ANTITRUST

Apple Is Getting Green Texts from Regulators

In anticipation of the forthcoming House Judiciary antitrust subcommittee hearing, the Morning Brew newsletter empire has pivoted to wall-to-wall antitrust coverage. The meeting was scheduled for Monday, but may be postponed due to a ceremony for the late Rep. John Lewis. 

The Brew’s Alex Hickey broke down why Apple is in the hot seat. The tl;dr—critics and some developers say Apple engages in anticompetitive behavior with the App Store by taking a 30% cut of digital goods and services purchased through its marketplace. 

Set aside the likeliness of antitrust enforcement or legislation happening in a bleak economy, pandemic, election year, polarized political environment, and...you get the point. Let’s just say it happens. 

What are the implications for Apple? 

Strategy: Apple champions the vertical integration model. As the Tim Cook mantra goes, Apple has "a long-term strategy of owning and controlling the primary technologies behind the products we make.” That control lets Apple build excellent products—and dictate the rules for iOS, a closed-source system.

• Antitrust action could push Apple to use less of an iron fist when managing the App Store (or possibly separate itself from marketplace management). 

Services: Apple is preparing for a post-iPhone world (i.e. device sales plateauing) by plotting an ambitious push into services. Bill Gates has said Microsoft missed the mobile revolution because of antitrust scrutiny.

• Apple could be in a similar situation. Would it be able to navigate scrutiny and continue expanding in new segments?

Marketing/PR: Apple has always been a savvy marketer, even in ads without Justin Long as a Mac. You can expect the company to continue flexing this muscle, playing up privacy as a human right and its products’ popularity with consumers. 

• I’d also expect Apple to argue that the App Store is just like any other marketplace—but better, because of iOS’s sticky, 1.5-billion-device-strong user base and its UX-friendly ecosystem.

That last point isn’t really speculation. Apple commissioned and just dropped a report that actually found the App Store’s fees and policies mirror other digital marketplaces like Google Play or Amazon Appstore. 

Bottom line: If competition authorities take action against Apple, they’ll likely target its status as a marketplace operator and competitor. 

CRYPTO

Custodians Go Digital

Tired: Custodian services for safekeeping securities 
Wired: Custodian services for safekeeping digital assets

The Office of the Comptroller of the Currency (I’m sorry about that name) has cleared the way for nationally chartered U.S. banks to take cryptocurrency deposits. Now you don’t need to keep your private key under your mattress.

The OCC’s decision allows banks to hold digital assets for customers. It requires a bit of mental gymnastics for banks used to traditional assets. 

• “A bank ‘holding’ digital currencies on behalf of a customer is actually taking possession of the cryptographic access keys to that unit of cryptocurrency,” the OCC wrote. 

Information superhighway x Wall Street

The OCC wrote that the move represents a modernized form of banking services. Regulators are becoming more innovation-friendly—Brian Brooks, the acting comptroller, was formerly the chief legal officer of Coinbase. 

Big picture: Coinbase is eyeing an IPO; JPMorgan recently extended banking services to the exchange as well as Gemini, a competitor. Blink and you’ll miss new cryptocurrency on-ramps for investors who haven’t hodl’ed before (misspelling intentional).

SPONSORED BY ORACLE NETSUITE

Today’s Buzzword: Continuous Close

Back in the old days (AKA the early 2000s), we still thought that closing the books had a definitive beginning, middle, and end. 

Now we know that’s wrong. Now we have the continuous close.

So Oracle NetSuite is here to discuss the benefits of the continuous close in their new white paper that you only need to download once but should continuously read.

Their Sr. Director of Product Marketing and Management, Tom Kelly, is breaking it down for all of us by outlining:

• How a modern day continuous close should look and be defined
• Why centralizing financial analyses is a key factor to smoothly close the books
• Why disparate platforms and systems will inhibit a continuous close

Mr. Kelly will not outline, however, why continuously closing your car door on your finger is a bad idea. That should be obvious.

If you’re looking to keep up with the modern economy, it’s time to consider the continuous close. 

Read NetSuite’s white paper today.

M&A

A New Beginning for Arm?

SoftBank is exploring a sale or IPO for Arm, the British chip design firm it acquired for $32 billion in 2016. Nvidia has emerged as a potential suitor, Bloomberg reported Wednesday. 

The key characters

Arm designs blueprints for chip architectures and licenses the IP to manufacturers. You can find Arm designs in nearly every smartphone on Earth. 

SoftBank is facing pressure from activist investors to increase liquidity, so it’s offloading assets, including stakes in Alibaba and T-Mobile. WeWork will do that to ya. In addition, the Japanese conglomerate has realized Arm isn’t critical to Masayoshi Son’s sweeping vision of an artificially intelligent future. 

Nvidia, which is on a cloud- and AI-driven winning streak, would gain control of a key R&D player in the semiconductor value chain if it bought Arm. Intel, Qualcomm, AMD, and other Nvidia competitors are Arm licensees.

Regulators know what I just wrote. Before Nvidia could grow a new Arm, the acquisition would be heavily scrutinized and possibly blocked. An IPO may be more feasible: It could be worth $44 billion if it goes public, and $68 billion by 2025, per New Street Research.

BITS & BYTES

Stat: Tesla turned in its fourth consecutive profitable quarter. Tesla recognized revenues of $48 million from "Full Self-Driving" in Q2. Tesla unlocks this deferred revenue as it rolls out automated driving features. FSD now costs $8,000, and remember, it is not self-driving. 

Related quote: “Tesla is not a stock.”—Jim Cramer

Thread: Facebook AI chief Jerome Pesenti elaborated on bias and safety concerns with GPT-3, OpenAI’s new language model. OpenAI CEO Sam Altman responded with a thread of his own. 

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WHAT ELSE IS BREWING

• TikTok is launching a $200 million fund to pay creators directly for their content. 
• Amazon took meetings with startups, then turned around and launched competing products, the WSJ reports. 
• Tesla is suing Rivian for allegedly poaching employees and trade secrets.
• Lime, Tier, and Dott won e-scooter licenses to operate in Paris. Bird was snubbed.
• Salesforce is axing its Einstein voice assistant. Not so E=mc² after all.

GOING PHISHING

Three of the following news stories are true, and one...I made up. Can you spot the odd one out?

1. The U.S. Space Force uses horses. 
2. White Castle hired a burger-flipping robot. 
3. SpaceX made a flying boat. 
4. Porsche is testing 3D-printed pistons. 

TECH THINGAMABOBS

For Quibi content: The streaming service’s subreddit is “the saddest place on the internet,” Inverse writes. 

For a Flashback: How Flash Games shaped video games

ICYMI

Catch up on the top Emerging Tech Brew stories from the past few editions: 

• How not to scale
• GPT-3, the buzz generator
• European Court of Justice strikes down Privacy Shield

GOING PHISHING ANSWER

SpaceX didn't make a flying boat.