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Developers are building ways to skirt Apple's cut of in-app purchases in preparation for new rules – CNBC

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Tim Cook at WWDC21 on June 7th, 2021.
Source: Apple

Developers are building new software for apps that lets companies bill customers without paying Apple, which takes up to 30% of app sales.

They’re preparing for new changes Apple has to implement after a federal judge ruled in September that Apple has to let app developers link to alternate payment systems. The ruling came as a result of a legal battle between Apple and Epic Games, the maker of Fortnite.

The new software, if adopted widely by developers and users, could threaten Apple’s profit engine. The App Store is part of the company’s services business, which reported $53.8 billion in sales during fiscal 2020 at a 66% gross margin, accounting for about 20% of Apple’s revenue.

Developers are preparing several options since it’s unclear what they’ll have to do to abide by Apple’s new rules. Apple hasn’t shared details of its plans to comply with the judge’s order, which takes effect on Dec. 7

Paddle CEO Christian Owens said the ruling provides an opportunity to expand his company’s Mac and Windows customer billing business to Apple’s iPhone App Store. Paddle built three different implementations of an iPhone payments product in the hope one will comply with the rules.

“We would love to hear from Apple, and get on-the-record a description of exactly what’s going to be allowed versus not,” Owens said.

One version of Paddle’s software development kit (SDK) lets app-makers offer monthly or annual subscriptions with an “Upgrade Now” button. The button links to a Paddle-hosted webpage in a Safari browser with several payment options, including Apple Pay and PayPal. The user is returned back into the app after a payment is processed.

Paddle will offer developers the ability to link out from their apps into a payment screen.
Paddle

RevenueCat, a company that builds tools for iOS developers to manage customer subscriptions, is also developing a browser-based payment system that developers can to apps add without having to build their own, CEO Jacob Eiting said.

“The real magic is that developers will get a portable link that they can include in external marketing, or now in the app, that will unlock access instantly using our SDK,” Eiting said in an email.

“We’re operating under the assumption that developers will still be required to use Apple’s IAP inside of their apps but that you now will be allowed to reference and link to external paywalls,” Eiting said.

RevenueCat plans to offer a product that lets app developers sign up new subscribers through a link in their app.
RevenueCat

That’s also what Paddle’s CEO thinks will happen.

“I think it’s going to be a situation of, if you want to offer an off-platform, in-app purchasing mechanism, you have to offer the Apple in-app purchasing mechanism alongside that as well,” Owens said.

Apple hasn’t updated its App Store guidelines, the document that determines what developers can and can’t do in iPhone apps, since the ruling last month. All iPhone apps and updates go through a process called App Review, where Apple employees reject apps that don’t conform to Apple’s rules.

The judge’s decision says Apple must allow customers to leave its ecosystem to buy virtual goods on the web. But it doesn’t prevent Apple from making other policy changes to its store, like developing a new way to charge fees for iPhone app transactions that happen off the platform. It’s a possibility that Apple CEO Tim Cook raised in testimony during the trial.

“If not for [in-app purchasing], we would have to come up with another system to invoice developers, which I think would be a mess,” Cook said in May.

Apple declined to comment but argued during the trial that the App Store ensures user privacy and safety. Apple general counsel Kate Adams said in September that the Epic Games ruling was a “huge win,” and the company hailed the court’s finding that Apple is not a monopoly.

What it means for Apple and consumers

Apple announces new iPhone 11 Pro at a launch event on Sept. 10. .
Source: Apple

Some Wall Street analysts believe the impact on Apple will be limited but real, potentially reducing Apple’s earnings by up to 4%, with off-platform billing being used more often for expensive software subscriptions.

Eiting said Apple’s changes might not have a huge financial impact on developers. He argued users will be less likely to complete purchases if they have to go to an external webpage, even if apps can link to it. It could also annoy users, who will have to manage subscriptions individually instead of inside the iPhone’s settings.

“I think it’s good to let systems compete, but I’m not convinced it’s going to be a windfall for anyone,” Eiting said.

Alternative payment systems will charge developers less than Apple does while still providing convenience, like managing subscription cancellations and offering insight into sales trends.

Owens said Paddle will take a 5% to 10% cut of gross purchases, undercutting Apple’s 15% to 30%, while still handling behind-the-scenes headaches like international taxes and customer support. That savings could be passed to consumers.

Developers will feel incentivized to lower prices if Apple requires apps with direct billing links also offer in-app purchases. For example, a music service might charge users $9.99 a month if they subscribe from within an app, since Apple takes a cut of those purchases, but only $6.99 a month if they click a link to subscribe directly on the service’s website.

“What we’re trying to get across with us building a competing solution to in-app purchases is the fact that even for the smallest transactions, we can do this for 10% of the value of those transactions, and then scale the price down from there,” Owens said.

Tim Sweeney, the CEO of Epic Games, whose lawsuit led to these changes, congratulated Paddle in a tweet on Thursday.

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Ottawa orders TikTok’s Canadian arm to be dissolved

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The federal government is ordering the dissolution of TikTok’s Canadian business after a national security review of the Chinese company behind the social media platform, but stopped short of ordering people to stay off the app.

Industry Minister François-Philippe Champagne announced the government’s “wind up” demand Wednesday, saying it is meant to address “risks” related to ByteDance Ltd.’s establishment of TikTok Technology Canada Inc.

“The decision was based on the information and evidence collected over the course of the review and on the advice of Canada’s security and intelligence community and other government partners,” he said in a statement.

The announcement added that the government is not blocking Canadians’ access to the TikTok application or their ability to create content.

However, it urged people to “adopt good cybersecurity practices and assess the possible risks of using social media platforms and applications, including how their information is likely to be protected, managed, used and shared by foreign actors, as well as to be aware of which country’s laws apply.”

Champagne’s office did not immediately respond to a request for comment seeking details about what evidence led to the government’s dissolution demand, how long ByteDance has to comply and why the app is not being banned.

A TikTok spokesperson said in a statement that the shutdown of its Canadian offices will mean the loss of hundreds of well-paying local jobs.

“We will challenge this order in court,” the spokesperson said.

“The TikTok platform will remain available for creators to find an audience, explore new interests and for businesses to thrive.”

The federal Liberals ordered a national security review of TikTok in September 2023, but it was not public knowledge until The Canadian Press reported in March that it was investigating the company.

At the time, it said the review was based on the expansion of a business, which it said constituted the establishment of a new Canadian entity. It declined to provide any further details about what expansion it was reviewing.

A government database showed a notification of new business from TikTok in June 2023. It said Network Sense Ventures Ltd. in Toronto and Vancouver would engage in “marketing, advertising, and content/creator development activities in relation to the use of the TikTok app in Canada.”

Even before the review, ByteDance and TikTok were lightning rod for privacy and safety concerns because Chinese national security laws compel organizations in the country to assist with intelligence gathering.

Such concerns led the U.S. House of Representatives to pass a bill in March designed to ban TikTok unless its China-based owner sells its stake in the business.

Champagne’s office has maintained Canada’s review was not related to the U.S. bill, which has yet to pass.

Canada’s review was carried out through the Investment Canada Act, which allows the government to investigate any foreign investment with potential to might harm national security.

While cabinet can make investors sell parts of the business or shares, Champagne has said the act doesn’t allow him to disclose details of the review.

Wednesday’s dissolution order was made in accordance with the act.

The federal government banned TikTok from its mobile devices in February 2023 following the launch of an investigation into the company by federal and provincial privacy commissioners.

— With files from Anja Karadeglija in Ottawa

This report by The Canadian Press was first published Nov. 6, 2024.

The Canadian Press. All rights reserved.

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Here is how to prepare your online accounts for when you die

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LONDON (AP) — Most people have accumulated a pile of data — selfies, emails, videos and more — on their social media and digital accounts over their lifetimes. What happens to it when we die?

It’s wise to draft a will spelling out who inherits your physical assets after you’re gone, but don’t forget to take care of your digital estate too. Friends and family might treasure files and posts you’ve left behind, but they could get lost in digital purgatory after you pass away unless you take some simple steps.

Here’s how you can prepare your digital life for your survivors:

Apple

The iPhone maker lets you nominate a “ legacy contact ” who can access your Apple account’s data after you die. The company says it’s a secure way to give trusted people access to photos, files and messages. To set it up you’ll need an Apple device with a fairly recent operating system — iPhones and iPads need iOS or iPadOS 15.2 and MacBooks needs macOS Monterey 12.1.

For iPhones, go to settings, tap Sign-in & Security and then Legacy Contact. You can name one or more people, and they don’t need an Apple ID or device.

You’ll have to share an access key with your contact. It can be a digital version sent electronically, or you can print a copy or save it as a screenshot or PDF.

Take note that there are some types of files you won’t be able to pass on — including digital rights-protected music, movies and passwords stored in Apple’s password manager. Legacy contacts can only access a deceased user’s account for three years before Apple deletes the account.

Google

Google takes a different approach with its Inactive Account Manager, which allows you to share your data with someone if it notices that you’ve stopped using your account.

When setting it up, you need to decide how long Google should wait — from three to 18 months — before considering your account inactive. Once that time is up, Google can notify up to 10 people.

You can write a message informing them you’ve stopped using the account, and, optionally, include a link to download your data. You can choose what types of data they can access — including emails, photos, calendar entries and YouTube videos.

There’s also an option to automatically delete your account after three months of inactivity, so your contacts will have to download any data before that deadline.

Facebook and Instagram

Some social media platforms can preserve accounts for people who have died so that friends and family can honor their memories.

When users of Facebook or Instagram die, parent company Meta says it can memorialize the account if it gets a “valid request” from a friend or family member. Requests can be submitted through an online form.

The social media company strongly recommends Facebook users add a legacy contact to look after their memorial accounts. Legacy contacts can do things like respond to new friend requests and update pinned posts, but they can’t read private messages or remove or alter previous posts. You can only choose one person, who also has to have a Facebook account.

You can also ask Facebook or Instagram to delete a deceased user’s account if you’re a close family member or an executor. You’ll need to send in documents like a death certificate.

TikTok

The video-sharing platform says that if a user has died, people can submit a request to memorialize the account through the settings menu. Go to the Report a Problem section, then Account and profile, then Manage account, where you can report a deceased user.

Once an account has been memorialized, it will be labeled “Remembering.” No one will be able to log into the account, which prevents anyone from editing the profile or using the account to post new content or send messages.

X

It’s not possible to nominate a legacy contact on Elon Musk’s social media site. But family members or an authorized person can submit a request to deactivate a deceased user’s account.

Passwords

Besides the major online services, you’ll probably have dozens if not hundreds of other digital accounts that your survivors might need to access. You could just write all your login credentials down in a notebook and put it somewhere safe. But making a physical copy presents its own vulnerabilities. What if you lose track of it? What if someone finds it?

Instead, consider a password manager that has an emergency access feature. Password managers are digital vaults that you can use to store all your credentials. Some, like Keeper,Bitwarden and NordPass, allow users to nominate one or more trusted contacts who can access their keys in case of an emergency such as a death.

But there are a few catches: Those contacts also need to use the same password manager and you might have to pay for the service.

___

Is there a tech challenge you need help figuring out? Write to us at onetechtip@ap.org with your questions.

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Google’s partnership with AI startup Anthropic faces a UK competition investigation

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LONDON (AP) — Britain’s competition watchdog said Thursday it’s opening a formal investigation into Google’s partnership with artificial intelligence startup Anthropic.

The Competition and Markets Authority said it has “sufficient information” to launch an initial probe after it sought input earlier this year on whether the deal would stifle competition.

The CMA has until Dec. 19 to decide whether to approve the deal or escalate its investigation.

“Google is committed to building the most open and innovative AI ecosystem in the world,” the company said. “Anthropic is free to use multiple cloud providers and does, and we don’t demand exclusive tech rights.”

San Francisco-based Anthropic was founded in 2021 by siblings Dario and Daniela Amodei, who previously worked at ChatGPT maker OpenAI. The company has focused on increasing the safety and reliability of AI models. Google reportedly agreed last year to make a multibillion-dollar investment in Anthropic, which has a popular chatbot named Claude.

Anthropic said it’s cooperating with the regulator and will provide “the complete picture about Google’s investment and our commercial collaboration.”

“We are an independent company and none of our strategic partnerships or investor relationships diminish the independence of our corporate governance or our freedom to partner with others,” it said in a statement.

The U.K. regulator has been scrutinizing a raft of AI deals as investment money floods into the industry to capitalize on the artificial intelligence boom. Last month it cleared Anthropic’s $4 billion deal with Amazon and it has also signed off on Microsoft’s deals with two other AI startups, Inflection and Mistral.

The Canadian Press. All rights reserved.

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