You know it's a busy day when Uber files its IPO documents, there's some dirt in them, and that's only item No. 4 in Login.
1 big thing: Amazon strikes back as criticism grows
Amazon is mounting a vigorous defense against the charge that it stifles competition, with founder Jeff Bezos pushing back on critics in his annual shareholder letter yesterday, and the company modifying allegedly anti-competitive practices in recent months, Axios' David McCabe reports.
The big picture: The top antitrust regulator in the EU has said her probe of Amazon is “advancing,” while lawmakers, including some presidential candidates, hammer the company in the U.S.
Driving the news: In Bezos' letter, the Amazon CEO countered two lines of criticism: that his company is strong-arming third-party sellers on its platform, and that it has monopolistic power over the market.
- “Third-party sellers are kicking our first party butt. Badly,” Bezos' letter said. It pointed to Amazon's investment in Fulfillment by Amazon and the Prime program as "the very best selling tools we could imagine and build" for its third-party merchants.
- “Amazon today remains a small player in global retail," the letter said in another section. "We represent a low single-digit percentage of the retail market, and there are much larger retailers in every country where we operate. And that’s largely because nearly 90% of retail remains offline."
What they're saying: “It certainly looks like they’re concerned about the growing scrutiny on their market power,” said Stacy Mitchell of the Institute for Local Self-Reliance, a longtime critic of the company, who also argued Bezos was downplaying Amazon's power in its marketplace.
Background: Amazon’s critics have ramped up their pressure in recent years, saying the company uses its scale to muscle out competitors in a growing array of businesses.
- Last year, European Competition Commissioner Margrethe Vestager announced she was probing the company's dual role running a marketplace for third-party sellers and competing against them with its own private label products. (Amazon maintains its private labels constitute a tiny percentage of sales.)
Now, Amazon is a regular target for progressives.
- Sen. Kamala Harris told Axios in January, around the time she launched her presidential campaign, that "Amazon should be subject to oversight that protects the dignity of workers and ensures fair competition."
- Sen. Elizabeth Warren released a plan in March to break up Amazon and other tech giants and ban marketplace platforms from selling products on their own service.
Amazon has also changed some of the practices that put the firm in the crosshairs of regulators.
- For example, in March, Amazon stopped banning third-party merchants in the U.S. from offering lower prices on other sales platforms, after Sen. Richard Blumenthal raised concerns about this practice, which was discontinued in Europe in 2013.
"I'm glad Amazon pulled back on some anti-competitive behaviors after I raised concerns about their business model, but I'm still deeply concerned that their own private-label sales on their platform are projected to hit $25 billion by 2022," said Warren in a statement.
Read more of David's story here.
2. Exclusive: Trump administration to unveil big 5G push
As Axios' Kim Hart reported earlier today, President Trump and his top telecom regulator will announce plans to unleash the largest-ever swath of radio frequencies in the U.S. and a $20 billion fund to help wireless companies to keep pace with global rivals — specifically China — in the 5G race.
Why it matters: Proponents maintain that a significant economic advantage will be won by the first country to broadly deploy 5G networks, which will deliver wireless speeds 100 times faster than today's mobile internet.
- The U.S.' lead in building current 4G technologies led to smartphone ubiquity and apps like Uber and Spotify.
- The next generation is expected to power self-driving cars and smart cities.
Fears that China has the edge in the global 5G race sparked some (including Karl Rove, Newt Gingrich and Trump campaign manager Brad Parscale) to call for a government-directed national network, similar to China's own approach.
The White House disagrees, as does the FCC which oversees the networks.
- "The Trump Administration is supportive of a private sector, free enterprise approach," per a White House official. "We believe the U.S. is winning the race to 5G with record deployments in cities across the United States."
Details: At a White House event today, Trump and FCC Chairman Ajit Pai plan to make two announcements.
1. Airwaves: The FCC will auction off three big slices of millimeter-wave airwaves that are crucial to connecting new devices at high speeds.
- The auction, slated to begin Dec. 10, will offer the wireless industry the biggest-ever chunk of airwaves the FCC has ever auctioned off for commercial use.
2. Funding: The agency will announce a "Rural Digital Opportunity Fund" to spend $20.4 billion over 10 years in rural broadband.
- The investment will be made in the form of subsidies available to eligible companies through a competitive auction to build out fiber optic lines in unserved areas.
- Fiber-optic infrastructure is expensive to install, but it's essential to carrying wireless network traffic back to the core of the internet.
Yes, but: The U.S. is hampered in other areas.
- No American company manufacturers 5G network equipment, leaving the U.S. to rely on foreign-owned Nokia, Ericsson and Samsung.
- China is poised to dominate that market with Huawei, its fast-growing telecom firm that has been shunned by the Trump administration out of fears of espionage.
The bigger picture: Wireless companies including Verizon and AT&T are in the early stages of 5G roll-outs, with limited services in handful of markets so far and 92 deployments planned by the end of the year.
- But widespread deployment will happen over the course of a decade, requiring a steady pipeline of spectrum and fiber projects.
Go deeper: Kim has more here.
3. Silicon Valley's startup gamble faces employee scrutiny
Startup equity has long been part of the Silicon Valley employee experience, but some are questioning whether the gamble is worth it, Axios' Kia Kokalitcheva reports.
Why it matters: Startup employees often give up cash compensation in exchange for stock, under the premise it could someday be worth a fortune.
- "Being an early employee at a startup is almost always a terrible decision financially," tweeted Sahil Lavingia, founder of Gumroad and Pinterest's second employee.
- Startups often require longer hours for less money, and the potential upside for early employees is usually much less than for company founders.
- Startups also are known to sometimes keep their employees in the dark about interim share values, or at least make it difficult to obtain.
Between the lines: Early employees know they're giving up some security for a lottery ticket, but even the winning numbers don't always pay off.
- When Amazon recently bought Wi-Fi router company Eero, the news was lauded by tech on Twitter.
- But the deal actually could have cost some employees money, according to Mashable, despite a price tag of nearly $100 million. That's because the deal structure valued Eero stock at just $0.03 per share, even though "it typically would have cost around $3 for employees to exercise their stock."
- Eero's founders and senior executives, however, reportedly received big bonuses and raises.
Go deeper: Kia has more here.
4. The dirt in Uber's IPO filing
Uber delivered the first public version of its IPO documents Thursday and, even though it didn't have key final details on how much Uber plans to raise, it had some very interesting information.
Details: Here are a few things that stood out...
- Uber's food delivery unit, Uber Eats, had $7.9 billion in gross bookings last year. That's up from $3 billion in 2017, but Uber's share of the revenue is still a tiny sum compared to what it makes from its ride-hailing business.
- Its largest outside shareholder is SoftBank with a 16.3% stake. Other major shareholders include Benchmark (11%), Expa (6%), Saudi Arabia's Public Investment Fund (5.3%), and Alphabet (5.2%). Former CEO Travis Kalanick has an 8.6% position.
Plus, there is some fresh, but nonetheless dirty, laundry from the Uber-Waymo settlement.
- Specifically, the S-1 notes interim findings that Uber's self-driving car technology may infringe on Waymo's intellectual property. Or, as Uber puts it, they "are problematic" and could result in Uber having to pay license fees or redesign its technology.
- Also, an arbitrator has reached a preliminary finding that former Uber employee Anthony Levandowski owes Google $127 million, and Levandowski and another former Google employee, Lior Ron, jointly owe another $1 million.
5. Apple's growing antitrust problem
Apple's expansion into services could test the hardware company in several ways — including the risk of making the company an even bigger antitrust target, Axios' Sara Fischer and I report.
That's because Apple already tightly controls its ecosystems, especially the iPhone and iPad.
Why it matters: Companies have long-alleged that Apple and Google exploit their footing as owners of both the world's largest smartphone operating systems (iOS and Android) and some of the world's most popular apps (like Apple Music and Google Maps).
Driving the news: Dutch antitrust officials said Thursday that they would investigate whether Apple favors its own apps over those of its rivals.
- In a statement, the Netherlands’ Authority for Consumers & Markets said it received indications from app providers that Apple abuses its position in the App Store, giving it a sufficient reason for launching a follow-up investigation.
- The probe comes on the heels of a complaint filed by Apple Music rival Spotify last month. The Swedish music platform asked EU officials to look into whether Apple stifles competitive apps in its App Store, which it says harms consumer choice.
Between the lines: Apple's move into services is likely to create even more of these kinds of issues.
- News publishers are also concerned about Apple's dominance in rolling out its new Apple News+.
- Apple, for its part, said it is confident the Dutch agency's review "will confirm all developers have an equal opportunity to succeed in the App Store."
The big picture: It's never been clear whether having a monopoly over a particular platform presents an antitrust problem if the platform itself faces sufficient competition.
- In this case, Apple dictates the terms and rules for the iPhone, but the iPhone itself has competition. Think Xbox or PlayStation as other examples of this.
- For the most part, regulators have been hesitant to step in.
Yes, but: It’s not a settled issue. Europe has taken on Google over Android, and similar questions were also raised when Apple controlled both the iPod and iTunes and wouldn't let the device work with other services or the service work with non-iPod devices.
6. Take Note
- Jumia is scheduled to go public.
- Jimmy Asci is joining WeWork as global head of communications. He previously was with Teneo, where he worked with such clients as Coca-Cola and former Uber CEO Travis Kalanick.
- Google diversity chief Danielle Brown has left to be chief people officer at Gusto.
- Axios' Jim VandeHei writes on how the explosion of technology in every facet of life is a big reason that the rich are getting richer, and the big are getting bigger — causing political and social instability that could get worse.
- SpaceX is raising another $500 million. (Axios)
- Disney says its Disney+ streaming service will launch Nov. 12 for $7 per month. (Axios)
- YouTube has begun looking at various alternative metrics in addition to total time spent on the site, amid criticism. (Bloomberg)
- The health care industry is expecting — in a pretty upbeat way — a surge in health IT companies. (Axios)
7. After you Login
Disney+ may be worth the price of subscription just for this.