The leading lobbying group for Amazon, Facebook, Google and other tech giants is joining the legal battle to restore net neutrality

The companies will intervene in a coming lawsuit through their trade group, the Internet Association.

A leading lobbying group for Amazon, Facebook, Google, Netflix, Twitter and other tech giants said Friday that it would be joining the coming legal crusade to restore the U.S. government’s net neutrality rules.

The Washington, D.C.-based Internet Association specifically plans to join a lawsuit as an intervening party, aiding the challenge to FCC Chairman Ajit Pai’s vote in December to repeal regulations that required internet providers like AT&T and Comcast* to treat all web traffic equally, its leader confirmed to Recode.

Technically, the Internet Association isn’t filing its own lawsuit. That task will fall to companies like Etsy, public advocates like Free Press and state attorneys general, all of which plan to contend they are most directly harmed by Pai’s decision, as Recode first reported this week.

As an intervener, though, the Internet Association still will play a crucial role, filing legal arguments in the coming case. And in formally participating, tech giants will have the right to appeal a judge’s decision later if Silicon Valley comes out on the losing end.

“The final version of Chairman Pai’s rule, as expected, dismantles popular net neutrality protections for consumers,” said the group’s chief, Michael Beckerman, in a statement. “This rule defies the will of a bipartisan majority of Americans and fails to preserve a free and open internet.”

“IA intends to act as an intervenor in judicial action against this order and, along with our member companies, will continue our push to restore strong, enforceable net neutrality protections through a legislative solution,” he continued.

For now, net neutrality advocates cannot yet file their lawsuits challenging Pai. That’s because his repeal — the final text of which was released yesterday — still must be published in a government repository known as the Federal Register.

Once that and other administrative steps are complete, then Pai’s opponents can head to the courts, where they are expected to argue that he acted arbitrarily and capriciously — and defied the will of the public — in rolling back net neutrality rules. The safeguards, implemented under former President Barack Obama, treated internet providers similar to utilities, preventing them from blocking or slowing web traffic or prioritizing their own offerings over those from their rivals.

It’s hardly the first time that tech giants have gone to court to defend net neutrality. Before Pai scrapped the U.S. government’s open internet protections in 2017, the likes of AT&T and Verizon sought to strike them down with a court challenge of their own two years earlier. In that battle, the Internet Association filed a friend-of-the-court brief defending the Obama administration.

* Comcast, through its NBCU arm, is an investor in Vox Media, which owns this website.


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MailChimp’s CEO clarifies: TinyLetter won’t shut down this year

Carry on for now, indie newsletter writers.

There was a collective gasp among many indie email newsletter writers (and some indie email readers) this week when an Inc headline circulated, reporting that MailChimp would “phase out its popular TinyLetter email service.”

The article itself was not clear about what that meant. It stated that “TinyLetter’s days as a standalone entity are numbered,” based on an October interview with MailChimp CEO Ben Chestnut, without any details or timeline. It also suggested there might be “potential headaches when MailChimp swallows up TinyLetter.”

Now Chestnut has emailed TinyLetter authors to say: The company has no plans to make changes to TinyLetter this year.

It’s not clear from this email if this is a reversal of plans — based on “premature eulogies” for TinyLetter — or if it’s just a clarification, adding more details to what Inc reported. I’ve asked for comment.

But either way, Chestnut writes: “We have no plans to make changes to TinyLetter in 2018. And we’ll let you know what to expect before we make any changes in the future.”

“In the long term,” Chestnut writes, “we do intend to integrate TinyLetter into MailChimp. Doing this will better enable us to support the product and its users. But we’re taking it slow because we want to get it right.”

As for the timing of that combination, he promised “you’ll hear it from us first” (we’ll see!) and that the company plans to “make it as seamless as possible” (we’ll see!).

TinyLetter, which MailChimp acquired in 2011, is a free and simple way to send an email newsletter. MailChimp is more complex and is designed for publishers and commerce companies to send bulk email.

Here’s the full text of Chestnut’s email:

Hi,

My name is Ben Chestnut and I’m the co-founder and CEO of MailChimp, the company behind TinyLetter.

I recently mentioned that TinyLetter would eventually become part of MailChimp instead of a stand-alone product. I wanted to write you directly about what we do—and don’t—have planned to address some of the premature eulogies and questions we’ve seen.

We have no plans to make changes to TinyLetter in 2018. And we’ll let you know what to expect before we make any changes in the future.

In the long term, we do intend to integrate TinyLetter into MailChimp. Doing this will better enable us to support the product and its users. But we’re taking it slow because we want to get it right.

MailChimp acquired TinyLetter in 2011 and relaunched it in 2014. Over the years, we’ve enjoyed watching it take on a life of its own. We know you feel strongly about the messages you send through TinyLetter, the relationships you have with your readers, and the experience of using the platform. Many of you feel a deep, personal connection with it—and we don’t take that lightly. We’ve always said that TinyLetter is for people what MailChimp is for businesses. That’s still true, and any changes will bear it in mind.

When we have a roadmap for the integration, you’ll hear it from us first, well in advance. We’ll make it as seamless as possible, and you won’t lose your subscriber list or your archives.

In the meantime, TinyLetter isn’t going anywhere.

Write on,

-Ben


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Uber powered four billion rides in 2017. It wants to do more — and cheaper — in 2018.

“I want to create a zero-defect culture,” Barney Harford told Recode.

In an otherwise turbulent year, Uber — which operates in 600 cities across 78 countries — managed to give four billion rides in 2017 alone. That’s significant for a company that for its entire existence hit the five billion total rides mark in May of 2017.

But for Barney Harford, the company’s first-ever COO, that’s not good enough. He wants to make Uber more efficient.

“A big focus for me is around achieving operational efficiency and discipline,” Harford told Recode in an interview.

That has to happen rather quickly, however. Harford, the former CEO of Orbitz, has an important year ahead of him as Uber prepares to go public in 2019. A big part of that is cutting the company’s losses. The ride-hail company widened its net losses to $ 1.46 billion in the third quarter of last year, up from $ 1.06 billion in the second quarter.

The University of Cambridge alum, who was a long-time associate of CEO Dara Khosrowshahi when the two were working at Expedia, said he was focused on reducing costs by being more methodical with things like marketing and customer support.

Harford is being tasked with figuring out how best to distribute Uber’s marketing dollars between traditional marketing channels and its rider and driver promotions and subsidies.

“I think you should expect to see over the course of the next 12 months that we’ll evolve that mix and the strategy that we use within the way we allocate those investments for sure,” he said.

Barney Harford, Uber’s new COO Uber
Barney Harford, Uber’s new COO

That doesn’t mean the company will do away with subsidies entirely, he said. While the company has already lowered its incentive payments to drivers quarter over quarter, it remains important for Uber to find a more cost-effective means to attract and keep riders and drivers, given it’s a big source of loss for the company.

There are typically more promotions when the company first enters a city or a market in order to attract new riders and drivers. But in places like China, where Uber was forced to merge with its rival, the company became embroiled in a long-term and expensive subsidy battle.

That said, the company has also historically invested in TV spots and other traditional means of advertising. Still, Harford has the difficult task of figuring out how to spend its marketing dollars intelligently without losing its ridership.

Another key way to reduce costs, he said, is to make customer support more effective.

“What I want to focus on is creating a culture of efficiency, a zero-defect culture,” he said, “because it solves multiple things. One, it reduces costs. Two, it creates a much more enhanced experience for our customers — for our riders, our drivers, for our restaurants.”

Customer support is an expensive and difficult problem to solve at any company, but at Uber’s scale it’s not only enormous, it’s mission critical for the company to get it right.

Uber’s customer support inefficiencies have been at the forefront of many drivers’ issues over the years, and the company isn’t exactly in a position to lose a critical mass of drivers. It’s why customer service was one of the first things Uber tried to solve during its driver improvement campaign.

But with 75 million active monthly riders and three million total active drivers, ensuring customer support is efficient, scalable and not a drain on resources is tricky. Harford said reducing the number of “defects” or issues needs to be the first step in addressing that.

“When you have 15 million trips a day, even a relatively low contact rate creates an immense number of contacts that agents have to handle,” Harford said. “And by the way, nobody really wants to have to chat with an agent or talk to an agent. They’d prefer the problem not happen in the first place.”

In general, Harford expects to focus more on the traditional ride-share business than he will on the company’s UberEverything arm. As COO, Harford oversees the company’s regional businesses led by general managers Rachel Holt, Andrew Macdonald and Pierre-Dimitri Gore-Coty, as well as UberEverything led by Jason Droege.

“At Eats we have a great leader in Jason,” Harford said. “He has full stack responsibility of both business but also product and engineering. My goal there is to make sure we don’t distract that business, it’s in phenomenal hyper growth mode right now.”


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Benchmark is selling $900 million of its holdings in Uber

The firm at the center of the Uber power struggle tried to part with 25 percent of its shares.

Benchmark Capital will end up selling about $ 900 million of its Uber stock to SoftBank and other buyers, or about 14.5 percent of the venture capital firm’s holdings in the company, according to people familiar with the transaction.

Benchmark, which said last year that Uber could soon be worth more than $ 100 billion, tried to sell about 25 percent of its shares in the company last month at a price that was less than half that.

But because so many shareholders wanted to sell their position in Uber, Benchmark was able to sell only 58 percent of what it sought to tender — or about 14.5 percent of its holdings, according to the people.

Uber stock was being sold at a significant discount that valued the company at $ 48 billion. At that pricing, Benchmark would receive about $ 900 million in cash in return for their 14.5 percent sale. Benchmark owned about 13 percent of the company.

Benchmark led the company’s Series A financing round in 2011 and the company has made the firm a tremendous amount of money — even though relations have soured between Benchmark and the company’s first CEO, Travis Kalanick. Benchmark’s decision to sell some of their earnings will weaken its power in company decision-making, but also locks in some of their winnings ahead of an uncertain IPO in 2019.

But it also could look foolish if Uber’s growth keeps exploding and Benchmark left money on the table. The venture capital firm said in August that its analysis “shows Uber could comfortably be worth over $ 100B in just two years.”

Kalanick himself also tucked away some of his earnings. The Uber founder sold about $ 1.4 billion in the tender offer, despite previously signaling that he wouldn’t sell any of his stock.

Other large sellers to the SoftBank-led group include Kalanick’s co-founder Garrett Camp and Menlo Ventures, which led Uber’s Series B round.

Benchmark declined to comment.


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Spotify’s chief content officer is leaving ahead of its IPO

Stefan Blom’s departure may raise questions.

Spotify’s top content executive is leaving, just ahead of the streaming music company’s planned public offering.

Stefan Blom, Spotify’s chief content officer, announced his departure via an internal memo today. The company hasn’t named a successor to Blom, who reported to CEO Daniel Ek.

Blom’s departure comes after Spotify has filed confidential plans to go public via a unique “direct” IPO; the company has been targeting a spring date for the listing.

The timing of Blom’s exit may raise questions for investors as they look at Spotify.

Last year, the executive helped Spotify secure critical licenses with the big music labels that paved the way for the company’s IPO. But he has also been in charge of the company’s attempted push into video, which has stopped and started a few times without gaining traction.

Yesterday, Spotify announced it has 70 million paying subscribers.


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Read all 539 pages of the FCC’s final order repealing net neutrality

It’s long!

Roughly a month after the Federal Communications Commission voted to scrap the U.S. government’s net neutrality rules, the agency has released the full, final text of its repeal.

Generally, it’s the same as the plan that Republican Chairman Ajit Pai unveiled in the weeks before the vote: It terminates FCC rules requiring internet providers to treat all web traffic equally, while shifting enforcement of the open web to another federal agency.

But the Thursday evening release is just a necessary next step. From here, the agency still must publish the text of the repeal in a government document, known as the Federal Register. That move officially opens the doors for net neutrality’s fiercest advocates to file lawsuits challenging the FCC.

It also gives us a lot more to read: as in 539 pages (which you can read in full below). Pai and his fellow Republican commissioners — Michael O’Rielly and Brendan Carr — also released fuller statements explaining their votes, as did their Democratic counterparts — Jessica Rosenworcel and Mignon Clyburn — who opposed the repeal.

FCC-17-166A1 by Recode on Scribd


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Travis Kalanick is now a real-life billionaire

The Uber founder’s bank account will grow by $ 1.4 billion thanks to the SoftBank deal.

Travis Kalanick is selling almost a third of his shares in Uber as part of the tender offer planned by SoftBank.

Kalanick, the founder of Uber and its CEO until this summer, tried to sell about half of his shares in Uber, according to people with knowledge of the matter, but like all other shareholders, is only able to sell about 58% of what he sought because too many sellers tried to rid of their shares. That means he’ll part with about 29% of his shares.

Several other Uber shareholders sold much of their holdings, including Menlo Ventures, which parted with a similar percentage of its holdings as Kalanick did. Large sellers are also expected to include Kalanick’s co-founder Garrett Camp and Benchmark, the venture firm with which Kalanick quarreled.

But some other institutional investors in Uber declined to sell shares, including Lowercase Capital and Kleiner Perkins.

SoftBank is buying 15% of the company from existing Uber shareholders like Kalanick and SoftBank’s co-investors are purchasing an additional 3% ownership stake.

Kalanick owned about 10% of the company prior to SoftBank’s investment. He was telling associates as recently as this summer that he had no plans to sell any of his shares, but his thinking became more opaque to outsiders in recent weeks.

Long a billionaire on paper, Kalanick’s personal bank account will now grow by $ 1.4 billion, given the each share is worth about $ 33 in the SoftBank transaction. The most recent transaction values Uber at $ 48 billion.

Uber’s investors ousted from the CEO chair this summer, but Kalanick remains on the company’s board. The decision to sell his shares will almost certainly reduce his power in company debates.

Kalanick’s stock sale was first reported by Bloomberg.


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Jimmy Iovine will leave Apple in August, four years after his $3 billion deal

The music producer helped launch Apple Music, but he has had a diminished role at the company for a while.

Jimmy Iovine, the legendary music producer turned entrepreneur who sold his Beats Music and Beats Electronics business to Apple in 2014, plans to leave the company this summer.

Iovine’s departure, timed to the end of an employment contract, has been widely discussed throughout the music industry for many months. His stock answer, when asked what will happen when that contract is up in August, has been a version of “I have no idea what I’ll be doing then. I’ll be 65.”

For the record, industry trade publication Hits announced that Iovine would leave in a post this morning. Billboard followed up. Apple, for the record, declined to comment; I haven’t heard back from Iovine.

Iovine, who was brought in to kickstart Apple’s move into the subscription music business, has had a limited role within the company for some time.

Apple Music, the service the company launched a year after buying Beats, is run by longtime Apple exec Robert Kondrk, who reports to content boss Eddy Cue. And while Iovine told reporters last spring that he was spearheading the company’s move into video, he hasn’t had an active role in its billion-dollar push into original TV shows; those efforts are headed by former Sony executives Jamie Erlicht and Zack Van Amburg, who also report to Cue.

An uncomfortable question for Apple: Did it get its money’s worth when it paid Iovine and his partner, Dr. Dre, $ 3 billion for Beats four years ago — the largest acquisition in the company’s history?

The positive answer: Apple makes real revenue from the Beats headphone line Iovine sold them. And Apple now says it has 30 million paying subscribers for Apple Music, which means it is generating real revenue, even if it is less than the ambitious goals Apple had laid out to the music industry in advance of its 2015 launch. You can attribute some of that to the connections and salesmanship that Iovine brought to Apple as it courted artists for the new service.

On the other hand, you don’t actually need a big-shot music executive to launch a music subscription service — just ask Spotify, run by a Swedish programmer who had no exposure to the music industry when he started the company. Now Daniel Ek has 70 million subscribers, and is headed for a $ 20 billion IPO this year.


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FCC Chairman Ajit Pai canceled his appearance at CES because of death threats

The threats have intensified following an FCC vote to repeal net neutrality rules.

Federal Communications Commission Chairman Ajit Pai canceled his scheduled appearance at a major upcoming tech industry trade show after receiving death threats, two agency sources told Recode on Thursday.

It’s the second known incident in which Pai’s safety may have been at risk, after a bomb threat abruptly forced the chairman to halt his controversial vote to scrap the U.S. government’s net neutrality rules in December 2017.

For both Pai and the whole of the FCC, the uptick in security concerns also presents a serious challenge to their ability to discuss critical tech policy issues in public view — without jeopardizing their safety or the safety of others in attendance.

In this case, the exact nature of the threat, made in advance of Pai’s fireside chat at the 2018 International CES, isn’t clear. A spokesman for Pai at the FCC, for its part, only said Thursday: “We do not comment on security measures or concerns.”

But sources at the agency said that federal law enforcement had intervened in the matter, and other FCC offices are expected to be briefed on the matter. The FBI did not immediately respond to emails seeking comment.

A spokeswoman for the Consumer Technology Association, which puts on the annual Las Vegas-based trade show, also declined to comment. Earlier, though, CTA’s leader, Gary Shapiro, told the publication Digital Trends that he did not know why Pai had canceled — but raised the fact that he had recently been “subject to vicious and direct attacks and threats.”

For months, Pai has been hounded by his critics, particularly online, who view his vote to repeal net neutrality rules as tantamount to destroying the internet. Pai has lamented in speeches and tweets that he and his family have been mocked, attacked and threatened, in public as well as on Twitter, where Pai himself is active.

By the nature of the job, the chairmanship of the FCC is an especially public role, and threats to its leaders and commissioners aren’t exactly new. In 2014, for example, protesters descended on the home of then-Chairman Tom Wheeler, a Democrat, and prevented him from leaving his driveway. Then, too, net neutrality had been the issue at hand.

In the most recent debate, though, tensions have been especially high, driven in no small part by broader frustrations among the public with the Trump administration writ large. If the death threats continue, it is unclear how Pai and his fellow commissioners will proceed.

For now, Democratic Commissioner Mignon Clyburn and Republican Commissioners Michael O’Rielly and Brendan Carr each plan to attend CES. So will Maureen Ohlhausen, the acting leader of their sister agency, the Federal Trade Commission. Ohlhausen had been slated to appear alongside Pai at the annual Vegas event.


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