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Apple got skewered at the most useful tech hearing yet

Apple

Good morning! This Thursday, we have notes from the latest tech antitrust hearing, a first look at the EU's plan to regulate AI, Roku getting ready to win the streaming wars and a feisty fight among delivery company CEOs.

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The Big Story

Apple the app bully

Yesterday's Senate Judiciary hearing on antitrust and app stores turned into largely a referendum on Apple. In a rare show of bipartisan cooperation, Protocol's Issie Lapowsky writes, senators on the antitrust subcommittee gave representatives from Match, Tile and Spotify ample space to air their grievances against Apple.

  • Match Group's Jared Sine told a story of the time that Tinder developed a new safety feature for LGBTQ+ users traveling in countries with discriminatory laws. When it came time to push the update to users, Sine said Apple blocked the new feature for two months, arguing that it violated the "spirit" of a company policy, but not offering Tinder ways to address Apple's concerns.
  • Spotify's Horacio Gutierrez zeroed in on the 30% commission fees that Apple began charging apps like Spotify that sell digital goods, even as Apple was planning to launch Apple Music. Gutierrez said the new fees forced Spotify to raise its prices from $9.99 to $12.99. Shortly after, Gutierrez said, "Apple launched Apple Music at $9.99, which meant they were now undercutting us on price."
  • Tile's Kirsten Daru accused Apple of serving prompts encouraging users to turn Tile off, revoking a "critical permission" that now requires users to go "deep, deep, deep into their settings to turn Tile on" and refusing to give Tile access to chips that would enable it to give its users more precise information about the location of their belongings.

Apple was left to do most of the explaining. And Kyle Andeer, its chief compliance officer, struggled: He couldn't refute Sen. Amy Klobuchar's questions about the App Store's huge profit margins, or explain the difference between using an iPhone to get an Uber (which Apple doesn't charge a commission for) and using it to get a Tinder date (which it does).

This is only going to get worse for Apple. Senators yesterday borrowed heavily from filings in the Epic v. Apple case, and that heads to trial in less than two weeks.

  • Apple's argument in that case, and in yesterday's hearing, was that it needs to control the App Store and payment systems in order to ensure users and apps are safe and secure.
  • But as Sen. Jon Ossoff and others pointed out, there are scams and problems all over the App Store. Andeer argued that nobody's perfect but Apple's the closest, though that didn't seem to convince anyone that its 30% commission is justified.

AI

The EU takes on 'high-risk' AI

Anna Kramer writes: The European Commission released the first law proposing serious limits on the use of artificial intelligence. This law (or the version of it that eventually passes) has the potential to someday be the AI equivalent of GDPR, and it poses a long list of potential restrictions on popular AI already in use.

The EU has focused on overseeing "high-risk" AI. That includes all biometric identification — facial recognition, genetic markers and iris scan databases, for example — as well as systems used for employment, immigration, education and law enforcement.

  • These high-risk systems would be required to undergo a risk assessment, provide documentation and human oversight and verify the quality of the datasets used to train them, among a long list of other restrictions.
  • The proposal also suggests banning some AI altogether. Specifically, AI systems that pose a serious risk to human health and human rights, including tools that would allow "social scoring" of populations by governments or systems that might direct children to perform dangerous activities. (The Chinese government currently uses a system like this to monitor some of its population.)
  • The regulation lists a few categories that qualify as low or minimal risk (which would require less oversight), including chatbots, video games and spam filters.

This won't be what passes. The proposed law will face years of debate and votes in the European Council, European Parliament and in EU countries before it could pass in some form. Industry lobbying groups like the BSA Software Alliance have already released noncommittal statements on the legislation, urging for continued cooperation and debate between tech companies and regulators as the law moves forward. Which is think tank speak for "get in loser, we're going lobbying."

Streaming

Roku leaves Switzerland

Someday the Roku Method is going to be taught in business schools. It's a four-step system to dominate a crowded industry:

  • Step one: Sell yourself as a neutral third party. Roku grew by resolutely refusing to compete with streaming channels, and thus got Amazon, Apple and Google to be on the platform even though they wouldn't work with each other.
  • Step two: Become impossible to ignore. Roku has been the largest streaming device provider for years, and has become a huge player in Smart TVs. If you're a streaming service and you're not on Roku, you're nowhere.
  • Step three: Start creeping. Roku started by consolidating all the free stuff on the platform into the Roku Channel. Then it started selling and inserting ads. Then it started holding its platform hostage, demanding concessions from HBO Max and Peacock in order to allow them into the Roku ecosystem.
  • Step four: Stop pretending to be neutral. Roku bought Quibi assets, started hiring creative pros and went all in on originals, going up against the battling companies it brought together in the first place.

Roku reached the endgame yesterday, launching Roku Originals by combining the Roku Channel (which, again, it grew using other people's content) and the shows it bought from Quibi. The company hinted there's much more to come, too.

With distribution, monetization and content all under one roof, few in the space can match its scope and none can match its power. The company that promised to be Switzerland spent a decade quietly amassing an army, and is now going to war.

A MESSAGE FROM CLEAR

Remember what it was like to see a new city, visit your family, watch a live show, or cheer for your favorite team in person? Those experiences are closer than ever with the free CLEAR app. Vaccine connection is coming soon - download today and get ready.

Learn more

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Join Protocol's Ben Pimentel for a conversation about the future of banking with Clearbanc's Michele Romanow and Wells Fargo's Ather Williams III at #CollisionConf on April 22. Learn more

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People Are Talking

Uber's Dara Khosrowshahi and Just Eat Takeaway's Jitse Groen went at it on Twitter after Uber Eats announced it's coming to Germany:

  • Groen: "Interesting way of trying to depress our share price @dkhos. Now, when did I see that before? 🤔"
  • Khosrowshahi: "Advice: pay a little less attention to your short term stock price and more attention to your Tech and Ops."
  • Groen: "Thank you for the advice, and then if I may .. Start paying taxes, minimum wage and social security premiums before giving a founder advice on how he should run his business."

On Protocol: UiPath had a huge public debut, and CFO Ashim Gupta said the market's not going down anytime soon:

  • "We're in line with how the market has moved. We're still in an extremely positive market for great enterprise software companies … [and] looking at it just versus February or January is too short of [a] time frame."

Startup fundraising is smashing records right now — the last quarter was up 41% over the previous high — and EB Exchange's Larry Albukerk said things feel crazy:

  • "I've never seen it this frenzied. It's lightning-fast rounds with a lot of cash."

Enough with the claims of meritocracy, Ellen Pao said:

  • "I think the biggest myth about tech and also the way I was raised, and a lot of Asians are raised, is that the workplace is a meritocracy. And if you work hard and you don't complain and you do a good job, that you'll be rewarded and that you will be treated fairly."

Making Moves

Al Prescott is Luminar's new chief legal officer, joining from Tesla.

Dish and Amazon are working together on 5G tech, as Dish tries to use cloud infrastructure to catch up quick in the wireless world.

Affirm acquired Returnly for about $300 million. Returnly does … what you'd guess: It builds software for product returns and exchanges.

In Other News

  • On Protocol | Policy: Lina Khan received a surprisingly warm bipartisan welcome at her confirmation hearing. Sen. Ted Cruz said he looked forward to working with her when she leads the FTC.
  • The Biden administration is pushing a big new climate goal: a 50% reduction on nationwide greenhouse gas emissions by 2030.
  • Seven House Republicans said they wouldn't take Big Tech donations anymore — though four of them are unlikely to receive tech donations anyway, having objected to the election results.
  • The Justice Department formed a ransomware task force, led by Acting Deputy Attorney General John Carlin. Apple was the latest company to be targeted by ransomware, with MacBook blueprints reportedly stolen and leaked from supplier Quanta Computer.
  • On Protocol: Slack revealed a slight increase in attrition among underrepresented minorities in its latest diversity report. It said the results were "disappointing."
  • Don't miss this story on the problems at Google's Ethical AI division, from Bloomberg. It sounds like the problems leading to Timnit Gebru's departure had been brewing for a very long time.
  • Signal found ways to exploit surveillance tools from Cellebrite, which is used by law enforcement agencies to extract phone data. Moxie Marlinspike said he got hold of some Cellebrite hardware when it fell off a truck in front of him.
  • On Protocol | China: Shanghai wants to be China's chip capital. The Lin-gang Special Area is at the center of Shanghai's ambitions: There are already 40 semiconductor companies there. Chip manufacturing demand isn't going away, either: Google announced that it uses a custom chip for YouTube transcoding.

Work In The Future

Get back to the whiteboard

Here's a new product worth trying: FigJam, a digital whiteboard app Figma just released. It's free for the rest of the year, and it's a pretty useful collaborative tool for quick brainstorms, design reviews and the like. There's a persistent audio chat, too, so you can jump in without needing a separate Zoom call. Digital whiteboards have become a necessity for lots of newly remote workers, and while Figma has lots of competition in this space it certainly seems to have a shot at winning the market. (I don't know if you know this, but people love Figma.)

A MESSAGE FROM CLEAR

Remember what it was like to see a new city, visit your family, watch a live show, or cheer for your favorite team in person? Those experiences are closer than ever with the free CLEAR app. Vaccine connection is coming soon - download today and get ready.

Learn more

---

Join Protocol's Ben Pimentel for a conversation about the future of banking with Clearbanc's Michele Romanow and Wells Fargo's Ather Williams III at #CollisionConf on April 22. Learn more

---

Today's Source Code was written by David Pierce, with help from Anna Kramer and Shakeel Hashim. Thoughts, questions, tips? Send them to david@protocol.com, or our tips line, tips@protocol.com. Enjoy your day; see you tomorrow.

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