Source Code

Source Code: Welcome to a new kind of tech publication

Your five-minute guide to what's happening in tech this Wednesday, from the app that crashed the Iowa caucus to the reasons behind Tesla's remarkable run.

Welcome to Source Code

Good morning, and welcome to Protocol! If you don't know what Protocol is, that's OK. We're a new publication from Robert Allbritton, the publisher of POLITICO, dedicated to covering the people, power and politics of tech. Today is our launch day. Check out protocol.com to see the stories of the day as well as a note from Tim Grieve, our executive editor, about who we are and what we're up to.

But before you do that, let me introduce myself. My name is David Pierce, and I'm Protocol's editor at large. This is Source Code, our daily briefing on the most important stories in tech. Normally, this newsletter won't start with a long preamble from me — it'll be a quick, fun and essential way to start your weekdays. If we do it right, you should be ready to win the day before you finish your coffee. Maybe even before it's done brewing.

I have more to tell you about Protocol and Source Code, but we'll get to that later. Let's get to the news.

People Are Talking

Steve Wozniak says he still appreciates his weekly paycheck from Apple—even though it's only $50 or so:

  • "It's small, but it's out of loyalty, because what could I do that's more important in my life? Nobody's going to fire me. And I really do have strong feelings always for Apple."

Clearview AI has a right to collect people's photosaccording to its CEO, Hoan Ton-That:

  • "There is a First Amendment right to public information. So the way we have built our system is to only take publicly available information and index it that way." (Ton-That will be on "CBS This Morning" today, and the interview should be … something.)

The Iowa chaos is a bad sign, Joshua Greenbaum, CTO at the U.S. Vote Foundation, told Protocol's Charles Levinson:

  • "What we're seeing is there's a tech bro culture trying to impose itself on the election world." (More on Iowa down below.)

Is Facebook too involved with Libra? Mastercard CEO Ajay Banga thinks so:

  • "It went from this altruistic idea into their own wallet. If you get paid in Libra … which go into Calibras, which go back into pounds to buy rice, I don't understand how that works."

The Big Story

How an app crashed a caucus

Last March, Gerard Niemira, the CEO of a company called Shadow Inc., told Protocol's Issie Lapowsky that Democratic election tech was a "tangled morass." He said this in the midst of talking about how he could fix things.

But Shadow's app was at the center of Monday's Iowa caucus debacle. It took a while, but we now have a much clearer picture of what happened:

  • The app, which was designed to make it easy to tabulate and share caucus data, was built in only a couple of months and given to caucus volunteers with little training or testing.
  • Motherboard got screenshots of the app, which volunteers had to install on their personal phones through a third-party testing service before going through a complicated login and security system (that didn't actually work). Even in the best case, that process is roughly as intuitive as reading hieroglyphs. And they had to do it this way because they didn't have enough time to go through an app store review process.
  • In Iowa, The NYT reports, only a quarter of the 1,765 precinct chairs even managed to download and install the app.

The mess up has had immediate consequences. Nevada — which had planned to use Shadow's app for its caucuses in a few weeks — announced that it's changing plans. And the whole idea of using tech in elections is suddenly up for debate (again).

Niemira told Bloomberg that he is "really disappointed that some of our technology created an issue that made the caucus difficult." He blamed the issues on "a bug in the code that transmits results data into the state party's data warehouse."

Read Issie's story to find out why the problem is so, so much deeper than that.

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Electric Cars

Tesla's meteoric rise continues

Every day this week, Tesla's share price has gone on a virtually unprecedented upward journey. It seems impossible, outlandish, ridiculous, overblown. Until it happens again the next day.

  • Tesla's stock closed at $887.06 on Tuesday, up more than $107 from just the day before. (And it was still climbing after hours.) Only a month ago it closed at $443.
  • In case you're wondering: yes, that's insane.

The weirdest part is that no one seems to know exactly why it's happening. It's a squeeze on the market's most-shorted stock! It's a bunch of amateur investors who just think Elon Musk is hella cool! It's Saudi Arabia! No, it's China! Maybe listeners just really liked "Don't Doubt Ur Vibe"!

The most compelling explanation I've heard goes like this: Tesla has a long history of getting in its own way, with things like ill-advised tweets and inefficient production lines. But now, Gartner analyst Michael Ramsey told me, Tesla's starting to nail the basics:

  • "They've always had a super strong brand and have always had major flaws," Ramsey said. "And they still have flaws. It's just that the big flaws seem like they're fading."
  • Tesla's getting better at building factories, better at running them, better at delivering on promises, better at keeping its CEO out of trouble.

Whatever the reason, it looks like Musk's unusual compensation plan is going to work out. There's an increasingly plausible world in which Tesla makes Musk the world's richest person.

Have you bought or sold Tesla stock in the last couple of months? What made you move? How high do you think it's going? Send me a note: david@protocol.com.

Politics

The White House 5G dream, now with Big Tech

In an interview with the WSJ, Larry Kudlow said that the White House is working with American tech companies to build "an American soup-to-nuts infrastructure for 5G." That's what Trump has been asking for, Kudlow said.

  • Dell, Microsoft, and AT&T are all part of the project, the WSJ reports, and they could have a system running within 18 months.
  • Surprised? Well, you're not alone: One source at a U.S. telecoms association told Protocol's Adam Janofsky that they hadn't heard of the project before reading the WSJ story either.

The project's focus is on building cloud services and software that can run on top of virtually any company's hardware — because no American company is set up to compete head-on with Huawei in the 5G infrastructure business. Kudlow even allowed for the possibility that the America-first plan might need to include European companies like Nokia and Ericsson.

If you're skeptical, you're still probably not alone. "There were U.S. alternatives [to Huawei], but they essentially went bankrupt," NYU professor Sundeep Rangan told Adam. "Taxpayers would be very confused about the government investing money into an industry that already has low margins and had to consolidate."

This is just the latest in a number of Trump administration moves designed to fight Huawei's 5G dominance. Kudlow echoed the party line on that front, calling the company "a threat to our national security."

Making Moves

  • Michael Ronen, the U.S. head of SoftBank's Vision Fund, is leaving the company. He expressed … "issues" about SoftBank, according to the FT, and had been planning to leave for several weeks. The FT also reports that Ron Fisher, SoftBank's vice chairman, could be in the hot seat.
  • Splunk hired former Okta Chief Security Officer Yassir Abousselham as its own CISO. Splunk's previous CISO, Joel Fulton, is starting his own cybersecurity company.
  • Dan Houser, a co-founder of Rockstar Games, is turning the "extended break" he took last year into a permanent departure from the company. His last day will be March 11.
  • Liz Schimel, the head of business for Apple News, is leaving amidst a rough first year for Apple News+. Bloomberg says Apple is "seeking to hire a notable name from the publishing world" to replace her.

In Other News

Everything else you need to know

  • 28.6 million people have already signed up for Disney+. That's more than analysts expected from the service's first quarter and puts the service already nearly on par with Hulu (which has been around for … many quarters). Here's hoping Baby Yoda gets a cut of the proceeds.
  • The hot new job title in Silicon Valley? Ethicist. Protocol's Linda Kinstler dug into what it's like trying to be the moral center of the tech industry. (Spoiler: tough.)
  • Foxconn hopes to "gradually" restart factories in China starting next week, in the wake of closures resulting from the coronavirus outbreak. Reuters reports that it could take one to two weeks for the plants to get back up to full speed.
  • Andreessen Horowitz is launching a new life-sciences venture fund, with $750 million to invest. "Bio is not the 'next new thing' — it's becoming everything," the partners wrote in the blog post announcing the fund.
  • Twitter announced new guidelines for how it handles "synthetic and manipulated media." Execs say it will either delete content that's been faked or changed in order to deceive viewers, or add a label saying what's happened. But the bar is high, and the onus for finding stuff is on users.
  • Instagram reportedly brought in about $20 billion in ad revenue last year. Facebook doesn't report Instagram's specific financials, but Bloomberg's figure places Instagram above the $15.1 billion in ad revenue that we now know YouTube made last year.
  • The owner of the NYSE wants to take over eBay. Intercontinental Exchange is reportedly interested in a deal in excess of $30 billion but says eBay "has not engaged in a meaningful way."
  • Tinder may be in GDPR hot water. Ireland's Data Protection Commission announced a formal inquiry into "ongoing processing of users' personal data," as well as how the company has communicated with users.

One More Thing

The Amazon van coming to a street near you

As you know, as FedEx and UPS know, and as everyone knows, Amazon is interested in taking more control over deliveries. It's working on drones, adorable robots, and who knows what else, but one of its more interesting plans might be a plain-old van. It's working with Rivian to manufacture 100,000 purpose-built vehicles and showed off some early designs on Tuesday. I can't believe I'm saying this, but the van is … kind of adorable? It pairs some Pixar-cuteness with an electric drivetrain, Alexa-powered smarts, and some seriously complicated ideas about packing efficiency. Coming to your Prime-subscribing curb in 2021.

A MESSAGE FROM NASDAQ

Reimagining Markets Everywhere

Nasdaq Technology is reshaping the future of global markets by redefining what a marketplace can be.

Learn more here.

That's it for us today. Source Code will come from me every morning, and you can always reach me at david@protocol.com or by replying to this email. (I'd love to see where you're reading this; I'll feature whoever sends a Protocol photo from the most remote location in tomorrow's newsletter.) But every day you'll also be seeing the work of Protocol's newsletter editor Jamie Condliffe and our terrific team of reporters. And I hope you'll see your own contributions here, too! Have a question or a story idea? Get a new job / have a birthday / sell your company / pull off an elaborate hack the likes of which the world has never seen? We want the Source Code community — the business leaders and tech insiders also getting this email — to hear all about it. (If you don't want to get this email anymore, you can unsubscribe below. I'll try not to hold it against you.)

Welcome to Source Code — I'm thrilled you're here, and I'm so excited to do this together.

Thoughts, questions, tips? Send them to me, david@protocol.com, or our tips line, tips@protocol.com. See you tomorrow.


Policy

A new UK visa could steal your top tech talent

Without meaningful immigration reform, U.S.-trained foreign graduates could head across the pond.

The U.S. immigration system turns away hundreds of thousands of highly skilled tech workers every year.

Photo: Ben Fathers/AFP via Getty Images

Almost as soon as he took office, President Biden began the work of undoing a lot of the damage the Trump administration did to the U.S. H-1B visa program. He allowed a Trump-era ban on entry by H-1B holders to expire and withdrew a Trump proposal to prohibit H-1B visa holders’ spouses from working in the U.S. More recently, his administration has expanded the number of degrees considered eligible for special STEM OPT visas.

But the U.S. immigration system still turns away hundreds of thousands of highly skilled — and in many cases U.S.-educated — tech workers every year. Now the U.K. is trying to capitalize on the United States’ failure to reform its policy regarding high-skilled immigrants with a new visa that could poach American-trained tech talent across the pond. And there’s good reason to believe it could work.

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Kwasi Gyamfi Asiedu
Kwasi (kway-see) is a fellow at Protocol with an interest in tech policy and climate. Previously, he covered global religion news at the Associated Press in New York. Before that, he was a freelance journalist based out of Accra, Ghana, covering social justice, health, and environment stories. His reporting has been published in The New York Times, Quartz, CNN, The Guardian, and Public Radio International. He can be reached at kasiedu@protocol.com.

Businesses are evolving, with current events and competition serving as the catalysts for technology adoption. Events from the pandemic to the ongoing war in Ukraine have exposed the fragility of global supply chains. The topic of sustainability is now on every board room agenda. Industries from manufacturing to retail and everything in between are exploring the latest innovations like process automation, machine learning and AI to identify potential safeguards against future disruption. But according to a recent survey from Boston Consulting Group, while 80% of companies are adopting digital solutions to navigate existing business challenges or opportunities like the ones mentioned, only about 30% successfully digitally transform their business.

For the last 50 years, SAP has worked closely with our customers to solve some of the world’s most intricate problems. We have also seen, and have been a part of, rapid accelerations in technology in response. Across industries, certain paths have emerged to help businesses manage the unexpected challenges over the last few years.

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DJ Paoni, President of SAP North America

DJ Paoni is the President of SAP North America and is responsible for the strategy, day-to-day operations, and overall customer success in the United States and Canada. Dedicated to helping customers become best-run businesses, DJ has established himself as a trusted advisor who places a high priority on their success. He works with many of SAP North America's 155,000 customers and helps them adopt business and technology best practices across 25 different industries.

Fintech

A new regulator is stepping into the 'rent-a-bank' ring

The CFPB is promising a "close look" at controversial lending partnerships between banks and fintechs.

Rent-a-bank lending for personal loans is getting regulatory attention.

Photo: Attentie Attentie/Unsplash

Consumer groups pushing for banking regulators to crack down on so-called rent-a-bank lending for personal loans may have found a willing watchdog.

Zixta Martinez, deputy director of the Consumer Financial Protection Bureau, said at a recent consumer group conference that the agency is taking a "close look" at the lending partnerships between banks and nonbanks, which are often fintech companies.

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Ryan Deffenbaugh
Ryan Deffenbaugh is a reporter at Protocol focused on fintech. Before joining Protocol, he reported on New York's technology industry for Crain's New York Business. He is based in New York and can be reached at rdeffenbaugh@protocol.com.
Enterprise

Why Thomas Kurian thinks cloud computing is on the brink of a new era

Kurian tapped his enterprise experience from 22 years at Oracle to reshape Google Cloud as an open, hybrid and multicloud player. What comes next?

Google Cloud CEO Thomas Kurian spoke with Protocol.

Photo courtesy of Google/Weinberg-Clark Photography

When Thomas Kurian landed the CEO role at Google Cloud, he was welcomed as a respected technologist and executive bringing 22 years of needed enterprise chops from Oracle for a substantial undertaking: turning an underdog into a heavyweight contender for meeting major corporations’ cloud needs.

At the Google Cloud Next conference in early 2019, Alphabet and Google CEO Sundar Pichai introduced Kurian, then about three months into his tenure, as a “tremendous leader with a powerful vision” who already had met with hundreds of customers and partners and whose “personal productivity is testing the limits of G Suite and Calendar.”

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Donna Goodison

Donna Goodison (@dgoodison) is Protocol's senior reporter focusing on enterprise infrastructure technology, from the 'Big 3' cloud computing providers to data centers. She previously covered the public cloud at CRN after 15 years as a business reporter for the Boston Herald. Based in Massachusetts, she also has worked as a Boston Globe freelancer, business reporter at the Boston Business Journal and real estate reporter at Banker & Tradesman after toiling at weekly newspapers.

Enterprise

AWS employees say evidence of misconduct hides in plain sight

Such is the reality of today’s corporate environment.

There was hope this report would be the catalyst to institute more systemic change within both ProServe and the whole of AWS.

Image: Henrique Casinhas/SOPA Images/LightRocket via Getty Images

It’s a tale as old as, well, the last few years. And this month, it’s AWS that got to live it.

The company recently outlined to employees the findings of an external probe conducted by Oppenheimer Investigations Group into a troubled division of the sprawling cloud giant. Known shorthand as ProServe, it’s the unit that helps customers make the most of AWS products.

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Joe Williams

Joe Williams is a writer-at-large at Protocol. He previously covered enterprise software for Protocol, Bloomberg and Business Insider. Joe can be reached at JoeWilliams@Protocol.com. To share information confidentially, he can also be contacted on a non-work device via Signal (+1-309-265-6120) or JPW53189@protonmail.com.

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