Tim Cook, chief executive officer of Apple Inc., speaks during the Apple Worldwide Developers Conference (WWDC) in San Jose, California, U.S., on Monday, June 5, 2017.
David Paul Morris | Bloomberg | Getty Images
In the summer of 2017, Apple CEO Tim Cook announced that Amazon’s Prime Video service would be launching on the Apple TV set-top box, after a long and noticeable absence.
An email released by the House Antitrust Subcommittee on Wednesday shed new light into the negotiations that led to that announcement. It shows an Apple exec offered Amazon a 15% fee on subscriptions that signed up through the app, which is lower than Apple’s customary 30% fee for most in-app purchases.
The email suggests that big players can negotiate for better business terms on Apple’s App Store, contradicting Apple’s public stance that all apps are treated the same on its platform. “We apply the rules to all developers evenly,” Cook testified on Wednesday.
Software makers are required to use Apple’s payment mechanism for any digital purchases inside an iPhone app. Apple typically takes 30% of the initial purchase price, including 30% from the first year of subscription services that customers buy through the app, then drops the fee to 15% in the second year of a subscription. The 30% fee is a core part of Spotify’s antitrust complaint with EU regulators.
In May 2016, Bezos told an interviewer that Amazon refused to sell devices like Apple TV or Google‘s Chromecast on Amazon.com because it was unable to agree on terms for placing Amazon Prime Video on those devices.
“When we sell those devices, we want our player — our Prime Video player — to be on the device, and we want it to be on the device with acceptable business terms,” he said. “You can always get the player on the device. The question is, can you get it on there with acceptable business terms?”
At some point later in the year, Bezos met with Apple senior vice president Eddy Cue and discussed business terms for this and other matters, according to the document released Wednesday.
“Jeff, I really enjoyed our time together,” emailed Amazon CEO Jeff Bezos in November 2016.
“Here are the details of what we discussed on Prime Video — Amazon Prime Video app in iOS and Apple TV — 15% rev share for customers that signup using the app (uses our payment); no rev share for customers that already subscribe.”
In addition, Cue said that if Amazon was able to sell services like Showtime in its app, that Apple would only take 15% if the customer originally signed up through Apple.
It’s not clear if the companies ended up agreeing to the terms in the email. Although the Amazon Prime Video app appeared on Apple TV only in 2017, a version of Amazon’s video app been available on iOS since 2012, and it’s not known what the terms were before or after Cue’s email to Bezos.
Representatives for Apple and Amazon didn’t respond to a request for comment.
Apple’s arrangement with Amazon was made public earlier this year when users discovered that the Amazon Prime Video iPhone app started to allow users to purchase digital content — movies and TV shows — inside the app using a credit card on file with Amazon. Apple said at the time that it was part of an “established program” for “premium subscription video entertainment providers.”
House Antitrust Subcommittee
Amazon, Apple not to charge extra for lossless music
Amazon Music, which so far charged a premium for lossless audio, became the first major music service on Monday to upgrade its subscribers to the format.
Lossless is a higher quality audio format that preserves every detail of the original audio file without compressing the quality while streaming.
American rapper Jay-Z’s Tidal was among the first to roll out the technology, charging $19.99 per month for lossless music.
The e-commerce giant’s Amazon Music Unlimited with lossless music will cost less than half that at the industry standard price of $9.99 per month.
Separately, Apple said subscribers would be able to listen to its entire music catalog of more than 75 million songs by next month in the lossless format at no additional cost.
(Reporting by Eva Mathews and Subrat Patnaik in Bengaluru; Editing by Anil D’Silva)
Cyberattack exposes lack of required defenses on U.S. pipelines
The shutdown of the biggest U.S. fuel pipeline by a ransomware attack highlights a systemic vulnerability: Pipeline operators have no requirement to implement cyber defenses.
The U.S. government has had robust, compulsory cybersecurity protocols for most of the power grid for about 10 years to prevent debilitating hacks by criminals or state actors.
But the country’s 2.7 million miles (4.3 million km) of oil, natural gas and hazardous liquid pipelines have only voluntary measures, which leaves security up to the individual operators, experts said.
“Simply encouraging pipelines to voluntarily adopt best practices is an inadequate response to the ever-increasing number and sophistication of malevolent cyber actors,” Richard Glick, the chairman of the Federal Energy Regulatory Commission (FERC), said.
Protections could include requirements for encryption, multifactor authentication, backup systems, personnel training and segmenting networks so access to the most sensitive elements can be restricted.
FERC’s authority to impose cyber standards on the electric grid came from a 2005 law but it does not extend to pipelines.
Colonial Pipeline, the largest U.S. oil products pipeline and source of nearly half the supply on the East Coast, has been shut since Friday after a ransomware attack the FBI attributed to DarkSide, a group cyber experts believe is based in Russia or Eastern Europe.
The outage has led to higher gasoline prices in the U.S. South and worries about wider shortages and potential price gouging ahead of the Memorial Day holiday.
Colonial did not immediately respond to a query about whether cybersecurity standards should be mandatory.
The American Petroleum Institute lobbying group said it was talking with the Transportation Security Administration (TSA), the Energy Department and others to understand the threat and mitigate risk.
Cyber oversight of pipelines falls to the TSA, an office of the Department of Homeland Security (DHS), which has provided voluntary security guidelines to pipeline companies.
The General Accountability Office, the congressional watchdog, said in a 2019 report that the TSA only had six full-time employees in its pipeline security branch through 2018, which limited the office’s reviews of cybersecurity practices.
The TSA said it has since expanded staff to 34 positions on pipeline and cybersecurity. It did not immediately respond to a request for comment on whether it supports mandatory protections.
When asked by reporters whether the Biden administration would put in place rules, DHS Secretary Alejandro Mayorkas said it was discussing administrative and legislative options to “raise the cyber hygiene across the country.”
President Joe Biden is hoping Congress will pass a $2.3 billion infrastructure package, and pipeline requirements could be put into that legislation. But experts said there was no quick fix.
“The hard part is who do you tell what to do and what do you tell them to do,” Christi Tezak, an analyst at ClearView Energy Partners, said.
U.S. Representatives Fred Upton, a Republican, and Bobby Rush, a Democrat, said on Wednesday they have reintroduced legislation requiring the Department of Energy to ensure the security of natural gas and hazardous liquid pipelines. Such legislation could get folded into a wider bill.
The power grid is regulated by FERC, and mostly organized into nonprofit regional organizations. That made it relatively easy for legislators to put forward the 2005 law that allows FERC to approve mandatory cyber measures.
A range of public and private companies own pipelines. They mostly operate independently and lack a robust federal regulator.
Their oversight falls under different laws depending on what they carry. Products include crude oil, fuels, water, hazardous liquids and – potentially – carbon dioxide for burial underground to control climate change. This diversity could make it harder for legislators to impose a unified requirement.
Tristan Abbey, a former aide to Republican Senator Lisa Murkowski who worked at the White House national security council under former President Donald Trump, said Congress is both the best and worst way to tackle the problem.
“Legislation may be necessary when jurisdiction is ambiguous and agencies lack resources,” said Abbey, now president of Comarus Analytics LLC.
But a bill should not be seen as a magic wand, he said.
“Standards may be part of the answer, but federal regulations need to mesh with state requirements without stifling innovation.”
(Reporting by Timothy Gardner; Editing by Cynthia Osterman and Marguerita Choy)
U.S. senator asks firms about sales of hard disk drives to Huawei
A senior Republican U.S. senator on Tuesday asked the chief executives of Toshiba America Electronic Components, Seagate Technology, and Western Digital Corp if the companies are improperly supplying Huawei with foreign-produced hard disk drives.
Senator Roger Wicker, the ranking member of the Commerce Committee, said a 2020 U.S. Commerce Department regulation sought to “tighten Huawei’s ability to procure items that are the direct product of specified U.S. technology or software, such as hard disk drives.”
He said he was engaged “in a fact-finding process… about whether leading global suppliers of hard disk drives are complying” with the regulation.
(Reporting by David Shepardson, Editing by Rosalba O’Brien)
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