Why Jeff Sessions scares tech companies - Axios
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Why Jeff Sessions scares tech companies

Susan Walsh / AP

As the new attorney general, Jeff Sessions has the power to create some major headaches for technology companies.

Sessions has gone after the tech industry for hiring high-skilled foreign workers and resisting law enforcement surveillance requests. Pile on Donald Trump's populist disdain for big companies and suspicion of some dominant tech platforms, and antitrust experts also say Silicon Valley has reason to be worried.

Encryption and privacy:

  • Sessions has been at odds with Silicon Valley over law enforcement's access to encrypted data and pushed back on surveillance reforms.
  • A year ago, Sessions took Apple to task for refusing to help the FBI access encrypted data on an iPhone linked to the San Bernandino attack. The government eventually backed down, but the industry is bracing for increased pressure from law enforcement as surveillance debates heat up.
  • The DOJ will also be involved in crafting policies around cross-border data sharing, an increasingly important issue for American tech companies doing business abroad.

Immigration:

  • Sessions has hammered Silicon Valley companies using H-1B visas to hire foreign workers for engineering jobs.
  • He and Trump share the general view that hiring American workers should be prioritized. The tech industry's long-standing goal of raising the annual visa cap is dead in the water — its goal now is to prevent the program from being gutted.
  • Sessions will be in the position to call for changes to the lottery system that divvies up the visas in ways that could discourage tech companies from using the system at all.

Mergers:

  • Front-runners to lead the DOJ's antitrust division include Joshua Wright (member of Trump's transition team) and Makan Delrahim (deputy White House counsel). They're known in antitrust circles as having traditional Republican pro-business leanings.
  • The real question is whether Trump will try to turn merger reviews into business negotiations. Antitrust experts fear Trump could use the merger review process to extract political promises, like creating jobs. (Mergers, of course, typically end up eliminating jobs.)
  • Take the proposed AT&T-Time Warner merger, which has drawn fire from Trump. Since the two companies don't directly compete against each other, the legal case to block the deal is seen as relatively weak. Still, Sessions could take the cue from his boss to intervene.

Competition:

  • The Justice Department can investigate the behavior of dominant companies if they are accused of engaging in anti-competitive practices (recall the case the DOJ brought against Microsoft in 1998). Typically Republican administrations don't go after companies on competition grounds, but as one antitrust attorney put it, "this isn't your typical Republican administration."
  • Trump has indicated he thinks some tech companies have grown too big and powerful. On the campaign trail, he said Amazon has "a huge antitrust problem." He told Axios he'd "like to create more competition," for companies like Facebook with rapidly expanding size and reach.
  • That means dominant tech companies like Apple and Google could also have targets on their backs, experts said.
What to watch: Immigration and visa program reform is top-of-mind for most tech companies, who've been increasingly vocal in speaking out about Trump's immigration order. But it's the antitrust division that keeps them up at night: Big tech firms know Sessions will have to bless any mergers coming down the pike and an activist department could even look at coming after tech companies the administration thinks have gotten too big. "Trump's a deal-maker," said one D.C. antitrust lawyer. "It's generally been frowned upon, but there's nothing illegal about the White House telling antitrust agencies what to do."
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Club for Growth starts hitting Republicans on border tax

The conservative group Club for Growth is launching its first ad in a campaign to pressure Republicans to oppose a key plank of Paul Ryan's tax plan — the $1 trillion border adjustment tax.

Target 1: Rep. Kristi Noem of South Dakota, who serves on the tax-writing Ways and Means committee. The Club's attack ad against Noem will run on TV and digital in South Dakota, starting Wednesday, with an initial buy of more than $150,000.

The strategy: Spook congressional Republicans, beginning with Noem, into opposing border adjustment by arguing that the import tax hike will raise household costs. The Club's President David McIntosh says he expects the Noem ad to be the first of a series the group will air in states and congressional districts across the country. Other members of Ways and Means will be targeted.

Why this matters: The fight over the border adjustment tax is shaping up as the biggest tax fight of the year. On one side: House Republican leadership, an outside coalition led by General Electric and Boeing, and — possibly, though it's still unclear — President Trump. On the other side: Major retailers like Walmart, oil and gas companies, the Koch donor network, a growing number of House conservatives, and now the Club for Growth.

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Facebook in talks to stream MLB games

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Per Reuters, Facebook is reportedly in talks with Major League Baseball to live stream one game per week in the upcoming season.

What's in it for MLB? Baseball's TV audience skews older than any sport in America. A streaming deal with Facebook extends MLB's reach to a younger generation, which has steadily become less engaged in America's favorite pastime. Per Nielsen, over 80% of those interacting with TV on Facebook are millennials and Gen. X.

What's in it for Facebook? Even though Facebook has been pursuing sports live streaming contracts for months with the NBA and others, Twitter still maintains the lucrative NFL contract to livestream Thursday night games on their platform. An MLB deal to stream games weekly would be the largest American livestreaming sports deal for Facebook.

Why it matters: Social networks are going after sports deals because unlike most TV content, sports are still viewed live. Additionally, 58% of TV viewers use Facebook as a second-screen while watching TV, per Nielsen. For Facebook, Twitter, Snapchat and others, pulling TV content onto their platform keeps audiences engaged on their platform longer.

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U.S. iPhone users are spending more on apps

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U.S. iPhone users are increasing their spending on premium apps and in-app purchases, according to data from mobile analytics firm SensorTower. In 2016, they spent an average of $40, up from $35 the previous year.

Games rule the App Store: Gaming apps generated 80% of that revenue, according to the data. The average iPhone user spent $27 last year on games, versus only $3.60 on music apps—the second biggest category after games. And while entertainment apps like Hulu and Netflix saw a 130% bump, revenue from that category is still only $2.30 from the average U.S. iPhone user.

The flip side: In contrast with revenue, which is growing, SensorTower found that the average U.S. iPhone user installed 33 apps, down from 35 the previous year. The trend was present across all app categories, including games.

Why it matters: While this is good news for Apple, which has been touting its growing revenues from its services including its app store, this latest data also underscore the challenges it will have to push a subscription model for its apps. As the data shows, users mainly spend money on gaming apps, so they'll have to be convinced to spend money on other types of apps to begin with.

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Google Site Search on its way out

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Fortune reported that Google is planning to discontinue its business feature, Google Site Search (GSS), which — for a fee — provides web publishers with customizable search technology, making it easier for users to find the site. Existing users can keep using GSS for the allotted time under their current contract, but Google will stop selling new licenses and renewals on April 1.

Once a customer's GSS contract is up, the account will "automatically convert" to Google's free Custom Search Engine (CSE). If customers don't want to move to CSE they can choose to remove their existing search engine. Google described its plans to customers and partners in an email obtained by Fortune on Tuesday, but the news has yet to be publicly announced.

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Uber CEO admits mistakes were made

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In a company-wide meeting two days after explosive allegations of sexual harassment and sexism from a former employee, Uber CEO Travis Kalanick "spoke very honestly about the mistakes he's made — and about how he wants to take the events of the last 48-hours to build a better Uber," according to a blog post from board member Arianna Huffington.

"It was great to see employees holding managers accountable. I also view it as my responsibility to hold the leadership team's feet to the fire on this issue," added Huffington, without providing further details of the conversations. The company spent more than an hour discussing women's experiences in the workplace, she said.

Why this matters: As a fast-growing company in the last few years, Uber chose not to focus its HR efforts on diversity and areas outside of hiring (and firing), as Recode recently noted and Axios has also heard. This is likely one of the mistakes Kalanick discussed during the meeting and where efforts after investigation of the allegations could focus.

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What to know from the DHS immigration memos

Evan Vucc / AP

Today the Department of Homeland Security released two memos, signed by Secretary John Kelly, which outline how the DHS will roll out President Trump's immigration executive orders from last month.

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Milo's controversial and contrite press conference

Mary Altaffer / AP

Alt-right provocateur Milo Yiannopoulous had his keynote speech at CPAC and his Simon & Schuster book deal cancelled after comments he made during a podcast taping that seemingly condoned pedophilia became public. This afternoon, he held a press conference to announce his resignation from Breitbart News.

His reason for the press conference: "This is about me apologizing for me saying things I did not mean. This is about me apologizing to other victims of abuse who viewed what I said as flippant...I've never apologized about anything before, and I don't anticipate doing so again, but this particular subject strikes very close to home for me."

He's not going anywhere: He'll be announcing an independently-funded media venture in the coming weeks, his book will still be released by another publisher, and he'll be expanding his college tour.

It wasn't pretty: When asked if he had a message to other victims of sexual abuse, Milo told the assembled press corps that other things — specifically, going bankrupt — are worse.

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Trump budget could dredge up battle over Export-Import Bank

Sean Spicer punted on the question of whether President Trump supports the Export-Import Bank on Tuesday, after the New York Times reported that the agency would be eliminated in the president's forthcoming budget.

The Export-Import Bank sounds like an independent agency Trump would love — it subsidizes foreign purchases of American goods, thus providing a boost to manufacturing employment. But free market fundamentalists hate the bank, arguing that it unfairly subsidizes one sector, thus diverting resources by government fiat from other enterprises that might be more deserving.

What's next: The president put a small government ideologue, Mick Mulvaney, in charge of his budget office, but also hasn't let conservative priorities get in the way of his message of supporting American jobs above all else. Watch to see how steadfastly he will defend such cuts in the face of lobbying by high-profile companies like Boeing.

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Milo Yiannopoulos out at Breitbart

From a statement:

"Breitbart News has stood by me when others caved. They have allowed me to carry conservative and libertarian ideas to communities that would otherwise never have heard them. They have been a significant factor in my success. I'm grateful for that freedom and for the friendships I forged there. I would be wrong to allow my poor choice of words to detract from my colleagues' important reporting, so today I am resigning from Breitbart, effective immediately. This decision is mine alone. When your friends have done right by you, you do right by them. For me, now, that means stepping aside so my colleagues at Breitbart can get back to the great work they do."

Why he resigned: for comments on sex between adult men and minors on a podcast that surfaced over the weekend. Yiannopoulos has now lost a CPAC speaking slot, a book deal and his role at Breitbart News.

What's next: he'll give a press conference shortly.

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Privacy hawks slam idea of checking social media of foreign visitors

Secretary of Homeland Security John Kelly (Matthias Schrader / AP)

A coalition of pro-privacy forces are aghast at the idea of the Department of Homeland Security requiring people entering the country to hand over their social media passwords:

"No government agency should undermine security, privacy, and other rights with a blanket policy of demanding passwords from individuals."

Why now: The groups are responding to comments from new DHS Secretary John Kelly at a congressional hearing earlier this month. "We want to get on their social media, with passwords: What do you do, what do you say?" He added that it was one of multiple ideas on the table.

Key context: Officials started asking for some foreigners to identify their online accounts in the waning days of the Obama administration, Politico reported. But questions about surveillance and immigration have taken on more resonance after Trump banned travel from seven Muslim-majority countries in January.