Good morning.
The U.S. Senate has finally found a cause for bipartisan action: bashing Facebook and Google. The tech giants (plus Twitter) took a thumping yesterday for their slow response to evidence that Russia was using them to try to manipulate the 2016 election.
Here’s Democratic Senator Dianne Feinstein, in whose state all three companies reside:
“I don’t think you get it. What we’re talking about is a cataclysmic change. What we’re talking about is the beginning of cyber warfare…You bear this responsibility. You’ve created these platforms. And now they are being misused. And you have to be the ones to do something about it. Or we will.”
So much for the home state advantage. And here’s Republican Senator Richard Burr, who chairs the Senate Intelligence Committee:
“This is about national security. This is about corporate responsibility. And this is about the deliberate and multi-faceted manipulation of the American people by agents of a hostile foreign power.”
Three takeaways from the day’s drubbing:
First—The tech companies erred badly by not sending their CEOs to face the music. It’s a sign they aren’t taking the charges seriously enough, and it will only inflame the anger on Capitol Hill.
Second—As CEO Daily has argued before, the line that “we’re not media companies, we are just platforms” needs to be abandoned. To quote Lyndon Johnson, “that dog won’t hunt.”
Third—This problem doesn’t end with the Russian investigation. The Senators believe—as do I—that the tech companies have to accept some responsibility for the quality and veracity of the information they pass on to Americans. That has far-reaching implications…which, of course, is why the companies so desperately, but futilely, cling to the notion that they are mere neutral “platforms.”
More news below.
Alan Murray
@alansmurray
alan.murray@fortune.com
Top News
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• Tesla Misses Big
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Auto sales topped expectations for the second month in a row in October, falling by a much-smaller-than-expected 1.3% year-on-year (that's actually a small increase when adjusted for working days). Post-hurricane replacements, the continued strength of the labor market, and a high level of consumer confidence all helped to stave off an expected decline. Overnight, Honda shares rose 5.2% after it raised its profit forecast for fiscal 2018. WSJ, subscription required
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Around the Water Cooler
• Colin Kaepernick and the Case of the Falling Pizza Sales
Roger Goodell is copping it from all sides now. The CEO of Papa John’s, no less, accused the NFL of poor leadership Wednesday. John Schnatter complained that the long-running anthem protests have hit sales. Papa John’s is an NFL sponsor that is entitled to grouse at not getting its money’s worth. However, when the comments go hand-in-hand with a downward revision to the outlook for sales and profits, Schnatter exposes himself to accusations of deflecting blame—quite apart from upsetting people who think the dispute itself is about more important things than the fortunes of a pizza company. Fortune
• Boardrooms Slightly Less White and Male
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• Fitbit, GoPro Prove Hardware Is Still Hard
Further proof of the saying that “Hardware is hard”: Fitbit reported a net loss of $113 million for the quarter, mostly due to write-downs and other exceptional items. Revenue slumped 22% to $392 million, although that was marginally less dismal than the market had expected. Meanwhile GoPro shares fell 12% after it forecast a weak holiday season, despite a surprisingly healthy underlying profit in the third quarter. Fortune
• Astros Clinch the World Series
The Houston Astros won the World Series for the first time, beating the LA Dodgers in Game 7 thanks not least to a two-run homer from George Springer. I’ve got a prior record of mangling baseball stories, so I’ll stop there, adding only that our colleagues at Sports Illustrated reckon they’ll repeat the trick next year. Sports Illustrated
Summaries by Geoffrey Smith; geoffrey.smith@fortune.com
@geoffreytsmith
