With help from Leah Nylen
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— The trial begins: Apple and Epic Games will today face off in federal civil court, in a case that could change the mobile tech world as we know it.
— Reality check: New policy papers from the American Economic Liberties Project debunk some of the major claims that Facebook, Apple, Google and Amazon have made in their antitrust battles.
— Racing against the clock: The FCC is moving fast this month to dole out billions in dollars of subsidies to help close the digital divide.
IT’S MONDAY; TAKE IT EASY. I’m your host, Emily Birnbaum. Thank you all so much for sending beautiful pictures of your animals. Every one of them is the winner. My friends like to claim that having pets isn’t a personality but I beg to differ.
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APPLE-EPIC KICKOFF IS HERE: The trial beginning today in Oakland, Calif. will focus on Apple’s control over its App Store, and could lead to a world in which everyday users have way more control over apps on their phones than they do now, POLITICO’s antitrust reporter Leah Nylen explains for Pros. And Leah’s out today with a video discussing what’s at stake in this complicated trial.
Just last week, the European Commission charged Apple with abusing its control of the App Store to harm rival music streaming services like Spotify — but Epic’s case against Apple is the first to reach a courtroom. The case will feature testimony from heavy-hitters including Apple CEO Tim Cook and Epic CEO Tim Sweeney, along with executives from Microsoft, Nvidia and Tinder owner Match Group. (Facebook’s head of gaming was slated to testify but fell off the witness list last week.)
— The two tech companies have already started arguing. Apple last week asked the judge to close the courtroom during testimony from an Epic witness — an accountant who will testify that the App Store would still be profitable if it made some of the changes that Epic is pushing for, like a commission of lower than 30 percent. Apple said allowing the accountant, who has seen Apple’s internal numbers, to testify could lead to confusion for the Cupertino company’s stockholders. Unsurprisingly, Epic disagreed.
Late on Friday night, the judge told Apple no. U.S. District Judge Yvonne Gonzalez Rogers replied that the accountant’s testimony is a key part of the trial. “The Court knows no case where an expert’s profitability analysis has been sealed where the expert’s opinion reflects their own independent analysis,” she wrote.
Though outside experts have made estimations, Apple has never publicly disclosed how much money it makes from the App Store itself. The accountant could likely provide the answer to that question.
Today: The first day of the trial will include opening statements from both parties, and Sweeney is expected to testify. We’ll be covering this trial at length in MT for the next few weeks (we’ll even have a new header), so stay tuned!
FIRST IN MT: NEW RESEARCH FROM ANTI-MONOPOLY GROUP: Policy briefs out today from the nonprofit AELP lay out the arguments Amazon, Facebook, Google and Apple have made — pulled from public materials as well as “private conversations with legislators and staff” — and offer a set of counterpoints. “These corporations have made misleading arguments to policymakers about their lines of business,” AELP wrote.
Amazon, for instance, has argued that it only makes up a “small fraction of retail,” in order to prove to policymakers and regulators that it doesn’t have monopoly power. But AELP found this argument is “misleading”: Amazon has between a 40 and 74 percent share of the online retail market. “More than half of all online product searches begin directly on Amazon,” AELP wrote.
And Google has famously argued that “competition is only a click away,” claiming that it’s simple to move from one platform to another. But it costs publishers and advertisers a lot of money to switch from Google to other platforms, according to the brief.
— Small business angle: Just in time for Small Business Week, one of the policy briefs focuses specifically on the effect that Google and Facebook have had on small businesses and their owners. The group spoke to a number of small business owners about how their interactions with the social media giants have harmed their wallets and business models.
One small business owner said Google’s recommended advertising plan “drains our budget” and there’s “no way of validating” whether the system is helping them reach their intended audience.
Another owner described how Facebook “holds small businesses hostage” by cornering them into paying to boost posts or else reach a much smaller audience. “A majority of small business owners report that Facebook ads don’t reach their intended audience,” AELP wrote. “Instead, Facebook forces small businesspeople to pay more to ‘boost’ posts, and then allows bots to create ad views that small businesses are charged for.”
— The intended audience: AELP is one of a few trustbusting advocacy groups that has successfully agitated about antitrust reform in Congress and across the U.S. These policy briefs will likely end up in the hands of lawmakers and their staff, bolstering the left’s viewpoint as Congress gets closer to potential legislative changes.
FCC FULL-SPEED AHEAD ON BROADBAND: The FCC is moving extra-quickly to start doling out funding allotted to the agency in the most recent Covid relief package, making good on acting FCC chair Jessica Rosenworcel’s pledge to prioritize closing the “digital divide” during her tenure at the agency.
Rosenworcel on Friday released the 80-plus-page draft of the proposed order to dole out $7.17 billion in subsidies to help students get connected to the internet at home, John reported for Pros. She said she hopes the FCC will adopt the order by May 10. The order would set ambitious performance goals for the fund and lay out the process by which schools and liberties could gain access to connected devices and broadband connections for students, school staff and library patrons. (The FCC is excluding desktops and mobile phones from its definition of “connected devices,” and streamlining the process for schools to obtain the funding.)
Meanwhile, the agency will open up enrollment for a separate broadband program aimed at low-income households, the Emergency Broadband Benefit subsidy program, on May 12.
— Quick timeline: This is a super-quick turnaround for an agency that’s used to deliberating over much smaller decisions for months at a time. But the Covid relief bill gave the FCC 60 days to figure it out, and lawmakers have emphasized that getting the money out as soon as possible is key to helping students and families as the pandemic extends into its second year.
— The endgame: Remember, Rosenworcel has urged Congress to start thinking about a “sustainable” successor program when these billion-dollar funds run out.
HEARING IN AMAZON UNION ELECTION FIGHT: The NLRB is set to hold a hearing this Friday on the Retail, Wholesale and Department Store Union’s objections to the results of the April election at an Amazon fulfillment center in Bessemer, Ala., a union spokesperson told POLITICO’s Rebecca Rainey. The union is requesting that the federal labor board set aside the results because, it says, Amazon “created an atmosphere of confusion, coercion and/or fear of reprisals” which interfered with the employees’ “freedom of choice” in the election.
Workers at the facility voted by more than a 2 to 1 margin against joining the union during a mail-in election that ended last month.
FACEBOOK JUMPS INTO 13(B) FIGHT: Facebook last week submitted a brief arguing that the Supreme Court decision narrowing the FTC’s powers is further evidence that the agency doesn’t have the authority to bring an antitrust case against the social media giant.
In a response on Friday, the FTC replied that Facebook is misinterpreting the Supreme Court’s ruling. But this SCOTUS precedent could indeed bode poorly for the FTC if its case against Facebook makes it all the way to the high court.
Former FCC Chair Ajit Pai is joining the American Enterprise Institute as a visiting fellow, where he will focus on tech and telecom policy. … Privacy attorney Adrienne Ehrhardt has joined Perkins Coie’s Technology Transactions and Privacy practice as a partner. … Intel announced it is investing $3.5 billion in its New Mexico operations. … Jared Weaver has joined Salt Point Strategies as a partner.
— Around the world: Protocol has analysis of what the EU’s crackdown on Apple means for the Epic trial. (For one, Europe’s definition of Apple’s market will probably raise eyebrows in the U.S.)
— Under the hood: Andrew Yang’s Venture for America aimed to create 100,000 jobs in cities where they were most needed. But a New York Times review shows that it fell very short.
— ICYMI: “An internal audit seen by POLITICO warned Amazon’s senior leadership in 2015 that 4,700 of its workforce working on its own sales had unauthorized access to sensitive third-party seller data on the platform — even identifying one case in which an employee used the access to improve sales,” POLITICO’s Simon Van Dorpe and Vincent Manancourt report for Pros.
— Drama at Basecamp: Basecamp employees are fleeing the company after its founders banned “societal and political discussions” on internal forums, The Verge reports.
— Getting invested: Deloitte is out today with a report exploring the potential economic benefits of closing the digital divide, focusing on how broadband coverage, adoption, and speed could create hundreds of thousands of U.S. jobs.
— ICYMI: Lawmakers are already raising concerns about TikTok’s new CEO, Alex reports for Pros.
Tips, comments, suggestions? Send them along via email to our team: Bob King (bki[email protected], @bkingdc), Heidi Vogt ([email protected], @HeidiVogt), John Hendel ([email protected], @JohnHendel), Cristiano Lima ([email protected], @viaCristiano), Alexandra S. Levine ([email protected], @Ali_Lev), Leah Nylen ([email protected], @leah_nylen), and Emily Birnbaum ([email protected], @birnbaum_e). Got an event for our calendar? Send details to [email protected]. And don’t forget: Add @MorningTech and @PoliticoPro on Twitter.
SEE YOU TOMORROW!