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January 11, 2023


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Reed Albergotti
Reed Albergotti

Hi, and welcome back to Semafor Tech, a twice-weekly newsletter from Louise Matsakis and me. Since the collapse of FTX, Coinbase is enjoying a sort of image boost. That prompted me to look into why, over the past few years, the media was more critical of Coinbase’s business than FTX’s. Hint: It has a lot to do with the personalities of the CEOs. And Louise asks a linguistics professor what she thinks of ChatGPT.

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➚ BUY: Microsoft’s cloud. Semafor reported the tech giant is in talks to invest $10 billion in OpenAI, the company behind the wildly popular chatbot ChatGPT. The deal could have huge benefits for Azure, Microsoft’s cloud computing arm.

➘ SELL: Flying in actual clouds. The U.S. Federal Aviation Administration temporarily halted thousands of domestic flight departures Wednesday, after the national flight control system suffered a computer outage

Semafor Stat

The percentage of Twitter users who accounted for 70% of the exposure to posts from Russian foreign influence accounts in the lead up to the 2016 U.S. presidential election, according to a new study. Researchers said their findings suggest it’s unlikely that Russia’s meddling on Twitter had “more than a relatively minor influence on individual attitudes and voting behavior.”

Reed Albergotti

The Media Loved Sam Bankman-Fried; it hated Brian Armstrong


Crypto exchange Coinbase has for years tracked how the company is portrayed in the press and online, and that “sentiment” measure has fluctuated depending on the price of cryptocurrencies and other factors.

One thing remained constant for years: Its competitor, FTX, the exchange founded by Sam Bankman-Fried, was a notch higher, according to people who’ve seen the analysis. (Bankman-Fried is an investor in Semafor.)

That changed only recently, when FTX collapsed dramatically and Bankman-Fried was indicted on several federal criminal charges related to allegedly stealing customer funds.


Reuters/Dado Ruvic

Last August, when the crypto markets were in freefall, The Wall Street Journal and The New York Times ran almost identical articles on the same day. They were deeply-reported features about how Brian Armstrong, Coinbase’s CEO, apparently mismanaged the company and caused its stock price to plummet.

Both articles called into question Armstrong’s management decisions, linking them to Coinbase’s plummeting stock price. They both had juicy anecdotes from inside the company, but neither proved with strong evidence that the company’s sinking valuation was due to Armstrong’s “failures” or because his initiatives “floundered,” rather than the market downturn. They focused on the fact that Armstrong, like many other tech CEOs, hired too fast during the boom years.

The most remarkable thing about these two articles: Both compared Armstrong’s management unfavorably to that of Bankman-Fried, who since then has been criminally charged with defrauding customers.

“The company is at risk of squandering its head start, as nimbler competitors like FTX and Binance continue expanding despite the downturn,” The New York Times said.

While the article cited Coinbase’s drop in revenue, disclosed in its audited financials, it got FTX’s revenue from Bankman-Fried, who provided in an email a ballpark figure that showed FTX was hardly affected by the “crypto winter.”

The Wall Street Journal mentioned FTX had a comparatively low headcount of 300 people, which in retrospect should have been more of a red flag than a sign of leanness.

It’s easy to criticize the imperfections of daily journalism after the fact, and I worked at the Wall Street Journal for 12 years and I’m sure had my own share of stories I missed. And The New York Times raised questions about the potential for consumers to get in over their heads trading on FTX.

But the Armstrong profiles illustrate a broader phenomenon, reflected through the coverage of the two firms: The way in which CEOs position themselves in America’s polarized political and cultural conflicts, particularly on Twitter, cascades into coverage of often unrelated questions about their companies.

While Bankman-Fried awaits a federal trial slated for October, Armstrong is having a more ordinarily challenging winter. Coinbase is currently retrenching amid the crypto downturn, laying off staff while its stock price falls and dealing with regulatory headaches.

In retrospect, the difference between the companies are blindingly obvious.

FTX was formed in Hong Kong and then moved to the Bahamas, which helped it avoid U.S. regulations and oversight. Not much was known about how the company was  organized or how much money it made, other than what it said publicly or leaked to journalists. The auditing firm for its international operation was little-known and unorthodox.

Coinbase subjected itself to U.S. laws and the kind of scrutiny that comes with being a publicly-traded company.  Armstrong also surrounded himself with adults. Coinbase’s CFO had the same job at OneWest Bank. Its chief policy officer comes from Goldman Sachs and served for nearly 10 years in government, including on the National Security Council. Its board includes former federal prosecutor turned venture capitalist Katie Haun and the former CFO of Cisco.

But the larger contrast is more superficial. Armstrong never figured out the media, and approached journalists with the suspicion now endemic to Silicon Valley. He was selective about giving interviews, and took to Twitter to snub reporters and financial regulators.

When protests erupted in the summer of 2020 against the murder of George Floyd, a Black man who was killed by a police officer, and many companies took official stances in support of the Black Lives Matter movement, Armstrong insisted that his employees refrain from discussing politics at work.

“We don’t advocate for any particular causes or candidates internally that are unrelated to our mission, because it is a distraction from our mission,” Armstrong wrote in a controversial memo that served as a major turning point for his public image and caused some employees to quit.

These were deliberate decisions Armstrong made, often against the advice and outright pleas from his public relations staff, according to people I interviewed over the past week. (Through a Coinbase spokesman, Armstrong declined to be interviewed.)

His disdain for the mainstream press invited more negative coverage from those journalists, which in turn fueled even more mutual disdain. After he took to Twitter to defend his executives against an anonymous letter criticizing his executive management team, columnist Charlie Warzel said in the Atlantic that it was a “poor and ineffective management style that is usually only thinly disguised by the executive’s cult of personality.”

But reporters appeared to be enamored with Bankman-Fried.

He was a public relations natural. He picked up the phone when reporters called. He leaked stories. He constantly talked about his plan to give away almost all his money and gave millions to Democrats. He was vegan. He drove a Toyota Corolla. He trash-talked crypto. He later admitted hiding his political donations to Republicans because he knew they wouldn’t go over well with reporters. (Are we this easy to figure out?)

Bankman-Fried’s well-cultivated persona added sheen to his business. The Wall Street Journal compared Bankman-Fried to Warren Buffett. The Financial Times telegraphed his plans to one day acquire Goldman Sachs.

The coverage of the two CEOs is really a microcosm of tech coverage at its worst: Reporters at war with or enamored by the people they cover, and readers paying the price in the form of two-dimensional coverage. And what they missed was a contrast between two companies that couldn’t be clearer in retrospect.


The role of the press is to hold the powerful to account, and that includes scrutinizing their stances on social issues and other controversial views on social media.

Nathaniel Popper, who previously covered crypto for The New York Times and has written a book on the subject, told me that after his article about Armstrong’s memo was published, current and former employees at Coinbase came out of the woodwork to tell him stories about discrimination.

Popper investigated the claims and reached out to Coinbase for comment. He later wrote an article about how 11 Black employees left over “what they said was racist or discriminatory treatment.”

People at Coinbase believed Popper would ignore what they perceived as exculpatory evidence that the company provided and chose to inform its employees about the impending article in a memo, frontrunning Popper’s story and further complicating the company’s relationship with the media.

Popper, whose story was thorough and accurate, said that this is simply how reporting works. Ultimately, he notes, Armstrong chose to put himself in this position. “Brian is slotted into this media narrative about what tech bros think,” Popper said. “He became the face of how Silicon Valley thinks about things.”

Sign Up for Semafor In Davos

Semafor’s Liz Hoffman, Steve Clemons and Ben Smith will be in Davos later this month for the World Economic Forum, where many of the most powerful people in the world come to do deals, show off their good deeds, and get trapped in the snow and forced to talk to us.

They’ll be delivering our frank and transparent reporting on global power in all its deal-making, gossipy, productive, and pretentious grandeur from one of its true centers in a pop-up newsletter, Semafor Davos Daily. Sign up here.


China Window

Chinese social media app Kwai played a role in Brazil riot


Reuters Connect/SOPA Images/Rafael Henrique

Brazilians and foreign observers are trying to sort out what role social media played in a riot on Sunday, when supporters of former president Jair Bolsonaro stormed Congress, the Supreme Court, and the presidential palace in the capital Brasilia.

One app that has not yet received much attention is Kwai, a video platform similar to TikTok run by one of ByteDance’s biggest Chinese competitors, Kuaishou. Last year, Kwai said it had 45 million monthly active users in Brazil, around 20% of the total population.

While experts say that apps like Telegram and Twitter may have played a larger part in last week’s attack, some people in Brazil have also blamed conspiracy theories and violent rhetoric that spread on Kwai. Marcelo Adnet, a well-known Brazilian actor, pointed to a video on the app in which a Bolsonaro supporter called for the murder of 11 Supreme Court judges.

In response, the official Kwai Brazil Twitter account wrote it was “working to contain the advancement and spread of content that has the potential to harm the democratic process,” which the company said violates its rules.

Kwai did not immediately return a request for comment.


Observers in the United States quickly began comparing the riot in Brazil to the January 6 attack on the Capitol building two years ago. The similarities are obvious, but the social media landscape differs.

While TikTok is the only Chinese social media company with a major presence in the U.S., others are gaining significant market share in Southeast Asia, Africa, and Latin America. Kuaishou, for instance, previously tried launching an app for American consumers called Zynn, but has since refocused its attention on Kwai, which is only available in certain countries, including Brazil, Colombia, and Argentina.

Kuaishou built Kwai into a popular platform in Brazil by targeting working-class audiences, a strategy that it first perfected in China, where it’s known for transforming charismatic farmers and other people from the countryside into internet sensations. In Latin America, it has tried to do the same thing with actors who film telenovela-style dramas.

As they expand abroad, Chinese social media firms are now contending with many of the same controversies over content moderation that have plagued their American counterparts. In September, the Brazilian investigative news outlet Agência Pública reported that Kwai was being used to spread misinformation about the country’s presidential election, which Bolsonaro supporters falsely claim was rigged against the former leader.

“Judges, bums, get ready,” said a man in one Kwai video cited by Agência Pública. “We won’t only storm the Supreme Court, we will hang you all upside down.”

Kwai’s Community Guidelines say it bans “electoral misinformation,” as well as “harmful conspiracy theories.” The company also has an entire separate policy for elections, noting it doesn’t “tolerate content that has the potential to harm the democratic process by the distribution of information that maybe [sic] false, misleading, or otherwise damaging.”

But it’s not always clear how well Kwai enforces its own rules. Over the past few years, public pressure has led Facebook’s parent company Meta Platforms and other American social media giants to disclose more information about how they police their apps around the globe. Far less is currently known about how Chinese social media firms operate abroad.

One Good Text ... with Emily M. Bender


There’s something about a pile of wrecked cars with a baby stroller in the foreground that gets you feeling emotional about autonomous cars. The Intercept obtained that image depicting the aftermath of a November car wreck on San Francisco’s Bay Bridge, apparently caused by a “full self-driving” Tesla that suddenly stopped and caused a pileup.

Tesla has been “beta testing” its full self-driving software on public roads for two years now, and The Intercept article says there have been 35 crashes in which the tech was likely in use. The Tesla driver in the November crash told police he had been using full self-driving mode.

Tesla CEO Elon Musk didn’t respond to a request for comment. He’s said in the past that the software is safe and will soon be safer than a human driver.

Autopilot, which is Tesla’s adaptive cruise control that automatically steers on the highway, is different from full self-driving, where a car can drive itself anywhere.

I tried an earlier version of the full self-driving software around a year ago, and wondered why anyone would want to buy it. It requires you to keep your hands on the wheel at all times and to be ready at any moment, in case the system fails, which in my experience happened often. (Tesla is constantly improving it and I haven’t tried more recent versions.)

The full self-driving software is amazing, and I understand why Tesla fans are obsessed with it. But I don’t believe it will ever progress to the point where the car can be trusted to go anywhere without a driver — the promised “robo taxi” idea. There doesn’t seem to be enough reason to put lives at risk to test this.


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— Reed and Louise