Jun 17, 2020

Axios Login

By Ina Fried
Ina Fried

In addition to Dan Primack's podcast moving to the afternoon and getting the new name "Axios Re:Cap," as I mentioned yesterday, I'm pleased to announce that we're launching the all-new "Axios Today" podcast with host Niala Boodhoo next Monday, June 22.

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Today's Login is 1,466 words, a 6-minute read.

1 big thing: EU's Apple suit bares tech's global antitrust threat

Illustration: Aïda Amer/Axios

The European Union's move to open antitrust investigations of Apple Tuesday is a reminder that the attack against tech giants over their market power is not limited to America's borders, Axios' Margaret Harding McGill reports.

Why it matters: Tech companies have historically faced some of their harshest criticism and judgments from Europe, though companies including Microsoft, Facebook and Google have been able to largely absorb the punishments levied. But a wider antitrust press by the EU could inform the accelerating U.S. probes, pry additional data and concessions from the companies, and add pressure on U.S. regulators to act.

Driving the news:

  • The EU announced formal antitrust investigations of Apple Tuesday for forcing app developers to use its proprietary system to offer in-app subscriptions — for which Apple takes a 30% cut— and for blocking developers from informing users of ways they can pay for in-app content that don't go through Apple.
  • Separately, according to a report from the Wall Street Journal, the European Commission is readying antitrust charges against Amazon, accusing the e-commerce giant of using data from third-party sellers to develop competing products.

"Antitrust enforcers seem to have finally woken up to the fact that having a few digital gatekeepers with power over their competitors is really problematic," Stacy Mitchell, co-director of the Institute for Local Self-Reliance, told Axios.

Context: Europe's moves come as federal and state antitrust agencies as well as lawmakers are already probing Google, Facebook, Amazon and Apple in the U.S. for anticompetitive practices.

  • Some of the investigations are expected to lead to lawsuits this summer, while the House Judiciary Committee is pressuring tech company CEOs to testify next month as part of its tech antitrust review.

In Apple's case, the EU is looking into grievances that a number of firms have voiced for years.

  • Spotify complained to the EU last year accusing Apple of working to "deliberately disadvantage other app developers" by taking the 30% commission while facing no such such surcharge on its own apps. Apple Music competes with Spotify.
  • For its part, Apple said in a statement that it is "disappointing the European Commission is advancing baseless complaints from a handful of companies who simply want a free ride, and don't want to play by the same rules as everyone else." Apple also reported this week that the App Store drove $519 billion in billings and sales for outside companies last year.

The big picture: The EU has moved aggressively against U.S. tech companies in recent years. Yet its investigations have typically ended in fines that don't trigger major changes in company behavior.

Yes, but: If the EU learns from those past experiences and looks to bring greater structural changes to bear — or even delivers antitrust cases that are perceived as hard-hitting — that could up expectations for their American counterparts.

  • U.S. regulators in turn may be able to draw on evidence the Europeans collect to build their own case against domestic tech giants, despite having a narrower mandate than their EU counterparts.
2. Apple developers speak out

In the wake of Europe's announcement of the Apple antitrust investigation, several iOS developers are publicly criticizing the policies that govern the App Store — in particular the up-to-30% cut Apple takes for the sale of digital goods.

Why it matters: The public criticism could encourage other developers to speak out and form the basis for antitrust investigations beyond Europe.

Driving the news:

  • The developers of Hey, a new email app from the creators of Basecamp, are blasting Apple for insisting on a cut of their subscriptions. "It's clear they feel embolden[ed] to tighten the screws with no fear of regulatory consequences," tweeted Basecamp CTO David Heinemeier Hansson.
  • Tinder parent Match Group on Tuesday said Apple "squeezes industries" including e-books, streaming media and cloud storage "for 30% of their revenue, which is all the more alarming when Apple then enters that space." Match has spoken with regulators on the matter, a source told Axios.
  • Fortnite creator Epic Games also criticized Apple’s approach, while Spotify has a website enumerating its issues.

Between the lines: Those criticizing Apple raise several issues about Apple's somewhat arbitrary decision tree for determining who does and doesn't have to pay.

  • Apple allows certain types of services not to offer sign-ups within their iOS apps, including "reader" apps for e-books and subscription video services. There's also a separate exception for services typically used by businesses.
  • But for most other consumer digital services, companies are required to offer the option to subscribe in the app and give Apple its cut, which can be up to 30%.

Apple doesn't take a cut of sales of physical goods and services, but does for digital goods. The distinction can be murky, though.

  • Match Group, for example, clearly wonders why an app used to match people romantically has to give a cut of revenue — but Uber, which matches riders and drivers, doesn't have to.
  • Also, Apple has an expanding range of rival services of its own, making it tough for independent services to compete.
3. Exclusive: Hawley bill targets Big Tech shield

Illustration: Aïda Amer/Axios

Sen. Josh Hawley (R-Mo.) will introduce legislation today that would give consumers grounds to sue companies like Facebook or Twitter over accusations of selective censorship of political speech, Margaret reports.

The big picture: The legislation is the latest attack on online platforms' legal protections from liability over content posted by users, and comes after President Trump signed an executive order taking aim at the protections in May.

Details: The Limiting Section 230 Immunity to Good Samaritans Act would prevent major online companies from receiving the protections of Section 230 of the Communications Decency Act unless they revise their terms of service to include pledges to operate in good faith and details of their content moderation policies, according to Hawley's office.

  • Section 230 protects website operators from lawsuits over user-generated content and empowers them to moderate content without losing that legal protection.
  • Under Hawley's bill, users who believe the provider is not "operating in good faith" by consistently and fairly applying its content rules could sue for $5,000 and attorneys' fees.
  • The bill is also sponsored by Republican Sens. Marco Rubio, Mike Braun and Tom Cotton, Hawley's office said.

Yes, but: The legislation would only apply to websites or mobile apps with more than 30 million users in the U.S. in a month — or 300 million worldwide in a month — and more than $1.5 billion in global revenue.

Meanwhile: The Justice Department is set to propose its own Section 230 rollback, the Wall Street Journal reported this morning. It will reportedly pitch a legislative plan to Congress to narrow the circumstances in which the law’s protections apply.

4. Logitech will list carbon content on boxes

A mock-up of a Logitech mouse with a label indicating its carbon impact. Image: Logitech

Logitech is adding labels to its computer accessories showing how much carbon the products consume — from the raw materials to the manufacture, distribution and use of the products.

Why it matters: The company hopes other firms will follow suit, giving consumers better info about the environmental impact of the products they buy.

Details: The labeling will start with Logitech's gaming products later this year.

  • CEO Bracken Darrell told Axios the company wants to see such labels become as ubiquitous as the nutrition labels that are on food boxes. "We want to play a key role here."

What's next: Darrell said other companies are free to use the company's methodology and adopt Logitech's label design or one of their own choosing.

"We don't want any ownership or credit," he said. "We just want other people to do it."

5. AT&T plans to lay off thousands, close 250 stores

Photo: Bruce Bennett/Getty Images

AT&T confirmed to Axios it is planning widespread job cuts that include managers and executives, in addition to 3,400 technician and clerical jobs. It will also close 250 retail stores that employ 1,300 workers.

Why it matters: While the cuts can't be separated from the impact of COVID-19 on the economy, the moves also come as the mobile industry has consolidated from four national players to three following T-Mobile's acquisition of Sprint.

Details: The stores facing closure are a mix of AT&T-branded locations and those of Cricket Wireless, AT&T's prepaid brand, according to the Communication Workers of America, which represents some of AT&T's employees.

  • AT&T confirmed the cuts, but did not give a specific total number other than to say they were "sizable."
  • In a statement to Axios, AT&T said the cuts stem from lower demand for some legacy products, as well as the impact of the pandemic. Most store employees will be offered another job with AT&T, the company said.

What they're saying: The Communications Workers of America criticized the cuts.

  • "If we are in a war to keep our economy going during this crisis, why is AT&T dismissing the troops?" CWA president Chris Shelton said in a statement.

Meanwhile: In a statement, T-Mobile confirmed it is cutting some jobs too, though it didn't say how many. But it notes it is hiring for 5,000 new positions over the next year as well. The company committed to growing its net employment as it sought regulatory approval to buy Sprint.

6. Take Note

On Tap

Trading Places

  • Christie Smith, the head of diversity at Apple, is leaving the company, per Bloomberg.
  • Square added Ford Foundation president Darren Walker to its board.

ICYMI

  • Facebook CEO Mark Zuckerberg, under fire for his handling of Trump's posts, said Tuesday night that Facebook wants to help 4 million Americans register to vote. (Axios)
  • San Francisco's district attorney sued DoorDash, accusing the food delivery company of misclassifying its drivers as contractors instead of employees. (Axios)
  • Google barred the right-leaning business site ZeroHedge from its ad platform and issued a warning to The Federalist, a conservative publication, both of which apparently ran afoul of Google policies about racial threats in content. (Axios)
  • Antitrust regulators in India are reviewing Facebook's $5.7 billion investment in tech and telecom firm Reliance Jio. (Bloomberg)
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Ina Fried