Data Sheet—Tuesday, June 21, 2016


This week the entire media industry is drinking rosé on the French Riviera and calling it business. Startup CEOs have described the annual Cannes Lions festival to me as “a cooler South by Southwest—with none of the riffraff.” Not being there myself, I can only assume the event is abuzz over tronc (lowercase), the Internet satirist formerly known as Tribune Publishing, which yesterday provided the world with a new, incredible piece of modern performance art.

If not tronc, then likely Snapchat, or Pinterest, or even Spotify. Cannes has morphed in recent years from a self-congratulatory advertising schmooze fest (few do this better than the ad world, and I say that with zero judgment) to a who’s who of up-and-coming tech platforms. The aforementioned startups have all made Cannes into their versions of debutante coming-out party.

Even Facebook has had its Cannes moment. Remember the company’s big falling-out with General Motors? Weeks before the company’s big IPO, GM’s chief marketing officer declared to the world that Facebook ads didn’t work. But Facebook COO Sheryl Sandberg famously patched up the broken relationship at Cannes—reports from the time toasted the power of rosé.

Sandberg and Facebook CEO Mark Zuckerberg don’t appear to be making the trip to Cannes this year. They spent yesterday fielding questions from their shareholders about Trendghazi (the conservative-news-suppression scandal) and how driving a Lamborghini makes people hate you (Sandberg declared Zuckerberg is “warm and fuzzy,” no comment on Lamborghinis).

Even though Facebook’s two top execs aren’t at Cannes, the company still has plenty of warm fuzzies for advertising. Sandberg and Zuckerberg made one thing very clear to their shareholders: Sure, Facebook is experimenting with e-commerce, and customer service, and other business-to-business forms of monetization. But the $320 billion market cap company’s main method of making money will remain primarily through selling ads. “That’s what we’re set up to do well,” Sandberg said. “Thinking about our business as advertising-based is the right way to think about it.” Investors can raise a glass of the pink stuff to that—since Facebook’s IPO four years ago, the company’s shares have climbed 197%.

Erin Griffith is a writer at Fortune. Follow her on Twitter or drop her an email.

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Surprise! SoftBank's No. 2 executive steps down. Nikesh Arora, the heir apparent to founder and chairman Masayoshi Son, is leaving his post as president. The reason? Son wants to remain CEO longer than he anticipated, which apparently didn't sit right with Arora, a former Google executive handpicked to be his successor. The revelation came one day after an internal investigation into some of Arora's deals—prompted by a group of shareholders—found their claims of wrongdoing to be "without merit." (Fortune)

Dell unloads software group to reduce ginormous debt. The sale to private equity firms Francisco Partners and Elliott Management covers Quest Software’s IT management products and the SonicWall security business, but not Boomi, Dell’s cloud integration business. The deal size wasn't disclosed, but it was estimated near $2 billion. The transaction is meant to lighten the company's debt load, pending its $67 billion takeover of EMC later this year. (Fortune)

Canadian company picks up HP Inc. software assets. Open Text, which sells document and content management systems, will pay about $315 million for several HP applications focused on customer support and information management. The deal comes two months after Open Text bought some of HP's content management software. (Reuters)

FCC chief pushes vote on 5G networks. The agency's chairman Tom Wheeler plans a vote on creating spectrum for the next-generation wireless technology on July 14. The high speeds and bandwidth promised by 5G are crucial for applications such as virtual surgery or controlling machines remotely. (Reuters)

India opens the door to Apple retail stores. The government passed a new rule exempting certain foreign-owned companies—those selling "cutting-edge" products—from a local retail law forcing them to also sell India-made goods. (New York Times)

Twitter needs more than a Magic Pony. The social media company's acquisition of Magic Pony, which has a reported price tag of $150 million, is supposed to boost Twitter’s abilities in the machine learning department so that it can get smarter about the photos and videos that it displays to users. (Fortune)

Does Elon Musk have a robot up his sleeve? OpenAI, the high-profile artificial intelligence organization backed by Tesla's founder along with controversial investor Peter Thiel, is planning to release an "off-the-shelf" design for household uses that companies can manufacture on their own. (Fortune)

Troubled chipmaker Marvell Technology names new CEO. Matthew Murphy, who will serve as president and chief executive, was previously the head of product development, sales, field applications, marketing, and central engineering for Maxim Integrated Products. His predecessors left after an internal probe into how Marvell books revenue. (Reuters)

Facebook shareholders approve three-class structure. The new model will enable founder and CEO Mark Zuckerberg to sell a huge chunk of his shares for philanthropic purposes while retaining significant voting control. Shareholders also re-elected board member Peter Thiel, even though some suggested his role in backing a suite against media company Gawker might represent a conflict of interest. (Fortune)

China edges U.S. in supercomputer ranking. It can boast the top machine on a twice-yearly Top 500 list with a system that includes only domestic-made processors. China claimed 167 spots on the latest ranking, compared with 176 for the United States. (Wall Street Journal)


Tech industry wins big in Supreme Court patent ruling. For years, the industry griped that the deck was stacked in favor of patent owners—until the Patent Office created a system for companies to challenge bad patents without spending years and millions of dollars in court.

On Monday that system got a big boost when the Supreme Court rejected a challenge to the review system. The challenge sought to weaken the system by eliminating the broad standard that its specialized judges use to determine if patents should be canceled, and introducing more oversight of the judges. (Fortune)


J.P. Morgan appoints woman CIO for corporate and investment bank
by Valentina Zarya

Tumblr wants to join the live-video-broadcasting craze by Kia Kokalitcheva

Netflix is definitely not entertaining its shareholders by Paul Hodgson

The NYT's planned ad-free paywall will be a double-edged sword
by Mathew Ingram

Employees are the weakest link in computer security by Tom Krazit

No, Europe does not have 47 unicorns by David Meyer

Microsoft says Google Chrome browser is burning up your battery
by Don Reisinger


Tim Cook plans fundraiser for Paul Ryan. Apple's CEO pulled his company's support from the Republic Convention because of Donald Trump's inflammatory comments about topics like immigration, Islam, race relations, and women. But he'll host a dinner for the House speaker on June 28. (Fortune)

This edition of Data Sheet was edited by Heather Clancy.

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