buyer's remorse. Not only because he arguably overpaid, but also because of the amount of paper value he's lost on Tesla stock (and possibly crypto holdings) since the Twitter deal was first announced.

There's a reason Twitter was trading around $10 per share lower than Musk's purchase price, which is way wider than typical merger arbitrage. (FYI: Musk isn't limited under a standstill agreement, so theoretically could buy discounted Twitter shares on the open market, but the poison pill remains in effect).

What to know: Axios' Felix Salmon called this situation a "clown car" during a phone conversation yesterday, harkening back to an old Mark Zuckerberg comment, after Twitter CEO Parag Agrawal canned two senior product executives and announced a hiring freeze. Again, that was yesterday.

At the time, it felt like Agarwal was auditioning for Musk. Still does, but now he has much more credibility for the "I have a business to run and revenue targets to hit" line.

The bottom line: It's possible, perhaps even likely, that this is Musk's way of trying to renegotiate. But if so, it's creating a ton of short-term collateral damage. 

Not only to Twitter and Musk's reputations, but also to the psyches of thousands of employees whose financial futures are being put in unnecessary flux. Remember, lots of these people have options that accelerate if the deal closes. And others could be needing to find new jobs, right as the tech industry appears to be contracting.

Elon Musk's Twitter clown car

An illustration of Twitter's logo as a puzzle with a piece missing.

Elon Musk

Media

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

YouTube creators who have switched to producing content about the defamation trial between Johnny Depp and Amber Heard have found a massive audience, accruing millions of views on their videos, according to NBC News.

The big picture: The trial between the two stars in Fairfax, Va. has attracted immense attention on social media, where many have sided with Depp.

Depp is suing Heard for defamation over an op-ed she wrote in the Washington Post in 2018, claiming she is a victim of domestic violence. Heard is countersuing Depp for defamation over his allegations that her claims are false.

Social media has been particularly supportive of Depp, with the hashtag #justiceforjohnnydepp reaching 10.8 billion views on TikTok.

Driving the news: YouTube creators from every background are jumping on the trend, including gamers, K-pop fans and musicians, NBC News reported.

One creator, who normally produced content about video games to limited views, received over 10 million views within a week after making compilation videos about the trial, according to the NBC News.

Most of the creators made content in support of Depp, leaning into the pro-Depp environment on social media, NBC reported.

YouTube creators are feasting on the Depp v. Heard trial

The trial between the two movie stars has attracted immense attention on social media.

US actress Amber Heard testifies as US actor Johnny Depp looks on during a defamation trial at the Fairfax County Circuit Courthouse in Fairfax, Virginia, on May 5, 2022. Photo: JIM LO SCALZO/POOL/AFP via Getty Images

YouTube

Crypto

Axios Crypto

For cryptocurrency, 2021 was a very exciting year. For Coinbase, the best known cryptocurrency company that's publicly traded, it was so-so. Strangely, Coinbase seemed unable to capitalize on frothiness in the very financial market it was built to serve.

Why it matters: There's an old investor adage: in a gold rush, the guy selling shovels gets rich even if there's no gold. Coinbase should be a shovel company, but somehow it hasn't been.

Driving the news: On Thursday afternoon, Coinbase (COIN) was trading at $58.50, that's down 83% from its first day of trading in April 2021.

Of note: COIN price did rally with the rest of the crypto market as Bitcoin hit its most recent all time high. COIN hit $343 on Nov. 7, just ahead of Bitcoin hitting $69,044.77 on Nov. 10.

What they're saying: "It has underperformed relative to cryptocurrency markets," Michael Miller, a Coinbase analyst with Morningstar told Axios. "I think a lot of it comes down to expenses." 

The company has increased expenses dramatically to scale, Miller argued. "They are up about 70% over the last 6 months."

Coinbase has faced a lot of scaling issues. Longtime crypto denizens know it has a bad reputation for customer service, though it is trying to catch up, and Miller said that's what some of the current spending is going toward. 

Yes, but: Coinbase would argue that this spending has been an intentional choice. In an investor call following the earnings release, Alesia Haas, the CFO, said: "We're choosing to make 2022 an investment year. And that's because we believe that investing now is key to our future of becoming a multi-product platform serving a diverse customer base."

By the numbers: Despite his critiques, Miller puts the fair value of Coinbase stock at $131 right now, well above the market's price.

Coinbase reported revenue of $1.17 billion and a net loss of $430 million, for the first quarter of 2022.

"You've seen the market really shift away from being willing to give low profit or high multiple companies the benefit of the doubt," Miller said.

Coinbase is also expensive to use. Miller said the cost to transact on Coinbase averages about 1.3% of trade value, Miller estimated. For comparison, FTX charges 0.10% between the two parties in any given trade. 

"The overarching long term risk to Coinbase is fee compression," Miller said, but he also says that's not the problem now. Users are coming to Coinbase, perhaps due to name recognition. It's just spending a lot of money. 

Bottomline: The crypto market is looking bad right now, and that's going to dampen trading. Miller said, "They've positioned themselves for good times, but it seems right now that we're going into bad times."

Coinbase never capitalized on the good times in crypto

In a gold rush, the guy selling shovels gets rich even if there's no gold.

Illustration of a sphere with the Coinbase logo rolling down a downward pointing trend line

Cryptocurrencies

Whats Next

Axios What's Next

The police in San Francisco see camera-laden autonomous vehicles as potential witnesses in their criminal investigations, setting off alarm bells for privacy advocates, VICE reports. 

Why it matters: As Axios has reported, self-driving cars capture and store huge databases of images so that they can train their algorithms and become better drivers. What that means is that bystanders are often captured in the footage, raising privacy concerns.

Driving the news: The police use of AV footage as evidence came to light because of a public records request from VICE's technology website, Motherboard.

A three-page San Francisco Police Department training guide provided to the website explained how officers should interact with AVs that don't have a human driver, mentioning Waymo and Cruise, two of the industry leaders.

Some of the guidelines include: "Do not open the vehicle for non-emergency issues" and "Do not pull vehicles over unless a legitimate law enforcement action exists."

A section titled "Investigations" advised officers of the AVs' usefulness in collecting footage, saying that this "potential evidence" had been accessed several times already. 

"Autonomous vehicles are recording their surroundings continuously and have the potential to help with investigative leads."

Privacy advocates warn that law enforcement agencies are extending their "web of surveillance" using information like Ring doorbell footage, automated license plate readers and location data they purchase from private companies. 

"​​As companies continue to make public roadways their testing grounds for these vehicles, everyone should understand them for what they are — rolling surveillance devices that expand existing widespread spying technologies," Chris Gilliard, visiting research fellow at Harvard Kennedy School's Shorenstein Center, told VICE. 

The other side: "The SFPD can unequivocally state that we do not use autonomous vehicles to surreptitiously surveil people in the City of San Francisco," an agency spokesman told Axios by email.

He would not say how many times the department had requested or accessed AV video for investigations. 

What they're saying: "Waymo captures data that's relevant for training our tech, not to identify individuals," a Waymo spokesman said.

"Our policy is to challenge, limit or reject requests that do not have a valid legal basis or that are overly broad."

A Cruise spokesman said: "We work closely with law enforcement on our common goal of making our roads safer. We share footage and other information when we are served with a valid warrant or subpoena, and we may voluntarily share information if public safety is at risk."

Self-driving cars could be potential crime witnesses

Cameras that gather video footage to train algorithms might also capture crimes as they occur

Illustration of a car as seen through a series of TV screens

Autonomous vehicles

Automation and AI

Login

Axios Login

The likely demise of Roe v. Wade is putting a new spotlight on privacy rights and personal data. But even as some big tech companies are beginning to try to limit how much data their existing products collect, the industry keeps rolling out new waves of devices and services that scoop up even more personal info.

Why it matters: Any trove of data will sooner or later end up at the other end of a request, or order, to be shared with law enforcement. The newest generation of gear, including autonomous vehicles and always-on cameras, could provide the state with a persistent and omnipresent method of surveillance.

The big picture: "Data minimization" is an ethical guideline, encoded in the EU's GDPR privacy framework and other regulations, urging organizations to collect only the data they actually need and to keep it only as long as they need it.

Google has taken a number of steps in this direction, including processing more data on devices rather than in the cloud and allowing users to set information to be deleted automatically.

Apple has made data privacy a core principle, encrypting messaging data and limiting access to some other types of data so that only the user with the device can access it.

Be smart: Broader shifts in computing threaten to overshadow those efforts with new classes of products that depend on massive collection of data. 

One big trend is building devices around sensors and cameras that are always recording, such as doorbell cameras and autonomous vehicles.

The machine learning algorithms that underlie everything from search engines to speech recognition only work when trained on mountains of data, creating another incentive for companies to build info stockpiles.

"Not only will more data be collected but exponentially more," says Evan Greer, deputy director of Fight for the Future. "It's inevitable that mountain of additional data being collected will be abused."

Driving the news: This week, Vice reported details of the San Francisco Police Department seeking footage from GM-owned Cruise, one of several autonomous car companies whose vehicles are constantly riding around the streets of the city. 

The SFPD acknowledged to Axios that it makes requests for footage to investigate specific crimes, but denied it wants to use them for ongoing surveillance.

Civil rights groups say the stakes of collecting such data have also increased, especially in the U.S. 

"Those data sources have long been vulnerable to government demands," says Matt Cagle, a staff attorney at the ACLU of Northern California, However, the rise of AI is "pouring fuel" on the fire, Cagle said, "particularly in this moment when states are criminalizing abortion and gender affirming care."

"In a world where the Supreme Court might overturn Roe v. Wade, that dystopian hypothetical is no longer hypothetical," Cagle told Axios.

Of note: Vast amounts of data are also available for purchase online, allowing law enforcement agencies to acquire information they may not be able to get through a court order.

Between the lines: While customers have some say over how their own data is stored on their devices, in many cases these newer technologies are sweeping up tons of data about bystanders and third parties.

With a doorbell camera, it's the home owner or renter who buys the device, but the video can capture everyone who passes by. 

Autonomous vehicles owned by large tech companies like Cruise and Waymo are capturing footage of anyone in their path.

Yes, but: Data stockpiles sometimes serve a public good, especially in documenting human rights abuses. 

One example: four Congressional Democrats Thursday called on Facebook and TikTok to preserve evidence of potential war crimes in Ukraine.

Flashback: Makers of the Flip camera, a portable video device that was popular before smartphones could capture large amounts of video, promoted the idea that more people recording more of their lives would make the world safer. This 2009 video explains it pretty well.

"Less is more" comes to big data

Big Tech is starting to limit the volume of data it grabs — but the industry keeps shipping new products that gobble up more info.

Data

Column / Signal Boost

Big Tech

Surveillance

Media Trends

Axios Media Trends

Elon Musk tweeted Friday morning that his $44 billion deal to buy Twitter is "temporarily on hold" as he seeks more details on the platform's new estimate that spam and fake accounts make up less than 5% of users.

Why it matters: Musk provided few details, but the tweet from his official account will ignite havoc in the tech and financial worlds. Twitter shares extended their fall in pre-market trading.

"Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users," he said.

Musk later added in a separate tweet that he is "still committed to acquisition."

The company's shares plunged more than 17% in pre-market trading in response to the news. Tesla's shares rose about 5%.

The big picture: Musk's takeover bid has been wrought with so many twists and turns that Wall Street is beginning to feel skeptical that it will even happen.

For Musk to liquidate a significant amount of his Tesla stake and to wrangle bankers into giving him billions of dollars in financing, only to backtrack due to a single article, shows how manic the entire takeover process has been.

Most acquirers go through a thorough due diligence process to address these types of concerns before submitting a formal bid.

Be smart: The tweet comes a day after Twitter's CEO Parag Agrawal ousted two of the company’s top execs and paused hiring in an effort to be more fiscally responsible.

While sources say the changes were made outside of Musk's purview, there's no question that a looming takeover bid is adding pressure on the company to become more innovative and profitable.

On Friday, Agarwal acknowledged the move tweeting, “While I expect the deal to close, we need to be prepared for all scenarios and always do what’s right for Twitter. I’m accountable for leading and operating Twitter, and our job is to build a stronger Twitter every day.”

”Our industry is in a very challenging macro environment – right now. I won’t use the deal as an excuse to avoid making important decisions for the health of the company, nor will any leader at Twitter,” he added. 

Sources tell Axios that internally, employees are exasperated by the whole process.

The potential sale already caused a lot of concern about job security, and morale has been low. A pivot away from a sale would’ve been a relief, but the bait and switch is just as exhausting.

Our thought bubble: There's been speculation for weeks that Musk would walk away, and he just took a giant first step.

Editor's note: This article has been updated with additional comments from Musk.

Elon Musk says Twitter deal "temporarily on hold"

Musk provided few details, but the tweet from his official account will ignite havoc in the tech and financial worlds.

Photo: Dimitrios Kambouris/Getty Images for The Met Museum/Vogue

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

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.

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.

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.

Friday's technology stories

Unity has goals far beyond gaming

Elon Musk's Twitter clown car

YouTube creators are feasting on the Depp v. Heard trial

Coinbase never capitalized on the good times in crypto

Self-driving cars could be potential crime witnesses

"Less is more" comes to big data

Elon Musk says Twitter deal "temporarily on hold"

Zoom takes over movie production

Terra briefly halts blockchain amid stablecoin uproar

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

Why currency pegs crack

Twitter freezes hiring, rescinds some offers as top execs depart

Democrats split on Big Tech measures in Congress

A worker reckoning at Nintendo

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

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

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

Lina Khan's to-do list on Big Tech

Food delivery needs tech support in some neighborhoods

Google adopts more inclusive skin tone model