Protocol Source Code
What matters in tech, in your inbox every morning.
Image: Olena Panasovska / Alex Muravev / Protocol

Robinhood’s in trouble


Good morning! This Friday, the GameStop stock drama might take down Robinhood, Tim Cook and Mark Zuckerberg are ready for a privacy war and Facebook's Oversight Board made some rulings.

(Was this email forwarded to you? Sign up here to get Source Code every day. And you can text with us, too, by signing up here or texting 415-475-1729.)

The Big Story

Can't sell, won't sell

Life is about to get really hard for Robinhood. On Thursday, everybody's favorite meme stocks were spiking again when everybody's favorite meme stock trading app suddenly stopped letting people buy new shares in GameStop, AMC, BlackBerry, Koss and a handful of other companies. Then all hell broke loose.

  • Users flocked to apps like Webull, M1 and Public to keep trading, but then those apps stopped allowing new trades as well. And suddenly, to a lot of new traders, the whole thing smelled like market manipulation.
  • GameStop's stock immediately crashed. It was down almost 50% yesterday, and at one point dropped nearly 75%.
  • Users immediately filed a class-action lawsuit against Robinhood, started a review-bombing campaign on the App Store and began pressuring the company to either reverse its course or at least explain what was going on. Without a better explanation, all kinds of conspiracy theories were flying.

Webull, Public and M1 eventually allowed trading again, and Robinhood said it'll do so today.

  • "To be clear, this was a risk-management decision," Robinhood said on its blog last night, "and was not made on the direction of the market makers we route to." Its CEO Vlad Tenev said the same on CNBC: "We just haven't seen this level of concentrated interest, market-wide, in a small number of names before."
  • As the day went on, it looked increasingly clear that Robinhood was facing serious liquidity issues: Bloomberg reported Robinhood tapped "at least several hundred million dollars" in credit in order to keep up with demand, while also raising $1 billion from existing investors.
  • Webull CEO Anthony Denier blamed the simple cost of doing deals in an outrageously volatile market. "It has nothing to do with … some sort of smoke-filled cigar room of Wall Street firms getting together to the dismay of the retail trader," he told Yahoo Finance. "This has to do with the settlement mechanics of the market." (Here's a good explanation of the very complicated world of market settlement.)

Lots of people were not convinced by any of these explanations. Tech-friendly folks fell in love with Robinhood because it felt democratic, open, internetty! I mean, it's called Robinhood. But now they believe Robinhood is kowtowing to the system again. To a lot of people, its "Let the people trade" slogan is starting to sound a lot like Google's "Don't be evil."

In maybe the best sign yet of how crazy things have gotten, the RobinStop events got Sen. Ted Cruz and Rep. Alexandria Ocasio-Cortez to agree on something. "As a member of the Financial Services Cmte, I'd support a hearing if necessary," Ocasio-Cortez tweeted, and Cruz dropped a "Fully agree" quote tweet.

  • They're going to get their wish: The new Banking Committee chairman Sherrod Brown said that, "It's time for the SEC and Congress to make the economy work for everyone, not just Wall Street."


A brief history of Reddit changing the world

Anna Kramer writes: Sure, r/WallStreetBets will live in infamy like no subreddit before. It's objectively the most impressive amount of chaos we've ever seen from a community that lives for the crazy.

But it's not even close to the first time a bunch of Redditors got together to screw with the rest of the world, so here's your (extremely subjective) list of the most impressive moments from the days of yore.

  • That time they doxxed an innocent man for the Boston Marathon bombing. This is probably the worst example on the list. Redditors have a nasty history of trying to out bad guys and going way too far with the doxxing (see earlier this month, when some of them organized doxxing for alleged Capitol rioters).
  • The 2012 internet blackout, wherein Wikipedia and Reddit coordinated with other pro open-internet organizations to turn off their services for 24 hours in protest of the Stop Online Privacy Act and the Protect IP Act. Both bills were eventually withdrawn, and most experts credit this protest as the turning point.
  • Remember the hacked nudes of Jennifer Lawrence, Selena Gomez and other celebrities? They were all posted to r/thefappening, where more than 100,000 Redditors waited for real-time uploads from the hack. (Reddit eventually banned the thread.)
  • Redditors have raised a lot of money over the years. Reddit atheists raised more than $200,000 for Doctors Without Borders last year using the slogan "Good Without God." In 2010, they sort of forced Stephen Colbert into hosting a rally to "restore sanity" in D.C. and then helped raise more than $600,000 for educational charities.
  • Boaty McBoatface. Need I say more?

There are a lot more, both wonderful and ugly, that I could add to this list, but this is definitely enough to remind us that, really, we should have seen Gamestonk coming from miles away. Social media, and Reddit in particular, has always had this kind of power lurking under the surface.


The trillion-dollar privacy wars

There's a privacy battle coming between Apple and Facebook, and two of the most powerful CEOs on Earth are both ready for it. After weeks of veiled shots, the gloves are off.

Tim Cook lit into Facebook during a speech he gave this week at the Computers, Privacy and Data Protection conference.

  • "We can no longer turn a blind eye to a theory of technology that says all engagement is good engagement," he said. A company like that, he said, "does not deserve our praise, it deserves reform."
  • Lest you say, "well, maybe he didn't mean Facebook!" I present to you the example from Apple's Privacy Day blog post, showing the tracking notifications Apple's planning to start showing. It's not your standard fake-app-with-a-silly-name, it's Facebook.

Facebook is thinking about filing an antitrust lawsuit against Apple, The Information reported. "We believe Apple is behaving anti-competitively by using their control of the App Store to benefit their bottom line at the expense of app developers and small businesses," the company said.

  • On Facebook's earnings call this week, Mark Zuckerberg said basically the same: "Apple has every incentive to use their dominant platform position to interfere with how our apps and other apps work, which they regularly do to preference their own."
  • I've talked to a number of people in the last few days who see it roughly like Zuckerberg does: That Apple's pro-privacy stance is really a means to an end, to create a world in which it has something like unilateral access to the billion-plus people using its devices.

If two of the world's largest companies fighting publicly (and maybe in court) about privacy isn't enough to force change in the industry, I don't know what is. Both sides are dug in here, both morally and because their business models won't let them change. I'm not sure it'll ever come to this, but it's a fascinating question: Who blinks first? Does Facebook need the iPhone more than the iPhone needs Facebook, WhatsApp and Instagram?



The technology trends that are driving the world of markets forward. Read more

People Are Talking

WallStreetBets creator Jaime Rogozinski didn't see this coming, but said the trend is unstoppable:

  • "A massive group of people have organized where they collectively have a seat at the poker table, which was previously invite-only. You can't ignore them anymore."

On Protocol: Fintech companies need to help people learn, not just hand them tools, Betterment's Dan Egan said:

  • "I don't mind people who like DIY trading, per se. But I don't like it when a company puts a person up at the top of the mountain, with no experience and no ability to understand what they are getting into in ways that can dramatically hurt them, then just [lets] them loose."

Miami Mayor Francis Suarez said his push for tech companies is partly about keeping homegrown talent at home:

  • "We've been a city that, for many decades, has produced talent that we've lost to bigger cities. That's something we want to recapture."
  • Related: SoftBank said it plans to spend $100 million on Miami-based startups.

Airbnb invested in policing its platform quicker than most, and Brian Chesky said there's a specific reason:

  • "At Airbnb, we learned lessons earlier than big tech companies, because we had people getting their homes trashed, we had people getting physically hurt or worse."

Number of the Day


That's how many of Facebook's moderation decisions (out of five) the Facebook Oversight Board overruled in its first batch of cases. From an image with visible nipples to a quote from Joseph Goebbels, the board asked Facebook for more transparency and clearer rules. The only decision it upheld? Here's Protocol's Issie Lapowsky: "The board upheld Facebook's decision to take down a post in which a Facebook user used a derogatory term to describe Azerbaijanis, which the board determined was used to dehumanize people based on their national origin."

In Other News

  • Henry Moniz is Facebook's first chief compliance officer. He joins from ViacomCBS, and is expected to report to general counsel Jennifer Newstead. One of his first jobs might be to deal with the U.K., which announced a formal investigation into Facebook's Giphy acquisition.
  • WeWork might go public via a SPAC. The Wall Street Journal reports that it's in talks with two SPACs, and the deal could value the company at $10 billion. It might raise a private funding round instead, though. Meanwhile, Coinbase is going public via a direct listing, having scrapped earlier plans to IPO.
  • On Protocol: A PR screwup drew unwanted attention to Google's Saudi data centers. Activists thought Snap might be using Google's expanded Saudi cloud services — it's not, but scrutiny remains over what Google's doing in the region.
  • Walmart wants to be a top 10 ad player. It renamed its ad-sales group to Walmart Connect, and launched new ad tech that lets brands use Walmart data to target users on non-Walmart platforms.
  • U.S. officials will meet with the Taiwan government, TSMC and MediaTek to discuss the auto chip shortage. Deputy Assistant Secretary of State Matt Murray and Acting Deputy Assistant Secretary of Commerce Richard Steffens are expected to attend the meeting next Thursday.
  • Activists are trying to get New York City to ban police use of facial recognition. It might be a tougher task than the San Francisco and Oakland bans, though: The New York City Council doesn't seem too keen on outright bans.
  • SpaceX could be worth $92 billion as a new funding round is finalized. Business Insider reports that the valuation is expected to be at least $60 billion.

One More Thing

The virtual velvet rope

The whole point of Sundance is to see and be seen, hobnobbing on the slopes. How do you replicate that virtually? Protocol's Janko Roettgers dug into that, and found that among other things, there's a virtual bar — called Film Party — that is limited to 250 people at a time. If you're number 251, they'll spin up a new virtual bar for you, but the scene in Film Party 2 isn't going to be nearly as cool as the original. Timing your party-hopping has never been more important.



The technology trends that are driving the world of markets forward. Read more

Today's Source Code was written by David Pierce, with help from Anna Kramer and Shakeel Hashim. Thoughts, questions, tips? Send them to, or our tips line, Enjoy your weekend; see you Sunday.

Recent Issues

The best of Protocol

The confessions of SBF

Your holiday book list

A tale of two FTXs