Breaking News Emails
Good morning. Tom Friedman is calling on 2020 Democrats to forego their more extreme proposals and nominate "a decent, sane person" with bipartisan appeal who can actually win the White House. His ideal candidate: Rhode Island governor Gina Raimondo.
How Libra explains the world
Moving the Market: Facebook's hard fight to win the hearts and minds of U.S. regulators for its Libra crypto-system highlights the poor state of Washington-Silicon Valley relations and the long-term risks for America when political leaders don't trust the nation's most innovative companies.
• The big picture: Someone is going to create a Libra-like crypto-network in the U.S. or elsewhere. But many lawmakers are so untrusting of Facebook in the wake of its myriad privacy scandals that they'd rather block its ambitions than ensure it leads the way on a revolutionary global innovation.
In a world where Facebook was not beset by privacy scandals and where Silicon Valley was not seen as an all-powerful threat to society, Washington might be more enthusiastic about Libra's potential — as well as the fact that an American company was setting the terms for a new global system rather than, say, China.
• Thanks to Facebook's myriad missteps, Washington's anti-Silicon Valley fervor and the general bogeyman-ing of big tech, that is not the world we live in.
• Marcus will face even more criticism from the House Financial Services Committee today. Rep. Maxine Waters, D-Calif., the committee chairwoman, has already drafted legislation to keep big tech out of finance entirely.
The system Facebook is proposing — secure, open source and backed by real assets — isn't delusional. It also wouldn't be run by Facebook. As Marcus explained to Senators, it would be overseen by a membership association made up of more than 100 companies, not-for-profits, NGOs, multilateral organizations and academic institutions — all of which would have the same amount of power and obligations as Facebook.
• Given the trust gap between Washington and Silicon Valley, it's fair for legislators to be highly skeptical about Facebook's motives in creating a financial system it won't control.
• But on this, too, Facebook has been clear: it wants to own and operate a service (Calibra) on top of the financial system, which *would* be quite beneficial for Facebook. Other companies could offer their own services for their own benefit.
• To which a legislator might ask: Well, why don't you run your service on a different global cryptocurrency, one that is also secure, backed by real assets and overseen by an independent membership organization?
Which is exactly the point. Such a system doesn't exist. And in a different world, Washington might join Silicon Valley in seeing that as an immense economic and geopolitical opportunity.
• The big picture: The committee doesn't "have authority to punish the companies... so the questioning served largely to convey the panel's displeasure over many of the companies' business practices."
Trump and Thiel target Google
Big in the Bay, big in the Beltway: President Donald Trump says the government will investigate Google's relationship with China after investor and Facebook board member Peter Thiel called on the FBI and CIA to probe the tech giant's work with China.
• Thiel had told Fox News that China may be spying on Google's artificial intelligence lab, which is based in that country: "Don’t you think that would attract the interest of foreign intelligence agents?" he asked.
• On Tuesday, Trump tweeted: "Billionaire Tech Investor Peter Thiel believes Google should be investigated for treason. ... The Trump Administration will take a look!"
• Hours later, Trump told reporters that he had directed Attorney General William Barr to look into Thiel's allegation to see "if there was any truth to it."
The big picture: "Thiel’s explosive remarks about a Silicon Valley rival caught some people close to him by surprise," WSJ's Sarah Needleman and Rob Copeland report. "Thiel, who describes himself as libertarian, hasn’t offered much criticism of Google before, publicly or privately."
🇺🇸 Talk of the Trail 🇺🇸
Bay Bucks for Buttigieg: Mayor Pete Buttigieg "appears to have the most impressive support from tech industry leaders," Recode's Teddy Schleifer reports. David Marcus, Reed Hastings, Ron Conway, Tony Xu and Wendy Schmidt have all given money.
• What's next: Hastings will co-host a fundraiser for Buttigieg one week from today in Menlo Park.
Tim Cook goes in on podcasts
Big in your AirPods: "Apple plans to fund original podcasts that would be exclusive to its audio service.... increasing its investment in the industry to keep competitors Spotify and Stitcher at bay," Bloomberg's Lucas Shaw and Mark Gurman report.
• "Executives at the company have reached out to media companies and their representatives to discuss buying exclusive rights to podcasts."
• "Apple has yet to outline a clear strategy, but has said it plans to pursue the kind of deals it didn’t make before."
Behind the investment: "Apple all but invented the podcasting business... [but] new entrants have encroached on Apple’s once-indomitable position. ... Growing the Podcasts app and adding exclusives could [retain] consumers, [and] Apple also has an advertising division focused on ads in the App Store."
The big picture: Podcast ad sales "have grown 65% a year for the past three years, according to the IAB, while the number of monthly listeners to podcasts has doubled over the past five years."
• Moreover, as Peter Kafka notes, "This makes total senseand it would be weird if Apple didn't try it. At a minimum it's cheap marketing expense."
• Elon Musk wants to connect your brain to a computer (NBC)
• Meredith Whittaker leaves Google, voices concerns (Bloomberg)
• Andrew Chen leads a big investment in newsletters (TechCrunch)
• Jeff Bezos encounters Prime Day shipping challenges (WSJ)
• Bob Iger faces another Abigail Disney problem (WaPo)
Richard Plepler sticks the exit
Talk of Tinseltown: HBO was absolutely dominant in this year's Emmy nominations, bolstering AT&T's WarnerMedia as it takes the reins of the network and providing a final victory for the network's former chief executive, Richard Plepler.
Top talkers, via NYT's John Koblin:
• "'Game of Thrones' demolished an Emmys record... picking up 32 nominations, the highest total for any show in a single year."
• "HBO led all networks with 137 nominations, well ahead of Netflix’s 117."
The big picture: "The big haul came at an important time for the network, which has been fending off competition as the go-to venue for prestige TV from Netflix."
• Variety headline: "HBO Retakes the Throne."
Reed Hastings awaits earnings
Stream on the Street: "Netflix will report its second-quarter results [today] during a period of dramatic change in the streaming sector, as bulls and bears marshal evidence for their contrasting views of the company’s future," Deadline's Dade Hayes reports.
• "Believers in the long-term viability of Netflix point to its global footprint and programming juggernaut, with stellar (albeit self-reported) viewership for... 'When They See Us' ... 'Murder Mystery' [and] 'Stranger Things 3.'"
• "Skeptics point to its negative free cash flow... as well as net debt of $10.3 billion. ... Bears also note that Disney, WarnerMedia and NBCUniversal are all preparing to launch direct-to-consumer services."
The big picture: "Overall Netflix sentiment on Wall Street remains largely upbeat as it approaches the 10th anniversary of its first stream. Look no further than the company’s share price, which was at $366.55 a share in Tuesday afternoon trading."
• What's next, via MarketWatch's Jeremy Owens: "When Netflix reveals its subscriber additions Wednesday afternoon, it should pass a milestone: 150 million paying subscribers."
🍸 What's next: Cocktail-hour question from The Ringer's Miles Surrey: "Who's had the hottest hot streak in 2019?" Sophie Turner, Lil Nas X, Keanu Reeves, Jeremy Renner, Zendaya, Tom Holland or Florence Pugh?
See you tomorrow.