Qualcomm has just reported its earnings for the March quarter, and one of the most interesting aspects is its commentary on its dispute with Apple. It says that Apple’s suppliers reported but did not pay around $1 billion in royalties in the quarter, which exactly offset the $1 billion Qualcomm is refusing to pay Apple under the Cooperation Agreement the two companies have, and which Qualcomm says Apple breached. Importantly, that Agreement ended in December, so there are no more payments to be withheld, which means if Apple suppliers continue to withhold royalty payments, they’d affect Qualcomm financially going forward in a way they didn’t this past quarter. As such, it’s given a wider EPS guidance range (25 cents) than usual (it was 10 cents in the last two quarters, for example) because of the uncertainty over these royalty payments (the math here is tricky but I reckon that’s about a $400m range in net income terms). Beyond the Apple dispute, the results are a little tricky this quarter because on paper they look terrible, with revenues and profits way down over the same quarter last year. But that’s partly because Qualcomm had to reduce from its GAAP revenues the nearly one billion dollars it’s due to pay BlackBerry as a result of arbitration between the two companies. The actual results are much better, in keeping with recent trends at Qualcomm, lawsuits aside.
Google Details Processes but Not Data in Response to Department of Labor Accusations Over Equal Pay (Apr 11, 2017)
Last week, the Department of Labor accused Google of violating equal pay laws, in the context of an investigation into compliance as a result of Google’s work as a federal contractor. Google pushed back hard against those allegations immediately, but has now released a more detailed statement through its blog. That statement outlines the processes Google has in place to ensure fair pay, through the use of salary setting processes in which analysts calculating compensation packages don’t know the gender of the person for whom they are setting the salary, and other mechanisms to ensure fairness. What Google doesn’t do in this post is say what the current ratio of male to female pay is at the company, or share any other numbers to back up its claims, which is a bit surprising. The DoL claims to have found massive disparities in pay and systemic bias against women, so one would have thought the simplest way to rebut those accusations would be sharing some data, which Google hasn’t done publicly (though presumably feels it has done as part of the investigation). The DoL, meanwhile, continues to seek more data which Google refuses to provide, hence the lawsuit. As I said last week, given the issues over diversity and equal pay in the tech industry generally, it wouldn’t be enormously surprising to find that Google exhibited some of the same problems, but if evidence of significant issues does emerge, it would be more damaging to a company of its size than a smaller one with less of a reputation to maintain. So far, though, neither side is releasing data that would allow independent observers to draw their own conclusions.
Qualcomm Files Response to Apple Lawsuit (Apr 11, 2017)
Qualcomm has now officially filed a response to Apple’s lawsuit over anticompetitive practices and breach of contract, including both answers to the specific allegations in the suit and a number of counter-claims. One of the main counterclaims is that, by “inducing” regulators to look into Qualcomm, Apple breached the companies’ “Cooperation agreement” and therefore was no longer entitled to certain payments it had received previously. The document further alleges that Apple made many false statements in the course of both its own suit and the discussions it had with regulators, and tried to insert itself into relationships between Qualcomm and other Apple suppliers. Perhaps most interestingly, Qualcomm brings to light something which was covered in the press at the time but didn’t get much attention: the allegation that Apple deliberately hamstrung the Qualcomm chips in the iPhone 7 such that performance would be consistent with those models that had Intel modems, and then prevented Qualcomm from talking about it. On the face of it, that allegation has nothing to do with the broader allegations, but it’s an area where Apple’s public reputation could be vulnerable, and I’m guessing it’s been included in the suit to garner more attention than Qualcomm would get through focusing on the patent and other issues alone.
Google accused of ‘extreme’ gender pay discrimination by US labor department – The Guardian (Apr 7, 2017)
The Department of Labor is suing Google over an alleged failure to adequately disclose its compliance with equal opportunity laws as a federal contractor. During the course of the court case, the DoL has accused Google of having a significant gender pay disparity, something Google strongly denies. Were the allegations to be true, it would be extremely damaging for Google’s reputation as an employer, but given that Google hasn’t given the DoL all the documents it’s asking for, you have to ask whether the Department has a full picture of Google’s pay practices. Google, in turn, has argued that the DoL has gone too far in its request for documents and that it has already adequately complied with the applicable regulations. Recent surveys have shown significant gender and race pay disparities within the industry, so it wouldn’t be surprising if those patterns held at Google too, but it claims its own data shows no such disparity. The court case will presumably eventually come down one way or another both on this question and whether Google has adequately complied with regulations, so it’s worth keeping an eye on how this develops.
via The Guardian
The Trump administration no longer wants Twitter to reveal the owner of an anti-Trump account – Recode (Apr 7, 2017)
Just a quick update on yesterday’s item about the USCIS’s fight with Twitter over revealing who was behind an account critical of the administration. It appears the administration has now backed off and so the lawsuit Twitter filed has been ended as well. What I’d love to know is why – whether calmer heads prevailed and someone in the government realized this was a fight it couldn’t win, or something else happened. Either way, what would have been a big test for Twitter and the administration now won’t be.
We finally have a fleshed-out response from Uber to the Waymo lawsuit over stealing of LIDAR technology, and it doesn’t do much more than muddy the water over this issue. The biggest sticking point here is that Anthony Levandowski, who is alleged to have stolen files from Waymo before he left and used these to develop LIDAR technology at Otto and then Uber, refuses to cooperate with the investigation, and Uber refuses to compel him as an employee to cough up the files. Uber also argues that its LIDAR design is different in key respects from Waymo’s and therefore that it clearly hasn’t been copied from it. The judge seems to be highly skeptical of Uber’s claimed inability to do anything with regard to the Levandowski files, and seems minded to grant at least a temporary injunction against Uber’s LIDAR technology. Uber’s claims that such an injunction would significantly harm its business seem like nonsense – this technology has nothing to do with its core business today and is merely being tested in a few cities. A longer-term injunction would obviously be more damaging because it would stop Uber from advancing the technology, but in and of itself that’s not a valid argument against such an injunction should the judge determine that the design was copied. Lots more to come on this, no doubt.
via Business Insider
A new front has just opened up in the war between the Trump administration and the tech industry: Twitter is suing the government after it attempted to compel Twitter to reveal the identity of the people behind the @Alt_USCIS Twitter account. That account is allegedly maintained by employees of the US Citizenship and Immigration Service and has been highly critical of the Trump administration and its policies on immigration. In and of itself, that seems like no legal justification at all for unmasking the account’s owners, and that’s why Twitter is pushing back on free speech grounds. But the legal hook here may be that the account is using the name of the agency in its Twitter handle, and as such might just possibly be in contravention of trademark or copyright law, or anti-impersonation regulations. Regardless of the reasoning, this sets up yet another fight between the tech industry and the administration, though in fairness Twitter had resisted some earlier attempts by the Obama administration to get at the people behind accounts as well. It’s also an important test of one of the key tenets of Twitter’s value proposition as a free speech platform.
This piece is sadly short on details and on comment from Apple, so we have to read between the lines a little bit to see what’s happening here. My guess is that this lawsuit from the Australian competition commission concerns Apple’s practice of disabling phones which have had their screens tampered with when that process involves the Touch ID sensor and its associated secure enclave. Apple does this in order to preserve the security of that system, but to an end user or repair shop it just looks like Apple is trying to keep the repair business to itself. Some US states have been pushing right-to-repair laws to deal with this kind of situation, and Apple has been pushing back, arguing that there are security issues at stake. The problem is that Apple often charges a lot more for either AppleCare or the repair itself than third parties, so the optics are bad even if the reasoning is sound. I suspect Apple is going to be dealing with a lot more of this kind of thing, and this Australian case will be an important test of how effectively Apple is able to fight its corner.
This feels like something of a slime ball move on Uber’s part on two fronts: firstly, trying to move the court case with Waymo out of open court and behind closed doors; and secondly, essentially trying to push the case off its back and onto Levandowski’s. I had said previously that the course was going to be fascinating for the details it would provide about how Uber developed technologies and how it would defend against what look like fairly solid allegations, but if it gets its wish here we won’t get to see any of that. But I think it’s the attempt to make this a case about an employee rather than the company that seems particularly sleazy – if the allegations are indeed true, then Uber and not Levandowski benefited the most, and making this seem like a dispute between an employee and former employer feels like a total misrepresentation.
via USA Today
Apple Joins Group of Companies Supporting Google in Foreign Email Privacy Case – Mac Rumors (Mar 14, 2017)
Given the way other big tech companies had weighed in on the related Microsoft case over the past few years, it was a little odd that more hadn’t sprung to Google’s defense in this one, but it’s good to see that they are now doing so. These cases have far-reaching consequences not just for user privacy but for the ability of US companies to do business in overseas markets, and those companies need to defend themselves vigorously. The final outcome of both cases is therefore worth watching closely.
via Mac Rumors
Alphabet’s Waymo filed an injunction against Uber for allegedly stealing intellectual property – Recode (Mar 10, 2017)
The fact that Waymo is suing Uber isn’t new, but this new step of filing for an injunction is, and that’s important because it could speed things up considerably. Judging the case in full could have taken months if not years, but a request for an injunction will involve convincing a judge in a much shorter space of time that there’s enough merit to the case for him or her to intervene in the near term. So we’ll know rather sooner how solid Waymo’s case here is, and will likely also get additional details from both sides about exactly what’s been going on. Importantly, we’ll get more from Uber than its brief initial statement about the accusations being baseless, which will be intriguing because from where I sit the forensic evidence looks fairly compelling. As I’ve said before, though, the toughest aspect of this for Waymo and its lawyers is proving that Levandowski actually used the files he downloaded rather than simply his memories of work he’d previously done.
Just a quickie here – Apple has now sued Qualcomm in the UK too, on top of its existing suits in China and the US. There’s not a lot more detail in this article or, apparently, in the court filing itself, but the thrust of the UK case seems to be the same as in the other cases already filed.
Uber’s self-driving unit quietly bought firm with tech at heart of Alphabet lawsuit – Reuters (Mar 1, 2017)
This is an interesting angle on the Uber-Waymo lawsuit over the alleged stealing of LiDAR technology by Anthony Levandowski – it appears Levandowski’s Otto acquired a company which specialized in LiDAR technology before it was itself acquired by Uber, providing an alternative theory for how the company was apparently able to get up to speed so quickly on the technology. One of Waymo’s key arguments in its suit was that Levandowski appeared to make unreasonably rapid progress on LiDAR following Otto’s founding, and that the only explanation was theft of ideas, designs and so on from Waymo. As an interesting side note, see also this newly-released October 2016 interview with Anthony Levandowski from Forbes, in which he somewhat bizarrely volunteers the information that he didn’t steal any IP from Google when he left. He also talks through his long history with autonomous driving technology, which raises a key point here: clearly Levandowski learned a lot about this technology over the years, and taking that knowledge with him to a new employer clearly isn’t stealing. So how does Waymo prove in court that Otto/Uber used the documents he allegedly downloaded rather than his personal knowledge (or technology from somewhere completely different) in designing LiDAR systems? If you know the best way to build a LiDAR system because you’ve done it before, are you obligated to act as if you have no idea how to do it when you move to a new employer? I’m not a lawyer, but I think some of these questions are fascinating, and are likely to be critical in this case.
Apple, tech leaders will side with transgender youth in upcoming Supreme Court case – Axios (Feb 24, 2017)
This is a nice scoop for Ina Fried, who just moved from Recode to Axios. But more importantly, the news itself is a significant escalation of the comments several tech companies made this week about the Trump administration’s policy on transgender students and bathrooms in schools. This would now be the second time in as many months that several major tech companies find themselves on the opposite side of a high profile legal case from the new administration. What a massive turnaround from those first weeks after the election, when tech companies seemed afraid to say anything negative about the new US government.
Waymo Sues Uber over Stealing of Confidential Information (Feb 23, 2017)
Alphabet autonomous driving subsidiary Waymo is suing Uber and its Otto subsidiary over alleged stealing of confidential information by Anthony Levandowski, who was one of the early executives at Waymo and subsequently left abruptly in early 2016 and immediately unveiled a self-driving truck company, Otto. That company, in turn, was acquired just a few months later by Uber. Waymo has done some fairly detailed investigate work that’s outlined in the complaint, and discovered that six weeks before Levandowski’s resignation, he downloaded lots of files from Waymo’s servers, and it argues that these in turn informed Otto’s (now Uber’s) LiDAR designs. As this blog post from Waymo says, fierce competition in autonomous driving technology is a good thing – it’s pushing the market forward rapidly and leading to some great innovations that should benefit consumers. But there are obviously lines companies shouldn’t cross as they compete, and this would be one of those, if it’s proven to be true. This is the second lawsuit in recent weeks involving employees moving between autonomous driving companies – the first involved Tesla and a startup. In both cases, the allegation is in part about stealing proprietary information. Given that Uber is already dealing with the fallout from a sexual harassment and discrimination blowup in the past week and still reeling from the #deleteUber campaign, this is terrible timing, but may also be a sign that the company’s aggressive stance on competition is hurting it in more ways than one.