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BRUSSELS (Reuters) – Facebook (FB.O) and Microsoft’s (MSFT.O) grievances over how their gaming apps appear on Apple’s (AAPL.O) App Store may feed into an EU investigation into the iPhone maker’s business as EU antitrust regulators said such concerns are on their radar.
The European Commission in June opened four probes into Apple, three of which are into its App Store and its restrictive rules, including requirements that app developers use its own in-app purchasing system.
U.S. social media giant Facebook and Microsoft are the latest companies to voice concerns about the rules, which have drawn criticism from app developers who say they create an uneven playing field to compete with the iPhone maker.
Asked about Facebook and Microsoft’s issues with Apple, Commission spokeswoman Arianna Podesta said in a statement: “The Commission is aware of these concerns regarding Apple’s App Store rules.”
She did not provide details.
Apple dismissed criticism of its App Store rules, saying that all apps are reviewed against the same set of guidelines whose aim is to protect customers and provide a fair and level playing field for developers.
Facebook last week said its gaming app was only available on Apple’s App Store as a streaming service and that users will not be able to play games.
Facebook Chief Operating Officer Sheryl Sandberg said the company had to remove gameplay functionality entirely to secure Apple’s approval of its Facebook Gaming app.
Microsoft, which has a game-streaming service called Project xCloud said: “Apple stands alone as the only general purpose platform to deny consumers from cloud gaming and game subscription services like Xbox Game Pass.”
“It consistently treats gaming apps differently, applying more lenient rules to non-gaming apps even when they include interactive content,” it added in an emailed statement.
Reporting by Foo Yun Chee; editing by Barbara Lewis
Potential action from US lawmakers may not be what forces Apple to change how it does business. Following a year-long investigation into the company, Reuters reports Russia’s Federal Antimonopoly Service (FAS) has found the iPhone-maker abused its dominant position in the mobile app marketplace and will order Apple to resolve multiple regulatory breaches.
The agency started investigating the tech giant after developer Kaspersky Lab filed a complaint over the rejection of its Safe Kids app from the App Store. At the time, Apple said the software put “user’s safety and privacy at risk.” The agency ruled Apple forces developers to distribute to their apps through the App Store and then unlawfully blocks them. A spokesperson for Apple told Reuters the company plans to appeal the ruling.
The decision comes as Apple faces increasing scrutiny over its gatekeeping of the App Store in both the US and EU. When Tim Cook testified before the House Judiciary Antitrust Subcommittee at the end of July, lawmakers asked the executive about the company’s decisions to block some competitors from its digital marketplace. Cook was also asked about the ongoing 30 percent cut the company takes from third-party app sales, a rate many developers argue is too high. Apple was again in the spotlight earlier this month after it said it would not allow Microsoft’s Project xCloud on iOS since its App Store guidelines require developers to submit games individually for review.
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A widely-followed Taiwanese stock analyst warns that Apple’s smartphone sales will fall by almost a third if the American giant removes WeChat from its app store under a US government directive.
Ming-Chi Kuo, an analyst with TFI Securities, wrote in an August 10 letter to clients that Chinese customers would shun the iPhone if the WeChat app were not available. China accounts for 30% of iPhone sales and 15% of Apple’s total revenue as of the second quarter of 2020. Kuo’s remarks were first reported by MacRumors, 9to5Mac and AppleInsider.
Kuo follows Apple for TFI Securities, a division of the Taiwanese firm China Development Financial, a banking and brokerage firm with annual revenues of almost US$7 billion. He warned clients in his Monday newsletter: “Because WeChat has become a daily necessity in China, integrating functions such as messaging, payment, e-commerce, social networking, news reading, and productivity, if this is the case, we believe that Apple’s hardware product shipments in the Chinese market will decline significantly. We estimate that the annual iPhone shipments will be revised down by 25-30%, and the annual shipments of other Apple hardware devices, including AirPods, iPad, Apple Watch and Mac, will be revised down by 15–25%.”
Kuo advised TFI’s customers to sell Apple stock along with companies in Apple’s supply chain, including LG Innotek and Genius Electronic Optical.
Apple stock was trading at US$455 at the New York opening before wire services reported Kuo’s recommendation. The stock fell to $442 as of 11 am, a decline of 2.6%.
WeChat’s parent company Tencent (HK 700) lost nearly 10% of its market capitalization on Friday and Monday in Hong Kong trading after President Donald Trump issued an executive order Thursday prohibiting all US transactions via WeChat. It isn’t yet clear whether the order will require Apple to remove the popular application from its platform in China, and Ming-Chi Kuo explained that his projection of a 30% sales drop was a worst-case scenario.
Apple depends heavily on foreign sales, while Tencent makes 96% of its revenues in Mainland China. WeChat has a relatively small following in the United States, mainly among Americans who communicate regularly with China. The steep fall in the company’s stock doesn’t appear justified by fundamentals. Under a worst-case scenario, the impact of the US ban on Tencent’s revenues would be negligible.
In other news, Tencent this week proposed to merge two Chinese game streaming companies, DouYu International Holdings and Huya, Inc, to create a giant firm with a market value in excess of $10 billion. Tencent presently owns 37% of Huya and 38% of DouYu. China’s game streaming market has $3.4 billion a year in annual revenues.
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