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Future of Privacy

Mark Zuckerberg vs. Bill Barr

Moving the Market: Mark Zuckerberg will proceed with his plan to add end-to-end encryption across Facebook's messaging apps, rebuffing Attorney General William Barr's request for some level of government access to messages in order to ensure public safety.

• The big picture: Facebook vs. Barr is the main front in a larger fight between Silicon Valley and Washington over how to balance consumer demand for privacy with the security interests of law enforcement.

The backstory: In October, Barr and British and Australian officials asked Facebook to postpone its plans for end-to-end encryption on WhatsApp, Instagram and Messenger, noting that it would make it easier for criminals, terrorists and other offenders to evade law enforcement agencies.

• On Tuesday, WhatsApp chief Will Cathcart and Messenger product chief Stan Chudnovsky sent a letter to Barr stating that "the ‘backdoor’ access" he and his counterparts were demanding "would be a gift to criminals, hackers and repressive regimes" that would leave users more vulnerable.

• "It is simply impossible to create such a backdoor for one purpose and not expect others to try and open it,” they wrote.

• The letter was sent before a Senate hearing at which Facebook and Apple representatives testified. Facebook's Jay Sullivan said “people should be able to communicate securely and privately... without anyone — including Facebook — listening to or monitoring their conversations."

• Across town at the WSJ CEO Council, Barr argued that Facebook's plans for end-to-end encryption would make it possible for terrorists, drug cartels, child pornographers and other criminals to be "completely impervious to government surveillance."

What's next: Nothing soon. "Despite the Justice Department’s push," WSJ's Dustin Volz writes, "Republican and Democratic lawmakers have expressed little interest in pursuing legislation to require tech companies to allow some form of government access to encrypted communications."

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T-Mobile + Sprint

Tim Höttges defends merger

M&A on trial: Deutsche Telekom chief Tim Höttges on Tuesday sought to convince a federal judge that his pursuit of a T-Mobile/Sprint merger was not done to reduce price competition in the U.S. wireless market, Reuters' Sheila Dang reports.

• Höttges, who is chairman of T-Mobile’s board, "testified that T-Mobile sought to merge with its smaller rival to increase scale and gain wireless spectrum... but denied the goal was to reduce competition."

• His testimony comes one day after the coalition of attorneys general who are fighting the merger presented text messages that showed a T-Mobile executive saying the deal could raise prices for consumers.

The big picture: The merger of T-Mobile and Sprint would effectively reduce the number of competitive wireless carriers from four to three. The state AG's attempt to block the deal, which already has federal approval, could give states new power over mergers and acquisitions.

🇺🇸 Talk of the Trail 🇺🇸

How to spend it: Mike Bloomberg has now surpassed $100 million in advertising spending for his 2020 campaign.

• The latest polls have him at 5 percent.

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TikTok, TikTok

Zhang Yiming tests Resso

Big in the Bay, big in Beijing: TikTok owner Zhang Yiming is testing a new music app called Resso in emerging markets like India and Indonesia in a bid to create another global internet sensation, Bloomberg's Zheping Huang and Lucas Shaw report.

• The big picture: Zhang's company, ByteDance, is looking "to challenge the likes of Spotify and Apple Music in countries where paid music services have yet to garner large audiences."

What's next: "There are still no rights deals with the world’s three largest music companies — Warner Music, Universal Music and Sony Music — which control the vast majority of popular music and whose catalogs would be crucial for Resso to catch on globally."

Market Links

• The Murdochs face yet another harassment scandal (VF)

• Bob Bakish renews Viacom's pursuit of Miramax (Variety)

• Ted Sarandos says 26 million streamed 'Irishman' (Verge)

• Steve Burke expects $1.2b for Tokyo 2020 ads (Variety)

• Guru Gowrappan will lay off 150 at Verizon Media (CNN)

• Sundar Pichai invests in an Oakland news venture (Axios)

• Justin Smith plans to bring CityLab to Bloomberg (Adweek)

Simon Stacpoole/Getty

Age of Amazon

Jeff Bezos moves on Europe ⚽

Talk of TV Land: "Amazon has signed another major deal for sports rights in Europe, securing the rights to select matches in the UEFA Champions League for the German market," THR's Scott Roxborough reports.

• The big picture: Amazon is buying up sports rights around the world to boost its Amazon Prime offering. This agreement follows another "high-profile deal for Premier League soccer matches in the U.K."

Bloomberg/Getty

Wide World of esports

Joe Tsai buys stake in G2

Big in Brooklyn, big in Beijing: Alibaba co-founder and Brooklyn Nets owner Joe Tsai has bought a $10 million minority stake in G2 Esports, valuing the the Berlin-based franchise at around $100 million, Bloomberg's Eben Novy-Williams reports.

• "G2 is hoping to use the investment from J Tsai Sports — and Tsai’s expertise — to expand in Asia, more specifically China, where esports are incredibly popular but Western teams have yet to fully penetrate."

• "G2 isn’t looking to build gaming teams in China, but it is working to attract followers through video and social media. The franchise is hiring Mandarin speakers, writers and videographers to help it cross the cultural divide."

• "There are more gamers in China than there are people in the U.S. It’s also the biggest market for gaming revenue. ...The hope is that Tsai’s experience building an e-commerce business in China will help give G2 an edge."

The big picture: "Tsai is just the latest billionaire sports owner to invest in esports. Others... include Stan Kroenke, owner of the St. Louis Rams, Denver Nuggets and Colorado Avalanche; Cleveland Cavaliers owner Dan Gilbert; and Dallas Cowboys owner Jerry Jones."

🎮 What's next: Decision day. Read WaPo's Alex Andrejev on yet another young esports gamer who is deciding between going to college and going pro.

See you tomorrow.