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The 12 words that scare the gig economy

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Good morning! This Friday, the White House might be looking to change the gig economy, Microsoft changed its game store commissions, the EU unveiled antitrust charges against Apple and everybody at Facebook is getting into VR.

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The Big Story

Gig work doesn't work

Just 12 words. "In a lot of cases gig workers should be classified as employees." That's all it took for U.S. Secretary of Labor Marty Walsh to send a chill up the spine of the entire gig economy.

  • Here's the whole quote, from an interview with Reuters: "We are looking at it but in a lot of cases gig workers should be classified as employees … in some cases they are treated respectfully and in some cases they are not and I think it has to be consistent across the board. These companies are making profits and revenue and I'm not [going to] begrudge anyone for that because that's what we are about in America. But we also want to make sure that success trickles down to the worker."
  • Walsh also said he wants to ensure gig workers have access to things like vacation time, health care and "all of the things that an average employee in America can access." Which is to say: that they're employees.

The comments dampened the mood around gig companies. They had been optimistic in recent months, riding their Proposition 22 victory in California into a series of similar debates around the country and world. But a Labor Department rule would stop that in its tracks.

  • DoorDash, Uber, Grubhub and Lyft all had rough days on the stock market, as investors took Walsh's quote as a signal of the White House's thinking on the subject.

But this could be a moment for positive change by the companies. There seems to be a growing recognition in the industry that the way things currently work just … doesn't.

  • DoorDash recently launched new pricing options designed to make the platform viable for more restaurants; Uber rolled out new tools for booking rides by the hour, combining rides with food pickup and more. They're trying to make things more flexible, more predictable, more functional overall.
  • All these companies are searching for the same, currently impossible thing: a system that makes everybody money and doesn't suck for customers. The way things work now doesn't really work for anyone, except the VCs who got paid when the companies went public.

As offices reopen, people get more comfortable going out again and stimulus boosts start to dwindle, we're due for a full-fledged reckoning on the gig economy. It might start with an edict from Walsh's Labor Department, or it might come from one of the gig companies finally cracking the problem. But the gig economy has been a house of cards for too long. And something's going to give.

App Stores

12 is the new 30

EU antitrust chief Margrethe Vestager announced antitrust charges against Apple this morning, with a specific focus on Apple Music and the App Store.

  • "With Apple Music," Vestager said in the announcement, "Apple also competes with music streaming providers. By setting strict rules on the App store that disadvantage competing music streaming services, Apple deprives users of cheaper music streaming choices and distorts competition."
  • Sounds familiar, right? It's pretty much exactly what Spotify has been alleging for years.
  • The EU is also looking into in-app purchases, and Apple's rule forbidding developers from telling users about other ways to pay for things.
  • Apple's response is that most Spotify subscribers require no commission at all, and allowing developers to advertise alternative deals is "a practice no store in the world allows."

Apple's 15% to 30% commission is a big target in almost every antitrust fight against Apple. It's going to come up a lot in the trial with Epic starting next week. Apple's defense typically hinges on the fact that it's an industry standard for app stores, but that might be starting to change.

  • Microsoft became the latest company to try and push a new industry standard: It's dropping its commission on PC games in the Microsoft Store to just 12%.
  • Microsoft is actually matching Epic here. Epic has charged 12% for developers in the Epic Games Store since it launched in 2018. Epic has lost a fortune on the Games Store, but that seems to most be a result of exclusivity deals and minimum guarantees to get developers on board.
  • Fun fact: Spotify's in the Epic Games Store. And hasn't filed a single anti-competitive complaint about it.

Solidarity around these numbers matters. If the industry standard starts to shift to a number like 12%, that will make it harder for anyone — no matter how competitive the market — to justify a higher number.

  • Steam is the next domino to watch. It's the market leader in the PC gaming world, and still charges 30% for most developers. If Microsoft and Epic can force it to budge, they might have a shot at doing the same to others.

People Are Talking

T-Mobile is making big network changes, and Dish CEO Charlie Ergen called foul:

  • "They've become the Grinch. The Uncarrier's become the uncaring carrier."

Lamba School laid off 65 employees, and Austen Allred said it's part of a required restructuring:

  • "We have been working for years on making incentive-aligned education work. It's harder than we initially thought; we've had to invent a lot from scratch simultaneously and we have to get a lot of things exactly right."

U.K. government minister Oliver Dowden responded to soccer's social media boycott, and said change to stamp out online abuse is coming:

  • "I will shortly introduce legislation into Parliament that will force social media firms to stamp out abuse — or face the consequences … I want footballers and everyone else to know that we heard them in Westminster and change is coming."

Spotify's Daniel Ek sees live audio as the next big universal social feature:

  • "I think creators will engage in the places where they have the best sort of creator-to-fan affinity for the type of interactions that they're looking for. And I think this is very similar to, say, how Stories played out historically."
  • He also announced that Spotify's Clubhouse competitor, created from its Locker Room acquisition, will be called Greenroom.

A MESSAGE FROM FACEBOOK

The internet has changed a lot since 1996 - internet regulations should too. It's been 25 years since comprehensive internet regulations passed. See why we support updated regulations on key issues, including: protecting people's privacy, enabling safe and easy data portability between platforms, preventing election interference and reforming Section 230.

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Making Moves

Bill Nelson is the new NASA administrator. He has said some conflicting things about the agency's relationship with the private industry, so keep an eye on him going forward.

Alex Karp earned about $1.1 billion last year, Palantir said in a filing this week. Seems good?

Facebook asked for the FTC's antitrust case to be dropped after the Supreme Court ruled in a separate case that the FTC can't force defendants to pay back money. Facebook argues that means the FTC can't force it to undo previous actions … like buying Instagram, for instance.

On Protocol: Snap dropped coding terms like "master" and "slave," joining the trend as part of its ongoing efforts to increase diversity at the company.

In Other News

One More Thing

VR is the new office

Anna Kramer writes: In perhaps the first legitimate widespread use of VR in a workplace setting, Facebook is allowing all employees to expense the Oculus Quest VR 2 (meaning they can keep it even when they leave). Zuckerberg announced the new program in an internal workplace meeting, and it sounds like the thinking is that VR can be a health and wellness benefit because it's increasingly used in workout settings. It's also a brilliant PR move: What better way to get a massive group of tech-obsessed people to try things and make their friends nice and jelly?

A MESSAGE FROM FACEBOOK

2021 is the 25th anniversary of the Telecommunications Act of 1996, the last major update to internet regulation. It's time for an update to set clear rules for addressing today's toughest challenges. See how we're taking action on key issues and why we support updated internet regulations.

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Correction: An earlier version of this newsletter miscounted the number of words in Marty Walsh's statement. There are 12 of them.

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 weekend; see you Sunday.

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