Square buys $170 million worth of Bitcoin
Tomio Geron ( @tomiogeron) is a San Francisco-based reporter covering fintech. He was previously a reporter and editor at The Wall Street Journal, covering venture capital and startups. Before that, he worked as a staff writer at Forbes, covering social media and venture capital, and also edited the Midas List of top tech investors. He has also worked at newspapers covering crime, courts, health and other topics. He can be reached at firstname.lastname@example.org or email@example.com.
Tesla is pushing for changes to Texas’ energy market rules that would allow anyone with solar panels or battery storage to essentially sell excess power back to the grid. The company wants residential owners to be able to participate in the market, including, of course, owners of Tesla's residential products, like its Powerwall.
Tesla is framing its ask as a bid to insulate the Texas grid from the kinds of demand spikes that have caused major blackouts in the past: a gesture of good corporate citizenship, if you will. It doesn’t hurt that it would come with the added benefit of making Tesla’s products even more attractive.
Tesla filed a request for a rule change with the Electric Reliability Council of Texas, which is in charge of the state’s independent grid, asking that it allow utility customers sell excess power back to the grid as they’re allowed to do in most other electricity set-ups nationwide.
This would be a major financial benefit for those with solar panels or battery storage technology at home. For instance, Tesla’s Powerwall products allow people to store their own solar power to use as their own backup — individual storage capacity means that “when the grid goes down your power stays on," the company says.
And in Texas, the grid going down is far from a remote possibility. Texas’ independent grid is particularly vulnerable to blackouts, as evidenced by the major outage caused by a cold snap and spiking power demand in February 2021.
If regulators were to change the rule as Tesla is requesting, homeowners could collectively serve as a backup for the grid as a whole, preventing it from shutting down entirely in the case of excess demand.
According to a LinkedIn post from Tesla’s energy markets policy lead Arushi Sharma Frank, the company keeps hearing that it will take 4-6 years to change the state’s rules. Tesla wants to speed it up — i.e. this year — and so the company is asking the ERC to expedite the filing process accordingly.
Tesla’s previous lobbying has been focused primarily on being allowed to deploy its Megapack batteries at the utility level, an effort that would have virtually no impact on users of the company’s residential energy products. Should this latest effort succeed, however, Tesla is potentially making it a lot more attractive for individual Texans to generate and store their own renewable energy: a boon both for their wallets and for the grid.
LAS VEGAS - The software industry is in the midst of a tumultuous time. But at ServiceNow, CEO Bill McDermott is nothing but optimistic about the vendor’s outlook.
On Tuesday, at a company conference in Las Vegas, McDermott outlined new financial targets. ServiceNow now expects to hit $11 billion in revenue by FY 2024, higher than the $10 billion that McDermott previously forecasted. It also expects to hit $16 billion by FY 2026, up from the prior estimate of $15 billion.
“We couldn't be more excited or more positive about where ServiceNow is going,” McDermott said. The company “has established itself as an enduring platform.”
The numbers are a clear attempt by McDermott, the consummate salesman, to separate ServiceNow from other software companies like Zoom that saw a boom in sales in the pandemic but are now struggling to maintain that momentum.
The rosy estimates come as ServiceNow aggressively expands beyond its core IT business into new verticals like low-code application development and ERP, as well as industry segments like manufacturing, which is helping the company sell higher-priced contracts.
Under McDermott, the company has also struck lucrative partnerships with industry giants, big-name consulting firms and up-and-coming vendors like Microsoft, KPMG and Celonis.
The proof — at least, so far — is in the numbers. ServiceNow continues to report strong financial results. In the three months through March, overall revenue grew to a better-than-expected $1.72 billion. However, its stock has dropped 40% since a November 2021 high amid a broader Wall Street sell-off of software stocks.
Correction: This story has been updated to correct ServiceNow's projected revenue. This story was updated May 24, 2022.
ClickUp laid off 7% of its staff on Monday morning, in a move that was called “unexpected” by several laid-off employees on LinkedIn. CEO Zeb Evans told Protocol the goal was to ensure ClickUp’s profitability and efficiency in the future.
"Yesterday, we made restructuring changes to optimize our business for utmost efficiency," Evans said. "In doing so, this puts us in a position to accelerate our timeline to profitability and ultimately achieve our goal of going public. We are by no means slowing down or pausing hiring, as we plan to hire 250 people this year and 300 more next year."
ClickUp declined to specify the departments impacted. But based on LinkedIn posts, the layoffs appear to have affected the customer success, communications and talent acquisition teams, among others. Layoffs have swept tech companies in recent weeks. Payment company Klarna laid off 10% of its workforce on Monday as well, and Netflix had another round of layoffs last week. Productivity startup Mural laid off employees a few weeks ago. Carvana laid off 2,500 employees, many over Zoom, angering employees with the impersonal nature of the announcement.Tech companies are feeling the burn given the
ClickUp’s spokesperson described the layoff as a preventative, "one-time decision" to remain on a profitable path.
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Ousted WeWork founder Adam Neumann is moving into crypto.
Flowcarbon, which counts Neumann and his wife Rebekah as co-founders, said Tuesday it has raised $70 million combined in venture funding, led by Andreessen Horowitz's crypto fund, and a token sale. The startup hopes to sell tokenized carbon credits on the blockchain.
Companies use the credits to offset greenhouse gas emissions. A16z projects the market for such credits could reach $50 billion by the end of the decade, citing data from McKinsey, but the voluntary markets used to track those credits currently are "fractured, opaque and gated," wrote Arianna Simpson, a general partner at the firm.
Flowcarbon sees the blockchain as the best way to connect buyers of credits with developers of projects that create the offsets, with a focus on nature-based carbon removal efforts, such as reforestation.
The investment includes $32 million in venture funding, with General Catalyst and Samsung Next joining the a16z in the round. The remaining $38 million comes through the sale of a token, according to Reuters, called the Goddess Nature Token, backed by a bundle of certified carbon credits issued over the last five years from nature-based projects. The tokens can be retired by holders to offset their emissions, traded or redeemed for underlying carbon credits to be sold off-chain.
Before the carbon credits are bundled, they are certified by groups such as the Climate Action Reserve and the American Carbon Registry, Reuters reported. Flowcarbon plans to soon sell similar tokens backed by credits.
The backing by a16z makes this a high-profile return to the startup world for Neumann, who was famously pushed out as chief executive of WeWork following its failed IPO attempt in 2019. But Flowcarbon is run by co-founders Dana Gibber and Caroline Klatt, as well as Chief Blockchain Officer Phil Fogel, with Adam and Rebekah Neumann "supportive to the operating team," a Flowcarbon spokesperson told Axios.
A recent report from Andreessen Horowitz illustrates a sad state of affairs for the fintech industry, which has gotten clobbered in the tech-stocks downdraft. A chart included in the report shows fintech valuations in sharper decline than any other sector, by a significant margin.
The analysis, which looks at forward revenue multiples, found that fintech valuations have fallen from 25 times forward revenue in October 2021 to four times forward revenue in May.
An analysis of valuations based on forward revenue multiples show fintechs have fallen harder than other tech sectors.Image: Andreessen Horowitz
The chart is part of a report, “A Framework for Navigating Down Markets,” by partners Justin Kahl and David George. Startups need to reassess how much they're worth and prepare for the worst, the authors say.
The report doesn’t focus on fintechs specifically, and thus doesn’t explain why fintechs’ numbers are in such steep decline compared to other groupings like large software companies or consumer and internet startups. The partners weren’t available to comment.
There are a couple of reasons analysts and other observers propose, the most common of which is simply that many fintechs are better evaluated as financial services companies than software companies. The financial sector is seriously affected by cyclical tightening and loosening of lending markets, and many fintechs haven’t proven they can last through those ups and downs. “Now there’s more and more talk of, ‘Are we headed toward a recession?’ and none of these fintechs have been through a credit cycle,” said Val Greer, chief commercial officer at Bread Financial.
Many economic analysts point to interest rates as a factor. Rising rates have affected tech valuations as a whole but also affect fintechs in unique ways. Lending models depend heavily on easy access to funding, for example, while fintech customers are particularly sensitive to any rate or fee increases that companies might use to generate extra revenue. Wealth management firms are likewise affected as the young, new-to-the-market consumers they court feel less flush and thus shy away from risky investments like meme stocks or crypto.
Then there’s the fact that fintechs collected about 20% of venture capital funding last year. The fintech sector may simply have had further to fall even more as investors came to terms with the fact that fintechs cannot achieve the growth entrepreneurs' pitch decks promised.
Jason Mikula, a consultant and publisher of Fintech Business Weekly, said that fintech is a diverse sector and includes many different business models, but the fintech "bucket" has many firms whose "core economics are derived from financial services businesses, which tend to have fairly low multiples.”
Andreessen Horowitz isn't exactly tightening its purse strings. While late-stage firms like SoftBank and Tiger Global are taking a step back from startup funding, a16z has continued at full speed, announcing a new $600 million fund for Web3 gaming investments just last week.And yet, the a16z partners’ advice to startups is in line with what a lot of VCs are saying right now: “Reevaluate your valuation, understand your burn multiples, and build scenario plans.”
Netflix is setting its sights on gaming beyond mobile, if a survey sent to subscribers this week is any indication. In the survey, the company asked respondents at length about their own gaming habits as well as their familiarity with a variety of game subscription services, including Xbox Game Pass, PlayStation Plus and Apple Arcade.
A Netflix member who took the survey told Protocol that they were also asked about playing on a variety of devices, including mobile, tablets and game consoles. A number of questions suggested that Netflix may either launch an app on existing game consoles or stream games directly to smart TVs without the need for dedicated gaming hardware.
A Netflix spokesperson didn’t immediately respond to a request for comment.
The entire survey took about 20 minutes, according to the subscriber, who asked Protocol not to be identified by name. 17 pages alone were dedicated to ranking the importance of a variety of possible features, including the ability to play games without ads, a catalog that includes well-known games, the ability to play with friends and as game streaming to TVs.
Netflix launched mobile games in all of its markets in November, and has since been rapidly growing its catalog of titles. The company will launch its new Exploding Kittens game next week; it reportedly aims to have 50 mobile games available to its subscribers by the end of the year.
However, Netflix also appears to realize that its gaming endeavor won’t be easy. Survey respondents were asked whether they agreed with a number of statements about the company’s gaming efforts, including: “I don’t think Netflix can make good mobile games because it’s not what they do.”
A California judge ruled that the sexual harassment case against Tesla can continue in court, despite the fact that the worker who brought the case had previously signed an arbitration agreement giving up her right to sue.
President Joe Biden in March signed into federal law a ban preventing employers from forcing sexual harassment cases into arbitration, but as Bloomberg noted, the law doesn't apply to arbitration agreements signed before it took effect. Alameda County Superior Court Judge Stephen Kaus on Monday denied Tesla's request to bring the case to arbitration, though he didn't provide a reason.
The proposed class-action complaint filed by former Tesla night-shift worker Jessica Barraza in November alleges that female employees experience “rampant sexual harassment” in its Fremont, Calif., factory. She described her experience working in the factory as “nightmarish,” and claimed she experienced repeated inappropriate comments with no help from supervisors or the company's human resources department.
Barraza's case is one of at least seven lawsuits that female employees at Tesla have filed alleging sexual harassment.
The allegations of sexual harassment at Tesla are timely, given that allegations accusing Elon Musk of sexual misconduct recently came to light. A former SpaceX flight attendant accused Musk of exposing himself to her and touching her inappropriately, Business Insider reported. Musk has denied the claims, and SpaceX COO and President Gwynne Shotwell told SpaceX employees in an email last week that she believes the allegations are false.
Tesla is also facing allegations of racial discrimination, with complaints alleging that the Fremont factory is a "racially segregated workplace." The California Department of Fair Employment and Housing sued Tesla in February for complaints that the company's Black workers were "subjected to racial slurs" and discriminated against in job assignments, pay and other areas of work. In April, Tesla asked a judge to delay the lawsuit for 120 days.
Startups that soared throughout the pandemic are now feeling the crunch, and on-demand grocery company Gorillas is the latest victim. The company announced Tuesday that it's laying off half its corporate staff, or about 300 employees around the world.
"Two months ago in March, the markets turned upside down, and since then the situation has continued to worsen," Gorilla co-founder and CEO Kagan Sumer said in a message to staff. "Very rapidly, greed in the markets was replaced with cautiousness. And tech companies, especially low or negative margin tech companies, are facing a very strong headwind."
Gorillas also employs roughly 14,400 warehouse and delivery drivers, The Verge reported. For those impacted by the layoffs, Gorillas said it has "identified ways to ensure that everyone is supported financially."
The company said it will narrow its focus on the five markets where it makes 90% of its revenue: Germany, France, the U.K., Netherlands and the U.S. It's also considering expanding into Italy, Spain, Denmark and Belgium.
The layoffs signal a broader trend that grocery delivery demand may be slowing as pandemic restrictions are lifted.
Gorillas, which Sumer started in May 2020, promises to deliver groceries in as quickly as 10 minutes — a business model that seems pretty unsustainable — and unprofitable. The company is competing with major delivery businesses like Instacart, Amazon and Gopuff for a customer base whose demand for quick grocery delivery has declined now that lockdowns are a thing of the past.
Sumer in his letter to staff made a bold prediction: "In January 2020 there were 30 players in our industry. In January 2021 only 15 remained. In January 2022 you can count four. And now the stage of the final four begins, where one year from now there will be only 1-2 players remaining. Gorillas will be this player. And this requires a new plan."
Netflix is releasing three new games Tuesday and plans to release Exploding Kittens, its most high-profile original game, on May 31, the company announced on Tuesday. Netflix says its catalog now includes 22 games in total.
Exploding Kittens was developed by the card strategy and tabletop studio Dire Wolf Digital, and it will largely be a digital re-creation of the popular Kickstarter card game Elan Lee and Matt Inman first launched back in 2015. The mobile app will pair with an upcoming animated series of the same name debuting in 2023, and the game will feature updates that coincide with the TV show to keep it fresh, Netflix says.
This latest slate of releases underlines Netflix's broadening ambitions in the game market. The company has so far mostly re-released existing games by partnering with established indie developers, either by porting titles to mobile that were originally made for other platforms (like Asphalt Xtreme) or by republishing games under its own App Store and Google Play account and requiring a Netflix login to make them accessible for subscribers (like the Stranger Things games from BonusXP).
Now, however, Netflix is putting more investment into original games. The company has partnered with developer Frosty Pop to make a number of exclusive casual games like Shooting Hoops and Bowling Ballers, as well as with publisher Rogue Games to make mobile versions of popular PC titles.
Moonlighter and Townsmen — A Kingdom Rebuilt, both launching Tuesday, are games that were originally published on PC and console platforms and are now coming to mobile for the first time with touch controls and other upgrades. Dragon Up, another game launching Tuesday, is a Netflix original from East Side Games, a studio best known for adapting popular TV shows into mobile titles.
Correction: An earlier version of this story misstated Bowling Ballers' name. This story was updated on May 24, 2022.
Barely more than two weeks after it agreed to stop selling its existing collection of face prints to private entities, facial recognition firm Clearview AI has a brand new plan to sell its software to private companies instead.
The software isn't exactly what Clearview AI has caught flack for in the past. Since the company's recent settlement with the ACLU bans Clearview from providing social media face matching technology to private entities, the product now on offer obtains the subject's permission to match them to ID photos and other data a client collects, according to Reuters.
The product's aim is to verify individuals' identities to give them access to certain spaces, such as visitor management systems used in schools. A company presenter at Montgomery Summit investor conference said the offering could significantly boost Clearview AI's sales.
Columbian lending app Vaale is reportedly going to use Clearview AI to match selfies to user-uploaded ID photos, replacing Amazon's facial recognition service, Rekognition. Vaale's CEO Santiago Tobón told Reuters that the company "can't have duplicate accounts and we have to avoid fraud."
"Without facial recognition, we can't make Vaale work," Tobón told Reuters.
Clearview's expansion into the private sector follows the company being ordered to to delete all data belonging to U.K. residents and halt data collection in that country for violating its data protection laws. The order was the fourth time the company has been forced to wipe data of an entire country's residents, and followed an investigation by U.K. and Australian privacy watchdogs that found the company failed to use the data it collected in a "fair and transparent" way, collected it without a lawful reason and didn't meet the data protection standards required for biometric data.
The company also settled with the ACLU in mid-May for violating the Illinois Biometric Information Privacy Act, which prohibits companies from taking and using Illinois residents' biometric identifiers without their permission.
LGBTQ+ workers are generally less satisfied with their employers than their straight, cisgender colleagues are, according to a new report from Glassdoor. But some companies are more popular with their LGBTQ+ employees than others.
Google, Microsoft, IBM and Apple all ranked among the top 10 companies on Glassdoor with the highest ratings for LGBTQ+ workers, Glassdoor announced Tuesday. The tech industry in general earned the second-best average industry rating for LGBTQ+ employees, yet LGBTQ+ workers have relatively low representation in tech. LGBTQ+ workers represent just 11% of Glassdoor reviews in the tech industry, compared to 23.1% in restaurants, 19% in personal consumer services and 18.3% in nonprofits.
In general, LGBTQ+ ratings lag behind others, according to Jacob Little, Glassdoor’s head of People Experience and Diversity & Inclusion. “Many companies still have progress to make when it comes to improving the workplace experiences of their LGBTQ+ employees,” Little says in the report.
Glassdoor found that LGBTQ+ employees ranked their employers 6% worse than their straight, cisgender counterparts, with an average rating of 3.62 out of five (versus 3.85 out of five for straight, cisgender employees). LGBTQ+ employees were 128% more likely to mention discrimination and 51% more likely to write about burnout in their Glassdoor reviews.
IBM was more popular with LGBTQ+ employees (four out of five) than with straight, cisgender employees (3.89 out of five); Google got similar ratings from LGBTQ+ employees (4.38 out of five) and straight, cisgender employees (4.41 out of five). And although they were ranked among the top companies, LGBTQ+ employees at Apple and Microsoft gave their companies lower ratings than straight, cisgender employees did.
Last year saw a notable jump in ransomware attacks that included exfiltration of data as a component, highlighting an ongoing shift in the way the attacks are monetized, according to Verizon's major annual breach report.
As in past years, the Verizon 2022 Data Breach Investigations Report aims to take a more-comprehensive look at the cyberattack landscape by incorporating findings from a range of organizations, both public and private. The 87 contributors to this year's report include the FBI, CISA, CrowdStrike, Palo Alto Networks, Proofpoint, Dell and many other companies, in addition to a number of teams within Verizon. The study, now in its 15th year, analyzed 5,212 confirmed breaches and 23,896 security incidents overall for 2021.
Ransomware attacks that included data exposure grew 13% in 2021 compared to the previous year, the Verizon report shows. For a study with such a large sample size, that is a significant increase that points to a shift in how attackers are operating, said Chris Novak, managing director of the Verizon Threat Research Advisory Center.
By comparison, ransomware attacks in which data was exposed had climbed just 6% in 2020, year-over-year, which itself was deemed a large increase at the time.
Ransomware rarely involved data theft in its early days, but "now the majority of ransomware events include an element of the threat actor taking and exfiltrating the underlying data," Novak told Protocol.
In part, that's a response to the fact that many companies can now restore data from backup in the event of a ransomware attack, leading the victims to be less likely to pay a ransom demand, he said. When the theft of sensitive data is involved, the likelihood of paying a ransom goes up significantly, Novak said.
While an NSA cybersecurity official recently suggested that sanctions against Russia have contributed to a decrease in ransomware attacks in 2022, Novak said it's hard to say whether this will be indicative of a longer-term trend when it comes to ransomware. Due to the financial windfalls associated with ransomware, "I'm not a believer that it's going to be staying down, or going away," he said.
Snap is the latest tech giant to join The Great Hunkering Down. Like other social media companies that flourished during lockdown, the company is struggling to meet earnings estimates and will slow hiring.
Snap CEO Evan Spiegel wrote in a note to employees on Monday that Snapchat's parent company would slow hiring through the end of the year on the heels of missing both revenue and earnings estimates. The earnings miss was first reported by CNBC and based on a letter Snap filed with the Securities and Exchange Commission.
“Today we filed an 8-K, sharing that the macro environment has deteriorated further and faster than we anticipated when we issued our quarterly guidance last month,” Spiegel wrote in the note that was obtained by The Verge. “As a result, while our revenue continues to grow year-over-year, it is growing more slowly than we expected at this time.”
Spiegel denied both layoffs and a hiring freeze.
“We will continue to hire new team members, including recruiting for open roles,” he said. The company will hire just 500 more workers this year, a significant reduction from the 2,000 recruits it added in the last year. Across the tech sector, recruiting for engineers still appears strong, although experts say compensation might suffer in the near future.
Snap joins Meta, Nvidia, Salesforce, Coinbase and other tech giants that have slowed or frozen hiring after disappointing earnings reports. Smaller companies and startups that flourished during the pandemic, including Carvana, Mural, Klarna and Cameo let go entire teams of employees, mostly via video calls since employees are still remote.
Snap’s reasoning for pulling back on hiring and cutting other expenses mirrors that of most of the other tech giants: rising inflation, rising interest rates, supply chain, the war in Ukraine, and Apple’s new ad-tracking policies. Apple's policies, which make it difficult for companies to target ads to users across their iPhone apps, have also hit Meta hard this year. The company said it would slow hiring.
Spotify stopped hosting political ads on its services in early 2020, citing a lack of “robustness” in its systems, ahead of what turned out to be the ugliest U.S. election in recent history.
Two years later, as the midterm primaries get going, the company is courting political advertisers once again, according to a company presentation and marketing email viewed by Protocol.
Spotify confirmed to Protocol that it is slowly bringing back political ads for candidates, political parties, PACs and elected officials in the U.S. “Following our pause of political ads in early 2020, we have spent the past two years strengthening and enhancing our processes, systems and tools to responsibly validate and review this content,” spokesperson Erin Styles said in a statement.
In an email the company sent out to potential partners this week, Spotify said that political ads will appear “across thousands of podcasts on and off Spotify.” An accompanying presentation promises political advertisers the ability to target niche audiences and tap into AI-driven “contextual targeting,” which allows advertisers to place ads in podcasts when they are discussing issues relevant to their target audiences.
But the company is approaching its reentry to the often-ugly world of political advertising with caution. Spotify will only host ads from known political entities, and it won’t accept ads from the much broader bucket of issue-related groups. The ads will also only run on Spotify’s podcast network for now, not its free music-streaming network. Podcasts will also have the option of turning off political ads if they want to. Since 2020, the company has strengthened its advertiser verification system. Its political sales team is triple its previous size.
Spotify has not, however, developed a political ad archive similar to the ones Meta and Google offer. After the Russian troll scandal in 2016, both of those companies set up ad archives that, while imperfect, have grown more robust by the year, giving the public a window into the previously opaque world of online political ads. This week, Meta announced that it would add aggregate ad targeting data to its political ad archive.
But the absence of legislation forcing social networks to create these archives — and the absence of firm federal election disclosure requirements for digital ads — has created an imbalanced situation, where some companies require political advertisers to show their work and others, well, don’t. Styles said Spotify may consider creating a political ad archive in the future.
Bringing political ads back to Spotify is bound to raise uncomfortable questions for a company that has already been at the center of so much political turmoil over Joe Rogan's podcast. But Spotify isn’t the only company that needs to be mulling what to do about political ads as the U.S. midterms near. Twitter similarly stopped allowing them in late 2019 after initially attempting to build an archive of its own. Meanwhile, Netflix may offer ads by the end of the year, forcing that company to make a similar choice. Disney+, for one, has already said it won’t offer political ads for the ad-supported version of its service.
Update, May 23: This story was updated with the correct timing of Spotify’s resumption of political ads.
Quality assurance testers at Call of Duty studio Raven Software have voted overwhelmingly to form a union with the Communications Workers of America, marking a historic labor victory for the video game industry. The vote, with the Milwaukee office of the National Labor Relations Board, was 19-3.
Until today, not a single major American game developer had a unionized work force of any kind. Only a single indie studio of remote workers, called Vodeo Games, voted to a form a union last year, though some game industry unions and cooperative do exist in Canada and overseas.
The union at Raven Software is known as Game Workers Alliance, and it marks a rare union win for the CWA, which has been working for years now to try to unionize game studios and combat worker exploitation.
“Five months ago, we formed the Game Workers Alliance-CWA on the principles of solidarity, sustainability, transparency, equity, and diversity. Activision Blizzard worked tirelessly to undermine our efforts to establish our union, but we persevered," the GWA said in a statement. "Now that we’ve won our election, it is our duty to protect these foundational values on which our union stands. Our biggest hope is that our union serves as inspiration for the growing movement of workers organizing at video game studios to create better games and build workplaces that reflect our values and empower all of us. We look forward to working with management to positively shape our working conditions and the future of Activision Blizzard through a strong union contract."
The union at Raven was spurred by both layoffs at the QA department in December and by parent company Activision Blizzard's ongoing sexual harassment and discrimination crisis. A California lawsuit filed last summer has kicked off a reckoning at the game publisher, leading to numerous other lawsuits, high-level firings and resignations, management reshuffles, employee protests and a growing unionization movement.
Earlier Monday, the NLRB found that Activision Blizzard had illegally threatened employees and violated their rights through intimidation and an overly broad social media policy prohibiting them from discussing labor organizing, the lawsuit and other related matters. The NLRB plans to sue the company if it does not settle the charges.
It’s been more than four months since quality assurance testers at Activision-owned Raven Software said they had formed a union following a five-week strike to protest layoffs. Since the QA testers formed GWA in late January, Activision Blizzard has waged a lengthy anti-union campaign at Raven.
Management split up the team and distributed members across various divisions at Raven, a tactic GWA members felt was designed to stifle organizing efforts. Activision Blizzard said in April it would convert thousands of contract workers to full-time and hand out pay raises, but it excluded Raven’s union members from the bump. Later that same month, the company tried to include all of Raven’s roughly 350 employees on the union vote; the NLRB struck the measure down, as well as future appeals trying to stall the vote.
“Activision did everything it could, including breaking the law, to try to prevent the Raven QA workers from forming their union. It didn’t work, and we are thrilled to welcome them as CWA members,” said Sara Steffens, the CWA secretary-treasurer, in a statement. “Quality assurance workers at Raven Software are bringing much-needed change to Activision and to the video game industry. At this critical time for the company and its employees, these workers will soon have an enforceable union contract and a voice on the job.”
An Activision Blizzard spokesperson said the company was unhappy with the election results and reiterated management's desire to have included all of Raven's employees on the vote. “We respect and believe in the right of all employees to decide whether or not to support or vote for a union. We believe that an important decision that will impact the entire Raven Software studio of roughly 350 people should not be made by 19 Raven employees," the spokesperson said.
Update 5/24, 10AM ET: Included a statement from Activision Blizzard.
Correction: An earlier version off this story misstated the length of time since Raven's QA testers formed their union. This story was updated on May 23, 2022.
Federal labor prosecutors in California plan to file a complaint against Activision Blizzard for illegally threatening workers if the company doesn't agree to a settlement, according to National Labor Relations Board spokesperson Kayla Blado.
The NLRB found merit in charges filed against the company by the Communications Workers of America union in November 2021, according to Blado. The original charge from CWA attorneys alleged that Activision Blizzard tried to prevent employees from talking about wages, hours and working conditions and also tried to control their social media communications, both of which could violate labor laws.
The company has been hit with additional labor complaints from CWA attorneys, including an April 2022 filing that also claimed the company was threatening workers who spoke publicly about protected issues.
“These allegations are false. Employees may and do talk freely about these workplace issues without retaliation, and our social media policy expressly incorporates employees’ NLRA rights," an Activision Blizzard spokesperson wrote in an email to Protocol. "Our social media policy explicitly says that it ‘does not restrict employees from engaging in the communication of information protected by law, including for example, rights of employees in the United States protected by the National Labor Relations Act.'" The company also said that it has not yet been informed of the director's findings.
Activision Blizzard has been mired in legal battles with shareholders and federal and state regulators since parallel state and federal investigations found that the company fostered a "frat house" culture that tolerated sexual harassment, assault and gender discrimination. The lawsuits in turn spurred a wave of worker activism, walkouts, protests and a union campaign from the CWA.
Activision Blizzard settled one lawsuit with federal regulators at the Equal Employment and Opportunity Commission in March 2022 against the wishes of state investigators at the California Department of Fair Employment and Housing, who have been leading a parallel investigation. Former Activision Blizzard employee Jessica Gonzalez filed an appeal against that settlement Monday.
"Under the current EEOC settlement, workers who apply to be claimants would be barred from suing Activision Blizzard for future settlements — essentially protecting the company from any future legal accountability," a CWA spokesperson wrote in a press release announcing the appeal.
Swedish "buy now, pay later" company Klarna is laying off 10% of its workforce, CEO Sebastian Siemiatkowski told staff via a pre-recorded video call Monday. Interest in pay-later products has sagged somewhat as consumers have felt more financially strapped and advocates in the U.S. began investigating the deferred payment plans last year. Klarna has reportedly been looking for more funding, potentially at a lower valuation.
“When we set our business plans for 2022 in the autumn of last year, it was a very different world than the one we are in today,” Siemiatkowski said in the video, according to a company-provided transcript.
Tech valuations generally are down. But “buy now, pay later” companies, which became particularly popular during the pandemic ecommerce boom, have been particularly battered; Affirm, which went public last year, has seen its shares drop 75%.
A few "buy now, pay later" startups are still announcing large funding rounds, but an investigation from the Consumer Financial Protection Bureau has elevated the argument that the increased buying power can be risky for some consumers, and raised scrutiny.
Investors, too, are taking a hard look at their portfolios. The Wall Street Journal reported last week that Klarna was seeking another $1 billion in funding at a $30 billion valuation. That’s a decrease of over one-third from Klarna’s peak valuation of $46 billion last year. SoftBank, a prominent Klarna investor, just posted an annual loss of $13 billion and has said it will pare back on investments.
Laid-off European employees will be compensated, Siemiatkowski said, though it’s unclear how. Severance for employees in other regions will vary. Klarna has about 5,000 employees, according to the company’s website.
The New York State Common Retirement Fund, one of the nation’s largest pension funds, announced that it will vote to remove all of Twitter’s directors at this week’s annual shareholder meeting. The vote against the directors is unlikely to result in change, but it shows mounting institutional pressure for Twitter to resist Elon Musk’s vision for relaxed content moderation policies.
Thomas DiNapoli, the New York state comptroller and trustee to the estimated $279.7 billion fund, said the Twitter board of directors had repeatedly failed to enforce the company’s own content moderation policies.
“Allowing this content on social media platforms facilitates the radicalization of individuals through repeated exposure to violent rhetoric, hate speech and examples of previous violence,” DiNapoli wrote in the public letter to Twitter's directors. DiNapoli placed particular emphasis on Twitter’s failure to remove footage from a livestreamed mass shooting that took place in Buffalo, New York, last weekend. The alleged shooter espoused white supremacy ideology and pointed to social media sites including 4chan as the source of his radicalization.
DiNapoli called on other investors to join the vote against the board. Twitter’s largest institutional investors recently included Vanguard, State Street Global Advisors, BlackRock, Morgan Stanley and Fidelity. The New York pension fund was not among the top 10 largest investors.
Twitter shareholders still have to vote on whether to approve Elon Musk’s $44 billion acquisition bid. A self-described “free speech absolutist,” Musk has indicated his intention to revamp Twitter’s content moderation policies.
Since the initial takeover bid, however, Musk has strayed away from the free-speech-at-all-costs stance: “If they say something that is illegal or otherwise just destructive to the world, then there should be perhaps a timeout, a temporary suspension, or that particular tweet should be made invisible or have very limited traction,” he said earlier this month at the Financial Times' Future of the Car conference.
Musk recently said the deal cannot “move forward” until Twitter provides more information on the number of fake accounts on the platform. That calls into question whether the deal would proceed, even if shareholders vote in favor of an acquisition. Twitter executives told employees last week that they would not be open to renegotiating the agreed-upon acquisition price.
This story was updated on May 23 to clarify that there is no date yet set for Twitter's acquisition shareholder vote.
Apple is looking to boost global production outside of China as the country’s "zero-COVID" strategy cripples production facilities, the Wall Street Journal reported.
The strict lockdown, which has been described by the WHO as "not sustainable," has shut down large cities, including Shanghai, as the highly infectious omicron variant spreads.
Currently, about 90% of Apple products are made in China, with a small number made in India and Vietnam. Apple is looking at factories in India and Vietnam to shore up its supply chain at a time when demand is high.
India is expected to increase its production of iPhones from about 3% last year to between 6% and 7% this year, according to the Wall Street Journal. Low labor costs and a large market make it an attractive destination. Taiwanese companies have already set up facilities in India to make iPhones for the local market, the Journal reported. However, neither India nor Vietnam is expected to radically overtake China as Apple’s main global supplier.
The over-reliance on China has been problematic for Apple in a variety of ways. The company was thrust into a trade war initiated under Donald Trump, then became vulnerable to supply chain shocks during the first wave of the COVID-19 pandemic in early 2020.
The company has also faced intense scrutiny for its human rights record in China, especially on the use of Uyghur labor in its supply chain. Apple was among other leading companies that lobbied Congress against passing the Uyghur Forced Labor Prevention Act.
"They were benefiting from forced labor or sourcing from suppliers that were suspected of using forced labor," Sen. Marco Rubio said at a Senate Foreign Relations Committee hearing last year. "These companies, sadly, were making all of us complicit in these crimes."
A 2020 report found that one of its main suppliers, Lens Technology, had used forced Uyghur labor, a claim Apple denied. Facing renewed criticism, the company announced a new human rights policy aimed at its suppliers.
As the Supreme Court weighs whether to block Texas' social media "censorship" law, a court of appeals has decided to uphold the injunction on a similar Florida law, finding that social media companies "are 'private actors' whose rights the First Amendment protects."
The 11th Circuit ruling comes in response to a lawsuit brought by NetChoice and CCIA, the same trade groups who filed an emergency application with Supreme Court Justice Samuel Alito after a similar Texas social media law went into effect earlier this month. The court found that Florida's argument that social media giants are not entitled to First Amendment rights doesn't hold up.
"Not in their wildest dreams could anyone in the Founding generation have imagined Facebook, Twitter, YouTube, or TikTok," the court wrote in its opinion. "But 'whatever the challenges of applying the Constitution to ever-advancing technology, the basic principles of freedom of speech and the press, like the First Amendment’s command, do not vary when a new and different medium for communication appears.'”
The opinion stands in stark contrast to the Fifth Circuit's decision to lift an injunction on Texas' law earlier this month without so much as a sentence of explanation. That decision created potentially catastrophic consequences for the tech industry, leading NetChoice and CCIA to file an emergency application asking the Supreme Court to stay the Fifth Circuit's decision. The Supreme Court has yet to issue its decision, which could come any day now.
The 11th Circuit's decision on the Florida law upheld an injunction on parts of the law that would prohibit companies from "deplatforming" political candidates, prioritizing or deprioritizing posts "by or about" political candidates and removing any content by a "journalistic enterprise." It also blocks provisions that require companies to provide a “thorough rationale” for every content moderation decision.
But the court did allow the other disclosure provisions in the law — which includes having clear content standards and allowing users to access their data — to stand, finding that they are "far less burdensome" and unlikely to violate the First Amendment.
Whatever the Supreme Court decides with regard to the emergency application in Texas, the Florida decision tees up a possible circuit split in the event that the Texas law, which is still awaiting appeal, is upheld. That could create an opportunity for the Supreme Court to decide once and for all whether social media platforms enjoy First Amendment rights or whether they should be, as Justice Clarence Thomas has suggested, considered common carriers of a new age.
The tech groups behind both lawsuits were encouraged by the Florida decision and what it could mean for the Supreme Court's forthcoming decision. “The First Amendment protects platforms and their right to moderate content as they see fit—and the government can’t force them to host content they don’t want," NetChoice Vice President Carl Szabo said in a statement. “This makes it even more likely that the US Supreme Court will overturn the 5th Circuit’s split decision on the similar Texas law.”
GameStop is all about Web3: The company announced on Monday that it will launch a digital wallet for crypto and NFTs.
The GameStop wallet can be used across apps without users needing to leave their browsers, the company said in a statement. The self-custodial Ethereum wallet gives users access to the keys to their digital assets rather than trusting them with a third party, and is available for download as an extension on Google Chrome's web store as well as on web browser Brave. The wallet will also be available as an iPhone app down the line, according to the GameStop wallet website. The wallet uses Loopring for transactions, a Layer 2 solution that's meant to lower transaction fees.
The timing is certainly less than ideal, given that the crypto market is crashing, and GameStop cautioned users to be responsible (i.e., if you're buying the dip, don't bet your life savings).
"This is a beta launch. Please use responsibly, and do not add more funds than you are comfortable with," GameStop said in a tweet.
The move is another shift in GameStop's strategy to focus on digital sales rather than brick-and-mortar locations. The launch of the wallet follows the company's announcement earlier this year that it will launch its own NFT marketplace in partnership with Australian company Immutable X by the second fiscal quarter of this year, or around July. The company also launched a $100 million fund for NFT gaming with Immutable X, which promises zero transaction fees for minting and trading. The wallet will be compatible with the GameStop's marketplace.
GameStop has been stingy on other details about its upcoming NFT marketplace, but did previously say it has hired "dozens" of people for the project, "with experience in areas such as blockchain gaming, e-commerce and technology, product refurbishment and operations."
D.C. Attorney General Karl Racine is suing Mark Zuckerberg, alleging the Meta CEO was responsible for decisions that opened the door for the Cambridge Analytica scandal.
Racine filed the suit on Monday, according to a news release, alleging, "Zuckerberg contributed to Facebook’s lax oversight of user data and implementation of misleading privacy agreements." The complaint cited in particular Zuckerberg's work to give third-party developers access to Facebook user data despite the company's prior privacy pledges.
That move enabled a seemingly innocuous personality quiz to vacuum up extensive user data, which it ultimately transferred to Cambridge Analytica, a political consultancy used by Trump's 2016 presidential campaign. The ensuing scandal resulted in a $5 billion fine for Facebook in 2019 and helped kick off the techlash, but some critics suggested it did little to bring accountability to Zuckerberg for the actions of a company he controls.
Racine is separately suing Facebook over the incident, and the latest complaint comes after a judge earlier this year rejected his office's attempt to add Zuckerberg to that suit. He said Monday's filing was based in "hundreds of thousands of pages of documents produced during" the litigation against the company.
Racine has repeatedly gone after powerful tech companies: He is currently trying to resurrect an antitrust lawsuit against Amazon, suing Google over location tracking and engaging gig companies including Grubhub in a suit over "deceptive" practices.
Facebook spokesperson Andy Stone declined to comment on Monday.
The U.K.'s Information Commissioner’s Office, the country's privacy watchdog, has ordered facial recognition company Clearview AI to delete all data belonging to the country's residents.
Clearview has also been ordered to stop collecting additional data from U.K. residents and will pay a fine of roughly $9.4 million for violating the country's data protection laws, the office said Monday. This is the fourth time the company has been ordered to wipe data of an entire country's residents, following orders from Australia, France and Italy in recent months.
The enforcement notice and fine follow an investigation of Clearview AI with the Office of the Australian Information Commissioner, which wrapped up in November and discovered that the company breached protection laws. The investigation found the company failed to use the data it collected in a "fair and transparent" way, collected it without a lawful reason and didn't meet the data protection standards required for biometric data.
"People expect that their personal information will be respected, regardless of where in the world their data is being used," John Edwards, U.K. Information Commissioner, said in a statement. "That is why global companies need international enforcement."
Clearview claims to have a database of more than 20 billion photos collected from across the internet. In the U.K., the company's database had been used by law enforcement, such as the Metropolitan Police, the Ministry of Defence and the National Crime Agency, a report published by The Register last year revealed.
The controversial company also recently got in trouble in the U.S., reaching a settlement with the ACLU that restricted it from selling its database of faceprints to most private entities. In a lawsuit, the nonprofit alleged that the company of violated the Illinois Biometric Information Privacy Act, which prohibits companies from taking and using Illinois residents' "biometric identifiers," such as faceprints and fingerprints, without their permission.
Correction: An earlier version of this story misstated the amount Clearview AI was fined. This story was updated on May 23, 2022.
Meta will finally give researchers access to targeting data for political ads — information that academics have been clamoring for and using legally risky workarounds to collect on their own for years.
The company had argued in the past that sharing targeting information would risk violating user privacy. Last year, it went so far as to permanently shut down a widely used ad transparency project run out of New York University after serving researchers there with a cease and desist.
In a blog post published Monday, Meta said it would share targeting data on individual ads with pre-vetted researchers who are part of its Facebook Open Research and Transparency project. The company piloted this type of data-sharing last year with a subset of 2020 election ads. Now, it's expanding that work for researchers in its network.
The company is also offering more information about political ads in its Ad Library, which anyone can access. Rather than sharing targeting data on individual ads, the Ad Library will show aggregate data about the number of ads a page has run targeting a given demographic and how much that page has spent targeting that demographic. "For example, the Ad Library could show that over the last 30 days, a Page ran 2,000 ads about social issues, elections or politics, and that 40% of their spend on these ads was targeted to 'people who live in Pennsylvania' or 'people who are interested in politics,'" the blog post reads.
One reason Meta has been reluctant to widely share more granular targeting data is because the company believes it would be too easy to reverse engineer who saw what ads and infer certain characteristics about individual users. "If you combine those two data sets, you could potentially learn things about the people who engaged with the ad," Steve Satterfield, Facebook's director of privacy and public policy, told Protocol last year.
In the absence of that information, researchers at NYU developed a browser extension through which Facebook users could opt-in to share political ads they saw in their own feeds with researchers. The extension also scraped the information Facebook shared with those users about why they were seeing the ad — information that, collected en masse, amounts to targeting data. The researchers then published that information in a public archive. That work came to an end last summer, however, when Facebook suspended the researchers' accounts following a months-long legal standoff.
Targeting data is critical to understanding a political ad's underlying motivation. By bringing that data to more researchers, which will begin later this month, Meta could significantly contribute to the public understanding of how political campaigns and groups are operating. It will also undoubtedly lead to more scrutiny of Meta and the way it enables political actors to manipulate and microtarget users.
Meta's FORT program also hasn't been without issue. Last year, the company admitted that it had sent a flawed dataset to researchers in the program, leading to potentially erroneous results for the academics who had been relying on it.
Meta also opened up additional data to an even more selective group of outside researchers, who studied the platform's impact on the 2020 election through the Jan. 6 riot. But the results of that research, due last year, were postponed and have yet to be released.
Coinbase just celebrated its 10th birthday. And the crypto powerhouse marked the milestone on a defiant note, with a snarky TV ad clapping back at crypto bashers.
“Crypto is dead. Long live crypto,” said the 30-second ad which aired Friday during the NBA Western Conference finals game between the Golden State Warriors and the Dallas Mavericks.
The ad showed tweets dating back to 2012, with the authors’ names blurred out, declaring “Crypto is dead.”
At a time when crypto is reeling from a severe downturn and Coinbase is making spending cutbacks, the reactions were understandably mixed.
Michael Fasanello, chief compliance officer of LVL, called the ad “classic and minimalist, yet effective.”
“It drives home the message that just like so many other emerging technologies and emerging markets, blockchain and crypto will have their ups and downs — but they are here to stay,” he told Protocol.
Jef Loeb, creative director at Brainchild Creative, agreed it was “effective if the objective is to let the market know Coinbase isn’t heading for the life rafts quite yet.”
“It’s also effective in preaching to an increasingly small choir not to abandon the Titanic quite yet,” he told Protocol, quipping, “Hey, the sopranos and altos may have headed for the exits, but the bros in the bass [section] are hanging in.”
Coinbase recently included a warning in its regulatory filings that in a bankruptcy scenario, customers' crypto holdings were at risk. Coinbase CEO Brian Armstrong hastened to reassure customers that it wasn't actually facing bankruptcy.
Loeb noted the dramatic shift in tone in the ad from the “celebrity-driven ‘don’t miss out’ [messages] in February’s Super Bowl" from other crypto companies "to a spin on Mark Twain’s aphorism four months later” about how ““reports of crypto’s death are both frequent and exaggerated.” Coinbase's Super Bowl ad featured a floating QR code which succeeded in bringing so many people to its website that it crashed.
The choice of the Warriors game was symbolic. Former Warriors player Kevin Durant invested in Coinbase, and Coinbase and the NBA struck the league's first cryptocurrency sponsorship deal last year, in flusher times.
The crypto exchange posted disappointing results recently amid the sharp slump in crypto prices epitomized by the UST stablecoin meltdown. In a sign of growing uncertainty, Coinbase also announced that it was freezing hiring and cutting back on other spending a week after declaring that it was pushing forward with expansion plans.
The crypto market has shed roughly $1 trillion in value the past month, while Coinbase shares have tanked more than 50%.