Sep 25, 2018

Axios Login

Situational awareness: Google CEO Sundar Pichai has agreed to testify before Congress and will meet with lawmakers on Friday. In a statement, House Majority Leader Kevin McCarthy said the hearing would be "scheduled later this fall" and hosted by the Judiciary Committee. He'll face questions on a wide range of issues — including bias allegations, privacy and Google's plans for China.

1 big thing: Qualcomm vs. Apple takes a sharp turn

Illustration: Rebecca Zisser/Axios

The most high-stakes legal battle in tech just got even juicer. In court documents, Qualcomm says new evidence shows Apple made improper use of its modem technology to help Qualcomm rival Intel develop a more competitive alternative.

Why it matters: Apple and Qualcomm were already locked in a bitter, global court battle. Both companies are behemoths used to getting their way in business dealings — and their face-off has been epic.

Driving the news: In a filing late Monday, Qualcomm seeks to amend a California state breach-of-contract suit, saying that documents provided by Apple support its belief that the company misused company trade secrets.

Although discovery is ongoing, it is clear that Apple's conduct went far beyond simply breaching the contract originally sued on. Indeed, it is now apparent Apple engaged in a years-long campaign of false promises, stealth and subterfuge designed to steal Qualcomm's confidential information and trade secrets for the purpose of improving the performance of lower-quality modem chipsets, with the ultimate goal of eliminating Qualcomm's Apple-based business.
— Qualcomm, in a court filing on Monday

The original breach of contract claim was focused on an allegation that Apple had not allowed Qualcomm to audit the iPhone maker's use of Qualcomm's trade secrets. At the time, Qualcomm suspected that Apple had misused the confidential information — but it had no evidence.

In the new filings, Qualcomm says that, at Apple's request, it allowed the iPhone maker deep access to its software and tools, but with strict limits on how those products could be used. Rather than just use it to improve the performance and functioning of Qualcomm chips, the company alleges that Apple used it to understand how the modem works and to help Intel improve their chips.

An Apple representative was not immediately able to comment.

Background: Apple used Qualcomm modems exclusively from 2011 through 2016, when it started using a mix of Intel and Qualcomm chips. The latest iPhone models are said to use only Intel modems.

History lesson: Qualcomm's state complaint for breach of contract is one of a dozen legal skirmishes between the two companies, a battle that spans the globe. There are also cases of patent infringement, antitrust and more in U.S. federal court and before the U.S. International Trade Commission, as well as in China and Germany.

What's next: It will be up to the judge whether to allow Qualcomm to update its lawsuit to include the new claims. If she does allow the change, that might delay the case's planned April 2019 trial. Qualcomm wants to see its complaint amended but also wants to see the trial date kept.

2. State AGs and Sessions huddle on tech

Representatives of more than a dozen state attorney general offices will convene Tuesday morning with U.S. Attorney General Jeff Sessions to discuss concerns about social media platforms.

Why it matters: The threat of an antitrust investigation of the big tech platforms looms over the proceedings, but it’s unclear what exactly the Department of Justice's plan is for the gathering, Axios' David McCabe reports.

The big picture: The states will be discussing “a growing concern that these companies may be hurting competition and intentionally stifling the free exchange of ideas on their platforms,” per a DOJ statement in early September, shortly after President Trump had tweeted about alleged anti-conservative bias at Silicon Valley companies like Google and Facebook.

According to a DOJ official, attendees at the 10am meeting will include:

  • The attorneys general from Maryland, Louisiana, D.C., California, Mississippi, Tennessee, Utah, California and Nebraska as well as representatives of the AG offices in Arkansas, Missouri, Texas, Washington and Arizona.
  • Sessions along with Deputy Attorney General Rod Rosenstein, DOJ antitrust chief Makan Delrahim and acting Associate Attorney General Jesse Panuccio.

Yes, but: The meeting is unnerving to some in tech policy circles, who fear the Justice Department is using its antitrust enforcement authority to pursue a partisan grudge.

  • Several groups and individuals led by the right-leaning TechFreedom said in a letter to Sessions last week that “we fear that the effect of your inquiry will be to accomplish through intimidation what the First Amendment bars: interference with editorial judgment.”
  • Earlier, the meeting had drawn criticism for only including Republican AGs, but DOJ changed course. The attorneys general from California, Maryland, DC, Mississippi and Washington state are all Democrats.

What’s next: Both the companies and their critics will watch closely to see what — if anything — officials say after the meeting, and whether more aggressive federal or state probes follow.

3. Instagram co-founders resign

Instagram co-founders Kevin Systrom and Mike Krieger have resigned and plan to leave the Facebook-owned company "in coming weeks," the New York Times' Mike Isaac first reported and Systrom later confirmed in a statement.

Facebook acquired Instagram for $1 billion in 2012. The photo-sharing app now has more than a billion users.

Why it matters: Facebook has succeeded in part by being able to acquire and absorb new social networks on top of its own, and Instagram in particular has looked like Facebook's ace in the hole, even as its original network has faced crises and setbacks around privacy, trust and election security.

  • However, in recent months Facebook has lost top founders from WhatsApp and now Instagram, both of which have been key to the company's efforts to connect with its next generation of users.

What they're saying:

"It’s not them, it’s Mark: Increasing tensions between instagram and their Facebook overlords is behind the departure, said sources."
— Recode's Kara Swisher, on Twitter
"Earlier this year, Zuckerberg moved a senior Facebook product executive, Adam Mosseri, over to Instagram in anticipation that the founders might leave, one source said."
— WSJ's Deepa Seetharaman, on Twitter
4. Call for AI master plan from inside the House

Illustration: Lazaro Gamio/Axios

The Trump Administration has done little to support artificial intelligence research, experts say. Now, the top members of a House subcommittee are calling for a plan to maintain American leadership in AI, Axios' Kaveh Waddell reports.

Why it matters: As the White House idled, China implemented a national plan that is propelling its AI research and implementation. Now, the two countries are in a race to reap the technology's economic and military rewards.

In a report to be published later today and shared first with Axios, the leaders of the House Oversight and Reform IT subcommittee — Chairman Will Hurd and Ranking Member Robin Kelly — call on the U.S. government to step it up

The government hasn’t moved with the urgency the situation requires, Hurd, a Republican from Texas, told Axios. China’s rapid AI rise should shock Congress and the White House into action, they write.

The pair of legislators lay out high stakes for failure. "Whoever masters AI will have an outsize role in this world," Hurd said.

  • The nation with the strongest AI program will achieve a more efficient economy and improve decision-making in every industry, and will get to set vital international norms and standards.

The report offers four recommendations:

  • More funding for R&D through agencies like the National Science Foundation, National Institutes of Health, DARPA, and NASA.
  • Publishing government data sets, a potential boon for training data-hungry AI.
  • Developing standards for measuring the progress and dangers of AI.
  • More DARPA Grand Challenges, like the one that motivated much of the early work on autonomous driving.

While it's early to be implementing rules, some areas show promise for regulation, said Paul Scharre, director of the technology and national security program at the Center for a New American Security. Scharre says these areas include:

The bottom line: "A completely hands-off approach to technology will lead to problems, just like we've seen in social media," Scharre said.

Go deeper: Read Kaveh's full story here.

5. Take Note

On Tap

Trading Places

  • T-Mobile said it hired former CenturyLink and Level 3 executive Sunit Patel for a new executive role overseeing the company's Sprint merger and integration work.
  • The military's Defense Innovation Unit has named former Quantum and Symantec executive Michael Brown as its managing director.
  • Tile named GoPro COO CJ Prober as its chief executive, adding Comcast as a new investor.


6. After you Login

You know what's creepier than a stroll through a seasonal Halloween store? A stroll through a seasonal Halloween store that used to be a Babies 'R Us where no one bothered to take down all the old signs.