Nov 19, 2020

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Today's Login is 1,479 words, about a 6-minute read.

1 big thing: The FTC's tech hits and misfires

Illustration: Sarah Grillo/Axios

With the Federal Trade Commission expected to unveil long-awaited antitrust action against Facebook in the near future, the agency's mixed record on regulating tech has experts viewing the case as a "put up or shut up" moment, Axios' Margaret Harding McGill reports.

The big picture: Most of the tech cases the FTC has tackled involve consumer protection rather than restraining monopolistic behavior. Past antitrust investigations of tech mergers or companies, like a review of Google that ended in 2013, led critics to paint the FTC as toothless.

Here's a look back at the agency's hits and misses in tech.

2019 —YouTube's $170 million settlement: YouTube agreed to pay a fine in 2019 and make other changes to how it handles kids' videos to settle allegations it violated children's online privacy laws.

  • Neil Chilson, senior research fellow for Tech and Innovation at Stand Together and a former FTC adviser, said the changes the agency secured, which included halting all tracking of minors without parental consent, have had "a big impact on how YouTube operates."

2019 — Facebook's $5 billion privacy settlement: The fine for violations of user privacy, including the Cambridge Analytica scandal, set a record. But critics viewed it as ineffectual, given how rich Facebook is, as well as an indication that a 2012 privacy settlement with Facebook perhaps proved toothless.

  • "I think the design and implementation of [the earlier settlement] certainly proved to be flawed," said former FTC Commissioner William Kovacic, now a professor with George Washington University Law School. "If you're doing your job well, you learn from that and don't make the same mistakes again."

2017 — Amazon acquires Whole Foods: The FTC investigated Amazon's acquisition of the natural-foods giant but took no action.

  • That "entrenched Amazon's power as an online retailer in a number of ways," said Stacy Mitchell, co-director of the Institute for Local Self-Reliance, including giving it new data on affluent consumers' offline shopping habits.

2017 — Qualcomm monopolization lawsuit: In the last days of the Obama administration, the FTC sued Qualcomm for allegedly using anticompetitive tactics to maintain a monopoly. The agency won the trial but lost the case on appeal this year.

2014 — In-app purchases: The FTC lodged complaints against Apple, Google and Amazon in 2014 (eventually settling them all) alleging the companies unfairly billed consumers for in-app charges incurred by children without their parents' consent.

  • In separate cases the companies agreed to refund roughly $121.5 million to consumers.

2012–2014 — Facebook's acquisitions: The FTC signed off on Facebook's 2014 acquisition of WhatsApp and its 2012 purchase of Instagram. Those two mergers shaped today's company — and are reportedly at the center of the FTC's current investigation into whether the social media company smothered competition by buying up rivals.

  • "The FTC is responsible for the dumpster fire that is the modern internet," said Matt Stoller, director of research at the American Economic Liberties Project. "There was a big merger wave in the online advertising and publishing space ... and the FTC and DOJ didn't block a single merger."
  • Chilson argued the FTC has prioritized antitrust action to address clearer consumer harms, such as in hospital mergers.

2013 — The Google search investigation: The FTC investigated whether Google used its power in the search market to squelch rivals and won commitments by the search giant to change some behavior — something Kovacic argued should've been in a court order and not the product of non-binding pledges.

Between the lines: The FTC's Google search episode may be the one most on commissioners' minds as they prepare for a Facebook case.

  • "To walk away from bringing a case against Facebook after all of the talk around it would be a shattering institutional failure," said Kovacic.
2. Google Pay adds peer-to-peer payments and more

Image: Google

Google announced a significant expansion of its Google Pay service on Wednesday, adding peer-to-peer payments to its contactless payment system as well as a partnership with banks to incorporate banking and checking services next year.

Why it matters: Contactless payments can be a gateway to other financial services, as Apple has shown by expanding from Apple Pay to Apple Card.

Details: Google unveiled a bunch of new features for Pay, including:

  • Splitting a bill and other peer-to-peer transactions.
  • The ability to track spending and do other personal finance tasks, including searching for transactions by keywords such as "pizza" or "last month."
  • A new kind of mobile-first bank account, called Plex, in partnership with banks, coming in 2021.

Between the lines: Bankrate industry analyst Ted Rossman called the move "an ambitious play for a wide spectrum of consumers' financial needs."

  • "Because the Google Pay app is available for Android and iOS phones, this is going to heat up the competition between Google and Apple," Rossman said in a statement.

Yes, but: Some critics warned that the move could further entrench Big Tech's market power and influence.

  • "It is a nightmarish example of the ways monopolies like Google can bully their way into new industries and it will open the door to all kinds of abuse," said Graham Steele, Senior Fellow at the American Economic Liberties Project.
3. Apple's App Store changes leave critics wanting

While many developers will benefit from Apple's move Wednesday to cut commissions for companies earning less than $1 million per year in App Store revenue, the company's critics derided the move as a cynical attempt to distract from what they see as Apple's broader anticompetitive business practices.

Why it matters: Apple's move appears designed to appease concerns from critics and regulators, but it's unclear how far it will go to assuage them. Thus far, not very.

Between the lines: The vast majority of developers make less than $1 million per year and will benefit from the change. But most of Apple's revenue comes from a small number of large developers.

That means most consumers will still be absorbing Apple's higher 30% rate for the vast majority of paid downloads and in-app purchases.

  • Loup Ventures' Gene Munster estimates that the move will cut Apple's commission revenue for fiscal 2021 from $15.8 billion to $14.2 billion, about 0.5% of the company's total estimated revenue.

The big picture: Most of those who spoke out Wednesday have previously criticized Apple over its App Store practices, including Spotify, Match Group, Basecamp — and of course Fortnite creator Epic Games, which is suing Apple (and Google) over mobile app store commissions.

  • Speaking at the New York Times' DealBook online summit, Epic CEO Tim Sweeney called his company's effort an act of civil disobedience: "When a contract goes outside the bounds of the law, as Apple is doing, and has such a negative and pervasive impact on society, it's everybody's duty to fight."
  • As for Apple's rate cut, Sweeney said it was "a fantastic change" for many small developers. "Who it's not awesome for is consumers," he said.

What they're saying:

  • Basecamp CTO David Heinemeier Hansson: "Trying to split the App Store opposition with conditional charity concessions, they — a $2T conglomerate — get to paint any developer making more than $1m as greedy, always wanting more. As clever as it's sick."
  • Coalition for App Fairness: "Apple's announcement doesn't even begin to rectify the abuse and monopoly behavior developers have to endure in the App Store. We need fundamental change."

The other side: "The reduced commission for small businesses will allow them to put additional resources towards scaling up and innovating new products and services," said ACT — The App Association president Morgan Reed.

4. Survey: Executives are prioritizing AI skills

Illustration: Annelise Capossela/Axios

Executives and senior managers say they will prioritize hiring candidates who have skills in automation and AI, according to a survey first shared with Axios Future's Bryan Walsh.

Why it matters: Automation hasn't yet transformed the business world, in part because companies don't yet know how to harness these new technologies. If that's going to happen, they'll need workers who know how to use AI.

What's happening: UiPath, a robotics process automation software company, surveyed hundreds of C-level executives and senior managers about their hiring plans.

  • In choosing between two similar candidates, 72% reported they would chose the employee who had more experience in automation and AI tools, whether the role specifically required those abilities or not.
  • 83% reported that automation and AI would be necessary for jobs of the future, with almost the same percentage believing the pandemic and remote work policies had increased the need for these skills.

What they're saying: Tom Clancy, UiPath's chief learning officer, said companies need to offer up-skilling and re-skilling programs in automation for employees on the job.

  • "70% of that education is going to be on the job; 20% is going to be working with peers and sharing, and only 10% is really going to be formal," Clancy says.
5. Take Note

On Tap

Trading Places

  • The Trust & Safety Professional Association named Charlotte Willner as its founding executive director. Willner was previously head of trust and safety at Pinterest.
  • NTCA–The Rural Broadband Association announced a trio of recent hires: Mano Koilpillai as chief financial officer, Roxanna Barboza as industry and cybersecurity policy analyst and Lauren Gaydos as PR manager.

ICYMI

  • Apple will pay states $113 million to settle allegations it secretly throttled speeds on older iPhones to extend battery life. (Axios)
  • More than 200 Facebook workers signed a letter demanding improved conditions for content moderators, some of whom say they were forced to go back into the office amid the pandemic. (The Guardian)
  • Brandon Wales, a career DHS employee, has reportedly taken over leadership of the Cybersecurity and Infrastructure Security Agency after the firing of Chris Krebs. (Politico)
  • Vietnam is reportedly threatening to ban Facebook if it doesn't agree to censor more posts critical of the country's government. (Reuters)
6. After you Login

How do you know the "stories" trend is out of control? How about when it shows up on your TI calculator. (I'm pretty sure this is parody.)