Overnight Tech: Feds say bid for Qualcomm could be national security threat | BlackBerry sues Facebook | House votes to reauthorize FCC | Pew survey on social media use

FEDS SAY BROADCOM TAKEOVER MIGHT BE A NATIONAL SECURITY THREAT: New details came out today about the government’s concerns over Broadcom hostile takeover bid for Qualcomm.

Qualcomm today released a letter from the Committee on Foreign Investment in the U.S. (CFIUS) revealing that the panel is worried that the acquisition could hurt U.S leadership in emerging technologies.

Specifically, the panel thinks that the deal puts at risk Qualcomm’s investments in developing new 5G capabilities and leaves the door open for China to take the lead on network development.

{mosads}”While the United States remains dominant in the standards-setting space currently, China would likely compete robustly to fill any void left by Qualcomm as a result of this hostile takeover,” the letter reads. “Given well-known U.S. national security concerns about Huawei and other Chinese telecommunications companies, a shift to Chinese dominance in 5G would have substantial negative national security consequences for the United States.”

CFIUS argued that Broadcom’s previous acquisitions have seen a decline in research and development funds and a pivot to short-term profit-generating projects that could hamper innovation from the chip-making giant.

 

Background: Yesterday, Qualcomm agreed to postpone its annual shareholder meeting this week, during which Broadcom was expected to win a majority of the company’s board of director seats.

Broadcom accused Qualcomm of orchestrating the investigation in order to “disenfranchise its own stockholders.”

 

Broadcom’s new tune: Today the company released a statement pledging to work with CFIUS and denying that it intended to water down Qualcomm’s R&D investments.

“There can be no question that an American Broadcom-Qualcomm combination will provide far more resources for investments and development to that end,” the statement said. “Entrusting this effort to a failing Qualcomm management who lacks the support of its owners, and that pays out much of its excess cash flow in fines as a result of serial lawbreaking, would not be in America’s long-term interests.”

 

What is CFIUS? The inter-agency panel is made up of officials from the departments of Justice, State, Treasury, Energy and other offices. It’s tasked with policing foreign deals for U.S. businesses to prevent any potential national security threats. The committee has been active in pushing back on Chinese forays into the U.S., but it’s rare to see the office make such an overt intervention into an ongoing deal.

 

Check out The New York Times’ for more on the secretive panel.

Please send your tips, comments and compliments to Ali Breland (abreland@digital-release.thehill.com) and Harper Neidig (hneidig@digital-release.thehill.com) and follow us on Twitter: @alibreland and @hneidig. We’re also on Signal and WhatsApp. Email or DM us for our numbers.

 

BLACKBERRY SUES FACEBOOK FOR PATENT INFRINGEMENTS: BlackBerry sued Facebook and two of its subsidiaries, Whatsapp and Instagram, over patent infringement claims on Tuesday.

The mobile phone company is accusing Facebook of developing applications that use proprietary BlackBerry messaging technology. BlackBerry says those actions affected its business, “diverting consumers away from BlackBerry’s products and services” and toward Facebook, according to its 117-page complaint filed to the U.S. District Court for the Central District of California.

“As a cybersecurity and embedded software leader, BlackBerry’s view is that Facebook, Instagram, and WhatsApp could make great partners in our drive toward a securely connected future, and we continue to hold this door open to them,” BlackBerry spokeswoman Sarah McKinney said in a statement.

Read more here.

 

FCC PROPOSES NEARLY $1 BILLION TO REBUILD NETWORKS AFTER HURRICANE: Federal Communications Commission (FCC) Chairman Ajit Pai is proposing a nearly $1 billion package to rebuild and expand broadband networks in Puerto Rico and the U.S. Virgin Islands, which were devastated by last year’s hurricanes.

“The people of Puerto Rico and the U.S. Virgin Islands are still recovering from last year’s devastating storms,” Pai said in a statement. “That means the FCC’s work is far from over.”

The proposal would allocate $64 million immediately to efforts to restore the existing networks in the territories. The rest of the $954 million would go toward medium- and long-term projects to expand mobile and fixed broadband networks.

Read more here.

 

LAWMAKERS WANT TO CRACK DOWN ON ONLINE COUNTERFEIT GOODS: Lawmakers on Tuesday pushed officials to crack down on the growing number of counterfeit goods sold online.

“With the rise of popular online marketplaces, counterfeiters have greater access to the market and can easily sell their phony products directly to consumers,” said Senate Finance Committee Chairman Orrin Hatch (R-Utah) during a hearing by his panel on protecting online consumers.

While authorities have techniques to police ports and shipments for counterfeit goods, online retailers — including Amazon — often inadvertently sell products that look authentic. Knock-offs often use stock images to masquerade as brand names.

Read more here.

 

HOUSE VOTES TO REAUTHORIZE FCC: The House on Tuesday voted to reauthorize the Federal Communications Commission (FCC), passing bipartisan legislation that includes provisions aimed at boosting the development of 5G networks and new funds for the agency’s spectrum incentive auction.

If the bill passes, it will be the first time Congress has approved a reauthorization for the FCC in 28 years. The House approved it by voice vote Tuesday afternoon.

The legislation, called the Ray Baum Act, is named after the late staff director for the House Commerce Committee, who passed away from cancer last month.

Read more here.

 

RURAL BROADBAND RESURFACES IN THE HOUSE: Two House subcommittees turned their attention to the digital divide between rural and urban America during a joint hearing Tuesday, The Hill’s Kayiu Wong reports.

The House Small Business Subcommittee on Health and Technology and the Subcommittee on Agriculture, Energy, and Trade discussed how small, local carriers can play a role in improving internet and telecom services in rural communities. Lawmakers also highlighted the impact high-speed internet would have on small businesses in rural communities.

“The internet has helped small business across the country grow, and we want to ensure that rural small businesses are not left behind due to poor connectivity or an unreliable network,” Rep. Brad Schneider (D-Ill.) said. “All of America’s entrepreneurs deserve a level playing field, regardless of where they’re based.”

 

ON TAP:

The Information Technology and Innovation Foundation will hold an event on piracy at 9:00 a.m.

The House Energy and Commerce Committee will hold a hearing on emerging tech’s impact on retail at 10:00 a.m.

The House Financial Services Committee will hold a hearing on data security at 2:00 p.m.

The Federal Communications Bar Association will hold a meeting on public safety communication systems at 6:00 p.m.

 

BREAKING DOWN SOCIAL MEDIA USERS: A new survey from Pew takes a close look at the demographics of social media platforms, in particular which apps different groups of Americans use. The racial breakdown is getting attention. (Here’s a handy visual from Axios.) YouTube and Facebook are used the most across racial groups. On Whatsapp, Hispanic individuals are far more likely to be app users than whites. And on Snapchat, blacks use the app more frequently than whites or Hispanics.

 

TECHMEME HAS A NEW PODCAST: The website which highlights the day’s top tech stories now has a daily audio roundup of tech news.

 

IN CASE YOU MISSED IT:

The Guardian: The U.K.’s information commissioner wants Facebook and Twitter to be more transparent in how they target users. There’s also more bad news for tech in Europe…

Reuters: France is considering probing Google and Facebook over their online ad dominance.

EFF’s FOIA request on the FBI’s ties to Best Buy came out, revealing a few new tidbits about Geek Squad informants.

Uber shifts into fifth — just kidding, no bad driving puns here… Uber’s self-driving trucks are doing some new stuff in Arizona.

The New York Times: A prominent reporter, who penned the book “Clinton Cash,” is taking the culture war back to Silicon Valley tech firms