Trump hates fake news, loves big media - Axios
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Trump hates fake news, loves big media

Illustration: Sam Jayne / Axios

President Trump continues to publicly belittle big media organizations as "fake news," but in Washington, his administration's moves are a boon to big media companies. Telecom and technology companies are being deregulated while smaller media companies worry about their ability to survive.

Why it matters: On the campaign trail, populist Candidate Trump vowed to "break up the new media conglomerate oligopolies" and to shut down the biggest media deal of the year. But President Trump's administration has actually encouraged consolidation as part of its deregulatory blitz.

Consider:

  • The number of announced media deals rose under the new administration, per PwC, with both the first and second quarter eclipsing the final year of the Obama administration in deal volume — as well as much of 2015.
    • While analysts say changes in viewing habits are driving consolidation in the media industry, they also say that's being helped along by the administration's deregulatory stance.
  • Google and Facebook are growing bigger than ever: Trump told Axios earlier this year that Facebook's dominance didn't concern him, because the platform enables him to communicate directly with the American people.
    • From regulators to Republican lawmakers, there has been little appetite to take on the companies beyond mandating more transparency for political ads — something that's grounded in national security concerns, not antitrust doctrine.

Who's benefited?

  • The telecom companies. Ajit Pai's FCC is well on its way to repealing net neutrality regulations and given the green light to arrangements that give free data to customers who use certain applications or services. And Republican lawmakers voted to repeal privacy regulations for the companies.
  • Broadcasters — particularly the Trump-friendly Sinclair. The FCC removed a key regulatory hurdle for local news consolidation, clearing the way for Sinclair's acquisition of Tribune's stations.
  • Google and Facebook. The titans of the internet are taking tons of flak on Capitol Hill over the role they may have played in Russian election meddling. But President Trump has been quiet about it and hasn't acknowledged that there was Russian election meddling in the first place. Meanwhile, his antitrust regulators don't seem interested in pursuing the companies despite pressure from the left.

Yes, but: The good fortunes of a select few big media companies shouldn't obscure the fact that Trump is using his office to carry out grudges against individuals reporters and outlets for reporting things he doesn't like.

Just last week he said — twice! — that licenses for NBC stations should be challenged and potentially revoked. His media regulator, Pai, was silent — despite earlier this year declaring himself a defender of the free press in response to questions about the president's attacks.

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Disney's $60 billion deal for Fox comes with lots of questions

Illustration: Rebecca Zisser / Axios

The Walt Disney Co. is expected to announce within the next few days that it will buy the entertainment assets of 21st Century Fox for roughly $60 billion. Included would be Fox's movie studio and television networks like FX and Nat Geo TV.

Why it matters: Disney would get the scale to take on Netflix, but first it will need to convince regulators that it doesn't pose the same sort of monopoly risk as AT&T's proposed purchase of Time Warner.

Strange timing

The Department of Justice recently sued to block a merger between AT&T and Time Warner, and the court has warned not to expect a final decision until at least the end of April. There had been some speculation — including from AT&T CEO Randall Stephenson — that the DoJ's action would put Disney's talks with 21st Century Fox on ice. Big mergers are disruptive to a business, and even more so when regulatory approval is in doubt.

The "we're different" argument:

Disney and Fox will argue that their proposed merger has more differences than similarities to AT&T/Time Warner. Key will be Disney and Fox's relative lack of direct-to-consumer distribution capabilities (i.e., they don't have anything like AT&T's DirecTV).

  • Disney wouldn't own any actual pipes, meaning it wouldn't be able to offer free data when consumers use a certain service (a.k.a. "zero rate").
  • This argument could become easier to make if the FCC repeals net neutrality rules on Thursday, as expected, thus further empowering telecom giants like AT&T.

The "we can't compete with Netflix" argument

Disney will argue that today's content environment is the most competitive it's ever been, with networks losing market power to tech companies that are dropping billions on original programming. And regulators will have heard it before, because AT&T is making a similar case.

  • Disney and Fox each own 30% of entertainment streaming service Hulu, meaning that a tie-up would give Disney a majority stake. It is certainly a distribution capability, but their thinking looks like this: Hulu < DirecTV + HBO Go.
  • Complicating matters is that Disney has announced plans to build out its own subscription streaming service in 2019. The goal is to scale that service to compete with Netflix, but it also would potentially compete with Hulu.

Across the pond

For Disney, this deal is about competing with Netflix. The motives are a bit less clear for 21st Century Fox, a family-run business that doesn't have the same short-term financial pressures as some other companies.

21st Century Fox is in the process of buying majority ownership of Sky TV, a U.K. based broadcast network, that Fox already has a minority stake in. The UK's competition regulators are currently weighing whether the Murdochs are "fit and proper" to manage the acquisition.

  • Sources suggest that Fox still thinks the Sky TV deal will go through, with or without Disney, despite how long the process has taken.
  • For Disney, Sky would provide greater international reach and yet another over-the-top streaming service.
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Twitter is rolling out a "tweetstorm" button

Twitter logo as it appeared on a phone post on the floor of the New York Stock Exchange in October 2016. Photo: Richard Drew / AP

Tweet threads — also known as "tweetstorms" — will now be easier to create thanks to a new button the company is rolling out.

Background: Threads, which Silicon Valley investor Marc Andreessen helped popularize a few years ago (before he quit Twitter last year), have become the go-to format for expressing longer and more nuanced thoughts on the service. Even with the recent doubling of the character limit for tweets, users are still using threads to post longer messages, so it's no surprise it's been working on a way to make them easier to create.

  • Twitter is also adding a "Show this thread" label on threads to make it easier for users to read all the tweets at once instead of looking for them.
  • Like many of its other product changes and improvements, this is part of Twitter's attempt to make its service easier to use, especially for newcomers. The company has been under pressure from Wall Street for the last few years to boost its user growth.

Fun fact: A few years ago, Twitter submitted a trademark application for the word "tweetstorm."

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Apple doesn't like to say how much it pays for acquisitions

Apple yesterday confirmed its rumored acquisition of music identification app Shazam, but declined to say how much it paid (some reports suggest around $400 million).

Bottom line: This is normal operating procedure for Apple, which has only disclosed purchase prices for 15 of its 68 acquisitions, according to Thomson Reuters.

Reproduced from Thomson Reuters Dals Intelligence; Note: Data as of Dec. 11, 2017; Chart: Axios Visuals
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Comparison shopping is bogging down the Fed

Shoppers roam through an Amazon Go store. Photo: Elaine Thompson / AP

Holiday shoppers are increasingly using their smartphones to get instant price comparisons to find the best deals, but the feature is making it more difficult for the Federal Reserve to manipulate interest rates, reports the WSJ.

Why it matters: The rise of consumer knowledge and price-checking is muddying the Fed's clarity on how much and how fast to implement interest rate hikes, as it restricts retailers' ability to charge different prices online and in stores. The result is bogged down inflation in advanced economies, like the U.S. and China.

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Microsoft vet Julie Larson-Green joins Qualtrics

Longtime Microsoft executive Julie Larson-Green has agreed to join privately-held Qualtrics as its first chief experience officer.

Why it matters: Larson-Green once led Microsoft's Windows group, and once was viewed as a possible CEO successor to Steve Ballmer (the role that eventually went to Satya Nadella). She also held prominent roles in the Office and Microsoft devices units.

Qualtrics, a Utah-based corporate survey and analytics that has a second headquarters in Seattle, originally contacted Larson-Green about joining its board of directors. "It turned out she was leaving Microsoft and we had this other search ongoing for a chief experience officer," explains Qualtrics founder and CEO Ryan Smith. "She'll run product design for us, plus all other experience-related areas that people have with the company."

Smith declined to comment on how his company's IPO plans are progressing, except to note that Qualtrics did recently add a chief financial officer.

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Why Cloudflare's CEO took down The Daily Stormer

Cloudlffarefare CEO Matthew Prince. Photo Illustration: Axios Visuals

Cloudflare's network powers internet connections to millions of websites, but most of the 2.8 billion people who use its network every month have never heard of the company. That is, until last August, when Cloudflare CEO Matthew Prince made the controversial decision to cut off its service to white supremacist website “The Daily Stormer" in the aftermath of the Charlottesville violence, causing the site to go down.

Why it matters: Prince, the son of a journalist and an avid defender of free speech, took heat from some for acting as an internet gatekeeper and was praised by others for taking down neo-Nazi content. His decision fed into the larger debate over whether powerful internet players should have editorial control over how content is distributed online.

What's next: The next turning point in that debate comes on Thursday, when FCC Chairman Ajit Pai leads the vote that will erase net neutrality rules from the books.

We caught up with Prince after he'd met with Pai on the topic of internet freedom. Below are excerpts, edited for length and clarity.

Q. You were opposed to the FCC's passage of net neutrality rules using Title II in 2015, but now you are opposed to rolling them back. Why?

The absence of regulation in a space that had been relatively unregulated is different than withdrawing regulation. And the chess board has changed since then (with more ISPs trying to bundle content). If you own the pipes and the content, there's even more incentive to prioritize your content over rival's content, which creates even more risk.

That said, I think the transparency requirements of Pai's proposal are important, forcing ISPs to publicly disclose if there's throttling, blocking or fast lanes. The net neutralty lobby is strong. There will be normative pressure on these companies to discourage that behavior.

I think that the interest group that is most at risk in all of these conversations is the startup that hasn't started yet. And unfortunately that's the group that least well represented.

Q. What's your reaction to Pai's remarks that edge providers like Google and Facebook are more of a threat to the open internet than ISPs?

I don't disagree and, in fact, he quoted a blog post I'd written about how there is real risk in anyone who is in the position of gatekeeper at them exercising some editorial control over what content should or should not be accessible online, or the rate at which it is accessible or how it is prioritized or preferred. The only threat to accessing content on the internet is not ISPs.

But just because there are other threats online to restricting content doesn't mean “let's create more." Which is what the risk is here. If a company like Cloudflare with 500 employees and market cap two orders of magnitude smaller than Comcast poses a threat, then even larger companies that have a monopoly over the eyeballs and access the internet also pose a threat.

Q. What is Cloudflare's role in that?

2.8 billion people use our network every month. 99.999 percent of them have no idea they're using it. That lack of visibility and as a result the lack of effective transparency, I think, is actually is concerning if we start making editorial judgement of what content can and can't be online… Our job is to move bytes, not to pick winners.

Q. How does that square with your decision to allow Daily Stormer to be taken down? Would you make that same decision again?

If we had a time machine, yes, I'd go back and do it again. We needed to provoke the conversation about what the right role was. We needed to meet with the FCC about this and to talk through this and to get people to say, there might be some difference between Facebook and Google and Twitter and Cloudflare and AT&T. There is unlikely to be one rule that applies in all of these cases. We need a framework to think [through] that.

Facts Matter Featured

Congress under pressure to reauthorize surveillance law

The headquarters of the National Security Agency. Photo: Patrick Semansky / AP

Congress is under the gun to reauthorize a major surveillance law in a debate that has been overshadowed by other major policy fights, like net neutrality and the investigation into online Russian election meddling.

Why it matters: The law — known as Section 702 — expires at the end of the year. Intelligence agencies say it would be ultimately catastrophic if it isn't reauthorized. Privacy-minded lawmakers and advocates, however, say that if it is reauthorized without reforms it will perpetuate a sprawling surveillance system that ensnares Americans' information without a warrant.

What the law does

The law is used by the intelligence community to justify the warrantless surveillance of the electronic communications of foreign nationals located abroad.

The debate

Those agencies have pushed aggressively to renew the law without any reforms. But privacy advocates inside and outside of government say that the programs under the law pick up communications belonging to Americans, too.

They've also raised concerns about the way information obtained without a warrant under the law can be used by the FBI in criminal – rather than national security – cases.

What's next?

  • There are several bills in Congress that would keep programs under the law going. Some would make significant changes to surveillance authorized by the law, while others have been met with an apoplectic reaction from privacy advocates and their supporters in tech who say these bills could make things worse.
  • One of those measures could be attached to a must-pass spending bill or move on its own. Lawmakers could also pass a short-term extension to the law and kick the can down the road.
  • Intelligence officials think, however, that they can continue surveillance under the law for some time even if the law doesn't get reauthorized by the end of the year.
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Exclusive: Digital vet Jim Roberts joins Cheddar as EIC

Cheddar

Jim Roberts, former Mashable executive editor and veteran New York Times and Reuters digital editor, is joining streaming TV startup Cheddar as editor-in-chief to lead Cheddar's newsroom and editorial coverage. The company is also launching "Cheddar Scoops," an exclusive-news reporting unit. Business Insider's Alex Heath is the first Cheddar Scoops hire.
Why it matters: Cheddar continues to expand amid a tumultuous landscape for VC-backed digital media. These hires are part of a push to strengthen the company's editorial product to keep up with its aggressive business deals.
  • The company hopes to add five to 10 people to the Cheddar Scoops team next year, many of whom will be experts in hot topic areas within business, deals, tech and media — Cheddar's specialties. Cryptocurrency, for example, is a "no brainer," says Cheddar Chief Content Officer Peter Gorenstein.
  • Roberts and Heath will begin December 19 and 18, respectively, and will be the first of several newsroom hires that will work to expand Cheddar's original reporting footprint. "We will use all of the weapons of distribution to get our scoops out there," says Roberts. "That means breaking things on our air, and pushing scoops out on social media."
Sound smart: Roughly a year old, Cheddar now has 100 employees — 46 of which work in content. But most of that editorial staff works on creating the product, not breaking its own news. Now, Cheddar is investing in original reporting, which it hopes will distinguish itself from other over-the-top livestreamers, like The Young Turks and Barstool Sports.

Prior to his role at Cheddar, Roberts was executive editor at Mashable, and has also held high ranking positions at The New York Times and Reuters. He sees his new role at Cheddar as a chance to be disruptive. "We know how difficult it is to make a news and information business work," Roberts tells Axios. "The ones taking chances and trying different things are the ones making an impact right now."

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You can log out, but you can’t hide

A new study from Ghostery, an anti-tracking tool, shows that an overwhelming majority (79%) of websites globally are tracking visitors' data — with 10% of these sites actually sending user data to 10 companies or more.

Why it matters: Trackers can collect and sell visitor data in ways that aren't always obvious to consumers. Too many trackers can also slow down website load times. As the trade war for data intensifies, companies that collect the most data through trackers will become the biggest targets of data privacy reform.

Reproduced from Ghostery; Chart: Axios Visuals
  • Tracking scripts from Google and Facebook are by far the most pervasive. Together, those two companies collect more data than most other companies combined.
  • The U.S., Russia and U.K. have more trackers per page load than the global average, while Germany, France and India have fewer. (Germany and many European countries are known for their culture of strong data privacy.)
  • The advertising supply chain represents the vast majority of tracking companies.
New regulatory efforts to protect consumer privacy will significantly hinder these companies' ability to collect data via tracking scripts. The General Data Protection Regulation (GDPR), which goes into effect next year in Europe, will require companies to get explicit permission from consumers to collect their data.
Too many trackers can often create slower web experiences. A Princeton study earlier this year found that mainstream news websites use more third-party ad tech vendors than any other type of website: sports, shopping, adult, etc. Such partnerships can slow down load times for publisher sites if there are too many trackers dropped on a page, or if they're using certain techniques to capture data.
  • Some of the more heavily-trafficked user websites are trying to peel back on these partnerships to speed up their sites. Bloomberg, The Washington Post and others have made significant efforts to curb the number of tracking scripts on their web-pages in an effort to keep their sites nimble.
  • Some websites use "redirect" buttons that allow users to post content to social media without giving those sites direct access to their first-party data that they could monetize. Sites may still share data with these platforms in other ways, however.
  • Nealy one third of websites tracked has a hidden Facebook tracker, per Ghostery's whotracksme.com site. Facebook won a critical privacy lawsuit in July over tracking users' internet activity through "like" button trackers even after they logged out of the social media website, per Reuters.
Our thought bubble: It benefits these ad companies to have as access to as much data as possible, not just for profit, but because they want to provide better advertising experiences for users. (Studies have shown that consumers prefer customized ads.) Some may argue it's the cost of having free access to their tools.
Methodology: The data was collected by the Ghostery browser extension's GhostRank feature and covers all major browsers (Firefox, Chrome, Edge, Opera, and the Ghostery Privacy Browser for iOS and Android). It encompasses the internet activity of 850,000 internet users internationally across 440 million page loads.
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Axios PM

1 big thing: terror targets New York

Law enforcement officials work following an explosion near New York's Times Square on Monday, Dec. 11, 2017. Photo: Andres Kudacki / AP

New York City was the scene of a terrorist attack this morning. Fortunately, no one was killed, although three people suffered injuries. The suspect, 27-year-old Akayed Ullah, is in custody.

The NYT reports: "He chose the location because of its Christmas-themed posters, recalling strikes in Europe against Christmas markets, he told investigators, and set off bomb in retaliation for U.S. airstrikes on ISIS targets in Syria and elsewhere, several law enforcement officials said."

More details from Axios' Alayna Treene:

  • The explosion occurred in an underground walkway that runs through the Port Authority bus terminal and Times Square along 42nd Street, the New York Police Department said.
  • Ullah is a lawful permanent resident "who benefitted from extended family chain migration," per Homeland Security.
  • Ullah attached the "low-tech" pipe bomb to himself with a "combination of Velcro and zip ties," NYC Police Commissioner James P. O'Neill said during a press conference.
  • O'Neill said that Ullah acted alone and that no other devices had been found.
  • It's unclear whether Ullah was attempting a suicide bombing.
  • Ullah was taken into custody and transported to Bellevue Hospital where he was treated for severe burns to his hands and abdomen.

One big quote, from New York Gov. Andrew Cuomo: "This is New York. The reality is that we are a target for people who would like to make a statement against democracy, against freedom. We are not going to allow them to disrupt us."

2. What you missed

This undated photo provided by the New York City Taxi and Limousine Commission shows Akayed Ullah, the suspect in the explosion near New York's Times Square on Monday, Dec. 11, 2017. Photo: New York City Taxi and Limousine Commission / AP

  1. Three women who have accused President Trump of sexual misconduct spoke out again today in an NBC interview with Megyn Kelly and in a press conference.
  2. Celebrity chef Mario Batali is stepping away from his show "The Chew" and his restaurant empire after four women anonymously accused him of sexual misconduct.
  3. The New Yorker has severed ties with Ryan Lizza for what it believes was "improper sexual conduct."
  4. Apple bought music-identification app Shazam. More.
  5. Congress is unlikely to pass a multi-year funding solution for the Children's Health Insurance Program until January, according to House GOP leadership sources. Expect temporary fixes for now.
  6. Axios tech editor Kim Hart is the star of our latest Sourced video, on net neutrality. Plug in.

3. Another big thing

The Pentagon announced today that transgender troops will be allowed to enlist in the United States military beginning on January 1. Details.