posted about 11 hours ago on re/code
Williams, Twitter’s co-founder and longtime board member, announced he’s leaving the board. It’s been a long time since Ev Williams, one of Twitter’s four co-founders and its one-time CEO, was making any notable decisions within the company he created way back in 2006. But on Friday, when Williams announced that he is leaving Twitter’s board to “ride off into the sunset” and “focus on some other things,” it still felt like the end of an era. Williams, always thought to be a bit of a counter-balance (and a former rival) to CEO Jack Dorsey, is officially out the door. “I’m very lucky to have served on the @Twitter board for 12 years (ever since there was a board). It’s been overwhelmingly interesting, educational — and, at times, challenging,” Williams tweeted Friday. I'm very lucky to have served on the @Twitter board for 12 years (ever since there was a board). It's been overwhelmingly interesting, educational—and, at times, challenging.— Ev Williams (@ev) February 22, 2019 Williams and Dorsey have historically been rivals, battling for power and influence internally while taking turns at the helm of Twitter in the company’s early days. Dorsey was Twitter’s first CEO, but was a bad manager and was quickly replaced by Williams in 2008. Dorsey was essentially booted from the company. When Williams was later replaced by Dick Costolo in 2011, Dorsey returned as Twitter’s executive chair with a vengeance. Here’s how we reported the transition in a Recode story from 2015: [Dorsey] seems to be a completely different man than the one who returned to Twitter in March 2011 as executive chairman and product czar. Former colleagues recall a man looking for payback for his 2008 ouster; loyalty was key, and many who were loyal to Twitter’s other co-founder, Ev Williams, were booted from the company. Even though Williams said publicly that bringing Dorsey back as CEO in 2015 was the right move, his seat on the board always felt ... interesting. Dorsey tweeted Friday that he would “miss [Ev’s] voice in our board conversations.” As a board member, Williams has been a thoughtful Twitter critic. Two years ago, he said that the advertising business that supports digital media is a “broken system” — a not-necessarily-untrue yet interesting thing to say when you sit on the board of a company that makes its money through advertising. He openly contemplated whether or not Twitter helped get Donald Trump elected president, and apologized if it did. Most recently, he questioned Twitter’s decision to track follower counts, calling it “unhealthy.” Which is all to say that while Williams hasn’t necessarily been calling the shots for Twitter, he’s still been a vocal presence made all the more interesting by the fact that he had a vote on the board. Almost 13 years after Twitter’s founding, that vocal co-founder is ready to move on. (Of course, Williams already runs another company, the publishing business Medium.) “I’m going to ride off into the sunset (or...down Market Street), so I can focus on some other things,” he tweeted. “I will always be rooting for the team (and, if someone lets me in, come by for lunch).”

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posted about 13 hours ago on re/code
It’s the latest point of tension with tech employees who are against defense uses of the tools they’re building. A group of around 50 Microsoft workers signed a letter today demanding the company cancel its nearly half-billion-dollar contract with the US military to license its augmented reality HoloLens technology for use in military combat and training. The letter, addressed to Microsoft’s CEO Satya Nadella and President Brad Smith, was initially circulated internally and is now being released publicly. It takes issue with the use of Microsoft’s technology to increase the lethality of warfare, arguing that it turns combat into a “simulated ‘video game’” and is “further distancing soldiers from the grim stakes of war and the reality of bloodshed.” Microsoft plans to release a new version of its HoloLens augmented reality headset at the Mobile World Congress later this week. The company did not immediately return a request for comment. The employees’ objections are also reflective of a larger “Tech Won’t Build It” movement by tech workers who are demanding a stop to what they feel are morally questionable uses of their companies’ products. Employees at Google were successful in helping pressure the company to drop its defense project with the Pentagon in June, as well as getting the company to halt plans to build a censored version of its search product in China, called Project Dragonfly, in December. This isn’t the first time Microsoft employees have raised concerns about government uses of its technology. Last June, hundreds of employees signed a petition demanding the company drop its contract with US Immigration and Customs Enforcement. And in October, a group of employees called for the company to cancel its $10 billion project to build cloud services for the Department of Defense. Employee efforts have been unsuccessful so far in getting the company to drop those contracts. While Microsoft has encouraged regulation and ethical debates over the use of facial recognition technology, it has recently doubled down on its support for selling its technologies to the US military and government agencies. “We believe in the strong defense of the United States and we want the people who defend it to have access to the nation’s best technology, including from Microsoft.” wrote Smith in a corporate blog post in October. In addition to the demand to cancel the US military contract, today’s letter also calls for the company to “cease developing any and all weapons technologies,” draft a public statement saying so, and create an external review board to enforce and validate the matter. The letter acknowledges that a review process already exists at the company for ethics in AI, called Aether, but the writers argue that the process is “opaque to Microsoft workers, and clearly not robust enough to prevent weapons development.” It remains to be seen if Microsoft workers will be able to change the company’s stance on the matter. Below is the full text of the letter. Dear Satya Nadella and Brad Smith, We are a global coalition of Microsoft workers, and we refuse to create technology for warfare and oppression. We are alarmed that Microsoft is working to provide weapons technology to the U.S. Military, helping one country’s government “increase lethality” using tools we built. We did not sign up to develop weapons, and we demand a say in how our work is used. In November, Microsoft was awarded the $479 million Integrated Visual Augmentation System (IVAS) contract with the United States Department of the Army. The contract’s stated objective is to “rapidly develop, test, and manufacture a single platform that Soldiers can use to Fight, Rehearse, and Train that provides increased lethality, mobility, and situational awareness necessary to achieve overmatch against our current and future adversaries.”. Microsoft intends to apply its HoloLens augmented reality technology to this purpose. While the company has previously licensed tech to the U.S. Military, it has never crossed the line into weapons development. With this contract, it does. The application of HoloLens within the IVAS system is designed to help people kill. It will be deployed on the battlefield, and works by turning warfare into a simulated “video game,” further distancing soldiers from the grim stakes of war and the reality of bloodshed. Intent to harm is not an acceptable use of our technology. We demand that Microsoft: 1) Cancel the IVAS contract; 2) Cease developing any and all weapons technologies, and draft a public-facing acceptable use policy clarifying this commitment; 3) Appoint an independent, external ethics review board with the power to enforce and publicly validate compliance with its acceptable use policy. Although a review process exists for ethics in AI, AETHER, it is opaque to Microsoft workers, and clearly not robust enough to prevent weapons development, as the IVAS contract demonstrates. Without such a policy, Microsoft fails to inform its engineers on the intent of the software they are building. Such a policy would also enable workers and the public to hold Microsoft accountable. Brad Smith’s suggestion that employees concerned about working on unethical projects “would be allowed to move to other work within the company” ignores the problem that workers are not properly informed of the use of their work. There are many engineers who contributed to HoloLens before this contract even existed, believing it would be used to help architects and engineers build buildings and cars, to help teach people how to perform surgery or play the piano, to push the boundaries of gaming, and to connect with the Mars Rover (RIP). These engineers have now lost their ability to make decisions about what they work on, instead finding themselves implicated as war profiteers. Microsoft’s guidelines on accessibility and security go above and beyond because we care about our customers. We ask for the same approach to a policy on ethics and acceptable use of our technology. Making our products accessible to all audiences has required us to be proactive and unwavering about inclusion. If we don’t make the same commitment to be ethical, we won’t be. We must design against abuse and the potential to cause violence and harm. Microsoft’s mission is to empower every person and organization on the planet to do more. But implicit in that statement, we believe it is also Microsoft’s mission to empower every person and organization on the planet to do good. We also need to be mindful of who we’re empowering and what we’re empowering them to do. Extending this core mission to encompass warfare and disempower Microsoft employees, is disingenuous, as “every person” also means empowering us. As employees and shareholders we do not want to become war profiteers. To that end, we believe that Microsoft must stop in its activities to empower the U.S. Army’s ability to cause harm and violence. Microsoft Workers

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posted about 14 hours ago on re/code
The Stanford grad is traipsing into a very different fundraising environment when he arrives in Silicon Valley this weekend. He is the intermittent faster, the Tim Ferriss podcaster, the first-generation tweeter, the startup founder, the college pal of Reid Hoffman and other Stanford graduates of the early ’90s who built the modern Internet. If any Democratic presidential candidate has tapped into the Silicon Valley zeitgeist over their careers, it is Cory Booker. And in 2019, that could be as much a political liability as it is a financial asset. Booker, long the darling of the tech industry and some of its marquee leaders, is traipsing into a transformed Silicon Valley when he touches down in town this weekend for his first fundraising trip here since he announced he was running for president. Friday lunch guests at the San Francisco home of David Shuh, Friday dinner guests at the 9,300-square-foot Piedmont home of Ali Partovi, and Saturday evening guests at the Atherton home of Gary Lauder (the heir to the Estée Lauder beauty empire) are paying up to $2,800 each to rub shoulders with Cory Booker. Then again, most have probably met him before. The presidential candidate has collected half a million dollars from the internet industry over his five years in the Senate, from people like LinkedIn’s Hoffman, Salesforce’s Marc Benioff, Google’s Eric Schmidt, Emerson Collective founder Laurene Powell Jobs, and early Facebook exec Sean Parker. Why? He is culturally of this place, donors say. But times have changed, and Silicon Valley is no longer merely an ATM for Cory Booker. Twitter is no longer primarily a place to find an elderly woman snowtrapped in her home in Newark, like Booker once did — it is now also a cesspool of hate and misinformation. Mark Zuckerberg is no longer a hero brandishing a $100 million check in a well-meaning attempt to save Newark’s schools, like Booker once described him — he is a bogeyman who badly mishandled our last election and is now as divisive as any of the people running for president. Silicon Valley is itself a minefield that in some ways sums up the broader political challenge for Booker in 2020: He’s running as a liberal on issues including tech regulation, but the progressive left holds him in suspicion — and he could face more as he begins to court tech money more openly. Booker’s tightrope walk needs to capitalize on his decades of coziness with tech elites and corporate America while not offending the liberal base that has them in its crosshairs. “Cory Booker is the Manchurian candidate of Silicon Valley. I believe they have cultivated him and groomed him,” said Jamarlin Martin, a 41-year-old political activist who runs a collection of digital media sites serving black audiences. “He’s going to run into problems as the public becomes more aware that he’s in bed with our generation’s Big Tobacco.” Cory Booker’s super PAC bind Democrats have dramatically soured on Silicon Valley over the last year: They’re now about evenly split on whether social media companies are good for democracy, for instance. That’s a far cry from a decade ago, when Silicon Valley epitomized the modern, progressive, cool mores of Barack Obama’s Democratic Party. Cory Booker thought it did, too. Now, he appears less sure. “The problem we have right now in America,” he told Recode in 2017, “is it is a perversion of the free market where corporate villainy is reigning.” To understand Booker’s love/hate relationship with Silicon Valley, look no further than how he’s handling the Bay Area’s most prominent outside group so far this primary: the super PAC set up by his Stanford classmate, Steve Phillips. Phillips and I are sitting in a corner of The Battery, the posh hangout for the tech elite in San Francisco. Phillips isn’t in tech — he’s a lawyer by trade, and a political operative by practice — but he is a key Booker emissary to the world of tech’s mega wealthy. He’s introduced Booker to the likes of billionaire Salesforce chief Democratic donor Marc Benioff (at Obama’s second inauguration) and to Google super-executive David Drummond. And while Phillips has his detractors in the Democratic fundraising world who think him more flash than substance, according to some Democratic sources, he’s got the ability to raise big money thanks to his marriage into the family of Herb Sandler, one of the Democratic Party’s biggest donors in recent cycles. He’s prioritized mobilization above persuasion, working on behalf of candidates of color like Obama, Stacey Abrams, and even Kamala Harris. His new group, Dream United, is the only candidate-specific super PAC up and running so far in the 2020 primary. Phillips claims $4 million in commitments to back Booker. “[Booker] was seen as the senator of Silicon Valley” “He was seen as the senator of Silicon Valley,” Phillips argued. “There’s this cultural connection that’s a little bit deeper with him.” But here’s the thing: Just like Booker isn’t totally sure how he feels about Silicon Valley big money, one gets the sense that Booker isn’t totally sure how he feels about his old friend Steve Phillips, either. Booker has ruled out taking money from corporate PACs, but he’s been hard to pin down on what he thinks about Phillips’s group. Booker has predictably been asked about how he feels about an outside group that can take millions from billionaires — and his protestations have not been effusive. When asked last week specifically whether Phillips’s group should be shut down, he told reporters, “I urge anyone and everyone not to have super PACs in this race.” Of course, candidates can’t coordinate with super PACs, so Booker can’t issue instructions to them on how to spend the money — but he’s not exactly washing his hands of them, either. One tech donor close with the New Jersey senator told me that the word he has gotten from inside the Booker operation is to not cooperate with Dream United. But it’s a hazy instruction, and maybe intentionally so: Booker’s looking for rhetorical cover in a political climate in which super PACs have transformed from a financial necessity into a public-relations vulnerability; Phillips has enough rhetorical cover, too, to claim he hasn’t been totally disavowed. Phillips said the criticisms of his group are merely “political gamesmanship” and that other Democratic contenders are eagerly accepting max-out $2,800 checks — and “not from waitresses or bus drivers,” as Phillips put it. But Phillips said he doesn’t need Booker’s permission to do the organizing work he has long done in the black community, and that he’s not shutting anything down just because of the moment’s politics. “The perception of what a super PAC is is a convenient bogeyman. I get that,” he said as he held court in The Battery, where it was hard not to notice that he was one of the only African Americans in the room. “But if there’s a rich person who wants to support black-voter mobilization in Georgia, Alabama, and Mississippi, why would I turn that down?” Another possible super PAC donor, Los Angeles billionaire surgeon Gary Michelson, who got close with Booker, a fellow vegan, after the senator headlined an animal-welfare banquet in Los Angeles in late 2016, said he was eager for the campaign to clarify its position on the super PAC. Despite Phillips’s claim that Michelson is a financial supporter of Dream United, Michelson told Recode he was willing to donate up to $1 million to the super PAC but had said he wouldn’t make any commitments until he got more information. “You’re reading the same signals I’m reading. It’s going to have to be better than that,” said Michelson. “I’d have to make sure that this would not go against Cory’s interests or his wishes. I don’t want to hurt someone helping him.” Booker’s love affair with Silicon Valley That, in many ways, sums up Booker’s bind: How can he tap Silicon Valley’s largesse without being caricatured as the candidate of the neoliberal rich? “The internet happened — and it happened where he went to college at the time he went to college” Take a look at Booker on policy that matters to tech: He was once a champion of education reform, the cause célèbre of tech donors, but has grown quieter on that issue over time. He has targeted wealthier families with higher taxes as part of a plan to give poor kids money and attack the racial wealth gap, but it’s not as extreme as the Alexandria Ocasio-Cortez wing of his party. And while tech policy drives relatively few tech donors, he has similarly tried to walk a fine line. On the one hand, in a race where presidential candidates are harshly calling out the perils of big tech in their announcement speeches, some tech donors take comfort in the idea that Booker is fundamentally optimistic about their industry. The next president will have wide latitude about how much they actually want to take Silicon Valley to task. “There are lots of politicians on both sides of the aisle that seem to welcome throwing punches at employers,” Carl Guardino, who has hosted fundraisers for Booker and is the head of the Silicon Valley Leadership Group, told Recode. “Cory Booker will never do that.” But on the other, the politics of tech have changed drastically since Booker first joined Twitter a decade ago, and Booker has spent the last few years grappling with things he might have missed. Booker has taken a more aggressive stance toward big tech than the unbridled reverence he expressed for it in his early years. On an episode of Recode Decode in 2017, he cast a glaring eye on Amazon, Google, and Facebook — companies that he has long wooed and, if things had played out differently, that he might’ve worked at. Booker advocates in the Valley are hopeful that his new punchiness toward big tech will insulate him from critiques on the left that he is too close with the players here. Look at Matt Stoller, a leading Washington voice against the monopoly power of companies like Facebook and Google. You’d expect him to rake Booker over the coals for being in bed with big tech. I did when I called him. But nope. “It’s reasonable to consider his relationships with people in Silicon Valley,” Stoller told me. “But he spoke out in 2017 when very few people did.” Those relationships, though, run deep. In the eyes of many donors here, he is, in their words, “one of us.” A Stanford man at the dawn of the internet Booker’s love affair with Silicon Valley began three decades ago when he arrived as a freshman at Stanford. A year behind Hoffman and a year ahead of Peter Thiel, the backup tight end Cory Booker got a little lucky. “The internet happened — and it happened where he went to college at the time he went to college,” said Gina Binachini, a college friend of Booker’s who is a longtime entrepreneur in the Valley. Those Stanford connections paid off with introductions. Booker, bursting with potential and ambition, got to know venture capitalists like Lauder, Ron Conway, and Ted Schlein as he was building a national profile in Newark. Schlein, who met Booker before he became mayor, told me that he’s introduced him to some CEOs out here and has held sessions for him to learn about different parts of tech. Schlein later hosted a fundraising event for Booker at the Rosewood, Silicon Valley’s see-and-be-seen hotel on Sand HIll Road. And for a young, camera-loving, media-savvy politician, technologies like Twitter were catnip. In 2009, Binachini recalls Booker spending a day at LinkedIn under Hoffman’s tutelage, meeting executives from places like Apple and Facebook, drinking it all in. Now, when every Democratic politician has highly paid digital strategists who can turn Luddites into Snapchat sensations, it’s easy to forget how agile Booker was on these platforms when they were still young. He was genuinely impressed with these people. From green tech to social media: inspiring meetings today. Incredible Silicon Valley leaders who are literally changing/empowering the world— Cory Booker (@CoryBooker) May 29, 2009 His tightness with the Valley has already given him one buzz-saw experience: Booker was actually a startup co-founder, at a video company called Waywire, and his role at the startup blew up into a controversy during his 2013 Senate race when opponents labeled it a conflict of interest. (Booker eventually donated his shares.) That experience drew him closer to the Valley, though, helping him appreciate just how hard it is to build a successful company, one person who worked with him at the time said. But Booker’s posture toward Silicon Valley in those early years looks almost naive in the rearview mirror. Take the now-famous story of how Booker convinced Mark Zuckerberg to invest $100 million into Newark schools in 2012. It was brokered through a venture capitalist, Marc Bodnick, the brother-in-law of Sheryl Sandberg, at the elite media-deals conference in Sun Valley, the so-called “summer camp for billionaires.” The Newark mayor and the Facebook chief found common ground on a walk that Idaho summer. Zuckerberg at that point had never been to Newark. The infusion of cash was announced with glitz and glam on the set of another billionaire, Oprah. The project largely ended up a bust. So did Booker’s bet that a tech billionaire could throw enough money at a problem and fix it — a belief that sounds very quaint in 2019. NBC NewsWire via Getty Images Zuckerberg, Booker and New Jersey governor Chris Christie advocating for their plan to save Newark schools. Still, all those those controversies, startup travails, Sun Valley visits, and reunions at his alma mater have given Booker a range of possible donors that are the envy of the Democratic field. But the general sense gleaned from interviews with top Democratic givers and fundraisers in Silicon Valley is that the emphasis right now — above all else — is on a candidate who can win. Booker’s politics are more mainstream than the Elizabeth Warrens of the world, And tech donors, predictably, are technocratic, data-driven, and less convinced that the class warfare waged by the furthest-left candidates is a winning strategy. “That is the single No. 1 important criterion. Consider the alternative,” said Lauder, Booker’s host this weekend. “If I didn’t think that Cory had a chance, I wouldn’t be doing this.” It’s important not overstate Booker’s immediate financial support. I reached out to about two dozen top Democratic donors and fundraisers in the Valley, including some who had backed Booker in previous races, and asked if they planned to endorse him this cycle. It’s hard to find committed donors right now. Former eBay CEO John Donahoe, a top giver in recent cycles? He’s met with Booker and says he’s “impressed.” But an endorsement? “It’s way too early.” Kleiner Perkins kingmaker John Doerr told me through a spokesperson, “It’s too early in the process for him to have a sense of who he will support.” Even Schlein, Doerr’s partner at Kleiner Perkins who has known Booker since before he was mayor, said it’s “very early to endorse anyone yet.” Silicon Valley’s big donors are torn. But do they even matter anymore? It’s not a Booker-specific problem. Democratic donors across the country are generally pushing the brakes on early exclusive endorsements of candidates this cycle, in a jump-ball field and with the decisions of several donor-friendly candidates — like Beto O’Rourke, Joe Biden, and even Mike Bloomberg — still to be determined. Facebook co-founder Dustin Moskovitz — the new hot money in Silicon Valley Democratic politics — is not expected to make any early endorsements in the primary. Hoffman, despite his decades-long relationship with Booker dating back to Stanford, is expected to write $2,800 checks to as many as six Democratic primary candidates but is not going to be using his billions to sway the process, according to a person close to him. That might surprise some Booker supporters who were hoping for Hoffman to advocate for him more publicly. It is Kamala Harris, leading Democratic fundraisers in the Valley say, who represents the clearest challenge to Booker in the money world here. Her ties to Silicon Valley are less cultural than Booker’s and more rooted in organizational power as an incumbent senator and, before that, a Bay Area politician. One early get was Susie Tompkins Buell, a close associate of Hillary Clinton and one of her top bundlers, who surprised the Silicon Valley set with her early Harris endorsement this month. Harris is also close with Benioff, who has known her for 30 years, but he’s likely to back several candidates this cycle. “Kamala is one of the highest-integrity people I’ve ever met and is a phenomenal prosecutor,” Benioff told me. “She is truly an impressive leader with a strong legal and public service background.” Marc Benioff: “Kamala is one of the highest-integrity people I’ve ever met” Another person making their preferences public: Ron Conway, a venture capitalist and an influential Democratic powerbroker, listed Harris and Booker as the two candidates he’s backing this cycle. Booker and Harris “have the greatest understanding of Silicon Valley and have cultivated the deepest relationships,” Conway told me. “Though they won’t always agree with the tech sector’s perspective, they’re generally both allies and each ‘gets it.’” But times have changed in an era in which Bernie Sanders can raise $6 million within 24 hours of his launch from small donors (more than Phillips has claimed, for instance). How deep the Moskovitzes and Hoffmans and Benioffs and Conways will give during the general election will matter to candidates. But there is an ascendant belief in the world of Democratic money that the personal preferences of the bagmen matters less than it once did, especially in primaries. While the well-networked bundler who can collect more max-out contributions will still be in demand, there are not many outside groups for Silicon Valley’s billionaires to back if they’re hoping to give beyond the $2,800 maximum campaigns can accept. What Sanders showed two elections ago, and O’Rourke one election ago, is that Democrats can be competitive with big-money machines merely with good old-fashioned viral marketing. “We used to have this invisible primary where reporters would closely follow fundraising numbers,” said Shomik Dutta, an Obama fundraiser who recently joined Harris’s national finance committee. “The first litmus test of strength is now content.” That may be the biggest ego blow for donors meeting Cory Booker this weekend in Silicon Valley: They don’t matter like they once did.

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posted about 22 hours ago on re/code
Plus: Amazon will bring computer science courses to more than 1,000 US high schools; “unhackable” blockchains are now getting hacked; here’s your interactive Oscar ballot. Pinterest confidentially filed paperwork for an initial public offering. The social network popular among home-renovation voyeurs and mid-century modernists is eyeing a late-June listing; aided by its main underwriters, Goldman Sachs and JPMorgan Chase, the company is expected to seek a valuation of at least $12 billion. Pinterest follows Slack, which filed its own confidential IPO paperwork earlier this month, ramping up buzz in what’s expected to be a banner year of public offerings, including Lyft, Uber and Airbnb. Recent tech IPOs have had a good run of it: the Journal reports that stocks are up about 33 percent, according to Dealogic; outpacing major indexes and all 2018 U.S. IPOs, which are up 11 percent. Meanwhile, Pinterest earned some goodwill among critics of social networks, announcing that it has stopped returning vaccine-related search results, as most of them spread anti-vax disinformation; it’s part of the company’s broader approach against “false cures.” [Maureen Farrell / The Wall Street Journal] [Want to get the Recode Daily in your inbox? Subscribe here.] CEO Spencer Rascoff has left Zillow, replaced by co-founder and former CEO Rich Barton. Rascoff helmed the real-estate site for nearly a decade, overseeing a tumultuous transition as the company moved from that place you go to see what your friend’s apartment cost to actually buying and selling homes, and offering mortgage-lending services. Zillow has been weathering a tough climate in the housing business, with its stock falling more than a quarter in the past year. The announcement of Rascoff’s departure sent shares tumbling a further 8 percent in late trading, before recovering. [Sara Salinas / CNBC] Carl Icahn is pushing to sell Caesars Entertainment, but the company’s holding on to its CEO for a bit longer. The gambling giant and resort operator reported solid gains: net revenue increased 11 percent to $2.12 billion in the last quarter. Profits were up, too, though primarily due to President Donald Trump’s tax reforms. No word as to whether this turning tide might be a lifeline for CEO Mark Frissora — he was supposed to be out the door earlier this month, but the company announced that he’ll stay on through the end of April to support a transition to a yet-to-be-named successor. [Aisha Al-Muslim / The Wall Street Journal] Amazon isn’t pulling out of its education goodwill initiative. In its battle to win New Yorker’s hearts and young minds, the e-commerce giant promised to fund computer science classes in 130 schools; now the program’s being extended across the country to more than 1,000 high schools. The classes, funded through Amazon’s Future Engineer program, aim to teach computer-science skills to more than 100,000 underprivileged kids in 2,000 low-income high schools. A spokesman for Amazon said in a statement that the company intends to roll out the program to another 1,000 schools in the coming months. The program is part of Amazon’s larger $50 million investment in computer science and STEM education. “Amazon notes that there will be 1.4 million computer science jobs available by 2020, according to the Bureau of Labor statistics, but only 400,000 computer science grads with the skills needed to apply for them.” [Sarah Perez / TechCrunch] “Powered by blockchain” ain’t all it’s cracked up to be. The “unhackable” blockchain public ledger that powers cryptocurrencies around the world is looking less like a bank vault and more like Swiss cheese these days. A recent attack on Ethereum Classic, among the currencies on offer via Coinbase’s exchange platform, made off with $1.1 million. But that’s just the tip of the iceberg, reports MIT Technology Review: “In total, hackers have stolen nearly $2 billion worth of cryptocurrency since the beginning of 2017, mostly from exchanges, and that’s just what has been revealed publicly.” In a smart explainer, Orcutt looks at how the inherent strengths of blockchain are being turned in vulnerabilities, and why hackers may be stubbornly difficult to defeat. As if you needed more bad news about your Bitcoin retirement account. [Mike Orcutt / MIT Technology Review] Recode presents ... For the fourth straight year, Recode Editor-at-Large Kara Swisher and Senior Commerce Editor Jason Del Rey are hosting some of the brightest minds in e-commerce and retail for a night of live journalism at An Evening With Code Commerce. The three-hour event — slated for Sunday, March 3, at The Venetian in Las Vegas — will feature Recode’s signature brand of unscripted interviews, as well as a cocktail party where you’ll have the chance to chat up 200 of your smartest peers. Onstage guests include Tim Armstrong, who has built a long career in digital media, and is now entering commerce with the launch of “the dtx company,” which is investing in direct-to-consumer brands like ThirdLove and Dirty Lemon; Helena Foulkes, who just a year ago was named CEO of Hudson’s Bay Company — the owner of the Saks Fifth Avenue, Lord & Taylor, and Hudson’s Bay chains; and Manish Chandra, who has quietly built eight-year-old Poshmark into the second-most-popular iPhone shopping app in the US, ranking just behind Amazon. This event will sell out, so register now. Top stories from Recode Google will end a practice that prevents its workers from taking the company to court over workplace disputes. It’s a big win for employee activists who have long demanded the change — but the new policies won’t apply to Google’s temps, vendors, and contractors. [Shirin Ghaffary] Full transcript: New York Times columnist Maureen Dowd on Pivot. Dowd joins Kara Swisher on the latest episode, sitting in for Pivot’s regular co-host Scott Galloway. [Kara Swisher] This is cool Interactive Oscar ballot 2019: Make and share your picks. Indie Spirits host Aubrey Plaza vows that Saturday’s awards show “will not be boring.” Critics picks: Who should “win” the Razzies.

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posted about 23 hours ago on re/code
Dowd joins Kara Swisher on the latest episode, sitting in for Pivot’s regular co-host Scott Galloway. On the latest episode of Pivot, Recode’s Kara Swisher was joined by a guest co-host, New York Times columnist Maureen Dowd. They talked about the rise of Alexandria Ocasio-Cortez, the upcoming HBO documentary about Michael Jackson Leaving Neverland, Jussie Smollett’s alleged hoax — and also why Dowd is increasingly disturbed by Silicon Valley’s power. “These are a group of people who think they are gods creating people and universes and things, and possibly killer robots,” she said. “You know, in some ways a lot of them are like little boys ... they talk about rockets to Mars and fast cars, you know, all these amazing things, but in other ways they’re our overlords. Although, as Barry Diller says, really, AI is the overlord, not these guys. They’re the midwives to the overlord.” But she’s not the only one looking at the tech sector with a wary eye. Referring to Amazon’s recent retreat from a planned “headquarters” in New York City, Dowd said tech leaders like Amazon CEO Jeff Bezos are now being held up to harsher scrutiny by the public. “Bezos could behave one way before, but now he sort of represents all the arrogance and ruthlessness that people have now come to associate with Bezos and Zuckerberg and people like that,” she said. You can listen to Pivot with Kara Swisher and Scott Galloway wherever you get your podcasts — including Apple Podcasts, Spotify, Google Podcasts, Pocket Casts and Overcast. Below, we’ve shared a full transcript of Kara’s conversation with Maureen. Kara Swisher: Hi everyone, this is Pivot from the Vox Media Podcast Network. I’m Kara Swisher. Scott’s out this week in some country, I don’t know where he is, but my friend and journalist Maureen Dowd from the New York Times is stepping in to the mic today. She’s from Washington. We’re broadcasting from Washington. Maureen, welcome to Pivot. Maureen Dowd: Thank you, Kara. Thank you for doing this. Now you got a general sense of what ... You’re supposed to be Scott, but please be like a thousand times less obnoxious. That would be great. Well, my only rule in life is do whatever Kara tells me, so... Okay, that’s a great rule. I think everyone should do that rule. Anyway, we’re going to talk about a bunch of news stuff and things like that. Just so people, people do know who you are, but explain who Maureen Dowd is. She is a famous columnist. I have a column at the Times, and I also have a feature in the Style section where I interview people, sometimes from Silicon Valley. You’ve done a great ... your Peter Thiel interview was so epic. I did Thiel, and Barry Diller, and Susan Fowler, and the 23andMe ... Anne Wojcicki. Anne Wojcicki. And talked to her mother, who is a piece of work. Esther Wojcicki. She is. She has a new book coming out. Yeah, how to raise children. Oh, she’ll be on the podcast. Right. She’s got some amazing children. She’s great. Jaron Lanier. Yeah, Jaron Lanier. Yes, with his book about social media. You like tech, or you’re very interested in it, right? Yeah. I’m fascinated with it in a sort of a Mary Shelley way. Explain, please. That these are a group of people who think they are creating, you know, they are gods creating people and universes and things, and possibly killer robots. You know, in some ways a lot of them are like little boys. You picture them meeting in that Palo Alto apartment where Sergey Brin, or is it just Larry Page and Elon? I don’t know. It’s all of them, all together. Yeah, and they talk about rockets to Mars and fast cars, you know, all these amazing things, but in other ways they’re our overlords. Although, as Barry Diller says, really AI is the overlord, not these guys. They’re the midwives to the overlord. Yeah. When you go see them, how do they compare to Washington people? Because you sort of are steeped in this, right? Well, that is exactly why I love talking to scientists and engineers, because you ask them a question and they give you an answer and tell you the truth. In Washington, that’s the opposite, obviously. More intensely so now in the Trump era. It’s often hard to get a straight answer out of a politician. You like meeting with them, or seeing them. Yeah. They think so differently, and they answer questions so differently. When you’re in Silicon Valley, you realize people in Washington think the universe revolves around them, but they’re deluded. Right, and who does the universe revolve around? Well, I think at the moment it revolves around Silicon Valley. Still. And do you think that Washington’s going to get them again this time, with regulation, is that like a big ...? I don’t know. Just in the past couple years the tenor of how we think about Silicon Valley has grown so dark. Sheryl Sandberg and the others have admitted that they don’t know how to keep control of their monsters, but you know, Congress is barely able to speak the language, so I don’t know. That obviously will change with people like AOC, who is completely fluent in social media. Yes, she is. She is, absolutely. What is the state of Washington right now? Then we’ll get to the big story breakdowns. What is the state? You’ve been pretty tough on the Trump administration. It’s sort of moving in on Mueller now. How do you feel right now, two, three years in? I would say the state is frenzied. Still? The latest is that the Mueller report might be coming out next week, so everyone is completely frenzied. It could be that the Mueller report is very disappointing to liberals who have so much invested in it. It might not be everything they’re hoping and dreaming. They might not be able to impeach Trump. Right. What is the feelings around, this many years into the Trump administration, which seems to be one thing after the next, essentially. Well, you know, it seems ridiculous to use the words Trump and Dickens in the same sentence. Well, we were at Mary Shelley, so go right ahead. Trump has an unbelievable talent for cliffhangers. In our section, in the Times Review section, they try and chart whether there is Trump fatigue. I just have absolute faith in Donald Trump that if Trump fatigue starts to set in, he will do something so self-destructive and crazy that he will grab back our attention. I’m sure today in the White House he is absolutely fuming because Michael Cohen postponed his testimony long enough that it’s going to be on the same day that he’s in Vietnam, trying to win the Nobel Peace Prize. Cohen is going to be talking about porn models. About Trump. Playboy models and porn stars. Right. Got to keep those apart. What is a porn model, Maureen? I don’t know. It’s a job. That’s a good question. We don’t judge here at Pivot, just so you know. No. There will be a split screen, which will ... Drive him crazy. That is the essence of what drives him crazy, yeah. All right. Let’s get to some of the stories. This week, speaking of crazy things in Washington, you know the cable networks have all sort of made us all feel awful all the time. CNN hired Sarah Isgur, she’s a former Trump aide, she worked for Jeff Sessions, as the new political editor to help run its 2020 election coverage. She was a spokesman and senior counsel at the Justice Department for Jeff Sessions. Previously she served as deputy campaign manager for Carly Fiorina for her terribly failed presidential bid. She doesn’t have any journalism experience that we can understand of. What do you think about this? What do you imagine they’re trying to do there? Well, I think she sold herself to CNN and MSNBC as someone who could help, who had deep knowledge with the Mueller report. It’s already paid off, because CNN broke the story about how the Mueller report might be coming next week. In general, I don’t believe in hiring people who have made a living trashing you. Which she did. She called it the Clinton News Network. Right, and I also don’t believe in hiring political operatives as journalists. Yeah, so why does that happen? I mean, it’s like all over cable. Well you know, this woman aside, we’re in an era when the very people who sold Sarah Palin and the Iraq war are liberal heroes on MSNBC. Right. Nicole. She’s the least of it. Yeah, they all are. We’re all cheering them now because they’re not awful. Right. The liberals were so shocked when Steve Schmidt took $2 million or whatever to go work for Howard Schultz, as though he was some pure liberal just because he hates Trump. Yeah, that’s what a friend of mine was saying. You were never nice to ... Everyone’s washing themselves in the blood of Trump. Yeah. Right. What does that do? What does that do to cable? How do you look at that when they do this? Does it matter? Or is it just a circus, just a ridiculous circus? Oh, that she ... Yeah, that she’s going to run political coverage or something. Well, I’m sure they’ll spin it like “we all missed, in 2016, the Trump …” Resurgence, yeah. I didn’t, and probably you didn’t, because we have family members who were voting. Yes we do. We do. You and I know. Yup. We know, but maybe their attitude will be, “Well, we have to have more diversity of outlook.” In an era when all these journalists are getting laid off, why are we hiring political operatives who trash journalists? Yes indeed. That is the thing, and I think they might be trying to sort of thwart Trump’s calling them fake news, but I think he’ll continue to do so because it’s part of the circus, right? Here’s one interesting tidbit. I was talking to Steve Bannon, and he said that ... “I was just talking to Steve.” What were you, like at the coffee shop? Oh, you might be. Well, you probably know this, but he was saying that Fox is not Trump’s favorite network, that CNN is. You know. He loves him some Don Lemon. Well, because yeah. Told you. Secretly, yeah, because he has to pay more attention. He takes it more seriously, in a way, because it’s not a slam dunk. It’s the same thing with the New York Times. Right. Oh, he’s completely ... Now, your publishers had a really amazing statement. Yes. I would say that’s a win, although I guess it’s kind of ... Yeah, we’ll get to that, but he loves the New York Times, right? Yes. He’s obsessed with the New York Times, the same way Bush Senior was because his father was, you know, he grew up with a father reading it, and Trump did too. You know, he called us after he got elected. We were the first call. Right. He came over and he said we were the crown jewel. You were at that meeting? Mm-hmm. And? We were the crown jewel of journalism. He was just loving on us. He’s obsessed with Maggie Haberman, and I think he is a ... And you too, I think, right? Well, you know, he stopped speaking to me when my book came out and I was promoting it. It was funny, I was on the Smerconish show promoting my book, and I guess I said something negative about him, and he began tweeting that I was a wacky, neurotic dope. The funny thing is I was thinking, “Who’s up at 9:00 AM on a Saturday morning watching CNN?” Then it was him, he was the only one. Okay. A wacky, neurotic dope. Yeah. Do you have a special nickname? He hasn’t given me a nickname. Do you wish you had one? Well, according to Chris Christie, if he doesn’t give you a nickname, like he hasn’t given Nancy one, that means he respects you underneath it all. I see. He trashes you, but there’s some lingering ... What would be your nickname? [George] W. [Bush] called me Cobra. Cobra. Okay. Yeah, but no, Trump hasn’t given me one. No. You used to know him pretty well, right? You talked to him not infrequently. Yeah. I talked to him for 30 years. Yeah. I talked to him in 1987 when Mikhail Gorbachev came to America for the first time. He was meeting with New York businessmen, and I called Trump before he met with him. He said, “We have to be really careful. We have to be really skeptical about the Soviet Union. We can’t get rolled by them.” Right. Then I called him after the meeting and it’s like, “I love them. They’re amazing. They asked me to build a Trump Tower in Moscow.” The Russians were onto him so fast. It was one compliment and they had him. Yeah, that’s it. Do you think you’d get him back if you compliment him? Yeah. Jared told me that. Jared Kushner said if I put out two nice tweets and a nice column, or one nice tweet and two nice columns or something, he might talk to me again. Oh my goodness. My goodness. The other thing that you wrote about recently, I’m going to move from Trump to another one of Trump’s enemies, I guess — Jeff Bezos, who owns the Washington Post, but more importantly he is the CEO and founder of Amazon. You wrote about the demise of HQ2, and AOC and Bernie Sanders pushing them out. You had a great take on that, talk about that. I think that we can’t look at any news story without seeing the backdrop of what’s happened, the darkening of our view of Silicon Valley, and also the fallout of no one getting punished in the financial crisis. These major things that happened in the country infect everything, elections, stories. Bezos could behave one way before, but now he sort of represents all the arrogance and ruthlessness that people have now come to associate with Bezos and Zuckerberg and people like that. That’s why that one moment where he stood up to the National Enquirer was his one ... Well, also how he’s handled the Post are sort of heroic moments, but in general he’s part of the problem in Silicon Valley. Just his attitude. Were you surprised that he pulled out of there? What do you think it represents? No. Because they are still of the mindset that New York was lucky to have them rather than they were lucky to have New York. Right. And were you surprised New York pushed back so hard? Well, it wasn’t all of New York. Right. It was some of New York. I have de Blasio and Cuomo on my losers lists. Oh, that’s true. We’ll get to that in a second, but where does it go? Do you think it’s going to have a backlash, not bringing them there? I think that somebody had to push back. Well, part of it also was his ... The cluelessness of Amazon about the union situation in New York. And everything else. And other things. Not fixing anything. Just coming in. Right. I mean, I think it would have been really good for Jeff Bezos on the heels of his positive publicity about the National Enquirer if, instead of just … pulling out, he had met with our ... Careful. Yeah, right. He had met with our Queen AOC and tried to offer some emoluments to make it work or giving back some of the money. He can’t do it. Yeah. He can’t do it. What do you think of how she got this? She was one of the many people who pushed against it, but she always is the most high profile. All the guys in my office roll their eyes when her name comes up, but I have a real soft spot for her because I have watched ... She was a bartender when Amazon talked about going there, which was first announced this thing, which is really interesting. I love her trajectory, but also I’ve just watched for decades while Democrats ... Democrats were too scared to even call themselves “liberals.” They’ve always been, in the language of S&M, they’ve always been the submissives. They have. Of course. So I love her whole fierce don’t-screw-with-me attitude. I just love it. I think if she can learn her way around Washington and get things, and not be on airplanes and cows. Yeah, yeah, yeah. I’ve interviewed her. I just think she’s great. She’s not perfect, but she has the fight. Even Hillary Clinton, if Hillary Clinton had a little of that fight in the debate with Trump when he was lurking around behind her. If she had turned around and said, “Get the hell out of my frame.” I asked her about that in an interview, and she said she should have said something. Yes. It’s that ... She felt like she’d get attacked if she said, “You creepy person.” Well, that’s why she was always hamstrung. She was always sort of over-thinking and over-correcting. You’re not her favorite, as I recall. Well ... You’ve been tough on her. Well, this is another thing that bugs me about Democrats, they just want you to censor and not talk about the flaws of Democrats and only talk about the flaws of Republicans, but you can kind of see what they’re doing wrong, and everyone else can see. So it would be better if they could just read the column and make a correction. Make a correction. Yeah. So last question in this area, so there seems to be a presidential candidate every hour, a different one. How do you think about the various rollouts of all of them? Yeah. At some point an adviser to Obama told me that Obama had already talked to 46 people, and that was five months ago. Right. Well, I’m running for president, Maureen. Well, I would vote for you. Yeah. Who do you think has done a good job in the rollouts? I think Amy Klobuchar seems very appealing, but I think this throwing things at staffers is very problematical, more so because she does seem so appealing. It’s kind of like, “Where is that coming from?” Right, right, right. Nobody likes a lady who throws things. Yeah. And I love the whole Kamala Harris and Willie Brown. Willie Brown keeps writing columns about how they had this affair and he helped her get jobs, but so what. He helped Nancy Pelosi. That’s a funny ... Women running have a whole level of ... A whole different thing. Different thing. So how did you like ... Who else? Was it Elizabeth Warren? Who was it this weekend, or was it Bernie Sanders? Well, Bernie Sanders, yeah. That’s right. Bernie Sanders. I think I’m one of the ones who thinks Bernie Sanders and Biden had their best shot last time. I could be wrong, but I just feel like at some point you have to move on and have some fresh leadership. That sounds like a Maureen Dowd column, I think. I need one. You need one. When do you have to have it by? Tomorrow night at 7:30. We’re here with Maureen Dowd. Welcome to the wins and fails segment of Pivot, where we get to call out all the people who are messing things up and highlight a couple people doing it right. So we’re going to do a bunch of wins and fails. I am going to start. I’m going to do a fail. My favorite person, Tucker “Tucky” Carlson, that’s my name for him, has a leaked tape — not that kind, that would be horrible — calling Rutger Bregman, who is the historian who was on the stage at Davos who called out billionaires and suggested we should be talking about tax avoidance, a “moron,” even though it looked like Rutger Bregman was very smart. He also called him a bunch of other things. And the line that I think Rutger Bregman had that was really amazing was calling Tucker Carlson, Tucky, a millionaire who works for billionaires, and sort of just does their bidding and doesn’t talk about these issues about the wealthy being too wealthy. This is a big move, this idea of the wealth. It’s going to hit Silicon Valley people. All kinds of people, the wealthy being too wealthy and taxing them. AOC has one, Elizabeth Warren. I just talked to her advisers on that. How do you look at that? Again, I look at it in the larger context of the Obama administration not punishing any of the bankers. That’s a fair point. I think everything is stemming from this anger that that was not resolved properly. Right, right. Do you think it has legs? Because there’s so many of these proposals. Yeah, I do, because now isn’t it a majority of Democrats who think it’s okay, the 70 percent tax? Lots of people, lots more people than you think. This is what Rutger Bregman was saying. More people than you think. Well, they brought this on themselves by being pigs. I always say, they’re so poor all they have is money. All right. Your fail? My fail. Let’s see. I wrote down a lot of them. I gave you the split-screen one. Okay, good. And also I think Cuomo and de Blasio were a fail because they couldn’t present ... They couldn’t either negotiate this thing or present this thing in a way that could ... or save this thing. Right. In a way that could make it work. Right. Because in some ways it would have been nice to have all those innovators in New York if it had been properly done. And oh, I told you I think Trump has a fail when he talks about the press and goes up against AG Sulzberger as “enemy of the people” because every time he does that our digital subscriptions jump. Which is good. And obviously Jussie Smollett is a fail. Talk about that. Because if you’re going to stage a homophobic and racist attack, I guess you shouldn’t do it with extras from your own show. No. But also it might be a fail for the media. The police were just having a press conference chastising the media because we’re all so eager to believe the anti-Trump plot lines, and we have to be careful also in Covington [Catholic]. Do you remember a long time ... This is the teen who ... they’re suing the Washington Post over this. I’m not sure why they picked the Washington Post particularly over anybody else, but this idea of jumping to conclusions. Yes, I was at fault myself. But I was thinking while I was watching this press conference, I guess the reason he did it is because he wanted a bigger salary. So it would have been better if he just read Lean In and took Sheryl Sandberg’s advice. The way to get a bigger salary is to smile at your boss during salary negotiations. He’s not going to get any salary now. He’s going to be out of salaries. He’s definitely a fail. It’s depressing because issues around people of color and gay people are very severe in this country, for real. So to use that, and then add on to a Trump thing was just ... I can’t even think of someone who would think of doing something like that. You might joke about it ... That show, Empire, is based on King Lear, and there are a lot of comparisons these days with Trump and King Lear. Howling at the moon in the storm. This is so literate, Maureen. We’ve got Shelly, Dickens. You’re bringing ... We’re bringing Shakespeare in. I think a win was these documentaries about R. Kelly and Michael Jackson. Oh right. And the new Alex Gibney one about Theranos. Exactly, that’s coming out. That’s in a couple of weeks. That’s on HBO. It’s on HBO. Right. There’s several of them. What do you think of these? They’re all sort of telling the tales of what occurred. The one on Jackson, I think is called Leaving Neverland. How do you look at these? It’s interesting because my friend Maureen Oreck did some groundbreaking stories on Michael Jackson. She did. At Vanity Fair. Vanity Fair 20 years ago. And she would tell me at the time about the vicious reaction of Michael Jackson fans, and she’d say it would be worse the next day because the ones from Europe weighed in, you were really in trouble, and I just thought when I wrote about it last weekend ... Tell them what you said, which I thought was great. Well, I just was writing about the documentary and these two kids, one was 7 and one was 8 or 9 when he began abusing them. They’re now in their 40s, and when they had sons of their own and their sons are reaching that age, they have intense trauma symptoms, and they just felt like they couldn’t hide the secret anymore, even though they had backed him in testimony. They had ... Helped get him off. I remember when that happened. But because ... This was the interesting thing to me: They were in love with him. He made them fall in love with him, and also their mothers. Yeah. The mother part was just ... And the mothers are so scary because they are still in awe of him. They talk about how they got the limos and the credit cards and the cars and the houses and Neverland, and one mother talks about the champagne and the wine and the wine cellar at Neverland and how great it was. You’re just cringing because one mother is very proud of herself because Michael Jackson said, “just leave your son here for a year” — because he would have one child companion for a year and then he’d move on to another — and the mother said, “No, I’m not going to leave him. I’ll share him with you.” That was her idea of standing up to Michael Jackson. Which is amazing. It’s an astonishing thing that this went on. It’s astonishing, and it’s sort of a saga about how celebrity warps judgment, and from OJ to Bill Cosby to anything. People who are famous can get away with things. Do you think that’s true anymore? This R. Kelly thing came out, although he’s still operating. He’s still not jailed. Yeah. I think that continues to be true. Michael Jackson was a level of star that we rarely see anymore. Hollywood doesn’t have that many stars anymore, so it was much more intense, but yes, I think celebrity continues to warp. To warp people. Judgment, yeah. Do you imagine all this #MeToo thing will have resonance? The Times was one of the papers that really pushed. Ronan Farrow was someone else who did that. Yes. I think that it definitely put a lot of creeps on notice, but I don’t think anything will change in Hollywood until we have more than 1 percent of women directors on the top 100 grossing films. Which you’ve written about. And cinematographers. I mean, as long as those statistics remain the same, it’s very much like Saudi Arabia or the Catholic church. If you have a society that systematically excludes the hearts and brains of women, you’re going to have a sick, warped society. Right. The Catholic Church this week. All this stuff. Yeah. Silicon Valley, too. Yeah. Oh, well, hello. Yeah. Exactly. You do have a warped thing. When you think about those cultures, where is the change point from your perspective? Where do you imagine it shifting? Because Washington was like that and now it’s much more ... There’s many more women in ... Now we have Nancy Pelosi. It took a long time, though. Yeah, yeah. It took a crazy-long time. I don’t know, I think Pelosi’s an interesting sort of emblematic figure, because when we see her wielding power in that fierce, effective way, and that’s what I was saying about AOC, I think that’s what’s really going to change the dynamic. Although, women do that every day in the home, right? They often ... Right. So it needs a public thing. Yeah, just to see little girls growing up seeing ... It needs the coat, it needs the glasses ... Women successfully wielding power more is what I think will change things. On the flip side, you have Elizabeth Holmes from Theranos. She doesn’t represent all women, but it certainly is disappointing. There’s this amazing new story in Vanity Fair by Nick Bilton talking about how, even when she was going down, she didn’t think she was going down. So, she got some Siberian Husky named Balto as a symbolic gesture about the Siberian Huskies, who in 1925 brought the antitoxin in Alaska for diphtheria. Right, he did. You’re thinking, “Oh, my god. This lady is so bananas.” Yeah, she showed up at an event. She shows up at events. I see her. And she has another startup? Yeah. I see her at events, I do. What kind of startup could she have? I don’t know. I just move quickly, faster. Yeah, but you were on to her. Well, no, I wasn’t. I just didn’t cover her. You knew something was weird. Luckily, Recode doesn’t cover health care. No. Like, didn’t have a reporter. But I just found it ... I never put her onstage. I didn’t. It was a weird feeling. I had a big argument with Bob Iger about it because he was like, “You should put more women onstage like that.” And I was like, “I don’t know, it’s something ...” That’s the one part of the new documentary, two things I would have liked to see more of. I would like to see the explanation of her strange, deep voice that she put on. I think it’s not real. And I would like to see more about how she kind of ensorceled all these older guys. Yeah. What’s with that? Weird. Even Jim Mattis. That was a disappointment. I know, all of them, all of them. It was amazing. And even [George] Shultz. Well, Shultz and the grandson, that to me was ... Well, he was so smitten with her that he couldn’t see his grandson was telling the truth. Yep, yep. It was a really ... it was a strange story and I don’t where it’s going to go. She’s still under, possibly under indictment and things. It could get worse for her, which is really interesting. But you know, in Silicon Valley, a lot of the people like, look, Travis Kalanick has his thing. Everybody gets to come back, despite all kinds of problems. In some cases, it’s just a regular fail like what happened with Apple and Steve Jobs, and sometimes it’s like, “Wow, you’re back.” Right. ”Here you are again. How did you ... We thought you stayed down.” You know what I mean? But they don’t stay down. That’s your motto, right? Yeah, stay down! Right? I told Maureen that. I’m using that. Yeah, stay down. When you are you going to stop? Stay down. I think it’s a good motto. All right, so now we’re going to finish up in talking about predictions, Maureen. Scott, a few [years] ago, he famously predicted that Amazon was going to buy Whole Foods, pushing into the health care space, I predicted that Amazon would get out, we thought that we know so much, would get out of New York ... escape from New York. Do you have any predictions? I’ve got three. Okay, good. How many do you have time for? You can have as many as you want. Okay. Speaking of Pelosi, my prediction is that she’s marshaling her forces. Congress will reverse Trump’s declaration, but he’ll veto it. The emergency. And they can’t override it. Right, okay. I think that the Democrats will probably pick Milwaukee as their convention site. Oh. Because Wisconsin will never be forgotten again. No. Miami’s fun, but Wisconsin ... Miami is fun. Will never be forgotten. Ah, Wisconsin. Finally, Jared Kushner is about to announce his Middle East Peace Plan. Oh. And Crown Prince Mohammed Bin Salman will be at the center of it. Oh, goodness. The Trump administration is still going to try and revive him, even though he’s a psycho. Yep, Mr … I call him Mohammed Bone Saw. And there’s also a scandal brewing with Jared and Tom Barrett. Like what? What scandal? And Flynn about giving nuclear reactors to Saudi Arabia. Yeah, yeah. What do you think of Jared? We mentioned him earlier and honestly, what did Kelly say? That he’s playing at government? Well, that’s the King Lear part. Yeah. You know, the mad king surrounded by all these duplicitous, scheming relatives. Which makes Jared okay. What do you really think? That’s disturbing that he’s coming up with a Mid-East plan. Yeah. That’s like a child playing at government, it really is. Well, yeah, I did hear him when I ... talking about bringing “deliverables” to Saudi Arabia and a chill went down my spine because that means weapons that can be used to kill children in Yemen. Right. Right, yeah. Yeah. So, I don’t know if ... They don’t understand the implications of it. They’re the ones that should be ... Do you think Ivanka will ever run? That’s what I keep hearing when I’m here at parties. I think she would have liked to at one point. And I think that maybe she thinks about it, but I just think it’s going to be hard for Ivanka and Jared after they get out of this administration, if they go back to New York. Yeah. I would think they would be sort of pariahs in the elite. Oh, come on, those people. They’d eat their children. You think so? Yes, I do, Maureen. Okay. I don’t have as much faith in humanity as you. I live in Silicon Valley, you know what I mean? Well, you’re right. You’re right. Kara’s always right. No, it’s true. Come on. Are you kidding? Wouldn’t it be great to have Ivanka versus Chelsea? Wouldn’t that be an interesting ... I don’t know, Barry Diller seemed kind of disillusioned. About? About Jared and Ivanka. Yes, they did. In fact, this my prediction. I think Netflix will be the first streaming service to win the Oscar for best picture with Roma, which I loved and I ... Well, they’ve got Harvey Weinstein’s old Oscar wranglers, so that would help. Yes, exactly. Oscar wranglers. Anyway, I interviewed Barry Diller this week, speaking of which, and he said that Hollywood was over, “irrelevant.” Ah, yeah. He told me that too, and he admires Reed Hastings more than anyone. He did, he talked about Netflix quite a bit. Yeah, and he just thinks that they’ve blasted Hollywood into another universe. And what do you think? Do you think that Roma will win? I never disagree with Barry Diller ... or you. Yeah, yeah. I think it will. Have you seen it? Roma? No, I don’t know. You have to see it. Is it too long for you? Too black and white? I used to be ... I grew up being so in love with movies and Hollywood, but they’ve been putting out such lame product for a long time, I’m not as obsessed. Oh, really? This one, you’ll like. I think you’ll like it. Good. What’s the last great movie you saw, Maureen? Mm, Shakespeare In Love? Oh, what? Maureen, that was like, I was like a teenager then. Come on. Come on. I don’t know. I don’t know. You didn’t like Black Panther? Oh, I did like Black Panther. In love with the movie ... I’m just not that much of a comic book person. Right, but there hasn’t been a movie ... Go see Roma. You will like Roma. Okay. I swear to God. It was a very good movie. I will. It was beautiful. You’re not going to see it, are you? You know, I love Rachel Weisz, so I’m rooting for her. Oh, for The Favourite? She’s saying that, you know, all these lesbians are coming up to her and thanking her for doing these two great portrayals of lesbian relationships. She did. She’s been a real lesbian this year. I love her. Yeah. I love Regina King too, but I’m rooting for Rachael because she’s so cool. And she gave me the scoop about her baby, the little 007. Oh, man. So, I love her for that too. I love Bond. Do you know how much I love Bond? I love Bond. Do you ever notice that I put a tweet out this week that Steven Miller looks like a Bond villain. That’s fantastic. It got really retweeted. It was amazing, it was astonishing. Does he rise to that level, though? Like every villain ... But then everybody sent pictures of all the Bond villains. It’s more like Robert Shaw in ... yeah. I don’t know if Steven Miller ... Steven Miller is like the guy who fetches cigarettes for the Bond villain. Oh, really? Oh, true, oh, true. Well, anyway, they sent pictures, and he looked like every Bond villain, which was really amazing. All right, Maureen. Thank you so much for doing this. Thank you, Kara. I know that you think you’re not witty and funny, but you really are. I would only do this for you. I know. I was like up all night studying. Did you? Yeah. I have a hoarse voice. Are you going to do my ... so Twitter Live is not something I’m going to get you to do, is it ever? No. I really want you to do that. You’d be an enormous star on Twitter. Do you understand that? But you told me I couldn’t wear make-up. You can’t wear make-up ... But I promised my sister I would never leave the house without mascara again. This is one of the Trump people? This is ... Well, yeah. Well, no. There’s a picture that’s used from Stephanopoulos’s book party where I don’t have on mascara and every time it’s in the paper she calls me and she goes, “Do not ever.” So, it’s going to be you versus my sister. Oh, man. I would like that. Yeah, you might win, though. No mascara on my Twitter Live, Maureen, how about just the back of your head and you can just talk? Maybe. Maybe. All right, we’re going to do it. I just have this feeling you’d be an enormous Twitter star. Anyway, you’re ... I really appreciate you doing this. Thank you so much for taking ... and you’re much more interesting than Scott. But that’s a very low bar. I love Scott, too. He is great. He’s terrific. Yeah, he’s great. All right, it’s time to get out of here. Thank you so much for coming on Maureen, again. Thank you. I’ll be back next week. Scott will still be out, but let’s face it, I’m better without him. No, I’m not. I miss Scott.

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posted 1 day ago on re/code
It’s a big win for employee activists who have long demanded the change — but the new policies won’t apply to Google’s temps, vendors, and contractors. Google announced today it will end forced arbitration for current and future employees, a practice that waives workers’ rights to sue their employer in court. The changes will apply to current and future Google employees beginning March 21, for any new cases. The move comes after months of sustained pressure by employee activists demanding the company drop forced arbitration. These critics point out that workers going through arbitration rather than the courts are more likely to lose their cases, according to studies, and even if they do win, are more likely to receive a lower payout than they would in court. After 20,000 Google employees walked out of work in November, listing an end to forced arbitration as their chief demand, the company ended the practice — but only in cases of sexual discrimination and sexual assault. Now, the company is dropping forced arbitration for all types of workplace disputes. However, the changes will not apply to Google’s temps, vendors, and contractors, who reportedly make up around 50 percent of the search giant’s total workforce. These workers have employment contracts with third-party vendors rather than with Google directly. Leaving them out of this change is a significant exemption that activists will likely be quick to criticize. In December, a group called Googlers for Ending Forced Arbitration spun out of the Google Walkout group to pressure the search giant and other tech companies to change their policies on the workplace practice. Google leadership was aware of the concerns of these and other employees, according to a spokesperson for the company, and took them into account when making today’s changes. The company consulted with outside experts and lawmakers in creating the new policy, she said. The search giant now joins other major tech companies such as Intuit and Adobe that don’t use forced arbitration for most employee cases of workplace disputes. However, many other tech companies still use the practice, which has become increasingly common with US companies across industries.

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posted 2 days ago on re/code
Plus: Disney, Epic Games and others pull advertising from YouTube after a child exploitation controversy; Lyft will launch its pre-IPO roadshow in mid-March; this Spotify quiz is the best time-waster in ages. Samsung revealed its new flagship phone, the Galaxy S10, as well as its first foldable smartphone, the Galaxy Fold, which starts at $1,980. The S10 and S10 Plus offer a triple-camera array on the back, with a new ultrawide mode. Camera sensors have been laser-etched into the screen, allowing for a notch-less display, which has a built-in fingerprint sensor. The phones also feature a new Instagram mode that lets users edit or add stickers or captions to the photo right after it’s taken to share directly to their feed or as a Story. Samsung also unveiled new Galaxy Buds with built-in microphones and its Bixby personal assistant; like Apple’s AirPods, they wirelessly charge in their own carrying case. And the company’s long-awaited entry into the smart speaker market, the Galaxy Home, will launch by April. [Natt Garun / The Verge] [Want to get the Recode Daily in your inbox? Subscribe here.] Special Counsel Robert Mueller may finally submit his full report on Russian interference as early as next week. Four of Mueller’s 17 prosecutors have ended their tenures with the office, with most returning to other roles in the Justice Department. Under the special counsel regulations, Mueller must submit a “confidential” report to the attorney general at the conclusion of his work, but the rules don’t require it to be shared with Congress, or by extension, the public. And, as Attorney General William Barr has made clear, the Justice Department generally guards against publicizing “derogatory” information about uncharged individuals. [Evan Perez, Laura Jarrett, and Katelyn Polantz / CNN] Walt Disney joined Nestle, Epic Games and other companies in pulling advertising from Google-owned YouTube following a report indicating that comments on the video platform are being used to facilitate a “soft-core pedophilia ring.” A video highlighting the comments, posted by the YouTube creator Matt Watson (a.k.a. MattsWhatItIs) and viewed 1.75 million times since it went up on Sunday, accused YouTube of “facilitating the sexual exploitation” of children; Watson said YouTube’s recommendation system also guided predators to other similar videos of minors — many of which carry advertisements for major brands. A YouTube spokesperson said the company has taken “immediate action” following the report, including deleting accounts, reporting illegal activity, and planning refunds for advertisers. [Mark Bergen, Gerrit De Vynck, and Christopher Palmeri / Bloomberg] A federal judge delayed a lawsuit over a $10 billion Pentagon cloud-computing contract that Amazon was favored to win so the government can investigate “new information” about possible conflicts of interest in the procurement process. The Joint Enterprise Defense Infrastructure contract, which would help the Pentagon use cloud computing to harness advanced technologies for much of the nation’s military; Amazon’s bidding rival Oracle called for an investigation into conflicts surrounding a former government employee who worked at Amazon before and after his role in the Pentagon’s procurement process.[John D. McKinnon and Kate O’Keeffe / The Wall Street Journal] Hoping to beat rival Uber to the public market, Lyft plans to launch its roadshow in mid-March, and is looking to IPO in early April. If Lyft wins this race, it will be the first ride-hailing company to go public. The two companies have been locked in a competition to go public, with Lyft facing pressure to be first to avoid being overshadowed by Uber, which is much larger. The two companies have competed fiercely for riders and drivers since their earliest days, often introducing copycat services within days of each other. In keeping with that tradition, both filed to go public with the Securities and Exchange Commission on the same day in early December. [Mike Isaac and Kate Conger / The New York Times] Facebook CEO Mark Zuckerberg explained why an ad-free version of the social network isn’t as simple as it sounds. During a nearly two-hour discussion with a Harvard Law professor, Zuckerberg correctly identified that the problem most people seem to have with Facebook is not actually with Facebook’s ads — it’s with the personal data that Facebook collects and uses to target people with those ads. He suggested that a subscription product would need to include a way for people to opt out of Facebook’s data collection practices altogether — something that doesn’t currently exist. Here’s more about Zuckerberg’s conversation with Jonathan Zittrrain, which also touched on encryption, “information fiduciaries” and targeted ads. [Kurt Wagner / Recode] Recode presents ... For the fourth straight year, Recode Editor at Large Kara Swisher and Senior Commerce Editor Jason Del Rey are hosting some of the brightest minds in e-commerce and retail for a night of live journalism at An Evening With Code Commerce. The three-hour event — slated for Sunday, March 3, at The Venetian in Las Vegas — will feature Recode’s signature brand of unscripted interviews, as well as a cocktail party where you’ll have the chance to chat up 200 of your smartest peers. Onstage guests include Tim Armstrong, who has built a long career in digital media, and is now entering commerce with the launch of “the dtx company,” which is investing in direct-to-consumer brands like ThirdLove and Dirty Lemon; Helena Foulkes, who just a year ago was named CEO of Hudson’s Bay Company — the owner of the Saks Fifth Avenue, Lord & Taylor, and Hudson’s Bay chains; and Manish Chandra, who has quietly built eight-year-old Poshmark into the second-most-popular iPhone shopping app in the US, ranking just behind Amazon. This event will sell out, so register now. Top stories from Recode Digital advertising in the US is finally bigger than print and television. TV and newspapers are out. Facebook and Google are in. [Kurt Wagner] The “PayPal Mafia” is teaming up once again at Peter Thiel’s Founders Fund. More turnover in the upper ranks of an industry that has had a ton recently. [Theodore Schleifer] Full Q&A: AT&T CEO Randall Stephenson on Recode Media. Stephenson talks about sports gambling, the potential of 5G, and buying Time Warner.[Peter Kafka] This is cool This new Spotify quiz is the best time-waster we’ve found in ages. The dead Mars Rover was a Springsteen fan.

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posted 2 days ago on re/code
Stephenson talks about sports gambling, the potential of 5G, and buying Time Warner. On the latest episode of Recode Media with Peter Kafka, AT&T CEO Randall Stephenson joined Peter onstage at the NBA All-Star Tech Summit to talk about sports gambling, why 5G internet will one day replace home broadband, and AT&T’s $85 billion acquisition of Time Warner last year. “My objective from day one was to run this acquisition different than we’ve run any other acquisition,” Stephenson said. “In a typical acquisition, we come in, we have processes, we have everything from travel/entertainment expenditure guidelines to cultural aspects. We literally just forklift that onto the target and boom, start running execution and off we go. Bam! ... This one, we said, ‘That’s not the play we’re going to run here.’” Unlike those other acquisitions that more closely align with AT&T’s telecommunications history, Stephenson said Time Warner will be run more “independently.” “You don’t want this one polluted also by a lot of the stuff going over here,” he said. “Those are very independent and necessary cultures. This one over here is a talent-based culture.” You can listen to Recode Media wherever you get your podcasts — including Apple Podcasts, Spotify, Google Podcasts, Pocket Casts, and Overcast. Below, we’ve shared a lightly edited full transcript of Peter’s conversation with Randall. Peter Kafka: Randall. Randall Stephenson: Hey, Peter. Nice to see you. I’ve got to say, it was very exciting to get introduced by Ahmad Rashad. That’s cool. I’ve got to go back in time and tell my 8-year-old Vikings-fan self that that was going to happen one day. I want to talk about the future. Why don’t we start there. We just saw a cool 5G demo. And every time you or anyone else from the telco business comes on a stage like this you talk about the importance of 5G. As far as I can tell, 5G means faster data. What does that mean for a consumer? Because our phones and our internet connections are pretty fast right now. What’s going to be better for us when 5G shows up? It’s just more than fast. I mean, fast is a key element to it. I tell people it’s like connecting a fiber optic cable to your phone, but it goes beyond that. The technology of 5G puts you in a world of no latency and what that means is just instantaneous. And it’s a real-time network, and think about the applications that require instantaneous connectivity. And the first one we all go to is autonomous cars. Right? You do not want to be in a car that’s relying on network connectivity if there’s any latency. You don’t want buffering when you’re trying to figure out if you’re going to pass that truck or not. Exactly. Or if something ... a child comes out in front of a car, you don’t want buffering if a child runs out in front of a car. And so this no-latency, zero-latency thing is a really, really big deal. It’s the game changer. And as you saw in Adam’s video, some of that looked terribly futurist but it’s really not because when you get to a world of high-speed no-latency, then all of the stuff that’s in that smartphone that you’re holding right there, the storage no longer needs to be there. The storage can be back in the network. The compute capacity no longer needs to be there. It can be back in the network, and why is that important? When you start taking all of that and the power requirements out of that, now you get to a place where you don’t need this big form factor. And you can actually begin to conceive of a world without screens. And that’s what happens. You lose the screen. And because suddenly you have a form factor that may look more like this. You don’t have to have power, you don’t have to have compute, you don’t have to have storage in here, it’s back in the network. And now you can begin to use really thin form factor capability and move to a world with no screens. So how does the NBA conceive and think about a world of no screens? You saw some examples of it over there. Virtual and augmented reality become truly possible in this kind of world. Is this a world where you and Verizon and your remaining competitors all need to build out individual 5G networks and as a consumer I need to decide which network I’m going to be in? And/or does this require some sort of public infrastructure commitment from the US or someone else to say, “Look, we’re going to need to build, we’re going to need to add capacity,” and that’s going to require government intervention or support or subsidy. It’s headed down a path where it will be a competitive environment and I obviously, being of a capitalist mindset, I think that’s the right way. That’s what will drive the fastest deployment of this. It ought to be a competitive race. Who gets there first? Who gets there with the best quality? Who gets there with the best services on top of it? So it will be each company developing their own 5G infrastructure. There are standards around it so that equipment manufacturers can develop to the same standards and you have interchangeability and interoperability. But it will be a competitive pursuit. And will that be evenly distributed or am I going to ... is my best chance of getting a 5G if I’m in New York or Atlanta or Charlotte as opposed to rural Montana? Well, your best chance to for getting it will be is if you’re, first of all, on AT&T. Here’s your softball. Once we get past that easy hurdle, then it’s ... look, it’s no surprise that you will build out metropolitan areas first. This is a whole different kind of technology deployment. You know, you’re accustomed to seeing mobile services deployed where you put up big cell site antennas that are on top of buildings. You see them everywhere you go, right? And there’s really large ones with big antennas that are probably as tall as you and I, this is going to be rather than tens of thousands of big antennas is going be hundreds of thousands of small antennas. They’re going to be on light posts. They’re going to be on the sides of buildings. It’s going to look more like a wifi router than a wireless antenna we’re accustomed to seeing. And so literally, for AT&T to deploy this is going to be a couple of hundred thousand of these antennas deployed. You will naturally go to metropolitan areas first. I get a press release from you guys every couple of weeks saying, “Coming to Minneapolis.” Name your city. How far before this stuff is actually ubiquitous and I have a good chance of getting it in any major metropolitan area? Ubiquity will be, I mean true ubiquity, I mean across ... Let’s call it the major NBA and NFL cities. You’re probably going to be a couple to three years, two to three years before you have ubiquity in those cities. Now you’re going to have pockets of this that begin to emerge and then so this is where you ask what are the real use cases early on. The real use cases early on are not going to be what you saw on Adam’s video. That will be three years from now, truly technology you’re capable of deploying. Early on is going to be business applications. And so we’re standing up the world’s first 5G hospital. And it becomes for a corporation environment, think about getting rid of all wifi services, wifi routers, short wifi routers, because in a world of 5G you no longer need that. You will see in Dallas the first 5G sports venue. It will happen to be named AT&T Stadium. But if I were an NBA owner, this would be something I’ve been very interested in because you can deploy 5G in your arena. Do you want me to ask him? What’s that? What me to ask Mark if he’s interested in this? I already have. Okay, good. But you deploy 5G in an arena. Now I begin to think about the services you saw up here. Once you put ... you don’t have to deploy a whole city to deploy an arena. We will be deploying AT&T this year. And is this a practical substitution/competitor for fixed broadband that I’m getting my ... that I’m streaming my Netflix on at home in Brooklyn? Is this a practical competitive solution for that or is this going to augment that? Ultimately, it will be a substitute. When I say it’s a substitute for wifi arrangements in a corporation office, you don’t have to think very hard to say, “Oh wow, that could be a wifi replacement or fixed-line broadband replacement for the home.” It’s going to be a while before we have the technology so pervasively deployed that you can begin to think ubiquitously — using your term — of a replacement for fixed broadband. But it ultimately be that. Throughout my career, everybody has said, “Look, wireless will never replace” — pick the service you think. “Wireless will never replace landline telephone service.” In my early days of my career, I did an analysis and showed that by the year 2006, 25 percent of the home phones will be gone and replaced by wireless. Everybody just said, “That’s crazy. There’s not enough capacity.” Well, we blew through that. We said in 2007, wireless will become the media by which people access the internet, the medium. “No way, there’s not enough capacity.” Well, along comes a guy with a black t-shirt and a touchscreen phone that we contract with him on, and that becomes the medium by which people access the Internet. Will this replace broadband to the home? Absolutely it will. How far out? Oh, I think within three to five years. Three to five years. And that’s a big shift. Because most Americans have either one choice, maybe two choices of broadband providers. And you’re saying we’re going show up and we’re gonna offer you a chance to do everything that you’re getting broadband from now but we’re going to deliver it to you wirelessly. And that’s a real thing. Oh yeah. That’s a real thing. Three to five years. We’re talking gigs speeds are potential in a world of 5G. One gig speeds. Good. In that video, Adam also mentioned gambling is here. It’s coming. You are now a media business owner. What does professional sports gambling mean for Warner Media as an opportunity? Is that something you want to dive into? Is that something you want to touch around the edges or maybe steer clear of altogether? Well, we don’t want to be running books. That’s not our gig. I think somebody might. I think one of your peers might end up actually being in that business at some ... And it’s quite possible. I don’t see that being something that we would want to do. For moral reasons or business reasons? Just business reasons. It’s like I wouldn’t want to be a bank either. Right? Just not the kind of thing that we’re good at and we should do. However, I am a believer that gaming, gambling is really critical to the business we’re in, in that gambling just deepens the engagement of the fans and the experience. There’s nothing that changes the fan engagement more than having something on the line on a game. And so broad pervasive gambling is a huge driver of fan engagement. And do you think the opportunity there is converting people who are already gambling maybe not legally, and getting them to do it legally through a bunch of different options? Or do your think it’s getting a casual fan who maybe is in a Super Bowl pool once a year and getting him to spend a little bit more throughout the year? It’s all of the above. And what our opportunity is — and you’re going to hear David Levy talk about this more, he’s doing some great work on this — but incorporating the gaming experience into the content that we deliver. So if anybody watched the match, the Phil Mickelson, Tiger Woods match the day after Thanksgiving, you saw the first evidence of what this would look like. We had ... not odds, I don’t think we were allowed to put the odds on the screen on each shot, but we were able to put percentage chance of being closest to the hole or winning the hole given where they were at a particular point in time, on the screen, while you’re watching the match. Now you don’t have to be a visionary to think about how do you go from there to actually initiating a gaming, initiating ... making a bet on each shot. Right, and this is what you do in Europe today. Right, right. In-game betting in soccer matches. And so it drives further engagement, drives new business models for us. And oh, by the way, this is an area just like if you’re trading in the stock market, latency is really important. You don’t want to be the guy with the slow latency making an investment in particular stock when things are moving. It’s the same with gaming. Why is that important? 5G. Having 5G connectivity, no-latency connectivity, in a world of gaming where your bet is not being delayed behind 12 other bets. You want it real time. So all of this comes together in terms of driving greater engagement, having the high-speed, no-latency networks integrating it into your content. We think this is all just part of the whole ... So you guys are there, there’s no moral issues here. You’re going to be involved in gaming. I think Bleacher Report already said they’re doing a deal with Caesar’s, that’s a Turner property. You guys are there. Yeah, absolutely. In terms of moral issues, we’re not condoning or saying we shouldn’t be doing it, it’s happening. People are gaming and so making it legalized and putting rules around it is probably good in general for society. Let’s talk about how you view the business of sports, TV rights in general, you guys have a big commitment with the NBA, goes through 2023, 2024, right now you’ve got a big deal with Sunday Ticket. I think that is going to come up for an option in the near future? They have an option coming up. Right. And you talked in the past about obviously sports are a huge driver in costs. It’s a big issue as people are cutting the cord, as someone who’s now fully in the media business and thinking about whether ... how much and whether you’re going to spend on rights, what are you thinking going a couple of years into this? Is this ... do you want to keep making the same level of commitment into buying sports rights, if fewer people are going to paying for sports individually, maybe do you cut back your spend? How are you balancing all that out? Sports is critical to everything we’re trying to do. If you think about AT&T today, we now have a media business which owns great content and lots of rights to sports and so forth. And then we have what you used to think of as AT&T being a distribution company, wireless and broadband and TV distribution. And sports is really an important variable in each of those. In fact, when you think of live content, live media, that’s always going to be very, very relevant. And live media, obviously over here on the distribution side, is really critical. We want live content, that’s time sensitive. Sports and news are it. And so we’re always going to want to have a premium position in sports and news. And so as we think about what type of sports do we want to be invested in, I have a real bias here and that is that I like those sports and then particularly, those leaders in sports who are trying to figure out how do we drive the best fan experience? There are some sports folks — and this goes from college through several professionals in soccer — whose primary objective is to slice up the rights really, really thin and maximize the revenue over a three-, five-year time horizon by how you slice up the rights. Be the NFL. There’s several that have taken this approach. NFL is really good at it. The byproduct of that, though, is it creates, pardon my language, just a crappy fan experience. The fan doesn’t know what I can get, where I can get it, and what device I can get. In fact, depending on ... what device I’m carrying may dictate what content I can get. Right, “this works on a phone but not an iPad.” Exactly. And that’s a frustrating experience for a fan and for our customers. I will tell you — and I’m not just sucking up because I’m here and we have a 35-year relationship with the NBA — I think the NBA does one of the best jobs of stepping back and saying, “Put yourself in the seat of the fan. How do we create an experience that is the best experience for the fan and they don’t have to sit here and be thinking about what device and so forth.” I think they’ve done a terrific job. And so you know, those are areas that we really like to invest in. I want to invest in and be part of that and to the extent that other sports — and no, I’m not just talking about NFL, there’s several sports that we invest in — to the extent that we invest in those sports and we’re working together to create a great fan experience, we will invest in those too. Sports is important to us. But what about the idea of saying, “Look, if you’re going to buy content from AT&T Warner Media, you are going to get sports as part of that bundle,” versus saying, “Sports is an optional thing. You can pay for it or you can’t pay for it. It’s up to you.” Well, we’re headed down a path of, some call it a la carte, but think about what Levy and the team have done with Bleacher Report. It is the epitome of a la carte. So the NBA ... and here’s another example of what is in the best interest of the fan experience. You can now on Bleacher Report buy a game for I think $6.99 or you can buy the fourth quarter of a game. I think it’s a $1.99. I’m not sure exactly what the price is. I think that’s right. But think about that. That is ultimate serving the interest of the fan. And that’s just a great business model. I think we’re looking at this for European football and so forth as well. But that is a la carte at the extreme, right? That’s a hard decision to make. And you got to be thinking about the fan first to go down those paths. How long do you think until the leagues themselves become direct distributors of their sports and cut you guys out or work together with you but also offer an option where you can buy a pacakge or a game directly through the leagues? Well, they do it today, right? You’re seeing this happen today, several leagues are going directly to the consumer. And I ... it’s not just sports. I mean, look, if you’re in the media business, if you have premium content, you better be trying to figure out how you go directly to the consumer. That’s where the business model is going. This is why the Time Warner acquisition was so important to us because this idea, that if you own premium content, and you think you’re just going to generate returns by going wholesale through cable companies, satellite companies, and so forth, that’s not going to do it in today’s day and age. You’re going to have to figure out how to get directly to the consumer. That’s why in Warner Media, it’s now what we call Time Warner, we’re standing up a direct to consumer platform that is called an SVOD, video on demand service to go directly to the consumer. You’re going to have to. So let’s talk about that world. So you guys have said, “We’re coming out with this” — late this year but I think actually it’s really going to launch next year — “the full service.” Going up against, Apple, Amazon, Netflix. Little company Netflix, yeah. Disney, Fox. They’re either all in the market or they’re spending billions and billions and billions of dollars on content, how much capacity do you have to sort of compete with them dollar for dollar? You’ve already taken on a ton of debt just to do this Warner Media deal. How much flexibility do you have to sort of keep up with them if they’re going after a deal that you want at the same time? The debt situation, we’ll have the lion’s share of that debt paid off by end of year this year. So I wasn’t sitting here thinking the debt somehow is an inhibitor to what we need to do. Warner Media, think about Warner Bros. Studios, I don’t think people appreciate just how deep and broad their IP library is, intellectual property library. I mean, just try to conceive of what sits within Warner Bros. In fact, I think the best example of this that people don’t think about is Netflix licenses a lot of Warner Bros content. And so last year, the contract for Friends, the rerun Friends, came up for renewal with Warner Bros. We own that intellectual property. And when it appeared that Netflix might lose Friends, their customers, there was an outcry, it was ... surprising outcry from their customers. Netflix wanted to relicense just Friends. Well, Friends is just one little piece of content sitting within Warner Bros. They have a library of this kind of stuff plus movies plus continued regeneration of new stuff. Now add HBO. There is a library of content here that I believe will rival just about anybody. And it’s not going to require a ton of new investments. Some. It will require some new investment. We’ve already said we’re going to plow a lot of money, additional money, into HBO to beef up that library. And so what is the objective of this? I’m convinced that as you go three, four years out, every household will have at least one, two, three video on demand subscriptions. Yep. A Netflix, a Hulu, a Disney. Do we think our library and service is so compelling that we will be one of those that’s in virtually every household? We actually do. We’re convinced that we will be one of those video on demand subscriptions that will be in the household. I also believe that attached to video on demand, if you have the opportunity and the potential to offer live TV as well. Can you offer the NBA through TNT? Can you offer CNN? Can you offer live content around that? We can. And I think you have a really unique offering in the marketplace. This is where we’re headed. And you got ... you talk about this probably a little bit, right now you’ve got a deal with Netflix, with Friends, where they’re going to have it this year as you guys launch next year, you’re going to have the option of taking it back or making it available on both platforms. And if you come down one way or the other? Yeah we did a non-exclusive deal with them. Do you imagine that becomes an exclusive show for Friends that eventually your best stuff is eventually only distributed through Warner? So I don’t believe there’s going to be a cookie-cutter approach to how you license content. I think Friends is an example where you look at that and you say, “Is that going to drive unique subscriber acquisition capabilities just by having it exclusive?” Probably not. But do you need it in a library, yes. So why would you not license it out on a non-exclusive basis. You think you can have ... you can sell it to two people, yourself and somebody else? Oh yeah. Yeah, especially that kind of content, for sure you can. Now there’s other content that will come out and you can ... I’m not saying this is what we’re doing but just as an example of where you might go: Aquaman. Thing just did a billion dollars in the box office. And it comes out of the window and at some point you can put it on your on demand service, is it conceivable that for a period of time it’s exclusive to your on-demand service? Yeah, I think there is. Does it need to be exclusive indefinitely? Probably not. But these are the business model questions we’re going through. One thing I’m impressed by with the folks in Warner Media, very sophisticated people in terms of how they think about licensing and what you hope for exclusivity bases and so forth. And so it’s going to be an interesting equation to kind of walk through. Are you guys all synced up on that? Because when that Netflix story, when the Friends story came out, there was some question about, “Well, maybe the guys in Burbank think this but the guys in New York HBO think that.” Are you guys ... are they all synced or this is a discussion that you’re still having with the people who are running your various media units? If you’re asking does everybody within AT&T always agree with everybody at all times, the answer is unequivocally no. And do we have good healthy debate around issues of this, and then by the way, this is a significant issue. It’s a big-time issue. It’s a business model issue that what you do has lasting implications, so go healthy debate and dialog, darn right we do. Prior to you guys buying the company, there was this narrative that said, “You know what, you got the telco guys from Dallas, and they’re going to buy this media company with these delicate flowers in New York and Los Angeles and there’s going to be a culture clash.” Got rid of my white socks, as you see. There you go. And how have you thought about that integration and how to give people their space but also say, “Look, we are going to go in a different direction. We’re going to ask new things of you.” Your lieutenant, John Stankey, he compared this to childbirth and then regretted saying that. But what he meant was this is going to be difficult. How is that process going? You’re about a year into it, I guess a little less than a year. I think it’s going as well as we could have expected. My objective from day one was to run this acquisition different than we’ve run any other acquisition. In a typical acquisition, we come in, we have processes, we have everything from travel/entertainment expenditure guidelines to cultural aspects. We literally just forklift that onto the target and boom, start running execution and off we go. Bam! Right? And we get synergies within a year and this thing’s all ... we’re good at that. This one, we said, “That’s not the play we’re going to run here. This play, this thing is going to be held independent. It’s going to be run very independently.” There are some connective tissues that we have to get in place, to create the value by it being part of the same family, we’re going to be very careful in terms of how we get to that. But we will have to run this thing independently for a number of reasons. First of all, it’s a very different kind of business. It inherently and necessarily has a very different culture. And by the way, I want to protect that culture but I also need to protect this telco guy culture you talked about over here a minute ago. We’re really good at logistics and driving results and execution. You don’t want this one polluted also by a lot of the stuff going over here. Those are very independent and necessary cultures. This one over here is a talent-based culture. And every single night, every asset drives home. And so protecting the talent, protecting directors, and protecting producers, and making sure that you maintain an environment where they want to do business with you is critical. And so I think so far, mission accomplished. Yeah. Now, can we get the connective tissue pulled together? I’ll let you know come fourth quarter when we launch this video on demand service. Good. You guys are distributors of sort of conventional TV bundles through DirecTV, DirecTV Now, you’re going to have a service that you’re going to charge me some amount of money for that’s going to have HBO and a bunch of other stuff. Right. Americans have a limited amount of money. If I have to decide between buying a sort of traditional bundle that’s got ESPN and a bunch of other stuff versus a Warner Media streaming service, which would you prefer I buy? Which would I prefer you buy? Yeah, as AT&T, where do you want me to spend my money if I have to choose between one of the two? Look, I just ... for my standpoint, I better have a product that fits your needs, that I want you to buy a product that fits your needs because you’re going stay with us longer, you’re going to spend more money with us. You’re going to have a longer relationship with me. If you’re asking the question, where do we make more money? In the short run, we make more money on the old legacy stuff. We always do in a business like ours. The highest-margin product we have today is, what would you guess? Landline telephone? A landline telephone. I win. Now I’m not out pushing you to buy landline telephones, all right? But that is our highest-margin product. That is a product that’s in decline and it will one day, we’ll finally be allowed by the regulators to turn the switch and remove that service, but that’s not where we tell our customers we want them to go. We’re constantly pushing them to the new platforms and new services. This will be the same. Okay. I’m going to chalk that up as “either.” I just want you to ... I want you doing what is in your interest, not what’s in my interest. Awesome. We’re out of time. Thank you, Randall. I appreciate it. All right. Good seeing you, Peter. Thank you.

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That’s because “ad free” doesn’t just mean ad free. As trust in Facebook and its ability to handle user data has eroded over the past year, one particular question has been asked a lot: Why isn’t there an ad-free version of Facebook? The general thinking is that Facebook should offer users a version of its service that doesn’t depend on user data and targeted advertising to make money, but instead relies on a subscription fee. People who don’t mind targeted ads could keep using Facebook for free, and those who don’t want those ads could pay to remove them. Facebook CEO Mark Zuckerberg has long argued that Facebook needs to be free in order for the company to accomplish its mission of connecting the world. But wouldn’t a subscription option solve many of Facebook’s problems? Not exactly, according to a new interview Facebook published Wednesday, February 20, in which Zuckerberg spoke at length with a Harvard law professor about all kinds of topics, from “fake news” to blockchain to augmented reality. When the conversation turned to an ad-free Facebook, Zuckerberg correctly identified that the problem most people seem to have with Facebook is not actually with Facebook’s ads — it’s with the personal data that Facebook collects and uses to target people with those ads. “When people have questions about the ad model on Facebook, I don’t think the questions are just about the ad model,” Zuckerberg said. “I think they’re about both seeing ads, and data use around ads. “I don’t think people are going to be that psyched about not seeing ads, but then not having different controls over how their data is used,” he added. In other words, no ads is a package deal with better controls over the data Facebook collects. Zuckerberg suggested that a subscription product would need to include a way for people to opt out of Facebook’s data collection practices altogether — something that doesn’t currently exist. Facebook users can opt out of certain types of ads, or curate the list of their “interests” that Facebook uses to show them targeted ads. But there is some data Facebook collects about people no matter what, like their internet browsing data. Zuckerberg used “Clear History,” a feature Facebook is building to disassociate your off-Facebook browsing history from your personal profile, as an example of the kind of feature users would expect in some kind of subscription. “Clear History is a prerequisite, I think, for being able to do anything like subscriptions,” Zuckerberg explained. “Partially what someone would want to do if they were going to really actually pay for [ad-free Facebook] — you would want to have a control so that Facebook didn’t have access or wasn’t using that data or associating it with your account. “And as a [matter of principle], we are not going to just offer a control like that to people who pay,” he continued. “If we’re going to give controls over data use, we’re going to do that for everyone in the community.” Zuckerberg’s argument is that it wouldn’t be fair to stop collecting data about people only if they can afford to pay for it. Instead, it sounds as though Zuckerberg thinks Facebook needs to create a way for all users to better control Facebook’s data collection, and once everyone has that ability, it would make sense to let some people pay for an ad-free version, if they choose. It’s a complicated explanation, mostly because Facebook’s data collection is complicated. Facebook pulls data from all kinds of sources, and even collects data about people who don’t have Facebook accounts. Facebook’s data collection is so broad and ingrained into the internet that the company has to build new features in order to stop collecting data about people. Even if Facebook comes up with these new data privacy controls, Zuckerberg seems confident that a subscription service won’t be necessary. “I personally don’t believe that very many people would like to pay to not have ads,” he said. “It may still end up being the right thing to offer that as a choice down the line, but all the data that I’ve seen suggests that the vast, vast, vast majority of people want a free service, and that the ads, in a lot of places, are not even that different from the organic content in terms of the quality of what people are being able to see.” You can watch the whole interview below.

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posted 3 days ago on re/code
Join us on Sunday, March 3, in Las Vegas. For the fourth straight year, Kara Swisher and I are hosting some of the brightest minds in e-commerce and retail for a night of live journalism at An Evening With Code Commerce during the Shoptalk conference in Las Vegas. The three-hour event, slated for Sunday, March 3, at The Venetian, will feature Recode’s signature brand of unscripted interviews, as well as a cocktail party where you’ll have the chance to chat up 200 of your smartest peers. Here’s who you’ll hear from that evening: Tim Armstrong built a long career in digital media, most recently running Verizon’s media division, Oath, and AOL before that. Now he’s entering commerce with the launch of “the dtx company,” which is investing in direct-to-consumer brands like ThirdLove and Dirty Lemon; he also plans to host a “festival of the future” that pops up in locations around the country so consumers can sample new products and brands that are otherwise predominately sold online. Helena Foulkes was named CEO of Hudson’s Bay Company — the owner of the Saks Fifth Avenue, Lord & Taylor, and Hudson’s Bay chains — just one year ago, and was tasked with reinvigorating department store businesses that faced myriad challenges. Since then, Foulkes oversaw the sale of the online retailer Gilt, which HBC had purchased only two years earlier, the $250 million remodel of Saks’s flagship Fifth Avenue store, and the hire of a new leader for Lord & Taylor, which shuttered 10 of its 50 stores, including its flagship location. Manish Chandra has quietly built eight-year-old Poshmark into the second-most-popular iPhone shopping app in the US, ranking just behind Amazon. While Poshmark was first known as a seller of second-hand fashion, it has evolved into a popular home of merchants-turned-influencers that hawk their own fashion lines to passionate groups of shoppers who frequent the app for its prices, its entertainment value, and, increasingly, its community. Our Code Commerce events do sell out, so grab one of the remaining spots today. See you on March 3 in Vegas.

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posted 3 days ago on re/code
More turnover in the upper ranks of an industry that has had a ton recently. Keith Rabois — one of the more prominent investors in Silicon Valley, and a close friend of Peter Thiel’s since they were a pair of controversial conservatives together as undergrads at Stanford — is teaming up again with his old friend. Rabois is joining Thiel’s venture capital firm, Founders Fund, as its newest general partner. It’s a major addition for the VC firm, which is a top performer but has seen a coincidentally high number of departures from its upper ranks in recent years. In fact, the entire venture industry has seen a ton of turnover recently. Rabois and Thiel are also two of the industry’s most prominent political conservatives. Thiel’s support for Donald Trump in 2016 became a flashpoint in the debate over the last few years about the relationship between Silicon Valley and the Republican Party. Rabois — even at his old firm, Khosla Ventures — has always been a part of the extended Thiel orbit, but this move has a bit of “getting the band back together” about it. He told Recode it was the “most professionally difficult decision I’ve ever made in my life.” “It moved from something that was a 5 to 10 percent probability to something that became real over the last couple of weeks,” Rabois told Recode. “I’ve learned more from Peter than anybody else in my career, and I probably quote something from Peter every single week of my life.” Here’s Thiel: “Keith is a great investor, a successful founder, and an extremely talented operating executive. Any one of those is hard to pull off; Keith has mastered all three. If you’re a founder, he’s exactly who you want on your side.” Unafraid to mix it up on Twitter — where he has become one of the industry’s loudest and most interesting voices — Rabois has had a colorful past: At Khosla since 2013, he was previously the chief operating officer at Jack Dorsey’s payments company, Square, but left following a sexual harassment claim from a coworker. (Rabois denied any wrongdoing.) He previously held senior roles at LinkedIn and PayPal, working alongside Thiel in what would later be known as the PayPal Mafia. The news was first reported by Axios. Here’s Rabois’s recent interview on an episode of Recode Decode.

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posted 3 days ago on re/code
One of the world’s most popular sports properties is getting a new boss. One of the internet’s biggest sports properties is getting a new boss. Dave Finocchio — who co-founded Bleacher Report in 2005, sold it to Turner Sports in 2012, left and then came back to run the site in 2016 — is leaving again. He’ll be replaced by Howard Mittman, a longtime Conde Nast executive who joined the sports site as chief revenue officer in 2017. In a memo to his staff, Finocchio says he’ll leave in June and doesn’t say what he’ll be doing next. “I view life as a collection of experiences, and though BR might very well be the most incredible journey I’ll ever go on, I want to have some others.” Bleacher Report has become an important asset for Turner, which is now owned by AT&T, and a rare example of a digital property thriving after being acquired by an old media company. It’s probably best known today for House of Highlights, an Instagram account that shows highlights, bloopers, and other video ephemera to more than 11 million followers. Finocchio is one of the first high-profile executives to leave the company formerly known as Time Warner after AT&T bought the company last year, though it seems Finocchio would have moved on from the company at some point, regardless of who his corporate owner is. I talked to Finocchio a year ago on the Recode Media podcast; we talked about the history of Bleacher Report, why he had rejoined the company after leaving it, and how to build a successful sports property in a social media age. You can listen to it here; Fiocchio’s memo to his staff follows. BR Team, Years ago, when I was in the highest pressure-cooker era of our startup phase, I made a promise to myself that I would be doing something else by the time I turned 30. I love sports so much, and I’ve lived for the rush of figuring out how to grow BR’s audience and revenue many times over, but I’ve long known that it wasn’t the right thing for me to do this forever. I view life as a collection of experiences, and though BR might very well be the most incredible journey I’ll ever go on, I want to have some others. Also, I turn 36 later this year (shrug). With deep appreciation for so many people who helped make BR what it is today, this is a heads up that I’ll wrap my tenure as CEO and involvement with Bleacher Report, House of Highlights and Turner Sports at the end of this June (full circle, also happens to be my birthday!). In 2017, I recruited Howard Mittman to Bleacher Report as CRO/CMO, but also hoping he would emerge as a potential successor. BR has become one of the most important and premium media companies in our space, and I believe it needs a leader who can continue to take the brand and everything we do for consumers and business partners to the next level. You’ll hear more from both Matt Hong and Howard soon, but I want you to know that I’m very comfortable BR is in great hands. Warning! We’re now moving on to the long-winded portion of the email! In early 2016, I came back to oversee Turner’s incremental 100M investment into BR. Phase 1 of my Bleacher Report experience (2005-2014) was all kinds of insane and miserable and wonderful, but I think most importantly, the relationships I developed over that decade are ones I’ll treasure for the rest of my life. The gist though, is that over those first ten years, we made a bunch of mistakes and broke a bunch of rules and innovated like crazy, and thru collective belief and sheer will-power, we got BR over the hump as a real business and a real brand that had enough juice to be around for a long time. In 2015, there was a confluence of tough circumstances, industry trends and other, that put BR in a place where we either had to shake things up significantly, or face a reality where the brand would be a lot less relevant in the future. I knew coming back that we would accomplish a lot of exciting and rewarding things, but I probably underestimated the extent to which extremely difficult and personally painful decisions needed to be made to best position the business and brand for long-term success. Three years later, I think we’re on the other side of most of the tough stuff, and now have very strong exec leaders sitting on top of all of our departments. The last big item on my to do list is to hire and successfully onboard a Chief Content Officer, which will happen in the very near future. We’ve transformed and scaled BR’s revenue incredibly in a challenging climate for most digital ad companies, but I’m even more proud and appreciative of how much we’ve grown BR’s brand. Honestly, I’m just super grateful that I got be a part of Bleacher Report when it became a legitimate household name and a mostly beloved brand by a generation who cares a lot about sports and its impact on culture. All of you worked together to play a part in that, and it was my great pleasure to have a chance to lead so many talented, creative and hard-working people. When I was a 21 year old kid, this was my crazy hope and a dream. And over the past three years, in many ways, it came true. I can’t thank you all enough for that. In that vein, though I tend to be the beneficiary of this dynamic, I think it’s often bs that a relatively small group of people end up getting the credit for something that had many, many absolutely integral contributors. I want to thank literally hundreds of individual people for going above and beyond to make BR happen (and I probably should over the next few months!), but that’s a bit absurd for this email. I do want to give a special thanks and recognition to a handful of people who I can assure you we wouldn’t be here without. My co-founder Dave Nemetz pushed the founding team to believe that BR could be a really big company, and in many ways turned this into high-stakes game where we all gave everything we had. My co-founder Bryan Goldberg who is so creative strategically and served as my foil when we cracked difficult problems that influenced how an era of digital media played out. Brian Grey will always be BR’s most important CEO, and worked tirelessly to professionalize the organization and put me in positions to create maximum value for the biz. Rory Brown and Joe Yanarella I get choked up thinking about these guys and I’m eternally grateful to each of them. It’s hard for me to articulate how well the three of our skill sets fit together in the key years and how much I think this partnership was the difference between BR being a moderate hit vs. what it became. The best team I’ll ever be apart of, thank you both. Bennett Spector, the voice of BR more than any other and still going strong. Every game-changing product I launched: newsletters, app, social channels. He was always the guy. Matt Hong deserves a HUGE amount of the credit for why BR has been such a success story inside Turner Broadcasting. I can’t hold someone in much higher regard. David Levy believed in what BR had a chance to become and went to the mat at Time Warner to acquire us. His support of BR has been unwavering, even in challenging circumstances. And lastly, thank you to Lenny Daniels and the entire Turner Sports organization who have consistently supported BR and allowed us the leeway to maintain our culture and fighting spirit at all costs. If I ever pushed too hard for disruption, it was out of love :)! I want to leave you with one anecdote. On 4th of July 2005, I came to an internal resolution that I was going to wake up the next morning and get to work on this sports media idea I’d been thinking about for the previous 5-6 months. But I woke up feeling VERY unsure of myself, and subconsciously I think I went searching for external validation that wouldn’t make fun of me. Next thing I know, I’m sitting with my ex-girlfriend’s mom in her office, who is just one of the most sincere, wonderful, totally non-judgmental people I’ve ever known. I told her about what I was planning to do, and she looked me in the eye and said “Dave, I think it’s terrific, and I have a feeling you’re going to be very successful doing this”. The way she looked at me when she said it, I could tell that she actually believed that. And it really surprised me. For some reason, because she believed it, I started believing it too. Throughout all of the hard moments over the years (there were many), I always went back to that moment; it became the center of my conviction, my confidence, and since I’ve just always believed deep down that BR was going to make it. That conversation meant THE WORLD to me. I wish you are all so lucky to have a chance to pursue your dreams, whether you’re pursuing them now or sometime in the future. And I hope that you have the good fortune of receiving the same kind of incredible support that I did. If not, maybe you can give it to someone else. This has been the experience of a hundred lifetimes. Thank you so much, sincerely. -Finko

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TV and newspapers are out. Facebook and Google are in. It was inevitable, but it’s finally here: Digital advertising businesses like Facebook and Google will be bigger in the US this year than traditional advertising businesses like TV, radio, and newspapers. New estimates from eMarketer show that US advertisers will spend more than $129 billion on digital advertising in 2019 — more than the $109 billion they plan to spend on “traditional” advertising. eMarketer It would mark the first time ever that the US digital ad business made up more than 50 percent of the market. The digital ad industry in the US has been growing steadily for years, primarily thanks to two behemoths: Facebook and Google. Even though digital advertising was just half the size of the “traditional” ad industry four years ago in 2015, it was only a matter of time before the two swapped roles. But this tipping point is also a good reminder of how dominant these advertising businesses like Facebook and Google actually are. Despite a year full of conflict — both companies were called before Congress, both companies are at major risk of regulation both in the United States and abroad — their ad businesses did not suffer. Facebook and Google made up a combined 60 percent of the digital ad industry in the US last year, which equates to roughly $65 billion in revenue. They’ll lose a little market share this year — eMarketer estimates they’ll combine for 59 percent of the industry in 2019 — but their haul will be even greater: The two are estimated to bring in a combined $77 billion in the US next year. The losers on the “traditional” side? Newspapers and magazines; eMarketer estimates that “print advertising” will decline by almost 18 percent next year. “Directories,” like the Yellow Pages, will have it even worse. Their print ad revenue is expected to decline by 19 percent. Print and television aren’t the only industries that have been impacted. Digital publishers that rely on Facebook and Google to distribute their stories (see: BuzzFeed) are also coming to the realization that those two companies aren’t sharing the wealth. There is some good news for people worried that Facebook and Google are too dominant. Amazon is emerging as a strong third competitor in the market. The company claimed just 1.2 percent of the digital ad market in 2015. In 2019, eMarketer believes Amazon will own 8.8 percent of the market, by far the third largest player outside of Facebook and Google. eMarketer

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posted 3 days ago on re/code
Plus: Amazon beat Google in Q4 smart speaker shipments; Trump signs the US Space Force into existence; the spectacular failure of the world’s only hard rock theme park. Emoji are showing up in US court cases — and the courts aren’t prepared to interpret them. Emoticons started appearing in court in 2004, and they have since been found most commonly in sexual predation cases. So far, the graphic symbols have rarely been important enough to sway the direction of a case, but as they become more common, the ambiguity in how emoji are displayed and what we interpret emoji to mean could become a larger issue for courts to contend with. Exhibit A: “Bay Area prosecutors were trying to prove that a man arrested during a prostitution sting was guilty of pimping charges, and among the evidence was a series of Instagram DMs he’d allegedly sent to a woman. One read: “Teamwork make the dream work” with high heels and money bag emoji placed at the end. Prosecutors said the message implied a working relationship between the two of them. The defendant said it could mean he was trying to strike up a romantic relationship. Who was right?” [Dami Lee / The Verge] [Want to get the Recode Daily in your inbox? Subscribe here.] About 60 million households worldwide now own at least one smart speaker, and unlike the slowing smartphone market, the smart speaker sector is nowhere near the point of oversaturation. Global shipments of the voice-controlled devices grew 95 percent from 22.6 million units to 38.5 million units in Q4 2018 — more than were sold in the entire year of 2017; the year-end total for 2018 was 86.2 million units. Amazon and Google were the winners by far, predictably: Amazon saw a 91 percent quarter-over-quarter rise in Echo device shipments, shipping 13.7 million Alexa-powered devices; Google had a 123 percent uptick in Google Home shipments over the same period, shipping 11.5 million units. [Kyle Wiggers / VentureBeat] President Trump signed a directive for the Department of Defense to draft legislation creating a Space Force as a part of the US Air Force, establishing the first new military branch in 72 years. The new branch will be overseen by an Air Force undersecretary for space, and it will be structured in a similar way as the Marine Corps, which is a component of the US Department of the Navy, but has its own Joint Chiefs of Staff representation. Meanwhile, on Earth, the Trump administration said it will cancel more than $900 million in federal grants earmarked for a high-speed rail project in California; the US Transportation Department said it was exploring legal options to recoup $2.5 billion in federal funds already granted to the project by the Federal Railroad Administration. [Michael Sheetz and Amanda Macias / CNBC] In an interview, Huawei founder Ren Zhengfei said there is “no way the US can crush” the Chinese tech company, and characterized the arrest of his daughter, Meng Wanzhou, the company’s chief financial officer, as politically motivated. The US is pursuing criminal charges against Huawei and Meng, including money laundering, bank fraud, and stealing trade secrets. Meanwhile, reporting by The Information details Huawei’s efforts to steal Apple’s intellectual property, including pressing suppliers for Apple Watch details, copying a MacBook Pro component, and debriefing new Apple hires. [Karishma Vaswani / BBC] Uber is suing New York City over a rule that caps the number of ride-hailing drivers allowed on the streets, saying that the city government does not have enough evidence to justify such a rule, and that Mayor Bill de Blasio is treating the business unfairly. City officials have said the rule’s creation will help reduce road congestion, and de Blasio’s office said Uber and other ride-hailing companies have made traffic worse. The lawsuit reflects the increasingly combative relationship between NYC and global technology companies: Two weeks ago, Lyft sued the city’s transportation commission over the implementation of minimum pay rules for drivers; last week, Amazon walked away from plans to build a sprawling new headquarters in Queens to support 25,000 employees; and Airbnb and other home-rental companies are fighting the city in court over its demand that they turn over renter data. [Eric Newcomer / Bloomberg] Top stories from Recode Oakland’s teachers strike is another sign of economic inequality in tech’s backyard. Teachers say they can no longer afford to live in an area that has seen an economic boom fueled by the tech industry. [Shirin Ghaffary] Google and Facebook have become “antithetical to democracy,” says the author of The Age of Surveillance Capitalism. On the latest Recode Decode, Shoshana Zuboff says Silicon Valley has compromised our autonomy: “They can take hold of our behavior and shift it and modify it in ways that we don’t know.” [Kara Swisher] This is cool The spectacular failure of the world’s only hard rock theme park. Behind the scenes of the Kiss farewell tour.

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Silicon Valley has compromised our autonomy, Zuboff says: “They can take hold of our behavior and shift it and modify it in ways that we don’t know.” Beginning with Google’s development of targeted online ads, the most successful companies in the world have been powered by “surveillance capitalism” — a term coined by the guest on the latest episode of Recode Decode, Shoshana Zuboff. “All of the economic imperatives now that define surveillance capitalism are aimed at, how do we get better and better prediction products?” Zuboff told Recode’s Kara Swisher. “How do we win the most lucrative prediction products, so that not only are we predicting the future, but really increasingly, our prediction products are equal to observation.” There are just a couple problems: One, when customers are fully informed about how their data is being used, they don’t like it. So, companies like Google and Facebook have decided to “take without asking,” Zuboff said. And whoever has all that data has a tremendous amount of power — so much so that the same people who unwittingly provided more data than they realized to tech companies can then be manipulated toward commercial and political outcomes. “Right now, surveillance capitalists sit on a huge asymmetry of knowledge,” she said. “They have an asymmetry of knowledge, a concentration of knowledge unlike anything ever seen in human history ... We have an institutional disfiguring of these huge asymmetries of knowledge and power which are antithetical to democracy.” “You cannot have a well-functioning democracy with massive inequalities of knowledge and power,” Zuboff added. “That’s eroding democracy from the big institutional level, but now from the individual level, from the inside out. The fact that our autonomy is comprised, that these things are happening outside of our awareness, that they can take hold of our behavior and shift it and modify it in ways that we don’t know.” You can listen to Recode Decode wherever you get your podcasts, including Apple Podcasts, Spotify, Google Podcasts, Pocket Casts, and Overcast. Below, we’ve shared a lightly edited full transcript of Kara’s conversation with Shoshana. Kara Swisher: Hi. I’m Kara Swisher, editor-at-large of Recode. You may know me as the surveiller of capitalists, but in my spare time I talk technology, and you’re listening to Recode Decode from the Vox Media Podcast Network. Today in the red chair is Shoshana Zuboff, a professor emerita of Harvard Business School who has written several books about technology and economics. Her most recent book is called The Age of Surveillance Capitalism: The Fight for a Human Future at the New Frontier of Power. That’s a lot there, Shoshana. That’s got a lot going on. So, let’s talk a little bit about your background so people get a sense. This is getting a lot of attention, your book, and especially I’ve been using the word surveillance quite a lot, especially about surveillance economy, surveillance dates, and things like that. A long-time issue in human history, but now it’s more important than ever. Why don’t we talk a little bit about how you got to writing this particular book and some things you’ve done in the past. So, love to hear a little bit of your background. Shoshana Zuboff: Well, I think the impetus for this book, which has been a long time in the making, seven years just to produce this book but many years before in the ideas and development, the real driver here is the sense that our hopes and dreams for the digital future, our sense of an empowering and democratizing digital future... Which it was, at the beginning. Which it was at the beginning, and a sense that this dream was slipping away. And that the reasons why it was slipping away, the causes of this shift, were not really clear, not really well understood, of forces taking shape very much behind the scenes. It’s almost like we woke up and suddenly the internet was owned and operated by private capital under a kind of regime, a new economic logic that really was not well understood. So my motivation, Kara, has come from really wanting to spend the time to understand, to name exactly what this economic logic is and how its own imperatives, its own compulsions created a completely different trajectory toward the digital future. Something that we didn’t buy into, that we didn’t expect, and because it’s so unprecedented, it is by its very nature difficult to perceive. Absolutely. And also difficult to control. I like the word compulsion, because I think that’s a really good way to put it. It’s an emotional word, but it’s not. It’s actually, it has to do what it’s doing. It has to do what it’s doing. It’s a machine that’s got to move in the direction that it’s moving. The people in it are not bad people. They’re not bad actors, but they themselves now are caught up in an economic machine that sometimes they even don’t understand very well, and where it’s driving, and what its imperatives are, and most important, what the consequences of those imperatives are. Right. Right. Interestingly, I just did an interview on Twitter with Jack Dorsey. That was sort of a bit of a goat rodeo, but it was interesting because a lot of the questions, I kept asking for specifics and he couldn’t do them. It was really fascinating. I think people found that part the most fascinating, besides the platform being terrible to try to conduct any kind of conversation on. But, let me hear from your background. Talk about some of the things you’ve done before this, and then I want to get to the term “surveillance capitalism,” which I think is a fantastic way to put it. Let me hear the trajectory of your career. You started where to get to this kind of topic? Well, as far as my professional career, I began studying the shift to the digital in 1978. Mm-hmm. Were you born then, Kara? I was. I’m very old. I look fantastic, but I’m actually quite old. Well, hat’s off. I’ll date myself. I’ll come right out there and date myself. I started in 1978 interviewing office workers, Linotype workers, factory workers ... As the shift was happening. ... who were the first, the front line of our workforce that was shifting to the digital medium. That, over time, led to my first book, In the Age of the Smart Machine: The Future of Work and Power. Talk about that time for people to understand it. I had a K-Pro. I had a Trash-80. I know all these things, but talk about what was happening then. I had one of those suitcase phones and everything else. Well, you know, what was happening then was typical of the 20th century story of capital, which was the real titanic struggles in society were between capital and labor, and the forces of capital came down in the economic domain, in our workplaces, on our lives as workers, as employees, even as managers eventually, you know, in our factories, in our offices. And so, that was the front line where I first began to understand that this shift to the digital wasn’t only a change in the equipment that we use, but a change in the whole way that we construe and relate reality into our own experiences. The removal from the essential, or the removal from the embodied experience, toward more abstraction, towards the intellectualization of work and so forth. I understood early on that this was going to require profound “retraining.” I kind of hate that word because it so trivializes the real deal here, which is that ... It’s beyond retraining. It’s a whole new idea. It’s beyond retraining. The entrepreneurship. Well, even before we get to entrepreneurship, the idea that I’m working in a factory. I used to deal with a machine. It was a whole-body experience running that thing. Mm-hmm. It was mechanical. And now I’m looking at a screen, and I’m looking at information, and I’ve got to understand it. If I’m going to be included in the workforce, then I’ve got to have the intellectual skills to understand this new milieu and make a contribution. Unfortunately, what happened in our society is that most businesses went the other direction. They didn’t include the workforce in this shift. Now, 30 years later, we’ve got so many people excluded from the workforce. So many people taking drugs and having no place to go and not being part of this future, and at the same time, we’ve got businesses who are complaining, “Hey, we don’t have a skilled workforce.” Right, right, right. Absolutely. ”Where are our skilled workers?” This is the profound irrationality that we’ve seen developing in the system. So why back then did it happen? I’m sorry to dwell on the past, but I think it’s very important to set the table of why we got here. Is there one thing that struck you at the time, an example of that? Of the exclusion? Mm-hmm. Well, I mean, it was ubiquitous. Honestly, Kara, there wasn’t a single company. I had researched companies all over the world going through this transformational process, and I rarely found a company that was taking the deep-seated need for a new level of educational effort, and inclusion, and public/private collaboration around that. The bigger story here is, you know, I write about this in the new book, the neoliberal paradigm, the idea that we’re moving into — this is back in the 1980s — we’re moving into a shareholder value-maximization universe. Everything is cost-down. Everything is cost-cutting. Everything is automation. Everything is offshoring. Everything is outsourcing. So really, the workforce and the development of a robust, smart, inclusive workforce that was going to carry us way into the 21st century, that was not on anybody’s radar. I really was kind of a voice in the wilderness on that subject. I think that has come back to haunt us now, to haunt our society, to haunt our people, but also, to haunt our competitive capacity. I do think this idea that people would matter in this equation... I know if you remember a crazy movie, it’s one of my favorite movies, Desk Set with Katharine Hepburn and Spencer Tracy, where he ... Oh yeah. It’s a wonderful movie about that issue. It’s very much ... For another century. Absolutely. ... For another century. They were all researchers, and they knew all the facts, and then the computer came in and would spit out the fact instantly, and so they could replace the entire thing. It was such an such a tricky little movie, actually. Yeah. Impression. It was trying to be light and bright, but it wasn’t at all light and bright. In the end, the humans prevailed, but they didn’t. You sort of like, “That’s going to last for five seconds.” They had a great cast; Joan Blondell, I think, was in it. But the concept that I always think about when I first start to see these things, and especially saw ... I worked at a newspaper and I saw them around classifieds. I covered retail and I was like, “These people don’t need to advertise in retail.” You know? “They don’t need to advertise.” Classifieds are static, expensive. The person who’s taking the ad is a jerk, and they don’t work. These were the things. Your whole business model is terrible, and classifieds do. The classifieds online do [work]. I thought they weren’t going to just, say, I don’t know, whatever, a $70 million business in San Francisco, the Chronicle for example, it would be collapsed to seven and never go back. It wasn’t going to be 70. Seven was the amount. What I kept thinking was every single thing that can be digitized would be digitized. And of course it would be digitized, and there’d be no question about it, and therefore so many jobs will be eliminated. So many people would not be able to be trained properly, and figuring out how to train them was really difficult. Very difficult to do, unless someone was really paying attention. Yeah. And someone who’s paying attention, if they’re willing to spend some money. Right. Exactly. Looking toward the future and all the things that we’re supposed to count on our institutions to do. Right. Which they didn’t do. Which they didn’t do, largely because of this ideology that swept in and ... Maximized shareholder profit. And now finally, again, all these years later, decades later, we’re finally getting the critiques of exactly the destruction and devastation wrought by that shareholder value-maximization paradigm that has had everybody by the throat for so long and ... Well. Okay. No. Go ahead. Well, I was just going say that that’s kind of the segue to the new work in a way too, because that paradigm scraped the life out of so many of our institutions and our businesses, you know? So now, whether you’re trying to deal with an insurance company, or a telephone company, or an airline, or your health care provider, or even the school system, these institutions have been scraped to the bone, and it’s so hard for us to get the information and the support and the relationship and all the things that we’re looking for, let alone the voice and the influence. So the institutional world has become a very impoverished, frustrating place for most people, unless you’re super wealthy and you can buffer yourself from these things. That’s really what drove us to the internet. You know, back in the day, in the late ’90s when the World Wide Web broke on us and ... We called it the World Wide Web, remember? Yeah. WWW. You bet. And we rushed there really, looking for the succor, the voice, the influence, the information, the connection that we couldn’t get in these hierarchical silos that were just now cost-down. You know, you get seven minutes with your doctor, and you know? Yeah. And so forth. So we went to the internet looking for what had been taken from us in the real world, and for a while, that promise really was alive. You know? That you could get information that had been siloed away. Right. From government or whatever. You could contact people up in a hierarchy that would never pay any attention to you, and you could create connection and networking that ... Whether it was medical, whether it was anything. Exactly, and find like-minded people, or people with a similar ailment, or people trying to tackle a similar problem. The promise of empowerment and democratization was real for a few years. The way I read that history was that there came a moment, and I write about it, that a lot of it had to do with the financial emergency of the dot-com bust and so forth, where that began to turn. That’s when surveillance capitalism was discovered, invented, stumbled into. That’s when Google was invented. It happened at Google. Well, Google was invented out of the bust. That was when it got ... The Google that we know came out of the bust, and it came out of the bust, building on that vocab, came out of the bust gangbusters because it had discovered surveillance capitalism. It had discovered this economic logic, and that’s what saved it, and that’s what spread from there. So, there was a window when our hopes and the promise of the digital milieu of a new information civilization, which reintegrated these principles of the individual and the democratization and so on, there was reality there. The Well. But that window slowly closed. It was closing even before we knew it. We still were thinking that it was this one thing when it was already turning into something very different. You know, the idea of it was that idea of reachability. It was a sort of a Star-Trekian version of ... You know what I mean? That we all shared information freely, and that it was easy to reach people, that you could connect. I will never forget going to AOL. That’s got to be in the ’90s, ’96. No, earlier than that, 4. 5. ’94. There was a bunch of quilters there who had met online, on America Online, and they had made a quilt all together. It was such a metaphorical thing, with a big AOL symbol for Steve Case. They wanted to meet him because he had a personality with them online. They’d never met him. They had never met each other, but they had created this thing together. I remember thinking, “What a hopeful idea. It’s a silly quilt, but at the same time, what a wonderful connect...” These people connected from all across the country. They brought cookies, and they petted him, and everything else. It was really like a moment. Like, this is a possibility. It was silly, but it was also very profound. I remember thinking, because it was about cooperation, and across borders, and across geographies, and across loneliness, all kinds of things, and it was fascinating. And then: no. You know what I mean? No. Something happened. Something happened. A funny thing happened on the way to the forum. On the way. That’s right. Exactly. That was a good movie. Talk about what happened, and how you sort of coined this term, which again, I love. Thank you. Well, the way I tell the story … surveillance capitalism, like mass production capitalism, was invented at a time and place. You could say invented, discovered, cobbled together, trial and error, experiment. But the thing is, it was a human thing, and it was discovered, invented, elaborated, in a moment of emergency in Silicon Valley with the bursting of the dot-com bubble, a lot of pressure on all those young startups, all those fledgling companies. Google was right there. It had the best search engine, it had some of the smartest people, these brilliant founders, great values, and have ... Allegedly great values. I was there. Well, publicly stated great values. I can’t opine beyond that. It was right after they got their first plane that everything fell apart, but go ahead. Okay. Well, you’re the ... I remember that. I was like, “Oh. I see.” You’re the onsite reporter, girl, so. No, I just have to say. When I saw that first plane, then they had several. Tell the story. I was like, “Oh, oh dear. It’s done.” I hear you, I hear you. So, what happened was, even though it was widely understood that they had the best search engine, even they were now under tremendous financial pressure, and even their very swanky venture capitalists were threatening to withdraw support. So, long story short, they went through a dark night of the soul. They had been very public about rejecting online advertising as a disfiguring force, both in general on the internet and specifically for their search engine. They did like the purity of it at the beginning, they really did. They really did mean that, and I do remember there’s a story in Fortune called “Chaos at Google.” I remember them doing the O’s with “chaos” in there. And I remember thinking, “Oh dear, now they’re going to have to ...” You know, there was pressure, you’re right 100 percent. Go over. Yeah. Yeah. So, you know, this kind of pressure really changes the situation for people, and they’re not the only ones who have experienced this kind of thing. But you know, then you got to make some tough choices. And essentially, what they did was declare a state of exception. That state of exception is a powerful concept. You get to suspend your principles. In politics, you get to suspend the parliament, suspend the congress, suspend democracy in order to operate under emergency. So, they declared a state of exception. And at that point, there was already a situation where they knew that they had a lot of collateral behavioral data that was left over from people’s searching and browsing behavior. The data was set aside, considered waste, not adequately stored or organized. So people have been fooling around with it, understood that it had a lot of predictive value. Under the state of exception, what they decided to do was use these data logs, “data exhaust,” for their predictive power. Combine those with their already frontier computational capabilities. And even in those days, they were calling it AI. You know, AI is a moving target, as you know better than anyone. In every era it’s AI, but it keeps changing. So, combine these unused data with their computational capabilities, and use that to predict a piece of future behavior. And this, a future human behavior. In this case, where someone was likely to click. And what they were going to do is now sell this to their advertisers. Coming out of the black box, a product, a computational product that predicts this little piece of human behavior, where someone is going to click. So those online advertising markets suddenly were transformed. Not just advertisers figuring out keywords and where to place their ads. Now they’re transformed into a different kind of market. These markets, if you just zoom out a tiny bit, what you see is that these markets are now trading in behavioral futures. They’re trading in these tiny products that predict future human behavior. Again, specifically here, click-through behavior. So now we have a logic where the surveillance capitalism is unilaterally claiming private human experience. Because of course, the folks who are searching and browsing didn’t know that they were exuding these collateral data, or that those data were being saved. Right, which they were. Because they would put them up on the wall at Google. If you’ve ever been there early in the day, they have the scrolling queries. That’s right, in the lobby. And then you would watch them. And you could see that it was so valuable, it was like gold going ... and they spun it into gold, really. They spun it into gold. That’s exactly what they did, Kara. And in fact, there’s stories about Larry Page actually worrying about that, that scrolling display in the lobby, that it gave away too much of exactly how intimate and how insightful and how personal these flows of data were. So, the logic here becomes, unilaterally claiming this private human experience for a market dynamic. Now we’re taking it into the market. Once we take it into the market, it comes out the other side as behavioral data. We combine that behavioral data with computation. And out of that we produce these prediction products that tell us what you are likely to do now, soon, and later. Right. And as they add more data into it, like location, or whatever you do. I used to call it to them, a database of human intention. You now have the database of human intention. Okay girl, well then you got it in one. It was fascinating. This is the database of the human future. And those online targeted ad marketplaces were the first precursors really of what have become the dominant form of information capitalism in our time, where we are trading futures in human behavior. That has become how surveillance capitalism rose to dominance, how it makes its enormous revenues, how it has earned its market cap and become the largest, most powerful companies on earth. By convening these markets to business customers, not to us, that want to know what we are going to do in the future. And all of the economic imperatives now that define surveillance capitalism are aimed at, how do we get better and better prediction products? How do we win the most lucrative prediction products, so that not only are we predicting the future, but really increasingly, our prediction products are equal to observation. Because ultimately, as you just mentioned Kara, first we go for scale, we need a lot of data. Then we go for scope, we need all different kinds of data, out from the online universe into the real world. Physical sensors. Where we’re going, all the sensors, all the cameras, all the devices, all the internet of things. Then we’re going deep into personality, emotions, facial recognition, voice. But then finally, we’re going beyond scale and beyond scope to something I call action, economies of action. How do we actually intervene in the state of play to shift, modify, tune, herd your behavior ... To where we want it. ... toward our guaranteed outcomes, our guaranteed commercial outcomes. Because the more we can do that, the more powerful the predictive data. Which was the premise of advertising in sort of a spray-and-pray method in the old days. Like, “Oh, this ad will make you want to use Kodak.” But it was very ... Yeah girl, but without the digital. Now they’ve got an unprecedented in human history digital architecture of intense detailed knowledge. Which also means intense kind of power. What is this knowledge that has never existed before? And what is the kind of power that accrues to them, that with that knowledge from all this ubiquitous architecture that allows them to know so much about us? What is the kind of power that accrues to that, that allows them to now use this architecture as a global means of behavioral modifications actually, to tune in ... That is used in some places that way. ... yes, to tune and herd and shape us with methods that are designed to be out of our awareness. Right. That’s exactly what I was just talking about, it’s that you don’t understand it and you shouldn’t have to understand it. You don’t understand why a car is unsafe. You don’t need to be an engineer to understand that you should be protected in that way. And what they do is, they force you to do ... I was saying this to Dorsey on the thing, I’m like, “You say we’re sick and then you force us to cure ourselves when you created the illness.” It’s kind of ... it would just fascinate, and they’re all like, “What?” Absolutely. Which I think, one of the parts of it that I find really is the ... they push away the power they have. They pretend they do not have this power. And then what I began to realize recently and over the last year or two is that they’re incompetent to the task. They don’t have the skills necessary. They don’t have the ethical underpinnings, they don’t have the knowledge about society. They don’t have the emotional quotient to do it. The whole thing is so abstract that they can’t even begin to get what’s happening. The question ... talk about how you came up with the idea of surveillance. Because surveillance is a very … heavy word. Heavy word. Loaded, it’s heavily loaded. It reminds one of China, surveillance, watching, spying, things like that. Talk about how you coined this term. Okay. Because I think it’s completely appropriate, but talk about that. All right, yeah. I hear you, and that’s a really good question. And I want our listeners to know that it’s not hyperbolic. Mm-hmm. No, it’s not. Yeah. And it was very intentional. Because, you know, think about the term mass production capitalism, which historians have used a lot, or later, managerial capitalism, which historians have used a lot. These adjectives that modify the capitalism, what they’re doing is, they’re pointing to the pivotal piece that is the value creation hub, that critical success factor for value creation that defines this unique market form. So for mass production capitalism, it was the mass production system that was the source of value creation. In contrast to, say, mercantile capitalism. For managerial capitalism, it was the whole professional managerial hierarchy, the administration, all of that, that created the value that drove the economies of this new capitalism and made it so successful. So when you’re saying surveillance, someone, I think it was Roger McNamee said the other day, “Capitalism is like chicken. You can make it taste like anything.” And as you add whatever the special factor is. And in this case, surveillance is it. Well, what happened in this discovery process was, they realized that there were behavioral data all over the place that had tremendous predictive value. And it was more data than they needed to improve their products and services. So it was surplus data. So, how are we going to get this surplus data? Because people aren’t giving it to us. Or, if they give it to us it’s by accident and they don’t know we’re taking it. If we ask them for it, they’re not going to give it to us. Because really, any time, every piece of research going back to the early 2000s, any time you tell people about these practices of taking their experience, turning it into data, using it to project and so forth, nobody wants any part of it. As you said a moment ago, everybody wants security, everybody wants to be protected from it. Nobody wants to be part of this. Though they like free things. But go ahead. Well, that’s another story. They understood early on that if they’re going to get this surplus data, they had do it surreptitiously. They had to do it through what I call the social relations of the one-way mirror. To take without asking. And early on, you look at many of those early patents and you see the scientists actually defining in a very positive way, “We can get data that people did not intend to disclose. We can get data that people don’t even know they disclosed, because we can fit together different bits and pieces and make deductions and inferences. Therefore, we can come up with profiles and insights and patterns about individuals and groups and so forth that people don’t even know they’re giving away and did not agree to give away.” So from the beginning, for this thing to work to get that behavioral surplus, they had to do it secretly. They had to do it backstage. They had to do it with mechanisms that were designed to keep us ignorant, designed to bypass our awareness. Mm-hmm. And then call it a black box. Well actually, better yet, don’t call it anything. Don’t call it ... right, right. It’s like ... “No, they’re doing it over there.” Well, “We’re not doing anything, what are you talking about?” Or aren’t these ... or if we give you this map and you turn it on, you will have an even better experience. And I’m like, “No.” Right, so what they’re ... And even using it, I’m disturbed, you know. And I don’t turn on any of the saving functions. You know, one time I took a few weeks off and I got together all the manuals I could find that great magicians had ever written to describe their craft and how they actually pull off these incredible treks. And what I learned from that was, the key pivot for a great magician is the idea of misdirection. Misdirection, distraction. Right. So boom, I’m over here, you’re over there. Your eyes are there, I’m working over here. And then going back to look at the rhetoric and the practice of surveillance capitalists right from the beginning, it’s so clear that misdirection has been an essential piece of this: “We’re giving you free services. And we’re connecting the world, we’re making a community, and you can search for everything, democratization of knowledge.” It’s not that some of that isn’t true, it’s just that it’s misdirecting us to this piece of the iceberg, when the whole other part of the iceberg is underwater, unavailable, uninspectable, obfuscated, intentionally hidden. And you know, fast-forward, 2012, 2013, the scholarly write-ups about the Facebook emotional contagion experiments. Where the smart people, they’re researchers from Facebook and academics, they write about the outcomes of this research in which they discovered that they can use subliminal cues online to manipulate offline behavior. Online, we can do something that changes you enough to actually change your behavior in the real world. This is a very big deal. In the scholarly write-up they brag about this. They say, “Now we know that we can use the online medium to change behavior in the real world,” and they boast very clearly, very explicitly, “And we can do this bypassing the individual’s awareness.” Right, exactly. That is a critical success factor to this entire economic logic. Right, you have to not know why you’re pushing that red button, but they make you. Ergo, surveillance capitalism. We’re here with Shoshana Zuboff, the author of The Age of Surveillance Capitalism. She’s a professor emerita at Harvard Business School and has written lots of books about technology and economics. And we’re just talking about this idea that they’re sneaking around, I mean, pretty much they’re sneaking around, and we don’t what they’re doing, and we’re agreeing to it, tacitly, by not doing anything. Or being taken advantage of. Which way do you look at it? Because I think people do accept ... you know, they accept, especially because they’re enormous companies. I was just talking to someone this week when Eero was bought by Amazon. I have Eero in my house. I like it. It’s a mesh network. My kids like it because it makes their whatever, Red Dead Redemption 26 work better. It was bought by Amazon and I remember thinking, “Oh God, they got into my house.” I didn’t let any of them into my house and I like this mesh network. Or I had a Ring thing in the front of my house and Amazon bought that and then Google’s Nest was in my house and I had to take it out. You’re going down, girl. I know, they’re gonna get me. I don’t know what they’re gonna do. They got you. But they don’t. Interestingly, my kids unplugged the Nests. Like, “We don’t want them watching us.” Okay. But they’re good products. They’re cool. They were. The temperature products are good. They were before the economic logic hijacked them. Right, exactly. Like, hey, it’s great to be able to manipulate your temperature on an app. Great. What a great product. Absolutely. But then I realized the other day, they’re watching my temperature. I don’t know what use that is but there’s some use to it. There’s some fascinating use. What do we do? Because even, I literally am thinking they have me coming and going, and I’m pretty aware of this stuff. Yeah, absolutely. I know they’re sneaky bastards. I got that. I know about them and then they ... If anyone’s had the close-up, bird’s-eye view, it’s you. What the worst part is, I think when I talk to them is they don’t think they are. I’m like, “Are you lying? Or lying to yourselves?” It’s a really weird ... “I don’t know how this happened, Kara, I don’t know how we have all this data, I don’t know how we misused it.” Then you get sort of essential bullshit from people like Mark Zuckerberg who’s like, “What we wanna do is bring you relevant ads,” and I’m like, “Said nobody to anybody ever. I do not want those.” Maybe I do, but not really. It’s not something I requested. What do we do? Part of what you’re talking about here is the misdirection, the romance. Right. Weaving this romantic fantasy about it. You like a magician. Who doesn’t like magician? Who wants to see the girl ... Reconnect you or relevant ads and we’re the new church. Right. But look, this is ... I hate the word “relevant ads,” but go ahead. This is economic history. This is big-time flows of capital. These are corporations. I think there are a couple of important things for our listeners to know. One is that there are some of what the philosophers call category errors that have been foisted upon us. One is that this is how the digital works. Everything that we’re talking about here, this is just a consequence of digital technology. It sucks up information. You want the digital, this is what you get. Mm-hmm. That is absolutely dead wrong. Yeah, they can turn it off. Right. Dead wrong. We know that there were wonderful models and reports and projects and early developments, the smart home, before surveillance capitalism became public when Google IPO’d in 2004 and we began to actually see this economic logic at work. The whole idea was a simple closed loop. You got devices in the home. Those devices are producing useful information for the occupant of the home. Simple closed loop. Two nodes. The devices and the occupant. It’s the occupant that gets the data, it’s the occupant that decides what it means, with whom to share, and so on and so forth. You fast-forward, you brought up the Nest thermostat. Analyses of the Nest thermostat now show that any vigilant consumer who’s got one needs to review a minimum of 1,000 privacy contracts because Nest is a hub for all these smart devices. Each one siphons your data to third parties and third parties and third parties in infinite regress. This is an economic logic that is like a parasite just glommed onto the digital milieu and hijacked it in a completely different direction. What is this direction? We’re in the beginning of the 21st century. One of the things that I think is so important for us to think about is that we’re talking about … When we talk about surveillance capitalism, just as industrial capitalism gave us the culture and the quality and the moral milieu of our industrial society and our industrial civilization, right now surveillance capitalism dominates, and if we don’t stop it, it’s going to define the moral milieu and the culture and the nature of 21st century society. Which is? Right now, what that looks like is an extremely unequal society where ... In an information society, we shift from really an emphasis on labor and the division of labor as the key thing that organizes us, to learning and a division of learning is the key thing that organizes us. Who gets to know stuff? Who decides who gets to know stuff? Who decides who decides who gets to know stuff? It all goes to Mark Zuckerberg, but go ahead. These are the dilemmas of knowledge, authority, and power that define our 21st century society. Right now, surveillance capitalists sit on a huge asymmetry of knowledge. They have an asymmetry of knowledge, a concentration of knowledge unlike anything ever seen in human history. And with that knowledge comes, as we’ve talked about before, the ability to actually shape and modify our behavior to tune us and herd us toward their commercial outcomes. This is now a new axis of social inequality that’s not only economic inequality — which is still critically important — but also knowledge inequality and the inequality of decision rights, the inequality of our capacity to be autonomous and self-determining, the inequality of human agency. We have an institutional disfiguring of these huge asymmetries of knowledge and power which are antithetical to democracy. Yes. You cannot have a well-functioning democracy with massive inequalities of knowledge and power. That’s eroding democracy from the big institutional level, but now from the individual level, from the inside out. The fact that our autonomy is comprised, that these things are happening outside of our awareness, that they can take hold of our behavior and shift it and modify it in ways that we don’t know. And make it very noisy. This is eroding our moral autonomy, our ability to claim our future for our own agency, for our own decisions, for our own choices, our own promises of where I wanna go and how I wanna get there. Essentially, we’re stupid from the top and we have no choice and we’re being spied on from the bottom. Exactly. And being pushed around without our knowledge. Stupid and manipulated is what you’re saying. These qualities of moral autonomy and individual sovereignty, these are the elements that are the constituent forces of democracy. You can’t imagine a democratic society without imagining people who have these qualities. Right. We’re getting eroded from the inside and from the outside and when we see something like Cambridge Analytica, which has been a big “aha” for a lot of people all over the world, what we see is this erosion in play, using exactly the methodologies of surveillance capitalism, just slightly pivoting them toward political outcomes instead of commercial outcomes, using them to change our behavior. And the only way they can do that is by mustering these huge asymmetries of knowledge, turning that into power to intervene on us and modify us and control us and manipulate us and undermining our individual sovereignty. What do we do? We only have a few more minutes. What do we do? Regulation, what happens? What has to? We’ve got sort of three big categories of what we do. No. 1, we need a sea change in public opinion. We need to wake up. We need to name what’s going on, we need to grasp it, we need to understand it. They have been allowed to develop in this direction for the last 20 years as democracy has slept. They have been unimpeded by law, unimpeded by regulation. That has to change. And the way that’s gonna change is a sea change in public awareness. The outrage, the sense of intolerability, this is not okay. As we become aware as a public, we’re putting pressure on our democratic institutions. We need new law, we need new regulatory regimes that interrupt and outlaw the key mechanisms of surveillance capitalism, including the very principles of taking human experience unilaterally and translating it into data. Including the very principles of do we want a dominant capitalism that trades in behavioral futures? Right. Is that the way we wanna make money in the 21st century? That’s No. 1. No. 2, we need new forms of collective action. In the 20th century, we had collective bargaining, we had the institution of the strike, we had people coming together to create power, to balance capital. We need to do that now beyond the economic domain. We’re just called “users,” but we’re not just users. We have political, social, and psychological vested interest in what’s going on and in the possibility of a free and democratic future. It’s interesting. “Users” are only used with drug addicts. Exactly. Think about it. It’s their name for us, not our name for ourselves. I had the most incredible meeting. I think it was Van Jones was speaking in front of a group of young African American kids in a church and I wouldn’t have said this but he did this, it was really amazing. He said, “How many of you download stuff from the internet?” And they said, “Oh, what a stupid old man. Yeah, of course we do. Everybody does.” Then he says, “How many of you upload things to it?” And they were like, “What?” And he goes, “You’re all digital sharecroppers.” It was an astonishing thing to say in front of ... But he was right. You are being used by the powers that be to till their land. Your land is now their land and your information is now theirs. It was really an eye-opening moment for me and I was sort of like ... And then the kids of course got it. Like, “Oh. If we’re not part of the ownership of it, we are being used.” It was really fascinating. What were are is the free source of raw material for this whole economic logic. Right. We’ve got changing public consciousness, outrage, intolerability, mustering democracy, new law, regulation, intervening, outlawing. We’ve got new forms of collective action. And a third critical piece is the opportunity for competitive solutions. We get the new companies, the right companies, the new leadership to create the new ecosystems and alliances that really provide an alternative trajectory to a digital future, the kind of place that we wanted in the first place. The kind of place that is human. That we can call home. And the tools are useful. And the tools are for us, not for them, about us. The knowledge is for us, not about us. If we get that new competitive solution, we’ve got ... Those new competitors, literally, Kara, have an opportunity to have every single human being on Earth as their customer. Right. Because there is no one on Earth who voluntarily wants to tangle with surveillance capitalism. They have foreclosed the alternatives. They have hijacked the internet. They have hijacked the digital milieu. They have hijacked our homes, our cars, and our bodies. This is not okay. This is not how it’s supposed to be. It’s not healthy capitalism. It’s not a healthy 21st century society and it’s a deadly, deadly recipe for human freedom and for democracy. This is not the future we want for our kids. You’re speaking my religion. But let me just end on this. I did an interview with Mark Zuckerberg, and one of the things he put forward and I was hammering him on all the things, these kinda things, saying exactly, not as eloquently as you have, but I was hammering him. One of the things he said, well, you know, what they’re doing in China, they’re doing all this surveilling, this facial recognition, this and that, I’m thinking “you’d love to do that, Mark Zuckerberg.” But he essentially was putting out the term, it’s either Xi or me. If we aren’t running the internet, if you constrain us, us big companies, the Chinese internet where they do do facial recognition, where they do allow social scores and things like that. I was thinking when he said this, I’m like, “I don’t like either choice. I don’t like you, I don’t like China, I don’t like any of it.” Once again, we’re back to misdirection, Kara, because ... I thought so. What that statement does is that statement has given up on democracy. Right. Some people may think, these folks, surveillance capitalists think that we can substitute computation for democracy. Computation for politics. That’s what the Google City is, substituting computation for politics. I believe in democracy. I believe that the values of the Enlightenment, in the arc of human history, these values were produced five minutes ago. That humankind has sacrificed for millennia in order to get to the ideas of human autonomy and individual sovereignty and democracy, that the demos can regulate itself, that we cannot let go of these ideas. Every generation has to step up to the responsibility to reclaim, to fight, to resuscitate, to maintain the flourishing and the growth and the deeper rooting institutionalization of these ideas. We cannot let this go. Mark has already let it go. He’s a cynic on democracy, but I’m not. I don’t think you are. No, not me. And I don’t think most of our listeners are. Yeah. Shoshana, this was fantastic. Thanks Kara. It was great talking to you. Thank you for coming on the show. I urge you to read this book. It’s called The Age of Surveillance Capitalism: The Fight For A Human Future at the New Frontier of Power. It’s critical that we think of these issues and thanks to you all for listening.

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posted 3 days ago on re/code
Teachers say they can no longer afford to live in an area that has seen an economic boom fueled by the tech industry. Thousands of public school teachers in California’s Oakland Unified School District — one of the largest school districts in the state, representing 3,000 teachers and more than 100 schools — voted to go on strike beginning this Thursday. The move comes at a time when a wave of public school teachers across the nation — recently in Denver, Los Angeles, and Oklahoma — have gone on strike to protest stagnant wages, large class sizes, and a lack of resources. What makes Oakland’s case unique — and raises the stakes of the issue at hand — is that it’s the first strike in the recent wave of teacher action in the San Francisco Bay Area, the backyard of tech. Oakland, along with the greater region, has seen a sustained economic boom amid growing income inequality and higher costs of living over the past several years. Oakland’s school district has been plagued with budget woes for years before the most recent tech boom, partly because of strict limits on Californians’ property tax rates. But the skyrocketing cost of living in the Bay Area, fueled by the growing tech industry, has made it increasingly harder for teachers and other workers to make ends meet. Some leaders of the strike have also blamed the increase in funding for charter schools in Oakland for diverting money from underserved district schools that they say need it most. While teachers in Oakland’s school district have seen stagnating annual wages — an average of $46,500 for the past five years — the cost of living in the city is now double the national average. An average one-bedroom apartment in Oakland rents for $2,680 a month, according to Zillow — an 86 percent increase from what it was less than 10 years ago. “Just 10 years ago, a teacher could find a studio apartment in Oakland and be able to make ends meet, but that’s not a reality anymore,” said Keith Brown, president of the Oakland Education Association, the educators union; Brown has been a middle school teacher in Oakland for more than 20 years. “The irony is that Oakland and the Bay Area have a booming tech industry, so it should reflect in having great public schools here that are well-funded.” Brown said that in his district, it’s common to see five or six teachers sharing apartments, and many classified staffers, such as custodians and cafeteria workers, are “on the verge of homelessness.” More than 500 teachers in the district quit last year, in what strike leaders are calling an unprecedented exodus. Oakland Unified School District serves students with a more economically and racially diverse background than in more affluent nearby neighborhoods such as Piedmont, Palo Alto, and Cupertino, which have some of the top-ranked public schools in the nation, and are better funded. More than 70 percent of students in Oakland Unified School District are eligible for free and reduced-price lunch meals, compared to only 11 percent in nearby Palo Alto, where many tech workers with families choose to live in part for the high-performing public schools. Leaders of the tech community who are active on civic issues, like Catherine Bracy, founder of the nonprofit Tech Equity Collaborative, acknowledged the “critical problem” of the unaffordability of the Bay Area to people working outside the tech sector. “Nobody in tech wants to live in a place where firefighters and teachers can’t be here. It’s a dead society,” Bracy said. Bracy’s organization, which is mostly made up of tech workers in the area, is supporting changes to a statewide property tax limit in California, under Proposition 13. The California Schools and Local Communities Funding Act would require commercial property owners to pay present-day tax rates. The teachers union also supports the changes, and California Gov. Gavin Newsom has also signaled support — an encouraging sign for supporters. Prop 13 has been politically untouchable since it first passed in 1978, because overturning it would mean higher taxes for landowners. While the teachers unions might agree with some civic-minded leaders on reforming tax rates, union leaders in Oakland have raised questions about how the district’s budget is managed, which they are blaming on influence from wealthy outside donors — in part funded by tech. The press release for the strike accused “a group of billionaires with a political agenda” for pushing their interests above those of local parents. The educators’ union point to wealthy donors who have helped fund Oakland’s school board races, including Michael Bloomberg, tech venture capitalist Arthur Rock, and Netflix CEO Reed Hastings. These business leaders have all poured money into groups backing successful campaigns for Oakland school district board members who support a “portfolio model” that uses private-sector-style governance to run public education, including divesting funds from underperforming schools. Over the next several years, the Oakland Unified School District plans to shut down as many as 24 public schools in the district, a move that the striking teachers vehemently oppose. Meanwhile, charter schools have been on the rise in Oakland. Currently more than a quarter of Oakland’s students are in charter schools, up from around 17 percent in 2009. Proponents of charter schools say they like the flexibility these schools have to try new methods, and point to some examples that show better performance at charters schools over local traditional schools, although other studies have shown mixed results. The Tech Workers Coalition, an influential volunteer-run group of politically active workers in the tech industry, said it will be supporting teachers on the picket line, and encourages other members of the tech community to do the same. ”Oakland has the ability and the responsibility to provide excellent public education for all students,” read a statement from the Tech Workers Coalition, in part. “The teachers, who make a difference in students lives, are the experts — not the consultants, politicians or tech executives — on what they need to provide the learning conditions their students deserve.”

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posted 4 days ago on re/code
Plus: A coalition of 16 US states sues to stop Trump’s use of emergency powers to fund his border wall; China’s most popular app is a government propaganda tool built by Alibaba; Alexa and the search for the one perfect answer. A coalition of 16 US states, including California and New York, have challenged President Trump in court over his plan to use emergency powers to spend billions of dollars on his border wall. The lawsuit, filed in Federal District Court in San Francisco, is part of a constitutional confrontation that Trump set off on Friday when he declared that he would spend billions of dollars more on border barriers than Congress had granted him. Meanwhile, Chinese and Iranian hackers have renewed their attacks on US companies and government agencies; security experts believe the hackers have been energized by Trump’s withdrawal from the Iran nuclear deal last year and his trade conflicts with China; negotiations with China resume this week. [Charlie Savage and Robert Pear / The New York Times] [Want to get the Recode Daily in your inbox? Subscribe here.] WhatsApp is at risk in India — so are free speech and encryption.Regulators in India — where both WhatsApp and parent company Facebook have more than 200 million users — are proposing a radical change to the country’s internet privacy and liability laws. The new set of rules require that internet companies proactively screen user posts and messages to ensure that people don’t share anything “unlawful.” The new rules would create a system where technology companies are suddenly the gatekeepers to what can be shared online. So it would be up to Facebook — or Twitter or WhatsApp or YouTube — to determine what content is acceptable and what content is “unlawful” before it’s ever even shared. One observer in India said the new rules would be “a sledgehammer to online free speech.” [Kurt Wagner / Recode] Mithril Capital promised to be the “capstone” to Peter Thiel’s investment empire. But the late-stage investment firm has become a major distraction, filled with drama, disarray, and unanswered questions. Mithril had its best moment yet last week when a portfolio company, Auris Health, sold to Johnson & Johnson for more than $3 billion — returning at least $500 million to the fund. But behind the scenes, Mithril has been a slow-burning mess for the past several months, angering current and former employees, limited partners, and, crucially, Thiel himself. It’s a classic Silicon Valley story of big celebrities, big paydays, and what can happen when you pair big money with little accountability. [Theodore Schleifer / Recode] Blackstone Group CEO Steven Schwarzman was criticized by a group of students and faculty from the Massachusetts Institute Technology, who asked the school to cancel a celebration of a new computing center named for him. Schwarzman’s work as an adviser to President Trump, his opposition to an affordable housing bill in California, and his hosting of Saudi Crown Prince Mohammed bin Salman were cited as reasons for the protest in an op-ed in The Tech, a campus newspaper, which raised concerns about the ethics of the school accepting Schwarzman’s donation of $350 million toward the Stephen A. Schwarzman College of Computing. [Tiffany Kary / Bloomberg] Apple is shaking up leadership and reordering priorities across its services, artificial intelligence, hardware, and retail divisions as the company works to reduce its reliance on iPhone sales in favor of emphasizing services and potentially transformative technologies. The changes, which include high-profile hires, noteworthy departures, meaningful promotions, and consequential restructurings, have rattled rank-and-file employees unaccustomed to frequent leadership changes and led Apple to put several projects on hold. Meanwhile, the reliable Apple analyst Ming-Chi Kuo says that Apple will release new iPads, a new 16-inch MacBook Pro, a 31-inch 6K monitor, iPhones with bilateral charging, and more in 2019. [Tripp Mickle / The Wall Street Journal] The most popular smartphone app in China — a Chinese government propaganda tool that some have nicknamed “the Little Red App” — was developed by e-commerce giant Alibaba at a time when China’s tech firms are under global scrutiny over their ties to Beijing. Downloaded more than 43.7 million times since its January launch, “Xuexi Qiangguo” — which literally translates as “Study to make China strong” — focuses on the thoughts of President Xi Jinping, the country’s leader. At least part of the app’s runaway popularity can be attributed to directives issued by local governments and universities that require people in China’s expansive party member network to download it. [Pei Li and Cate Cadell / Reuters] Top stories from Recode The UK Parliament wants to regulate Facebook. So does everybody else. The UK’s Digital, Culture, Media and Sport Committee called Facebook a “digital gangster” — but it’s not the only group of regulators out for blood. [Kurt Wagner] This is cool Amazon Alexa and the search for the one perfect answer. Facebook’s Portal learned its video skills from some of Hollywood’s best cameramen.

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posted 4 days ago on re/code
India is proposing new content laws that could be a “sledgehammer” for free speech. India is WhatsApp’s biggest market. It’s also suddenly one of the company’s biggest threats. Regulators in India, where both WhatsApp and parent company Facebook have more than 200 million users, are proposing what amounts to a radical change to the country’s internet privacy and liability laws. The new set of rules, first published in late December and still under consideration, would require, among other things, that internet companies proactively screen user posts and messages to ensure that people don’t share anything “unlawful.” It’s an attempt by the Indian government to hold technology companies accountable for the content that appears on their platforms — content that can be misleading, create confusion, and has even led to real-world violence in India. But the new rules would also create something else: A system where technology companies are suddenly the gatekeepers to what can be shared online. It would be up to Facebook — or Twitter or WhatsApp or YouTube — to determine what content is acceptable and what content is “unlawful” before it’s ever even shared. The new rules would be “a sledgehammer to online free speech,” wrote Apar Gupta, the executive director of the Internet Freedom Foundation, an international nonprofit in India. “We are talking about China-style surveillance here” — Jayshree Bajoria, Human Rights Watch The rules would force tech companies to make technical changes. Companies that don’t have technology to monitor content would need to build it (though one issue with the proposed Indian rules is that it’s unclear, for now, what the punishment will be for failing to comply). WhatsApp, for example, encrypts all of its messages so the company can’t read them, which makes it impossible for WhatsApp to monitor user posts. It would likely have to eliminate encryption to comply with a law like this. Not everyone thinks this is a bad idea. “A lot of the people defending WhatsApp in this particular context ... they say WhatsApp doesn’t kill people, people kill people,” said Prashant Reddy, a resident fellow at the Vidhi Centre for Legal Policy, a nonprofit political think tank in India, in an interview with Recode. “But the fact is, WhatsApp enables people to do this at a much larger scale.” But creating headaches for tech companies isn’t the biggest issue: The future of internet privacy and encryption is suddenly on the line for the world’s second-largest country, and digital rights advocates are terrified that privacy will lose out. These new rules could open the door to widespread government censorship and surveillance. “I think honestly the biggest [technology] story around the world is India trying to bring these intermediary guidelines,” said Jayshree Bajoria, a researcher with the nonprofit organization Human Rights Watch, in an interview with Recode. “We are talking about China-style surveillance here.” The end of end-to-end encryption? This proposed law, known colloquially as Intermediary Guidelines, isn’t specific to WhatsApp. If passed, it would apply to all internet companies that host, publish, or store user information, including social networks, messaging platforms, and even internet service providers. Understanding WhatsApp’s problems in India, though, is key to understanding why a law like this is suddenly on the table. WhatsApp, the private messaging service that Facebook bought in 2014 for $19 billion, is incredibly popular in India. More than 200 million people use the app every month, in part because WhatsApp has traditionally been simple and reliable in markets where internet connectivity is weak. One of WhatsApp’s key features is end-to-end encryption. Enabling that level of encryption means that messages sent using the app are only visible to the message’s sender and receiver. WhatsApp can’t read them, and therefore can’t reproduce them if ever required to by government or law enforcement agencies. And if the company can’t read them, it can’t proactively monitor them, either. But WhatsApp also has a content issue in India. The app has become a vehicle for widely distributing misinformation and fake news — in some cases, false stories that have gone viral on WhatsApp have led to actual offline violence and deaths. In 2017, rumors of a band of child kidnappers made the rounds on WhatsApp, sparking an angry mob that ultimately killed four innocent men, according to the New York Times. Later, three more men were killed by another mob. There was no evidence any of the men were actual kidnappers. WhatsApp has been in discussions with Indian officials for months about how to stop information like this from spreading — one approach has been limiting peoples’ ability to forward messages to a large number of groups at one time. But policing content is a real challenge, given WhatsApp’s encryption; and a real concern, given that India’s national elections are just months away. WhatsApp has become a central service for spreading campaign-related news and updates, and is a key part of the campaign strategy for politicians. The new proposed rules would eliminate that encryption challenge, but at a real cost. They would require companies in India with more than 5 million users to make a number of changes, including incorporating the company in India and maintaining an office in the country, with a physical address. But the two most important and concerning rules are related to censorship and encryption. The first is that tech companies would be required to hand over any information demanded of them by government or law enforcement agencies, and would also need to “enable tracing out of such originator of information on its platform.” In other words, tech platforms need to be able to trace content back to the original users who shared it on the platform to begin with. You can’t do that if content and messages are encrypted. The second is that tech companies “shall deploy technology based automated tools” — like artificial intelligence algorithms — with the purpose of “proactively identifying and removing or disabling public access to unlawful information or content.” In other words, tech companies will be required to use algorithms to scan user posts and prevent them from sharing anything deemed “unlawful.” Many tech companies, like Facebook and YouTube, do some form of this monitoring today, but that’s to catch content like child pornography or copyrighted music. Indian regulators are asking companies to also search for things that are much harder to define, like content that is “grossly offensive” or “blasphemous.” Some of this was once considered illegal in India, but a law forbidding “grossly offensive” content was deemed unconstitutional in 2015 by India’s Supreme Court. These new proposed rules include a long list of content that wouldn’t be permissible, an apparent attempt to reinstate some of that content censorship. “[Beyond] breaking the end-to-end encryption requirement, which is horrible, there are other horrible proposals also in these proposed changes,” said the IFF’s Gupta in an interview with Recode. He’s worried that the new rules would “turn the internet in India into an incredibly censored place.” Kevin Frayer/Getty Images Indian Prime Minister Narendra Modi in 2014. Modi is up for reelection later this year. A “safe harbor” no longer There’s a strong incentive for tech companies to comply with these new rules: If they don’t, they could be held liable for “illegal” content that their users share online. Internet services like WhatsApp and Facebook in India have so far enjoyed what is broadly referred to as “safe harbor” laws — laws that say tech platforms won’t be held liable for the things their users share or post online. If you defame someone on Facebook, for example, the company may be required to take down your post following a court order, but it probably won’t be held legally responsible for what you say. Safe harbor laws also exist in the United States — under the Communications Decency Act — and India’s version of the protections are part of the 2000 Information Technology Act. But these new rules have been proposed under the section of India’s IT Act that includes the safe harbor distinction — which means that companies would have to follow the new rules if they want to continue to receive those protections. That’s a big deal, as no tech company wants to be held legally liable for the stuff their users post. In fact, these laws are a big reason that tech giants became giant to begin with. “It’s important to remember ... these laws had nothing to do with free speech. It had to do with commercial supremacy of the early US internet companies,” said Alex Abdo, an attorney at Columbia University’s Knight First Amendment Institute. “It was meant to give them an edge, to make sure they weren’t hobbled by liability as they were trying to compete to develop the latest and most interesting service.” Big tech platforms like Facebook and YouTube have used that protection to their advantage. Facebook has 2.3 billion monthly users worldwide; YouTube has nearly 2 billion. “At the end of the day, sure, WhatsApp and Facebook ... they will have an additional burden. But we will be the eventual losers, because it will be our freedom of speech which will be restricted.” —Amba Kak, Mozilla But safe harbor protections have also allowed tech companies to move slowly when it comes to taking down content like hate speech or threats. Until recently, many weren’t proactively searching for that kind of content — primarily because they didn’t have to. Most of that content is not technically illegal, at least in the US; in other countries, like India, the law only requires that they take it down following a court order. Twitter, for example, still doesn’t proactively search for these kinds of posts, and instead waits for users to flag them for the company. (CEO Jack Dorsey says that needs to change.) The proposed Indian rules are presented as a way to keep internet users safe and force big tech companies to work harder to prevent bad stuff from making its way online. But the side effects of these new rules are easy to spot. “Proactively” monitoring content means tech company surveillance of everything that users share. Gupta calls it “proactive censorship.” Monitoring content also means being able to read it — and that combined with the “tracing” requirement would likely mean that products like WhatsApp would need to break encryption to operate in India at all. WhatsApp is against that change. Here’s part of a statement sent to Recode from a company spokesperson: What is contemplated by the rules is not possible today given the end-to-end encryption that we provide and it would require us to re-architect WhatsApp leading us to a different product, one that would not be fundamentally private. Imagine if every message you that you sent was kept with a record of the fact that you sent it and with a record of your phone number. That would not be a place for private communications. Sill, some in India believe that the extra oversight is necessary, given the state of the internet today. Prashant Reddy, the resident fellow at the Vidhi Centre for Legal Policy, has come out in favor of the guidelines, primarily because he believes tech companies are big enough and make enough money that they should be held accountable for the information they carry. “The traditional legal rule has always been that you’re liable for the actions that you allow other people to do and for the profits that you make off such actions,” Reddy said in an interview with Recode. “[These companies] have grown, they have the money; I think it’s only logical to withdraw these subsidies or special immunities.” Reddy isn’t worried about tech companies monitoring user content — they do that anyway, he argues. This would just mean that they do it before a post is shared, not after. “These safe harbour provisions ... led to the world’s greatest experiment with mass communication that was not moderated by editors,” Reddy wrote in a story for India’s the Wire. “The results have not been good. The troll armies, the toxic hate targeted against women have shown us the consequences of handing over the internet to the mob.” What happens next? India’s current safe harbor protections appear to be teetering on a knife’s edge. The Intermediary Regulations have already been put to public comment, a process that officially closed last week. At this point, it is believed that the rules could be implemented by the government at any time. India’s general election, meanwhile, is just two months away. The New York Times reported that some people fear that these changes may give the Indian government and Prime Minister Narendra Modi more “power to remove social media posts by political opponents in the coming election.” There is also fear that what happens in India could set a precedent for other parts of the world. Digital privacy groups are closely watching new laws that are being proposed in Europe, too, like the “Terrorist Content Regulation,” which would require tech platforms to quickly identify and remove terrorist content. Members of Parliament in the UK have also suggested that Facebook “assume legal liability” for what their users post. Opponents of that regulation believe that, like India’s proposed rules, the sweeping requirement could create too much government and tech company surveillance. The reality is that once tech companies comply with laws in one country — if WhatsApp breaks encryption to survive in India, for example — it’s clear to the world that they can and could comply with similar laws in other countries. “Once they have that machinery in place, it becomes a lot easier for them to apply it to all countries, not just the one where they happen to be required to,” Abdo said. There is still much to be decided. It’s unclear, for example, what the punishment will be for companies that fail to follow these rules, should they be implemented. It’s also likely that if these rules are enacted, that they may be challenged in Indian courts. Some believe these Intermediary Guidelines could be shut down the way that other censorship laws were struck down by the Indian Supreme Court in 2015. “Often these kinds of regulatory moves by governments are framed as ‘the government versus big technology companies’ — this is like a fight between Facebook and WhatsApp and the government,” said Amba Kak, a lawyer and policy adviser for Mozilla who has come out against the proposed India legislation. “That kind of headline is very misleading,” “At the end of the day, sure, WhatsApp and Facebook ... they will have an additional burden,” she continued. “But we will be the eventual losers, because it will be our freedom of speech which will be restricted.”

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A dozen former employees, investors in the fund, and other people close to the matter describe an investment firm in disarray. Seven years ago, a smooth-talking associate of Peter Thiel promised that he had launched the “capstone” to Thiel’s investment empire, naming their new firm after a mythical metal in Lord of the Rings because it was flashy yet permanent. “It’s invaluable,” leader Ajay Royan told one interviewer about Mithril Capital. “It’s lifesaving. It’s sustainable. It has all of the things we’d like to be associated with.” But Mithril Capital is primarily associated with some other things these days: drama, disarray, and unanswered questions about its finances. Mithril had its best moment yet last week when a portfolio company, Auris Health, sold to Johnson & Johnson for more than $3 billion — returning at least $500 million to the fund. All appears well. But behind the scenes, a far different story has been unfolding. The late-stage investment firm has been a slow-burning mess for the past several months, angering current and former employees, limited partners, and, crucially, Thiel himself, sources say. The firm’s troubles have disappointed Silicon Valley’s highest-profile investor, according to multiple people close to Thiel, who has lent his brand name to the firm but is not operationally involved. And it has left a long list of scorned parties, slowly shrinking the firm’s headcount of investors — despite having more than $1.3 billion in assets under management. That has all raised questions about what exactly is happening with the money and how Royan is handling it, according to a dozen former employees, investors in the fund, and other people close to the matter who spoke with Recode. Mithril declined multiple requests to make Royan available for an interview for this story. The firm also declined to comment on the record to address any specific pieces of reporting. “Mithril has invested deliberately and differently. We owe the success of this patient approach to entrepreneurs who work for the long term amid a trend-ridden industry,” a Mithril spokesperson said. This is a classic Silicon Valley story of big celebrities, big paydays, and what can happen when you pair big money with little accountability. But it is not a five-alarm fire in the orbit of Thiel, who is proudly “contrarian” and no stranger to drama. Despite raising $740 million for its second fund — with a first close in April 2016 — Mithril Capital has invested only about $90 million of the cash, according to multiple people with knowledge of the figures. That’s highly unusual for a firm at this point in its investment period; a typical firm would probably be spending at a three- or four-times faster clip. Royan has long been clear that he wants to be able to wait out high valuations that have dominated tech investing over the past decade — crafting a 12-year fund instead of the usual 10-year fund to give him more flexibility. Raised in Abu Dhabi and Canada, Royan graduated from Yale at age 20 and got to know Thiel while he was becoming a minor celebrity at PayPal. The two have now worked together for 16 years. Mithril has always been a somewhat unusual firm, industry observers say, with an emphasis on investing outside of Silicon Valley in places like Kansas City and with a single clear leader, Royan, instead of a broad partnership. “Mithril is a unique fund: By design, its orthogonal approach is not for everybody, and it’s been uniquely successful,” said Jeremiah Hall, a spokesperson for Thiel. “As the largest LP in Mithril and the chairman of its investment committee, Peter is proud of Ajay’s leadership.” But not all are happy with Royan. Troubling to some are concerns about Mithril’s management fees, which an investment firm uses to pay for operational costs like salaries, travel, and rent. Despite Thiel co-founding the firm, Royan has told people that he and his entities control 100 percent of the management company, meaning that he would be entitled to 100 percent of the fees and would decide where they go, sources say. The source with knowledge of Mithril’s thinking disputed the ownership structure of the management committee but declined to provide any details. Paperwork filed with the SEC shows that more than 75 percent of the management company is owned by a limited company in the Cayman Islands called Talleus, which in turn is owned 75 percent or more by Royan. The firm is likely collecting as much as $20 million a year in management fees, sources familiar with the figures say. We don’t know exactly how much the firm spends, but people close to Mithril say they can’t imagine that the firm, given its staff size, is spending more than half of that on operational expenses. Royan’s salary, like that of other venture capitalists, is not publicly disclosed. One limited partner called the fees, given the size of Mithril’s staff, “outrageous.” The source with knowledge of Mithril’s thinking disputed the $20 million figure but also declined to provide an alternative. Perhaps the only other person with that data? Royan’s sister, Anuja Royan, who he hired as the firm’s chief financial officer — she has a separate staff that is technically part of an affiliate based in Canada called Mithril360. While she is well credentialed as a former public company CFO, her role has troubled some former employees, limited partners, and others close to the firm and raised questions about its internal transparency and governance. “A lot of things that were really transparent suddenly became not transparent at all,” said one former employee. Ajay Royan told Bloomberg in 2017 that Mithril does not “charge excessive fees.” But he was not exactly known for being thrifty with management money. Former employees describe Friday catered lunches where costs could run over $100 per person, and Royan was known internally for a “book ordering problem” — a former employee said that “unbelievable amounts of books” would be delivered each week to the office by Amazon to maintain the firm’s extensive library. This was all before Royan late last year surprised some in his orbit, including some of his employees and portfolio company founders, sources say, by suddenly announcing internally that the firm was moving to downtown Austin, Texas — one of the lowest-taxed states in the country. Royan has since said he was thinking about moving the firm since 2016 after growing frustrated with Silicon Valley. “What made [Silicon Valley] really attractive was it was one giant incubator as a society, with a lot of pay-it-forward culture and a low cost of trying,” he told TechCrunch last year. “Now I’m worried about all three of those.” That decision has been unpopular internally, however. Some employees have been resisting moving to Austin and leaving the heart of the tech ecosystem. They’re now in limbo. Over the past month, four junior employees in San Francisco — some of whom are the children of limited partners in the fund — believed that they were soon to be terminated because they would not move to Austin, according to former Mithril employees in touch with current employees. Then at the last second — as Recode was making inquiries about this story — the employees were spared. One employee, an executive assistant, was let go. But the rest have been operating in some fear of looming axings and are now without an office. The source with knowledge of Mithril’s thinking confirmed that the firm did ask all its employees to move to Austin, but insisted that it was open to its employees working remotely. This has all led to a work environment that alternates between absent and intimidating, sources say, and where Royan has a reputation for being a difficult boss. In an industry where turnover is rare, at least 11 members of the investing team have left the firm since the firm’s founding in 2012; five departed after the second fund had its first close in the spring of 2016. Four of those 11 were managing directors. That turnover has forced at least some founders to have to cycle through multiple different people from Mithril on their board, which can be frustrating for a CEO. While those 11 are of different seniority levels, a common concern for multiple people across the organization has been the salaries that Mithril has paid to its investors, which multiple sources described as below-market. In a work hierarchy described as very top-down, some sources describe Royan, who now splits his time among Austin, San Francisco, and Canada, as hard to get ahold of and say communication is an issue. That can be true for Mithril’s limited partners, even the venture firm’s own investors. Those relationships are tightly controlled by Royan, who is the firm’s sole managing general partner, and who in general likes to avoid confrontation, former employees say. Limited partners have included the Singaporean sovereign wealth fund Temasek, the philanthropic MacArthur Foundation, and a heavy mix of personal offices that manage family money from overseas, sources say. Money has come from the billionaire empires of Egypt’s Sawiris family and Malaysia’s Krishnan family. To be sure, some limited partners still speak highly of Royan and are sympathetic to his argument about being slow and steady with deals at a time of high valuations in Silicon Valley. And the sale of Auris, the medical robotics company, should quiet some concerns about his strategy. But other limited partners have been trying to survey their options. Some limited partners have tried confronting Royan over his spending rate, one person briefed on one exchange said. And it’s especially hard for limited partners to organize themselves since Mithril unusually does not have a regular annual meeting — during which limited partners typically trade contacts. The firm may be listening to the calls for change — last week, it posted a job listing for a chief accounting officer, a new position, in Austin to handle financials and deal with limited partners. But it wasn’t always this dramatic. A first fund is raised on reputation — in this case, Peter Thiel’s. Investors, perhaps seeing it as a way to get into Thiel’s choosier, earlier-stage venture arm, Founders Fund, flocked to Mithril Capital in 2012 given its $100 million blessing from Thiel. And its first fund has performed quite well, sources say, with investments in not just Auris but also Thiel’s data analytics company Palantir. It was a pretty normal fund. Thiel doubled his personal investment in the second fund, announced in January 2017, to nearly $200 million, sources say. But that’s when the spigot got clogged. Royan appeared no longer interested in deals. Why? “[W]rite clichés on a roulette board and just roll the wheel,” said one former employee. “Too expensive. Founders have too narrow a vision. Too crowded a space. “He literally did not want to compete. If there was a process or bidding war or something resembling a competition, he would just walk,” the employee said. “And he would just say, ‘I don’t want to outbid.’” The source with knowledge of Mithril’s thinking said the pace of spending in the second fund was about equivalent to the pace in the first fund. Now, a further challenge is that the team simply may be too small to compete, with only a few professional investors who can lead their own deals remaining. The source with knowledge of Mithril’s thinking said it employs 17 people, but that figure includes many people who work for Mithril360 and in support functions. Only eight employees are listed on the firm’s website. Lurking behind the scenes has been Thiel, who has paid relatively little attention to the drama at Mithril in recent years. But as Recode began inquiring about the state of his late-stage venture arm, Thiel in recent weeks has become increasingly agitated with Royan and the state of affairs there, people say. Thiel, who is technically the chair of Mithril’s investment committee, has worked with Royan for going on two decades, dating back to their work at Clarium Capital, Thiel’s hedge fund. But like Royan, Thiel can also be non-confrontational, and associates of his say they have been reluctant to bring up the situation at Mithril with him. So the problem has festered. Now, he is described by associates to be frustrated, disappointed, and a little embarrassed. After all, Thiel gave his imprimatur to Royan’s fund in the first place. But Thiel’s focus is less on Silicon Valley investments and more on other pursuits. He’s active in politics. He has made noise — but with little evident followthrough so far — about building a conservative media company. And he sold his San Francisco mansion and moved to Los Angeles (although Recode has learned that he recently bought a previously unreported house in Palo Alto), motivated by a revulsion to Silicon Valley’s politics and culture. Royan, too, appears sick of the Bay Area. Mithril has given up its modern industrial office in San Francisco’s Presidio. But despite announcing plans to move to Austin five months ago, Mithril Capital’s office — overlooking the Texas Capitol — today remains sparsely furnished.

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The UK’s Digital, Culture, Media and Sport Committee called Facebook a “digital gangster” — but it’s not the only group of regulators out for blood. The cries to regulate Facebook are getting louder and louder. This week they’re coming from a familiar foe: The UK’s Digital, Culture, Media and Sport Committee, which has been investigating Facebook’s role in spreading disinformation. The Committee issued a new report on Sunday that said, “Facebook intentionally and knowingly violated both data privacy and anti-competition laws” in the UK — a conclusion the committee came to based on a cache of internal emails it collected last fall. The report also calls for more regulation for Facebook, and described the company as “digital gangsters” for how it handles its users’ data. The committee suggested a number of ways to regulate Facebook: It suggested that UK regulators “investigate whether Facebook specifically has been involved in any anti-competitive practices.” In other words, is Facebook a monopoly? It suggested that Facebook be regulated as “a new category of tech company” that is “not necessarily either a ‘platform’ or a ‘publisher.’” The committee would like Facebook to “assume legal liability for content identified as harmful after it has been posted by users.” Today, tech platforms like Facebook and Twitter are not held liable if their users post something illegal as long as they remove it. It suggested that a “Code of Ethics” be created to identify what is considered “harmful content.” Facebook and other platforms would then be regulated to ensure that they don’t spread that content. In a lengthy statement from Facebook’s UK Public Policy Manager, Karim Palant, the company says it is “open to meaningful regulation” and also “supports effective privacy legislation that holds companies to high standards in their use of data and transparency for users.” You can read the whole statement below. The UK report was an update of a previous report, but it still got a lot of attention on Sunday, in part because it was scathing — “digital gangsters” makes for a great headline — and in part because those internal emails the committee gathered from Facebook last fall were a big deal. They showed, among other things, how Facebook uses personal user data to strengthen or weaken its competitors. But the DCMS Committee is not the only group that wants to regulate Facebook. In fact, Facebook is facing calls for regulation across the globe. In India, regulators are hoping to pass new rules that would threaten end-to-end encryption for Facebook-owned WhatsApp, and require Facebook to more aggressively monitor user posts for “unlawful” content. Germany has ordered Facebook to change its data collection practices. And in the United States, the company is in talks with the Federal Trade Commission, which is investigating Facebook, that could lead a “multibillion-dollar fine,” according to the Washington Post. Facebook is no longer just battling US regulators upset about the 2016 election or a perceived conservative bias. Facebook is battling regulators everywhere. Sunday’s report from the DCMS Committee is yet another reminder of how global the social giant’s problems have become. It seems that no one believes Facebook can or should be able to police itself, so everyone is trying to do the job for it. Here’s the full statement from Facebook’s Palant: “We share the Committee’s concerns about false news and election integrity and are pleased to have made a significant contribution to their investigation over the past 18 months, answering more than 700 questions and with four of our most senior executives giving evidence. “We are open to meaningful regulation and support the committee’s recommendation for electoral law reform. But we’re not waiting. We have already made substantial changes so that every political ad on Facebook has to be authorised, state who is paying for it and then is stored in a searchable archive for 7 years. No other channel for political advertising is as transparent and offers the tools that we do. “We also support effective privacy legislation that holds companies to high standards in their use of data and transparency for users. “While we still have more to do, we are not the same company we were a year ago. We have tripled the size of the team working to detect and protect users from bad content to 30,000 people and invested heavily in machine learning, artificial intelligence and computer vision technology to help prevent this type of abuse.”

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Plus: Northern Virginia is keeping Amazon’s 25,000 jobs; Amazon invests in a rival to Tesla’s electric cars; what all the US presidents served at state dinners — and what it means. Comparing Facebook to “digital gangsters” in the online world, a final report by a British parliamentary committee found that the company deliberately broke privacy and competition laws, and called for Facebook’s use of user data to be investigated by the UK’s data watchdog. The Digital, Culture, Media and Sport committee spent months last year investigating online political disinformation and singled out Facebook for “disingenuous” and “bad faith” responses to democratic concerns about the misuse of people’s data. The committee also urged the government to investigate whether Facebook specifically has been involved in any anti-competitive practices and conduct a review of its business practices towards other developers “to decide whether Facebook is unfairly using its dominant market position in social media to decide which businesses should succeed or fail.” [Natasha Lomas /TechCrunch] [Want to get the Recode Daily in your inbox? Subscribe here.] Uber is slowing down, and it no longer looks unstoppable. The ride-hail company generated $14.2 billion in bookings in the quarter ended December 31 — which includes what customers spend on Uber rides, Uber Eats orders, and other Uber services. Uber reported $3 billion in revenue, which is roughly the share of bookings the company is left with after paying out wages to drivers and delivery people. Both those figures — up from the same period a year earlier — represented Uber’s slowest growth rate for 2018. Uber lost $865 million in the latest quarter, down from a loss of $1.07 billion in the third quarter of 2018. The deceleration in Uber’s bookings and revenue could alarm investors as the company prepares for an initial public offering expected this year; Uber hopes to be valued as much as $120 billion in its IPO. [Alison Griswold / Quartz] Northern Virginia is keeping Amazon’s 25,000 jobs — and wants you to know it. When the company canceled its plans to build an expansive corporate campus in New York City, Virginia officials more than 200 miles away decided to make a statement: Their region has its act together, has been far more prepared, and is free of drama. The comments came from people in the area that has branded itself National Landing, an amalgamation of Arlington and Alexandria neighborhoods that was the other winner in Amazon’s sweepstakes last year to award massive new campuses. After landing Amazon, National Landing faded from the spotlight as attention focused on NYC. [Cecilia Kang / The New York Times] A potential rival to Tesla in electric cars just got a big boost from Amazon. The online retail giant is leading a $700 million investment in Rivian, a Michigan company that is developing a battery-powered pickup truck and an electric sport utility vehicle; Rivian said it would remain independent. Founded in 2009 by MIT-trained engineer R. J. Scaringe, Rivian first showed its truck and SUV at the Los Angeles Auto Show in November. The key feature of each is a chassis that is shaped like a skateboard and includes all the components that propel the vehicles — a large battery pack, axles, suspension, cooling system, and four electric motors. The company says its pickup will be able to go up to 400 miles on a full charge. [Neal E. Boudette / The New York Times] Discount shoe chain Payless is liquidating its 2,100 US and Puerto Rico stores and shutting down its online operations. Payless, which was founded in 1956 with the goal of selling affordable shoes in a self-service setting, was preparing to file for bankruptcy for the second time in two years; the company is starting liquidation sales on February 17, and expects its stores to remain open until at least the end of March. Heavily indebted store chains have been going under for two years, claiming once-iconic names like Toys “R” Us and retailers including Shopko, FullBeauty Brands, Charlotte Russe, Things Remembered and Gymboree, all of which have filed for bankruptcy this year. [Dan Wilchins and Lauren Coleman Lochner / Fortune] There were no tears for now-defunct Toys “R” Us at the no-kids-allowed Toy Fair New York, the largest toy show in the US. The giant that once dominated the show was liquidated last year, leaving hundreds of toy sellers high and dry, but the show was bigger than in recent years, as toymakers looked for new buyers. Manufacturers like Wicked Cool, which makes Cabbage Patch dolls and Pokémon toys, set up booths in New York’s Javits Convention Center to woo buyers like Walmart, Target, and Amazon. “It’s hard to hold grudges when you’re trying to open doors,” said Wicked Cool co-president Jeremy Padawer; Toys “R” Us once made 15 percent of his company’s business. [Hailey Waller / Bloomberg] Top stories from Recode Amazon’s grave HQ2 mistake: The political landscape changed, but the company’s playbook didn’t. The HQ2 contest was very Amazonian. So was its refusal to back down. [Jason Del Rey] How long before big media companies become big sports-gambling companies? Sooner than you think. But AT&T — which owns HBO, TNT, and CNN — says it won’t be taking your bets. [Peter Kafka] “Hollywood is now irrelevant,” says IAC Chairman Barry Diller. On the latest Recode Decode, Diller, the former CEO of Paramount and Fox, talks about the diminished power of movie studios and why “Netflix has won this game.”[Kara Swisher] This is cool All the presidents’ meals. How do the insanely wealthy actually pay for something worth hundreds of millions of dollars?

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Diller, the former CEO of Paramount and Fox, talks about the diminished power of movie studios and why “Netflix has won this game” on the latest Recode Decode. Before he became a tech mogul, IAC and Expedia Group chairman Barry Diller was a media mogul, working in executive roles at ABC, Paramount and Fox. But now, he says, the people who used to have all the power in the entertainment business have a lot less. “Hollywood is now irrelevant,” Diller said on the latest episode of Recode Decode, hosted by Kara Swisher. “... It was these six movie companies essentially were able to extend their hegemony into everything else. It didn’t matter that they started it. When it got big enough, they got to buy it. For the first time, they ain’t buying anything. Meaning they’re not buying Netflix. They are not buying Amazon.” “In other words, it used to be if you could get your hands on a movie studio, you were sitting at a table with only five other people,” he added. “And so that table dominated media worldwide. That’s over.” On the new podcast, Diller praised Disney CEO Bob Iger as a “superb executive,” but predicted Disney would only do “okay in streaming” when it launches its streaming service Disney Plus later this year. In general, he advised, “those who chase Netflix are fools.” “Netflix has won this game,” he said. “I mean, short of some existential event, it is Netflix’s. No one can get, I believe, to their level of subscribers, which gives them real dominance.” And that includes its closest rival Amazon Prime, which isn’t designed to bid as aggressively on tomorrow’s media stars as Netflix is. “Amazon’s model is saying, ‘If you join Prime, we’re giving you things,’” Diller said. “‘So our job is to get you to join Prime. If we can get you to do that by giving you Black Panther, or whatever, or The Marvelous Mrs. Maisel, then great.’ But that model, to people in the entertainment business, is like, ‘Oh my god, how did that happen?’” You can listen to Recode Decode wherever you get your podcasts, including Apple Podcasts, Spotify, Google Podcasts, Pocket Casts, and Overcast. Below, we’ve shared a lightly edited full transcript of Kara’s conversation with Barry. Kara Swisher: Hi. I’m Kara Swisher, editor-at-large of Recode. You may know me as someone who wants Barry Diller to run for president, because why not? But in my spare time, I talk tech and you’re listening to Recode Decode from the Vox Media Podcast Network. Today in the red chair is someone I know very well, Barry Diller, who I’ve known, I don’t know, for a million years. Beginning of the internet time. Barry Diller: Prehistoric times. Prehistoric. He’s the chairman of IAC, the former CEO of several TV and movie studios. He’s been the chairman of Expedia Group since 2006. He does everything. He’s a man about town. He’s also a big civic booster of New York, which we’re going to talk about a little bit because he’s doing a really cool thing, another cool thing in New York, and he is one of my favorite people to talk to. He’s witty and funny and he has lots of opinions. Try me. Try you. Okay. Barry, welcome to Recode Decode. Thank you so much. We talked recently at your IAC event, and we had a really good talk about where that is going. Why don’t you fill us in on the stuff you’re doing, and I do want to talk about the stuff in New York separately, but talk about where you are as chairman of IAC. What do you mean, where I am? What are you doing? Where I am is about ... What do you spend your days ... 24 blocks north of here. Thank you. Thank you. Physically. Okay, but ... What do I do? Yeah. I cause a little trouble. I stimulate, I hope, and the great thing for me at this point is on the public companies, there are chief executives of each of them, and so I basically don’t really have ... I have one person. No, I have two people actually reporting to me. Okay. So these people that report to me, who are the CEOs, they run the businesses and I cause trouble here and there, and I help out. Sometimes when asked, sometimes not even being asked. All right. It’s a different kind of role. Than an operating role. Than line operations. But you know, I stopped being a decent manager some time ago. You are. You’ve had to be. The businesses that you have now are, in IAC, a lot of the dating. You sort of dominate the dating service. Sort of. You completely dominate it. No. Well, whatever. Very close. Yes, yes. And then travel. Travel, and home services with Angie, HomeAdvisor, and Vimeo and, I don’t know. Lots of other stuff. Talk about those businesses just briefly. The dating business, for example. That’s been the big success. The big knock-it-out-of-the-park kind of business. Of all of our businesses? Yes. The one that is the best known, but you have tons ... Expedia’s not well-known? Expedia ... No, of course it is, but I want to talk about the dating servicers. Of course it is. All right, fine. But you’re dominating. You just want to talk about the dating services. No, I don’t. I don’t need to date, but I’m just interested in it. That’s all right. Where has it been? You were very early to this, compared to other people. Well, we were very early, because what could be more natural than saying that if you could make dating an easier prospect than wandering down the street and think that somebody is going to turn the corner and that’s going to be something interesting? And technology solved that 20 or so years ago. It is such a ... Look, all ways are lovely. It’s great if there’s a coup de foudre and you turn the corner and you’re in love, but the odds are not so great for that. This is just a better process for meeting people. And what is it going to develop into? Where do you look at the business? Well, it is what it is. It develops into the thing that it actually does every year more efficiently because the technology gets better. So instead of simply having a little tech stuff, you now have pictures. You can do live video. You can do ... Look, anything that serves people being connected. Whether they do it because they like swiping, because that’s a nice little game to look at pictures of people and you get to quickly swipe right or left depending upon what your interest is, or is not. So the evolution of it really is simply that more and more people are more comfortable with it. It started out kind of with a bit of a stigma, like, “Oh God, you mean I’m not good enough? I have to resort to online dating to meet somebody?” But I think that’s all washed away as more and more things get done digitally. And you have several. You have Match. You’ve got Tinder. You’ve got ... OkCupid. PlentyOfFish. We’ve got lots. You got lots. You got lots of offers for people, and Tinder obviously is the one that gets the most attention. Well, because Tinder is one of those phenomenons. They do not come along very often. They don’t. And this was grown up in-house, and that’s also fairly rare for a large company to be able to innovate with really new things. And so Tinder was 0 to 90 miles an hour in a flash of a second. Yeah. So yeah, Tinder’s a phenomenon. And travel. Let’s talk about travel. Where is that, from your perspective? Where is it? Yeah. It’s doing well, travel. The world travels. Expedia is the world’s largest travel company. It has shockingly $115 billion in gross sales, which is quite remarkable. 27,000 employees, so it’s a fairly large enterprise now, servicing every form of travel in almost every country in the world, and it’s a tech company. It’s 6,000 or so engineers. It’s a tech marvel. I mean, to be able to take all of this information coming from all of these sources ... The hotels and planes and ... And trains and planes and whatever, and cars, and tame that so that when you just type in a simple query, it snaps it right back to you and serves you. I mean, that’s kind of magic. And how do you look at the whole travel scene? Obviously, Airbnb is going to go public this year. I think most people expect it. So they say. It’s sort of a comer in that space. How do you look at that, how that space is developing? So they say. They’re going public. We have a company called HomeAway, or also V-R-B-O, VRBO, which is vacation rentals. It’s not exactly the same thing as the classic Airbnb which is rent your extra room, so to speak, or your extra bed, or whatever. Or rent yourself. But Airbnb has a slice of this, but people in the hotel business worry about it that in fact it’s going to encroach upon “normal,” so to speak, or standard hotel services. I don’t really think so. Well, they would get into ... They’d be a partner, I would think. It’s also younger people, and older people are two segments of naturalness, so to speak, for Airbnb. Younger people because it’s much cheaper than a hotel room. Younger people also for the same reason as really older people is community. It’s interesting. Yeah. They want some warmth around them rather than a maid who never shows up. Right, exactly. The shift in travel to me is the most interesting part of a lot of the way we do that and how we move and information and things like that. Do you see another shift happening in that? In being able to make it even more facilitating? I think that technology, what I see in machine learning and AI and its ability ... Every birdbrain will tell you the same, but I see it so practically in travel because the ability for tech to actually give you services that surprise you, meaning that they’ve put together this, that, and other disparate information, and again through these advanced tech platforms are able to give you an experience that you would never get before in the way that you could never get it. Right. Or have the knowledge about it. Well yeah. Again, it used to be you wanted to go to Zanzibar, you ... I never did, but go ahead. Well if you did, you’d really read about it. You’d go through this whole process. With a travel agent. Yeah. It would take you a long time to research it, to figure it out. What you would be doing wouldn’t be that reliable just because there was not enough information. All this is now in a millisecond. It used to be you could never see a hotel room you were going to stay in. They’d have to describe it to you or whatever. There weren’t pictures. There weren’t video virtual tours. There weren’t all of these services that technology ... I mean, I do go on too much about all of that ... No, not at all. It’s absolutely true. Tech stuff, but I actually do. Because we were in it very early, so I saw. Expedia was the first company to really colonize an offline area. An area that had never been online. Let’s talk about that idea of you seeing something early. One of the things I always tell people, someone said, “Who in the media was very smart about this?” And I said there were two people who contacted me. One was you and one was Peter Chernin, of all people, who were interested in internet stuff and who saw it pretty early. You with home shopping, the Home Shopping Network. Yes. Yes, yes, yes. And Peter with lots of different things. Before the internet. Three years before the internet. They were doing Myspace and things like that. Why was that? I never really asked you. Why were you ... Why was what? Why me? Yeah. Why did you see that, compared ... Because a lot of people were very recalcitrant. I guess Bob Iger was a little bit on the edge of that more, the traditional media executives I knew. Well, I mean, there’s no “traditional media.” First of all, traditional media. Narrative media. But you’ve never been traditional at anything. Well, narrative media, say. Screens that are used to tell stories, as against screens that are used for other purposes, i.e. the world of computational stuff. The cavern between them is ... You can’t make a bigger cavern. In their brain formation, they do such completely different things. Narrative media is an instinctive, editorial process. I like this idea as against that idea. Whatever. And we’ll develop it into ... You think research can help you. It’s quite purely instinctual. Instinctual. Whereas on the other side for sure, everything tech is ones, zeros. Predictive. In perfect order of the blocks falling, so they’re completely opposite brain systems and that’s why I think there’s been such very little, almost none, but rare stories where it has been so of that divide has never been well crossed. But for me what happened was, like everything for me, it was serendipitous. And also because I do have curiosity, so in the early ’90s ... God. We met in the Ticketmaster office. You don’t remember that. I do. Did we really? Yeah. You didn’t like the furniture. Well of course. Why would I? The guy who ran it. What’s his name? Oh, the guy who did it had no taste. Yeah. You said that. That’s exactly what you ... But what were you doing at Ticketmaster? Fred. Fred Rosen. Fred Rosen. What were you doing at Ticketmaster? You invited me there. Why? Because you wanted to talk about the internet. Oh. You were like, “You, girly, seem to know about the internet.” Oh yeah. ”Come in and speak to me.” All right, fine. And I said, “Absolutely. You did Tuesday Movie of the Week. I will come any day.” That is true. I did do that. And Wednesday Movie of the Week too, thank you. The thing that happened was that in ’94, ’95, I knew two guys at Fox, and the first thing I saw in my tour ... Because I didn’t want to repeat myself. I had been running movie companies for a long time. I went to QVC. This is at that time ... In Florida. It’s still in Pennsylvania. Or Pennsylvania. Anyway, and I saw again screens being used for something other than telling stories, and I said, “Whoa!” I’d never seen that one before, and that intrigued me. I thought, that is an application of something I thought I completely understood and I completely don’t understand this application. Though they were telling stories too. They were telling ... No, no, no. What I’m saying is that ... Yes, I get it. There’s a difference between using a screen, being passive, sitting back and listening, watching someone tell a tale. As against what QVC did which was it was a very primitive convergence of telephones, television sets, and computers where you did something, put up a piece of Kleenex and said, “Would you like to buy this?” And somebody on the other end instead of being passive and getting a Coke ... Said, “Gimme.” Said, “I want it” and was able to order it. So that fascinated me, and I didn’t know what was going to happen with it, but I thought, things are going to happen out of that utterly unknown, and that’s when I took this interest in QVC and then that was ’92, ’93, and that led me in ’95, ’96 to the very beginnings of the consumer internet. Right. Absolutely. I mean it was so ... That’s how ... So let me fast-forward to today, because now those consumer internet companies, which you knew very well in the early days — the Googles, the Facebooks, the Amazons — have now moved into entertainment. Not Facebook, Apple. Yes. How do you look at that now? As they now look up and say, “Maybe we need to move into this space.” And they have. Obviously Netflix has led the way. Well, as I said, there’s exceptions, and this is an interesting one in Netflix. Netflix is the real exception. Netflix really came into this, again, very primitive but not real tech, but came into it with those boxes that stood in stores where you could get a film and it would clang down and you’d pull the film or whatever, and then ... Mailing. Then into mailing movies, and it is the brilliance really of Reed Hastings, the founder really of Netflix, that he was able to come from a fair pure tech background ... He really does. Yeah. That he was able to get into this narrative show business thing in such a sure-footed way that no one else has really been able to do. You can’t compare it. The only other tech company that is in this world of media, really in media, is Amazon. But Amazon’s business model has nothing to do with anything anybody who’s been in the entertainment business has lived with their whole lives, which is, we have one job. We entertain the folks. If they like what we do, they buy a ticket or subscribe to this or get that, and then they get that in a fair exchange for their creative ability being essentially exchanged by somebody who says, “I’ll buy that thing.” Amazon’s model has nothing to do with it. Toilet paper. They’re selling toilet paper or whatever. Amazon’s model is saying, “If you join Prime, we’re giving you things. So our job is to get you to join Prime. If we can get you to do that by giving you Black Panther, or whatever, or The Marvelous Mrs. Maisel, then great.” But that model, to people in the entertainment business, is like, “Oh my god, how did that happen? I don’t know how to do that one. I don’t know how. I only know how to serve my entertainment customer. I have no idea how to get somebody to join Prime, to do this, to get my end product which is a creative thing.” Anyway, that ... Right. So where does that lead, because Apple is now moving very heavily into it after ... Well I wouldn’t say they’re heavily yet. Not heavily, but more. There’s money. Well, they’re prancing around. They have their little feet in it. They’ve hired some people. They’re spending some money, but they do not have at least yet, although they’re going to announce something I think very soon or start their streaming service. Everybody is going to play in this, but I think that those who chase Netflix are fools. Or try to compete with Amazon Prime, because I don’t think there’s any ability for anybody in the, let’s call it the ... The media business, the entertainment business, who do so. And I’m not saying that other people can’t build services. Disney has good programming. They’re starting their streaming. Right. They’ll get some subscribers. But to chase ... Netflix has won this game. I mean, short of some existential event, it is Netflix’s. No one can get, I believe, to their level of subscribers, which gives them real dominance. They can outbid, and do... And they do. … anyone, and they will continue to do so. Right. They just got Ryan Murphy. They got Shonda Rhimes. They got ... Well yeah, but they will outbid anyone because they have the platform to be able to do so. That network effect circle ... Then what happens in Hollywood now? How do you look at it when you look at ... Hollywood is now irrelevant. Okay. I mean it has nothing ... Explain. That’s a big statement. Explain. It is. Look. It will make and continue to make programming. Clearly. And that was one of its functions. But what happened to the entertainment business since the early, you know, hundred years ago, is that the ... Basically let’s start with radio. Radio essentially was dominated by NBC, CBS, and as the decades went on, they were able to, because the hegemony was complete, they were then able to get into television. Then they were able to get into the cable business. Then they were able to get into all these businesses, all of which, not that they founded them, but when they got big enough, they would buy them. So little Warner Bros. Studio bought Time Inc. which had HBO. And CBS, which actually was the leader in news. It wasn’t CBS that started 24-hour cable news, but it was Ted Turner who eventually got bought by Warners. So it was these six movie companies essentially were able to extend their hegemony into everything else. It didn’t matter that they started it. When it got big enough, they got to buy it. For the first time, they ain’t buying anything. Meaning they’re not buying Netflix. They are not buying Amazon. No, they’re not. And consequently, their relevance in the world ... In other words, it used to be if you could get your hands on a movie studio, you were sitting at a table with only five other people. And so that table dominated media worldwide. That’s over. So when you ask about Hollywood, what connotes “Hollywood,” which is that that era is over and finished. So how do they get … You have Iger buying [Fox]. Well, what happened is for the first time in a hundred years you saw now the shrinkage. In other words, six movie companies has now gone down to five, because Fox will cease to exist except as some small little brand like TriStar in five or 10 years, so Fox as an entity is gone. Look. Disney is making a very big play because it’s got so much content and because it’s Disney, they’ve always stood a bit apart. They’re going to continue to have relevance, and Bob Iger’s a superb executive and there’s a lot of depth in that company, and they’ll be a world player. Theme parks. They’ve got other things. And do okay in streaming. Again, hopefully they don’t chase Netflix with capital expense. But other than that, the movie company’s play no larger role than just making stuff. What about tech companies, how you see them? Obviously, they’ve had a very bad year, there’s all these issues around ... Does it matter or is it just … They’ve had a good financial year. They make tons of money, they’re grappling with the adolescent age, where lots of other things come up. They’re real serious issues, they’re real social issues that are a byproduct of it. But if you think that they’re in no economic or in industrial economic danger ... They may and should, in some cases, be regulated. Because things that have power and influence and, in some cases, monopolies, need regulation, which will come. Right. How do you feel that they’ve behaved? Do you think that they ... I think they’ve done ... Look, they’ve done what any dope would do. And I don’t mean “dope” in a negative way. What they did is, with wisdom, greater wisdom than, I think, you demand from them, they started getting these extraordinary outsize audiences. And particularly ... We’ll do it with Facebook. And the consequences of those audiences and what you have to do about them, when you get to that size, is something that in their speed and their thing to develop it, and only recently did they start actually getting any revenue for this stuff, and their revenue then skyrocketed and all of that. Just tracking that, just getting it to function is a very, very big task. Can you fault them for not, at the same time, saying, “Oh my God, there are consequences here we really have to deal with?” Well, first of all, I don’t really think they knew about those consequences. I think those consequences were told to them by what happened with Russia, what’s also happened with disinformation, and all sorts of other things. They’re doing, now, and have been doing diligently, they’ve been taking care of that aspect to the extent that they can, which is never gonna be perfect. But I’ve always thought ... I think Mark Zuckerberg is a fine and decent citizen. Probably far more decent than any other outsize industrial development of the last trillion years. Yes, probably. Better than Andrew Carnegie. I’ll give you that. Or John D. Rockefeller and whatever, but Carnegie, too. All of them. And by the way, post Carnegie, Mr. Smith at GM, and this one and that one. I think Mark’s very decent and very thoughtful, and he will sort it out. Is it easy pickings? Of course, meaning the sense that, here’s this person who’s very young, very rich, very powerful, and all this stuff. He should be criticized, he should be able to take that criticism, and he should be able to be productive about it. Do you imagine they will be? Because a lot of the interviews they do, they do tend to ... What’s really interesting to me is, when I talk to them, when something’s great, it’s them, when it’s not, it’s “we.” Like, “We need to fix this.” And I was like, “I didn’t break it.” So, I don’t know. Do you think people are being too hard on them in that regard? I don’t, obviously, you know that. I don’t think they’re being too hard on them, I think that’s fine. Meaning, yeah, they should get criticized because they’ve made mistakes. I don’t think those mistakes were of commission, it’s not like they said, “Yes, let’s have our stuff ... Let’s have evil, horrible stuff flow through our communication pipes.” But their criticism is fine, I don’t think you take it to the next level. Which would be? Of saying, “Let’s throw him out.” Or, “He is not appropriate to serve.” Right, or, “Let’s regulate them in such a way.” No, I do think ... So what regulation, for example? Well, I’m not a regulator here. I do think, as I said, a general thing is — and, particularly, this is true of Google, which is an absolute monopoly. Facebook’s not really ... it’s got a big audience, but it’s not a monopoly. You could easily see a future where it isn’t being used. It’s not structurally monopolous. But I think when you’ve got that kind of power it’s that you will “abuse” it. By nature, it gets abused. If you have monopsic power, then you are going to squeeze, this one, that one, and the other one, in order to simply get to the next day. So proper regulation in those areas, particularly, as I say, for Google, because with Google ... Google can’t help but being predatory in saying, well, you used to get all this traffic for free, our goal, over the last, now it’s about 10 years, has been to say, no, traffic is not going to be free. Those 10 blue links you used to see are now disappearing, so below the fold, so below the main page ... You will be paying for access to our system. You’re simply going to pay us for this. And that’s a natural ... Yeah, why not? Well that, since there are no other alternatives, that needs some regulation. In terms of whether or not you allow them to say, okay, we used to, in travel, put your travel services here. We’re gonna, essentially, take your money ... And, Expedia spends $3 billion a year ... On Google. Yes. Well, a little less than that, but on marketing, on internet marketing, on SEM. A lot of Google and Facebook, pretty much. Pardon me? Google and Facebook. Yeah. Anyway, it’s certainly ... It’s a big number. ... Above $2 billion. And we don’t think it’s a good idea when you’re paying somebody to advertise on their servers, and they go into competition directly against you. We think that’s, kind of, wrong. Many people do. So, that would be a form of regulation. So, do you imagine that’s coming? Do you see it coming? Yeah. Of course it is. Quickly? No, nothing comes quickly. No, nothing comes quickly. All right, let’s move to Amazon and Jeff Bezos. Obviously, he’s been in the news and a lot of his body parts have been in the news. You can’t help yourself. I can’t help it, but come on. He did it. He put it out there, so to speak. I can’t help it, it’s a minefield of puns. Yes, yes, yes. You were on the board of the Washington Post. Yes, I was, for many years. You were, for many years. How do you look at them, as an entity? You didn’t mention them, you mentioned Google and Facebook here. As what? You mean, in terms of ... As giant entities, yeah. Oh, Amazon is absolutely there! And one of the great things about Bezos is, as against others who’ve been very defensive about this stuff, Jeff Bezos said, long before it ever went directly at him, he said, “We are absolutely deserving of great scrutiny. We are a very large company and we deserve to be put under anyone’s Microsoft” — Microsoft, wow! Microsoft. That’s cool, I love that. Please save that piece. I will, it’s going on. “Anyone’s microscope, and be completely open and not defensive about that process,” which is exactly the right attitude. So, what’s your question? So where do they stand in this lexicon of power? No, they’re an increasingly powerful entity and they need people to look at their practices. And when they go over the line, which they absolutely will, not as a matter of some evil person petting a kitten in the back room, stroking a kitten devilishly, but that’s going to happen. And when that happens there should be results to that. So yes, Amazon, of course, qualifies for that. And I think, under the circumstances, Mr. Bezos has handled all this recentness, I think he’s handled it courageously. Were you surprised by his response? I am a very good friend of both Jeff’s and Mackenzie’s, as is my wife, and I will never have a single thing to say about any of that. Okay. But I mean in terms of pushing back on this kind of behavior? Well, I think he did, as it relates to what he did publicly, which is when he wrote his blog, whatever. Memo. To David Pecker. The National Enquirer. No, where did he release it? Medium. Medium, right. I thought, many people, there’s no one you could say ... that’s not true. We’re all in his position, to one degree or another, meaning when you have a lot of assets, you’re a wealthy person, a lot of people would have said, let’s just put this in the drawer. Because making that statement, taking that position, is gonna invite what is has invited, which is lots of attention, ridicule, puns, etc., a great work in the New York Post front page, and all of that. And that’s a courageous act. Yeah, absolutely. How do you think he’s run the Washington Post? Having been there. Wonderfully. No, I mean ... The Washington Post, I was, I think there was nine board members at the time, or 10, I guess, because it was nine to one to sell the Washington Post, and I was the one who said we shouldn’t sell the Washington Post. Why was that? Because I thought that the Graham family, which had done such a wonderful job being its steward for all that time, had, in their company, which was called The Post Company, at the time, had enough resources to be able to invest more in the Washington Post and continue to be its steward. And it was because Don Graham, who is one of the finest human people that I’ve ever known, Don Graham said, “I have a greater responsibility, I have a responsibility to the shareholders. And I cannot ... acquitting that responsibility, knowing what I know, I can’t do that.” And I argued that companies are more than just simply for shareholder returns. They have other responsibilities to their communities, to what their product is, to all sorts of things, da da da da. In any event, they sold it. And by the way, there were a few people I would’ve hated to buy it, one of whom almost did. Murdoch. No, not Murdoch. No, no, no. Oh, I know. I think I know. And so when Mr. Bezos bought it, I thought, well, that’s fantastic. Because I certainly know him and his sense of obligation, responsibility, quality, and he’s done a fantastic job with it. And so, the reluctance of the Washington Post company and the Graham family to continue to support it and sell it to the right person was a great act of great good luck, because now, the Post is thriving. Absolutely. Absolutely. And he’s brought some technological changes to it that were smart. He’s done good stuff with it, yes he has. He has. And he’s leaving it alone, from what I can tell, for the most part. Well, the idea ... I think proprietorship ... I’ve always felt this about the film business and the television businesses that I’ve been in when creators say, “Well, the greatest thing that they did was they left me alone.” I do not believe that people should be left alone. I’m talking about meddling. Yes, I agree with you, I think he should be involved in the things ... It’s not in my DNA to do that. I’ve heard that. Yes, that’s probably known by some. I don’t think that that’s a bad thing, I think it’s a responsibility of proprietorship. And so, he and Marty Baron and whatever, have gone to lengths to stay never involved in any part of the editorial process. Frankly, any editorial process would be bettered by somebody as smart, decent, engaged, as he is. I was always impressed with one thing about ... God knows, I’m not a ... I had nothing to do with Fox News when I was at Fox. We did Fox broadcasting, out of which, after I left, came Fox News. So we won’t give you the blame, Barry. You cannot do that. But the one thing that I always admired about Murdoch is when it came to the ultimate responsibility for what was in his newspapers, he said, “I stand behind every one of them. When you want to look for who, look to me. I am the proprietor of those papers and take that responsibility.” It’s the same thing I felt in the movie business when some of my fellow movie executives would say, “Oh, well, that was Oliver Stone’s fault for making a movie where he literally said that Lyndon Johnson murdered JFK.” A wildly irresponsible movie on every level, historically and every other thing, and the people in charge of the company said, “Well, that’s not our responsibility.” To which, I said, “It is, of course, your responsibility.” So, anyway, there we are. So you have Bezos running these, you have other ... You talked about Murdoch, you brought up Murdoch, who you had a long history with, previously. You have Laurene Jobs buying up some stuff, putting money into the Atlantic and stuff like that. You’ve got Marc Benioff buying Time. How do you look at this? This era of media and tech converging? Or tech money, at least. Yeah. I mean, I don’t know. Laurene Jobs is ... I don’t think she or anyone else would ever think of her as a technician. No. A fortune comes from that, but it doesn’t matter where the fortune comes from. And I know ... Benioff said to me, because I just saw him the other night, and I said, “So why, having been a person who bought Newsweek magazine, stupidly, and lost a lot of money, why are you doing this, Marc?” And he really said, “I’m curious about it, number one, and number two, there are a lot of things that I believe in,” all of which, by the way, are pro social, I mean, they may be too pro social or too whatever, you can do whatever you want on the critical rainbow, but he’s buying it for public service purposes. He has the money to do so. Whether that ever works out economically, doing something for public service, he’s a very good businessman, so maybe he confused the two, but all of these things are, I think, positive, not negative. Do you see more of that happening? Do you see a ... It’s interesting that this genre of tech money is interested in media, so interested in media, both personally and from their companies’ perspectives. I think you overstate it a bit. All right. Okay, they just have money and they don’t want to buy a sports team? Yeah. I mean ... Although, I have to say, Pierre Omidyar, who started eBay when he was getting into hotels, I’m like, “Why are you doing that?” He’s like, “I just don’t want to own a sports team.” I was like, “Is that, like, a requirement of a billionaire? Is that, like, you have to buy something?” Do something. Yeah, like, I’m building an island ... We’re gonna talk about the island in the next section, I want to understand your ... In Manhattan, because I don’t want to buy a sports team, although my son does. I’m sure someday he will. I wanna finish up this section with ... You’ve done a lot of things. What are you curious about, right now? And then, I wanna talk about the island almost completely in the next section. And your other New York City stuff. It is curious, I am really lucky. I really do say it, because I think you either ... I don’t think it’s something you can buy or develop or whatever, but I am and always have been natively curious. I am curious about almost everything, too many things. And that ends up being ... Usually my grasp has never gotten within reach, or the other way around. So, what am I curious about now? Right now, I’m not actually ... I’m trying to write a book, and that takes up almost all my angst. Meaning? It’s hard to do. Yes it is, I’ve written two. It’s hard to do. Are you writing it yourself or do you have a ghostwriter? I have no ghost, no. You’re just typing away. I am typing ... I wouldn’t call it away, I’m typing slowly. I should finish by 2082. Yeah. I’m trying to ... I know that, again, in pure story terms, I have a good story, it’s an interesting story. And so I want to try and tell it, and the only ... I have nothing to sell, I mean, I’m not trying to teach anybody anything and I’m not writing a business book, whatever. I just think I’ve got a good story and the only reason for it to be done or me to do it is if I do it myself. Right. Right. And that’s a bitch. Do you have a thematic thing ... Pardon me? ... Or a title, do you have a title? I don’t have a title. No. ”Barry Diller doesn’t give any fucks” would be the title. No, no, no, I give too many fucks. Oh, really? That’s interesting. You know, people used to say, about Steve Jobs, “He is heartless.” I was, like, “No, he has too much heart.” I said, “That is really the issue, more than anything.” And it seems heartless, that’s why ... Yes, yes, yes. Which was interesting. All right, so what are you interested in, right now? And then I want to get ... What am I interested in right now? Right now. I said, I’m writing ... Writing the book, but what thing, what thematic thing interests you? Ah, thematic? I don’t do thematics. All right, all right, Barry Diller can be introspective, that’s fine. Well, that is as introspective as the plot will allow. All right. And themes? Yeah. You mean like the world order and issues of whether or not the green thing [Green New Deal] should pass? Yeah. I think it’s a nice, idealistic, and idiotic concept. I want to first start on the political thing, and then I wanna talk about what you’re doing civically, because you’ve been very civically involved here in New York City. You love New York City, you’ve been here much of your life, right? Well, off and on, yeah. Off and on, you’ve lived in Los Angeles for part of it, right? I still live in Los Angeles. Talk, first, about the politics right now. We’re about to pass this government bill finally. Yes, yes. Trump is going say he won. Whatever. Whatever. How do you look at the political scene right now? Or the state of the country? With great dismay. Why is that? Because we have a thoroughly rotten leader in the country, an accident of history that hopefully will be over soon. Though the Democrats, in their usual way, are not coming out ... In the beginning of this long, long process, will be for the next couple of years, they’re not coming out at the very beginning of it in anything but a, I think, a destructive way, but that’s okay, it’ll be early mistakes. But hopefully, in two years, to paraphrase Gerald Ford, this national nightmare will be over. And that is what I think we have. I think we’ve degraded ourselves, we’ve degraded the office of the presidency, we’ve degraded politics, we’ve degraded almost everything since he entered the picture. Why is it an accident? Some people think this is exactly the age of the social media, the age of noise, the age of cable, the age of Fox News, the age of this led to all this. Because I would like to think and it’s maybe thoroughly naïve that it is hopefully an accident, that it happened because of a confluence of forces that put essentially the video game in tilt. I mean, it made it so that someone unqualified, indecent ... I mean look, we’ve had good presidents, bad presidents, we’ve had excesses and this and that. I don’t think we’ve ever had an actually bad person, his core, a mean and ... Vindictive, obviously. You know, I could riff on with all the things. Oh, my god. Everybody’s said them already. You don’t need to hear it. I think that is hopefully an accident of historical forces and not something that is essentially going to be repeated by Pamela Anderson becoming presidentress. President. She might do a better job. That would be ... Is she running? I don’t know. I don’t know. All right. So what happens then? Where do we come out of it? It will be over. It will be over. Again, we’ve got to go through a lot of process and that process isn’t pretty. Certainly Democrats are not, in my opinion, coming out of it or entering it ... Do you like any candidate right now? I like lots of them. Some of them, I mean, I’ve known for a long time. Some are my friends. Some are people I don’t know. There are tons of them. Who would be the most ideal candidate? I can’t do that. You can’t say? Okay. I won’t do that. Other than to say, which I’ve said to some of my friends, everybody knocks on the doors looking for support. I’ve said the only commitment that I’ve made — and it’s just a commitment of honor, so to speak — is if Mike Bloomberg runs, I will absolutely support him. And why is that? Because I think he would be without, to me, any question ... This country would be very lucky to have a leader like him in that office. I think it’s going to be difficult for that to happen for him. So if it does, I support him. If it doesn’t, I’ve said ... Not that it matters what I say to these people, but I said “Let’s get through the winning on process and see where we go.” See where we go. Bloomberg’s interesting. I think he sort of missed that turn in the last ... He probably could have prevailed in many ways if you think about it. Yeah. It’s history and who knows? Yeah. He would say that there was no chance, that he would have only ensured, if it wasn’t gonna happen, the victory of Trump, but I don’t know. I don’t think so. My argument has always been to him and to others is you can’t do this by polling. You can’t do this by research. You just got to get in. When you get in, you change the dye in the water. Right. Getting in changes the water. Therefore, you can’t predict it. Absolutely. It’s an instinct. You’re like ... What do you think of Howard Schultz’s candidacy, the independents, and the billionaire backlash given you’re in that little club? Well, I think it’s kind of predictive. I’m surprised only because Howard’s a bright man. I agree. I can’t imagine why he would come out and say he’s going to run as an independent which seems to make utterly no sense to me, but whatever. What about the billionaire backlash? Do you feel a backlash, Barry? Billionaire Barry. Well I don’t ... I think for sure it is not the age right now to say, “Oh, god. There goes a good billionaire.” I mean, I think that right now people are skeptical and I think that’s okay. I think that, like everything else, there are good ones and bad ones. Right. Most of them, however, vast, vast majority have made great contributions to society, to charity, to this, to that. I watched Gates the other morning. I read the ... I don’t know. He just came out with this letter. I don’t know if you read it. He did. His letter. Yes, I have. I thought to myself, “Look at the transformation of this person.” Oh, yeah, speaking of difficult people. Look at the transformation of somebody ... I didn’t really compete with him, though in one little case he actually thought we did, years and years and years ago. But here’s somebody who was as pure pitch a businessperson as you could find and he has truly converted himself. I mean, converted. The personal growth of this person is simply phenomenal. His talent, his capacious brain, bigger than almost anyone’s, that by self-direction, he turned it to the betterment of humanity. Yeah, he took the aggression. He took his massive aggression and did that. Yeah, I’d agree. And is so wildly impressive that I think, God, there for the human spirit. How lucky we are. And then he has the means to do so. Speaking of the means, one of the things you’ve been doing are a lot of civic things in New York City particularly. I don’t think I’m aware of other cities you’re so focused on. Los Angeles. Los Angeles. You’ve been doing ... You haven’t been digging that tunnel with Elon have you? No, no, no. All right. Well let’s talk first about New York. Okay. You built ... You helped the High Line. Yes, we did. We did. You and your wife, Diane. Yes, very much so. Which was this old railroad. Yeah, two and a half, 2.7 mile abandoned railroad track. Railroad. Elevated track that had been decaying for 60 years and was going to be torn down because the developers in the Lower West Side of New York, which is where it is, said that it was impeding their development. By the way, a development none of them had done in about 40 years. Right. Nothing had been done down there. All they did is sat on their property, but they thought they should tear this down. A great irony is because Diane, my wife, was one of the one or two people who actually prevented Giuliani from being able to tear it down just before he ended his term as mayor. The irony is that, of course now, it’s now almost 20 years later and every ... The Lower West Side, because of the High Line ... Yeah, is now an attraction. Hudson Yard. Has had the greatest development, the greatest development, creative, architectural, buildings, everything you could imagine, and these real estate folk have benefited more than of course anyone else and they’re the ones who wanted to tear the thing down. Right. So anyway, we’re very proud of that. So you built that. It’s beautiful to walk on. Yeah. I’m sure Rudy Giuliani takes his daily constitution there to clear his very clear head. I bet he does. I bet he uses it. That would be very funny. Unlikely. You did this and created a beautiful civic space. Yes, yes, yes, a public space. Public space that was really lovely and people ... There’s all kinds of businesses pulling off of it like you said and the neighborhoods have gotten better. My god. Yes, yes, yes, yes, yes. Did you anticipate that or you were just like “This is something real ...” No. We thought it was ... Look, like all these things you do, we thought what a good idea this was. The imagination and how it was done was really an amazing work of art. We thought the first year we’d have ... We thought actually, we thought 350,000 people would come in the first year. We had three million seven in the first year. Right. We had, last year, six and a half million people come. It so far exceeded anybody’s original idea, which is always great. You either exceed it this way or to me ... I’m really interested in cities, why that succeeded, because cities are going ... Talk about digital transformations and no cars maybe, things will be changing in cities. Good luck. I know. That would be nice in this city. There’s gonna be no cars in the city. Yeah, right. We’ll be dead, Barry, but that’s the way it’s gonna be. Thank you. It’ll be up-down stuff, it’ll be vertical lift and takeoff, it’ll be autonomous. Okay, fine. That’s my feeling. That’ll be before the synchronicity. Right. Or the singularity. It’s all a simulation anyway, Barry. We’re all characters in a mind-fucking game with someone. But when you think about making the city beautiful, what you did was a statement that analog city matters. Here’s the thing: My reason again that it caught my interest is because I have always been amazed at public work, public art. You go to Central Park and you think, how did they do this? Right in the middle. 150, 160 years ago. They took this place and they made this thing out of it, which just the doing of it was almost impossible. It should’ve been buildings, in other words. Or anything that you see. They’re all electives and it took somebody to say, “I’m gonna create something here that didn’t exist before,” and then they do it, sometimes it works out terribly because it’s not a good thing. But when it works out, you come upon it and you marvel, “Oh my God, that was somebody’s elective to do something that now I get to walk by it or walk in it or be part of it and how lucky am I that that thing happened?” Right, that they had that impetus. Central Park, you think about in the middle of a city which should’ve had buildings all over it. But there’s so many examples of this and they’re not just here, they’re all over the country. In Tulsa, Oklahoma, George Kayser, who is a big oil person, built a 450 — along whatever that river is there — park that you just go and you marvel at his imagination and the fact that 100 years from today, people will be wandering on it. It was just this guy saying ... “We need a park.” “I’m gonna do something to make something better for the public,” you know? Right. I don’t know, that juices me. That loss of civic responsibility, that’s one of the issues in San Francisco right now, a lot of the tech people, they live up in their things and they have not contributed to the body, the civic life of the city. I think that maybe it’s early for them and hopefully they will, but yeah, I think that’s a terrible shame. Yeah, San Francisco’s a hellscape now. The most beautiful city in the world is ... Which? San Francisco. San Francisco is gorgeous physically. But it’s a hellscape now, to walk through it. What is just amazing to me and I say it to Sam Altman, you know Sam. I’ll be doing a big interview with him in a couple of weeks. Are you? Anyway, I was in San Francisco and I left him at lunch on Market Street and I was walking from there back to the Four Seasons, about probably a mile and a half, something like that. I thought, I cannot believe I’m walking down this scary street on a sunny day and I’m literally dodging things that just should not be taking place in a cosmopolitan city. Right. I thought, I don’t care what your excuses are. All you people who are leaders of San Francisco, you’re not doing your work. Right, agreed. It’s really, it happened very quickly, which was really fascinating. It was a relatively new phenomena of people. I do think it’s linked to the tech leaders not taking responsibility. In the old days, you had Bank of America, the founders of Wells Fargo, would take civic responsibility for cities. Absolutely. And that’s ... rich people’s civic duties are to contribute. Absolutely. It has been true in New York, it’s been true in Los Angeles. I participated, growing up in Los Angeles. Whatever. Anyway. Talk about your new thing. This is the thing I wanted to talk about most of all and we’ll finish up on that. We are, for our sins, we’re building an island off the Hudson River. So easy. And yeah. Let’s do that. You can see it going up right now before your very eyes. Explain it. An island. It started, like many things ... Is it called Diller Island? No! Absolutely not. It’s called Pier 55 and probably is gonna end up being called Little Island. Okay, all right. It’s a sweet name. Anyway, it started very prosaically which is the people who ... Hudson River Park Trust which covers the waterfront from Battery Park up to George Washington Bridge and has lots of piers and lots of development ... Lots of parks. And lots of public works that they’ve done and parks. There was a pier that was falling apart, they came and they said, “Would you like to just rebuild this pier? We’ll just put a pier up and it’ll be for entertainment stuff, but it’s falling.” And there’s been, there’s that pier with the sports on it. There’s Pier 40. Every city has piers that used to bring in stuff. Yeah. Right, there’s this declining pier. I said, “Well, I don’t know about just rebuilding this thing, but if we could be ambitious about it because there’s nothing on the water, architecturally.” No there’s not. It’s amazing. In this great city, whatever, whatever. On either side. Absolutely true. We started to think about that and out of that came this plan which if I had a picture I could push through this microphone and show you, I think you would see that it’s very architecturally ambitious. Mm-hmm. It’s, I think, a thing of real beauty and it is a ... It is founded on driving 265 piles into the Hudson River and then on top of those piles, putting 169 essentially petals that form the outline and the support for what is a park and a performance center. Right. It’s highly technical, what you’re doing. It’s ridiculously ambitious. No one’s ever, which is what they say to me every time the costs go up, which is I say, this was a firm budget. They say, no, it’s an R&D project. I said, that’s easy for you to say. Well, it is but it’s highly technical what you’re doing. I was reading through the stuff. It is crazy. Architecturally technically. It is very, very, very. It floats. It doesn’t float, it floats on the river because it floats on big, big cement piles. Right. But it’s just started to come up. It’ll take another three years and it is simply a gift, simply ... It is for the people of New York and the people who visit New York to enjoy themselves on. That’s it’s pure purpose. And will it be a performance space, a ... It will be everything. Sports. It will be festivals, we think of it as it’s whimsical. We hope that when you walk out to it on bridges and as you enter midway through that bridge, you’ll leave the New York noise and stuff behind and enter a fairyland. How very Willy Wonka of you. A whimsical place for you to be with your kids, with your friends, hang out, lay about, be entertained, be stimulated, laugh, cry, and do all of those things. It’s very ... Are there digital elements to it? Or are you just saying analog all the way. No, no, no. This is not ... I mean, it’s digitally supported in every way we can think of, but no, this is absolutely about touch and feel. This is about grass and this is about ... The landscaping for this, I would hate to quantify for anybody because it would scare them and me. But it’s designed to be beautiful and to touch it and feel it. Do you think that’s necessary in this modern city where ... It’s not the work of the Gates Foundation. It’s not gonna cure malaria. But as I said earlier about public art, public spaces, it is for the enjoyment and stimulation of the public. I think that is a worthy thing in any environment, in any place. Do you imagine our populus has gotten too screen oriented, too digital? I think on the contrary ... That we need ... I think the more you’re in an ugly little room like this with microphones. I love you insulting ... And buttons to push and things like that ... I can’t do it outside, Barry. The more you wanna be outside on the lawn or you wanna see pretty things, you want to be in ... I think that’s life. It’s just like I love travel because life is travel and if there’s life, there’s travel and vice versa. I think the same is true of being able to come upon something that’s unexpected, that gives you pleasure, is part of ... A physical ... Life. Right. You would never wanna be replaced by a robot or robotic parts or things like that. I could not be. It would be ... That would be a really good episode of Black Mirror. It would. It would be organ rejection. Exactly. Last thing I wanna talk about. When we talked recently at your IAC event, you said you were optimistic. I was sort of surprised because you’re very funny. Like one of the funniest things you ever said, you were talking about Hollywood and you said it’s a miracle their children have teeth because they’re so inbred. You always have such a good line about things. I don’t wanna say you’re cynical but you’re very funny and critical. Hopefully I am. I’m definitely ... But you said optimistic, which I never would have linked with you. I can’t take critical faculty off. I am absolutely optimistic. And my wife, who is European, and Europeans born in the mid century, 20th mid century, are not by nature optimistic. They had some history. They have reasons. She says to me what a naive fool I am when I say yes, I am, and I’m going to continue to be. Diane is like, “The end of the world is nigh!” Right? True. But I don’t feel that way. All right. Barry Diller, as usual, you’re a fantastic person to talk to. I’m sure we’ll have many discussions in the future. Thank you for coming on the show.

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posted 8 days ago on re/code
Sooner than you think. But AT&T, which owns HBO, TNT, and CNN, says they won’t be taking your bets. Sports betting in the US used to be illegal, for the most part. Now it’s up to individual states to decide if they want it. Besides Nevada, which has always had legal sports betting, a handful of states have authorized it, with only New Jersey jumping in completely. But with estimates of US sports gambling hovering around $150 billion annually, it won’t be long before many states decide they want a piece of that action. So here’s the question for media companies that are hoping to profit in some way from the billions of dollars gamblers are going to bet on sports: How do we get a slice? I’ve been talking to people who make money in sports betting and media, and this looks like the way it’s going to play out: The easiest way for media companies to play in this is to simply take ad money from sports bookmakers, and/or develop programming aimed at sports gamblers. We’re already seeing plenty of people getting into this, from ESPN to WarnerMedia’s Bleacher Report, which just announced a deal with Caesars Entertainment to produce a gambling show hosted in Caesars’ Las Vegas casino; in return, Caesars will buy ads on Bleacher Report and on other properties — including TV networks — owned by WarnerMedia. One complicating wrinkle: The overwhelming majority of sports gambling happens via illegal/offshore operations. Do media companies want to take money from those guys, the legal/US guys, or both? Trickier: Making more money via affiliate advertising, where the media companies make money by sending viewers and readers directly to casinos and sports books, and getting paid for each referral. Affiliate revenue is increasingly important to all kinds of publishers (including Vox Media, which owns this site), so this isn’t a difficult idea to grasp. But it does link the media companies more directly with betting, which may give some of them pause. Maybe because they’re worried about liability issues that could arise when problem gamblers end up looking for someone to sue once they’ve lost all their money, or perhaps because they simply don’t feel great about embracing gambling, period. The most involved: Actually getting into the sports betting business by taking bets and making payouts. This isn’t an unheard-of idea. Sky, the UK satellite TV business recently acquired by Comcast*, owned its own betting business for 15 years. And yesterday an executive from a sports betting company told me they are reasonably confident we will see it happening with one or two US-based companies in the coming years — but wouldn’t tell me who they will be. You can argue that Big Media has already been touching sports gambling in lots of different ways, from NFL pre-game shows that mention betting lines, to the March Madness brackets CBS and other companies produce, or the fantasy sports services run by ESPN, Yahoo, and others. But none of those toe-touches into gambling offer the media companies a direct way to benefit from people directly wagering on sports. And when media companies have bumped against more traditional gambling in the past, they’ve been skittish about it. In 2015, for instance, Disney was set to invest in Draft Kings, a “daily fantasy” betting operation (that is now morphing into a real betting operation), but backed out. But now we are talking — in theory — about big media companies actually running their own sports books. Who might that be? We can rule out AT&T’s WarnerMedia, per AT&T CEO Randall Stephenson: Onstage at the NBA’s Tech Summit event in Charlotte, North Carolina, I asked him whether he’d be in the sports betting business directly and he responded with an emphatic, “No.” (But, per above, his company’s Bleacher Report is indeed going to be taking other gambling operations’ sports money.) My uneducated hunch is that Rupert Murdoch’s Fox will be up for it, given that they’ve already been exposed to it via Murdoch’s operations in the UK and other territories where sports gambling has been legal for years. Any other guesses? Feel free to ping and I’ll follow up. Meanwhile, if you want to hear my conversation with Stephenson, I’m happy to oblige: We’ll be running it as the next episode of Recode Media, which you can hear here (or many other places!) next Thursday. * Comcast is a minority investor in Vox Media.

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posted 8 days ago on re/code
The HQ2 contest was very Amazonian. So was its refusal to back down. No one looks good in the wake of Amazon’s decision to scrap plans for a giant New York headquarters in Long Island City, Queens. The state’s two powerful politicians — Governor Andrew Cuomo and New York City Mayor Bill de Blasio — thought they had secured the deal of a lifetime when they lured Amazon and its 25,000 jobs to New York. Now they look like civic chumps. The local politicians and activists who wanted Amazon’s job creation — but only if they came on different, less usurious terms — are now left with no new jobs. Amazon, meanwhile, looks “like a petulant child”: an entitled rich kid who, confronted by a worthy opponent, opted to pack up and jet home. It could have been different. But it would have required Amazon doing something it has never been very good at: seeing a loophole or advantage, but deciding it was worth it to figure out a better way. Still harder for the $800 billion tech giant: caving to pressure, whether it believed it to be right or wrong, and risking looking weak in the service of getting a deal done that all sides could live with. This saga began with a very Amazonian creation. In September 2017, the company announced a one-of-a-kind contest — equal parts brilliant and off-putting — that pitted cities across North America against each other to make their best pitch to host a new Amazon headquarters, dubbed HQ2. Newark, NJ, offered $7 billion in incentives. The city of Tuscon shipped a 20-foot cactus to Amazon’s Seattle campus. The New York governor joked that he’d change his name to “Amazon Cuomo.” As it turned out, Amazon settled on two locations to split an estimated 50,000 new jobs: Long Island City in Queens, New York, and Northern Virginia. For those who were already skeptical of the HQ2 spectacle, this felt like the final straw showing the whole thing was a charade designed simply to wring as much financial aid as possible from destinations Amazon had atop its list from the start. In Virginia, where Amazon only received $570 million in promised incentives, the announcement was not met by strong opposition. It probably helps that it chose a bland, corporate locale, a spot unloved and underutilized just outside of Washington, DC. In its negotiations with New York, Amazon circumvented the city council with the help of the mayor, the governor, and the state’s economic development arm. The path they chose was legal, but ultimately disastrous. Because when the New York deal was finally announced, with up to $3 billion tax incentives, local politicians felt blindsided — and wronged. It didn’t matter that most of these funds would come in the form of a reduction of future taxes Amazon would pay rather than cash straight into Jeff Bezos’s coffers. What mattered was that a tech giant — run by the wealthiest man in the history of the world — was coming into a city that wasn’t its own and demanding it pay fealty. (The proposed helipad didn’t help.) Timing is everything To add ignorance to insult, Amazon somehow made a grave miscalculation: Its executives did not seem to grasp that they launched the HQ2 contest in one political climate and ended it in an altogether different era. This point can’t be stressed enough. When Amazon made the original HQ2 announcement in September 2017, Senator Bernie Sanders (D-VT) hadn’t yet targeted the company’s wages and labor practices and Alexandria Ocasio-Cortez was still a New York bartender and a complete unknown on the national political change. By November 2018, Sanders had successfully pressured Amazon into raising its minimum pay to $15 an hour and AOC was a Representative-elect with a huge following who excoriated wealthy corporations for not doing enough for everyday Americans. Democrats also won control of the State Senate in the midterm elections, which ultimately resulted in an Amazon opponent being named to a powerful state board. The local New York Democratic party — galvanized by AOC’s election — was moving decidedly to the left and Amazon seemed astonishingly unprepared to weather the wave. Gone was former New York City Mayor Mike Bloomberg’s idea of progress for New York City, which included the ambition of becoming a tech hub that could rival Silicon Valley. In its place, AOC drove an altogether different vision that meant going chest to chest with a corporate bully rather than welcoming it with a close embrace. The wrath of local politicos and activists was plain at Amazon’s first hearing with the City Council. And company officials did themselves no favors by arriving nearly empty-handed when it came to benefits the tech behemoth would offer the local community, segments of which had legitimate fears about what kind of impact Amazon’s invasion would have on real-estate prices and an already faltering subway system. Amazon expected some community pushback but thought it had a bit of time to prove it would be a good, and generous, corporate neighbor. It was once again wrong. By the time the second hearing came around in late January, Amazon had announced funding for several educational initiatives, but they barely registered and ultimately did not move the needle. Protests were gaining steam and local politicians were emboldened, even as some polls suggested the project had support among a majority of local residents. “There’s a real disconnect between decision makers and the feeling on the ground,” New York State Senator Michael Gianaris told my colleague Shirin Ghaffary in January. “It’s a problem across the country where the anger at wealth concentration is not appreciated by people who are making decisions.” Less than a week later, Gianaris was nominated for a state board that would ultimately vote on parts of the deal. That nomination — and the fear that Gianaris could single-handedly scuttle the whole thing — played a role in Amazon backtracking, according to a source. Right up until that point, Amazon officials gave no indications that the New York fight would change their minds. But within days of Gianaris’s appointment, reports surfaced saying that Amazon was reconsidering bringing its headquarters to Long Island City. Perhaps Bezos still considered the HQ2 selection at this point to be a “Type 2 decision,” ones that are “changeable, reversible.” “If you’ve made a suboptimal Type 2 decision,” Bezos once wrote, “you don’t have to live with the consequences for that long. You can reopen the door and go back through.” Still, Amazon had a golden opportunity in its grasp — one that would have secured it a bounty of praise. “We messed up, local friends,” the company could have said. “And we’ve decided we want to be here bad enough that we don’t need many, if any, incentives.” Imagine the victory parade for all involved. Imagine Amazon as the model of a tech giant willing to shed its arrogance to do the right thing. Yes, I can hear some of you laughing: “Jason, you are so naive.” “Jason, that’s not how big business is done.” “Jason, you take what is given to you or someone else will. And this was all political grandstanding anyway.” I hear you. And for its entire existence, Amazon has made a practice of leaning into every advantage it’s had. Exploiting advantages For years, that meant exploiting tax laws that allowed internet retailers to avoid collecting sales tax from shoppers, thus creating a pricing advantage over brick-and-mortar shops. “Amazon had avoided sales-tax collection for years with various clever tricks,” journalist Brad Stone wrote in his 2013 book The Everything Store. “In states where it had fulfillment centers or other offices ... it skirted the definition of what constituted a physical presence by classifying those facilities as wholly owned subsidiaries that earned no revenue.” As a public company, Amazon also long ago convinced investors to let it play by a unique set of rules, where it was rewarded for revenue growth even if it didn’t allow much profit to drop to the bottom line. While Walmart’s stock might nosedive if the traditional retailer reported fast growth but no profit, it was not uncommon for Amazon’s stock price to rise with those kinds of results. And in Seattle, Amazon flexed its muscles when the city threatened to curtail its office expansion in its own hometown over a new business tax. After initially passing it, the City Council quickly repealed the law. But Amazon and Seattle have a 25-year history with each other; Seattle needs Amazon, for better or worse. This New York City battle felt very different. For starters, New York City does not need Amazon. Plus, Ocasio-Cortez’s election and subsequent celebrity meant that when she focused her laser on the Amazon deal, her massive following did too. Among a growing segment of the left, it was cool to hate on Amazon. And other politicians took note. Amazon needed to draw up a different playbook than the one Jeff Bezos followed from an upstart online book seller to a $800 billion titan of industry. It would have felt risky. It would have felt un-Amazon. It would have required Amazon to be okay, for once, with looking weak to some insiders and outsiders alike. But it would have been the right move.

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posted 8 days ago on re/code
Plus: Trump will declare a national emergency to get money for his wall; JPMorgan Chase creates its own cryptocurrency; meet Australia’s first tech billionaires. In a startling and rare defeat for the $800 billion tech giant, Amazon is scrapping its plan to bring a new headquarters — along with 25,000 jobs — to New York City. The company had faced a wave of fierce opposition from New York politicians, activists, and labor unions. Amazon says it will continue with plans for a new corporate campus in Northern Virginia that can hold up to 25,000 employees, and will spread the remaining 25,000 jobs over its existing 17 offices and hubs throughout North America. The move stunned real-estate speculators, developers, and renters who had rushed into the Long Island City neighborhood to be near the new HQ2 development. Amazon’s pullout was a huge victory for the groups that protested the billions in tax breaks the company brokered in secret, but some of the deal’s opponents — including New York Governor Andrew Cuomo and New York City Mayor Bill de Blasio — wish that Amazon had stuck around and compromised. [Jason Del Rey / Recode] [Want to get the Recode Daily in your inbox? Subscribe here.] President Trump will declare a national emergency to bypass Congress and build his long-promised wall along the nation’s southwestern border — even as he agreed to sign a spending package that does not finance it. The White House announcement came just minutes before the Senate voted 83 to 16 to advance the spending package; the House followed later in the evening, 300 to 128, in effect ending a two-month war of attrition that closed much of the federal government for 35 days and threatened a second shutdown on Friday. Declaring a national emergency lets Trump avoid another shutdown while not giving in, but it could instigate a constitutional clash over who controls the federal purse and test the bounds of presidential authority in a time of divided government. [Peter Baker, Emily Cochrane, and Maggie Haberman / The New York Times] Faced with a multibillion-dollar fine, Facebook is negotiating with the Federal Trade Commission to settle the agency’s investigation into the social media giant’s privacy practices, including its entanglement with Cambridge Analytica, a political consultancy that improperly accessed data on 87 million of the social site’s users. The fine would be the largest the agency has ever imposed on a technology company; to date, the largest fine the FTC has imposed on a tech giant for breaking an agreement with the government to safeguard consumers’ data was a $22.5 million penalty that Google paid to settle a probe over in 2012. If talks break down, the FTC could take the matter to court in what would likely be a bruising legal fight. [Tony Romm / The Washington Post] JPMorgan Chase is the first major US bank to create its own cryptocurrency. The bank, which moves more than $6 trillion around the world every day, has created the “JPM Coin,” a digital token that will be used to instantly settle transactions between clients of its wholesale payments business. JPMorgan is preparing for a future in which parts of the essential underpinning of global capitalism, from cross-border payments to corporate debt issuance, move to the blockchain, the database technology made famous by its first application, bitcoin. But in order for that future to happen, the bank needed a way to transfer money at the dizzying speed that those smart contracts closed, rather than relying on old technology like wire transfers. While the bank’s CEO Jamie Dimon notoriously bashed bitcoin as a “fraud” a year ago, he and his managers have consistently said blockchain and regulated digital currencies held promise. [Hugh Son / CNBC] Samsung plans to open three Samsung Experience Stores next Wednesday, February 20 — the same day it unveils its Galaxy S10 and foldable smartphones during an event in San Francisco. Samsung is the world’s biggest phone and TV maker, but until now it hasn’t operated its own retail stores; the first locations are The Americana at Brand in Los Angeles; Roosevelt Field on Long Island in Garden City, New York; and The Galleria in Houston. Samsung will also launch pop-up stores in other malls next month. [Shara Tibken / CNET] ABC is moving its Oscars red-carpet preshow from Facebook to Twitter for 2019. Twitter’s exclusive livestream will be available at the @TheAcademy account Sunday, February 24, starting at 6:30 pm ET / 3:30 pm PT. The deal is a bit of a coup for Twitter, which has been pushing to bring more live video to the platform. Facebook was the Oscars’ official streaming partner for red-carpet coverage the last two years, and has worked with ABC on the Oscars since 2015. [Todd Spangler / Variety] Top stories from Recode You still can’t edit your tweets, but you may soon be able to “clarify” them. “That’s not what I meant!” [Kurt Wagner] This is cool The strange experience of being Australia’s first tech billionaires. How to decode a wordy wine label.

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