Jun 28, 2021

Axios Login

Join Axios' Kia Kokalitcheva and Dan Primack tomorrow at 12:30pm ET for a virtual event on the future of cryptocurrency policymaking and regulation. Guests include Rep. Bill Foster (D-Ill.) and Grayscale Investments CEO Michael Sonnenshein.

Today's newsletter is 1,344 words, a 5-minute read.

1 big thing: Republicans' new plan to tax Big Tech

Illustration: Sarah Grillo/Axios

Key Republicans are warming to an idea that was once anathema to the party — leveling taxes on big American companies to pay for internet subsidy programs, Axios' Margaret Harding McGill reports.

Why it matters: Republican interest in taxing Big Tech could help shore up a struggling subsidy fund that supports broadband in rural areas, schools, libraries and hospitals.

State of play: An idea from GOP FCC commissioner Brendan Carr to force tech companies to pay into a pool of money used to fund broadband programs is gaining steam with some key lawmakers.

What they're saying: GOP Minority Leader Kevin McCarthy called the proposal "thought-provoking," and his office notes that video streaming accounts for more than 50% of web traffic and online advertising is a $100 billion a year industry.

  • "Any conversation about building out broadband for unserved Americans should include a Big Tech user fee that corresponds to their use of that infrastructure," a McCarthy spokesperson told Axios. "Funding for the Universal Service Fund — which is increasingly at odds with the principle of user pays — needs to be updated and reimagined."
  • Likewise, Sen. Roger Wicker, the top Republican on the Commerce Committee, thinks Congress should explore the idea, his office told Axios. Rep. Cathy McMorris Rodgers, ranking Republican on the House Energy and Commerce Committee, thinks all options should be on the table, her office said.

The big picture: The interest in taxing Big Tech coincides with some GOP support for antitrust bills that would prevent the companies from buying up smaller rivals or favoring their own products.

Catch up quick: Americans pay a fee on their phone bills that goes into the FCC's Universal Service Fund, which is used for broadband subsidy programs.

  • But the fee has been increasing as the revenue base decreases, leading for calls to revise how contributions are made to the fund.
  • Companies like AT&T have suggested Congress use direct appropriations instead of the fee.

Details: Carr, the FCC commissioner, argues instead that Congress should direct the companies that benefit from using internet networks to pay into the subsidy fund.

  • That means Apple would pay because of its App Store, Amazon because of cloud services and video streaming, and Facebook and Google because of online advertising, Carr said.
  • "It's just simply asking them to pay a fair share and start contributing on an equitable basis for these networks that they benefit from so tremendously," Carr told Axios.

The other side: The Internet Association, a trade group that includes Amazon, Facebook, Google and Apple, called the idea an attempt to punish its members.

  • "We hope the FCC will take a common sense approach and not punish innovative, high-quality streaming services that are fulfilling consumer demand," IA president K. Dane Snowden said in a statement.

Between the lines: Big telecom companies have argued for years that the online companies that ride their networks should have to pay more for the privilege.

  • But Carr said under his proposal, broadband providers would pay into the fund as well.

What's next: While acting FCC chairwoman Jessica Rosenworcel has called the idea "intriguing," the FCC can't do much on its own to force Google or Amazon to pay into its fund — Congress would have to act.

2. Google cuts app store fees, for some

In the latest in a series of app store fee cuts, Google has a new program that will halve commissions for some large developers who agree to support Android on non-phone devices, such as cars, TVs and tablets.

Why it matters: Although a 30% cut to Apple or Google remains the baseline for both of their mobile app stores, there are a growing number of exceptions amid pressure from both competitors and regulators.

Driving the news: Google is expanding what it calls the Play Media Experience Program, which offers the lower 15% commission for certain popular media apps.

  • To qualify under the broadened guidelines, video apps will have to support Android TV, Google TV and Google Cast, while audio apps will have to integrate with Wear OS and Android Auto, as well as TV and Cast. Book apps will need to be optimized for large screens, including tablets, and to support foldable devices.

The big picture: The move, announced last week, comes as Microsoft is putting pressure on both Apple and Google. The company has already cut its PC game commission to 12 percent and will cut its commission to 15% for other apps starting with Windows 11.

  • Also starting with Windows 11, developers can list their apps in the Windows store, use their own payment mechanism and pay no fees to Microsoft.
  • "Fortnite" maker Epic is also suing Google and Apple seeking to force them to open up to additional app stores and payment mechanisms, while regulators around the globe are also examining whether Google's and Apple's app store practices violate antitrust law.

Between the lines: Google is getting something it wants, too — support for what it sees as growth areas for Android. The software is on billions of devices, overwhelmingly phones, but Google has struggled to get developer support for new types of devices, including tablets, TVs and foldables.

3. Microsoft flags attacks by Russia-based group

Photo: Chesnot/Getty Images

Microsoft said late Friday that it has seen new attacks from the Russia-based group responsible for the attacks last winter on SolarWinds customers, Margaret reports.

Driving the news: The company indicated the activity was targeted at specific customers including IT companies, government agencies, non-governmental organizations and think tanks, and financial services.

  • Microsoft refers to the attackers as Nobelium, and said the activity involved password spray and brute-force attacks.
  • The company detected information-stealing malware on a machine that belonged one of its workers with access to basic account information for a "small number" of its customers, and the attacker used the information to launch "highly targeted attacks" as part of a broader campaign. Microsoft says it has secured the device.

What they're saying: A U.S. government official told Axios that Microsoft has seen limited impact, and that it appears to be "largely unsuccessful run-of-the-mill espionage."

Flashback: Nobelium recently targeted human rights and international aid groups.

4. Lawmakers urge review of T-Mobile-Dish spat

Illustration: Rebecca Zisser/Axios

A bipartisan pair of Colorado lawmakers want the Justice Department to investigate T-Mobile's plans to shut down a network used by Dish customers, as Margaret scooped on Friday.

Why it matters: T-Mobile agreed to help Dish stand up its own 5G network as a condition of obtaining approval for the Sprint merger, but Dish argues that T-Mobile is putting its customers at risk with its shutdown plans.

Driving the news: Republican Rep. Ken Buck and Democratic Rep. Joe Neguse, both on the House antitrust subcommittee, said it is "critical that parties live up to the commitments provided to regulators" in a letter to acting antitrust chief Richard Powers.

  • They say that if the DOJ concludes T-Mobile's plans are contrary to the commitments the company made as part of the merger or would raise competitive concerns likely to harm consumers, "we urge you to take prompt remedial action."

Catch up quick: Colorado-based Dish has been agitating for regulators to take action since T-Mobile announced it would shut down Sprint's CDMA network on Jan. 1, 2022. Millions of Dish's Boost prepaid customers use that network.

5. Take note

On Tap

  • Mobile World Congress takes place this week, largely online. There is an in-person component in Barcelona, but some of the biggest names won't take part, including Ericsson, Nokia, Samsung, Google and Sony.

Trading Places

  • Zendesk has added two engineering VPs. Daisy Itty joins Zendesk this month from RingCentral and will lead the company's customer service offering, while Sydney-based Katherine Squire recently joined and will head up its platform and AI-based chatbot efforts.

ICYMI

6. After you Login

Photo: Justin Sullivan/Getty Images

The so-called "Flintstone House" off Interstate 280 is surely one of the best known properties among Silicon Valley commuters. Well, it can keep its prehistoric look, complete with dinosaurs, after settling a lawsuit. The suit, filed by the town of Hillsborough, had wanted it declared a public nuisance.