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What’s at stake in California’s recall election

Gavin Newsom

Good morning! This Tuesday, Gavin Newsom's recall election is today, Apple fixes a major security flaw, Pinterest's co-founders are being sued, and the answer to the climate crisis might be woolly mammoths.

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The Big Story

What's next for Newsom

If polls are to be believed — and at this point in election history, that's a big if — Gavin Newsom should handily win today's gubernatorial recall election in California. For the vast number of tech workers and major donors who have supported the current governor, including Reed Hastings and Laurene Powell Jobs, a win for Newsom would constitute a crisis averted.

That's not just because Newsom's most formidable challenger, conservative talk radio host Larry Elder, is a climate change skeptic who has vowed to repeal mask and vaccine mandates, which have widespread approval among the tech set. It's also because Elder and Newsom couldn't be more different in terms of their relationship to tech.

Elder has lashed out at Big Tech, repeating the same talking points about political bias on social media that have become ubiquitous in national Republican politics.

  • "Big Tech is after us and what we believe in," Elder tweeted in March, while promoting his YouTube alternative, LarryTube. "They want to destroy our income because they want to cancel us!"

Meanwhile, Newsom's ties to tech run deep. As mayor of San Francisco he made a pit stop at TechCrunch Disrupt. And as lieutenant governor, he worked out of a "private clubhouse" for entrepreneurs because he said he wanted "to bring innovation back to our state government."

  • At the outset of the pandemic last year, Newsom recorded a Facebook Live conversation with Mark Zuckerberg and Priscilla Chan, where he lavished the billionaire couple with praise for their philanthropic contributions during the crisis.
  • Newsom also stayed out of the Prop 22 fight between rideshare companies and drivers last year, a decision some viewed as an acquiescence to industry.

But Newsom's tech ties don't get him very far in the eyes of tech leaders who support the recall, including investors Chamath Palihapitiya and David Sacks.

  • For some, the fight over Newsom's future has become a sort of proxy battle in the fight over whether California is still the best place to start and grow a company.
  • It's a fight fueled in part by COVID lockdowns that has manifested in the recent (and somewhat overblown) tech exodus from Silicon Valley to cities like Miami and Austin. It's also fueling another recall campaign targeting San Francisco District Attorney Chesa Boudin, backed by many of the same players.
  • California, the thinking goes, has "created an inhospitable culture for innovation," as Palihapitiya put it earlier this year. Some new blood, they argue, might turn things around.

There's a lot at stake with the vote, starting with the fate of the Senate. With speculation swirling about Democratic Sen. Dianne Feinstein's possible retirement, Democrats want Newsom, not Elder, in place in case he needs to pick her replacement. But if he stays in office, Newsom will also have a stacked agenda that touches various corners of the tech world.

  • Just two months ago, Newsom signed a $6 billion, multiyear broadband plan aimed at closing the digital divide in the state.
  • Newsom also has several bills awaiting his signature that stand to affect tech. One, the Silenced No More Act, would bar non-disclosure agreements that prohibit California workers from talking about illegal discrimination and harassment they faced. Another would allow warehouse workers in the state, including Amazon workers, to fight production quotas.

That's to say nothing of the state's COVID restrictions and mandates, which will undoubtedly continue to affect California's tech companies, and which Newsom will have a heavy hand in crafting. If polling and fundraising figures are any indication, Newsom will likely get to see those policies through. And maybe this time, he'll follow them, too.

— Issie Lapowsky (email | twitter)

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Facebook supports updated regulations, including four areas where lawmakers can make quick progress:

  • Reforming Section 230
  • Preventing foreign interference of our elections
  • Passing federal privacy law
  • Setting rules that allow people to safely transfer data between services

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People Are Talking

Walmart and Litecoin's fake deal announcement was was "fishy," says Christine Parlour, a UC Berkeley Haas School of Business professor:

  • "Events like these clearly will make regulators pay more attention to what is happening in crypto. That is not necessarily a bad thing."
Will Cathcart said he was surprised about the recent privacy questions around WhatsApp's reporting policies:
  • "I think that's very consistent with people's model of privacy: If I send you something and you think it's a problem and you want to ask for help, you should be able to."

China's EV industry needs to consolidate, says Xiao Yaqing, minister for industry and information technology:

  • "We have too many EV firms on the market right now."

Don't disregard China, even with all its regulations, Martin Sorrell says:

  • "It's going to be the world's largest economy in a few years, not on a per capita basis, but on an absolute basis, and you ignore it at your peril."

On Protocol: Ben Lamm wants to resurrect the woolly mammoth — and help save the planet while he's at it:

  • "We're focused on loss of biodiversity and we're looking at restoration. It's not just about bringing back the mammoth."

Making Moves

Intuit is buying Mailchimp for around $12 billion in cash and stock. It's among the biggest exits ever for a bootstrapped company, and a big win for the email lovers out there.

Epic paid Apple $6 million, as ordered in the Epic v. Apple ruling. Tim Sweeney even joked about using Apple Pay.

Gary Gensler is fielding questions on crypto regulation. The SEC chair is facing the Senate Banking Committee today to discuss bitcoin, stablecoins and other digital assets.

Mike Amend is Ford's new chief digital and information officer. Amend is a former president at Lowe's.

Alvaro Bedoya is President Biden's next FTC nominee. He's a known critic of corporate data practices.

Robert Krakowiak joined Vroom as CFO. He previously served as the CFO of Stoneridge.

In Other News

  • Apple patched a major flaw that let the NSO Group get into Apple devices. Researchers at the University of Toronto's Citizen Lab, which first detected the vulnerability, say the flaw allowed NSO Group to infect Apple devices with Pegasus spyware.
  • Fame helps you flout Facebook's rules, according to a report by The Wall Street Journal. A program inside the company known as "XCheck" has been found to let big-name users skirt the rules and get away with posting violative content.
  • Uber drivers are employees, not contractors, at least according to a Dutch court. The ruling means drivers are entitled to greater workers' rights under labor laws, but Uber said it does not intend to employ drivers in the country and plans to appeal.
  • The FEC dismissed a GOP complaint against Twitter. Republicans accused the platform of breaking election laws by blocking users from tweeting links to an unsubstantiated article about Hunter Biden, but the FEC said Twitter had a valid commercial reason for doing it.
  • Two of Pinterest's co-founders are being sued by Christine Martinez, who claimed she helped create the site but wasn't paid for her work. The lawsuit follows a string of other accusations of the company fostering a hostile work environment for women.
  • Don't miss this story about the delivery workers of NYC who lean on each other for safety on the job, no thanks to restaurants and apps. The tens of thousands of workers have built protections for bikes, shelter and other needs while they try to meet the demands of apps and avoid threats like theft.
  • Sunny Balwani's attorneys can't reserve seats in the courtroom at Elizabeth Holmes' trial, the judge handling the case decided. Holmes' ex-boyfriend didn't get an explanation for the decision; the judge just stamped Balwani's motion with the word "DENIED."

One More Thing

Meet Packy McCormick

If Ben Thompson and Bill Simmons had a baby, Packy McCormick said it would look something like his newsletter, Not Boring. The former Breather exec and investment banking associate started the newsletter a little over a year ago, writing twice a week about startups, big public companies and investment memos. He's quickly become a favorite read of ours, and a lot of folks in the tech world.

McCormick also has a Public portfolio, where people can discuss potential investors and companies to bet on. Maybe some of his past banking jobs were, well, boring, but his self-started hustle is certainly trying to make that world less so.

We're featuring tech-industry creators and leaders we think you might like here every Tuesday. If you have folks you think everyone should know about, send them our way!

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