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July 12, 2022

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Today's newsletter is 1,145 words, a 4-minute read.

1 big thing: Companies want DOJ's Apple investigation to pick up pace

Illustration of a loading screen with the bar shaped like a gavel

Illustration: Sarah Grillo/Axios

The Justice Department’s Apple investigation is taking too long, allowing harm to competitors and consumers to continue, several companies say, Axios' Margaret Harding McGill reports.

Why it matters: Big Tech's dual threats from Washington are antitrust lawsuits and bills rewriting how they operate, but Apple has yet to feel the full brunt of either.

Catch up quick: In 2019, the Justice Department and FTC split up competition investigations into Big Tech companies, with DOJ taking Apple and Google.

  • Critics have complained that Apple's requirement that iPhone apps use its own in-app payment system and its 30% commission rate on most transactions are anticompetitive practices.
  • A 2020 House antitrust subcommittee investigation found that Apple's monopoly power has led to "harm to competitors and competition."

What's happening: Companies that have raised concerns about Apple tell Axios that the investigation has been slow moving and the San Francisco field office leading the inquiry does not have the resources of the main D.C. office. (The companies requested anonymity to discuss a non-public investigation.)

  • The DOJ's Google investigation, which became public in 2019 and was run out of Washington, led to a lawsuit a year later.
  • The Justice Department won't just "nonchalantly file a complaint against a company like Apple," one company official told Axios. "But at the same time, these digital markets move fast and the harm that consumers and small developers are facing is real. So a failure to act has consequences."

The big picture: The Justice Department already has one massive antitrust case against Google underway, as well as a separate investigation into the company's adtech business.

  • The San Francisco field office has led major antitrust investigations in the past, including the Microsoft investigation and a lawsuit to block Oracle from acquiring PeopleSoft in 2004. (The DOJ lost the Oracle case.)
  • "They do have a history of being involved in fairly significant civil matters, particularly technology civil matters," Charles "Rick" Rule, a former DOJ official and chair of antitrust law firm Rule Garza Howley, told Axios.

Between the lines: Factors that may have contributed to the length of the Apple investigation include the pandemic, the change in administration and the private antitrust suit Fortnite-maker Epic Games launched against Apple.

  • The DOJ weighed in on Epic's appeal against Apple, arguing the district court made “legal errors that could imperil effective antitrust enforcement, especially in the digital economy.”
  • "It is a long period of time, but under the circumstances, maybe it’s not all that surprising," Rule said.

The other side: Another company told Axios that both the pace and scope of the investigation have increased in the last several months, while a different company told Axios that the DOJ is bringing resources beyond the San Francisco office to the case.

  • “My own experience is they’ve been taking their time because they’re going so, so deep,” one company official told Axios. “I’d much rather them take their time to get ready for the best case possible.”
  • The source also noted that Apple is a “strategic and formidable opponent” in litigation. “Suing Apple is not anything close to suing Google.”
  • A Justice Department spokesperson declined comment.
  • Apple declined comment. The company has previously defended its App Store policies as protecting consumers' privacy and security.

The intrigue: The Justice Department recently named former Microsoft economist Susan Athey as the antitrust division's chief economist.

  • Athey was most recently an economics of technology professor at Stanford University and served as an expert economist for Epic in its suit against Apple.
  • That prior work may mean she could be recused from the DOJ's Google and Apple investigations, according to Bloomberg, which first reported the news of her hire.

2. Twitter: Musk's move to end deal is "invalid"

Data: Yahoo Finance; Chart: Baidi Wang/Axios

Twitter on Monday said that Elon Musk's effort to abandon his $44 billion takeover of the company is "invalid and wrongful," according to a letter filed with the U.S. Securities & Exchange Commission.

Why it matters: This is an opening legal salvo in what soon will become a full-fledged brawl in Delaware Chancery Court, Axios' Dan Primack reports.

What Twitter said: The social media company, via its attorneys, claims that it has "breached none of its obligations" under the merger agreement, and that it has not suffered a "material adverse effect."

  • Musk on Friday argued that the company had breached its obligations by not providing certain data about "bot" accounts, and by several HR moves that he deemed to have not been in the course of normal business.
  • Twitter also claims that the only contractual breaches have been made by Musk, and that they have been done "knowingly, intentionally, willfully, and materially."
  • It concludes by saying that the merger agreement "is not terminated."

What to watch: Expect Twitter to file its formal complaint against Musk later this week.

Go deeper:

3. Quick takes: Push for K-12 computer science

1. A wide range of officials — from CEOs to union leaders — have signed a letter calling for states to update their K-12 curriculum so that every student can learn computer science.

  • What they're saying: "It is rare to see multibillionaires and union leaders agree, to see competitors all on the same page, and diverse groups from all walks, all getting behind one idea," Code.org CEO Hadi Partovi told Axios. "This letter shows that the United States of America can still act United."

2. Mark McGann, a former top Uber policy executive in Europe, has revealed himself in the Guardian as the man behind a trove of leaked company documents that were published starting this past weekend.

  • Why it matters: Much as when Frances Haugen came forward as a source for the Facebook Files, the move puts a face to the story, which could give it more traction.

3. The Information has a fresh report on the internal struggles inside Apple's self-driving car project.

  • Between the lines: The story shows that the effort continues to face skepticism from some of the company's top executives, as well as technical challenges. However, it's still early days for autonomous vehicles, and Apple could yet prove to have something to contribute.

4. Take note

On tap

Trading Places

  • Tom Krause has been tapped to become CEO of the combined Citrix Systems and TIBCO Software when the deal combining those two companies is closed. Krause had been software head of Broadcom, which itself has been pieced together from multiple companies.

ICYMI

  • Apple released public betas for the next versions of its iPhone, iPad, watch and Mac operating systems. (The Verge)
  • The Federal Trade Commission said Monday it is fully committed to enforcing the law in the illegal use and sharing of sensitive data, including location and heal information.
  • Twitter introduced a new “unmentioning” feature, whereby users can remove themselves from unwanted conversations. (TechCrunch)

5. After you Login

The first full-color image from the Webb Telescope
Photo: NASA, ESA, CSA, and STScI

In case you have been living in a black hole, here is the first full-color picture from NASA's James Webb Space Telescope.