News: This Week in Apps: Antitrust investigation dubs App Store a monopoly, Microsoft adopts ‘app fairness’ rules, pandemic boosts Q3 app revenues

• October 10, 2020
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Welcome back to This Week in Apps, the TechCrunch series that recaps the latest OS news, the applications they support and the money that flows through it all. The app industry is as hot as ever, with a record 204 billion downloads and $120 billion in consumer spending in 2019. People are now spending three hours and 40 minutes per day

Welcome back to This Week in Apps, the TechCrunch series that recaps the latest OS news, the applications they support and the money that flows through it all.

The app industry is as hot as ever, with a record 204 billion downloads and $120 billion in consumer spending in 2019. People are now spending three hours and 40 minutes per day using apps, rivaling TV. Apps aren’t just a way to pass idle hours — they’re a big business. In 2019, mobile-first companies had a combined $544 billion valuation, 6.5x higher than those without a mobile focus.

In this series, we help you keep up with the latest news from the world of apps, delivered on a weekly basis.

Top Stories

Apple declared monopoly by U.S. House Judiciary subcommittee on antitrust

Apple was one of the four big tech companies the House Judiciary subcommittee on antitrust declared as having enjoyed monopoly power in the U.S. The report suggests that Congress make changes to break up their businesses. In Apple’s case, the company was deemed to have market power in the app distribution business, meaning its App Store. The report agrees that while the App Store provides significant benefits to both consumers and developers, Apple has also controlled the App Store in a way that allows it to create barriers to competition and exploits developer data to its advantage.

Apple responded that it “vehemently” disagrees with the report’s conclusions…”with respect to Apple.”:

Our company does not have a dominant market share in any category where we do business. From its beginnings 12 years ago with just 500 apps, we’ve built the App Store to be a safe and trusted place for users to discover and download apps and a supportive way for developers to create and sell apps globally. Hosting close to two million apps today, the App Store has delivered on that promise and met the highest standards for privacy, security and quality. The App Store has enabled new markets, new services and new products that were unimaginable a dozen years ago, and developers have been primary beneficiaries of this ecosystem. Last year in the United States alone, the App Store facilitated $138 billion in commerce with over 85% of that amount accruing solely to third-party developers. Apple’s commission rates are firmly in the mainstream of those charged by other app stores and gaming marketplaces. Competition drives innovation, and innovation has always defined us at Apple. We work tirelessly to deliver the best products to our customers, with safety and privacy at their core, and we will continue to do so.

Apple in the past year has received an increasing number of complaints from iOS app developers over its rules to include in-app purchases and to remove any mentions from their app as to where consumers could pay for a subscription outside the App Store. The company has had high-profile debacles with Basecamp’s email app Hey, Spotify, Epic Games (where it’s engaged in a lawsuit) and cloud gaming services, like xCloud and Stadia.

This week, more developer complaints also surfaced related to how Apple can abuse its power.

In one, ProtonMail’s CEO shared what it was like to work with Apple, where he compared the company’s business practices to “Mafia extortion.” The company said Apple made it add in-app purchases, even though its app had been a largely free app, like WordPress, for years. When ProtonMail alerted its customers over email, Apple threatened to remove the app and block all updates.

In another, Apple told private messaging app Telegram what’s allowed on its channels. Specifically, it wanted channels closed where Belarusian protesters were identifying members of the country’s oppressive regime.

Microsoft digs at Apple with adoption of “App Fairness” principles

Last month, a number of top app makers came together to launch the “Coalition for App Fairness,” an advocacy group fighting back at market power abuses by the tech giants, namely Apple and to some lesser extent, Google. This week Microsoft joined Apple’s critics by announcing it would adopt 10 “app fairness” principles in its own Microsoft Store for Windows 10. The company didn’t reference Apple by name, but said it had “concerns about app stores on other digital platforms.”

In a blog post, Microsoft wrote:

Windows 10 is an open platform. Unlike some other popular digital platforms, developers are free to choose how they distribute their apps. The Microsoft Store is one way. We believe that it provides significant benefits to consumers and to developers by ensuring that the available apps meet strong privacy, security and safety standards, while making them easier to find and providing additional tools and services so developers can focus on development.

The company pointed out that it allows third-party app stores, like those from Epic and Steam, on Windows. It also says users can pick their own payment method and notes that developers are allowed to distribute their apps on their own terms via the internet without restrictions. And, Microsoft stressed that it would not use its market power to “tilt the playing field to our advantage.”

Though it is admirable for Microsoft to take a stand, the company is likely more concerned with ensuring U.S. regulators don’t turn their eyes to its own storefronts as they investigate tech giants for anticompetitive behavior. In particular, it wants to avoid scrutiny of its Xbox store, which will not apply these same principles.

It’s worth noting, too, that Apple’s own desktop platform, macOS, doesn’t restrict developers from offering their apps for installation via the web, so the Microsoft Store is not the most apt comparison to what’s taking place on the iOS App Store.

Consumers spent a record $28 billion in apps in Q3

Image Credits: TechCrunch

Mobile usage continues to remain high amidst the COVID-19 pandemic, which has prompted social distancing measures and lockdown policies, and has pushed consumers to connect online for work, school and socializing. This, in turn, has helped drive record spending in apps during the quarter, as well as a huge surge in time spent in apps. According to a new report from App Annie, consumers in the third quarter downloaded 33 billion new apps globally and spent a record $28 billion in apps — up 20% year-over-year. They also spent more than 180 billion collective hours each month of July, August and September 2020 using apps, an increase of 25% year-over-year.

For comparison, Sensor Tower’s Q3 report had estimated app revenue grew to over $29 billion in Q3, while it pegged new app downloads higher at 36.5 billion.

Weekly News Round-up

Mobile industry Lawsuits

• TikTok vs. the U.S. government. The U.S. government on Thursday appealed the judge’s ruling that prevented the Trump administration from banning TikTok. The White House has said TikTok represents a threat to national security. Meanwhile, the app has just been banned in Pakistan.
• Google faces antitrust lawsuit in India where it’s accused of having abused its Android OS’s position in the smart TV market.
• Philip Shoemaker testifies in Apple vs. Epic. Shoemaker, who headed App Store Review from March 2009 to April 2016 said that the App Store had been used to protect Apple’s interests, saying that Apple had not been honest about treating all developers the same. He also said the App Store rules were arbitrary and Apple has “struggled with using the App Store as a weapon against competitors.” He also argued that Apple Arcade would violate the same policies that are keeping Stadia and Game Pass off the App Store.
• Judge denied Epic’s request to force Apple to allow Fortnite back into the App Store. This means Fortnite will not return to the App Store before the trial begins; a court filing this week stated that the two companies will go to trial on May 3, 2021.

Platforms & Services

• Apple extended the deadline for app updates using the UIWebView API to beyond the end of 2020. Apple designed WKWebView in 2014 to integrate web content into an app “quickly, securely, and consistently across iOS and macOS,” the company says. Its since recommended that developers adopt WKWebView instead of UIWebView and WebView — both of which were formally deprecated. Maybe Apple didn’t want any more stories about app rejections right now?
• Apple launches new subscription server notifications for testing. The new notifications can offer real-time updates on a subscriber’s status, so developers can create customized user experiences. Initially, developers can get a notification about a subscriber who auto-renews and another that lets them be alerted to when the App Store starts asking users to agree to a new subscription price.
• Apple Developer app now supports enrollment in the U.K. and Ireland.
• Google hiring for Android Security team. A job posting indicates Google Play is staffing up an Android Security team that looks for vulnerabilities in Android apps, including COVID-19 apps, election apps, and those dealing in sensitive data.
• Google Assistant can control Android apps. Google’s voice command “Hey Google” can now not just launch by also search within and perform common tasks in apps. Users can also set their own voice commands as shortcuts.
• Android launches sound notifications. The OS can help people hard of hearing by alerting them to sounds like appliances beeping, water running, baby sounds, fire alarms, dogs barking, and knocks on the door, among others. iPhone offers a similar feature.

Trends

• TikTok passes Instagram as second-most popular social app for U.S. teens. A new report from Piper Sandler says 34% of teens list Snapchat as their favorite social app followed by 29% picking TikTok, then 25% picking Instagram.
• Google is latest to adopt “Stories” format. The company added Stories to its main search app on iOS and Android, featuring AMP-based visual content from a range of publishers.
• Instagram embraces home screen customization trend with launch of custom icons. For the app’s 10th anniversary, the company added a time-traveling Stories map, anti-bullying features, and a big set of custom icons that users can easily swap to, including the classic brown instant camera icon. The app declined to talk about its user numbers or revenues, however.
• Microsoft joins Amazon in working around App Store rules on gaming services. Microsoft gaming head Phil Spencer told employees the company is targeting 2021 for a web-browser based solution for its Xbox Game Pass streaming service. Amazon had earlier said it would bring its cloud gaming service Luna to iPhone by offering it as a web app.

Other News

• Over 240 Android apps were caught showing “out-of-context” ads in violation of a Google Play Store policy. These ads are shown outside of the app’s container, like pop-ups or full-screen ads. Google banned this advertising type in February 2020, when more than 600 apps were found to be spamming users. (ZDNet)
• Baidu launches a Douyin and Kuaishou rival called Kankan, which is mostly just a video search engine for the time being. The app looks a lot like Baidu’s main search app, but focuses on videos and live streaming. (SCMP)
• Google Fi comes to more phones, including new 5G phones from Samsung and Google. (Galaxy Note20 5G, Galaxy Note20 Ultra 5G, Galaxy S20 5G, Galaxy S20+ 5G, Galaxy S20 Ultra 5G, Galaxy A71 5G, Pixel 5 and Pixel 4a 5G) (Google)
• Instagram Threads turns into Instagram Direct. The formerly “friends-only” messaging app now lets you use it as a direct messenger for all your IG contacts. The company plans to bring some of IG’s other new messaging features soon, meaning it would be tied to the new IG infrastructure that currently allows cross-platform messaging between IG and Facebook Messenger. But IG says Threads won’t support cross-platform messaging. We’ll see! (TechCrunch)
• Mobile RPG Genshin Impact becomes world’s No. 2 top-grossing game in first week. The game Chinese publisher miHoYo generated $60 million across the App Store and Google Play. (Sensor Tower)
• Spotify launches collaborative music app Soundtrap Capture. The company acquired Sountrap in 2017. The new app is meant to take the place of Voice Memo to save tracks that can then be shared with others. The app has been in beta since this spring. (TechCrunch)
• Triller is paying for TikTok talent. The U.S.-based rival is shelling out cash, cars, fine dining and creator mansions to lure creators to its app at a time when TikTok’s U.S. future remains uncertain. The app offers a similar experience, but without support for duets or an as extensive library. A related report claims Triller inflated its user numbers in the past. (The New York Times)

Funding and M&A

• Picker raises €1.3 million seed round. The app lets you discover and buy products recommended by people you follow. Backers in the round include Berlin’s Btov and other angels.
• Zynga acquires game maker Rollic. Zynga completed its acquisition of hyper-casual game maker Rollic, based in Istanbul. Its titles include Go Knots 3D and Tangle Master 3D. Zynga doesn’t fully own Rollic, but has purchased 80% of the company for $180 million with additional payments to acquire the remaining portion over the next three years.
• GoPuff raises $380 million. The Philadelphia-headquartered startup offers an app that lets you buy over-the-counter medicine, baby food and alcohol — basically, convenience store items — and have them delivered to your door in 30 minutes or less. The new round was led by Accel and D1 Capital Partners.
• Camera app Dispo raises $4 million seed. Seven Seven Six fund, the Reddit co-founder Alexis Ohanian’s new venture fund, made its first investment in LA-based social media platform, Dispo. The app, previously known as David’s Disposable, was created by popular YouTuber David Dobrik and friend Natalie Mariduena. The app’s gimmick is to make you wait until the next day to see your photos, which are shared without editing.
• Healthcare app Your.MD raises €25 million. The London-based company’s Healthily app uses A.I. to help users check symptoms before visiting a doctor. Funding was led by global health and hygiene company Reckitt Benckiser (RB).

Downloads

Up Spell

Image Credits: Up Spell

Noted Apple software engineer and designer Ken Kocienda, whose work included the original iPhone and the development of touchscreen autocorrect, launched his first iOS app, a word game called Up Spell. The game challenges users to spell all the words you can in two minutes and uses a lexicon of words Kocienda built to allow for the inclusion of proper names and words with apostrophes, like S’Mores.

Bold icons

Tapping into the iOS 14 home screen redesign trend, designer Doney den Ouden released his own set of new icons for iOS devices, a bright one called “Bold,” a dark version called “Bold Dark,” and all-white background icons “Bold Light.” Designers have regularly dabbled in redesigns of the iOS interface, but the ability to now create Shortcuts to launch apps using custom icons has inspired designers to turn these side projects into a side hustle.

Google Arts & Culture

Image Credits: Google

While not a new app, the art appreciation and educational app this week introduced a new “Art Filter” that uses 3D-modelled AR filters based on iconic paintings, objects and accessories from all over the world. You can use the filter to become Van Gogh or Frida Kahlo’s self-portraits, or the famous Girl with a Pearl Earring. You can also step into history with a traditional Samurai helmet or a remarkable Ancient Egyptian necklace, Google says. The app is a free download on Android or iOS.

Harbor

Prepper app Harbor, backed by $5 million in funding, launched its emergency-preparedness app that gamifies the tasks you need to get done in order to have fully prepared for an emergency. The app determines the most likely emergencies you’d face based on your location.

News: A prison video visitation service exposed private calls between inmates and their attorneys

• October 10, 2020
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Exclusive: Calls supposed to be protected by attorney-client privilege were recorded and transcribed.

Fearing the spread of coronavirus, jails and prisons remain on lockdown. Visitors are unable to see their loved ones serving time, forcing friends and families to use prohibitively expensive video visitation services that often don’t work.

But now the security and privacy of these systems are under scrutiny after one St Louis-based prison video visitation provider had a security lapse that exposed thousands of phone calls between inmates and their families, but also calls with their attorneys that were supposed to be protected by attorney-client privilege.

HomeWAV, which serves a dozen prisons across the U.S., left a dashboard for one of its databases exposed to the internet without a password, allowing anyone to read, browse and search the call logs and transcriptions of calls between inmates and their friends and family members. The transcriptions also showed the phone number of the caller, which inmate, and the duration of the call.

Security researcher Bob Diachenko found the dashboard, which had been public since at least April, he said. TechCrunch reported the issue to HomeWAV, which shut down the system hours later.

In an email, HomeWAV chief executive John Best confirmed the security lapse.

“One of our third-party vendors has confirmed that they accidentally took down the password, which allowed access to the server,” he told TechCrunch, without naming the third-party. Best said the company will inform inmates, families and attorneys of the incident.

Somil Trivedi, a senior staff attorney at the ACLU’s Criminal Law Reform Project, told TechCrunch: “What we see again and again is that the rights of incarcerated people are the first to be trampled when the system fails — as it always, invariably does.”

“Our justice system is only as good as the protections for the most vulnerable. As always, people of color, those who can’t afford lawyers, and those with disabilities will pay the highest price for this mistake. Technology cannot fix the fundamental failings of the criminal legal system — and it will exacerbate them if we’re not deliberate and cautious,” said Trivedi.

Inmates have almost no expectations of privacy, and nearly all prisons in the U.S. record the phone and video calls of their inmates — even if it’s not disclosed at the beginning of each call. Prosecutors and investigators are known to listen back to recordings in case an inmate incriminates themselves on a call.

HomeWAV, a prison video visitation tech company, exposed thousands of phone calls between inmates and their families, but also calls with their attorneys that were supposed to be protected by attorney-client privilege. (Image: HomeWAV/YouTube)

The calls between inmates and their attorneys, however, are not supposed to be monitored because of attorney-client privilege, a rule that protects the communications between an attorney and their client from being used in court.

Despite this, there are known cases of U.S. prosecutors using recorded calls between an attorney and their incarcerated clients. Last year, prosecutors in Louisville, Ky., allegedly listened to dozens of calls between a murder suspect and his attorneys. And, earlier this year defense attorneys in Maine said they were routinely recorded by several county jails, and their calls protected under attorney-client privilege were turned over to prosecutors in at least four cases.

HomeWAV’s website says: “Unless a visitor has been previously registered as a clergy member, or a legal representative with whom the inmate is entitled to privileged communication, the visitor is advised that visits may be recorded, and can be monitored.”

But when asked, HomeWAV’s Best would not say why the company had recorded and transcribed conversations protected by attorney-client privilege.

Several of the transcriptions reviewed by TechCrunch showed attorneys clearly declaring that their calls were covered under attorney-client privilege, effectively telling anyone listening in that the call was off-limits.

TechCrunch spoke to two attorneys, whose communications with their clients in prison over the past six months were recorded and transcribed by HomeWAV, but asked that we not name them or their clients as doing so might harm their client’s legal defense. Both expressed alarm that their calls had been recorded. One of the attorneys said that they had verbally asserted attorney-client privilege on the call, while the other attorney also considered that their call was protected by attorney-client privilege but declined to comment further until they had spoken to their client.

Another defense attorney, Daniel Repka, told TechCrunch confirmed one of his calls with a client in prison in September was recorded, transcribed and subsequently exposed, but said that the call was not sensitive.

“We did not relay any information that would be considered protected by attorney-client privilege,” said Repka. “Anytime I have a client who calls me from a jail, I’m very conscious and aware of the possibility not only of security breaches, but also the potential ability to access these phone calls by the county attorney’s office,” he said.

Repka described attorney-client privilege as “sacred” for attorneys and their clients. “It’s really the only way that we’re able to ensure that attorneys are able to represent their clients in the most effective and zealous way possible,” he said.

“The best practice for attorneys is always, always, always to go visit your client at the jail in person where you’re in a room, and you have far more privacy than over a telephone line that you know has been designated as a recording device,” he said.

But the challenges brought by the pandemic has made in-person visits difficult, or impossible in some states. The Marshall Project, a non-partisan organization focusing on criminal justice in the U.S., said several states have suspended in-person visitation because of the threat posed by coronavirus, including legal visits.

Even prior to the pandemic, some prisons ended in-person visitation in favor of video calls.

Video visitation technology is now a billion-dollar industry, with companies like Securus making millions each year by charging callers often exorbitant fees to call their incarcerated loved ones.

HomeWAV isn’t the only video visitation service to have faced security issues.

In 2015, an apparent breach at Securus resulted in the leak of some 70 million inmate phone calls by an anonymous hacker and shared with The Intercept. Many of the recordings in the cache also contained calls designated protected by attorney-client privilege, the publication reported.

In August, Diachenko reported a similar security lapse at TelMate, another prison visitation provide, which saw millions of inmate messages exposed because of a passwordless database.

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News: Original Content podcast: Netflix’s ‘Enola Holmes’ is thoroughly mediocre

• October 10, 2020
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There’s nothing excessively bad about “Enola Holmes,” a new film about Sherlock Holmes’ younger sister Enola. But there’s nothing particularly good, either. The film was originally planned for a theatrical release from Warner Bros., but Netflix picked it up earlier this year, after the pandemic shuttered theaters around the world. “Enola Holmes” stars Millie Bobby

There’s nothing excessively bad about “Enola Holmes,” a new film about Sherlock Holmes’ younger sister Enola. But there’s nothing particularly good, either.

The film was originally planned for a theatrical release from Warner Bros., but Netflix picked it up earlier this year, after the pandemic shuttered theaters around the world.

“Enola Holmes” stars Millie Bobby Brown as titular adolescent detective, along with Henry Cavill as Sherlock, and they’re both … fine? Neither of them seems to be phoning it in, and Cavill is downright charming at times. And although Brown has admitted that she struggled to reacquire her English accent, she brings plenty of energy to her role, which includes plenty of fourth-wall-breaking monologues that fill the audience in on backstory and explain the solutions to not-particularly-puzzling mysteries.

As we explain on the latest episode of the Original Content podcast, the film seems competent in virtually every respect, but thoroughly inspired, leaving us underwhelmed by the results — Anthony to the point where he was pacing around the room and wondering about his life choices. But hey, maybe kids will enjoy watching it?

In addition to reviewing the movie, we also discuss Netflix’s recent discussion to cancel “Glow” and “Teenage Bounty Hunters.”

You can listen to our review in the player below, subscribe using Apple Podcasts or find us in your podcast player of choice. If you like the show, please let us know by leaving a review on Apple. You can also follow us on Twitter or send us feedback directly. (Or suggest shows and movies for us to review!)

If you’d like to skip ahead, here’s how the episode breaks down:
0:00 Intro
0:37 “Away” listener response
4:04 “Glow”/”Teenage Bounty Hunters” discussion
12:43 “Enola Holmes” review
29:17: “Enola Holmes” spoiler discussion

News: Brian Armstrong’s new problem: 60-plus free agents

• October 9, 2020
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A lot has been made of the open memo that CEO Brian Armstrong published nearly two weekends ago, essentially barring political activism at work because he sees it as a distraction. He also made it clear that employees who disagreed with the decision — and he foresaw that some would not be happy — were

A lot has been made of the open memo that CEO Brian Armstrong published nearly two weekends ago, essentially barring political activism at work because he sees it as a distraction. He also made it clear that employees who disagreed with the decision — and he foresaw that some would not be happy — were free to leave.

“I recognize that our approach is not for everyone, and may be controversial. I know that many people may not agree, and some employees may resign. I also know that some of what I’ve written above will be misinterpreted, whether accidentally or on purpose. But I believe it’s the right approach for Coinbase that will set us up for success long term, and I would rather be honest and transparent about that than equivocate and work in a company that is not aligned,” he wrote.

Perhaps owing to an almost immediate backlash, Armstrong sent a separate, internal memo several days later detailing separation packages for employees who might be upset and want to leave. Coinbase was willing to be very generous, too, offering four months’ severance pay for those who have been at the exchange for less than three years, and paying longer-term employees six months of severance. (Worth noting: Coinbase also gives employees up to seven years to exercise their stock options.)

Whether Armstrong expected that more than 60 employees of Coinbase’s staff of 1,200 would take him up on the offer is something only he knows. As he disclosed in a follow-up post yesterday, that’s how many people have alerted the company that they are leaving, and Coinbase expects the number to inch higher, based on a “handful” of ongoing conversations.

Employees had until this past Wednesday to submit a form to begin the process of receiving severance.

Either way, if I were Armstrong, I might be a little nervous about that number. Though small in the grand scheme of the company’s ambitions, that’s 60-plus people who have Coinbase on their resume, institutional knowledge about the company and potentially money in the bank, between their severance and equity.

Most dangerously, they might also have a bit of an axe to grind against a company that told them it was changing the world, then changed the terms of its pact with employees in the middle of an already trying time for most people.

That frustration — if it exists — can come out in potential leaks to the press, though presumably every employee had to sign a lengthy non-disparagement agreement on their way out the door.

The bigger threat is that one or numerous of these employees might now start their own crypto-related business, or else join rival companies that could use their skills. (Non-compete agreements are famously difficult to enforce in the state of California.)

Certainly, taking on Coinbase is a very tall order at this point. Two years ago, when the company closed on $300 million in Series E funding, it did so at a post-money valuation of more than $8 billion, putting it leaps and bounds ahead of numerous other crypto exchanges.

No matter what you think of Armstrong’s new policy, there aren’t a lot of founders with the stuff to grow a company as strong and fast as he has, either.

Still, it happens all the time that people launch companies to take down other companies. It’s human nature. Given that a number of former Coinbase employees has already raised funding for projects after leaving Coinbase, combined with so many investing dollars sloshing around out there, the risk of this happening to Coinbase because of Armstrong’s memo and its aftermath may be small, it’s true. But it isn’t zero.

News: Judge denies Epic’s request to force Apple to bring Fortnite back to App Store

• October 9, 2020
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The California judge in the legal skirmish between Epic Games and Apple has denied Epic’s request that Apple be forced to reinstate Fortnite in the App Store, but did affirm that Apple can not take action against the Epic Games developer accounts used to bring Unreal Engine developers access to Apple devices. The court’s decision

The California judge in the legal skirmish between Epic Games and Apple has denied Epic’s request that Apple be forced to reinstate Fortnite in the App Store, but did affirm that Apple can not take action against the Epic Games developer accounts used to bring Unreal Engine developers access to Apple devices.

The court’s decision re-affirmed their proclamation from late August in a court hearing where Epic Games’ lawyers sought to obtain a temporary restraining order after Apple informed the Fortnite developer that they would be kicking the company off the App Store and terminating all of their company accounts.

The judge noted that “[p]reliminary injunctive relief is an extraordinary measure rarely granted,” and detailed that they were granting in part and denying in part Epic’s request, noting that “Epic Games bears the burden in asking for such extraordinary relief.”

From the filing:

Epic Games has strong arguments regarding Apple’s exclusive distribution through the iOS App Store, and the in-app purchase (“IAP”) system through which Apple takes 30% of certain IAP payments. However, given the limited record, Epic Games has not sufficiently addressed Apple’s counter arguments. The equities, addressed in the temporary restraining order, remain the same.

This confirms that Fortnite will not return to the App Store before the trial begins, a court filing this week signaled that the two companies will go to trial on May 3, 2021.

News: Dear Sophie: How can employers hire & comply with all this new H-1B craziness?

• October 9, 2020
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Although both the DOL and DHS rules will likely be challenged, they will likely remain in effect for some time before any litigation has an impact.

Here’s another edition of “Dear Sophie,” the advice column that answers immigration-related questions about working at technology companies.

“Your questions are vital to the spread of knowledge that allows people all over the world to rise above borders and pursue their dreams,” says Sophie Alcorn, a Silicon Valley immigration attorney. “Whether you’re in people ops, a founder or seeking a job in Silicon Valley, I would love to answer your questions in my next column.”

Extra Crunch members receive access to weekly “Dear Sophie” columns; use promo code ALCORN to purchase a one or two-year subscription for 50% off.

Dear Sophie:

I’ve been reading about the new H-1B rules for wage levels and defining what types of jobs qualify that came out this week. What do we as employers need to do to comply? Are any other visa types affected?

— Racking my brain in Richmond!

Dear Racking:

As you mentioned, the Department of Labor (DOL) and the Department of Homeland Security (DHS) each issued a new interim rule this week that affects the H-1B program. However, the DOL rule impacts other visas and green cards as well. These interim rules, one of which took effect immediately after being published, are an abuse of power.

The president continues to fear-monger in an attempt to generate votes through racism, protectionism and xenophobia. The fatal irony here is that companies were in fact already making “real offers” to “real employees” for jobs in the innovation economy, which are not fungible and are actually the source of new job creation for Americans. A 2019 report by the Economic Policy Institute found that for every 100 professional, scientific and technical services jobs created in the private sector in the U.S., 418 additional, indirect jobs are created as a result. Nearly 575 additional jobs are created for every 100 information jobs, and 206 additional jobs are created for every 100 healthcare and social assistance jobs.

The DOL rule, which went into effect on October 8, 2020, significantly raises the wages employers must pay to the employees they sponsor for H-1B, H-1B1 and E-3 specialty occupation visas, H-2B visas for temporary non-agricultural workers, EB-2 advanced degree green cards, EB-2 exceptional ability green cards and EB-3 skilled worker green cards.

The new DHS rule, which further restricts H-1B visas, will go into effect on December 7, 2020. DHS will not apply the new rule to any pending or previously approved petitions. That means your company should renew your employees’ H-1B visas — if eligible — before that date.

The American Immigration Lawyers Association (AILA) has formed a task force to review the rules and help with litigation. Although both the DOL and DHS rules will likely be challenged, they will likely remain in effect for some time before any litigation has an impact. They are actively seeking plaintiffs, including employees, employers and representatives of membership organizations who will be hurt by the new rules.

News: Human Capital: Uber engineer explains why he spoke out against Prop 22

• October 9, 2020
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Welcome back to Human Capital where we discuss the latest in labor, and diversity and inclusion in tech. This week’s eyebrow-raising moment came Wednesday when the U.S. Department of Labor essentially accused Microsoft of reverse racism (not a real thing) for committing to hire more Black people at its predominantly white company. And that wasn’t

Welcome back to Human Capital where we discuss the latest in labor, and diversity and inclusion in tech.

This week’s eyebrow-raising moment came Wednesday when the U.S. Department of Labor essentially accused Microsoft of reverse racism (not a real thing) for committing to hire more Black people at its predominantly white company.

And that wasn’t even the most notable news items of the week. Instead that award goes to Uber engineer Kurt Nelson and his decision to speak out against his employer and urge folks to vote no on the Uber-sponsored ballot measure in California that aims to keep drivers classified as independent contractors. I caught up with Nelson to hear more about what brought him to the point of speaking out. You can read what he had to say further down in this newsletter.

But first, I have some of my own news to share —  Human Capital is launching in newsletter form on Friday, Oct. 23. Sign up here so you don’t miss out.

Now, to the tea.

Stay Woke

Coinbase loses about 5% of workforce for its stance on social issues

Remember how Coinbase provided an out to employees who no longer wanted to work at the cryptocurrency company as a result of its stance on social issues? Well, Coinbase CEO Brian Armstrong said this week that about 5% of employees (60 people) have decided to take the exit package, but that there will likely be more since “a handful of other conversations” are still happening.

Armstrong noted how some people worried his stance would push out people of color and other underrepresented minorities. But in his blog post, Armstrong said those folks “have not taken the exit package in numbers disproportionate to the overall population.”

Trump’s DOL goes after Microsoft for committing to hire more Black people

Microsoft disclosed this week that the U.S Department of Labor Office of Federal Contract Compliance Programs regarding its racial justice and diversity commitments made in June. Microsoft had committed to double the number of Black people managers, senior individual contributors and senior leaders in its U.S. workforce by 2025. Now, however, the OFCCP says that could be considered as unlawful discrimination in violation of Title VII of the Civil Rights Act. That’s because, according to the letter, Microsoft’s commitment “appears to imply that employment action may be taken based on race.”

“We are clear that the law prohibits us from discriminating on the basis of race,” Microsoft wrote in a blog post. “We also have affirmative obligations as a company that serves the federal government to continue to increase the diversity of our workforce, and we take those obligations very seriously. We have decades of experience and know full well how to appropriately create opportunities for people without taking away opportunities from others. Furthermore, we know that we need to focus on creating more opportunity, including through specific programs designed to cast a wide net for talent for whom we can provide careers with Microsoft.”

This comes shortly after the Trump administration expanded its ban on diversity and anti-racism training to include federal contractors. While this does not fall into the scope of that ban, it’s alarming to see the DOL going after tech company for trying to increase diversity. However, it does seem that the effects of the ban are making its way into the tech industry.

Joelle Emerson, founder and CEO of diversity training service Paradigm, says she lost her first client as a result of the executive order. While it’s not clear which client it was, many of Paradigm’s clients are tech companies.

Crunchbase report sheds light on VC funding to Black and Latinx founders

It’s widely understood that Black and Latinx founders receive not nearly as much funding as their white counterparts. Now, Crunchbase has shed some additional light on the situation. Here are some highlights from its 2020 Diversity Spotlight report.

Image Credits: Crunchbase

• Since 2015, Black and Latinx founders have raised more than $15 billion, which represents just 2.4% of the total venture capital raised 
• In 2020, Black and Latinx founders have raised $2.3 billion, which represents 2.6% of all VC funding through August 31, 2020.
• Since 2015, the top 10 leading VC firms in the U.S. have invested in around 70 startups founded by Black or Latinx people.
• Andreessen Horowitz and Founders Fund are the two firms with the highest count of new investments in Black or Latinx-founded companies since 2015.

Gig Work

Uber engineer encourages people to vote no on Uber-backed Prop 22

Going against his employer, Uber engineer Kurt Nelson penned an op-ed on TechCrunch about why he’s voting against Prop 22. Prop 22 is a ballot measure in California that seeks to keep rideshare drivers and delivery workers classified as independent contractors. I caught up with Nelson after he published his op-ed to learn more about what brought him to the point of speaking out against Prop 22. 

“It was a combination of COVID affecting unemployment and health insurance for a bunch of people, getting close to the election and not having seen anyone who is really former Uber or Uber or former any gig companies saying anything,” Nelson told me. 

Plus, Nelson is on his way out from Uber — something that he’s been forthcoming about with his manager. He had already been feeling frustrated about the way Uber handled its rounds of layoffs this year, but the company’s push for Prop 22 was “the final nail in the coffin.”

Uber’s big arguments around why drivers should remain independent contractors is that it’s what drivers want and that it’d be costly to make them employees. Uber has said it also doesn’t see a way to offer flexibility to drivers while also employing them.

“I think it’d be really challenging,” Uber Director of Policy, Cities and Transportation Shin-pei Tsay told me at TC Sessions: Mobility this week. “We would have to start to ensure that there’s coverage to ensure that there’s the necessary number of drivers to meet demand. That would be this forecasting that needs to happen. We would only be able to offer a certain number of jobs to meet that demand because people will be working in set amounts of time. I think there would be quite fewer work opportunities, especially the ones that people really have said that they like.”

But, as Nelson notes, Silicon Valley prides itself on tackling difficult problems. 

“We’re a tech company and we solve hard problems — that’s what we do,” he said.

In response to his op-ed, Nelson said some of his co-workers have reached out to him — some thanking him for saying something. Even prior to his op-ed, Nelson said he was one of the only people who would talk about Prop 22 in any negative way in Uber’s internal Slack channels. And it’s no wonder why, given the atmosphere Uber has created around Prop 22. 

During all-hands meetings, Nelson described how the executive team wears Yes on 22 shirts or has a Yes on 22 Zoom background. Uber has also offered employees free Yes on 22 car decals and shirts, Nelson said.

As for Nelson’s next job, he knows he doesn’t “want to touch the gig economy ever again,” he said. “I know that for a fact. I’m done with the gig economy.”

Union Life

Kickstarter settles with NLRB over firing of union organizer

Kickstarter agreed to pay $36,598.63 in backpay to Taylor Moore, a former Kickstarter employee who was fired last year, Vice reported. Moore was active in organizing the company’s union, which was officially recognized earlier this year. As part of the settlement with the National Labor Relations Board, Kickstarter also agreed to post a notice to employees about the settlement on its intranet and at its physical office whenever they reopen. 

In September 2019, Kickstarter fired two people who were actively organizing a union. About a year later, the Labor Board found merit that Kickstarter unlawfully fired a union organizer.

NLRB files complaint against Google contractor HCL America

It’s been about a year since 80 Google contractors voted to form a union with US Steelworkers. But those contractors, who are officially employed by HCL America, have not been able to engage in collective bargaining, according to a new complaint from the National Labor Relations Board, obtained by Vice.

The complaint states HCL has failed to bargain with the union and has even transferred the work of members of the bargaining unit to non-union members based in Poland. The NLRB alleges HCL has done that “because employees formed, joined and assisted the Union and engaged in concerted activities, and to discourage employees from engaging in these activities.”

News bites

• Games Industry Biz published a damning story about sexual assault, racism and other abusive behavior at Twitch.
• Google is providing cash awards to 76 startups through a racial equity initiative announced in June
• White Ops is changing its name because the company just realized, “The name White Ops represents something different than what we’ve intended. It perpetuates a toxic association of good and bad with color and race.“

News: How Roblox completely transformed its tech stack

• October 9, 2020
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Picture yourself in the role of CIO at Roblox in 2017. At that point, the gaming platform and publishing system that launched in 2005 was growing fast, but its underlying technology was aging, consisting of a single data center in Chicago and a bunch of third-party partners, including AWS, all running bare metal (nonvirtualized) servers.

Picture yourself in the role of CIO at Roblox in 2017.

At that point, the gaming platform and publishing system that launched in 2005 was growing fast, but its underlying technology was aging, consisting of a single data center in Chicago and a bunch of third-party partners, including AWS, all running bare metal (nonvirtualized) servers. At a time when users have precious little patience for outages, your uptime was just two nines, or less than 99% (five nines is considered optimal).

Unbelievably, Roblox was popular in spite of this, but the company’s leadership knew it couldn’t continue with performance like that, especially as it was rapidly gaining in popularity. The company needed to call in the technology cavalry, which is essentially what it did when it hired Dan Williams in 2017.

Williams has a history of solving these kinds of intractable infrastructure issues, with a background that includes a gig at Facebook between 2007 and 2011, where he worked on the technology to help the young social network scale to millions of users. Later, he worked at Dropbox, where he helped build a new internal network, leading the company’s move away from AWS, a major undertaking involving moving more than 500 petabytes of data.

When Roblox approached him in mid-2017, he jumped at the chance to take on another major infrastructure challenge. While they are still in the midst of the transition to a new modern tech stack today, we sat down with Williams to learn how he put the company on the road to a cloud-native, microservices-focused system with its own network of worldwide edge data centers.

Scoping the problem

News: Why Amazon and Panasonic are betting on this battery recycling startup

• October 9, 2020
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JB Straubel, the Tesla co-founder and former CTO, is often cast as the humble and pioneering engineer, the quiet one who toiled away in the background for 15 years on some of the company’s most important technologies. That characterization — which intensified as the hype and media attention on Tesla CEO Elon Musk grew —

JB Straubel, the Tesla co-founder and former CTO, is often cast as the humble and pioneering engineer, the quiet one who toiled away in the background for 15 years on some of the company’s most important technologies. That characterization — which intensified as the hype and media attention on Tesla CEO Elon Musk grew — tells a half truth.

Straubel isn’t prone to self-promotion, or even progress reports. His personal Twitter account, nor the one dedicated to his startup, Redwood Materials, has ever even tweeted. And he does like toiling away on complex problems.

But his understated delivery obfuscates his ambitions and plans for Redwood Materials, the recycling startup that he co-founded in 2017. Straubel envisions and is actively working to make Redwood one of the world’s major battery recycling companies, with numerous facilities strategically scattered throughout the globe.

“This is something that is a major industry and a major problem, and it’s a big part of why I want to spend my time on it,” Straubel said on TechCrunch’s virtual stage Wednesday at TC Sessions: Mobility. “I want to do something that can actually make a really material impact on sustainability in the world. And you need scale to do that. So I am very excited to keep growing this and to be one of, if not the major battery recycling company in the world. And eventually, one of the large battery materials companies in the world.”

The Carson City, Nevada-based company, which Straubel runs, is aiming to create a circular supply chain. The company has a business-to-business strategy, recycling the scrap from battery cell production as well as consumer electronics like cell phone batteries, laptop computers, power tools, power banks, scooters and electric bicycles. Redwood collects the scrap from consumer electronics companies and battery cell manufacturers like Panasonic. It then processes these discarded goods, extracting materials like cobalt, nickel and lithium that are typically mined, and then supplies those back to Panasonic and other customers. Redwood Materials has a number of customers, and has only publicly disclosed that it is working with Panasonic and Amazon.

Image Credits: Redwood Materials

While Redwood Materials is a B2B company, its business model could someday evolve. Interest has been so high that Straubel is now contemplating whether it should also expand into a more consumer-facing business as well. Redwood may never offer collection sites where consumers can drop off old smartphones and other consumer electronics. However, the number of inquiries from local government officials, as well as consumers looking for options to recycle electronics, including the batteries in EVs, has prompted Straubel to at least consider the possibility.

What is known is that Straubel sees numerous facilities — perhaps dozens — getting set up regionally, and in some cases co-located with factories if the customer is large enough. The company hasn’t disclosed where those future facilities will be located.

The company has two recycling and processing facilities in Carson City. And while that hardly qualifies it as one of the world’s largest battery recycling companies, Redwood is already operating at the “gigawatt scale.”

“We’ve been able to grow extremely quickly and to ramp up our capacity and I expect that will follow roughly the scale of lithium-ion production, lagging by a few years,” he said.

To put Straubel’s words into context, consider the Gigafactory that Panasonic operates with Tesla in Sparks, Nevada. Today, the factory has the capacity to produce 35 gigawatt hours of lithium-ion battery cells annually. If Straubel hit the scale he’s shooting for, Redwood would be supplying Panasonic with enough materials to match that production capacity. Reaching that goal would fundamentally change Panasonic’s supply chain away from minerals that had been mined and toward those recycled by Redwood. Those recycled materials would come from Panasonic’s production scrap as well as other sources of consumer electronics.

Celina Mikolajczak, vice president of battery technology at Panasonic Energy of North America, said it would be foolish for the company to ignore the recycling supply.

“We’ve already dug these metals out of the ground, we’ve put them in cells, they’re sitting there,” Mikolajczak said during the joint interview with Straubel at TC Sessions: Mobility. “And yeah, it’s a little difficult to handle cells, they process a little differently than a typical metal ore, right, but at the same time, we have a much higher concentration of the metals we need than a typical metal ore. So it makes total sense to go after recycling and to do it aggressively because there’s a lot of it, there’s a lot of batteries already out in the world.”

Second-life batteries

Today, the majority of lithium-ion batteries used in smartphones and other consumer electronics are not recycled and instead either sit forgotten in the owner’s junk drawer or enter the waste stream and end up in a landfill. Electric vehicles have a much longer shelf life, so to speak. But eventually batteries used in electric vehicles will pose a challenge for automakers, as well as communities grappling with the waste.

Straubel wants Redwood to be a part of that end-of-life solution for electric vehicle batteries as well.

“The second-life issue and how these batteries are recovered it’s really interesting and there’s a lot of different ideas around about how batteries can go into a whole second application,” Straubel said, noting that Redwood is not working directly on second-life use cases. “It’s great if we can get more useful life on these devices by reusing them for a period of time, but it only delays the inevitable; they eventually need an appropriate disposal, and recycling solution.”

Straubel said he wants Redwood to be that backstop.

There are a number of automakers that have talked about repurposing EV batteries for energy storage. But the details of how an OEM might recapture those batteries back from consumers is scant. Straubel wants Redwood to be an independent company so it can partner with all OEMs producing electric vehicles and provide its materials across the entire industry.

Redwood has never talked publicly about which automakers it might or already is partnering with. However, looking across the EV landscape a few likely partners emerge. For instance, electric vehicle startup Rivian has never announced plans to work directly with Redwood Materials. But the companies do share Amazon as an investor and customer. Rivian CEO RJ Scaringe and Straubel not only know each other, they share a common vision.

Scaringe has talked about plans for second-life batteries — albeit without a lot of detail yet — as well as what happens at the end of a battery’s life. Rivian doesn’t have any vehicles on the road today, so it’s a seemingly distant problem. That changes in 2021 when the company will bring an electric pickup truck and SUV to the consumer market, as well electric vans to Amazon. Ultimately, Rivian has a contract to deliver 100,000 electric vans to Amazon.

“I’m really excited about what JB [Straubel] is doing because we’d love to have these vehicles be a feedstock, and the batteries from these vehicles be a feedstock to then begin another start of lifecycle for another set of batteries and electric vehicles,” Scaringe said in an interview last month at the Bloomberg Green Summit, in which he joined Straubel and Ross Rachey, director of Global Last Mile Fleet and Products at Amazon, on a panel. “The ability to control this essentially as a closed ecosystem allows us to learn and build the muscle memory for this as the whole industry starts to shift not only to electrification, but different methods of consumption as well.”

All about scale

Straubel said he isn’t interested in taking Redwood Materials public, certainly not in the short term.

“For better or worse, I had a front row seat to some of the less efficient parts of being a public company,” Straubel said, a comment directed to Tesla’s public status. “It’s nothing that I’m rushing toward. I think that being public is somehow equated with success, which doesn’t really make sense.”

He said his goal is for Redwood to make an impact, do something meaningful at an industrial scale and generate returns — aka be profitable.

“It’s not about going public quickly, or, you know, trying to give a quick return to investors or something like that,” Straubel said. “This is what I really want to spend my time on. And I see this as a very long-term growth mission that is likely to span decades.”

Workers sort through a pile of used mobile phones in New Delhi, India. (Image Credits: Getty Images / Kuni Takahashi/Bloomberg)

Straubel talks a lot about scale, both in terms of his vision for Redwood as well as the current state of e-waste sitting in junk drawers of U.S. consumers. It was the scale of the Gigafactory, which is used by Panasonic to make battery cells and by Tesla to make the battery packs and electric motors for its vehicles, that partially drove Straubel to start Redwood in the first place.

“As the world electrifies transportation it needs so many different materials and the supply chain upstream of the factory is, I think, often under appreciated,” he said. “The Gigafactory is a little bit like an iceberg — there’s so much of it that’s kind of below the surface, in the suppliers and in the mines and refineries and all the different things that need to feed into it that you don’t typically see.”

Parts of the supply chain became more of a bottleneck as the Gigafactory ramped, he added.

“You certainly see Tesla focusing more on this, I think rightly so,” Straubel said, a nod to Musk’s recent public comments about needs to focus on the broader supply chain of materials such as nickel. “That was a very interesting area that I thought wasn’t getting as much attention and end-of-life and recycling as a part of that material supply chain is just an incredibly powerful space, one where I think we can have a major impact on the sustainability of creating batteries.”

News: Facebook and Instagram will pin vote-by-mail explainers to top of feeds

• October 9, 2020
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Starting this weekend, everyone of voting age in the U.S. will begin seeing informational videos at the top of Instagram and Facebook offering tips and state-specific guidance on how to vote through the mail. The videos will be offered in both English and Spanish. The vote-by-mail videos will run on Facebook for four straight days

Starting this weekend, everyone of voting age in the U.S. will begin seeing informational videos at the top of Instagram and Facebook offering tips and state-specific guidance on how to vote through the mail. The videos will be offered in both English and Spanish.

The vote-by-mail videos will run on Facebook for four straight days in each state, starting between October 10 and October 18 depending on local registration deadlines. On Instagram, the videos will run in all 50 states on October 15 and October 16, followed by other notifications with vote-by-mail information over the next two days.

Image via Facebook

Image via Facebook

The videos let voters know when they can return a ballot in person, instruct them to sign carefully on additional envelopes that might be required and encourage returning ballots as soon as possible while being mindful of postmarking deadlines. Facebook will continue providing additional state-specific voting information in a voting information center dedicated to the 2020 election.

Even more than in past years, app makers have taken up the mantle of nudging their users to vote in the U.S. general election. From Snapchat to Credit Karma, it’s hard to open an app without being reminded to register — and that’s a good thing. Snapchat says it registered around 400,000 new voters through its own reminders and Facebook estimates that it helped 2.5 million people register to vote this year.

Voting rights advocates are concerned that 2020’s rapid scale-up of vote-by-mail might lead to many ballots being thrown out — a worry foreshadowed by the half a million ballots that were tossed out in state primaries. Some of those ballots failed to meet deadlines or were deemed invalid due to other mistakes voters made when filling them out.

In Florida, voters that were young, non-white or voting for the first time were twice as likely to have their ballots thrown out compared to white voters in the 2018 election, according to research by the ACLU.

Adding to concerns, state rules vary and they can be specific and confusing for voters new to voting through the mail. In Pennsylvania, the most likely state to decide the results of the 2020 election, new rules against “naked ballots” mean that any ballot not cast in an additional secrecy sleeve will be tossed out. In other states, secrecy sleeves have long been optional.

Facebook gets ready for November

Since 2016, Facebook has faced widespread criticism for rewarding hyper-partisan content, amplifying misinformation and incubating violent extremism. This week, the FBI revealed a plot to kidnap Michigan Governor Gretchen Whitmer that was hatched by militia groups who used the platform to organize.

Whether the public reveal of that months-long domestic terrorism investigation factored into its decisions or not, Facebook has taken a notably more aggressive posture across a handful of recent policy decisions. This week, the company expanded its ban on QAnon, the elaborate web of outlandish pro-Trump conspiracies that have increasingly spilled over into real-world violence, after that content had been allowed to thrive on the platform for years.

Facebook also just broadened its rules prohibiting voter intimidation to ban calls for poll watching that use militaristic language, like the Trump campaign’s own effort to recruit an “Army for Trump” to hold its political enemies to account on election day. The company also announced that it would suspend political advertising after election night, a policy that will likely remain in place until the results of the election are clear.

While President Trump has gone to great lengths to cast doubt on the integrity of vote-by-mail, mailed ballots are a historically very safe practice. States like Oregon and Colorado already conduct their voting through the mail in normal years, and all 50 states have absentee voting in place for people who can’t cast a ballot in person, whether they’re out of town or overseas serving in the military.