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The Technology 202: Six ways the shutdown is affecting the tech sector

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with Bastien Inzaurralde

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It’s Day 24 of the partial government shutdown, and its effects are rippling through the technology sector.

As the longest shutdown in U.S. history drags on, it is increasingly impacting agencies that enforce vital protections for consumers in the digital age, which shield the public against everything from spam to privacy violations. And the technology companies themselves are not immune -- their business plans could be derailed as the shutdown prevents agencies from responding to regulatory filings and causes delays in reviews of new devices.

The effect of the shutdown on the tech sector puts a fine point on the increasing interdependence of Washington and Silicon Valley. Though technologists have long tried to keep an arms distance from policymakers and regulators, here are some ways this industry can’t escape the reach of the stalemate between the White House and Democrats in Congress: 

1. The Federal Trade Commission is closed for business — tying up the federal agency responsible for policing Big Tech.

In the wake of multiple scandals at Facebook last year, the FTC’s closely watched investigation into the social network and whether it violated a 2011 order from the agency intended to safeguard users’ data is on hold, as my colleague Brian Fung reported. “The key part of any investigation is the information-gathering stage, which is revealing documents and talking to people,” David Vladeck, a former director of the FTC’s consumer protection bureau, told Brian. “It just stops. And it has to stop in an organized way.”

The agency is shut down as there is growing support in Congress to expand its resources, staffing and rulemaking authority to take on more technology issues, such as privacy. Sen. Brian Schatz (D-Hawaii) last year introduced privacy legislation that would give the agency these broader authorities, and it gained support from Senate Democrats but not Senate Republicans.

2. The SEC is operating in a limited capacity — potentially stymying a rush of long-awaited tech companies to the public markets.

This was supposed to be the year the initial public offering floodgates opened — and we would finally see trading begin on billion-dollar start-ups such as Uber, Lyft and Pinterest. The timeline for those IPOs is now up in the air,  as Bloomberg reported. Uber and Lyft have both filed confidentially, but neither has received feedback on their submissions from the SEC.

It’s not just the Silicon Valley darlings that are impacted. The Wall Street Journal reported that some biotech companies planning to list shares in January have had to push back their plans because of the shutdown.

In past shutdowns, the SEC has been able to draw on surplus cash to remain open during government shutdowns. It did not have the funds available to do that this time, according to the Journal.

3. Robo-call and identity theft victims are left in the lurch.

Don’t expect the onslaught of spam phone calls to stop while the government is shut down, my colleague Tony Romm reported. Federal regulators aren’t around to take consumers’ complaints or investigate the most egregious offenders. “It’s a neighborhood with no police on the beat,” Alex Quilici, the chief executive of an app that helps users block robo-calls, told Tony.

And victims of identity theft are also left without a clear avenue for restitution. Louette Duvall, a 67-year-old woman who had her purse with all her credit cards stolen, told NBC News that she tried to contact the FTC after the incident. No one at the closed agency answered the phone, and its identity theft website said the service was down because of the shutdown. "It was like I can’t stop it and my government is not there to help," she told NBC.

4. The Federal Communications Commission isn’t certifying new devices heading to market.

Radio frequency devices such as phones and TVs undergo an often lengthy process to get certified by the Federal Communications Commission. That’s not happening during the shutdown, as Jessica Rosenworcel, a Democrat on the committee, pointed out:

Though businesses are used to waiting a long time to have these devices approved, a prolonged government shutdown could affect their timelines for rolling out new products.

5. Stories of employees without paychecks could affect government’s ability to recruit top tech and science talent.

There are also implications for tech efforts by government, which has an uphill battle when it comes to recruiting tech and science talent. It can’t offer the cushy perks or lofty salaries that come with positions in Silicon Valley. But as the Verge noted, the threat of weeks without pay may make federal government jobs less appealing to a young generation of scientists.

“I don’t know if I want a job that could be used as a pawn to further someone’s agenda,” Kathleen Farley, a graduate student at Rutgers University at Newark, told the Verge.

6. Dozens of government websites have been rendered insecure or inactive.

Some NASA, Justice Department and other government agency websites were insecure or not working as of today because important security certificates had expired, according to a report from Internet security company Netcraft. With so many federal employees out, the agencies probably do not have the IT resources to renew the certificate.

It’s not the only IT issue the shutdown is posing for the government. A key vote on legislation to elevate the position of federal chief information officer to a presidentially appointed position has been delayed, probably until after the shutdown, Politico reported on Friday. One of the bill’s sponsors told Politico the shutdown is putting the government behind in tech recruiting.

Correction: A previous version of today's newsletter misidentified the state Sen. Brian Schatz represents. The senator is from Hawaii. 


BITS: Trump said his administration will shake up the way it manages temporary H1-B visas that enable American firms to bring qualified professionals such as tech workers to the United States, the Associated Press's Colleen Long and Deb Reichmann reported. The tech industry has stressed the importance of this visa and supporters of the program say that it encourages students to remain in the United States once they obtain a diploma in a high-tech domain.

“H1-B holders in the United States can rest assured that changes are soon coming which will bring both simplicity and certainty to your stay, including a potential path to citizenship,” Trump said in a tweet Friday. “We want to encourage talented and highly skilled people to pursue career options in the U.S.” Trump's tweet probably referred to changes that the Department of Homeland Security proposed late last year — though the final changes have not been published yet. “The proposal included a shift to online applications for the coveted visas and changed procedures to increase the advantages of applicants with graduate degrees,” according to the AP.

NIBBLES: The prevalence on YouTube last week of conspiracy theories about the health of Supreme Court Justice Ruth Bader Ginsburg, who has recently undergone cancer surgery, shows that the video platform's efforts to prevent its algorithm from promoting misinformation are still falling short, The Washington Post's Tony Romm and Drew Harwell reported. On Wednesday, more than half of the top 20 search results for Ginsburg's initials “RBG” in YouTube directed users to false far-right videos, with most of this false content coming from QAnon, a fringe movement.

“The algorithm rewarded the conspiracy videos over reliable news based on what it calculated was their ‘relevance,’ signaling that the videos were probably new, popular or suitable to the search,” my colleagues wrote. “By Thursday, a day after YouTube was contacted by The Washington Post, searches for ‘RBG’ also surfaced multiple videos from mainstream news organizations.” The conspiracy theories about Ginsburg’s health also extended to Twitter. Additionally, data from CrowdTangle, a social-monitoring company, showed that several Facebook groups also discussed the theories.

BYTES: Automation stands to deeply alter the service industry and cut down on workers' hours, according to the Atlantic's Sidney Fussell.  However, it's unlikely automation will replace these jobs outright or impact hourly wages. For instance, “partial automation” could turn a two-person job at a front desk overnight into a one-person job where an employee would be assisted by a robot, Fussell noted. ​​​Service workers worry about the trend: Employees of Marriott International asked that their jobs not be taken over by robots as part of their demands during a strike late last year.

“Automated experiments include robots that take over bartending and salad-making duties on cruise ships and in airports, and that deliver food to hotel guests’ rooms,” according to the Atlantic. “More hotels are offering automated check-in via app or even — in China — via facial recognition. Alexa-enabled speakers in hotel rooms let guests ask for sightseeing tips and order toothbrushes without talking to staff.” (Jeffrey P. Bezos, the founder and chief executive of Amazon, which makes the virtual assistant Alexa, is the owner of The Washington Post.)


— Chinese telecommunications giant Huawei fired a Chinese employee who was detained in Poland on suspicion of spying, The Post's Anna Fifield reported. Huawei said Wang Weijing, who also goes by Stanislaw Wang, brought the company “into disrepute” and sought to distance itself from him. “Huawei has decided to terminate the employment of Mr. Wang Weijing, who was arrested on suspicion of breaking Polish law. His alleged actions have no relation to the company,” the company said in a statement. A Polish citizen employed by the European carrier Orange and who used to work for a Polish intelligence agency was also detained, Anna reported. He and Wang have denied the charges.

— Elon Musk’s SpaceX intends to cut its workforce by 10 percent, according to the Wall Street Journal's Andy Pasztor. Such reduction would amount to about 600 employees. “The move, believed to be the most significant cutback since SpaceX gained international prominence about a decade ago, is the latest sign of major strategic and technical challenges roiling the closely held Southern California company,” Pasztor wrote.

— More tech news from the private sector:

Hustle, the Political Text Messaging Service, Fires One-Third of Its Staff (Bloomberg News)

Google Demanded That T-Mobile, Sprint Not Sell Google Fi Customers' Location Data (Motherboard)

Apple demanded $1 billion for chance to win iPhone: Qualcomm CEO (Reuters)

Bird tries to forcibly remove Boing Boing’s story detailing how to hack and keep its scooters (The Verge)

Amazon reportedly developing a subscription video game streaming service (Hamza Shaban)

Legislators of both parties continued partisan attacks on Jan. 13, the 23rd day of a partial government shutdown over the president’s proposed border wall. (Video: Patrick Martin/The Washington Post)

— Furloughed federal workers are being recruited via social media to work for companies such as Uber, Lyft and Postmates, according to BuzzFeed News's Caroline O'Donovan. People who have encouraged furloughed employees to join gig economy companies during the shutdown often have a financial incentive to refer potential new workers. “Companies like Uber, Lyft, DoorDash, Postmates, and Instacart offer these workers the opportunity to earn money as independent contractors without having to get a new job,” BuzzFeed News reported. “Government employees are allowed to take outside work during the shutdown, as long as it doesn’t violate the government ethics rules that typically apply to their employment.”

However, Debra Roth, managing partner at Shaw Bransford & Roth, told Nextgov's Frank Konkel that furloughed workers who moonlight could endanger their employment. “They could be risking their jobs or other administrative charges against them,” Roth said. “Depending upon your job activity and the agency you work for, the agency may or may not allow you to have to outside employment.”

— William P. Barr, Trump's nominee for attorney general, said he would recuse himself from the Justice Department's review of the proposed merger of AT&T and Time Warner should he be confirmed, according to a news release from Sen. Amy Klobuchar (D-Minn.). Klobuchar said that Barr, a former board member of Time Warner, made the commitment during a meeting with her.

“As Ranking Member of the Antitrust Subcommittee and as someone deeply concerned about maintaining a marketplace that benefits consumers, it is critically important that the Justice Department is able to complete an unbiased review of the proposed AT&T-Time Warner merger,” Klobuchar said in a statement. “Given Mr. Barr’s ties to Time Warner, this commitment from Mr. Barr to recuse himself from the Department’s review is necessary.”

— More tech news from the public sector:


Why the FTC Thinks You Pay Too Much for Smartphones (Wired)

Top House Dem requests emergency FCC briefing on wireless providers' data-sharing practices (The Hill)

Army ready to embrace AI (FCW)

Beijing widens control of wildly popular short-video apps (Financial Times)


— Warnings are increasing about the perils that electric scooters can represent for pedestrians, according to my colleague Peter Holley, who reported that doctors in five cities said trauma centers receive pedestrians who are badly injured in incidents involving those devices several times a week. Lime and Bird, two of the biggest e-scooter firms, said safety is a priority. Lime said it seeks to “promote safe-riding behavior and proper etiquette” with an investment of more than $3 million while Bird said it gives safety information that's adapted to local laws in its app, Peter reported.

— Meanwhile, Lime is also facing troubles abroad. The company “has pulled its full fleet of scooters in Switzerland, in the cities of Basel and Zurich, for safety checks after multiple reports of people injuring themselves after their scooters braked abruptly while in use,” TechCrunch's Ingrid Lunden reported.

— More tech news generating buzz around the Web:

How We Apologize Now (The New York Times)

Mental well-being took center stage at CES 2019 (TechCrunch)

Robotic Milkers and an Automated Greenhouse: Inside a High-Tech Small Farm (The New York Times)


— Today in funding news:

Companies to Watch in IPO-Land This Year (Bloomberg News)

After the Smartphone: The Race for the Next Big Thing (The Wall Street Journal)

Corporate investors pile into electric vehicle startups (Reuters)



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