Tech Brew Ride Home - Mon. 11/26 - Apple Visits the Supreme Court

Episode Date: November 26, 2018

Apple heads to the Supreme Court over antitrust concerns about its App Store; Facebook’s internal documents are seized by the British Parliament; what’s behind the resurgence of Atari; the human story of Black Friday inside Amazon’s fulfillment centers; and Lenny—a chatbot designed to frustrate telemarketers. Links: U.S. top court leans toward allowing Apple App Store antitrust suit (Reuters) My Amicus Brief (AVC/Fred Wilson) Parliament seizes cache of Facebook internal papers (The Guardian) Internal documents Facebook has fought to keep private obtained by UK Parliament (CNN) Atari CEO interview — How Rollercoaster Tycoon revival saved the company (VentureBeat) The human costs of Black Friday, explained by a former Amazon warehouse manager (Vox) The Story of Lenny, the Internet's Favorite Telemarketing Troll (Motherboard) Learn more about your ad choices. Visit megaphone.fm/adchoices

On April 4th, 2023, around 2 in the morning, a man was found stabbed multiple times on a sidewalk in downtown San Francisco. Hey, who did this to you? What happened next turned the story into a political firestorm. Reports have identified the victim as Bob Lee, the founder of Cash App. From Bloomberg Podcasts, this is Foundering, the Killing of Bob Lee, beginning April 16. Welcome to the TechMeme Ride Home from Monday, November 26, 2018. I'm Chris Higgins, in for Brian McCullough. Today, Apple heads to the Supreme Court over antitrust concerns about its app store.

Facebook's internal documents are seized by the British Parliament. What's behind the resurgence of Atari? The human story of Black Friday inside Amazon's fulfillment centers. And finally, Lenny, a chatbot designed to frustrate telemarketers. Let's get started. Today, the U.S. Supreme Court considered whether to allow a class action lawsuit involving Apple and antitrust regulations to proceed. It's an escalation of an ongoing legal battle started in 2011 when lead plaintiff Robert Pepper of Chicago, an App Store user, filed suit in California

Federal Court. Pepper and his group said that Apple's App Store created a monopoly for commercial iPhone apps and then abused that monopoly by requiring software developers to give Apple 30% of their revenue when selling their apps on the store. This case has been making its way through the courts for quite some time now. At one point, a federal judge in Oakland, California, dismissed the suit, saying that the plaintiffs did not have standing to sue. This was based on a 1977 Supreme Court ruling that said only people who had directly suffered damages by being overcharged due to anti-competitive conduct had standing to sue. That Oakland court's finding was that because the end customers were not themselves app developers who were forced to give 30%

of the revenue to Apple, they lacked legal standing to sue. And that's a central issue in this case. Pepper suggests that the 30% is effectively passed along to consumers like him, which does give them grounds to sue. The Ninth Circuit Court of Appeals based in San Francisco reversed the Oakland finding last year, which is what brought the case all the way up to the U.S. Supreme Court. Today, Apple continued its line of argument that the plaintiffs don't have ground to sue under Supreme Court precedent from the 1970s. Apple is backed up by the Trump administration and the U.S. Chamber of Commerce. On the other side, Pepper is backed up by a group of 30 state attorneys general. In his ABC blog, Fred Wilson wrote an unofficial amicus brief in the case arguing in favor of

the plaintiffs. His basic argument is that while Apple claims in its legal filings that allowing this case to proceed would harm innovation, exactly the opposite is true. In fact, Wilson argues the big ecosystem players, in this case Apple and Google, who both operate big app stores, are operating as gatekeepers, who are currently harming innovation. He concludes his argument with this statement, quote, Apple and Google have constrained the distribution system for mobile apps in many parts of the world,

and the result is higher costs for consumers, less choice, and ultimately less innovation. None of this is good for the economy. It is high time for the courts to weigh in here and open up the opportunity for third-party app stores to exist on Apple and Google phones. I encourage the Supreme Court to rule in favor of the consumers in this case

in hopes that it will lead to that." End quote. Today, in an interview from Venture Beat, a look at Atari. When Frederique Chenet took the helm of Atari in 2013, it was $34 million in debt and had annual revenue of just $1 million. Clearly, its glory days were behind it, and maybe way behind it. But today, Atari has zero debt,

and $20 million in annual revenue, and it's profitable. It's launching a new hardware console next year, and its game licensing business is booming. So what happened? According to Chenet, the key to Atari's turnaround was the strength of its classic brand. But it was also the strength of a specific modern game, rollercoastered tycoon. Since 2003, Atari has published the roller coaster simulation game and has successfully

transitioned the franchise into mobile gaming. And that's not Atari's only modern mobile success. Days of Doom is doing well, but it represents how taking a single title and moving it into the modern era can really rake in money. Atari is also working on other simulation games, including the Citetopia. Beyond selling games directly, Atari is licensing its brand. Atari appeared in the movie's Blade Runner 2049 and Ready Player 1, and four of its classic games are playable in Tesla cars, thanks to a recent software update.

Atari is also lending its brand to casino games in Europe and Africa, and is thinking about expanding into scratch-off lottery tickets and other gambling markets. For Generation X people like me, Atari is absolutely a friendly brand, associated with fun, simple gaming. The hope for big growth at Atari is its upcoming, VCS home console, which has already sold 10,000 pre-orders at $295 a pop. While we'll have to wait and see how that console does in the actual market, Chenet sums up his hopes for the company.

Quote, our priority isn't to release the next Pong or even necessarily the next missile command. We are more interested in a multimedia play on Atari as a brand. We are known to people over 25. People younger come to us because they're interested in the history of video games. End quote. Late last week, Vox released an interview with an Amazon warehouse manager, taking a deep dive into what it's like to fulfill all those Black Friday orders. This is a great Cyber Monday read for all of us to understand the human cost of clicking through dozens of bargains on heavy shopping days.

Check the show notes for the link. I want to give you three highlights from the interview, conducted with an unnamed former Amazon employee who worked at an Amazon fulfillment center in California after leaving the Air Force Reserves and completing graduate school. 1. The man says there are a lot of veterans working for Amazon. Quote, It's easy for Amazon to hire us because they know vets are willing to shut up and cooperate. In my opinion, Amazon is preying on the work-life balance issue that the military has and feeds off the rigid order the Army teaches, end quote. Two, these big shopping days are genuinely extreme in human terms.

Quote, the volume of orders on Black Friday is like what happens when Amazon opens the floodgates. We were at full capacity and we just never stopped. I remember looking at the backlog and watching the orders go from 10,000 to 300,000, and just thinking that we'd never be out of it. The backlog was even higher on Cyber Monday because Cyber Monday is actually busier for Amazon than Black Friday. End quote. 3. It's hard to be a manager at Amazon's fulfillment centers, and it's also hard to be a worker. Quote, Amazon has built the system so that managers and workers have entirely different

incentives. Workers constantly feel like their jobs are on the line because they are. We were supposed to be observing their packing rate and not be concerned with how hard it is to pack things. Managers were pressured to identify the weak links and get them out so that we can have a faster rate. It's a pressure cooker environment and that's what you have to be to get to Amazon's level of efficiency, end quote. Now there's a lot more in the interview, including details on how Amazon handles time off and overtime during these heavy parts of the year, and how this man feels today about shopping at Amazon on Black Friday. Check the show notes and read up. Over the long holiday weekend, you may have missed an incredible Facebook-related saga that played out in London. Let me walk you through some of what

happened and what's going to happen next. The background here is simple. The British Parliament has tried many times to get Mark Zuckerberg to testify before Parliament so he can answer questions about Facebook's actions regarding data privacy and fake news. Their latest attempt was to get Zuckerberg to show up on Tuesday, that's tomorrow, to answer questions about fake news, and what's being called the International Grand Committee on Disinformation. Zuckerberg again declined to appear and is sending a Facebook VP in his place. So late last week, Damien Collins, an MP sharing an investigation of fake news, did some truly extraordinary things. Collins noticed that Ted Kramer, the founder of U.S. Software Company 643 was staying in London on a business trip.

643 is involved in a lawsuit with Facebook and a California court, and the company had obtained a bunch of internal Facebook documents as part of the discovery process in that suit. Collins decided that his committee needed to see those documents, which reportedly include high-level communications between Zuckerberg and other executives. So Collins invoked a super- rarely used parliamentary procedure to demand the documents from Ted Kramer, When Kramer didn't immediately comply, Collins ratcheted things up big time.

Quoting from the Guardian here, quote, Parliament sent a sergeant-at-arms to his hotel with a final warning and a two-hour deadline to comply with its order. When the software firm founder failed to do so, it's understood he was escorted to Parliament. He was told he risked fines and even imprisonment if he didn't hand over the documents, end quote. Yeah, so Kramer handed over the documents. Now quoting Collins, who was interviewed by the Guardian.

quote, we are in uncharted territory. This is an unprecedented move, but it's an unprecedented situation. We failed to get answers from Facebook, and we believe the documents contain information of very high public interest. We have very serious questions for Facebook. It misled us about Russian involvement on the platform, and it has not answered our questions about who knew what, when, with regards to the Cambridge Analytica scandal. We have followed this court case in America, and we believe those documents contained answers to some of the questions we have been seeking about the use of data, especially by external developers." End quote.

All right, so what's in these documents? According to the Guardian, quote, 643 alleges the cache shows Facebook was not only aware of the implications of its privacy policy, but actively exploited them, intentionally creating and effectively flagging up the loophole that Cambridge Analytica used to collect data, end quote. Brief Britishism translation here, flagging up means pointing out. So the allegation here is not only did it. Facebook know about their privacy loophole, they were encouraging developers to exploit it.

As they say, big, if true. Once Parliament had its hands on the internal Facebook documents from the 643 case, the battle of media narratives began earnest. Facebook said, quote, The materials obtained by the DCMS Committee are subject to a protective order of the San Mateo Superior Court restricting their disclosure. We have asked the DCMS Committee to refrain from reviewing them and to return them to counsel or to Facebook. We have no further comment, end quote. On Twitter, reporter Carol Cadwallader

posted a letter sent by Facebook's Richard Allen to Damian Collins. In it, Alan wrote, quote, This case has become a matter of public debate, and it is important that participants in that debate understand its context. The app that had been developed by 643 was designed to surface images of women in bikinis that had been shared by friends. It received some press attention, parentheses, link to Jezebel article titled, New Picini's app helps creeps find your bikini picks with ease, end parentheses, when it was launched. We understand that around 4,500 people installed the app, end quote.

Guardian reporter Julia Carey Wong reacted to that statement, writing on Twitter, quote, The problem with Facebook responding to this lawsuit by being so disdainful of 643's creepy bikini app is that Facebook is the company that was allowing any Tom, Dick, and creepy bikini app, to back a Mac truck up to its API spigot and haul away a truckload of user data." And quote. Collins returned fire to Facebook shortly after, noting some key points. For one thing, he pointed out, I mean flagged up,

that Facebook was perfectly willing to allow this creepy bikini app to operate on its platform up until privacy changes in 2014 and 15. For another, those changes in 2014 and 15 were specifically what Collins was looking into, so the documents seized were likely to be useful in understanding those changes. and whether the internal changes actually matched what the company said externally about them. Finally, Collins said he took no position on the merits of the 643 case in California, nor does he particularly care about what the California court thinks about these documents. He sees that as outside his committee's scope.

But the internal Facebook documents obtained because of that case are very clearly within his committee's scope. This story will continue in a big way tomorrow as the parliamentary hearings start up and international battle lines are drawn. Stay tuned. And finally today from Motherboard, the story of Lenny, a slow-talking Australian chatbot designed to frustrate telemarketers

created by an IT worker who was bothered by all the unsolicited calls he was receiving at work. Quoting motherboard here. In 2009, the anonymous IT worker began using an interactive, automated message to handle telemarketing calls to the company where he worked.

He called the chatbot Lenny in homage to his elderly neighbor who used to collect plastic shopping bags in a, quote, giant man-hite stockpile in his backyard, end quote. Lenny, the chatbot, is designed to be chatty and distractable, and very proud of his family. Honestly, he's more willing to talk about his family

than whatever the telemarketer is selling, because he doesn't know what that is. He is voiced by his anonymous creator, and he's actually very simple. He has just 16 stock pre-recorded phrases. He starts with an opening salvo of four phrases, played an order in a bid to hook the telemarketer into talking and giving their pitch. From there, he just loops the final 12 phrases until the telemarketer eventually hangs up.

But the way Lenny uses all these conversational snippets is very clever. He uses them in a conversational manner designed to waste telemarketer's time. And he talks very slowly. Lenny knows when to speak by listening for a 1.5 second pause. the conversation. That's when he jumps in and derails everything with a story about his daughter and her schooling and his computer and what's happening outside. You get the picture. Lenny is actually a publicly available service so you can forward your own spam calls to him if you have the technical know-how. And there are tons of YouTube recordings of Lenny talking to actual telemarketers. They're

pretty funny and very frustrating. And he's been the subject of research. On that research tip, Here is a wild bit from the motherboard story. Quote, remarkably, 72% of telemarketers studied by Sahin made it through two loops of Lenny's recordings before abandoning the call. Only 11 of the 200 telemarketing calls analyzed by Sayhan and her colleagues resulted in the telemarketer realizing that they were speaking to a recording. Seven other telemarketers thought that Lenny had Alzheimer's or dementia and tried to get him to put his nurse on the line.

Moreover, the researchers write, several spammers aggressively tried to interrupt Lenny by shouting phrases like, sir, please stop, or listen to me, or even by clapping hands, end quote. Check out the motherboard article for recordings of Lenny and a detailed look at whether he's actually effective in combating scams. It's great to be back on the podcast after some time off last week. I spent the holiday with family in Pittsburgh, and I quietly conducted a little experiment. I tried to go through an entire trip buying things only with Apple Pay, and it actually worked great with all of my airport purchases working easily, and even online shopping working with the service. I had to break down and use a regular credit card to pay for brunch, though, twice, actually. So our contactless payment future isn't quite here yet, but if you want to buy a Diet Coke at an airport in the U.S.,

I am here to tell you that is very doable. Happy Monday. We'll be back with you tomorrow.