Data Sheet—Tuesday, March 1, 2016

I still find that when I talk to people generally involved in the non-technology business world there is little sympathy for Apple’s position, as I wrote last week. Among technologists, pro-encryption is the norm.

This seems to be a debate about technology—a face-off between privacy advocates and law enforcement officials and their supporters. Yet in reality it is as much a statement about belief in government. One simplistic way to think about it is where one stands on Edward Snowden: Hero or villain? The hero crowd tends to be on Apple’s side; those who see Snowden as a traitor obviously are with the FBI.

This spat is so much bigger than Apple and the FBI though. To understand this, I highly recommend a Rolling Stone article from last fall by the journalist David Kushner about the so-called Darknet. Kushner explains in admirably clear language how a separate network runs on a U.S. government-funded browser called Tor that allows its users to be anonymous. The government started it as a voice for dissidents and others needing privacy, yet a small percentage of Darknet users are criminals, including drug dealers.

Unsurprisingly, federal prosecutors want to chip away at anonymity on the Darknet even though their own government created it. Supporters don’t condone criminality on the Darknet, but they oppose the government’s efforts to unmask anyone on it.

The solution? It isn’t easy. Sound familiar?

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A rare invitation for Data Sheet readers: If you’re in New York City on the evening of March 8, please join Fortune for a celebration of our annual Best Companies To Work For list. My colleague Leigh Gallagher will interview the CEOs of three high-ranking members of the list, which is compiled partly from employee surveys—SAS Institute, Wegmans, and Edward Jones. The party/panel also is an opportunity to see Time Inc.’s brand-new world headquarters, which I haven’t visited yet. It will be held at 225 Liberty St., from 6 to 8 p.m. Reserve your place here.

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BITS AND BYTES

Apple, FBI take fight to Washington. Apple general counsel Bruce Sewell and FBI director James Comey will testify Tuesday before the House Judiciary Committee about their dispute over the iPhone's encryption technology. (Here's the written text of Sewell's official statement.) Meanwhile, Apple's pro-privacy argument could get a boost from the ruling for a similar case in New York. The judge denied the government's request for Apple to "extract" data from a smartphone seized as part of a drug raid. (Re/code, Reuters, New York Times)

Cisco spends $260 million on hot cloud startup. The networking giant is buying CliQr, which specializes in software that helps companies manage applications running in cloud data centers, such as the services offered by Amazon, Google, and Microsoft. The acquisition isn’t really a surprise, since developers from the two companies are already working together. (Fortune)

Microsoft opens preorders for HoloLens. The company will start shipping a developer edition of the augmented reality headset, priced at $3,000, on March 30. The idea is to get businesses building applications, including those for manufacturing operations and other industrial settings. (Fortune)

IBM buys Resilient Systems, boss of prominent cryptographer Bruce Schneier. Terms of the acquisition weren't disclosed, but the deal adds 100 experts to IBM's hacking breach incident response team. Schneier, who is a prominent author on cybersecurity matters, is the firm's chief technology officer. (Reuters)

GoPro expands into software. The digital camera company is spending $105 million on two mobile video-editing apps, Replay and Splice. The reason? It's still pretty painful to edit GoPro footage. The company needs something to rekindle growth after its less-than-successful Hero4 Session product launch last year.(Re/code)

EMC debuts flash storage designed for analytics applications. The technology provides a fast lane between where data is stored and the servers running business intelligence applications, helping companies process massive amounts of information far more quickly. EMC bought the startup behind the new product, called DSSD D5, two years ago. (Fortune)

Yahoo may take even bigger write-off for Tumblr acquisition. The Internet company has already recorded a $230 million impairment charge related to its $1.1 billion buyout of the microblogging service. A regulatory filing suggests that may not be the full extent of its losses and that "some portion or all of the remaining goodwill" for the division may also be impaired. (Reuters)

E.U. blesses Dell-EMC union. The $67 billion merger of the two giant hardware companies has cleared another regulatory hurdle. The deal, announced last October, still requires EMC shareholder approval. (Reuters)

THE DOWNLOAD

IBM vows financial transparency, with one big exception. Starting this year, the company is basically taking key pieces of its software business and divvying them up among its cognitive solutions, technology solutions, and hardware units as it deems appropriate.

The stated goal is to be more transparent to shareholders and analysts. But the “cognitive computing and cloud company” would not budge on providing details on the one business everyone wants to hear about: Watson, the centerpiece of IBM’s cognitive computing push.

Speaking on IBM’s analyst day last Thursday, IBM CEO Ginni Rometty wouldn’t disclose, even a tiny little bit, how Watson is doing in the market. Read Fortune writer Barb Darrow's complete analysis (complete with chart). Plus, did Warren Buffett blunder in paying $13 billion for so much IBM stock? As Stephen Gandel reports, it's not as simple as its seems.

IN CASE YOU MISSED IT

Warren Buffett says 'privacy has its limits' by Don Reisinger

How Pixar quietly dominates the Oscars—year after year by Chris Morris

Snapchat admits getting scammed and leaking employee data
by Kia Kokalitcheva

Bill Gates offers common sense on unicorns by Barb Darrow

Is Fitbit's Blaze smartwatch smart enough? by Jason Cipriani

Mightybell wants to help businesses build mobile communities
by Leena Rao

InsideSales.com promotes former Oracle, Salesforce exec to COO
by Heather Clancy

Amazon teams with Brita on smart water pitcher by Leena Rao

Need deep learning? There's a cloud for that by Stacey Higginbotham

Target poaches supply chain guru from Amazon by Phil Wahba

ONE MORE THING

Google's self-driving car causes fender-bender. While avoiding an unusual obstacle in the road, one of the company's autonomous test vehicles wandered into the path of a city bus in Mountain View, Calif. (Wired)