Why Amazon’s $8.5 billion acquisition of MGM should be blocked

In Tuesday’s announcement of Amazon’s $8.5 billion acquisition of MGM—the historic film studio behind the Rocky , Legally Blonde , and James Bond  franchises—Mike Hopkins, senior vice president of Prime Video and Amazon Studios, naturally dropped two major Hollywood buzzwords.   “The real financial value behind this deal,” Hopkins said, “is the treasure trove of” —ding-ding-ding— “ IP in the deep catalog that we plan to reimagine and develop together with MGM’s talented team. It’s very exciting and provides so many opportunities for high-quality” —ding-ding-ding— “ storytelling .” Yes, in the latest proposed media merger, intellectual property will be married with innovative storytelling to create a company like no other. This has never been done before . . . if you don’t count Disney, Comcast, Sony, ViacomCBS, or the 10-day-old prospective merger of Warner-Discovery. Indeed, just as Marvel and Star Wars spin-off TV shows now populate Disney Plus, prepare yourself for a Rocky -themed reality-TV show (with real boxers!) and as many Bond prequels as Barbara Broccoli and Michael G. Wilson (the highly protective producers of the franchise) will allow for, to roll out on Amazon Prime Video.   What is more worrisome, though, is the even greater monopolistic foothold that this deal gives one of the world’s richest and most powerful companies, one whose market cap is not in the billions but trillions. Now, beyond just selling its own products, like baby oils, in its own marketplace and thus edging out smaller, independent businesses, Amazon will be doing the same thing with movies and TV shows at a scale of 10 times what it’s currently been doing in entertainment. Read More …

In Epic case, Apple might win the battle and lose the war

No matter who prevails in the Epic Games v. Apple app store antitrust trial, history may see it as just one skirmish in a wider war. Apple has a good chance of winning. Current antitrust laws—which are ancient—as well as decades of jurisprudence in U.S. courts make it very hard for plaintiffs to win antitrust cases. But Congress is now considering reigning in the monopoly power of companies like Apple through changes to antitrust laws or even through direct regulation of app marketplaces. Indeed, my sources in Congress say lawmakers are watching Epic v. Apple , which is expected to wrap up this week in a federal court in Oakland, California, with great interest. Both the House antitrust subcommittee (led by Democratic Congressman David Cicilline of Rhode Island) and the Senate antitrust subcommittee (led by Democratic Senator Amy Klobuchar of Minnesota), have held hearings on app distribution through Apple’s App Store and Google Play. During those hearings, app developers complained about the strict rules they must abide by in order to be listed in the App Store, which is virtually the only way developers can access the huge worldwide market of iOS device users. In the U.S., more than half of all mobile devices run iOS, and studies show iOS users spend far more money on apps and in-app purchases than other mobile users. Apple requires that apps use the App Store’s in-house payment system to sell goods or services within their apps, and it charges developers a commission of up to 30%. App developers are prohibited from selling their apps and many forms of digital services to iOS users any other way. Here’s the language from Apple’s own developer guidelines document: “Apps may not use their own mechanisms to unlock content or functionality, such as license keys, augmented reality markers, QR codes, etc. Apps and their metadata may not include buttons, external links, or other calls to action that direct customers to purchasing mechanisms other than in-app purchase.” Apple, of course, makes its own apps, such as Apple Music, and can give them better visibility within the App Store than competing apps from third-party developers. (Search for “Music” in the App Store, and Apple Music, not Spotify, is the top result.) Developers are urging Congress to pass a law that limits the “gatekeeper” power of companies running app stores. Epic complained of all of these things in the courtroom in Oakland but, at least in light of past court decisions, Apple has a compelling defense. Read More …

Amid worker and regulator complaints, Google is facing a turning point

By any measure, Google is a colossus of the tech industry, with a market capitalization of nearly $1.5 trillion , a massive army of lobbyists , and elite academics at its disposal . But lately, its reputation has been hurt by a highly publicized feud with well-respected ethical AI researchers, and revelations about its toxic workplace, previously hidden under NDAs , are roiling the tech giant’s PR-spun Disneyland-like facade. Now, it’s facing a multitude of challenges including talent attrition, resistance from an increasingly influential union, and increased public scrutiny. Privacy-centered competitors are nipping at its ankles, antitrust regulations loom on the horizon, and user interest in de-Googling their online activities is mounting. These headwinds are threatening the tech giant’s seemingly unassailable industry dominance and may bring us closer to a “de-Googled” world, where Google is no longer the default. At war with its workers In December 2020, the tech giant dismissed eminent scholar Timnit Gebru over a research paper that analyzed the bias inherent in large AI models that analyze human language—a type of AI that undergirds Google Search. Google’s whiplash-inducing reversal on ethics and diversity as soon as its core business was threatened was not entirely surprising. However, its decision to cover this up with a bizarre story claiming that Gebru resigned sparked widespread incredulity. Since Gebru’s ouster, Google has since fired her colleague Margaret Mitchell and restructured its “responsible AI” division under the leadership of another Black woman , now known to have deep links to surveillance technologies. These events sent shock waves through the research community beholden to Google for funding and triggered much-needed introspection about the insidious influence of Big Tech in this space . Last week, the organizers of the Black in AI, Queer in AI, and Widening NLP groups announced their decision to end their sponsorship relationship with Google in response. While the prestige and lucrative compensation that comes from working at Google is still a huge draw for many who don’t consider these issues a dealbreaker, some, such as Black in AI cofounder and scholar Rediet Abebe , were always wary. As Abebe explained in a tweet, her decision to back out of an internship at the tech giant was triggered by Google’s mistreatment of BIPOC, involvement with military warfare technologies, and ouster of Meredith Whittaker , another well-known AI researcher who played a lead role in the Google Walkout in 2018 . Abebe is not the only one who has decided to walk away from Google. In response to this latest AI ethics debacle, leading researcher Luke Stark turned down a significant monetary award , other talented engineers resigned , and Gebru’s much-respected manager Samy Bengio also left the company. A few years back this level of pushback would be unimaginable given Google’s formidable clout, but the tech giant seems to have met its match in Gebru and other workers who refuse to back down. Even with its formidable PR machinery spinning out an announcement touting an expanded AI ethics team, the damage has been done, and Google’s misguided actions will hurt its ability to attract credible talent for the foreseeable future. More ex-employees are also coming out with details of their horrifying experience s, adding fuel to the rising calls for better employee protections. These disclosures have renewed support for tech workers as hundreds of Google employees unionized after many years of activism, despite union-busting efforts by their employer. Read More …

Why Apple will win its App Store antitrust case against Epic

Epic, the maker of the hugely popular Fortnite game, has gone to federal court to complain about the high fees and strict rules imposed by Apple in its App Store. Going to the App Store is currently the only way iOS users can get Fortnite and other Epic titles. Apple requires developers to use its own proprietary payment system to pay for apps and games, and it charges big developers like Epic 30% of their in-app revenue to do so. Apple says it uses the money to provide an easy-to-use and well-organized app store experience, invest in the platform and tools exclusive to iOS developers, as well as offer strong privacy and security measures to prevent customers from being exposed to financial fraud and apps containing malware. Epic’s case against Apple is highly nuanced and filled with gray areas. It has, to quote The Dude from the Big Lebowski, “a lotta ins, lotta outs, lotta what-have-you’s.” There are strengths and weaknesses to both sides’ main arguments. And with all antitrust cases, the burden lies with the plaintiff—in this case, Epic—to prove Apple’s actions harm competition and ultimately harm the consumer. These are the main points of the case so far, and why I think Apple has an edge over Epic as the trial heads into its final week. Tax or Commission? Apple argues that its 30% commission is the industry standard for digital transactions, and that retail commissions on apps and games have historically been north of 40%. Market forces drove app store operators including Microsoft, Sony, Steam, and Nintendo to converge on that common 30% rate, but just because that is the standard doesn’t mean there isn’t room for improvement Read More …

The five best arguments that Apple’s App Store is a monopoly

Apple and Google testified in front of the Senate Judiciary’s Antitrust Subcommittee Wednesday, and it’s fair to say the committee members came with their A game and that Apple walked away the biggest loser. At issue are the strict rules Apple imposes on app developers for the privilege of being listed in the App Store, which is virtually the only way developers can access the huge worldwide market of iPhone users. Google may be somewhat less in the antitrust crosshairs because it allows Android users to side-load apps from other marketplaces and websites. But both Apple and Google require many developers to use their respective marketplaces’ own proprietary payment systems to sell their apps, and they charge the developers up to 30% to do so. Both Democrats and Republicans in the hearing seemed surprised at that high toll and wondered out loud whether it would be so high if the two main app stores faced more competition. The subcommittee members had clearly coordinated their efforts before the hearing and presented Apple with a wide-ranging, and nonoverlapping, set of informed and relevant questions. However, the hearing was especially fiery because some big-name app developers who have a beef with the app stores—Spotify, Tile, and Tinder’s parent, Match Group—were sitting at the witness table too. Some of the best arguments against Apple’s App Store policies came from them. Spotify’s App Store blues Case in point: Spotify’s lawyer Horacio Gutierrez pointed out that not only is his company required to use Apple’s payment system (and pay the “Apple tax”), but the music app is also prohibited from directing users of its free iOS app to online promotions offering three months of Spotify Premium for 99¢. Gutierrez called this a “gag order.” Spotify had the sympathy of Democrat Amy Klobuchar of Minnesota, the chair of the Senate Judiciary Committee’s antitrust subcommittee, even before the hearing. “[Telling people] they can get a better deal [on an app] on a website, when the companies . . . on the app store are banned from doing that, that’s pretty outrageous,” Klobuchar told me on the phone Tuesday night. Spotify has a particularly interesting viewpoint because it competes directly with Apple’s own Music service, which naturally gets more visibility in the App Store. Klobuchar called this “self-preferencing.” Gutierrez said Apple had threatened retaliation against Spotify and in some cases carried it out. He claimed Apple told Spotify straight out that it would not promote the Spotify app and forced Spotify to wait for months for app-upgrade approvals. Read More …