May 3, 2021

Axios Login

Greetings, fair reader ... well, more than fair ... Let me start that again: Greetings, great reader.

Situational awareness: The Oversight Board will announce its decision on the case concerning former President Trump on its website on Wednesday at approximately 9 am EDT.

  • Also: Verizon is selling Yahoo and AOL to private equity firm Apollo Global Management for $5 billion, Axios' Dan Primack reports.

Today's newsletter is 1,150 words, a 4-minute read.

1 big thing: The trial to decide the future of Apple's App Store

Illustration: Sarah Grillo/Axios

A federal court in Oakland will begin hearing Epic Games' antitrust suit against Apple on Monday, a case that could radically reshape the way iPhone apps and services are sold.

Why it matters: Fortnite maker Epic Games is asking the court to invalidate the entire business model behind the iOS ecosystem, seeking to bar Apple from requiring developers to use its in-app purchases for digital goods and services.

Catch up quick: Last year, Epic added its own in-app payment system into Fortnite, despite prohibitions by both Google and Apple on doing so.

What to watch: The star-studded trial is expected to feature live testimony from Apple CEO Tim Cook, Epic CEO Tim Sweeney, top Apple executives Phil Schiller and Craig Federighi, as well as other witnesses from the company and economic experts trying to help each side make their case.

The big picture: In order to win, Epic has to convince the judge that Apple has a monopoly with its App Store and abused that market power by forcing Epic (and other developers) to use Apple's payment system.

  • Apple argues that the relevant market isn't iOS, but rather all the different options players have for games, of which it is just one player.

Between the lines: The most interesting revelations are probably not going to be deeply relevant to the question at hand.

  • Apple, for example, has made a big deal about the fact that Epic planned this confrontation in a deliberate attempt to get around Apple's rules. (Spoiler alert: Epic will probably not attempt to argue otherwise.)
  • Epic, meanwhile, cites a bunch of internal emails where Apple, among other things, decided not to do iMessage for Android because it could make it easier for people to switch off the iPhone. (My thought bubble: Even without the emails, we know that's what Apple decided because if they hadn't, we'd all have iMessage on Android by now.)
  • A huge part of the case hinges on the least exciting part of the trial — back-to-back expert witnesses who will argue over how the relevant market should be determined.

Yes, but: These lines of inquiry will provide useful insight. Apple's long-running legal battles with Samsung forced the company to share a great deal of detail on its usually secretive design process, among other revelations.

What's next: The trial is expected to run until roughly May 25. U.S. District Court Judge Yvonne Gonzalez Rogers will decide the case.

2. What we've already learned thanks to the Apple-Epic trial

While the heart of the Apple-Epic case begins with the trial today, there have already been a number of interesting revelations as part of various pre-trial findings.

Why it matters: Tech companies, especially Apple, like to keep their inner workings secret, but court cases often force them to reveal things either to make their case or in response to discovery requests from the opposing side.

Here are a couple of things we have learned so far:

  • Microsoft recently considered cutting the commission it takes on Xbox games to 12% from the industry standard 30%. It announced last week — perhaps because this was going to become public — that it will make such a cut on its PC game store commissions. However, the company said this weekend that a similar move on Xbox isn't part of its current plans.
  • One of Epic's economic experts estimates that Apple's profit margins on the App Store are more than 77%. Apple disputes this figure.

What we're watching: Presumably some of the best dirt each side has dug up has already come out. But, having covered the various Apple-Samsung cases, I can tell you that there are usually a few unexpected twists that come out at trial.

3. Workers flee Basecamp after it bans politics talk

The reaction from Basecamp employees has been swift and severe, with nearly a third of the staff turning in their resignations last week. The move followed the company's ban on political talk at work.

Why it matters: The reaction at Basecamp and Coinbase, which made a similar shift, suggests that other companies might want to think long and hard before adopting similar policies.

Catch up quick:

  • Things started last Monday, when CEO Jason Fried posted a blog titled "Changes at Basecamp" outlining a number of policy shifts, including eliminating the company's diversity and inclusion committee and banning political talk in work channels.
  • Another company executive said the company would offer severance to workers who wanted to leave, and nearly a third announced on Twitter on Friday that they were doing so.
4. Using AI to root out unconscious bias

Illustration: Annelise Capossela/Axios

While AI language models are often accused of injecting or exacerbating existing biases, one startup is using machine learning to identify instances of racial and gender bias in employee performance reviews, Axios Future's Bryan Walsh reports.

Why it matters: The tech industry — and all industries — have an ongoing problem with bias in the workplace. AI systems that parse text can help identify bias in at least one area: who companies decide to hire and promote.

How it works: Text IQ, an AI startup that focuses on uncovering latent risk in unstructured data like reports and financial data, recently launched its Unconscious Bias Detector.

  • Its AI system can scan employee performance reviews and identify, for example, whether male managers in a company are more likely to give higher scores to male workers.
  • It can also parse the text in written reviews and identify "work-focused language versus personality-focused language," says Apoorv Agarwal, Text IQ's CEO.
  • If a manager is giving one group of workers reviews that focus much more on personality versus work performance, that suggests some element of bias may be at work.

What they're saying: "Our goal with this is if we can make something unconscious conscious, that's already doing a lot," says Omar Haroun, Text IQ's COO.

The catch: While natural language processing models like this one have made major leaps in recent years — in part by being able to "combine the social aspect of text along with the linguistic," notes Agarwal — they're far from perfect and shouldn't be relied upon alone.

5. Take note

On Tap

  • Intel is set to unveil a $3.5 billion effort to upgrade its chipmaking facilities in New Mexico. CEO Pat Gelsinger teased the plan in a 60 Minutes interview last night, and the company will offer further details at a press conference later this morning.

Trading Places

  • Neuralink co-founder Max Hodak tweeted Saturday that he has left the Elon Musk-backed company, which aims to create direct connections between machines and the human brain.

ICYMI

  • As Axios' Sara Fischer scooped yesterday, Twitter will launch a major advertising and social media campaign today urging people to follow local journalists and support their work. (Axios)
  • The New York Police Department has terminated its contract with Boston Dynamics for a robotic dog after residents complained. (Axios)
  • Britain's Rockley Photonics, which is working on health sensors such as blood pressure and glucose monitoring, said in an SEC filing that Apple is its largest customer. Such capabilities have been rumored for Apple Watch but are not yet part of its feature set, but reportedly could come next year. (Forbes/Telegraph)