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Data Sheet—Tuesday, August 18, 2015

There’s curious news out of Google this week, albeit of the fringe variety. Via a tweet, the company says it no longer plans to test its “Project Ara” modular smartphone in Puerto Rico this year. Instead, as Cnet neatly summarizes, Google aims to try out the product somewhere in the U.S. in 2016.

This leads to two obvious questions: What’s a modular phone and why would Google have considered testing it in Puerto Rico in the first place?

The first answer is pretty cool, actually. Google wants to seed the smartphone market with a product that lets consumers pick and choose the components they like, much the way they currently configure phones with software applications of their choosing. As Google notes in an online FAQ: “With a modular platform, you can pick the camera you want for your phone rather than picking your phone for the camera. You could have a sensor to test if water is clean. You could have a battery that lasts for days. A really awesome speaker. A gamer phone. Or it could even be your car key. The possibilities are limitless.” As for Puerto Rico, it seems Google liked the idea of an FCC-regulated area where inexpensive phones still dominate the market, among other attributes.

Production problems are the culprit for the delay. But a setback for a pie-in-the-sky project isn’t all that important. What matters is that Google continues to try whacky ideas. What’s more, though Project Ara certainly is a stretch, it resides within what will be Google Inc., not the new Alphabet, home to Google X and other out-there experiments. The company’s Advanced Technology and Projects Group—which Miguel Helft profiled when he was at Fortune—runs Project Ara, and a modular phone theoretically fits nicely with Android, the mobile software that’s core to Google’s search business. ATAP is staying with Google, whose engineers still work on creative “20% projects,” like the solar-panel information site Katie Fehrenbacher covered Monday. In other words, the advertising company is maintaining its spirit of experimentation as well as a “moonshot factory” of its very own.

Adam Lashinsky

@adamlashinsky

adam_lashinsky@fortune.com

TOP NEWS

Google dubs new Android operating system “Marshmallow.” The search giant has christened the sixth iteration of its market-mopping mobile software after another sugary treat, following in the tradition of past versions such as Ice Cream Sandwich (4.0-4.0.4) and Lollipop (5.0-5.1.1). Sundar Pichai, the company’s recently appointed CEO, first introduced details about the system—known until Monday only as “Android M”—back in May. (Fortune)

Uber beefs up security team. The ride-sharing startup plans to quadruple its security staff to 100 from 25 by end of year. The team, led by former Facebook security chief Joe Sullivan, handles physical as well as cybersecurity. (Financial TimesFortune)

Facebook redesigns little-used “Notes” feature. The social network is taking a page out of Medium’s and LinkedIn’s books by revamping its template for long-form posts. Like the Instant Articles initiative, the move can be considered an attempt by the company to natively host more media content. (Fortune)

Inequality grows in Silicon Valley. One result of the nation’s tech boom has been a rising gap in wealth within its innovation capital. San Francisco’s Tenderloin neighborhood, home to the offices of Twitter, is one of the worst areas in terms of the disparity. (New York Times)

Tesla stock surges. The electric car company’s share price jumped more than 5% on Monday morning after a Morgan Stanley analyst raised its price target on the shares by 66% to $465 from $280. Investors are realizing that the company could become a leader in both the self-driving and ride-sharing markets. (MarketWatch, Fortune)

Google loses key ally at FTC. Joshua Wright, a commissioner at the Federal Trade Commission, will step down on August 24 to return to a professorship at George Mason University. During his tenure, the commission concluded—following staffers’ recommendations—that Google had not abused its search powers by unfairly manipulating results. (Fortune)

IRS hack worse than thought. The Internal Revenue Service more than doubled its estimate of the number of taxpayer accounts compromised in a May data breach to 330,000 from 114,000. Hackers will likely use the breached information to file fraudulent tax returns next year. (Wall Street Journal, Fortune)

CA Technologies joins Linux Foundation’s Open Mainframe Project. The software development firm joins IBM and others as a founding member of the newly announced project, which will promote the adoption of Linux on mainframe computers. (eWeek)

Netflix will pull the plug on its last data center by end of summer. The video streaming giant plans to move the last of its IT infrastructure to the public cloud. The company’s transition to Amazon Web Services began seven years ago. (Wall Street Journal)

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Your usual curator Heather Clancy is away on vacation. Fortune reporter Robert Hackett here, subbing in. You can reach me on Twitter (@rhhackett) or email robert.hackett@fortune.com. Feedback welcome.

THE DOWNLOAD

In light of this weekend’s National Security Agency leaks by whistleblower Edward Snowden, Fortune writer Chris Matthews explains why no one should be surprised that AT&T has had such a close relationship with the U.S. government.

“While it is unclear whether the behavior described by the leaked documents is ongoing at the company today, it should come as no surprise that AT&T, compared with other technology and telecommunications firms, was working most closely with the government. The company, which was launched in 1885 by Alexander Graham Bell and protected from competition by the first U.S. patent issued for the telephone, has had a symbiotic relationship with the U.S. government for much of its history. Here’s a look at the major events in the history of AT&T’s collaboration with the federal government…” Read more on Fortune.com.

BITS AND BYTES

You can now use Stephen Hawking’s speech software for free. Intel has released its application—ACAT for “assistive context-aware toolkit,” made famous by the star astrophysicist—as an open source platform. (Wired, Intel Open Source)

Apple Pay belongs on the wrist. According to a consumer survey, a whopping 8-in-10 Apple Watch owners report using Apple’s contactless payment technology. (Fortune)

Japan’s largest airline launches Star Wars-themed jets. It’s a bird, it’s a plane—it’s R2D2? (Bloomberg)

Disney removes Bill Cosby statue. Allegations of sexual assault continue to make the comedian a pariah. (Fortune)

Engineers seek money for a robot battle with Japan. A team of American inventors has created a Kickstarter campaign to fund a giant fighting robot set to duel next summer. (Verge)

Volkswagen gagged security researchers over flaw. The automaker sued hackers for two years to prevent them from revealing how they could wirelessly lock-pick vehicles. (Computerworld)

ALSO ON FORTUNE

Google will now help you get solar on your roof by Katie Fehrenbacher

McDonald’s is now the top choice for ‘Breakfastarians’ by Claire Groden

Amazon: Working there will kill you. But you’ll love it by Leena Rao

 

ONE MORE THING

How much does it cost to clone your favorite app? Just ask Gigster, a marketplace that is essentially an “Uber for apps.” (Priceonomics)

FINAL THOUGHT…

“Other than not quite looking like him, his voice being different, and his inability to cook the world’s best chicken, we thought Norm was the perfect choice to play the Real Colonel.”

KFC’s U.S. marketing chief Kevin Hochman, introducing comedian Norm Macdonald as the latest portrayer of the company’s iconic brand representative, Colonel Sanders. Macdonald will replace the comedian Darrell Hammond, who began his short stint in the white suit in May. (Fortune)