Why Trump Might Want to Reconsider Taking Foreign Dirt on 2020 Rivals

President Donald Trump said he’d want to hear damaging information about a political opponent in the 2020 election even if it were provided by a foreigner — a scenario that evokes some of the controversial conduct at the heart of Robert Mueller’s Russia investigation.

“I think I’d take it,” the president said in an interview with ABC News’s George Stephanopoulos that aired Wednesday.

Asked whether he would accept information from foreigners or hand it over to the FBI, Trump said he thought that “maybe you do both.”

“I think you might want to listen, there isn’t anything wrong with listening,” he said, adding that if someone from a country like Norway offered information on his opponent, he would “want to hear it.”

On Thursday, Trump said in a pair of tweets that it’d be “ridiculous” to expect him to report all his conversations with foreigners to the FBI.

Donald J. Trump

@realDonaldTrump

I meet and talk to “foreign governments” every day. I just met with the Queen of England (U.K.), the Prince of Whales, the P.M. of the United Kingdom, the P.M. of Ireland, the President of France and the President of Poland. We talked about “Everything!” Should I immediately…..

Sent via Twitter for iPhone.

View original tweet.

Trump’s comments come despite the years-long federal investigation into whether his campaign colluded with Russian agents to coordinate the release of damaging emails hacked from the Democratic National Committee and aides to former Democratic presidential candidate Hillary Clinton. Mueller found numerous Russian attempts to interfere in the 2016 election, but ultimately concluded there wasn’t enough evidence to establish that the president, or a member of his campaign, had conspired in those efforts.

In his report, Mueller explored whether a 2016 meeting in Trump Tower with Russians, which was arranged on the promise of dirt on Hillary Clinton, constituted an illegal act. Mueller concluded that there wasn’t enough evidence to charge participants — who included his son, Donald Trump Jr., and son-in-law Jared Kushner — with a crime.

Foreign Entity

Mueller also made clear that there was good reason to be concerned about opposition research coming from foreigners.

“A foreign entity that engaged in such research and provided resulting information to a campaign could exert a greater effect on an election, and a greater tendency to ingratiate the donor to the candidate, than a gift of money or tangible things of value,” Mueller wrote.

The president said those believing his aides and family members who were approached with offers of damaging information about Clinton should have contacted the FBI were na?ve, and said lawmakers regularly collected “opposition research” on their opponents.

“Give me a break,” Trump said. “Life doesn’t work that way.”

After excerpts of the Stephanopoulos interview were released, House Judiciary Chairman Jerrold Nadler, who is leading an investigation of Trump in the aftermath of Mueller’s inquiry, said on Twitter that it’s “shocking to hear the President say outright that he is willing to put himself in debt to a foreign power.”

Senator Elizabeth Warren, a Democratic candidate for president, tweeted: “The #MuellerReport made it clear: A foreign government attacked our 2016 elections to support Trump, Trump welcomed that help, and Trump obstructed the investigation. Now, he said he’d do it all over again. It’s time to impeach Donald Trump.”

One of her rivals for the 2020 nomination, Senator Kamala Harris, wrote on Twitter: “China is listening. Russia is listening. North Korea is listening. Let’s speak the truth: this president is a national security threat.”

Harris, in an NPR interview posted earlier Wednesday, said that the Justice Department in a Harris administration would probably press obstruction of justice charges against Trump.

“There has to be accountability,” Harris told NPR. “Everyone should be held accountable, and the president is not above the law.”

In the ABC News interview, Trump intimated that the FBI didn’t have the resources to investigate possible foreign interference, and disputed the notion that foreign offers of assistance necessarily amounted to interference in U.S. election processes.

He added FBI Director Christopher Wray was “wrong” to say that the bureau would want to know about any foreign election meddling.

“The FBI director is wrong, because frankly it doesn’t happen like that in life,” Trump said. “Now maybe it will start happening, maybe today you’d think differently.”

More must-read stories from Fortune:

Democrats hold out on USMCA as Trump walks back Mexico tariffs

–The story behind the Baby Trump balloon

–FCC takes major steps toward limiting robocalls and scammers

Michael Bloomberg pledges $500 million to combat climate change

–Listen to our new audio briefing, Fortune 500 Daily

Get up to speed on your morning commute with Fortune‘s CEO Daily newsletter.

Term Sheet — Thursday, June 13

THE STUDENT DEBT BUBBLE

The crowded scooter market is starting to consolidate.

Bird agreed to acquire smaller electric scooter rival Scoot, a San Francisco-based company that operates a fleet of mopeds and scooters. Financial terms weren’t disclosed, but the WSJ reports that Bird paid approximately $25 million in a cash and stock deal. That’s … not exactly great news given that Scoot was last valued at $70 million in 2017. It had raised $47 million in venture funding from investors including Maveron and Elemental Excelerator.

So why Scoot? The second I saw the news, I thought “Duh, it’s about San Francisco.” Remember last year when San Francisco chose much-smaller players Skip and Scoot as its scooter launch partners, effectively shunning Bird and Lime? Yeah, Bird probably didn’t like that.

It looks like this acquisition gives Bird an opportunity to relaunch its service in San Francisco. The Information reports that San Francisco officials gave a green light to the deal, allowing Scoot to keep its permit as a wholly owned subsidiary of Bird.

My colleague Danielle Abril reports:

The acquisition, announced Wednesday, is an example of what many market watchers have been saying about the scooter industry: The long list of rivals will consolidate and that a few major players left standing will prevail. The survivors will be the ones that can find a way to turn a profit, experts say, reversing the huge losses that they’ve racked up since bursting onto the scene a couple of years ago.

Expect more acquisitions — especially of small players that have snagged permits to operate in key markets.

THE NEXT WAVE OF SOCIAL MEDIA: The group video chat app Houseparty has been acquired by Epic Games, the company that created popular game Fortnite. Financial terms weren’t disclosed. Houseparty had raised approximately $70.2 million in venture funding from investors including Sequoia, Greylock, Arena Ventures, Aleph, and Soma Capital.

This seems like an unusual deal, but it makes more sense once you understand the reasons behind it. Houseparty CEO Sima Sistani tweeted that she kept hearing that people were using Houseparty to talk to their real-life friends while gaming together “and one game came up over and over again: Fortnite.”

Although Fortnite has an in-game voice chat function, many players choose to use independent group chat programs to communicate with other gamers. In other words, Houseparty allows players to talk regardless of whether they’re gaming, unlike in-game voice chats. Sistani added: “If that last decade of social media was about sharing, the next decade will be about participating.”

One important thing to note is that Houseparty’s user base is largely made up of teens. Epic Games told Fortune it made the acquisition partly because of Houseparty’s focus on user privacy. Because so many Fortnite players are children, Epic must be careful about how it collects data and uses it.

Read more at Fortune.

CYBERSECURITY IS ON ?: The cybersecurity space is having a moment. Yesterday, we reported that private equity giant KKR is leading an additional $300 million in funding for cybersecurity firm KnowBe4, in a deal that values the startup at $1 billion.

And I’d be remiss not to mention that cloud-based cybersecurity company CrowdStrike made its public debut to a pop of nearly 80%, opening at $63.50 before retreating to close at $58 Wednesday.

The sector is about to heat up even more in 2019 — global spending on technology to protect sensitive data and information is expected to reach an unprecedented $124 billion this year.

ADDING TO THE BOARD: Quibi, the short-form media startup founded by Jeffrey Katzenberg and Meg Whitman, that we wrote about two days ago has selected several executives for its board of directors. They include Mellody Hobson, president of Ariel Investments and former chairwoman of DreamWorks Animation; Roger Lynch, CEO of Cond? Nast and former CEO of Pandora; Ann Daly, co-founder at WndrCo Holdings and former president of DreamWorks; and others. Read more here.

PS: I’ll be at Fortune’s inaugural Brainstorm Finance conference next week in Montauk. If you’ll be there, let me know & we can meet in person.

VENTURE DEALS

[ts_bullet_primary] Symphony, a secure collaboration platform, raised $165 million in Series E funding. Investors include Goldman Sachs, Standard Chartered and MUFG Innovation Partners.

[ts_bullet_primary] SignalFx, a San Mateo, Calif.-based cloud application monitoring company, raised $75 million in Series E funding. Tiger Global Management led the round.

[ts_bullet_primary] SpotOn Transact, a San Francisco-based payments and software company, raised $40 million in funding. Franklin Templeton led the round, and was joined by investors including Dragoneer Investment Group.

[ts_bullet_primary] CRITICALSTART, a Plano, Texas-based provider of managed detection and response services, raised $40 million in funding from Sagemount.

[ts_bullet_primary] Zava, a U.K.-based online medical service provider, raised $32 million in Series A funding. HPE Growth led the round.

[ts_bullet_primary] Simulmedia, a New York-based media marketing firm, raised $29 million in Series E funding, according to a blog post on its site. Union Square Ventures led the round.

[ts_bullet_primary] Lifen, a France-based company that aims to facilitate communication between health professionals, is raising a $22.7 million (EUR20 million) in funding. Partech will lead the round, and will be joined by investors including Idinvest Partners and Majycc eSant? Invest.

[ts_bullet_primary] Helium, a San Francisco-based peer-to-peer wireless network, raised $15 million in Series C funding. Union Square Ventures and Multicoin Capital led the round.

[ts_bullet_primary] Traction Guest, a Canada-based cloud-based solutions for enterprise visitor management, raised $13 million in Series A funding. Bessemer Venture Partners led the round, and was joined by investors including Salesforce Ventures.

[ts_bullet_primary] Bux, an Amsterdam-based trading app, raised $12.5 million in funding. Velocity Capital and Holtzbrinck Ventures led the round.

[ts_bullet_primary] Orca Security, an Israel-based developer and operator of a cloud native security platform, raised $6.5 million in seed funding. YL Ventures led the round.

[ts_bullet_primary] CybeReady, a Tel Aviv-based cybersecurity training platform for enterprises, raised $5 million in funding. Baseline Ventures led the round.

[ts_bullet_primary] Funderbeam, an Estonia-based funding and trading platform, raised $4.5 million in Series A funding. Accelerated Digital Ventures led the round.

[ts_bullet_primary] Riverlane, a quantum computing software developer, raised ?3.25 million ($4.1 million) in seed funding. Investors include Cambridge Innovation Capital, Amadeus Capital Partners, and Cambridge Enterprise.

HEALTH AND LIFE SCIENCES DEALS

[ts_bullet_primary] Purigen Biosystems Inc, a Pleasanton, Calif.-based provider of next-generation technologies for extracting, enriching, and quantifying nucleic acids from biological samples, raised $26.4 million in Series B funding. Agilent Technologies led the round, and was joined by investors including Cota Capital, 5AM Ventures and Roche Venture Fund.

PRIVATE EQUITY DEALS

[ts_bullet_primary] CutisPharma Inc, a portfolio company of NovaQuest Capital Management, acquired Silvergate Pharmaceuticals Inc, a developer of pediatric medications. Financial terms weren’t disclosed. NovaQuest will own a majority of the combined company, called Azurity Pharmaceuticals.

[ts_bullet_primary] Xpressdocs Partners, which is backed by Falcata Capital, acquired Amazingmail, a Phoenix, Ariz.-based provider of direct mail solutions. Financial terms weren’t disclosed.

IPOs

[ts_bullet_primary] ESR Cayman, a real estate developer backed by Warburg Pincus, has shelved its Hong Kong IPO that would have raised up to $1.24 million. Read more.

[ts_bullet_primary] Chewy, a Dania Beach, Fla.-based pet product ecommerce firm, now plans to raise $832 million in an IPO of 41.6 million shares (87% insider) priced between $19 to $21. The firm posted $3.5 billion in sales for the year ending January 2019 as well as loss of $2.7 billion. PetSmart backs the firm. Allen & Company, J.P. Morgan, and Morgan Stanley are underwriters. It plans to list as “CHWY.” Read more.

[ts_bullet_primary] Fiverr International, a Tel Aviv-based online marketplace for freelancers,raised $111 million in an IPO of 5.3 million shares priced above range at $21. It posted $75.5 million in sales in 2018 and loss of $19.3 million. Bessemer, Accel, and Square Peg back the firm. J.P. Morgan, Citi, BofA Merrill Lynch, and UBS are underwriters. It plans to list on the NYSE as “FVRR.”

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Polina Marinova produces Term Sheet, and Lucinda Shen compiles the IPO news. Send deal announcements to Polina here and IPO news to Lucinda here.

U.S. and Iran Tensions Are Escalating: How We Got to This Point

Tensions between the United States and Iran have soared in recent weeks, with Washington dispatching warships and bombers around the Persian Gulf, and Tehran threatening to resume higher uranium enrichment. The tensions come a year after President Donald Trump withdrew from Iran’s 2015 nuclear accord with world powers and restored crippling sanctions.

A timeline of recent events:

May 5: Deployment of USS Abraham Lincoln carrier strike group

John Bolton, the White House national security adviser and a longtime Iran hawk, announces the deployment of the USS Abraham Lincoln carrier strike group and a bomber task force in response to “a number of troubling and escalatory indications and warnings,” without providing details. He threatens “unrelenting force” in response to any attack.

 

May 8: Iran vows to enrich its uranium stockpile

Iran vows to enrich its uranium stockpile closer to weapons-grade levels starting July 7 if world powers fail to negotiate new terms for its nuclear deal. The U.S. responds by imposing sanctions on Iran’s metals industry.

 

May 9: The EU asks Iran to respect nuclear deal

The European Union urges Iran to respect the nuclear deal and says it plans to continue trading with the country despite U.S. sanctions. Trump says he would like Iran’s leaders to “call me.”

 

May 10: U.S. Patriot missile battery

The U.S. says it will move a Patriot missile battery into the Middle East to counter threats from Iran.

 

May 12: ‘Sabotage Operations’ of UAE Ships

The United Arab Emirates says four commercial ships off its eastern coast “were subjected to sabotage operations,” just hours after Iranian and Lebanese media outlets air false reports of explosions at a nearby Emirati port.

 

May 13: Trump Warns Iran

European foreign ministers urge the United States and Iran to show restraint, while Secretary of State Mike Pompeo briefs his counterparts on the alleged threats from Iran. Trump warns that if Tehran does “anything” in the form of an attack “they will suffer greatly.”

 

May 14: Houthi rebels launch drone attack

Yemen’s Iran-aligned Houthi rebels launch a drone attack on Saudi Arabia, striking a major oil pipeline and taking it out of service.

— The New York Times reports the White House is reviewing military plans that could result in sending 120,000 U.S. troops to the Middle East if Iran attacks American forces or steps up work on nuclear weapons. Trump says it’s “fake news,” but that he would “absolutely” be willing to send troops if necessary.

— Iran’s Supreme Leader Ayatollah Ali Khamenei says “no one is seeking war,” but that it wouldn’t be difficult for Iran to enrich uranium to weapons-grade levels.

— A senior military officer in the U.S.-backed coalition fighting the Islamic State group says “there’s been no increased threat from Iranian-backed forces in Iraq and Syria.” In a rare public rebuttal, U.S. Central Command says his remarks “run counter to the identified credible threats.”

 

May 15: Evacuation of U.S. Embassy in Baghdad

The U.S. Embassy in Baghdad orders all nonessential government staff to leave Iraq immediately. The Netherlands and Germany say they are suspending their training of Iraqi forces.

 

May 16: Saudi Arabia Blames Iran

Saudi Arabia blames Iran for the drone attack on its pipeline and an English-language newspaper close to the palace calls for the U.S. to launch “surgical” strikes in retaliation.

— President Donald Trump says he hopes the U.S. is not on a path to war with Iran amid fears that his two most hawkish advisers could be angling for a conflict with the Islamic Republic. Asked if the U.S. was going to war with Iran, the president replied, “I hope not” — a day after he repeated a desire for dialogue, tweeting, “I’m sure that Iran will want to talk soon.”

 

May 19: Rocket at U.S. Embassy in Baghdad

A rocket lands near the U.S. Embassy in Baghdad, without harming anyone. It’s not clear who is behind the attack, but after the initial reports, Trump tweets: “If Iran wants to fight, that will be the official end of Iran. Never threaten the United States again!” Iran’s foreign minister responded by tweeting that Trump had been “goaded” into “genocidal taunts.”

 

May 20: Reports of Iran quadrupling production of low-enriched uranium

Semi-official media in Iran report that it has quadrupled its production of low-enriched uranium, which is used for civilian applications but not nuclear weapons. Iran is allowed to enrich uranium to the low level of 3.67%, but increased production could lead it to exceed the stockpile limits in the nuclear deal.

 

May 24: More U.S. troops to Middle East

President Donald Trump says the U.S. will bolster its military presence in the Middle East with an additional 1,500 troops. He says the troops will have a “mostly protective” role.

— Senior Pentagon officer Vice Admiral Michael Gilday says the U.S. has a high degree of confidence that Iran’s Revolutionary Guard was responsible for the explosions of the four tankers in the Gulf of Oman, and that Iranian proxies in Iraq fired rockets into Baghdad.

 

May 31 and June 1: Mecca summits

Saudi Arabia’s King Salman hosts three high-level summits in Mecca, drawing heads of state from across the Middle East and Muslim countries to present a unified Muslim and Arab position on Iran. The monarch calls on the international community to use all means to confront Iran and accuses the Shiite power of being behind “terrorist operations” that targeted Saudi oil interests.

 

June 12: Houthi rebels attack in Saudi Arabia

Saudi Arabia says 26 people were wounded in an attack by Yemen’s Houthi rebels targeting an airport in kingdom’s southwestern town of Abha. The Houthis claim they’d launched a cruise missile at the airport.

June 13: Oil tankers attacked

Two oil tankers near the strategic Strait of Hormuz were reportedly attacked in an assault that left one ablaze and adrift as 44 sailors were evacuated from both vessels and the U.S. Navy rushed to assist.

 

More must-read stories from Fortune:

Democrats hold out on USMCA as Trump walks back Mexico tariffs

–The story behind the Baby Trump balloon

–FCC takes major steps toward limiting robocalls and scammers

Michael Bloomberg pledges $500 million to combat climate change

–Listen to our new audio briefing, Fortune 500 Daily

Get up to speed on your morning commute with Fortune‘s CEO Daily newsletter.

We Can’t Photoshop Our Way to Diversity: The Broadsheet

Good morning, Broadsheet readers! Ginni Rometty writes about how AI will change–not eliminate–all jobs, France moves to get rid of discrimination around who can access IVF, and a gathering of tech titans tries to photoshop its way to diversity. Have an inspiring Thursday.

EVERYONE’S TALKING

[bs_bullet_primary] Photoshop fail. On 2019’s outrage meter, this will likely register rather low, but it is so emblematic of the working world today that we must discuss:

BuzzFeed yesterday discovered that the women featured in a photo of “titans of tech” were photoshopped in. The doctored snapshot, which appeared in GQ and on the personal Instagram of luxury designer Brunello Cucinelli, was captioned as featuring Silicon Valley executives who’d gathered for a summit of sorts in Brunello’s village in Italy, including two women. But reporter Ryan Mac figured out that the original photo was actually of only men and the two female CEOs pictured–Peek’s Ruzwana Bashir and SunRun’s Lynn Jurich–were digitally added after the fact.

A Cucinelli representative offered this explanation: that not all the attendees were captured in a single photograph so “we added in photos of two female CEOs taken during the weekend” with the women’s permission. GQ said it wasn’t aware the photo had been altered.

If this was an attempt to illustrate diversity, it was a misguided, lazy one; “more a cheapfake than a deepfake,” as Mac so perfectly put it.

While the effort was unwise in concept and laughably bad in execution (“her head isn’t quite in line with what is supposedly her leg and foot”), it is highly effective as a metaphor for a corporate world looking for a drag-and-drop solution to an entrenched cultural crisis; one that publicly preaches women’s empowerment but is accused of pregnancy discrimination, one that doles out perks to new mothers before allegedly stymying their career progression, one that finagles employee data to give the illusion of a not-as-bad gender pay gap.

Yes, real, true diversity takes hard work and dramatic institutional change, and until that end goal is reached, it’s best to be honest about your shortcomings. Attempts to manipulate them out of existence are counterproductive and are, in the long run, often found out.

[ceo_attribution author=”Claire Zillman” email=”claire.zillman@fortune.com” twitter=”clairezillman”]

ALSO IN THE HEADLINES

[bs_bullet_primary] IBM and AI. IBM CEO Ginni Rometty writes for Fortune about how artificial intelligence will change–not eliminate–nearly all jobs. She argues that, to prepare, universities should loosen work-study restrictions to allow students to gain experience at companies off-campus; Pell Grants should cover skills education; and federal student loans should be made available for education besides traditional degrees. [bs_link link=”http://fortune.com/2019/06/12/ibm-ginni-rometty-hea-reform/” source=”Fortune”]

[bs_bullet_primary] Theresa’s last act. In one of her last acts as U.K. prime minister, Theresa May is expected to pass into law legislation that would lower U.K. emissions to “net-zero” by 2050. “Standing by is not an option,” May said in one of the last releases from her office. [bs_link link=”http://fortune.com/2019/06/12/uk-net-zero-emissions/” source=”Fortune”]

[bs_bullet_primary] Not going quietly. Women who have been fighting a gender discrimination lawsuit against Goldman Sachs for 14 years are trying to stop Goldman from forcing them into arbitration. Their argument? It’s been too long–with “755 docket entries, 376 discovery requests, 100 letters to the court, 44 motions, 33 days of depositions, and 20 expert reports”–for the bank to push them out of open court. [bs_link link=”https://www.bloomberg.com/news/articles/2019-06-12/goldman-women-in-14-year-discrimination-fight-resist-arbitration” source=”Bloomberg”]

[bs_bullet_primary] Tune in. Our Fortune 500 Daily podcast is in full swing, and today’s one-minute brief is on Advanced Micro Devices, led by CEO Lisa Su. The company is No. 460 on the 500 list, a new addition this year. You can hear from Su in this clip: [bs_link link=”http://fortune.com/radio/” source=”Fortune”]

MOVERS AND SHAKERS: Giphy hires Alexis Berger as VP of revenue. Prudential names Shan? Harris head of the Prudential Foundation. Quibi assembles its board of directors, which will include Ariel Investments’ Mellody Hobson, former DreamWorks president Ann Daly, and Quibi CEO Meg Whitman.

IN CASE YOU MISSED IT

[bs_bullet_primary] IVF pour tous. In France, only heterosexual couples married or living together for more than two years have been allowed to access IVF. The country intends to lift that ban, Prime Minister ?douard Philippe said, opening up IVF to single women and women in same-sex relationships. [bs_link link=”https://www.theguardian.com/world/2019/jun/12/france-to-end-ban-on-ivf-for-lesbian-couples-and-single-women” source=”Guardian”]

[bs_bullet_primary] Sara settles. In Israel, Sara Netanyahu, wife of Prime Minister Benjamin Netanyahu, faced accusations that she misused $100,000 in public funds paying a cook at the couple’s home. She’ll pay $15,000 in fines and restitution to settle the case. [bs_link link=”https://www.nytimes.com/2019/06/12/world/middleeast/israel-sara-netanyahu.html” source=”New York Times”]

[bs_bullet_primary] Keeping Ken Burns. PBS chief executive Paula Kerger has been at the helm for 13 years. Part of her job now? Keeping Ken Burns and the next Downton Abbey away from Netflix. Her pitch: “An independent filmmaker like Ken Burns wants to see that his programs don’t just disappear into the Netflix jukebox but will be carefully protected and curated in communities.” [bs_link link=”https://www.wsj.com/articles/the-woman-leading-pbs-through-tvs-time-of-turmoil-11560340803?” source=”Wall Street Journal”]

[bs_bullet_primary] The MEE generation. The Millennial Experience Economy–spending money on experiences, not things–is only growing. Here, four entrepreneurs in the category, from puppy parties and teacup pig parties to bridesmaids for hire, weigh in on the trend. [bs_link link=”https://www.refinery29.com/en-us/2019/06/229287/millennial-experience-economy-trend-jobs” source=”Refinery29″]

Today’s Broadsheet was produced by Emma Hinchliffe. Share it with a friend. Looking for previous Broadsheets? Click here.

ON MY RADAR

Hollywood reconsiders the bad female boss, with a generational twist [bs_link link=”https://www.nytimes.com/2019/06/12/arts/late-night-bad-bosses.html” source=”New York Times”]

How I get it done: NPR correspondent Nina Totenberg [bs_link link=”https://www.thecut.com/2019/06/nina-totenberg-npr-supreme-court-how-i-get-it-done.html” source=”The Cut”]

Fortnite maker Epic Games acquires Sima Sistani’s social video app Houseparty [bs_link link=”http://fortune.com/2019/06/12/fortnite-houseparty-acquisition/” source=”Fortune”]

The USWNT is an American treasure. Pay them a bounty [bs_link link=”https://www.washingtonpost.com/sports/dcunited/the-us-womens-national-team-is-american-treasure-pay-them-a-bounty/2019/06/12/1c151908-8c9a-11e9-adf3-f70f78c156e8_story.html” source=”Washington Post”]

QUOTE

[bs-quote link=”https://www.hollywoodreporter.com/features/gayle-king-cbs-news-woes-charlie-rose-r-kelly-staying-at-cbs-1217434″ author =”Gayle King on becoming the face of CBS News”]I am now a part of that history. Let’s see what we do.[/bs-quote]

Mark Zuckerberg’s Privacy Practices: CEO Daily

Good morning. David Meyer here in Berlin, filling in for Alan.

Facebook’s shares fell by almost 3% at one point yesterday after the Wall Street Journal reported the firm had “uncovered” emails showing Mark Zuckerberg was connected to “potentially problematic privacy practices at the company.” The emails in question were dug up as part of the Federal Trade Commission’s probe into whether or not Facebook broke its 2012 privacy consent decree with the regulator.

Now, it’s still not clear what these emails entail. And Facebook is still maintaining that “at no point did Mark or any other Facebook employee knowingly violate the company’s obligations under the FTC consent order.”

But, bearing that in mind… seriously?

The consent decree banned Facebook from misrepresenting “in any manner” its privacy and security practices, from the level of control users have over their data, to the ways in which Facebook collects that data, to the level of access third parties have to that data, to “the steps [Facebook] takes or has taken to verify the privacy or security protections that any third party provides.”

The Cambridge Analytica data-scraping scandal alone led Zuckerberg to grovel before users and regulators about Facebook’s “breach of trust.” Then there was the kerfuffle around Facebook’s secret data-sharing deals with Amazon, Apple, Microsoft and others. And the time Facebook misled European antitrust regulators and the public by claiming it wouldn’t merge WhatsApp data into the mothership’s systems, which of course it did (result: $122 million EU fine.) And the way in which it systematically misled users about how their data would be used for commercial practices (result: $11 million fine from the Italian competition regulator.) The list goes on and on and on.

Either Zuckerberg has his head in the clouds to a remarkable degree for a founder who still has unbreakable control over his company, or he was personally connected to these “potentially problematic” practices. These are not slip-ups by underlings; they’re the results of fundamental business choices.

The Journal reports that Facebook worries these newly-unearthed emails could prove a PR problem, but in all likelihood they will only put flesh on the bones everyone can already plainly see.

More news below.

David Meyer
@superglaze
david.meyer@fortune.com

Top News

Tanker Attack

Train your eyes on the Middle East again. The U.S. Navy and Iranian search and rescue teams have both sent assistance to two oil tankers that were attacked in the Gulf of Oman. The oil price has surged and Gulf stock markets are down. Initial reports say at least one of the tankers was hit by a torpedo, and its crew was rescued by the Iranians. It’s not yet clear whether there is a connection to alleged limpet-mine attacks against tankers off the UAE last month–the U.S. claimed that episode was Iran’s work. Sky News

Telegram Attack

The founder of the encrypted messaging app Telegram claims the service has come under massive cyber-attack from China. Pavel Durov said the denial-of-service attacks were timed to coincide with protests in Hong Kong, which have been partly coordinated via Telegram. Bloomberg

Ford Recall

Ford has issued four recalls including one for 1.2 million Explorer SUVs. The company says it doesn’t know of any injuries, but in theory a defect could fracture the rear suspension and cause steering issues. Another one of the recalls is an expansion of an earlier one for F-150 pickups that apparently have a transmission flaw. Fortune

Eurozone Industry

Eurozone industrial output fell in April, marking its second consecutive month of contraction. Again, Germany was the chief culprit, though Italy also suffered a small decline. Reuters

Around the Water Cooler

Sanders vs Dimon

Bernie Sanders has lashed out at Jamie Dimon after the JPMorgan Chase chief said it would be a “huge mistake” for the U.S. to go the socialist route. “I didn’t hear Jamie Dimon criticizing socialism when Wall Street begged for the largest federal bailout in American history–some $700 billion from the Treasury and even more from the Fed,” Sanders tweeted. Fortune

Trump Strategy

President Trump has said that, if a foreign government quietly offered him damaging information about a presidential rival in next year’s elections, “there isn’t anything wrong with listening.” “It’s not an interference, they have information–I think I’d take it,” he told ABC News. “If I thought there was something wrong, I’d go maybe to the FBI–if I thought there was something wrong.” ABC News

Brexit Plans

As lawmakers from the U.K.’s Conservative Party engage in the first round of voting for the next party leader and prime minister, how ready are British businesses for the possibility of the no-deal Brexit that some candidates are planning? “Not even close,” according to figures seen by the BBC, which suggest less than a tenth of companies that would need a special status to ease imports have applied for it. BBC

EU Power Play

Want a primer on how Franco-German tensions will affect the upcoming selection of the EU’s new leaders? The Financial Times has one. Taster: “The alliance remains what academics call the world’s most institutionalised bilateral relationship. But in recent months, some unwritten rules–the avoidance of surprises, co-ordination of positions before big decisions, the need to keep disputes private–have been swept aside by a burst of Gallic vigor.” FT

This edition of CEO Daily was edited by David Meyer. Find previous editions here, and sign up for other Fortune newsletters here.

House Panel Votes to Hold Barr, Ross in Contempt of Congress: What Happens Now

A House panel voted to hold Attorney General William Barr and Commerce Secretary Wilbur Ross in contempt of Congress for withholding documents on plans to add a citizenship question to the 2020 census. Earlier Wednesday, President Donald Trump asserted executive privilege over the material.The Oversight and Reform Committee’s 24-15 vote Wednesday for the civil contempt resolution gives Democratic Chairman Elijah Cummings the option to file a lawsuit to enforce the panel’s subpoenas for the documents.

Republican Mark Meadows of North Carolina warned colleagues their vote was “a significant moment in history” in holding two cabinet-level officials in contempt. Cummings said he didn’t disagree.

“Nobody is trying to be harmful to our attorney general. It’s not about him” or the Commerce secretary, said Cummings of Maryland. “It’s about our country.”

“The Constitution gives Congress the responsibility and the authority to ensure that the census is working as it was intended,” Cummings said. “We must protect the integrity of the census, and we must stand up for Congress’ authority under the Constitution to conduct meaningful oversight.”

The chairman didn’t disclose when he may file a legal action, saying he’ll consult with Democratic leaders on the next steps.

Ross, in a statement, called the committee’s action “shameless” and said Democrats “aren’t going to let the facts get in the way of their own concocted stories.”

Justice Department spokeswoman Kerri Kupec said in a statement: “The committee’s attempt to define the Department of Justice’s good-faith cooperation as ‘contempt’ defies logic.”

Response Rate

Congressional Democrats are pursuing what they say is evidence that the Trump administration’s bid to include the citizenship question was designed to suppress the response rate to the census of immigrants and non-citizens. That could reduce some states’ number of congressional seats, Electoral College clout and federal funding.

Before the Oversight panel vote, Trump asserted executive privilege over documents concerning plans to add a citizenship question to the census, including the material sought by the Oversight Committee.

“These documents are protected from disclosure by the deliberative process, attorney-client communications, or attorney work product components of executive privilege,” Assistant Attorney General Stephen Boyd wrote in a letter Wednesday to Cummings. “In addition, the president has made a protective assertion of executive privilege over the remainder of the subpoenaed documents.”

The move was just the latest effort to stymie and frustrate efforts by House Democrats to investigate actions by the Trump administration.

But the Democratic-controlled House is firing back. The chamber voted Tuesday to authorize a lawsuit against Barr in a separate matter, for refusing to give the Judiciary Committee redacted parts of Special Counsel Robert Mueller’s report on Russian interference in the 2016 presidential election.

The House also approved a speedier process for committee chairmen such as Cummings to file a lawsuit to enforce subpoenas. Under the plan, they would only need to be green-lighted by a panel led by Speaker Nancy Pelosi.

Ross has denied assertions that the citizenship question was inspired by efforts to suppress census participation by immigrants, including those in the country legally, who may tend to vote for Democrats. The underlying issue is now before the Supreme Court.

Trump told reporters at the White House that he feels strongly the census should ask Americans whether they’re citizens.

“That doesn’t sound so good to me” if the question can’t be included, he said Wednesday during a meeting with Polish President Andrzej Duda. “It’s ridiculous, I think it’s totally ridiculous that we would have a census without asking.”

Ross’s role in the 2020 census has come under Democratic scrutiny because he and other Commerce Department officials asserted multiple times that the decision to include the citizenship question stemmed solely from a Justice Department request in December 2017 to aid enforcement of the 1965 Voting Rights Act.

Barr additionally is accused of ordering Justice Department official John Gore to defy a subpoena for his testimony.

The Justice Department said the Oversight Committee abandoned efforts to reach an accommodation by going forward “with an unnecessary and premature contempt vote.”

Representative Jim Jordan of Ohio, the top Republican on the committee, asked why Democrats don’t want to ask about citizenship even though many people think the question already is included in the census.

“Every person you ask will say, ‘yes we should do that,'” Jordan said. Referring to Democrats, he said, “Why don’t they want to know?”

Democratic Representative Alexandria Ocasio-Cortez of New York responded that she wants to know why people like former Kansas Secretary of State Kris Kobach — “with a resume of voter suppression techniques in Kansas” — and former Trump adviser Steve Bannon “have their fingerprints all over the census.”

“I want to know about corruption. That’s what I want to know about — the racism and the very disturbing history that we are seeing here,” she said.

Representative Justin Amash of Ohio was the only Republican who voted to hold Barr and Ross in contempt. Amash, who last month enraged much of his party — and Trump — when he said that the president had engaged in “impeachable conduct” wrote on Twitter: “Fact: Both Democratic and Republican attorneys general are capable of being in contempt of Congress.”

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Two Japanese Oil Tankers Reportedly Attacked Near Strait of Hormuz

Two oil tankers near the strategic Strait of Hormuz were reportedly attacked on Thursday, an assault that left one ablaze and adrift as sailors were evacuated from both vessels and the U.S. Navy rushed to assist amid heightened tensions between Washington and Tehran.

Japan’s Trade Ministry said the two vessels had “Japan-related cargo” as Prime Minister Shinzo Abe was wrapping up a high-stakes visit in Tehran that sought to ease tensions between Iran and the United States.

Benchmark Brent crude spiked at one point by as much 4% in trading following the reported attack, to over $62 a barrel, highlighting how crucial the area remains to global energy supplies. A third of all oil traded by sea passes through the strait, which is the narrow mouth of the Persian Gulf.

The latest incident comes after the U.S. alleged that Iran used mines to attack four oil tankers off the nearby Emirati port of Fujairah last month. Iran has denied being involved, but it comes as Iranian-backed rebels in Yemen also have launched missile and drone attacks on Saudi Arabia.

Cmdr. Joshua Frey, a 5th Fleet spokesman, said the U.S. Navy was assisting the two vessels that he described as being hit in a “reported attack.” He did not say how the ships were attacked or who was suspected of being behind the assault.

Dryad Global, a maritime intelligence firm, preliminarily identified one of the vessels involved as the MT Front Altair, a Marshall Islands-flagged crude oil tanker. The vessel was “on fire and adrift,” Dryad added. It did not offer a cause for the incident or mention the second ship.

The firm that operates the Front Altair told The Associated Press that an explosion was the cause of the fire onboard. International Tanker Management declined to comment further saying they are still investigating what caused the explosion. Its crew of 23 is safe after being evacuated by the nearby Hyundai Dubai vessel, it said.

The second vessel was identified as the Kokuka Courageous. BSM Ship Management said it sustained hull damage and 21 sailors had been evacuated, with one suffering minor injuries. Iranian state television said 44 sailors from the two tankers have been transferred to an Iranian port in the southern province of Hormozgan.

The timing of Thursday’s reported attack was especially sensitive as Abe’s high-stakes diplomacy mission was underway in Iran. On Wednesday, after talks with Iranian President Hassan Rouhani, Abe warned that any “accidental conflict” that could be sparked amid the heightened U.S.-Iran tensions must be avoided.

His message came just hours after Yemen’s Iranian-backed Houthi rebels attacked a Saudi airport, striking its arrivals hall before dawn and wounding 26 people Wednesday.

Abe met with Iran’s Supreme Leader Ayatollah Ali Khamenei on Thursday, the second and final day of his visit. There were no immediate details about what they discussed.

Meanwhile, in Tokyo, Japan’s Chief Cabinet Secretary Yoshihide Suga, a top government spokesman, told reporters that Abe’s trip was intended to help de-escalate tensions in the Mideast — but not specifically mediate between Tehran and Washington.

His remarks were apparently meant to downplay and lower expectations amid uncertain prospects for Abe’s mission.

Tensions have escalated in the Mideast as Iran appears poised to break the 2015 nuclear deal with world powers, an accord that the Trump administration pulled out of last year.

Iran’s nuclear deal, reached in 2015 by China, Russia, France, Germany, the United Kingdom and the U.S., saw Tehran agree to limit its enrichment of uranium in exchange for the lifting of crippling sanctions. Western powers feared Iran’s atomic program could allow it to build nuclear weapons, although Iran long has insisted its program was for peaceful purposes.

In withdrawing from the deal last year, Trump pointed to the accord not limiting Iran’s ballistic missile program and not addressing what American officials describe as Tehran’s malign influence across the wider Middle East. Those who struck the deal at the time described it as a building block toward further negotiations with Iran, whose Islamic government has had a tense relationship with America since the 1979 takeover of the U.S. Embassy in Tehran and subsequent hostage crisis.

Already, Iran says it quadrupled its production of low-enriched uranium. Meanwhile, U.S. sanctions have cut off opportunities for Iran to trade its excess uranium and heavy water abroad, putting Tehran on course to violate terms of the nuclear deal regardless.

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Behind the Barricades in Hong Kong, a Game of High-Tech Cat and Mouse—Data Sheet

Clay Chandler, filling in for Adam today.

I write from Hong Kong where an uneasy calm descended this morning after the Legislative Council announced it will delay debate on a controversial proposal allowing extraditions to China’s mainland.

The extradition measure is deeply unpopular here. The artless manner in which Hong Kong’s Beijing-annointed chief secretary Carrie Lam has tried to ram it through has triggered everyone’s worst fears that Xi Jinping means to renege on the autonomy promised this former British colony by Deng Xiaoping when it reverted to Chinese rule in 1997.

On Wednesday tens of thousands of angry protesters, most of them in their 20s or younger, surrounded the legislature to prevent passage of the bill. Riot police opened fire with tear gas and rubber bullets. Things got ugly fast.

Some folks are calling Wednesday’s protest “Occupy 2.0,” a reference to the 2014 sit-in that paralyzed Hong Kong’s for nearly 80 days. But, as the South China Morning Post reports, the new wave of protestors is far more tech-savvy than their predecessors. They’re paying for subway tickets in cash and have ditched the digital (and therefore trackable) Octopus cards widely used to pay for public transport in this city. To thwart police surveillance cameras (plus the batons and gas), they’ve donned hard hats, goggles and masks. They’re using Twitch instead of Twitter to broadcast video from the front lines and they’re using encrypted messaging services like Telegram, WhatsApp and Signal to communicate.

They’re also learning to switch off FaceID and TouchID on their iPhones. The Post report includes a fascinating detail I didn’t know: under Hong Kong law, people have the right not to incriminate themselves, which means police can’t force them to divulge PIN numbers to unlock their phones. Apparently, though, police are allowed to force detainees to unlock handsets using fingerprints or facial recognition. (Go figure.)

But in the digital age, such counter-measures inevitably invite counter-counter-measures. Telegram’s founder Pavel Durov on Thursday accused China of orchestrating a massive distributed denial of service attack to prevent protesters in Hong Kong from using the service. On Tuesday, Hong Kong police arrested a 22-year-old administrator of a Telegram group on suspicion of conspiracy to commit a “public nuisance crime.”

Like many (if not most) apps developed in the West, Telegram, WhatsApp and other encrypted messaging services don’t work inside the Great Firewall of China. They are unrestricted in Hong Kong under the “one country, two systems” framework by which this city is theoretically governed. As Beijing pushes Hong Kong’s technological integration with Macau and Guangdong province into a “Greater Bay Area,” one can’t help wonder how much longer that will remain the case.

 

Clay Chandler
@claychandler
clay.chandler@fortune.com

NEWSWORTHY

Woe betide Facebook. The drama never ends. Yesterday, The Wall Street Journal reported that emails, uncovered by Facebook staff digging-up records requested by the Federal Trade Commission, reveal that CEO Mark Zuckerberg was aware of pitfalls present in the social media giant’s data-sharing policies as early as 2012 but failed to act. Facebook denies the emails exist and the Journal hasn’t seen them but the company’s shares dipped 2% on the news.

You can’t hack me, I quit. This week, rock superstars Radiohead released 18 hours of additional audio to their seminal album, OK Computer, after hackers tried to hold it ransom. Rather than pay, Radiohead put the files online for ?18 ($23) and pledged the proceeds to charity. Today, Google adopted a similar mindset and tweeted images of its upcoming Pixel 4 after a tech blog leaked digital renders of the phone’s design. “Wait ’til you see what it can do,” Google teased, seizing the narrative back from the leakers.

Speaking of Google… The tech giant plans to move some manufacturing of its U.S.-bound Nest appliances out of China, to avoid Trump’s 25% tariffs. Much of the production is moving to Taiwan. Taiwanese owned Foxconn, a major manufacturer for Apple, said it could move iPhone production out of China too, if needs must.

Huawei wants to break free. Embattled Huawei has deployed 10,000 engineers to rid itself of dependence on U.S. tech before Washington’s reprieve on an effective embargo of U.S. components expires in August. Two months is not enough time. Huawei cancelled its new laptop launch yesterday, because it can no longer supply them, and yet is pushing into autonomous vehicles, where Huawei could provide modems, chips and A.I. – provided it can still gather all the components it needs.

Picking up the slack. Corporate communication tool Slack is expected to reach a $17 billion valuation in its New York IPO next week. The company, which operates an internal messaging system for workplaces, was valued at $7.1 billion in its last fundraising. But keep your eyes on the horizon for Slack-challenger Lark, which $75 billion tech start-up Beijing Bytedance launched in Singapore last month.

FOOD FOR THOUGHT

A genetics start-up is using CRISPR technology to edit pig DNA so that porcine organs can be successfully transplanted into monkeys. It’s an experimental step in eGenesis‘ ultimate goal of using pigs to resolve the shortage of human organ donors. eGenesis is not the first to experiment with the technique and, with 100,000 Americans on transplant waitlists, some doctors are wondering how long we should hold-off before using the offal:

“We’ve got a Chevy. We may even have a BMW now. Do we wait for a Ferrari? There’s a point where you just want to give it a test drive,” says Devin Eckhoff, director of the medical school transplantation division at the University of Alabama at Birmingham.

BEFORE YOU GO

Lego has spent the last seven years trying to derive a plastic from plants so that it can make its bricks eco-friendlier. “Lego tried making pieces from corn, but they were too soft,” the Journal writes. Personally I imagine softer Lego bricks would find a receptive market among parents, tired of stepping on upturned shards of the brightly-colored Danish shrapnel.

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

Exclusive: Quibi Taps Mellody Hobson, Roger Lynch for Board of Directors

Its namesake service isn’t slated for North American launch until April 6, 2020, but Quibi, the short-form media startup founded late last year by Hollywood kingpin Jeffrey Katzenberg and led by Silicon Valley skipper Meg Whitman, is well on its way to building a star-studded team.

Over the last eight months Quibi–under the temporary name “NewTV”–hired former Hollywood Reporter editor Janice Min, former DC Entertainment president Diane Nelson, and former Viacom Music and Entertainment Group president Doug Herzog, among others, for the content side of the Los Angeles company. It brought on Blake Barnes (Instagram), Tom Conrad (Pandora), Joe Burfitt (Snap), and CJ Smith (Snap) for its product department. Rob Post, Hulu’s former engineering VP, leads engineering. Talent from CAA, CBS, Funny or Die, Google, Lionsgate, NBCUniversal, Netflix, Makeready, TBS, and Vice round out a pack of about 135 employees.

And now the company’s board of directors is set.

Fortune has learned that Quibi has selected the following executives for its board: Mellody Hobson, president of Ariel Investments and former chairwoman of DreamWorks Animation; Roger Lynch, CEO of Cond? Nast and former CEO of Pandora; Ann Daly, co-founder at WndrCo Holdings and former president of DreamWorks; Harry “Skip” Brittenham, founding partner of Ziffren Brittenham LLP and a top entertainment industry attorney; Greg Penner, founder of Madrone Capital Partners and chairman of Walmart; Meg Whitman, CEO of Quibi and former CEO of Hewlett-Packard and eBay; and Jeffrey Katzenberg, founder and chairman of Quibi and co-founder of WndrCo and DreamWorks.

In a statement, Katzenberg called the executives “innovative thinkers” from the tech and entertainment industries who understand that people are consuming video in new ways: “They understand how both worlds can come together to reimagine how we tell original stories and create the next era of entertainment.”

As Sheila Marikar wrote in the February 2019 issue of Fortune magazine, Quibi raised $1 billion from investors in a bid to build a high-quality, original, short-form video platform for mobile devices–a Netflix of sorts that’s native to the handheld format and backed by Hollywood’s major movie studios. (Imagine episodic series from directors such as Guillermo del Toro, Antoine Fuqua, and Sam Raimi–all of which are actively working on material for Quibi–that are two to four hours in total length but delivered in chapters or segments no more than 10 minutes long.)

“Quibi” is a portmanteau of “quick bites.”

The three key questions dogging the young media company: Whether anyone will pay for high-quality mobile content offering (it’s tentatively priced at $5 per month; an ad-free version costs $8 per month); whether it can grow large enough to outpace its considerable launch spending; and whether it can make enough progress to outpace competing efforts by Apple, Google’s YouTube, Disney, and others.

In an interview with Fortune last weekend at the Producers Guild of America’s Produced By conference at Warner Bros. Studios in Burbank, Calif., Katzenberg and Whitman offered further detail on Quibi and its business model and waved away comparisons with competitors. The startup plans to spend $1 billion on content and another half billion on marketing, Whitman told me. It’s primarily aiming for users 25 to 35 years old; more broadly, ages 18 to 44, Katzenberg said. It’s working with advertisers to create serialized, short-form ads to match the content–for example, there will be just one 15-second preroll ad for every five to 10 minutes of content, and a five-second version for clips less than five minutes long.

Production companies meanwhile benefit from Quibi fronting the money for their creations. After two years, creators can repackage Quibi’s segmented content into complete series for distribution on other platforms; after seven, they’ll own the intellectual property outright, Katzenberg said.

Quibi has no desire to be a movie studio, Katzenberg said–it’s a platform for a new kind of video product. Which is why its board draws equally from the power corridors in northern and southern California. Or as Whitman told me on Saturday: “We’re trying to bring the very best of Silicon Valley and Hollywood together.”

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Netflix Takes Baby Steps Into Video Gaming

Netflix made its presence known at gaming conference E3 this year.

The company, known for its streaming video service, is getting its toes wet with video games. It’s just one of the ways it’s trying to expand beyond its roots.

On Wednesday, Netflix announced that it would work with developer Next Games to create a third mobile game based on its hit series Stranger Things. That game, expected to be available in 2020, follows the debut of Stranger Things: The Game from 2017. Stranger Things 3: The Game also drops July 4, the same day the third season of the show premieres.

“Shortly after season one of Stranger Things, we realized this is a phenomenon. It was our first attempt at doing consumer products and merchandise. We had never done anything like that before,” Chris Lee, director of interactive games at Netflix, said on stage at E3.

In another twist on the video game theme, Nintendo showed off a new game that will be available on its Switch console based on the 1982 movie Dark Crystal that will be adapted into a Netflix series. Dark Crystal: Age of Resistance will premiere in August. The show is distributed by Netflix, and the game is developed by the studio BonusXP, which also makes Stranger Things: The Game and Stranger Things 3: The Game.

The potential for cross pollination between the video game industry and companies focused on other kinds of entertainment is creating a lot of excitement in Silicon Valley and Hollywood. Doug Bowser, president of Nintendo of America, said that the mixing is a good opportunity for both sides to reach a broader audience.

“I think it’s interesting to see how various forms of entertainment are able to transfer themselves onto other platforms in other ways,” he said. “It’s an exciting opportunity for all of us.”

Netflix’s Lee said that he saw an opportunity to expand into the gaming industry prior to a meeting with Stranger Things creators Matt and Ross Duffer. The group met to discuss all areas of merchandise before the team realized they had untapped potential in gaming.

Says Lee, “The idea is we would take our original series and films and then find a game developer from the industry who’s just as passionate about that content and work closely together with them to bring these things in an authentic way to games.”

Netflix hasn’t given details on any other potential spin-off games, but there’s plenty of potential with its massive library of original shows and movies.