SCOTUS to weigh Apple antitrust case

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SCOTUS TO WEIGH APPLE ANTITRUST CASE — The Supreme Court will hear oral arguments today in Apple v. Pepper, a long-running class-action lawsuit brought against Apple by consumers who allege the company’s App Store holds monopolistic power. The court’s ruling could settle the matter of whether a third-party distributor can be sued by consumers for prices that, to an extent, are determined by an outside seller.

— Appeal background: Last year, the U.S. Court of Appeals for the 9th Circuit ruled that consumers who purchase iPhone apps were direct customers of Apple and thus could sue the company for practices perceived as anticompetitive. That ruling reversed a district court that dismissed the class-action suit, citing precedent that holds only direct buyers can sue a monopolist on antitrust grounds. Apple argues that it charges a commission to the app creator, not the consumer, and thus cannot be held accountable for setting prices.

— Applicable elsewhere? The court’s decision could have broad implications for e-commerce, industry and advocacy groups told MT. “A ruling for Apple would give other tech platforms more power to escape consumer antitrust suits,” said Open Markets Institute legal director Sandeep Vaheesan, whose group filed an amicus brief in support of lead plaintiff Robert Pepper. “Undermining private antitrust enforcement means undermining the effectiveness of antitrust law in general,” he added.

— Pro-Apple voices apprehensive of overreach: But ACT | The App Association President Morgan Reed, whose group represents app makers and filed a brief in support of Apple, said that “a ruling in Pepper’s favor would take away our industry’s direct relationship with consumers, and ultimately harm a $950 billion global industry which employs more than 4.7 million Americans.” And in an editorial on Friday, The Wall Street Journal editorial board warned against giving would-be challengers “more bites at the Apple.” “Expanding antitrust law by judicial decree would usurp Congress’s authority to regulate commerce and disrupt innovation that has benefited millions of consumers,” the board wrote.

GREETINGS AND WELCOME TO MORNING TECH, where your host is still coping with the transition from apple pie eating to Apple Inc. covering. Got a news tip? Drop me a line at [email protected] or @viaCristiano. Don’t forget to follow us @MorningTech. And catch the rest of the team’s contact info after Quick Downloads.

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THE DRUMBEAT OF FACEBOOK CRITICISMS — Despite a Facebook executive’s pre-Thanksgiving admission he hired Definers Public Affairs to target critics of the social network, scrutiny of Facebook shows no signs of ebbing. As Steven reported, outgoing policy and communications chief Elliot Schrage took the blame in a blog post Wednesday night for bringing on the firm to undermine anti-Facebook groups, including asking Definers to dig into ties between the critics and billionaire George Soros. But the company’s lobbying tactics, first detailed by The New York Times, continue to spark backlash in Washington.

— “Everything must be on the table”: “Facebook’s top leadership now acknowledges despicable complicity in using Definers to smear its critics,” tweeted Sen. Richard Blumenthal (D-Conn.) over the weekend. Blumenthal, ranking member of the Senate Commerce consumer protection subcommittee, called on his panel to look into the company, including at its Tuesday hearing with all five members of the Federal Trade Commission. “Privacy commitments, deceptive & misleading practices, shareholder disclosure, antitrust — everything must be on the table,” he said. Others, like New York University professor Scott Galloway, have called for Mark Zuckerberg to “relinquish” his role as Facebook CEO.

PRESSURE FROM OVERSEAS — While Facebook takes political heat in the U.S., lawmakers in the United Kingdom seized a long-sought series of documents from the company, MP Damian Collins said on Sunday. And according to The Guardian, “The cache of documents is alleged to contain significant revelations about Facebook decisions on data and privacy controls that led to the Cambridge Analytica scandal,” as well as “confidential emails between senior executives, and correspondence with Zuckerberg.” If made public, the documents could shed light on how the company has handled its data scandals — information that would surely be of interest to lawmakers on both sides of the Atlantic.

TECH LEADERS STEP INTO CLIMATE FRAY — A growing number of tech CEOs and industry leaders are warning about the dangers of inaction on climate change in the wake of a new federal report raising alarm about its impact on the U.S. economy. After federal scientists warned that global climate change will disrupt the country’s economy, several prominent tech leaders sounded off.

— Environmentally friendly: Salesforce CEO Marc Benioff said the report “gave a stark answer that climate change is a menace that threatens the wellbeing of the United States.” Former Google executive chairman Eric Schmidt argued that it is “much cheaper to act now” on climate change “than to clean up the awful mess that is going to happen.” And tech mogul Elon Musk shared a link to all U.S. electric car manufacturers, including his company Tesla and its competitors, after citing the climate report.

— Something to keep an eye on: By calling for action on climate change, tech leaders once again find themselves at odds with the Trump administration on a hot-button issue. As we have chronicled, the industry has already taken issue with the administration’s actions on international trade and immigration, among other issues.

IS TIME RUNNING OUT ON TECH’S D.C. TACTICS? — “When liberal Silicon Valley wants things done in Washington, it sends in Republicans — even as Democrats prepare to take over the House,” Nancy, Steven and Margaret report in a new dispatch out this morning. It continues: “That strategy had a certain logic in Obama-era D.C., letting tech companies’ Washington operations serve as a counterweight to their left-coast headquarters. But now it’s causing the industry heartburn, from blowback over Facebook global policy chief Joel Kaplan’s public support for Brett Kavanaugh to companies like Microsoft and Google facing internal dissent over their work with President Donald Trump’s administration.”

TRUMP GEARS UP FOR SUMMIT, TECH WATCHES — President Donald Trump will partake in another round of high-stakes trade talks with Chinese President Xi Jinping this week, the latest chapter in the international tariff discussions that have kept the tech sector on its toes. POLITICO’s Doug Palmer and Andrew Restuccia have the latest: “The one-on-one meeting this week with President Donald Trump and Chinese President Xi Jinping could begin to shape how the world’s two biggest powers will share the global stage for decades.”

LATER THIS WEEK: BILLS, BILLS, BILLS — The House is set to take up suspension votes on a couple of tech-related measures as early as Wednesday, according to House Majority Leader Kevin McCarthy’s office. Under consideration: Rep. Will Hurd’s (R-Texas) Federal CIO Authorization Act, H.R. 6901 (115), which would reauthorize the office of the federal chief information officer, and Rep. Bob Latta’s (R-Ohio) SMART IoT Act, H.R. 6032 (115), which would direct the Commerce Department to conduct a study on the internet-connected devices industry.

HOLIDAY NEWS ROUND-UP — The tech news cycle did not let up for Turkey Day. Here’s a rundown of some of the stories you may have missed while MT was off:

— Data woes: A recent report from Ireland’s Data Protection Commission found that Microsoft’s LinkedIn used the email addresses of “approximately 18 million non-LinkedIn members” to target individuals with ads on Facebook. Irish data regulators said the action violated its protection standards, though the complaint was “amicably resolved,” according to The Verge. Amazon, meanwhile, “said it mistakenly shared customer data with undisclosed parties in an email to customers,” according to Bloomberg. The message came just prior to Black Friday and Cyber Monday, one of the company’s busiest stretches of the year.

— Get out of Huawei? U.S. authorities are pressing allies to drop Chinese telecom giant Huawei amid concerns over meddling in 5G networks, according to The Wall Street Journal. “The U.S. government has initiated an extraordinary outreach campaign to foreign allies, trying to persuade wireless and internet providers in these countries to avoid telecommunications equipment from China’s Huawei Technologies Co.” The report continues: “American officials have briefed their government counterparts and telecom executives in friendly countries where Huawei equipment is already in wide use, including Germany, Italy and Japan, about what they see as cybersecurity risks.”

— Added requirements: Google is beefing up its disclosure requirements for ad buyers ahead of parliamentary elections in the European Union. “To bring people more information about the election ads they see across Google’s ad networks, we’ll require that ads that mention a political party, candidate or current officeholder make it clear to voters who’s paying for the advertising,” Google EU public policy director Lie Junius wrote in a post. As MT has noted, U.S. lawmakers have stepped up calls for Google, Facebook and Twitter to boost their political ad disclosure rules.

— Real tech vs. fake news: The Wall Street Journal’s “The Future of Everything” series explores how artificial intelligence and voice recognition are being deployed to combat misinformation in real time.

— Spoiler alert: China has big plans for its development and deployment of artificial intelligence. Its not-so-secret weapon? Cheap labor, The New York Times reports.

— BuzzFeed News tackles the complicated link between online hate speech and real-world violence.

— The New York Times editorial board writes that “jihadists and right-wing extremists use remarkably similar social media strategies.”

— “Treated like a terrorist”: Google has settled a racial discrimination claim from a contractor who alleged he was treated like a terror suspect while working on research for Google Maps, The Guardian reports.

— Fear the freshman? Could Missouri Attorney General and incoming Republican Sen. Josh Hawley become Google’s fiercest critic in the chamber next year? ArsTechnica explores.

— Game of Phones: T-Mobile is offering up a revised rationale for its merger with Sprint, a twist that critics say shows its original arguments weren’t winning over U.S. authorities, Bloomberg reports.