Daily Tech Snippet: Tuesday, May 10

• Report claiming bias in Facebook 'trending' topics sparks social media outcry: Facebook workers have often omitted conservative political stories from the website’s "trending" list, the technology news site Gizmodo said on Monday in a report that sparked widespread comment on social media. An unnamed former Facebook employee told Gizmodo that workers "routinely suppressed news stories of interest to conservative readers," according to Gizmodo, while "artificially" adding other stories into the trending list. Facebook told Reuters on Monday that there are "rigorous guidelines in place" to maintain neutrality and said that these guidelines do not prohibit any news outlet from appearing in trending topics. Facebook did not respond directly though to questions about whether employees had suppressed conservative-leaning news. "These guidelines do not permit the suppression of political perspectives. Nor do they permit the prioritization of one viewpoint over another or one news outlet over another," a spokesperson for Facebook said. The report alarmed some social media users, with several journalists and commentators criticizing Facebook for alleged bias. "Aside from fueling right-wing persecution, this is a key reminder of dangers of Silicon Valley controlling content," tweeted journalist Glenn Greenwald. Well, you go to Hell, Facebook," tweeted Kyle Feldscher (@Kyle_Feldscher), a reporter at the Washington Examiner, a conservative-leaning publication. "For anyone who cares about press freedom, this is frightening stuff," tweeted Bloomberg Editor Bill Grueskin (@BGrueskin), with a link to Gizmodo's story.

• As Lending Club Stumbles, Its Entire Industry Faces Skepticism: Renaud Laplanche and his crew steered a 105-foot racing boat through New York Harbor one day last spring, its towering sails ripping across the water at 30 knots. An accomplished sailor and founder of Lending Club, Mr. Laplanche was hosting executives from hedge funds, Goldman Sachs and other banks — part of his effort to win over Wall Street on his plans to upend traditional banking with a faster, more democratic form of lending. He already had endorsements from Lawrence H. Summers, the former Treasury secretary, and John Mack, the former chief of Morgan Stanley, who joined his board. At Lending Club’s initial public offering in December 2014, the company was valued at over $8 billion. But on Monday, Lending Club announced that Mr. Laplanche had resigned after an internal investigation found improprieties in its lending process, including the altering of millions of dollars’ worth of loans. The company’s stock price, already reeling in recent months, fell 34 percent. The company’s woes are part of a broader reckoning in the online money-lending industry. Last week, Prosper, another online lender that focuses on consumers, laid off more than a quarter of its work force, and the chief executive said he was forgoing his salary for the year. Marketplace lenders like Lending Club have created easy-to-use websites that match consumers and small businesses, hoping to borrow a few thousand dollars, with individuals or Wall Street investors looking to lend money. Freed from the costs of brick-and-mortar branches and federal regulations requiring that they reserve money against their loans, marketplace lenders have been able to grow quickly and with fewer expenses. The process is almost entirely online, with loans approved in days rather than the weeks a traditional bank might take. While marketplace loans account for less than 1 percent of the consumer loans in the United States, a recent report by the investment bank Jefferies said that in some segments — like installment loans — the new lending companies account for more than 10 percent of the market. But in the first quarter, lenders like Lending Club, Prosper and OnDeck Capital had difficulty convincing investors that their business models are sound. Wall Street’s waning demand for loans exposed the Achilles’ heel of marketplace lending. Unlike traditional banks that use their deposits to fund loans, the marketplace companies discovered how fleeting their funding sources can be.

• Researchers say computer screens change how you think about what you read: You probably spend a lot of time staring at screens -- but all that computer time may be making you miss the big picture, new research has found. Reading something on a screen -- as opposed to a printout -- causes people to home in on details and but not broader ideas, according to a new article by Geoff Kaufman. a professor at Carnegie Mellon, and Mary Flanagan, a professor at Dartmouth.  "Digital screens almost seem to create a sort of tunnel vision where you're focusing on just the information you're getting this moment, not the broader context," Kaufman said. The article is based on a series of studies involving a total of more than 300 participants that were carried out while the two researchers worked together at Tiltfactor, a Dartmouth game design lab. The studies covered in the latest article were prompted by earlier research from Kaufman and Flanagan that found players using the iPad version of a disease prevention strategy game struggled with long-term strategy much more than those playing a physical copy of the game.

• Zenefits Was the Perfect Startup. Then It Self-Disrupted: Zenefits makes online software that automates health insurance, payroll, and other essential office drudgery—kind of a human resources version of TurboTax. It’s not a sexy idea, but with 6 million small businesses in the U.S., it’s enormously useful. The company was founded in 2013 by Parker Conrad, who realized he could streamline small businesses’ managerial needs, saving them hundreds of hours of mind-numbing paperwork—not to mention the cost of staffing an HR department—by putting everything online. Conrad was known to be a little frenzied and disorganized but fiercely intelligent. “From an investment philosophy … we look for the magnitude of the genius, as opposed to the lack of issues,” says Andreessen’s founding partner Ben Horowitz. “And in a way, [Conrad] was like the prototype.” Conrad had no background in health insurance but quickly learned the intricacies of the business as well as any veteran. “If you’re an insurance broker,” he said at the TechCrunch Disrupt conference in 2013, “we’re going to drink your milkshake.”  Then In California, they found, some of the sales team used Conrad’s macro to systematically cheat on the state’s training course, which included a section on ethics. “As far as a company doing what Zenefits has done, I don’t know that we have seen this before,” says Nancy Kincaid, press secretary for the California Department of Insurance, which has also opened an investigation. In March, Massachusetts’ division of insurance opened a third. Zenefits confirms that other states have since followed but won’t say which ones or even how many. Sacks became CEO and is guiding Zenefits through its crisis cleanup. He has banned alcohol at the office and changed the company motto from “Ready. Fire. Aim.” to “Operate With Integrity.” In February the company laid off 250 employees, including the enterprise team. Sales Vice President Blond, Semaan’s boss, and any executive or manager known to have helped disseminate the macro are also gone. Zenefits says it has self-reported the findings of its internal investigation to all 50 states and is working with those that have opened formal inquiries. Fidelity Investments, which owns a stake, has slashed its valuation of Zenefits from $4.5 billion to less than $2 billion. There are rows of empty desks at the San Francisco office; the company plans to downsize from four floors to three. The Star Wars-themed conference rooms will soon be renamed after inspirational entrepreneurs. Kegs have been replaced with cold-brew coffee. The stairwells are condom-free. Zenefits might also survive for the one reason that made its product so appealing to business owners in the first place: Shopping for health insurance remains really frustrating. The company says it now has 20,000 accounts. “As long as their problems don’t affect our company, we’ll stay,” says Todd Harmond, vice president for finance and operations of the e-book service Scribd, which uses Zenefits to offer Kaiser Permanente and Anthem health insurance plans to its 85 employees. “Unless something else goes really wrong with Zenefits, we’ll stick with them for a while,” says BlogMutt’s Yates. “It’s too much of a hassle to switch.”