| What Not to Expect From Big Tech's Antitrust Showdown |
 | | Construction of an Apple Store at the Carnegie Library in Washington. Apple announced this week that it would split iTunes into Music, Podcast and TV apps. Brendan Smialowski/Agence France-Presse — Getty Images | |
| Each week, we review the week's news, offering analysis about the most important developments in the tech industry. |
| Hi, I'm Jamie Condliffe. Greetings from London. Here's a look at the week's tech news: |
| Big tech is about to face a reckoning. Probably. |
| The federal government is reportedly considering antitrust inquiries into Google, Apple, Facebook and Amazon. The Justice Department will handle Apple and Google; the Federal Trade Commission takes Facebook and Amazon. The House Judiciary's subcommittee on antitrust also plans to investigate possible anticompetitive behavior and decide whether current antitrust laws need to be updated. |
| This is what vocal critics, as varied as a Facebook co-founder and Senator Elizabeth Warren, have been waiting for: the chance to hold these companies to account and use antitrust law to break them up. |
| But how far will the new wave of investigations go? |
| ■ Don't expect this to be quick. When the government went after Microsoft in the 1990s (the last major United States tech antitrust case) it took 12 years, from the first F.T.C. investigation to a court-approved settlement. The work now may be more substantial: Harry First, an antitrust law professor at New York University, said that the agencies taking on these four companies were "clearly ambitious." |
| ■ Forget wholesale change. All the companies have multiple fronts on which antitrust battles could be waged: Google could be pursued for dominance in ad tech, search, Android or something else. "You can't do everything," Mr. First said. "They will have to find a focus, quickly." So the agencies will chase specific problems. |
| ■ Legal action isn't guaranteed. The agencies usually take to court only the cases they're confident they can win, so many investigations fizzle well before that point. And big tech has huge legal and lobbying teams, so the bar for a government slam dunk is high. |
| ■ Punishments may disappoint. Remedies to antitrust violations must be tailored to the harm. If WhatsApp and Instagram were the root of anticompetitive behavior by Facebook, then, sure, force a spinoff. But the remedy is dictated by the (very specific) violation, not vice versa, and it may be that limits on business practices are more relevant. |
| All of which is to say: The antitrust showdown will be long, difficult, uncertain and, for some, potentially disappointing. |
| That doesn't make it a bad idea. Even abandoned investigations can yield some change: Google made voluntary business changes after the F.T.C. dropped a 2011 antitrust investigation into it. And the point isn't just fixing the current problem: It's also about deterring future bad conduct. |
| ITunes lives on |
| In 2003, Apple made a masterstroke: Its music software, iTunes, was released for Windows as well as MacOS. ITunes became a Trojan horse, putting Apple products in the hands of non-Apple users and democratizing the iPod, which exploded in popularity. |
| Fast-forward to this past week, when Apple killed iTunes. Yes, the software was bloated and slow. But it was also a hangover of an older Apple built on the success of the iPod, then the iPhone. |
| Now, Apple's iPhone sales have plateaued, and the company is having to find new ways to grow, said Roberta Cozza, a senior research director at Gartner. Its strategy for that was on display in announcements at its developer conference. |
| ITunes is being split into Music, Podcast and TV apps, the latest part of Apple's push to compete on services with the likes of Spotify and Netflix. Its Watch will get a dedicated App Store, so people won't need an iPhone to use one. And a new universal authentication tool promises more secure logins, not limited to Apple platforms. |
| Together, those announcements show Apple experimenting again with how to put its products in the hands of more people. ITunes is dead; long live iTunes. |
| YouTube's new rules |
| Rules can be useful. If we all follow them, they help us coexist in harmony. But sometimes new things happen and rules don't change. Then things go wrong, people get upset (or worse), and it's time to invent new rules. That's also good! |
| YouTube announced on Wednesday new rules that mean "videos alleging that a group is superior in order to justify discrimination, segregation or exclusion" will be banned. So will those denying violent events, like the 2012 school shooting at Sandy Hook Elementary in Connecticut. A three-strike rule will apply to users sporadically uploading such content, and those who repeatedly come close to violation won't be able to profit from YouTube ads. |
| Sounds positive. Only, YouTube also showed this past week that it struggles to live by its rules. It came to light that Steven Crowder, a popular conservative commentator on YouTube, had repeatedly insulted Carlos Maza, a journalist from Vox, using racial and sexual slurs. Initially YouTube said Mr. Crowder's comments did not break its rules. Later, after an outcry, it appeared to backtrack and said he couldn't earn ad revenue on his channel unless he changed some practices. |
| So, rules. Great if you enforce them effectively. But … kind of pointless if you can't? |
| What's in an I.C.O.? |
| Imagine you run a company and need money. One idea: Promise a thing to people, take some money and send the thing later. That's O.K. It's crowdfunding. What if, instead of offering a thing, you offer a cryptographic token to exchange for a thing in the future? That may be less O.K. |
| On Tuesday, the Securities and Exchange Commission sued Kik Interactive, a Canadian social media company, over this. In 2017, Kik sold $100 million worth of digital "coins" called Kin that would be used to buy and sell digital services. This is an initial coin offering, a practice with a bad rap thanks to some less than scrupulous companies. Kik isn't accused of fraud; it's accused of not properly registering the offering with the S.E.C. |
| This rests on what, exactly, Kik was offering. The S.E.C. says Kin counted as a security, like stocks, because it couldn't be used to buy anything when it was launched. The S.E.C. also claims Kik said Kin investors could "make a ton of money" from appreciation, as with securities. Kik says that Kin is now a proper medium of exchange and that investors didn't expect to profit, so it's not a security and didn't need to be registered. |
| Well, it either is or isn't, and now a court will decide. The distinction will be important: It will shape the S.E.C.'s ability to regulate the industry, and help the crypto world understand what it can, and can't, do. |
| Some stories you shouldn't miss |
| ■ YouTube is a safe haven for pedophiles. Its recommendation system created a vast video catalog of children for them. |
| ■ Silicon Valley was seen as an untainted source of political funding. Now, that's changing. |
| ■ Minority Facebook investors want less Mark Zuckerberg. Almost 70 percent voted to appoint an independent chairman, but Mr. Zuckerberg's voting control blocked it. |
| ■ Almost everyone has a cellphone. Of about 5.3 billion people on the planet over 15 years old, about five billion have one. |
| ■ China is starting to consider A.I. ethics. A new set of guidelines highlights a willingness to consider the issue in the country. |
| ■ IOS 13 and Android Q will change your smartphone. Here's how. |
| ■ Amazon has a new delivery drone. It hauls five-pound packages, has a range of 15 miles and will, apparently, be delivering parcels within months. |
| ■ Uber wants to helicopter you from J.F.K. to Lower Manhattan, an eight-minute journey that'll cost a little over $200. |
| ■ The Tiananmen Square protest anniversary brought a censorship flurry, from Twitter to financial analyst terminals. |
| ■ Artificial intelligence could hurt the planet. Training a single algorithm can emit as much carbon as the life cycles of five cars. |
| ■ Uber and Lyft were blamed for the crisis in New York's taxi industry. But a New York Times investigation found that was only part of the problem. In the latest episode of "The Weekly," airing Sunday night at 10 on FX and starting Monday on Hulu, our reporters introduce you to the bankers, brokers and city officials behind the reckless loans that helped squeeze the taxi industry. |
| I'm away next week, and one of my colleagues will be filling in for me. See you again on June 21. |
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