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What really happened at Equifax

Your five-minute guide to what's happening in tech this Tuesday, from the future of digital banking to a report card for the web.

Good morning! This Tuesday, the DOJ blames China for Equifax, Uber and Postmates fail to temporarily block AB 5, and the Vision Fund takes its first official loss.

People Are Talking

The FTC needs an overhaul to take on big tech, Senator Josh Hawley said:

  • "Google and Facebook have acquired hundreds of companies in the last two decades, yet the FTC never once intervened to try to block any of these acquisitions."

Amazon wants Trump to testify in its JEDI case, along with other White House officials:

  • "The question is whether the President of the United States should be allowed to use the budget of the DoD to pursue his own personal and political ends."

Also, Amazon is already the company politicians want it to be, according to … its global affairs head Jay Carney:

  • "When it comes to creating jobs, raising wages, providing benefits and training employees for higher-paying jobs, Amazon is doing many good things — for the economy, and for American workers."
  • Carney also had A Big Day on Twitter dealing with criticism of his comments, which Matt Stoller summed up thusly: "That's interesting now pay your taxes."

The case against Theranos' Elizabeth Holmes should be dismissed, her attorney said:

  • "The indictment is full of ambiguity and fudging language, the government is inserting these phrases so they can shift their theory as they go along in the trial."

The Big Story

The international conspiracy behind the Equifax hack

It was the hack everyone heard about, leading to the settlement that caused us all to naively try to claim our $125. Equifax remains one of the biggest data breaches ever — and now we know what allegedly happened.

  • Attorney General William Barr said at a press conference Monday that the DOJ has identified and indicted four members of China's People's Liberation Army in connection with the hack.
  • Barr made clear how extraordinary this was: "We normally don't bring criminal charges against members of another country's military or intelligence services outside the United States … the deliberate indiscriminate theft of the vast amounts of sensitive personal data of civilians as occurred here cannot be countenanced."

Our friends at POLITICO have a good rundown of exactly how the hack worked, if you want more details.

I asked Protocol's security reporter, Adam Janofsky, what he thought of it. Here's what he said:

  • The indictment might look like a win for U.S. prosecutors and Equifax — and in some ways it is — but it's important to remember that a lot of the damage done won't be reversed.
  • The Chinese military likely has a trove of sensitive information on about half of all Americans, which it can use to spy on government officials or blackmail people who are financially stressed.
  • Perhaps even worse, the data could be fed into Chinese artificial intelligence tools to target Americans, Barr said.

Equifax might naturally want everyone to move on: One Equifax employee described the day to me as "drinking from a firehose," but also said that it's "like one of those traumatic experiences we can put behind us."

  • But the pressure might not be finished just yet. Senator Mark Warner said in a statement that, "the indictment does not detract from the myriad of vulnerabilities and process deficiencies that we saw in Equifax's systems and response to the hack."

How much time is your business spending thinking about China, or hackers at all? Or, actually, here's my real question: Did anyone reading this email ever get their $125? If so, please send me an email: david@protocol.com. I want to learn your ways.

Fintech

A finance app gets its banking wings

Varo Money took a big step to becoming a national, digital-only bank, announcing Monday that it's set to receive the first-ever "de novo national bank charter" for a banking startup. It means the company will soon be able to operate as a full-fledged bank, instead of relying on a partner to handle some services.

This is a key moment for Varo, and for the fintech industry as a whole, Varo CEO Colin Walsh told me.

  • He recalled a Bloomberg Law story from late last year saying Varo was "an important bellwether for the fate of fintech banking." If Varo couldn't get approved, there was little hope for anyone else. That's how it felt to him, too.
  • Walsh also said he doesn't expect the process to be easier for the long list of other tech companies hoping for a charter — he said that the Federal Deposit Insurance Corporation is likely to make everyone jump through the same hoops as Varo did, and many companies simply won't have the expertise or resources.

Varo's been working with regulators since the company's early days in 2016. Walsh says the process hasn't been easy: Varo filed 5,000 pages in applications, had FDIC employees prowling its offices for weeks, and had to build new teams and new systems to satisfy regulatory requirements.

But now Varo, which focuses on lower- and middle-income customers, can offer more to users. "We're not going to open branches, we're not going to open cash vaults, we're not planning to buy an ATM network anytime soon," Walsh said. But it does plan to have a pretty complete product line soon after it becomes an official national bank in the second quarter of this year.

Do you use an app like Varo, Robinhood, or Chime? What would entice you to switch? Let me know: david@protocol.com.

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.

State of the Web

Twitter's up, Yahoo's down, and Google basically owns the web

SimilarWeb published its annual report on the state of the web on Monday, and it's full of interesting tidbits.

First, the not-so-surprising stuff:

  • Desktop web browsing is down slightly from last year (and has been decreasing for a while) while mobile traffic continues to climb.
  • Google still absolutely dominates the web. Twitter's traffic climbed last year, while Yahoo and Facebook's dropped — though Instagram and WhatsApp both grew significantly.

Then there's the somewhat-surprising stuff:

  • Amazon Prime Day has become a top-notch shopping holiday, up there with Black Friday.
  • The most mobile-friendly category on the web? Porn. Number two? Gambling. Turns out anything people want to do privately, they do on their phones. Though they pretty much do everything on their phones — the only category still dominated by the desktop is "Arts & Entertainment," which is mostly streaming media.

The report hits on everything from President Trump's continuing reign as the most popular search term on the planet to the remarkable rise of Google Flights and what it means for the online travel business. Flip through this and Benedict Evans' 2020 tech trends, and you'll have 2020 pretty much in focus.

Making Moves

Facebook is hiring a communications manager for its new Oversight Board. Key requirements: lots of experience, good relationships, and (I'm guessing) a remarkable tolerance for chaos.

Eileen Naughton, Google's head of HR, is leaving the company later this year. She's been involved in many of the company's high-profile internal clashes over the last few years.

Amazon's video efforts have a new leader: Mike Hopkins. Previously the chairman of Sony Pictures Television and before that the CEO of Hulu, Hopkins will oversee Prime Video and Amazon Studios.

In Other News

  • The White House officially announced its budget proposal for 2021 with a huge increase in AI and quantum spending. Keep in mind that the details will change — a lot — before anything actually passes.
  • Amazon is still winning the smart speaker war. A new report found about 70% of people playing music and setting timers and irritatedly shouting "no, I said the LIVING ROOM lights," are doing it with Alexa.
  • From Protocol: Uber and Postmates lost their bid for a temporary injunction against AB 5. That means California can enforce the gig-economy law while the fight continues in court.
  • The court challenge of the T-Mobile / Sprint merger is coming to a close. The NYT reports that a judge in Manhattan is planning to rule in favor of the deal.
  • A Business Insider story caused confusion about Slack. The story implied that IBM had decided to sign up 350,000 employees; Slack's stock spiked on the news, and even paused trading at one point. But in an SEC filing Slack said that IBM has actually been its largest customer for several years — it didn't sign up all 350,000 employees overnight.
  • The Bloomberg campaign made a plea to Silicon Valley: send us your best people, and help us win the election.
  • From POLITICO: Google is appealing a 2017 antitrust ruling against the company, giving Europe's big-tech fighters their first major public test.
  • Bill Gates may not be buying that superyacht after all, the BBC reports. But honestly, he should be. If he's not, get on it. And send me pictures.
  • From Protocol: Brandless became the first Vision Fund-backed company to shut down. Biz Carson reports that the company is stopping all orders and laying off nearly 90% of its staff.

One More Thing

When your car-share is a getaway car

One time, I rented a car only to find the windshield had been shattered. Turns out that was nothing: NBC News reports that users of car-sharing services like Getaround and Turo are increasingly finding their cars have been broken into — and even used to commit crimes. Why? Because as NBC puts it, "the app gives precise locations of cars, even for people just browsing without a reservation — and the keys are always left inside." Getaround responded to the story, explaining all the new and existing safety measures it's taking for people's cars.

A MESSAGE FROM NASDAQ

Reimagining Markets Everywhere

Nasdaq Technology is daring to think differently.

Learn more here.

Thoughts, questions, tips? Send them to me, david@protocol.com, or our tips line, tips@protocol.com. Enjoy your Tuesday, see you tomorrow.

Fintech

Affirm CEO: 'Buy now, pay later' becomes more attractive in a slump

With consumers grappling with rising rates and prices, the question of whether they’ll still buy now and pay later is open. Max Levchin thinks Affirm knows the answer.

Affirm CEO Max Levchin spoke with Protocol about "buy now, pay later."

Photo: John Lamparski/Getty Images

Shortly after Affirm went public last year, CEO Max Levchin told Protocol that he saw “an ocean of opportunities” for the “buy now, pay later” pioneer. Wall Street agreed.

Affirm’s stock soared in its trading debut as the company blazed a trail for a fast-growing alternative to the credit cards that Levchin says consumers are increasingly rejecting.

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Benjamin Pimentel

Benjamin Pimentel ( @benpimentel) covers crypto and fintech from San Francisco. He has reported on many of the biggest tech stories over the past 20 years for the San Francisco Chronicle, Dow Jones MarketWatch and Business Insider, from the dot-com crash, the rise of cloud computing, social networking and AI to the impact of the Great Recession and the COVID crisis on Silicon Valley and beyond. He can be reached at bpimentel@protocol.com or via Google Voice at (925) 307-9342.

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

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.

Workplace

The post-layoff playbook: How to avoid 'survivor's guilt'

Taking care of your laid-off employees is important. But how can you restore trust with the employees who make it through?

Employees who survive layoffs are charged with holding the company together. Whether or not managers listen to their concerns can make or break a company’s culture.

Photo: Justin Pumfrey/The Image Bank/Getty Images

Jennifer Burke was on her way to Hawaii for her daughter’s wedding when Zillow followed through on its long-anticipated layoff. She asked her manager to break the news to her by message in the car. You’re one of the safe ones, her manager responded.

“I felt relieved, of course,” Burke said. “I felt apprehensive. I felt sympathy for my co-workers that I knew were going to be laid off.”

Keep Reading Show less
Lizzy Lawrence

Lizzy Lawrence ( @LizzyLaw_) is a reporter at Protocol, covering tools and productivity in the workplace. She's a recent graduate of the University of Michigan, where she studied sociology and international studies. She served as editor in chief of The Michigan Daily, her school's independent newspaper. She's based in D.C., and can be reached at llawrence@protocol.com.

Enterprise

Why chip companies need the college students dazzled by software jobs

New chip fabricating plants will need tens of thousands of skilled workers who don’t currently exist. Training them means persuading students to look away from jobs at big tech companies.

Intel employees in clean room "bunny suits" work at Intel's D1X factory in Hillsboro, Oregon.

Photo: Intel Corporation

Every morning, Isaiah Morris drives his white Nissan Altima eight miles down Arizona state Route 101 to a sprawling, low-level office park in South Tempe. Inside one of the unassuming buildings adjacent to GoDaddy’s headquarters and a couple of Amazon offices, the Arizona State University student dons a lab coat, safety shoes and prescription goggles as he helps engineer chemicals for a chip manufacturing process called planarization.

Morris is an unusual 21-year-old. When they graduate college, many of his tech-minded peers will opt to work for the likes of Apple, Google and other household names that have enjoyed meteoric growth over the last decade. Jobs at those tech companies symbolize prestige for graduates and their parents in a way that careers with chipmakers like Intel do not.

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Anna Kramer

Anna Kramer is a reporter at Protocol (Twitter: @ anna_c_kramer, email: akramer@protocol.com), where she writes about labor and workplace issues. Prior to joining the team, she covered tech and small business for the San Francisco Chronicle and privacy for Bloomberg Law. She is a recent graduate of Brown University, where she studied International Relations and Arabic and wrote her senior thesis about surveillance tools and technological development in the Middle East.

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.

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