The Big Story

What Eric Schmidt wants from the government

Anna Kramer writes: Does Eric Schmidt want into the Biden administration? Does Biden want Schmidt? First there were suggestions Schmidt could lead a tech task force. Then that idea was debunked. And since, we've been hearing more from the debunking side about the whole idea.

No matter how it shakes out for Schmidt, he's become a powerful political player since he left Google. And there's an overriding theme to his work: He seems to want the government to work more like a tech company.

• He's spent much of the last three years trying to up the DOD's tech game, leading the Defense Innovation Board and the National Security Commission on Artificial Intelligence.
• That's been tough sledding, but Schmidt's earned praise from government leaders for making progress — like helping shape the DOD's first AI ethics principles — in a world where no movement is the norm.

Schmidt's biggest and most controversial idea has been his push for nationalization of 5G.

• To keep up with China, Schmidt wants the Pentagon to rent airwaves to private companies, rather than auctioning spectrum for exclusive use.
• His biggest opponents here are companies like AT&T, who argue that DOD running the infrastructure could slow 5G adoption and innovation. The debate comes down to whether you believe the federal government can get it right faster than the telcos — and Schmidt has that faith.

Government in Schmidt's mind is not highly-regulating and trust-busting, but about a return to scientific investment last seen during the Cold War era. And he's been eager to talk about it. Basically, he's the poster boy for public-private partnerships.

• But on Tuesday, Schmidt's critics urged Biden against including him in the administration because of his ties to Google. Still, no matter what happens publicly, Schmidt has more pull than almost anyone when it comes to tech's relationship with the federal government.

Ultimately, his political energy may find its focus in his philanthropic venture initiative, Schmidt Futures. In May, Governor Cuomo announced that Schmidt would chair a blue-ribbon commission to integrate tech into New York's coronavirus recovery, and the commission's work will be facilitated by Schmidt Futures. Schmidt's already outlined his vision for the commission, so it's worth watching what comes out of this group.

Developers

Pushback on 'better' App Store deals

The possibility of newly lowered App Store commissions made some developers happy — but sure didn't quieten some of its loudest detractors.

• "Machiavelli would be so proud of Apple," David Heinemeier Hansson said. He took particular issue with Apple characterizing itself as a great friend to small businesses when its grand gesture is only going to affect 5% of App Store revenues.
• Tim Sweeney called it "a calculated move by Apple to divide app creators and preserve their monopoly on stores and payments."
• And Spotify said it hopes "regulators will ignore Apple's 'window dressing' and act with urgency to protect consumer choice, ensure fair competition, and create a level playing field for all."

Some critics saw Apple's "improvement" as further evidence that it's running an essentially lawless app ecosystem. And, they pointed out, the $1 million threshold is now something like a ceiling — it may be more lucrative for a lot of developers to make $900,000 from their apps than to try and grow.

Between the lines, this is increasingly becoming a fight about payments. Epic might want its own App Store, but what a much louder chorus of developers wants is a way to get paid that doesn't involve Apple at all.

Risk Factors

What the future holds for Affirm

The IPOs, they just keep coming. Next up: Affirm, the buy-now, pay-later company that's become a big part of ecommerce.

Max Levchin, Affirm CEO and recent Source Code Podcast guest, wrote in the company's S-1 that part of what makes Affirm different is its "moral backbone and consumer-first mindset." Affirm was early in ditching late fees, for example.

• Levchin told me earlier this year that "we're actively deciding to leave money on the table to align our financial interests with your good behavior."

But enough of that: Let's look at Affirm's S-1 risk factors, the things that scare the bought-in-six-installments pants off the company.

• Peloton accounts for as much as 30% of Affirm's revenue, and the company's top 10 customers account for 37%. You never want to be that reliant on one partner — or the trend that's currently launching said partner to potentially unsustainable heights.
• Affirm's competitors range from big banks to credit card companies to fintechs. Being the good guy bought Affirm an advantage, but it might not last.
• Merchants hold a lot of Affirm's power. From the S-1: "We do not have any recourse against merchants when they do not prominently present our platform as a payment option."
• As with any fintech, expanding internationally is tough. Even operating domestically in such a regulated industry means more work and more risk than your average tech firm.

Affirm's S-1 is probably a good guide for a lot of upcoming fintech IPOs, potentially including Robinhood's sooner rather than later. The new generation of finance giants is coming.

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Apps

Why Marissa Mayer wants to fix your contacts first

Marissa Mayer's new company, Sunshine, has a lot of ideas. But it soon realized that most of them had one thing in common: helping small groups of people interact with each other. One powerful way to make that easier is simply to make sure they have each other's contact info. "Everyone just made it way too hard to meet someone new," Mayer told me, "and have that connection be reflected in your contact book."

• Sunshine the company and Sunshine Contacts the app launched yesterday. The company plans to use AI to solve regular-person problems. The app has a goal that sounds simple but turns out to be wildly complicated: cleaning up your contacts.
• It hopes to make it easy to share your information with someone nearby or update your information for all your contacts. Behind the scenes, it connects to your email — and eventually other services — to figure out who you chat with, which phone numbers and email addresses are actually current, and keep things up to date. "We're happy being the brains in the background," Sunshine CTO Enrique Muñoz Torres said.

Sunshine has a lot more plans for how to use its new tools. Mayer mentioned everything from event-planning to family-management to making it easier to share a photo with someone sitting next to you. That all requires good AI, good UI and, it turns out, well-managed contacts.

People Are Talking

On Protocol: There's plenty of room in the music-streaming space for everybody, Sonos' Patrick Spence said:

• "This is not a zero sum game in any way. People are listening to Spotify, Apple Music and [other] on-demand services in addition to what's happening on radio."

When COVID-19 started, Google found junior employee productivity dipped. Ruth Porat said they figured out how to fix it:

• "What we really needed was to double down on: What coaching do our senior leaders need to help their more junior people along? We had a real surge in G2G training, what we call Google-to-Google training. We think we're pretty much back to pre-COVID levels."

One CEO was missing from this week's hearing, Senator Mazie Hirono said:

• "@YouTube is doing a terrible job stopping election-related misinformation. That @SenateGOP didn't invite them to yesterday's hearing just shows they don't really care about protecting our elections and only about their metrics."

Hundreds of Facebook's moderators and employees said they shouldn't have been sent back to the office so quickly:

• "Now, on top of work that is psychologically toxic, holding onto the job means walking into a hot zone."

And in the midst of a really fantastic interview, Jimmy Wales had some moderation advice for Mark Zuckerberg:

• "Hiring people in sweatshop conditions to make content judgments or trying to get AI — which is not really ready to judge the nuances of human conversation — to do it, neither of those is scaling very well."

Making Moves

Steve Sordello is joining Compass' board. He's LinkedIn's CFO, and is very familiar with taking companies public. Just saying.

Keith Rabois is leaving Silicon Valley. For once, tech's favorite contrarian is actually extremely on-trend!

Jake Saper is the newest general partner at Emergence Capital. Lotti Siniscalco is now a principal at the firm.

In Other News

• Amazon is laying off dozens of people on its drone project, with the Financial Times reporting that it's looking to partner with outside manufacturers to help. Along similar lines, Dara Khosrowshahi said Uber will likely partner with autonomous vehicle providers in the future.
• Apple will pay $113 million to settle the U.S. "batterygate" investigation. States took issue with the company throttling performance of old iPhones; Apple said it was to preserve battery life.
• The judge overseeing the DOJ-Google case wants a schedule set before the holidays. Google said it needs to know what materials the DOJ has before it can commit to a timeframe.
• Google Pay relaunched, adding Venmo-like P2P payments and banking services (powered by actual banks, not Google). You can even get a Google-branded debit card, because of course you can.
• The EV SPAC flood continues. Arrival is the latest electric vehicle company to go public via a SPAC, while Electric Last Mile is reportedly in talks to do the same. Meanwhile, GM will reportedly announce new investment in EVs today.
• Joyy's stock plunged 26% after a short seller accused it of being a fraud. Muddy Waters said YY Live, which Baidu is set to buy for $3.6 billion, is "almost entirely fake" and populated by bots. Joyy denies the accusations.

One More Thing

It's a holiday miracle, Charlie Brown

Here's one good thing Apple did this week: allow its Charlie Brown holiday movies to screen on PBS, in addition to streaming them on Apple TV+. Mark your calendars for 7:30 p.m. on Nov. 22 and Dec. 13, folks. Or just watch it on Apple TV+, which I think every person on Planet Earth got a one-year free trial for. Either way, it's free; either way, it's not the holidays without Schroeder on the piano.

A MESSAGE FROM SAMSUNG NEXT

Welcome to the age of synthetic media

Content generated or manipulated by AI through machine or deep learning is changing how we create, distribute, consume, and democratize media. What does synthetic media have the power to change next?

Learn more