Tech Brew Ride Home - Wed. 09/06 – The Modern Antitrust Era Begins Now

Episode Date: September 6, 2023

The EU has listed 22 services falling under its Digital Markets Act. Britain pulls back from an encryption law. And if that’s not enough, the Google antitrust trial begins next week so the modern antitrust era is officially here. Which cars are spying on us? Maybe all of them. Who has all the money in crypto? And the new law here in NYC that could change Airbnb forever. Sponsors: Hatch.co/ride Links: EU Challenges Apple, Microsoft in New Push to Rein in Big Tech Dominance (Bloomberg) UK pulls back from clash with Big Tech over private messaging (Financial Times) In Its First Monopoly Trial of Modern Internet Era, U.S. Sets Sights on Google (NYTimes) There are just six bitcoin billionaires in the world, new crypto super-rich report says (CNBC) If You’ve Got a New Car, It’s a Data Privacy Nightmare (Gizmodo) The End of Airbnb in New York (Wired) 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 right home for Wednesday, September 6, 2023. I'm Brian McCullough today. The EU has listed 22 services following under its Digital Markets Act. Britain pulls back from an encryption law. And if that's not enough, the Google antitrust trial begins next week. So the modern antitrust era really is officially here. Which cars are spying on us? Maybe all of them. Who has all the money in crypto and the new law here in New York City that could change Airbnb forever? Here's what you miss today in the world of tech. The EU has finally listed the 22 services that they say will fall under the Digital Markets Act, including TikTok and Facebook, and the EU will assess if Microsoft services and IMessage from Apple

will eventually qualify for this list. Both Microsoft and Apple have been claiming that Bing and iMessage, respectively, are too small in terms of market share to qualify, which, I don't know about that, but quoting Bloomberg, the likes of Alphabet's Google Search, Apple's Appel App Store and Amazon's Marketplace are among a list of 22 services that fall under the EU's Digital Markets Act revealed on Wednesday. Now, companies including BightDance's TikTok and meta-platforms Facebook have six months to fall in line with the new rules or challenge them in the EU court. However, the European Commission, the Block's executive arm, said it needed more time to investigate

whether Microsoft's Bing, Edge, and advertising services and Apple's eye message should be exempt from the new rules. The probe will not result in a fine. For its part, Microsoft argues that Bing is too small a competitor to Google, so should be exempt, while Apple says it doesn't have the data available to calculate the number of iMessage users. The Commission has also opened a probe to examine whether Apple's iPad operating system should be included in the regulation. The new rules which come into force in March will impose a rigid regime on firms whose practices have previously resulted in billions of euros in fines and tax orders from the watchdog.

It will be illegal for certain platforms to favor their own. own services over those of rivals. They'll be barred from combining personal data across their different services, prohibited from using data they collect from third-party merchants to compete against them, and we'll have to allow users to download apps from rival platforms. The new obligations could result in iPhone users being able to download apps from rival app stores, meta being barred from combining user data between Facebook and Instagram without obtaining permission, and see Google prohibited from favoring its own search verticals like shopping in its general search results, end quote. If you click through to the story to see the list of platforms, Alphabet

has the most on the list with eight, including things like Google Maps and Chrome, meta had six including Instagram and even its marketplace. Interesting that Amazon ads got listed, and Microsoft for now only has LinkedIn and Windows listed. Meanwhile, the Financial Times is saying the UK government is planning to pull back from a new encryption rule in its so-called online safety bill, averting a clash with big tech as the bill enters its final stages. Quote, the UK government will concede it will not use controversial powers in the online safety bill to scan messaging apps for harmful content until it is, quote, technically

feasible to do so, postponing measures that critics say threaten users' privacy. A planned statement to the House of Lords on Wednesday afternoon will mark an 11th hour effort by ministers to end a standoff with tech companies, including WhatsApp, that have threatened to pull their services from the UK over what they claimed was an intolerable threat to millions of user security. The statement is set to outline that off-com, the tech regulator, will only require companies to scan their networks when a technology is developed that is capable of doing so, according to people briefed on the plan. Many security experts believe it could be years before any such technology is developed if ever. A notice can only be issued where technically

feasible and where technology has been accredited as meeting minimum standards of accuracy in detecting only child sexual abuse and exploitation content, the statement will say. The online safety bill, which has been in development for several years and is now in its final stages in Parliament, is one of the toughest attempts by any government to make big tech companies responsible for their content that is shared on their networks. Social media platforms have railed against provisions in the bill that would allow the UK regulator to force them to allow their encrypted messages to be monitored for harmful content, including child sexual exploitation material. WhatsApp, owned by Facebook parent meta and Signal, another popular

encrypted messaging app, are among those that have threatened to exit the UK market should they be ordered to weaken encryption, a widely used security technology that allows only the sender and recipient of messages to view a message's contents. Officials have now privately acknowledged to tech companies that there is no current technology able to scan end-to-end encrypted messages that would also not undermine users' privacy, according to several people briefed on the government's thinking, end quote. I want to put this on your radar. The U.S. at all versus Google begins next week, Tuesday. This marks the federal government's first monopoly trial of the modern internet era.

It's set to last 10 weeks, and we can expect top execs from various tech platforms to testify. And this whole piece I'm going to quote from outlines the contours of the case if you're interested, but quoting briefly, this is from the New York Times. quote, such a consequential case over tech power has not unfolded since the Justice Department took Microsoft to court in 1998 for antitrust violations. But since then, companies like Google, Apple, Amazon, and Meadow, which owns Facebook and Instagram, have woven themselves into people's lives to an even greater degree. Any ruling from the trial could have broad ripple effects, slowing down or potentially dismantling the largest internet companies after decades of unbridled growth. The stakes are particularly high for Google, the Silicon Valley

company founded in 1998, which grew to a $1.7 trillion giant by becoming the first place people turned to online to search the web. The government has said in its complaint that it wants Google to change its monopolistic business practices, potentially pay damages, and restructure itself. The case centers on whether Google illegally cemented its dominance and squashed competition by paying Apple and other companies to make its internet search engine the default on the iPhone, as well as on other devices and platforms. Fireworks are expected at the trial, which is scheduled to last 10 weeks. Google's chief executive Sundar Pichai, as well as executives from Apple and other tech companies, will probably be called as witnesses. Judge Amit P. Mehta, who was appointed by President

Barack Obama in 2014, is presiding over the trial, which will not have a jury, and he will issue the final ruling. Kenneth Dinser, a 30-year veteran litigator for the Justice Department will lead the government's arguments in the courtroom, while John E. Schmidt, a partner at the law firm Williams and Connolly will do the same for Google. The jockeying over the trial has already been intense. The Justice Department and Google have deposed more than 150 people for the case and produced more than 5 million pages of documents. Google has argued that Jonathan Cantor, the Justice Department's head of antitrust,

is biased because of his earlier work as a private lawyer representing Microsoft and News Corp. The Justice Department has accused Google of destroying employees' instant messages that could have contained relevant information for the case, end quote. I've always wondered about data points like this. According to Crypto Wealth Report, across the broad spectrum of the entire crypto market, 88,200 people own crypto worth $1 million or more. So again, to restate that 88,000 people in the world are officially crypto millionaires. That's less than 1% of all crypto users, but by my math, given that the entire market cap of crypto is around a trillion dollars, 8% of crypto wealth is held by those 88,000 people.

Drilling down, 182 folks have crypto holdings worth more than $100 million, and 22 have holdings worth more than a billion dollars. Interestingly, of those 22, six hold the funds only in Bitcoin, according to CNBC. Hundreds of millions of people around the world have some form of crypto holdings, whether that is in Bitcoin or one of the many other digital currencies. To be exact, 425 million people use crypto according to Henley and Partners Crypto Wealth Report, which was released by the investment migration consultancy on Tuesday. Crypto may no longer be booming in the same way that it did at the peak of its popularity, but it remains a highly common investment.

For example, over half of Gen Z between the ages of 18 and 25 have invested in it, a report by the CFA Institute and Financial Industry Regulatory Authority's Investor Education Foundation, showed earlier this year. Singapore topped the overall index in terms of countries, followed by Switzerland in second and the United Arab Emirates. in third place, while the U.S. and U.S. and U.K. ranked fifth and seventh, respectively, in terms of percentage of citizens holding crypto. Other countries in the top ten included Australia in six place, as well as Canada, Malta, and Malaysia that ranked 8th, 9th, and 10th, end quote.

Mozilla examined 25 major car brands and found that they failed to adhere to the most basic privacy and security standards in their new internet-connected models, quoting Gizmodo. Bad news. Your car is a spy. If your vehicle was made in the last few years, you're probably driving around in a data-harvesting machine that can collect personal information as sensitive as your race, weight, and sexual activity. Volkswagen's cars reportedly know if you're fastening your seatbelt and how hard you hit the brakes. That's according to new findings from Mozilla's Privacy Not Included Project. The nonprofit found that every major car brand fails to adhere to the most basic privacy and security standards

in new internet-connected models, and all 25 of the brands Mozilla examined flunked the organization's test. Mozilla found brands including BMW, Ford, Toyota, Tesla, and Subaru collected data about drivers including race, facial expressions, weight, health information, and where you drive. Some of the cars tested collected data, you wouldn't expect your car to know about, including details about sexual activity, race, and immigration status, according to Mozilla. Many people think of their car as a private space, somewhere to call your doctor, have a personal conversation with your kid on the way to school, cry your eyes out over a breakup, or drive places you might not want the world to know about, said Jen Caltwriter, program director of the

Privacy Not Included Project in a press release, but that perception no longer matches reality. All new cars today are privacy nightmares on wheels that collect huge amounts of personal information, end quote. Modern cars use a variety of data harvesting tools, including microphones, cameras, and the phones, drivers connect to their cars. Manufacturers also collect data through their apps and websites and can then sell or share that data with third parties. The worst offender was Nissan, Mozilla said. The carmaker's privacy policies suggest the manufacturer collects information including sexual activity, health diagnosis data, and genetic data, though there's no details about how exactly that data is gathered. Nissan reserves the right to share and sell,

quote, preferences, characteristics, psychological trends, predispositions, behavioral, attitudes, intelligence, abilities, and aptitudes to data brokers, law enforcement, and other third parties. Other brands didn't fare much better. Volkswagen, for example, collects your driving behaviors such as your seatbelt and breaking habits and pairs that with details such as age and gender for targeted advertising. Kia's privacy policy reserves the right to monitor your, quote, sex life, and Mercedes-Benz ships cars with TikTok pre-installed on the infotainment system, an app that has its own thicket of privacy problems.

The privacy and security problems extend beyond the nature of the data car company's siphon off about you. Mozilla said it was unable to determine whether the brands encrypt any of the data they collect, and only Mercedes-Benz responded to the organization's questions. Mozilla also found that many car brands engage in privacy washing or presenting customers with information that suggests they don't have to worry about privacy issues when the exact opposite is true. Many leading manufacturers are signatories to the Alliance for Automotive Innovation's Consumer Privacy Protection Principles. According to Mozilla, these are a non-binding set of vague promises

organized by the car manufacturers themselves, end quote. Finally, today, some local news. New York City's Local Law 18, which imposes registration and other requirements on short-term rentals, goes into force today, potentially wiping out thousands of Airbnbs here in the city. Wonder what this will do to the half-dozen or so Airbnbs on my street. Quoting Wired, Local Law 18, which came into force Tuesday, is so strict. It doesn't just limit how Airbnb operates in the city. It almost bans it entirely from any guests and hosts. From now on, all short-term rental hosts in New York must register with the city, and only those who live in the place they're renting and are present when someone is staying can

qualify, and people can only have two guests at a time. Gone are the days of sleek downtown apartments outfitted for bachelorette parties, cozy two-and-three-three-bedroom apartments near museums for families, and even the option for people to rent out their apartments on weekends when they're away. While Airbnb, VRBO, and others can continue to operate in New York, the new rules are so tight that Airbnb sees it as a, quote, de facto ban on its business. Airbnb's attempts to fight back against the new law have, to date, been unsuccessful. The company sued New York City in June, but a judge dismissed the case in August, ruling that the restrictions were, quote, entirely rational. Airbnb did not comment on whether it would appeal the decision. Hoss are also fighting for the right

to list their apartments as short-term stays by meeting with city officials to try to change the law. The change will make short-term rentals, quote, a lot less attractive for many people coming to New York, says Sean Hennessy, a professor at the New York University, Jonathan M. Tish Center of Hospitality. And in a city where hotel rooms are small and expensive, it could, quote, make the city a little less accessible, end quote. There are currently more than 40,000 Airbnbs in New York, according to Inside Airbnb, which tracks listings on the platform. As of June, 22,434 of those were short-term rentals defined as places that can be booked for fewer than 30 days. Many Airbnbs are concentrated around downtown Manhattan along the Upper East Side and in Williamsburg and Park Slope in Brooklyn. While the number of rentals may be small compared to New York City's population of 8 million people, Murray Cox, founder of Inside Airbnb, says some desirable neighborhoods are overly burdened by short-term rentals, which can result in housing shortages and higher rents. The new law, in theory, could open these homes to local residents. New York City is facing a housing shortage that has increased rents and rates of homelessness.

There's an older law on the books that prevents short-term rentals of entire apartments for less than 30 days in New York, but it's been difficult to enforce without the registration mandate that takes effect Tuesday in place. Compounding the sudden shortage of Airbnbs in New York is another piece of the new law that allows landlords to ban entire buildings from short-term rental platforms. As of July, nearly 9,000 buildings across New York City were on the list. New York's laws on short-term rentals exempt certain entire apartments on rental platforms that are zoned as hotels and boarding houses, meaning there will still be some entire units advertised on rental platforms, end quote. Nothing for you today. Talk to you tomorrow.