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Wait, there’s supposed to be a gadget repair market?

July 22, 2021, 4:37 PM UTC

The Federal Trade Commission yesterday unanimously approved a policy saying people should be able to easily repair their own technology, and outlined how the government could enact future regulations to achieve that goal.

It was a warning to companies that glue together smartphones so they can’t be opened, charge exorbitant fees for replacement parts, or greatly limit who can fix a device. (In short, Apple.)

It’s a big moment for the Right To Repair movement, but one word from the document really stands out. In the statement’s last sentence: “market,” as in repair market.

Now this is the FTC—to it, everything is a market. But the implication of creating true competition in smartphone, tablet, or computer repairs and upgrades would be a radical shift.

If you want to fix an iPhone that’s in warranty, you have to go to Apple or an Apple-authorized repair shop. Apple also requires that repair shops make their financials available for Apple to review, pass tests for proper repair, and to open a line of credit with Apple Finance. Only then can the shop even buy genuine Apple-made parts, which Apple can still sell at whatever price it chooses.

Even repair shops that want to buy Apple parts to fix phones out of warranty must sign historically-draconian contracts. One contract stipulation, Motherboard reported in 2020, stated that if a shop used more than 2% of non-genuine Apple parts, it could be fined $1,000 per transaction and reimburse Apple for the cost of the audit that uncovered the supposed malfeasance, too.

This is only half of it. We’re going to pick on Apple a little more, since it’s the biggest offender among makers of popular consumer tech products. The company throws up a ton of roadblocks for repair shops to fix the devices it makes. And by Apple setting the cost for genuine parts, phone repairs even at authorized repair centers can be more expensive, too. Suddenly, the most cost-effective way to ensure you don’t foot the bill for a $300 repair is to buy the company’s AppleCare insurance, which highly subsidizes the cost of common repairs like screen replacements.

Apple has a rationale for these stringent rules. It has argued that making these repairs itself and by thoroughly-vetted providers ensures high-quality parts are used, and maintains the quality the company is known for. Apple has also argued against Right to Repair legislation, saying it could force companies to give up trade secrets.

Let’s get back to that word “market.”

Independent repair shops, even companies like Best Buy that offer repair services, aren’t in any meaningful competition with Apple, that ever-important word when defining a market. Apple makes the parts, sells the parts, sets the prices, and on top of that commands huge customer loyalty. If Apple says it’s the only one that can repair an iPhone, people listen.

This sets up the FTC for an uphill battle. If commissioners are serious about encouraging a bigger repair marketplace, the FTC must seriously regulate how companies make their products and sell parts. That means taking on some of the most powerful tech companies, which have been working against the Right to Repair for years.

Dave Gershgorn 
@DaveGershgorn

Correction (July 21. 2021): Yesterday’s version of this newsletter misstated the number of merchants on Square. The company said there are “millions”.

NEWSWORTHY

Shifting tides. About 50% of tech workers said they were somewhat or very interested in joining a union, according to a survey by news publication Protocol and market research firm Morning Consult. A similar number said they were aware of unionization rumblings at their own company. This trend follows unionization at tech companies from Alphabet to Kickstarter, and less formal worker organization at other tech giants like Amazon and Microsoft.

A day late. Facebook has banned the hashtag "#VaccinesKill" from its platform, CNN reports. The only problem is that Instagram, which Facebook owns, banned the hashtag two years ago. It's another example of Facebook's uneven content moderation policies, and more ammunition as the Biden administration hammers on the social media giant for facilitating the spread of misinformation.

A 'frat bro' culture off the rails. One of the world's largest gaming companies, Activision Blizzard, is facing a lawsuit alleging that male employees subjected female employees to extreme sexual harassment, discrimination, unequal pay, and retaliation. One female employee referenced in the lawsuit killed herself during a work trip with her male boss. The suit alleges nude photos of her had been previously passed around at a company holiday party.

Robot chauffeur on its way. Self-driving car firm Argo AI and investor Ford are adding 1,000 self-driving cars to Lyft's ride-hailing network over the next five years, TechCrunch reports. The cars are currently being tested in Miami, and will slowly be distributed to Austin, and then other unnamed cities. Argo AI also tests in Washington D.C., Palo Alto, Calif., Pittsburgh, and Detroit.

FOOD FOR THOUGHT

Behind the curtain of NSO Group. You might have heard of the mysterious Israeli startup NSO Group, as investigations continue to dig into its omnipresent spyware located on the devices of presidents, state officials, journalists, and dissidents. The Washington Post digs into the founding of the group in a new profile of one of its founders, CEO Shalev Hulio, and shows how the company got into the spyware business.

Hulio has acknowledged that some of NSO’s government customers had misused its software in the past — describing it as a “violation of trust” — and said NSO shut off five clients’ access in the past several years after conducting a human rights audit, and had ended ties with two in the last year alone. Hulio said he was bound by strict confidentiality agreements with law enforcement agencies that prohibit him from naming clients or describing their activities. He said he could not name the country or agency that initially approached him in Europe because it later became a client.

But two people familiar with the company’s dealings said the clients that have been suspended include Saudi Arabia, Dubai in the United Arab Emirates and some public agencies in Mexico. One of the people said the Saudi Arabia decision was a response to the Khashoggi killing, and two others said that Mexican agencies continue to use another NSO product designed to help first responders in search-and-rescue missions.

IN CASE YOU MISSED IT

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Tech can’t solve death. But startups increasingly want to help with what comes after by Stav Dimitropoulos

The Delta variant causes 83% of U.S. COVID cases. See the states where it’s most prevalent by Erika Fry and Nicolas Rapp

Rent the Runway’s IPO filing marks a return to parties by Mike Hofman

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BEFORE YOU GO

Robinhood's big experiment. The founders of Robinhood, an app for buying and selling stocks, are trying something a little different for their company's IPO. Up to a third of the stock offered in its IPO will be available to users of its app—around $770 million of its shares. The New York Times notes that this is extremely unusual, as companies typically reserve only 1% to 2% of their stock for customers.

“We recognize that for many of you this will be the first I.P.O. you have had a chance to participate in,” [Robinhood founders] Mr. Tenev, 34, and Mr. Bhatt, 36, wrote in Robinhood’s offering prospectus. They added that they wanted to put customers on an “equal footing” with large institutional investors.

 

The Software Revolution Sweeping the Digital World

In a digital world, the ability to code – to train a computer, using its own language – is key, hence the enormous push to make people literate in programming languages. “Don’t just play on your phone,” urged President Barack Obama in 2013, “program it.” But the demand for digital applications outstrips the programming talent, especially during COVID-19, when digital accessibility is a necessity. Enter low-code and no-code application development: Platforms where software is configured visually, using drag and drop interfaces. They’re faster and cheaper to use than traditional coding, but how well do they work? 

On today’s Brainstorm, Brian O’Keefe and Fortune’s Robert Hackett discuss the promise of low-code and no-code platforms, and how they've stood the test of emergency situations brought on by the COVID-19 pandemic.

Laela Sturdy is a general partner at Capital G, Alphabet’s growth equity investment fund, which helps growth-stage tech companies scale. She says the power of these platforms is to enable creators and non-technical people to access the power and magic of code. 

Michael Beckley is the Chief Technology Officer of Appian, the first company to go public as a low-code vendor. He says low-code has the power to deliver to clients perfectly tailored software in half the time. 

Also in this episode, Veronica Soto, director of San Antonio’s Neighborhood and Housing Services Department describes digitizing an entire rental assistance program in a week, at the outset of the pandemic, in partnership with low-code platform Mendix. Listen to the podcast here.

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