Source Code: What matters in tech, in your inbox every morning
Sign up for Source Code — David Pierce’s daily newsletter on everything that matters in tech.
Good morning! This Thursday, the U.K. has a plan to police the internet, Mark Zuckerberg had his master plan in a notebook, and how to get VC funding through Fortnite.
People Are Talking
Should there be a U.S. Data Protection Agency? Sen. Kirsten Gillibrand thinks so:
- "We face a national crisis as our personal data gets targeted — and not just for marketing by brands, but also to establish if we can access certain jobs, loans, or prices on products. Americans should be able to go to an institution that will look out for, and actively work to protect, their privacy and freedom."
There's a lot to admire about China's fast-growing economy, says Charlie Munger, Warren Buffett's business partner:
- "The strongest companies are not in America. The Chinese companies are stronger than ours and are growing faster."
In this week's Protocol Braintrust, venture capitalist Hunter Walk explains what governments could do to speed up financial services innovation:
- "Create 'safe harbor' guidelines for experimentation so that teams can try new ideas without going through the regulatory and certification process required for large institutions."
The U.S. doesn't need to buy its way into the 5G race and may have the capacity to succeed by itself, In-Q-Tel CEO Chris Darby told the House Intelligence committee:
- "I think Huawei is definitely beatable. Titans can fall."
Messaging encryption isn't going anywhere, according to WhatsApp boss Will Cathcart:
- "For all of human history, people have been able to communicate privately with each other. And we don't think that should go away in a modern society."
The Big Story
The U.K. picks its online watchdog
The British government announced on Wednesday an updated, wide-ranging plan for how to police the internet. It starts with Ofcom, the country's broadcasting and communications regulator (roughly the British equivalent of the FCC), to which the government plans to grant sweeping powers over social media companies.
- Ofcom wouldn't be able to remove posts from Facebook, Twitter and the like, but would require those companies to post public and specific rules for behavior. Ofcom's job would be to hold those companies to those rules.
- Platforms would be expected to quickly and reliably remove especially objectionable content, like terrorism and child pornography, but the rules are less strict for what the proposal calls "offensive" content. That's where they would ask companies to clarify the rules for what's allowed and what's not.
- Priti Patel, the U.K.'s home secretary, said: "It is incumbent on tech firms to balance issues of privacy and technological advances with child protection."
The proposal doesn't include specifics on one key part: What would Ofcom do to companies that violate the rules?
- Government officials have been arguing about whether the rules should allow for things like prison sentences for executives whose companies don't abide by the rules.
This isn't a final plan, and things could yet change before it becomes a reality. But it's a significant moment, and a noted shift from the self-regulation powers tech companies have in many places.
When investors meet the regulators
Does big tech stifle innovation? That sounds kinda crazy in some ways, but it was the question of the day for about 200 investors, regulators and academics, who gathered at Stanford to talk about the possibilities — and limits — of antitrust reform.
- The theme of the day was startups, kill zones — the areas where big tech may be smothering startups — and what it's like to be a small company in the big tech era.
- U.S. Department of Justice Antitrust Division chief Makan Delrahim (who was, by the way, the subject of a very good Hollywood Reporter cover story Wednesday), appealed to the common ground between regulators and VCs. "We both care deeply about market conditions that encourage entrepreneurs to take calculated risks that benefit society," he said.
- Paul Arnold of Switch Ventures raised eyebrows by saying big tech companies are cooling the market for startups: "Everybody is dissatisfied with LinkedIn, and every founder thinks there's a better way for it to be done, and they're probably right. It's not that good, but they have a very powerful network effect, and it's incredibly hard to overcome that network effect."
It was a timely conversation, and one that's likely to continue as the FTC probes deeper into the inner workings of tech giants.
A MESSAGE FROM NASDAQ
Reimagining Markets Everywhere
Nasdaq Technology is reshaping the future of global markets by redefining what a marketplace can be.
Inside Facebook's fight against gun sales
On Wednesday, Protocol's Matt Drange published an investigation into Facebook's four-year-long attempt to block private gun sales on the platform. I caught up with Matt and asked him how he found this marketplace that Facebook can't shut down. Here's what he said:
- "When Facebook banned gun sales in January of 2016, I was skeptical it would be able to succeed. So I joined a bunch of gun enthusiast groups across the country, which quickly went from 'buy/sell/trade' pages to the same function but with a different name: 'discussion groups.'"
- "It turns out that these private groups, many of which have since been moved to unlisted settings — making them more difficult to join — remain good places to buy a gun. It took me all of 20 minutes to get in touch with a handful of gun sellers in Virginia, where a major battle over gun control is happening offline."
Sen. Bob Menendez had a particularly strong reaction to the story, even hinting at a regulatory response:
- "The fact that a former Facebook employee recognized that the company's real intentions were not to completely avoid gun sales on its platform, but to reduce them to some 'acceptable' level is baffling. No level of gun sales on Facebook or any other social media platform is acceptable. Period. If Facebook — and others — cannot enforce their own policies, we need to seriously discuss whether a federal response may be the only way to address this increasingly worrying issue."
By the Numbers
That's how many cybercrime reports the FBI received in 2019 — and it's just the ones the agency knows about. Phishing and extortion are the most common vectors of attack, though the FBI also received 13,633 complaints about tech-support fraud, in which a scammer tells a user their device is broken and then offers to fix it. (Don't answer these calls, folks.) In all, cybercriminals made at least $3.5 billion from their work last year.
In Other News
- In the early days of Facebook, Mark Zuckerberg had a secret notebook. And what he wrote inside reveals a surprising amount about how Facebook would turn out.
- From Protocol: Essential Products is dead. What killed Andy Rubin's creation? Bad timing, bad strategy and a problematic founder.
- Seattle City Council member Kshama Sawant won reelection and said she'll redouble her efforts to bring back the "Amazon tax" that was passed and then repealed in 2018.
- Jeff Bezos bought a house. His LA hunt ended with a $165 million purchase of David Geffen's nine-acre estate in Beverly Hills. My quick mortgage calculations put his monthly payment at about $800,000 — but I have an odd feeling he just wrote a check and moved in. (Thanks to Fred for sending this one in!)
- From Protocol: What does the Mobile World Congress cancellation mean for companies? Actually, really quite a lot for the smaller ones. (Also Protocol's Mike Murphy was planning to go — please send him Barcelona vacation tips.)
- JD.com is hiring up to 20,000 workers who have been displaced by coronavirus. Alibaba and other companies are doing the same, as the Chinese government tries to keep people working through the crisis.
- Larry Ellison is hosting a "golf outing" fundraiser for President Trump's 2020 campaign. As Recode points out, that's all but unheard of for a tech exec.
- A culture of "move fast and break things" causes companies problems, a recent study found. Even a mission statement promoting "locomotion" can cause employees to make more unethical decisions.
- Michael Bloomberg is paying influencers to post memes of him asking them to post memes. Confused? One influencer told The New York Times: "It's the most successful ad that I've ever posted, and I think a lot of it came from people being confused whether or not it was real."
One More Thing
Where founders and investors meet: video games
Ramp, a corporate credit card startup, launched on Wednesday with $25 million in funding. Founders Fund led the investment — and guess how they got connected? Fortnite. Founders Fund's Delian Asparouhov tweeted that he met Ramp CTO Karim Atiyeh in the game, and that Atiyeh pitched him when they first played together.
Asparouhov told me a bit more: He met Atiyeh through a mutual friend, who suggested they play as a four-person squad. Atiyeh was better than he was, but in just the right way — and watching Atiyeh operate in stressful Fortnite situations might have played a small role in Asparouhov deciding to invest. "I do think you can reveal somebody's character pretty damn well" playing games together, Asparouhov said.
Lots of people on Twitter responded that Fortnite is the new golf course. But that's not right: Burning Man was the new golf course. Which makes Fortnite the new Burning Man.
A MESSAGE FROM NASDAQ
Reimagining Markets Everywhere
Nasdaq Technology is daring to think differently.
Thoughts, questions, tips? Send them to me, firstname.lastname@example.org, or our tips line, email@example.com. Enjoy your day, see you tomorrow.