With help from Kellie Mejdrich, Brian Faler and Sam Sabin

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— It’s (still) Infrastructure Week: Senators will likely vote late Monday on the infrastructure package, but couldn’t work out a deal to carve out software developers and others from a new cryptocurrency tax reporting requirement.

— FTC wants a do-over: The agency urged the full 2nd U.S. Circuit Court of Appeals to reverse a decision favoring 1-800 Contacts in a novel antitrust suit involving trademarks and online search ads.

— Unredacted: Google considered buying Epic Games to keep other developers from following the Fortnite-maker’s lead in launching popular apps outside the Google Play Store, according to newly unsealed court filings.

IT’S MONDAY, AUG. 9. WELCOME TO MORNING TECH. I’m Leah Nylen, MT special guest star, hanging in the land of Sen. John Sherman (R-Ohio) this week. Might visit his Memorial Gateway later for kicks. Send me your favorite central Ohio landmarks at [email protected] or on Twitter, @leah_nylen.

Got an event for our calendar? Send details to [email protected]. Anything else? Team info below. And don't forget: Add @MorningTech and @PoliticoPro on Twitter.

SENATE STALLS ON CRYPTO BROKER CARVE-OUTS — Senators continued to wrangle parts of their huge bipartisan infrastructure package this weekend, as digital currency advocates unsuccessfully pressed for last-minute changes to a provision related to tax reporting of currencies like Bitcoin and Ethereum.

The complaints: The crypto language in the bill would generate $28 billion over the next decade by requiring cryptocurrency trading platforms and “brokers” to report digital asset transactions to the Internal Revenue Service. But advocates and lobbyists warned the bill could inadvertently sweep in technology players that could not conceivably comply with the reporting rules, such as software developers and “miners,” owners of computers that are paid to keep the cryptocurrencies functional and safe to use.

“Forcing reporting rules on Americans who develop software and hardware, who mine and secure the network, or who run nodes to build resilience and efficiencies, is an impossible ask that will only drive development and operation of this critical technology outside the US,” Twitter CEO and Bitcoin backer Jack Dorsey said in a Twitter thread Saturday, urging senators to amend the bill to clarify what kinds of entities it would affect.

Competing fixes: Sen. Ron Wyden of Oregon, the top Senate Democrat responsible for writing tax legislation, teamed up with Sens. Patrick Toomey (R-Pa.) and Cynthia Lummis (R-Wyo.) to offer an amendment to scale back the tax reporting rules so they would not capture software developers and miners. Sens. Mark Warner (D-Va.), Rob Portman (R-Ohio) and Kyrsten Sinema (D-Ariz.), in cooperation with the Biden administration, came up with an alternative amendment that would have fewer exclusions.

Portman said in a floor speech Sunday that he’ll still make sure crypto actors who “play a key role by validating transactions, or sellers of hardware or software for digital wallets, or node operators … are clearly exempted.” It was "not the intent” of the bill to include those parties, he said.

So much for that: Ultimately, the Senate took up neither amendment before voting to close debate on the bill. Final passage is expected late Monday night, or the wee hours of Tuesday at the latest.

For more, POLITICO’s Victoria Guida breaks down the issue on crypto’s first big lobbying battle.

APPLE’S PRIVACY CONUNDRUM — Since Apple announced last week that it would start scanning iPhone users’ photos to see if they match known images of child abuse, warnings that the new tool could set a dangerous precedent among government agencies have only grown louder.

Over the weekend, more than 5,400 tech experts and privacy advocates signed onto an open letter calling for Apple to halt its plans and to release a statement “reaffirming [its] commitment to end-to-end encryption and to user privacy.” WhatsApp head Will Cathcart said Friday that his app doesn’t plan to replicate Apple’s systems because “the approach they are taking introduces something very concerning into the world.” Epic Games CEO Tim Sweeney, who is engaged in an unrelated antitrust lawsuit against Apple, said Saturday that “inescapably, this is government spyware installed by Apple based on a presumption of guilt.”

Meanwhile, lawmakers and government officials are cheering the move: Sen. Richard Blumenthal (D-Conn.) called Apple’s new tool a “welcome, innovative, & bold step.” “Time for others - especially @Facebook - to follow their example,” Sajid Javid, the United Kingdom’s health secretary, tweeted on Friday.

— This creates a tough dynamic for Apple to navigate: On one hand, Apple has been promoting itself as the one Silicon Valley giant that cares about user privacy. On the other, government agencies have urged the company for years to provide a “backdoor” to its iMessage encryption to help investigate crimes from child abuse to terrorism.

Either way, privacy advocates say the new tool sends a very different message from Apple’s typical privacy and surveillance practices. (Remember when the company bought a billboard in 2019 in Las Vegas that read, “What happens on your iPhone, stays on your iPhone”?)

FIRST IN MT: SENATORS PRESS FACEBOOK ON NYU REMOVAL — A trio of senators is pressing Facebook CEO Mark Zuckerberg for more details on the social network’s decision to suspend the accounts of New York University researchers studying political ads on the platform. In particular, the senators said they want more information on Facebook’s discussions with the FTC in light of the agency’s statement last week that the social network didn’t tell it in advance about the suspensions.

“While we agree that Facebook must safeguard user privacy, it is similarly imperative that Facebook allow credible academic researchers and journalists like those involved in the Ad Observatory project to conduct independent research,” Sens. Amy Klobuchar (D-Minn.), Chris Coons (D-Del.) and Warner wrote. The senators asked for answers by Aug. 20.

FTC SEEKS TO APPEAL 1-800 CONTACTS LOSS — The agency asked a full appeals court late Friday to rehear its antitrust case against online contact lens retailer 1-800 Contacts, saying it had “exceptional nationwide importance.” In a petition for a rehearing before the full U.S. Court of Appeals for the 2nd Circuit, the FTC said a three-judge panel on the court was wrong when it overturned the agency’s win in June. “The panel said competitors may agree to withhold competitive advertising, allowing privately-defined trademark interests to trump antitrust enforcement,” the agency said in its brief.

This case will have widespread implications for how companies can advertise online. The agency found that 1-800 Contacts violated antitrust law by agreeing with rival online contact lens sellers not to advertise on each others’ trademark terms (i.e., no one else could reference the brand name “1-800 Contacts” in their ads). But a 2nd Circuit panel reversed that decision in June, saying the trademark settlements were reasonable and that the FTC failed to show how else 1-800 Contacts could have 1protected its brand.

The FTC’s chances: The 2nd Circuit doesn’t often agree to rehear cases before the full court. A 2016 analysis by the law firm Paul Weiss of so-called en banc hearings found that the 2nd Circuit heard fewers rehearings than any other appeals court, allowing full review in just two cases over a five-year period.

GOOGLE EXECS PONDERED EPIC GAMES TAKEOVER — The revelation that Google may have attempted to buy out Epic emerged in court documents unsealed Friday, as part of Epic’s antitrust suit against Google.

The backstory: When Epic launched its popular battle game Fortnite on Android smartphones, the company opted not to sell Fortnite via the Google Play app store, where it would have needed to pay the search giant 30 percent of any sales. Instead, Epic made Fortnite for Android available to download directly from its website and reached a separate side deal with Samsung to distribute it through Samsung’s own app store. Epic alleges in court filings that Google feared other popular developers might use the same strategy and developed an internal strategy to fight this “contagion.”

Epic’s Sweeney said on Twitter Friday that the company had no idea about Google’s discussions about buying the company and only learned of them when Google turned over documents as part of the litigation. Google spokesperson José Castañeda countered that Epic’s lawsuit “mischaracterizes our business conversations.”

Jason Kratovil, formerly the executive director of the Consumer First Coalition, is now head of policy for SentiLink.

Going public: TikTok parent company ByteDance is considering an initial public offering next year, the Financial Times reports.

Not so anonymous: Some Amazon sellers are tracking down negative reviewers to get them to change their tune, WSJ reports.

You want fries with that? Fast-food restaurants are exploring ways to automate more tasks amid a labor crunch and rising wages, according to the WSJ.

Whoops: YouTube has changed its policies on when it will take down videos that contain misinformation, after backlash to its removal of videos of local government meetings where speakers spread false rumors about the coronavirus, the Washington Post reports.

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TTYT(uesday).