The UpStream

When AT&T purchased DirecTV in 2015, a lot of people were surprised by the purchase. The brand had been struggling for years and AT&T was not a player in the media space. The idea that AT&T thought that they could revitalize a brand that was completely outside of their wheelhouse was a concern for investors and DirecTV subscribers. In the 5 years since the purchase, things have only gotten worse. AT&T has been sued by investors and investigated by the government. The last resort for the brand was to sell the brand.

This week, it was revealed that there is almost no interest in DirecTV. According to The New York Post, initial bids have been incredibly low.

Opening bids from a coterie of buyout firms came in at around 3.5 times DirecTV's roughly $4.5 billion of EBITDA, implying a valuation at around $15.75 billion, according to a source close to the process.

AT&T is receiving bids in the $16 billion range, while they paid around $67 billion for the brand just 5 years ago. This would represent a fire sale on the level of Myspace, which was purchased by News Corp for $580 million and sold for $35 million. Despite this massive drop in valuation, AT&T is moving ahead with the sale, though they are hoping to receive a second round of bids.

Following this news, AT&T announced other issues related to the global lockdown in the media division. Layoffs in the thousands are headed to the entertainment division, including HBO, Warner Bros, and other WarnerMedia properties. At the beginning of the year, WarnerMedia had almost 30,000 employees. There were already layoffs earlier in the year, and now thousands more will be without jobs. In a statement, WarnerMedia said,

Like the rest of the entertainment industry, we have not been immune to the significant impact of the pandemic. That includes an acceleration in shifting consumer behavior, especially in the way content is being viewed. We shared with our employees recently that the organization will be restructured to respond to those changes and prioritize growth opportunities, with an emphasis on direct-to-consumer. We are in the midst of that process and it will involve increased investments in priority areas and, unfortunately, reductions in others.

All of this should be worrying for both AT&T shareholders and employees. Layoffs are not the sign of a thriving business, and AT&T has proven they have not been able to keep control over its acquired media brands. Sure, the lockdowns have changed the face of media, with production coming to a stop across the globe, but these troubles started long before the lockdown. With the confused HBO streaming brands, massive price increases, and more, the media aspirations of AT&T might be falling apart.

Anyone who regularly uses Yelp's rating service knows that user ratings should always be taken with a grain of salt. Far too often, user reviews are published by accounts that haven't been to the location, are associated with the business or a competitor, or over emphasize the negative impact of their experience. We've all seen a user rate a restaurant 1 star because the place setting was missing a fork, or because the server was a little slow to get water for the table during a busy service.

We've also seen a business get flooded with reviews from a social media mob trying to destroy the company because of a minor or unrelated issue. There are even businesses that, for a fee, will add negative reviews to a listing in order to damage its reputation. As we often say, whenever you create rules you create a game, and all games will have professional players.

It is those professional players which worry us with Yelp's newly announced feature. The company will now add a warning label to listings that have an uptick in reviews pointing out racist behavior, speech, or symbology. According to Noorie Malik, VP of User Operations,

Yelp's User Operations team already places alerts on business pages when we notice an unusual uptick in reviews that are based on what someone may have seen in the news or on social media, rather than on a first-hand experience with the business. Now, when a business gains public attention for reports of racist conduct, such as using racist language or symbols, Yelp will place a new Business Accused of Racist Behavior Alert on their Yelp page to inform users, along with a link to a news article where they can learn more about the incident.

Almost all tech companies (except maybe Coinbase) have spent the last 6 months trying to show how connected they are to the struggle for racial justice. However, whenever a company makes decisions quickly and without regard for the business model or user experience, bad things can happen, and that is where the potential for trouble comes in here. Professional or organized nefarious actors can easily use this new feature to completely destroy a business without any real evidence.

According to the company's own announcement, if a nefarious actor can get an article published about a negative experience and an uptick in negative reviews referencing racial discrimination, this warning could go into effect. Over the past 6 months, we have seen a huge influx in inaccurate racial accusations against individuals and companies, including attacks at restaurants across the country.

Because of the sensational nature of the events, the news covers these events on the local and national level. When "protesters" harassed and attacked restaurant patrons here in Saint Petersburg recently, it made the national news because of the nature of the event. Those attacking the patrons claimed that they were racist, without even knowing who the diners were. But, the event did create articles on reputable news sites referencing the racial nature of the complaints. If an uptick in Yelp reviews were to accompany this event, these restaurants, which were already defamed publicly, could see their reputations ruined forever because of a warning that has no basis in reality.

Of course, this has always been the problem with crowd-sourced ratings. However, there is a difference between knowing that a location's rating is based on user reviews, and seeing an official stamp from the company. The warning represents an official position from the platform itself. The problem is that there is no way that Yelp has a team that can accurately verify each one of these accusations. There won't be Yelp lawyers or compliance officers showing up to a restaurant to verify racially charged speech, or racially insensitive symbology. That task will fall to operations employees in Yelp offices.

The other issue at hand is the ever-changing definition of racism. Merriam-Webster defines racism as the belief that one race is better than another or the behaviors that support the belief. Today, the definition is fluid, meaning something different to different people. As such, not having a clear working definition of what constitutes racist speech or behavior means that it will be open to the interpretation of the employee reviewing the listing. Inconsistency in this area, which can directly affect the livelihood of dozens of people, should not be acceptable to anyone.

In addition, the company has been unclear about the process for a business to clear the alert and any media coverage from their business's listing.

When Epic Games sued Apple, it looked like the fight would center on Fortnite. But, Apple decided to expand the ban against Epic Games, revoking the company's developer license effective at the end of their month. This move had a significantly bigger impact than just preventing iPhone owners from playing one of the most popular games in the world. It meant that everyone who uses Unreal Engine to build their apps and games for iPhone, iPad, and macOS, would lose that core. To express just how important Unreal Engine is to the software world, even GMS's new Hummer uses it for the infotainment system.

This week, Judge Yvonne Gonzalez Rogers of the US District Court for the Northern District of California ruled in favor of both companies. The court upheld the injunction against Epic Games, allowing Apple to keep Fortnite out of the App Store but also put in place a permanent injunction against Apple, preventing them from blocking Unreal Engine.

There was little chance that the court would put in place a temporary stay of the ban against the game, but it is a good thing to see that Apple cannot harm Unreal Engine. So many apps and games use Unreal Engine to build their products that this move would have negatively harmed most of Apple's customers almost immediately. While it was designed as a gaming engine, it has been used for drone flight controllers, enterprise applications, and now even vehicle computer systems.

This is still just the beginning of the battle between these two companies. The next major court date will be in May 2021, when the primary issue will be heard. That case will have lasting ramifications to the mobile world, no matter which direction the ruling goes. We also expect whichever company loses to appeal until the Supreme Court weighs in. With that said, this court case could pend for a long time, if Google and Oracle is any indication.

When it comes to the mobile world, there is an important battle heating up over the way developers and users are treated. As time goes on, sides are forming and unlikely allies are building. Some companies have been incredibly outspoken, like Epic Games, which went so far as to sue Apple over its billing policies. Facebook and Microsoft spoke out over Apple's gaming policies.

It seems most publishers would like to see the option for external stores introduced to Apple's iOS ecosystem. Google's Android allows for external stores, such as Samsung's Galaxy Store or Amazon's Appstore, but on iOS, Apple is 100% in charge like Marcus Lemonis. Microsoft, whose ecosystem has always been an open one, decided to call out Apple's policies without calling them out.

In a blog post, the company put forward what it considers to be an essential set of principle - its "app fairness" policy. The first commitment is that Microsoft will never prevent alternate distribution methods. Sure, Windows 10 S restricts installation to the Microsoft Store, but that is a security feature, which can be turned on or off. If you want to install software from the web, you can. If you want to install a competing store, Like Steam or Epic Games Store, you can. The computer is yours, not Microsoft's.

The most blatant commitment, though, is their commitment to not block an app or a developer because of the payment method they choose. That issue has been at the heart of the Epic Games battle, which also had some motion this week. Epic does not want to pay Apple 30% of its sales for the privilege to use a payment system they don't want to use.

The company also promises to revisit these core principles regularly in order to evaluate its fairness against current legal requirements and developer feedback.

A little over a decade ago, Oracle followed what seemed like every other tech company and filed suit against Google. While it was the popular thing to do at the time, Oracle's suit was different from everyone else's. Oracle claimed that, in Google's implementation of Oracle's Java programming language for Android, they duplicated protected API interfaces. Google argued that the API surfaces, or the outer structure that defines the methods and arguments for those methods, were publicly available and, therefore, not protectable.

The Details

This is an unbelievably complicated topic that requires further explanation. In particular, let's discuss some of the terms which have been at the center of this court battle. The first and most important term is API. An API, or Application Programming Interface, is a collection of code with publicly exposed methods for a system's operation. Generally, when we discuss APIs, we talk about web APIs also known as web services. A lot of web services are intended for public consumption, and so their structure is publicly known.

In the Oracle and Google case, the API is very low level, including basic math functions. The idea of creating a method to find the maximum value or a number is far from unique. However, creating a class called Math in a namespace named java.lang, with a method named max with two arguments, both doubles, named E and PI, is unique. The structure was designed by the Java language team, which Google duplicated in order for Java to be used to develop for Android. That's because Oracle does not make the implementation of Java available to the world. But, because of the nature of APIs, the surface is publicly documented.

The programming surface is the most outer aspect of the API. It is the part that is exposed to programmers. It includes the namespaces, the classes, the methods, and the arguments. Even with fully compiled and signed code, the programming surface is exposed. There is no way for an API to be useful if you cannot discover, one way or another, the structure of the surface. Everything under the surface, however, is protected. That means that the implementation is private, and the code behind the implementation is copyrightable. The case, however, is all about whether or not the surface itself is also copyrightable.

The Case

Over the past ten years, this case has seemingly landed in every court possible. This week finalized that legal tour, with Google and Oracle arguing their cases in front of the final word in US law - the United States Supreme Court. The court, which currently has 8 sitting Justices, heard the case presented by both sides and will before the end of their current term. Under normal circumstances, there are two likely outcomes, but under these current circumstances, there are three.

The first likely outcome is that Oracle wins outright, setting a national precedent in favor of code protection. This would mean that developers can protect their general program code, as well as their interfaces. The second likely outcome is that Google wins outright, setting a national precedent in favor of code ubiquity. This could mean that, not only are programming interfaces lose protection, but code as a whole could as well. The third possibility, which is created by the even number of Justices, is a tie. In this fairly unusual scenario, the ruling would default to the previous court's ruling, but would not set a national precedent, meaning that different jurisdictions could relitigate the case. The previous ruling was in favor of Oracle.

In addition to national precedent, which is important to the developers of the country, Oracle is looking for a licensing fee to subsidiary Sun, which is responsible for the Java ecosystem. Sun licenses the Java language and ecosystem as its primary business model. A decade worth of overdue licensing fees for billions of instances of Android across the world could cost Google billions or tens of billions of dollars.

The Arguments

With a case this important, being argued in front of the most important court in the country, with potential repercussions beyond what we currently understand, you would expect that both sides would bring their A-game. However, Google appears to have gone a different direction. In fact, legal scholar James Grimmelmann of Cornell University said of Google's attorney Thomas Goldstein,

He did an abysmal job. At the level of nuance he was willing to get into, his case was a loser. The only way to make it stick is to be nuanced about what it means to declare code.

Nuance was the key to this case. How do you argue that some parts of a software system are protectable but other parts are not? You have to describe in nearly excruciating detail just how different these two aspects of software are. But Goldstein's primary argument was that an API method like Math.max was a "method of operation" because programmers "operate" the Java language through invocations of these interfaces. This seems like an important distinction because Section 102(b) of the Copyright Act, the centerpiece of the case, states that an "idea, procedure, process, system, method of operation, concept, principle, or discovery" cannot be copyrighted.

Google's argument falls apart immediately, however, because any function, including private functions, can be described the same way. That would mean that no software could ever be copyrighted, meaning that software clones (which is where someone steals the code of an app and publishes it under their own name) would be entirely legal. It also means that the entire law, which is intended to allow developers to protect their work, has zero value. Justice Samuel Alito summed this up well, saying,

I'm concerned that under your argument, all computer code is at risk of losing protection under 102(b). How do you square your position with Congress' express intent to provide protection for computer codes?

Goldstein was not able to articulate a position in which the two types of code were different, essentially undermining his own case. Justice Brett Kavanaugh, the last to ask questions because of his position on the court, brought up that Oracle's lawyer said,

...declaring code is a method of operation only in the same sense that computer programs as a whole are methods of operation, and that therefore your method of operation argument would swallow the protection for computer programs.

He followed up by asking Goldstein,

You're not allowed to copy a song just because it's the only way to copy a song. Why is that principle not at play here?

The Conclusion

The Court has not yet ruled but will need to by the end of their current session. There is no clear indication which way the court is leaning, though at least some of the Justices seemed unconvinced by Google's arguments.

If you've missed the news about alternate fuel vehicle brand Nikola, it's been quite a wild ride. The company has been exposed for being a Theranos-level fraud in all aspects. The design of their flagship truck was stolen from the 2010 concept by designer Adriano Mudri, who is now the head designer for the Croatian automaker Rimac. This is following a lawsuit against Tesla, claiming the company stole the design from them. Then, a partnership was announced with GM to produce the vehicle. Within short order, it was revealed that the sizzle video that was everywhere, showing the truck in operation was also a fraud.

Things have just gotten worse from there. The GM deal, which was supposed to be finalized this week, has not and potentially will not close at all. GM has come under fire for accidentally supporting a company that has no product and is under legal scrutiny on every front. But, it is all about that video - which has become a topic of much conversation, both in the technology space and in the investment space.

Investors are seeing another Theranos, with a founder that is under fire, and a company with high theoretical value based on nothing but lies. In discussing the topic, many commentators have included the clip of the truck rolling down the hill by gravity, which has been the center of the controversy. Including this clip is an important aspect of the news reporting, as it shows just what the company did to defraud investors and partners. However, the company has been using the Digital Millenium Copyright Act (DMCA) to issue takedowns against those who include the clip.

Many of the uses, including one from Sam Alexander, fall under fair use, but YouTube took the video down and hit Alexander with a copyright strike. That could ultimately affect the channel's monetization and reach, even though he did nothing wrong. Filing an invalid DMCA notice is illegal, and in Nikola's case, could also violate SEC guidelines in trying to hide fraudulent activity. Nikola founder Trevor Milton resigned as executive chairman but could be facing the same future as Elizabeth Holmes, as the cases are incredibly similar.