'People are getting scammed': A top California regulator has major crypto worries – Protocol

'People are getting scammed': A top California regulator has major crypto worries – Protocol

Blockchain Crypto Market Technology
June 9, 2022 by Coinvasity
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Suzanne Martindale, who leads California’s financial consumer-protection efforts, sees the industry moving fast and regular people getting hurt.Suzanne Martindale told Protocol why regulating crypto has become critical and challenging.Suzanne Martindale, head of California’s Division of Consumer Financial Protection, had just joined the state’s financial regulatory body in early 2021 when crypto suddenly became a serious
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Suzanne Martindale, who leads California’s financial consumer-protection efforts, sees the industry moving fast and regular people getting hurt.
Suzanne Martindale told Protocol why regulating crypto has become critical and challenging.
Suzanne Martindale, head of California’s Division of Consumer Financial Protection, had just joined the state’s financial regulatory body in early 2021 when crypto suddenly became a serious consumer concern.
Crypto’s explosive growth sparked heightened worries about consumers dabbling in a volatile market and getting ripped off in the process.
“I would say that 2021 really was the year that everything seemed to get turbocharged,” Martindale, a senior deputy commissioner at California’s Department of Financial Protection and Innovation as well as head of the financial protection division, told Protocol.
“We are getting complaints where people are just straight-up being defrauded,” she said.
The resulting push to regulate crypto has kept Martindale busy.
She began the week by studying a new bill — AB 2269, filed by Assemblymember Timothy Grayson — that would require crypto companies offering financial products in California to register with the DFPI.
Martindale described the proposal as “a massive new bill that would create a new kind of crypto native licensing program in California.” It would be a big change for a state that’s taken a mostly hands-off approach, even as San Francisco’s become a hub for the crypto industry and Sand Hill Road has raised billions to invest in startups.

In an interview with Protocol, Martindale discussed why regulating crypto has become critical and challenging, given the industry’s rapid expansion, and how California can play an important role in this effort.
This interview has been edited for brevity and clarity.
What would California’s AB 2269 do if passed?
By and large, it is a bill that would create a new licensing regime for crypto finance. It would direct our department to stand up a new licensing program over crypto finance. It would sweep up a lot of the crypto-asset-related financial products out there and subject them to required licensing and examination. It is designed to be a consumer protection bill, to establish minimum standards for various crypto-related products and services.
What is in place now? What are crypto companies required to do given the current laws?
There’s no one-size-fits-all answer at this point. We’ve had discussions over the last several years. The term “fintech” has become popular, and you have tech companies wading into the financial services market.
You can talk about technology all day long, but when it comes to consumer finance, there are four kinds of activities people engage in: They’re spending, they’re saving, they’re borrowing or they’re investing. That’s always where I start: What kind of activity are we talking about?
Because in some cases, some products and services that may be marketed as tech may still fall squarely under one of those buckets: “Oh, it looks like a deposit account. It looks like a form of payment. It looks like a loan or it looks like an investment product.”
What we look at is really the activity. There are different kinds of products out there. There’s a wallet where you can hold assets. You may send money to a friend. You may be borrowing against your bitcoin, using it as collateral or you might be taking on an investment product.

There may be a different answer depending on the use case for what laws may or may not apply. That’s the debate that everyone is having right now.
We’re trying to take a measured approach. We don’t want to go too slow or too fast. We want to do it right with the explosion in these offerings and the increasing activity at the retail customer level.
We know we need to act, but we want to do it right. We are getting complaints where people are just straight-up being defrauded. We know that there are people that are just outright just getting scammed, and so we don’t want to move too slow either.
If this bill passes, what would be the next step for the DFPI?
We would have to put in a budget request to hire a bunch of new staff to implement this. We would have to pivot quite substantially to implement a new licensing program that may indeed override some of the work that we were contemplating doing on the regulatory and administrative level.
Wouldn’t it help provide clarity, or create more confusion potentially?
We need to analyze it. I’m someone who likes to be plain-speaking and give clear, your-grandma-can-understand kind of answers. Part of the challenge, part of the vexing challenge with crypto — and this has been the case for years in the area where crypto meets finance — even getting stakeholders to use a common set of terms, we’re not even there yet.
You have people that are still saying “crypto assets” or “cryptocurrency.” In the Biden executive order, they use the term “digital asset.” By and large, in our executive order, we have “crypto assets and related” financial products and services.
People use different terms and have different kinds of preconceived notions in their heads about what this may or may not be. We need to all be speaking the same language as regulators and as stakeholders in this process so that we can be on the same page to even have coherent policy debates. And that’s part of the challenge here.

New York introduced its own crypto licensing program a few years ago. What have been the big lessons from that experience?
I can’t speak for New York. To create a crypto-specific licensing regime, that’s one approach.
What we’re doing right now is taking a look at the laws we already have. We have this new California Consumer Financial Protection Law that passed in 2020. That’s modeled after Dodd-Frank. That gives us broad and flexible general authority over financial products and services.
We already have statutory authority, and a broad definition of financial product and service where we could leverage the existing tools we have to establish supervision and examination and potentially draft rules of the road through regulation for financial products and services.
There’s an open question: Do you craft an entirely new bucket that’s for crypto? Or do you leverage the existing laws that you already have and just clarify when a company that is engaging in financial products and services, XYZ-product features, you know, does it already fit under an existing bucket? Or do you have to create a new bucket?
That’s kind of the open question that we’re now going to be facing, particularly with this legislation now being introduced.
So, there’s still a debate.
Very much so. Absolutely, there’s a debate.
Coinbase wants a separate regulator for crypto.
Right. I understand that people get frustrated all the time with the fact that technology outpaces the law. The California Consumer Financial Protection Law gives us broad definitional jurisdiction over financial products and services. You can call yourself whatever you want, but what we’re going to ask is: What are you doing?
Are you offering a product or service that facilitates deposit taking? Does it look a lot like banking? Are you offering some sort of product that looks like an investment? Are you maybe a security? Are you offering a way to send or receive funds? Does that look like payments? Or are you offering something that gives people an advance on funds that kind of sounds like credit or loans?

Again, the four pillars of consumer finance are spending, saving, borrowing and investing. So we’re going to look at the activity first. So I’m always going to ask the question: Do we need a new law? Do we need a new licensing regime? Or are these products, all things being equal, already covered by existing financial laws?
Maybe those financial laws aren’t good enough. Maybe they don’t quite fit. But let’s start with what authority do we already have before we’re looking at whether there are actual changes [we need to make] or you need a new license, or you need a new regulator completely to somehow handle these products and services.
All of those things you mentioned many crypto companies are doing.
Yeah. If there is something in a particular statute that just doesn’t quite fit, let’s have a conversation about it. But I think starting at the high level, I am not someone who says, “Oh, there’s a new technology involved. Therefore, we need entirely new laws.”
That may or may not actually be the case. You really have to drill down, look at the facts and circumstances, look at what these companies are actually offering. Again, there’s no one-size-fits-all answer in this.
That’s why the executive order in California includes extensive stakeholder engagement. We published our invitation to comment a few days ago. We asked a series of questions about approaches to regulating this space. We’re also directed to develop consumer protection principles.
At a very high level, if you want to be a good guy, here’s the kinds of things you should be thinking about.
A lot of it’s going to be pretty common sense, like truth in advertising, good customer service and a way to have error resolution procedures so people can fix problems, have a way to handle complaints — stuff that traditional companies have long been required to do under various laws.
We’re going to be having meetings with various stakeholders and various industry segments and obviously with community groups and people who are using these products as retail customers to get a better sense for where the biggest risks are and where we should be allocating our resources to really provide some sanity to what is still an increasingly growing and often volatile ecosystem.

What are the most common consumer complaints you’ve received?
Some of it’s been customer service issues. Some of it’s been criminal fraud: the romance scams and affinity scams. It’s — often, unfortunately — heartbreaking that there’s just really very little we can do.
How do you compare the need to regulate crypto with the way other past trends or technologies had to be regulated?
It’s moving very fast. I would say that 2021 really was the year that everything seemed to get turbocharged. For a while, it was just some early adopters and people that had money to burn. It was folks that were kind of crypto enthusiasts who were comfortable with the speculative nature of it. It was a relatively small pool of people, largely in the tech world, who are engaging.
But last year was the first year that we started getting complaints from regular folks that were saying, “Hey, I saw what I think was going to be a great deal and I thought, ‘Oh, this would be an alternative to traditional banks, and I could put my savings in it’ and, oops, my account got wiped out by a hacker and now I have no money.”
Last year was the first year we really heard that.
It’s still an emerging issue. It doesn’t quite compare to — I’m remembering back in the years building up to the foreclosure crisis, where community groups and advocates are sounding the alarm bell: “This is a ticking time bomb; you’re putting people in mortgages they can’t afford.” Then we hit that precipice and the global collapse of the financial system.
I don’t think that we’re there, in part because this has become a parallel system, right? These folks, by and large, are not in the banking system. So it’s not quite the same thing as the real estate bubble of the 2000s or anything like that.

It still feels like early days. But it also feels like the pace is so much faster. It does feel like the next year to two years are going to be very critical for regulators across jurisdictions to start to put down some guardrails where the law is clear, where [if] there are obvious violations really start to draw some lines in the sand, like, “No, this is clearly illegal.”
The next year or two I think is going to be critical.
Another trend is the growing interest of institutional investors in crypto, highlighted by Fidelity’s announcement that it plans to allow retirement account holders to invest in bitcoin.
Certainly, we’re seeing a lot of capital flowing. That certainly is going to be of interest to us. We’re not necessarily going to say that a lot of investment in a particular space is an unqualified good or unqualified bad.
We need to take a look at what’s going on and get the best information and then just make sure that we are adaptive. People may find this odd coming from a regulator, but we’re trying to be nimble here. We’re trying to get in front of these emerging issues so that we’re not waiting until after everyone’s been ripped off, or you and the bad actors have made good money and the good actors have been outcompeted. We don’t want that to happen.
Again, we have to balance that with: If we rush in too fast before we have good information, we could potentially make the wrong call. We don’t want to make the wrong call.
Where the money flows may or may not be indicative of what actually is responsible. It just indicates stakeholder interest, and it means that we need to be where those conversations are happening.
California, historically, has been known to set the pace for different areas of regulations. How do you view efforts to regulate crypto in Washington and other states?
Well, California, on its own, is the fifth-largest economy in the world. Often, businesses and industries often start and grow here. We are a resource-rich state in more ways than one. In many instances, where California goes, so goes the nation. We do think we have a responsibility to play a leadership role in this space.
Washington can’t do everything from Washington. We strongly believe that there is an important role for states to play in regulating industries and protecting our residents. So we’re doing this all in concert with our federal partners. We don’t want to create conflicting rules that don’t make sense.

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Benjamin Pimentel ( @benpimentel) covers crypto and fintech from San Francisco. He has reported on many of the biggest tech stories over the past 20 years for the San Francisco Chronicle, Dow Jones MarketWatch and Business Insider, from the dot-com crash, the rise of cloud computing, social networking and AI to the impact of the Great Recession and the COVID crisis on Silicon Valley and beyond. He can be reached at bpimentel@protocol.com or via Google Voice at (925) 307-9342.
Some VCs still see remote work as “phoning it in,” and would rather bet on IRL startups.
High-profile VCs showing interest in IRL startups could give companies one more reason to work in person.
Remote work has taken over startup culture in the last two years. But some investors now say they specifically want to fund “IRL startups.”
Not all have been as brash as Elon Musk, who told Tesla employees last week that remote work was “no longer acceptable” (and later said he’d be laying off 10% of his salaried workforce). But Musk’s jeer that employees who don’t like the policy should “pretend to work somewhere else” seems to have tapped into a brewing disillusionment with remote work on the part of some vocal VCs.
“[Tech workers] aren’t storming the beaches of Normandy nor climbing out of coal mines,” Lux Capital co-founder Josh Wolfe told me in a Twitter DM last week. “They’re asked to suffer the inconvenience of showing up into fancy modern offices to be with their teammates.”
Wolfe, whose firm invests in companies developing emerging technologies, said that top talent should expect flexibility when it comes to time off, parental leave and “family or health needs,” but “will also show up and build camaraderie” rather than working remotely indefinitely.

“There’s been a wave of entitlement attitude slowly crashing ashore,” Wolfe said. “There is a reason people talk about fair-weather, fickle or checked-out colleagues as ‘phoning it in’ — long before Zoom.”
Tech workers have reason to feel entitled. Most are still enjoying a candidate’s job market that has put pressure on companies to offer flexible work. But more high-profile VCs showing interest in IRL companies could give startups one more reason to work face to face.
Some investors are going so far as to announce their interest in investing in companies with an in-office culture. Founders Fund partner Keith Rabois tweeted last month that he was “looking to fund IRL startups.” When I followed up with him later, Rabois told me in a DM that he is “only investing in startups that are primarily IRL.” Apparently, startups with remote-first cultures need not apply.
Wolfe tweeted last week that Musk’s in-office requirement was “another example where I strongly agree with @elonmusk.” Wolfe cited that a recession will require in-person communication to show “commitment + companionship + compassion.”
Wolfe hasn’t yet been deterred from investing in a company because of its remote-first culture, he told me, but he reiterated that “tougher teams together will outcompete” others in a down market.
A SaaS investor from a leading VC firm — speaking on the condition of anonymity because they aren’t authorized to speak to the press — admitted a “strong preference” for founders who promote an in-office culture. In-office cultures can move a company through its early stages faster, and early-stage ideating is “very, very hard” to do remotely, that investor has found.
But, that investor said, once a startup has customers and starts to build out an executive team, things tend to get more flexible by necessity, with some startups allowing hybrid schedules and opening up additional offices in other cities. That stage typically comes when the startup has matured to the point where it makes decisions without needing to involve the whole team in real time.

“If things are more defined, I do think in general, founders and employees can be incredibly productive remote-first. There’s huge, huge benefits,” the SaaS investor said. But when companies are still ideating, “hopping in a room to have a conversation makes a big difference, as opposed to timing a Zoom. Grabbing that extra five minutes between meetings makes a big difference.”
Recruiting is already a huge challenge, and many companies simply can’t afford to limit their options by imposing an in-office policy. (For this reason, recruiters have a strong preference for flexible work policies because they make the widest possible pool of candidates available, the SaaS investor said.)
When I posed this to Rabois, though, he wasn’t swayed.
“LOL. I wouldn’t hire any of those people,” Rabois said. “The ambitious people want to work IRL.”
One IRL startup, the compensation-benchmarking software maker Pave, has so far only hired in San Francisco and New York, where it has offices.
“We’re very much in the minority” when it comes to being office-centric, Pave’s founder and CEO, Matt Schulman, told me last month. “It’s a huge selling point when we recruit candidates, actually.”
Companies that start remotely seem to have particular challenges transitioning to the office, Schulman said, because some employees won’t want to go to IRL.
By contrast, Pave has found success with an in-office culture because it’s “so explicit and proactive” in communicating it to candidates from the beginning, Schulman said. That can be a selling point when candidates visit the office and “walk in and hear the laughter, hear the [sales] gong ringing,” according to Schulman.
And during COVID-19 spikes, when Pave would temporarily go remote, Schulman said employees felt isolated, morale dropped and “velocity on the product road map slowed down.”
“It just wasn’t as vibrant of a company culture because our thesis is all geared around camaraderie and in-person collaboration and creativity,” Schulman said. “When you removed the office, the ability to be in person, it made it really tough.”
Rabois’ tweet attracted criticism from Yelp co-founder and CEO Jeremy Stoppelman, who posted that wanting to fund in-person startups was “equivalent to ‘looking to fund startups running Windows95.’”

“Time to live in the future and fully embrace remote [work],” Stoppelman tweeted. “Open source communities have built amazing and complex things entirely remote for decades.”
“Not a single $10b company was built this way,” Rabois fired back. But not all VCs feel so strongly oppositional toward remote work; remote-first startups will find “plenty of other investors” willing to bet on them, he said.
The SaaS investor I spoke with agreed. Most VCs are “completely indifferent” to whether a startup is working remotely or in person, they said.
As the market turns, some VCs are even recommending remote-first as a cost-cutting measure. In a blog post on Monday, Kat Steinmetz, a principal and talent adviser at Initialized Capital, suggested that companies “make everything virtual for now” — including subletting their office if they can’t get out of the lease — in order to save money.
When Initialized surveyed its own portfolio companies six months ago, it found that the share of fully distributed startups in its portfolio had more than doubled during the pandemic, with 42% saying they would be all remote. Of the Initialized-backed startups with offices, only around 15% said they’d expect employees to come in four or five days a week.
Ultimately, founders drive culture, whether it’s office-based, remote-first or somewhere in between. Most aren’t dogmatic about their strategy here. The SaaS investor estimated that around 80% of founders are open to changing their remote or in-office strategy based on where the market goes and what allows them to execute.
“They basically want remote-first so that they have better recruiting options and satisfy some employee needs, mostly driven by the FAANG companies,” that investor said. “If everyone suddenly said, ‘You know what? This remote-first thing sucks. Everyone’s going in person,’ they’ll gravitate that way.”
Internet for Growth, an initiative of the Interactive Advertising Bureau, supports the transformative role the advertising-supported internet plays in empowering America’s small businesses, helping entrepreneurs bring their ideas to life. Supported by a diverse community of over 700 IAB members including marketers, agencies, publishers, platforms and ad tech providers, as well as hundreds of small businesses and creators, Internet for Growth highlights the benefits the internet delivers to local economies, expanding opportunities for innovators to reach markets far beyond their neighborhoods. Their work ensures people understand the limitless opportunity the internet provides for creativity and commerce, fair competition, and connecting with consumers on mutually shared values and interests, no matter the background or geography.

Smaller companies like ours are buckling under the weight of unprecedented price increases, supply chain shortages and rising labor prices. To increase our marketing reach on a slim budget, the internet is our best option. Internet marketing is critical to the survival of our business. It’s one of the most affordable, effective forms of marketing at our disposal.
Limiting our options will only hurt us at a time when we need every opportunity possible to stay in business. Small companies like ours are competing with much larger competitors to reach the same customers in a busy, crowded space.

How many Valpaks, grocery store flyers and random postcards from local businesses have you discarded in the last month? We’re all overloaded with physical junk mail. Even if an offer catches our eye, there’s no instant online access or interactivity. Generational shifts have also impacted marketing. For younger generations, digital media is a part of everyday life. How they shop, date and travel: It’s all digital. For most of our customers, shopping online is the norm, and their payment choices are digital too, including at pop-up and live events. The digital economy is a way of life and here to stay. Congress needs to be careful tampering with digital advertising tools that Pot Pie Factory needs to stay in business.

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Over 100 years in business, Virginia Diner has learned and shifted approaches to advertising through changing times and overcome inevitable hurdles.
The idea that politicians could restrict cost-effective online advertising and marketing is daunting. These laws could potentially cripple the way small companies like ours do business in this ever-evolving digital age.
The recent pandemic was devastating for many brick-and-mortar small businesses relying on in-person transactions, especially those in remote, rural areas like ours in Wakefield, Virginia. E-commerce was a lifeline. As consumers spend more time online, they also demand goods be delivered directly to their doorsteps, quickly. Targeted, tailored advertising has become a critical tool for Virginia Diner to identify and serve customers, maintain growth and stay viable in a rapidly changing marketplace.
Traditionally, our core business had been wholesale, with retailers selling our products in brick-and-mortar stores. But during the pandemic, direct-to-consumer sales (DTC) became our biggest revenue channel, generating enough volume for us to stay at full capacity and keep all our team members employed. Proposed restrictions on data-driven advertising would demolish DTC sales. Our ability to identify and advertise to customers inclined to do business with us is at risk. Speaking as a consumer, I enjoy learning about and purchasing unique brands that meet my tastes, which I might not discover without personalized ads. I hope legislation making it hard to use data responsibly and to personalize ads to serve more customers never gets enacted.
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I founded my small business to help other small businesses grow. Whether they need help amplifying a brand, an artist or selling a product or service, our clients rely on S.S. Creative to connect with more customers, and much of that relies on consumer data.

The last few years have been tremendously difficult for small businesses, especially those I represent. For musicians and artists, live venues where they would typically connect with fans suddenly went dark, halting their ability to grow their brands and promote their work. For many, they could only connect with their audiences using social media and internet advertising.
Consumer data and digital marketing aren’t just nice tools to have: They’ve been essential to my clients’ survival. They range from recording studios and musicians to hair salons and lawyers, and the one thing they all have in common is that during the last two years, every one of them has had to move his or her business online to forge a path to success. The only reason my clients’ businesses are still surviving today is because they can connect with their customers digitally.
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Baby Chick is a digital media company covering everything from pregnancy and birth to postpartum and parenthood, helping parents make the best decisions for their families. My wife Nina and I started the company on Mother’s Day in 2015. Since then, Baby Chick has influenced over 26 million (primarily) women over the past seven years and gained over 81 million pageviews. If we didn’t have internet advertising, it would be challenging for us to continue operating the company.
Internet advertising has enabled us to grow our business to what it is today, but proposed regulations limiting advertisers’ ability to reach target audiences would hurt media publishers like us. With less precise information, advertisers would likely reallocate budgets from programmatic ad-buying or bid less money on digital ads, which would negatively impact Baby Chick’s revenue and our family’s income. The readership experience would suffer if site visitors weren’t seeing ads relevant to their interests and Baby Chick’s unique content. If Congress enacts restrictions on using data for advertising, it would be extremely difficult to deliver the content our customers enjoy and to pay our staff.
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New markets are constantly emerging on the internet. That’s why we see the IBM and AOL of one era replaced by the Google and Spotify of the next. That’s why today direct-to-consumer brands like Madison Reed in hair care are winning market share from giants of the industry, and brands like Allbirds are finding entirely new markets. This pace of innovation is only possible because companies are leveraging data about consumer behavior to create truly customer-centric products, services and media.

When television was the main way brands built their businesses, 200 advertisers were responsible for about 88% of network television revenue in the U.S. TV advertising was the only way to reach most households in a visual medium. It was costly, requiring relationships with big ad agencies and minimum campaign spends.
High barriers made it hard for small firms and startups to advertise at all. By contrast, millions of small businesses today are finding customers on Amazon, Facebook, Google and niche platforms like Marriott and Uber Eats with the help of data-driving advertising. There’s also “earned media.” In the open environment of the internet, millions of times a day social media users are promoting their favorite brands on Instagram and TikTok.

Used responsibly and transparently, data does not harm competition and innovation. It fosters it, as my research for the Interactive Advertising Bureau shows. A healthy economic future depends on fair and creative use of data.

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Internet for Growth, an initiative of the Interactive Advertising Bureau, supports the transformative role the advertising-supported internet plays in empowering America’s small businesses, helping entrepreneurs bring their ideas to life. Supported by a diverse community of over 700 IAB members including marketers, agencies, publishers, platforms and ad tech providers, as well as hundreds of small businesses and creators, Internet for Growth highlights the benefits the internet delivers to local economies, expanding opportunities for innovators to reach markets far beyond their neighborhoods. Their work ensures people understand the limitless opportunity the internet provides for creativity and commerce, fair competition, and connecting with consumers on mutually shared values and interests, no matter the background or geography.
The Xbox app will let you stream games straight to your TV without dedicated console hardware.
Microsoft’s partnership with Samsung has been rumored for weeks now.
Nick Statt is Protocol’s video game reporter. Prior to joining Protocol, he was news editor at The Verge covering the gaming industry, mobile apps and antitrust out of San Francisco, in addition to managing coverage of Silicon Valley tech giants and startups. He now resides in Rochester, New York, home of the garbage plate and, completely coincidentally, the World Video Game Hall of Fame. He can be reached at nstatt@protocol.com.
Microsoft is entering new territory for its Xbox Game Pass subscription platform: smart TVs, no Xbox required.
On Thursday, the company announced a partnership with Samsung to bring a dedicated Xbox app to the electronics giant’s newest line of TVs, so subscribers to Game Pass can stream games straight to the display. You won’t need an Xbox, PC or any other separate hardware save a game controller to link with the Samsung display. You will, however, need a good internet connection to stream Xbox games from the cloud. The app will be distributed to compatible Samsung sets starting June 30.
The news marks a pivotal moment for Microsoft’s gaming division and an initiative it’s now calling “Xbox Everywhere.” The vision is to make its library of Xbox games available on virtually any screen, using cloud gaming in the absence of dedicated Xbox or PC hardware. The company is starting with Samsung, but it says it wants to work with other TV makers in the future, too.

Microsoft’s partnership with Samsung has been rumored for weeks now, and the company said a year ago that it had ambitions to make Game Pass available on smart TVs and through dedicated set-top box hardware. The company is in the process of building its own streaming device, said to be similar to a Roku puck, but it’s still in the development stage, according to a report from Windows Central last month. Microsoft isn’t sharing any new details about the device, codenamed “Keystone.”
That way, the company can sign up new Game Pass subscribers and grow its audience, even if those customers don’t own pricey consoles or gaming computers, and especially if they might be new to the hobby and hesitant to drop hundreds of dollars on hardware and software to get started.
Microsoft took the first steps toward this vision with the launch of its cloud gaming platform in 2020. Since then, the company has expanded access from PCs and Android phones to iOS devices and Xbox consoles, the latter allowing players to quickly try games without downloading them and to stream more graphically intensive titles on older Xbox hardware.
Going forward, one of the primary goals of Microsoft’s Xbox strategy is to expand its customer base well beyond the console audience, which includes a few hundred million customers worldwide but pales in comparison to the world’s billions of smartphone owners. “As we look to make gaming more accessible to even more people, and reach the three billion players globally, we’ve invested heavily in the cloud,” Xbox Cloud Gaming chief Catherine Gluckstein wrote in a blog post last month detailing the Xbox Everywhere initiative.
Gluckstein’s boss, Microsoft Gaming CEO Phil Spencer, has said similar versions of this countless times over the past few years. “At some point in our future, more people are going to be part of the Xbox community on mobile than they are on any other device, just by the nature of how many mobile phones there are,” Spencer told Axios last year.

Microsoft is planning a number of updates to Xbox Game Pass in the coming months. The company is expanding the subscription service to Argentina and New Zealand, and later this year it will let subscribers to Game Pass’ pricier Ultimate tier stream purchase games from the cloud, even if those titles are not part of its subscription platform. (Right now, Microsoft’s cloud gaming platform only supports Game Pass games.)
It’s also working on launching something it’s calling Project Moorcroft, a specialized game demo program just for Game Pass subscribers that sounds similar to Sony’s planned game demo program for its competing PlayStation Plus platform.
Nick Statt is Protocol’s video game reporter. Prior to joining Protocol, he was news editor at The Verge covering the gaming industry, mobile apps and antitrust out of San Francisco, in addition to managing coverage of Silicon Valley tech giants and startups. He now resides in Rochester, New York, home of the garbage plate and, completely coincidentally, the World Video Game Hall of Fame. He can be reached at nstatt@protocol.com.
The agency’s chair is getting ready to zero in on behavioral advertising.
Lina Khan has long been preparing to write regulations that would ban the collection of certain kinds of data.
Ben Brody (@ BenBrodyDC) is a senior reporter at Protocol focusing on how Congress, courts and agencies affect the online world we live in. He formerly covered tech policy and lobbying (including antitrust, Section 230 and privacy) at Bloomberg News, where he previously reported on the influence industry, government ethics and the 2016 presidential election. Before that, Ben covered business news at CNNMoney and AdAge, and all manner of stories in and around New York. He still loves appearing on the New York news radio he grew up with.
Congress is getting closer to some kind of agreement on how it wants to regulate data usage, but FTC Chair Lina Khan told Protocol that companies will still have to contend with her agency’s powers as well.
Khan welcomed an agreement struck last week by three of the four congressional negotiators on a privacy bill, calling it “incredibly exciting to see Congress take this important step.” The FTC chair made clear, however, that she feels the agency shouldn’t pause its agenda just because of the congressional push.
“While this effort is pending, we’re also of course fiercely committed to using all of our existing tools, enforcement and policy — doing anything we can to make sure Americans are fully protected,” Khan said.
Khan, who is coming up on the end of her first year in office, has long been preparing to write regulations that would ban the collection of certain kinds of data, as well as tackle algorithmic discrimination. She’s also complained repeatedly about behavioral advertising.

“We need to be very clear-eyed about the fact that the behavioral ad-based business model creates a certain set of incentives that are not always aligned with people’s privacy protections,” she said.
To Khan, this work — which would likely rely on the commission’s existing power to regulate specific “unfair or deceptive acts” — should proceed even while Congress weighs its own approach to data protection. In their recent draft, lawmakers propose dramatically expanding the FTC’s role in digital privacy. The bill would give the agency power over what kinds of sensitive data need the most protection, a say in how companies can minimize the information they collect and oversight of data relating to kids and teens. The FTC’s role in the bill, however, is part of the reason the measure would give consumers only limited rights to sue companies, and at least one key senator, Democrat Maria Cantwell, is still withholding her support for the draft over the issue.
Available legislative days are also rapidly dwindling on Capitol Hill, making it more likely the U.S. will continue without a national privacy law for years to come.
Still, many Democrats in particular would like to see the FTC act on data. A number of Democratic senators recently wrote to Khan, for instance, asking the FTC to help ensure protections for the data of people seeking information about abortion. The letter cited the likelihood that the Supreme Court will soon overturn a federal right to abortion and the fact that many consumers rely on health and location-based apps that could give law enforcement and anti-abortion activists personal information about people seeking to terminate pregnancies.
“We take very seriously the fact that there are now all sorts of technologies that Americans rely on to navigate everyday life that have either business models that are endlessly surveilling them or that are collecting that data and then selling it on secondary markets,” Khan said. “Inasmuch as existing laws and our existing tools cover some of those practices, we’re going to be taking action.”

Despite the coming anniversary of her tenure, Khan’s agenda is only just now really getting started. Alvaro Bedoya joined the FTC as its third Democratic commissioner less than a month ago, and his votes are likely needed to kick off any privacy rulemaking, both because of his career focus on the issue and because the possibility of expansive rulemaking has alarmed big business groups and the FTC’s two Republican commissioners.
Ben Brody (@ BenBrodyDC) is a senior reporter at Protocol focusing on how Congress, courts and agencies affect the online world we live in. He formerly covered tech policy and lobbying (including antitrust, Section 230 and privacy) at Bloomberg News, where he previously reported on the influence industry, government ethics and the 2016 presidential election. Before that, Ben covered business news at CNNMoney and AdAge, and all manner of stories in and around New York. He still loves appearing on the New York news radio he grew up with.
Lina Khan said she’s been focused on stories of workers who had their pay cut or schedules thrown into disarray by consolidation.
FTC Chair Lina Khan is eyeing mergers.
Lizzy Lawrence ( @LizzyLaw_) is a reporter at Protocol, covering tools and productivity in the workplace. She’s a recent graduate of the University of Michigan, where she studied sociology and international studies. She served as editor in chief of The Michigan Daily, her school’s independent newspaper. She’s based in D.C., and can be reached at llawrence@protocol.com.
Ben Brody (@ BenBrodyDC) is a senior reporter at Protocol focusing on how Congress, courts and agencies affect the online world we live in. He formerly covered tech policy and lobbying (including antitrust, Section 230 and privacy) at Bloomberg News, where he previously reported on the influence industry, government ethics and the 2016 presidential election. Before that, Ben covered business news at CNNMoney and AdAge, and all manner of stories in and around New York. He still loves appearing on the New York news radio he grew up with.
Companies need to think more about how their mergers and acquisitions affect working conditions, according to FTC Chair Lina Khan.
In an interview with Protocol, Khan explained that her recent efforts to collect information on the results of consolidation, including in tech, have highlighted how M&A “can really degrade working conditions for people,” and she suggested U.S. antitrust enforcers will do more to take labor issues into account when analyzing deals.
Khan said she was particularly concerned with reduced wages or shaky schedules. She spoke after a series of listening sessions by the FTC and Justice Department antitrust section, which aimed to hear from workers, and signaled interest in trying to block deals that competition enforcers might have previously ignored because they didn’t raise prices.
One goal of the FTC and DOJ forum, Khan said, is to provide a space for everyday workers to detail their lived experiences with mergers and acquisitions. “There have been a few areas where we’ve heard particularly salient stories that compel us to make sure our merger guidelines are addressing those problems,” Khan said.

This isn’t the first time Khan has referenced labor as a metric for scrutinizing deals. In a January interview with CNBC, Khan said both the FTC and the Department of Justice are focused on protecting workers caught up in mergers. It’s not a question of whether labor is important, she said, but of how to incorporate worker protections in the FTC’s merger guidelines.
“Both agencies have been looking at the ways in which mergers in particular may lessen competition for labor and have downstream effects on workers in ways that are harmful,” Khan told CNBC. “That needs to be on our radar.” She made clear to Protocol, however, that wages and schedules had emerged as key themes as she’d heard from workers in recent months.
Khan also urged Congress to pass antitrust legislation further protecting gig workers’ right to organize in September of last year.
2022 has been a big year for M&A, starting with Microsoft buying Activision Blizzard in January for $68.7 billion. The deal was reportedly influenced by rampant workplace issues within Activision Blizzard, including misconduct allegations that led employees to call for CEO Bobby Kotick’s resignation. The never-ending Elon Musk-Twitter saga has also prompted speculation as to how such a controversial acquisition might impact Twitter employees.
It’s unclear how much mergers help or harm workers: It depends on the particular deal, and who you ask. Khan acknowledged this herself in her interview with CNBC, noting that in some cases, unions think mergers act in workers’ best interests. But previously, some M&A activity has clearly been viewed as cutting prices — and thus, good for competition — because it would eliminate jobs. Khan also referenced retrospective studies that revealed detrimental effects of mergers.
Khan and the head of DOJ’s antitrust section, Jonathan Kanter, have been pushing to hear more from workers and others in the economy, while relying less on price in analyzing competition. That’s prompted criticism from conservatives and antitrust traditionalists that the two enforcers, who are known as reformers, are abandoning the economic grounding of competition law and using it to pursue a left-wing agenda outside of the text of the statute.

As part of their efforts, Khan and Kanter have been taking in comments on revamping guidelines that tell the public and the business community what kinds of deals the enforcers tend to scrutinize more heavily and which they tend to let pass through without much investigation.
Lizzy Lawrence ( @LizzyLaw_) is a reporter at Protocol, covering tools and productivity in the workplace. She’s a recent graduate of the University of Michigan, where she studied sociology and international studies. She served as editor in chief of The Michigan Daily, her school’s independent newspaper. She’s based in D.C., and can be reached at llawrence@protocol.com.
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