| In today’s edition, how AI outgrew antitrust lawsuits and regulation, and big tech CEOs brush off fe͏ ͏ ͏ ͏ ͏ ͏ |
 | Reed Albergotti |
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Hi, and welcome back to Semafor Tech.
A long time ago, in a tech industry far, far away, Epic Games sued Apple and Google over their app store policies. Believe it or not, nearly five years later, Epic’s lawsuit against Google is still going on. The companies are set to make their arguments in front of the Court of Appeals for the Ninth Circuit on Monday.
Back then, in August 2020, Epic’s David vs. Goliath antitrust battle became a rallying cry for app developers who were fed up — mostly with Apple, to be honest — about anticompetitive practices and high fees on the app stores.
This was the height of the walled garden era and then-President Joe Biden was hard-pressed to sue Big Tech for unfairly wielding its monopoly power.
It’s a good time to reflect on that era as it closes with the exit of Lina Khan, former chair of the Federal Trade Commission and Biden’s antitrust weapon. The lawsuits brought by the government and private companies like Epic are reaching their conclusions.
And yet, the tech landscape has been upended. Most of those wary developers are probably making generative AI apps now. Nobody even talks about dusty, sleepy app stores anymore.
Predictably, it wasn’t laws and regulation that changed things. It was innovation. The current AI race, brought on by Microsoft and OpenAI with the release of ChatGPT, forced tech companies to jump into action, spending hundreds of billions of dollars on infrastructure and R&D.
If we ignore the specific legal claims made by Epic and government agencies, the purpose of the whole exercise was really one thing: Ensure that Silicon Valley’s behemoths don’t stifle innovation. It’s a legitimate concern, but big, powerful companies — even if they resemble monopolies — aren’t a hindrance to innovation if they are under intense competitive pressure.
But based on historical patterns of cases gone moot (Ref: antitrust litigation against Microsoft in the 1990s), it’s clear the US government has been reaching for the wrong knobs and levers to spur innovation. Instead of lawsuits and regulation, it could increase funding for basic scientific research and support startup ecosystems with more financial incentives and tax benefits. The list could go on.
The current AI race is the best antitrust tool currently available. If you want evidence of that, look at what happened last week when a small Chinese startup erased a trillion dollars of market cap with a single piece of open-source software. (Even if the market’s response was unwarranted).
Microsoft CEO Satya Nadella famously said he hoped AI would make competitor Google “dance.” Everybody is dancing now, and that means more innovation.
➚ MOVE FAST: Profit. Elon Musk’s X is expanding its gains since the US election, with Amazon planning to boost ad spending on the platform, The Wall Street Journal reported. Apple is also considering returning to X after pulling out in 2023 as advertisers fled over concerns around toxic content. ➘ BREAK THINGS: Loss. The iPhone maker is still struggling in its key Chinese market, posting an 11% drop in quarterly sales there. CEO Tim Cook told CNBC part of the problem was that Apple still hasn’t gotten the green light to release its AI tools in China.  Kevin Lamarque/Pool/Reuters |
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Copyrights and copywrongs. AI might need humans more than we need AI, at least when it comes to getting copyright protection for artwork. The US Copyright Office just provided some clarity on AI-generated works, indicating they can be covered under copyright law as long as there’s enough of a human touch, the office said in a report Wednesday. That human element can take the form of arranging and editing the output, or when an artist’s hand is “perceptible” in the finished product. While the office will look at pieces on a case-by-case basis, works resulting from a vague prompt where the AI model fills in most of the gaps will not receive protection.  Example of a work with significant human authorship that could receive copyright protection, according to the US Copyright Office.Filmmakers, musicians, and other visual artists have, in recent years, faced public blowback for their experimentation with AI tools. Academy Awards frontrunner The Brutalist is one such example, using AI to enhance the Hungarian-language speech and generate depictions of the fictional architect’s buildings, as we covered last week. By the copyright office’s definition, the use of AI doesn’t negate copyright protection, and the announcement clears a more official path for further AI use across artistic fields. |
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 Kevin Lamarque/ReutersWashington’s alarm over DeepSeek has sparked a US probe on whether the Chinese AI firm got backdoor access to Nvidia’s advanced chips through Singapore. Donald Trump’s incoming Commerce Secretary, Howard Lutnick, claimed this week that DeepSeek bought “tons of” GPUs despite bans on selling them to companies in China, emphasizing that he’d be “very strong” in putting an end to such alleged practices. Meanwhile, other regions of the world have also put DeepSeek on their radar: Italian authorities blocked access to its service in the app stores of Google and Apple over personal data collection worries. |
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 Making it in media is one thing — turning it into a profitable career is another. Kara Swisher knows how to do both. This week on Mixed Signals, Ben and Max call up reporter, editor, founder, and one of the world’s most successful podcasters, Kara Swisher, to talk about the business of media in 2025. She talks candidly about breaking away from traditional media, her own income, and even shares some unexpectedly kind words for Rupert Murdoch. Plus, an update on her bid for The Washington Post. |
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 Moore’s law. In the first week of tech earnings calls, CEOs shrugged off the threat of DeepSeek, all playing a similar tune that disruption is par for the course. “That’s part of the nature of how this works, whether it’s a Chinese competitor or not,” Mark Zuckerberg said Wednesday after reporting higher fourth-quarter and annual earnings, though he acknowledged they were “still digesting” the news that upended US tech stocks earlier this week. When asked about DeepSeek during Apple’s earnings call, CEO Tim Cook said, “Innovation that drives efficiency is a good thing,” adding that Apple has always taken a “prudent and deliberate” approach to its AI spending. Meta and Apple, which both reported higher earnings, are slightly shielded from DeepSeek’s ascendance, at least when it comes to their bottom lines. An overwhelming majority of Meta’s $48 billion in quarterly revenue came from social media ad sales, a market DeepSeek can’t touch yet. And Apple reported record-high revenues of $124 billion partly thanks to a bump in streaming and cloud services. The biggest loser was Microsoft, which saw its stock drop 6% on the heels of disappointing guidance. It will soon bring DeepSeek models to its personal computers, CEO Satya Nadella said during Wednesday’s earnings call. As powerful models that used to require cloud infrastructure start to run on PCs, “AI will be much more ubiquitous,” he said. “And so, therefore, for a hyperscaler like us, a PC platform provider like us, this is all good news as far as I’m concerned.” Microsoft’s dependence on software services highly integrated with AI makes it a bigger target — and potentially a bigger benefactor — of competitive models from China. Alphabet and Amazon report earnings next week, and Nvidia later in February. |
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  Elizabeth Frantz/ReutersPresident Donald Trump is taking the Republican Congress on an economic wild ride, Semafor’s Shelby Talcott and Burgess Everett report. Some GOP lawmakers are hoping they can still head off the tariffs, and a few complained about the conflicting guidance on government money, but most said they’re feeling little heat for the president’s moves. Not only is there little evidence that party legislators mind his muscular executive power, there’s plenty of signs that Trump-state Republicans are happy to take the ride with him. |
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