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Data Sheet—Facebook and Twitter Finally Face the Music

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Official Washington was riveted Wednesday by the theater of a Senate hearing to confirm an associate justice of the Supreme Court. The technology and business community was busier following the testimony of a bearded and tieless founder, Twitter’s Jack Dorsey, and an on-message, Washington-savvy business poo-bah, Facebook’s Sheryl Sandberg.

Nothing much will change as a result of either of these hearings. Brett Kavanaugh will be confirmed. Twitter and Facebook will continue to avoid acknowledging that they are media companies while dodging and weaving on accepting further regulation in Washington.

Dorsey, belying his techno-visionary status, read nervously from his phone. Sandberg, true to her Harvard-McKinsey-Treasury-Google training, intoned in a well-rehearsed fashion.

One line, however, from Sandberg’s voluminous prepared testimony stands out. “The threat we face is not new,” Sandberg told the Senators. “America has always confronted attacks from opponents who wish to undermine our democracy. What is new are the tactics they use.”

What’s also new is that a single powerful company was the reckless dupe of America’s enemies. The Wall Street Journal reported convincingly Wednesday that Facebook engineers were well aware of their “platform” being used as a vessel for Russian interference in the 2016 elections. This was before Mark Zuckerberg and Sheryl Sandberg publicly pooh-poohed the notion that Facebook might be culpable.

Sandberg testified at length about all the ways Facebook is trying to make amends. And all it took was a novel attack on the way of life that allows Facebook to thrive to spur it to action.

***

Talk about riveting, tech followers everywhere are glued to the details of the Minnesota arrest of JD.com CEO Richard Liu, a star of this summer’s Fortune Brainstorm Tech conference, on suspicion of rape. An impossible-to-ignore detail: Liu’s lawyer is named Earl Gray.

Adam Lashinsky
@adamlashinsky
adam_lashinsky@fortune.com

NEWSWORTHY

The course of true love never did run smooth. The digital currency markets took another significant tumble over the past 24 hours, after news emerged that Goldman Sachs is not planning to jump into trading in a big way. Bitcoin dropped 12% to under $6,500, while Ethereum lost 19% and Ripple’s XRP was off 12%.

Sweets to the sweet. With Honor, a super political action committee focused on helping military veterans get elected, got a $10 million boost from Amazon CEO Jeff Bezos and his wife MacKenzie. One of the less common bipartisan super PACs, With Honor is funding 33 candidates: 19 Democrats and 14 Republicans.

Reason and love keep little company these days. Struggling video game retailer GameStop is making progress in its efforts to go private, hiring Perella Weinberg Partners to advise on a possible sale. That sent GameStop shares up 16% on Wednesday, though that still leaves the stock down 15% over the past year.

If love be rough with you, be rough with love. A decade ago, Walmart came under attack for the number of its employees on welfare. Lately, it’s Amazon under the microscope. On Wednesday, Sen. Bernie Sanders introduced legislation to tax large employers whose workers rely on federal benefits. It’s called the “Stop Bad Employers by Zeroing Out Subsidies Act,” or Stop BEZOS Act. Get it?

I ne’er saw true beauty until this night. Virtual reality was supposed to be the next big thing. Maybe not? Shipments of VR headsets dropped 34% in the second quarter, accelerating the 31% decline seen in the first quarter, according to market tracker International Data Corp. Average selling prices perked up to $442 from $333 a year earlier, however, IDC reported.

None is left to protest. Footage of ordinary New Yorkers collected by the city’s police department was provided to IBM and used to develop image recognition software that could sort people pictured by hair color, facial hair, and skin tone, The Intercept reports. IBM said its agreement with the city allowed for the data sharing and contained “the absolute requirement” to keep all data confidential.

(You do not need a headline reference explainer.)

FOOD FOR THOUGHT

The success of the largest tech companies is bringing increased scrutiny from lawmakers and regulators. In addition to the Bernie Sanders bill mentioned above, the Justice Department is convening a meeting with some state attorneys general to discuss using antitrust law against big tech. Russell Brandom at The Verge has written a lengthy think piece on how such antitrust scrutiny may play out, including how Google, Amazon, Uber, and Facebook each might be pursued. Here’s Brandom’s scenario for Jeff Bezos to ponder, for example:

In that view, the problem is that Amazon the store gives too much advantage to Amazon the manufacturer. And thanks to acquisitions such as Whole Foods and the power of Prime, Amazon the store keeps getting bigger.

But Stacy Mitchell, co-director at the Institute for Local Self-Reliance, says that could be solved with a Microsoft-style antitrust suit, carving Amazon up into distinct parts and setting new rules for each part. “Amazon needs to be broken up so that the platform is separated from its retail and manufacturing operations,” says Mitchell. “The platform needs to be treated like a common carrier, so it’s required to serve all comers equally.”

In short, it would be court-mandated net neutrality for The Everything Store. That would take a pretty aggressive Department of Justice to get us there, but [lawyer Lina] Khan’s analysis is gaining favor in surprising corners of Washington.

IN CASE YOU MISSED IT

President Trump Is Helping Make Chinese Research Great Again By David Meyer

Why a Top Scientist Thinks AI Could Face a Massive Public Backlash By Lucas Laursen

Now That Amazon Has Joined the $1 Trillion Club, Can Anything Stop Its Massive Growth? By Kevin Kelleher

How the Overwatch League Is Breaking the Rules of E-Sports By Lisa Marie Segarra and Devin Hance

Alexa Will Now Tell You About Upcoming Concerts By Emily Price

Fox Invests $100 Million in Caffeine, Squaring Off Against Amazon in Growing Video Game Streaming Field By Chris Morris

Uber Will Block Difficult Riders in Australia and New Zealand By Don Reisinger

BEFORE YOU GO

In a great victory for human rights in the world’s second-largest country, the Supreme Court of India has struck down a 157-year-old law outlawing gay sex. “Criminalising carnal intercourse is irrational, arbitrary and manifestly unconstitutional,” the unanimous ruling noted.

This edition of Data Sheet was curated by Aaron Pressman. Find past issues, and sign up for other Fortune newsletters.