Tech Brief: Airbnb Hints at 2018 IPO

Washington Brief

  • New York City sued Verizon Communications Inc. for allegedly failing to honor a 2008 contract that promised high-speed Fios internet service availability to all prospective customers in the city. New York says “tens of thousands” of people remain without access to Fios. (The New York Times)
  • Technology management software company CA Technologies agreed to pay $45 million to settle a lawsuit brought by federal prosecutors who alleged that the company provided false information to the General Services Administration about its discounting practices while negotiating contracts with the agency. (FedScoop)
  • Six major advertising industry trade groups praised Sen. Jeff Flake (R-Ariz.) and Rep. Marsha Blackburn (R-Tenn.) for their legislation aimed at rescinding the Federal Communications Commission’s privacy rule for internet service providers. (The Hill)

Business Brief

  • Airbnb Inc. Chief Executive Brian Chesky hinted that the company will likely go public in 2018. Chesky said he always considered the preparation of an initial public offering to be a “two-year process,” and said Airbnb is currently halfway through that process. (CNBC)
  • Toshiba Corp. said it would “aggressively consider” selling the majority stake of Westinghouse, its U.S. nuclear business that cost the company a $6.3 billion writedown last month. Toshiba’s stock climbed on the news. (Financial Times)
  • Verizon Communications Inc. initially sought a $925 million discount from its proposed $4.83 billion deal to purchase Yahoo Inc. after revelations that Yahoo suffered two massive data breaches. Verizon eventually agreed to a $350 million discount. (The Associated Press)

Chart Review

Events Calendar (All Times Local)

No events scheduled
Senate Commerce Committee hearing on integrating unmanned aircraft systems 10 a.m.
House Energy and Commerce subcommittee hearing on advanced materials and production 10:15 a.m.
FCBA Wireless Committee meeting with FCC eighth-floor wireless aides 12:15 p.m.
AT&T policy forum on tech infrastructure investment 12:30 p.m.
FCC Communications Security, Reliability and Interoperability Council meeting 1 p.m.
ITIF event on Chinese innovation 10 a.m.
House Energy and Commerce subcommittee hearing on smart communities 10 a.m.
Open Technology Institute event on strong encryption 1:30 p.m.



CA to pay $45M to settle allegations brought by whistleblower
Evan Fallor, FedScoop

A New York-based technology-management software company will pay $45 million to settle allegations that it made false statements in relation to a General Services Administration contract, according to the Department of Justice. CA Inc., now known as CA Technologies, is paying the settlement to resolve allegations brought in a whistleblower lawsuit filed by a former employee that the company “did not fully and accurately disclose its discounting practices” to GSA, federal prosecutors said in a news release issued Friday.

Toshiba eyes sale of its troubled US nuclear business
Kana Inagaki and Leo Lewis, Financial Times

Shares in Toshiba staged a sharp recovery on Tuesday after the crisis-hit Japanese conglomerate said it would “aggressively consider” selling a majority stake in Westinghouse, its US nuclear business that is reeling from large cost overruns on flagship projects. The potential disposal, as the problems around Toshiba’s nuclear operations deepen, came as part of a three-year growth plan the group unveiled in an effort to convince regulators and investors that it has improved its corporate governance.

Could Google rankings skew an election? New group aims to find out.
Craig Timberg, The Washington Post

A researcher who long has argued that rankings on Google and other search engines can skew elections will announce plans on Tuesday to establish a global monitoring system to detect and counter the political effects of such alleged bias. Robert Epstein, a former editor in chief of Psychology Today and co-founder of a behavioral research institute in California, has won several converts through a series of experiments since first raising his concerns in 2013.

Are Teenagers Replacing Drugs With Smartphones?
Matt Richtel, The New York Times

Researchers are starting to ponder an intriguing question: Are teenagers using drugs less in part because they are constantly stimulated and entertained by their computers and phones? The possibility is worth exploring, they say, because use of smartphones and tablets has exploded over the same period that drug use has declined.

Alexa and Cortana May Be Heading to the Office
Cat Zakrzewski, The Wall Street Journal

The next assistant in many offices could be named Alexa or Cortana. In 2016, Silicon Valley obsessed over how text-based bots in apps like Slack could make employees more efficient, turning complicated tasks or forms into conversational texts.

Stocks Drop Before Fed as Pound Slumps on Brexit
Garfield Clinton Reynolds and Samuel Potter, Bloomberg News

Futures on the S&P 500 Index slipped 0.1 percent after the benchmark gauge ended Monday virtually unchanged.

Intellectual Property and Antitrust

FTC: No Antitrust Issues With Gray/Diversified Deal
John Eggerton, Broadcasting and Cable

The Federal Trade Commission said Monday that the Gray/Diversified TV station deal had been granted early termination of its antitrust review, which means they found no reason to sue to block the deal or condition it. Gray TV announced last month it had struck a deal to buy Diversified Communications’ two TV stations—WABI Bangor, Maine (CBS) and WCJB Gainesville, Fla. (ABC) for $85 million.

A legal ruckus over Super Mario and his moustache
Leo Lewis, Financial Times

A copyright case in Japan, which has captivated armchair advocates, split genuine legal expertise down the middle and straddled the line between “definitive” and “daft”, may all hinge on the status of a fake moustache. And possibly a hat, too.

Telecom, Wireless and TV

New York City Sues Verizon, Claiming Broken Promises of Fios Coverage
Patrick McGeehan, The New York Times

Nine years after Verizon promised to make its high-speed Fios internet service available to every household in New York City, the city sued the company on Monday, saying it had failed to keep that pledge. In a complaint filed in New York State Supreme Court in Manhattan, the city contends that Verizon is in breach of a 2008 franchise agreement.

Advertisers urge Congress to roll back internet privacy rule
Harper Neidig, The Hill

The advertising industry is calling on Congress to eliminate the Federal Communications Commission’s privacy rules on internet providers. Six advertising trade groups on Monday applauded Sen. Jeff Flake (R-Ariz.) and Rep. Marsha Blackburn (R-Tenn.) for introducing bills last week that would roll back the rules approved in October.

Verizon Sought $925 Million Penalty for Yahoo’s Lax Security
Michael Liedtke, The Associated Press

Verizon demanded a $925 million discount on its acquisition of Yahoo’s online services to help offset the damage from the biggest data breaches in internet history. It ultimately settled on a $350 million concession. Yahoo disclosed new details about its negotiations with Verizon in a regulatory filing Monday.

Yahoo’s Marissa Mayer stands to receive $23m golden parachute
Hannah Kuchler, Financial Times

Marissa Mayer, Yahoo’s chief executive, stands to receive $23m in severance benefits if her employment is terminated after Verizon’s deal to buy Yahoo closes. In a filing on Monday, Yahoo said Ms Mayer would receive the “golden parachute” if her employment was terminated “without cause” following the $4.5bn acquisition by Verizon planned to close in the second quarter.

One Lawyer, 6,905 Hours Leads to $1.5 Million Bill in Sprint Suit
Joe Palazzolo and Sara Randazzo, The Wall Street Journal

Alexander Silow, a contract lawyer for a Pennsylvania plaintiffs’ firm, clocked 6,905 hours of work on a shareholder lawsuit against former executives and directors of Sprint Corp. related to its 2005 merger with Nextel. Averaging about 13 hours a day, Mr. Silow reviewed 48,443 documents and alone accounted for $1.5 million, more than a quarter of the requested legal fees, according to court documents.

Mobile Technology and Social Media

Airbnb CEO Brian Chesky hints at 2018 IPO
Lauren Thomas, CNBC

For Airbnb, going public has always been thought of as a “two-year process,” and the company is about halfway through that process, Chief Executive Brian Chesky said at a luncheon hosted by the Economic Club of New York on Monday. That would imply an initial public offering in 2018.

Snap’s revenue growth looks like it will come from more ads, not more users
Kurt Wagner, Recode

Snapchat saw a slowdown in user growth in the back half of 2016, a legitimate concern for those who hope Snap becomes the next Facebook (1.8 billion users) and not the next Twitter (319 million users). Snap chalked up the slowdown to a technical issue, and those close to Snap don’t seem concerned about user growth — in part because they don’t want you to be concerned about user growth, but also because Snap’s revenue growth isn’t necessarily reliant on driving new users.

Samsung Still Mulling Holding Company Even With Heir Arrested
Sam Kim and Heejin Kim, Bloomberg News

Samsung Electronics Co. isn’t letting the arrest of de facto head Jay Y. Lee stop it from considering strategic moves, with the technology giant continuing to evaluate a potential holding company structure. The idea was first announced in November after pressure from activist investor Paul Elliott Singer for changes at the world’s biggest maker of smartphones and TVs.

Cybersecurity and Privacy

Rep. DelBene continues push to extend U.S. Digital Service as its future remains uncertain
Patrick O’Neill, FedScoop

Faced with sky-high private sector wages and turbulent-to-tanking morale, the U.S. government at all levels faces a worsening shortage of capable technologists, in part because of an exodus of top talent in key cybersecurity positions within the intelligence community. Getting highly sought-after people to come work for the government longterm is one question, but another is how to have them contribute their expertise in short-term bursts that don’t have a big impact on their careers or earning power.

It’s Possible to Hack a Phone With Sound Waves, Researchers Show
John Markoff, The New York Times

A security loophole that would allow someone to add extra steps to the counter on your Fitbit monitor might seem harmless. But researchers say it points to the broader risks that come with technology’s embedding into the nooks of our lives.

A Message from the Electronic Payments Coalition:

Looking for something voters can agree on? Repeal the Durbin amendment. Recent polling shows that by a 2-1 margin voters think the Durbin amendment should be repealed. It is a failed policy, with retailers pocketing an extra $42 billion at their customers’ expense. Get the facts about retailers’ broken promises from EPC.

Opinions, Editorials and Perspectives

Consumer Protection Progress At Risk
Ruth Susswein, Morning Consult

How often must we read the day’s headlines and proclaim, “They’ve got to be kidding me!” Consumers have seen some major improvements in consumer protections, particularly in the past year.

The Big Security Mistakes Companies Make When Buying Tech
Andrea M. Matwyshyn, The Wall Street Journal

Companies are expected to spend more than $3 trillion on workplace technology this year, buying everything from traditional servers to augmented-reality glasses. For many, those purchases will make them more efficient, more innovative—and more vulnerable to attacks on their information security.

Trump Is Already Losing to China
Michael Schuman, Bloomberg View

In the waning days of Barack Obama’s administration, one of the president’s advisory councils issued a report warning of China’s plans to snatch control of the critical semiconductor industry. Its recommendation: “Win the race by running faster.”

Patents Are Property Rights, Not A “Bizarre Regulatory Lobby”
Adam Mossoff, Townhall

In a recent Townhall op-ed, Mytheos Holt argues that patents are not property rights like other “natural” property rights in land and tangible goods. As his primary foil, he uses my seven-minute talk at CPAC last month on the unique American approach to securing property rights to innovators, which Holt calls a “bizarre regulatory lobby.”

A Message from the Electronic Payments Coalition:

Across party lines, a majority of voters identify the Durbin amendment as a price control. History has taught us price controls rarely work as intended and the Durbin amendment is another example of failed policy. It’s time to end the merchant markup once and for all. Learn how to take action now.

Research Reports

Globalized Israel: High Tech Prowess and Buttressing FDI
Assaf Razin, The National Bureau of Economic Research

The paper reviews the crucial role which globalization forces played in Israel’s transformation from low tech to high tech economy. Special emphasis is placed on foreign direct investment as a driver for the high-tech transformation.

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