On Apple’s abuse of power, the crisis in tennis, the genius of Amartya Sen, and the workings of DARPA

Interesting Links: August 23, 2020

1. Apple, Epic and the App Store by Ben Thompson at Stratechery. Epic Games initiated legal action against both Apple and Google about their allegedly anticompetitive practices when it comes to payment processing for apps on their app stores. It’s yet another large ‘cry for help’ from many companies and developers around the world against these two (Apple in particular.)

   The article talks about how Apple leveraged its control of payment processing, which was based on its control of app installation, which was based on its control of the operating system, into complete ownership of the customer relationship.

   The article notes that this was all known (even if not truly appreciated) from day one - when Steve Jobs introduced the App Store back in 2008. There is one additional point of contention which is in this video but not dwelled on in the article: the App Store is the “exclusive” way to distribute apps. In practice, there is no way for a consumer to install an app without jailbreaking their iPhone. There is no alternative to the iPhone.

   But as the article notes, the increasingly aggressive vertical integration employed by Apple isn’t helping anyone:

   “Users are confused, these big developers get fewer customers than they might have otherwise, while Apple’s overall iPhone experience is degraded. The ones that really lose out, though, are smaller developers whose cost structures cannot support Apple’s 30% cut, yet don’t have the brand awareness to enable customers to find their websites.”

   The article does admit that in the Epic Games lawsuit, “the most likely outcome is an Apple victory — the Supreme Court has been pretty consistent in holding that companies do not have a ‘duty to deal’.”

   Ben Evans also wrote about this with the most predictable opinions possible from him.

   Separately on Epic’s lawsuits against Apple(pdf) and Google(pdf) itself:

   Epic is represented by some heavy hitters at Cravath - Christine Varney and Katherine Forrest among others. Epic isn’t seeking monetary damages but is seeking injunctive relief.

   Unlike with Apple, technically Google does allow users to install apps from a source other than the Play Store. Hence the complaint against Google specifically addresses this point. For example, Epic had a deal with OnePlus to make its games available on their phones through its own Epic Games app. However, Google forced OnePlus to renege on the deal. Similarly, LG told Epic that its contract with Google did not allow it to enable direct distribution of apps.

2. The New Yorker writes about the many issues that plague the world of tennis today. It’s a good read in the build up of the US Open, which has been mired in its own controversies.

   “Prize money has skyrocketed at the slams—the U.S. Open has more than doubled its purse since 2012—but it is still understood to be between just twelve and fifteen per cent of tournament revenue…. [I]]n the N.B.A., for example, player compensation is now equal to roughly fifty per cent of league revenue, per the league’s collective bargaining agreement.”

3. Great conversation between Amartya Sen and Angust Deaton(*pdf). Many great anecdotes about Joan Robertson, and in particular about how Sen looked at the Bengal famine of the early 1940s.

4. Ben Reinhardt on how DARPA works so well and how one could build a similar model for innovation. It’s a very long read, but the “Distillation” covers all the major points and is a quick read.

   Broadly, the 100 program managers are key, with the responsibility to pursue high-level visions like “actualize the idea of man-computer symbiosis.” But that’s almost begging the question and not particularly insightful. And the author’s comments like hedge fund analysts fit the profile for good DARPA PMs rings hollow, to put it very mildly.

   I wish there were actual case studies of individual DARPA PMs (other than the favourite example of everyone in tech, J.C.R. Licklider) because as it stands, the article reads much more like the author’s own biases. Similarly, a comparison to how this differs with any other (successful) past corporate research lab structure, like at Xerox PARC or the early years of Fairchild Semiconductor, and so on. Would he consider the efforts of Stuart Brand to have been successful or not? How does that differ from his DARPA PM thesis?

   To what extent does being a government entity play into DARPA’s success? Are they better able to capture innovation in areas they want when they want it?

   Any analysis on the variance among PMs? Or are we to consider them similar for all practical purposes? As the author states, only 5-10% of programs successfully produce transformative research. Any commonality or differences between those 5-10 vs. the other 90-95? Or are the 100 ‘perfectly’ chosen and the high-risk nature of the projects themselves reflected in that success rate?

   According to a former PM, DARPA avoids hiring people with a significant web presence. But again the author then states “people with a strong web presence tend to be focused on playing status games or at least are in a world where they realize that their career depends on public perception of their output.” No backing for this massive claim. Let’s get Robin Hanson to argue both sides of whether Tyler Cowen plays status games through his web presence. Also, why single out web presence here? Why not any public presence?

   The author writes “I think it’s foolish to try to find patterns among outliers because outliers are outliers in different ways except in the most broad strokes.” Yet the author then proceeds to write staggeringly sweeping, prescriptive conclusions about innovative research models.

   At the end of the day, there are many details in the DARPA program, none of which are individually surprising. But is it that specific collection of features that makes it successful? Which of these features might detract from it? It’s really difficult to reach any conclusions based on such an ‘analysis’ (which is not at all comparative, yet somehow trying to be very prescriptive). But it got me reading and thinking, so it’s worth sharing! And studying things like DARPA certainly seems worth some effort.

5. Zak Brown on his McLaren F1 team. Strictly for F1 fans only, but this is a hilarious, long interview with the clown Zac Brown who heads the McLaren F1 team. This is more about how the top bosses at top F1 teams do not operate, rather than how they actually do operate. But entertaining read for F1 fans.