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News publishers ask Apple for the same App Store deal it offered Amazon – CNBC

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Apple CEO Tim Cook testifies before the House Judiciary Subcommittee on Antitrust, Commercial and Administrative Law on “Online Platforms and Market Power” in the Rayburn House office Building on Capitol Hill in Washington, DC on July 29, 2020.
Mandel Ngan | AFP | Getty Images

Major news publishers have joined a growing number of companies criticizing Apple over its App Store policies, which they argue promote anti-competitive practices.

Digital Content Next (DCN), a trade body representing the likes of The New York Times, The Washington Post, News Corp and CNBC, wrote to the iPhone maker asking how its members could qualify for a special deal like one given to Amazon in 2017.

Under that arrangement, Apple offered Amazon a 15% fee on customer subscriptions for Amazon’s Prime Video app via the App Store, lower than Apple’s customary 30% fee for most in-app purchases.

“We would like to know what conditions our members — high quality digital content companies — would need to meet in order to qualify for the arrangement Amazon is receiving for its Amazon Prime Video app in the Apple App Store,” DCN CEO Jason Kint said in a letter addressed to Apple CEO Tim Cook.

Apple declined to comment on DCN’s letter. The company has previously defended its treatment of Amazon, saying the firm is part of a program for “premium” video subscription services to offer integration with core Apple services, apps and features. It claims this program is only for individual purchases, not subscriptions.

Kint referred to a line of questioning from Rep. Hank Johnson, D-Ga. at last month’s congressional grilling of four top tech CEOs. At the House Antitrust Subcommittee, Johnson asked Cook if the agreement with Amazon was available to other app developers, to which Cook said: “It’s available to anyone meeting the conditions.”

“Nearly all of DCN’s members offer apps in the Apple App Store and, as noted above, many offer subscription-based access to a wide variety of content,” Kint said. “The terms of Apple’s unique marketplace greatly impact the ability to continue to invest in high-quality, trusted news and entertainment particularly in competition with other larger firms.”

In a separate blog post, DCN Senior Vice President of Government Affairs Chris Pedigo said that news organizations have increasingly turned to subscriptions as a source of revenue as advertising incomes have “cratered over the last decade.” News publishers have also been heavily impacted by the coronavirus pandemic due to a steep decline in ad spending.

“The monopolistic behavior of big tech puts a wide range of industries — not the least of which is the news industry — at a distinct disadvantage,” Pedigo said. “It is laudable that EU and American regulatory bodies are digging in and uncovering these anti-competitive behaviors. Talking trust is not enough. We need to level the playing field and transparency is a critical first step.”

The EU recently opened two antitrust investigations into Apple, one of which focuses on the App Store. Brussels has said it will assess whether Apple’s rules for app developers breach EU competition rules.

News organizations join an increasing list of companies railing against Apple for allegedly anti-competitive rules in its App Store. Last week, Epic Games brought a lawsuit against Apple and Google for booting its popular Fortnite game out of their respective software distribution platforms.

Fortnite was removed from the App Store and Android after it introduced a new way to buy in-game credits directly from Epic Games, effectively skirting Apple’s App Store and Google’s Play Store rules. Epic Games was particularly aggressive with its campaign against Apple, launching an ad that mocked Apple’s famous “1984” ad for its Macintosh computer.

App makers such as Epic Games have criticized Apple’s 30% cut of digital sales and approval process for apps. The App Store is the only means by which iPhone users can download their apps, unlike Google’s Android mobile operating system which allows the installation of alternative app stores.

Earlier this week, Apple became the first publicly-listed company in the U.S. to reach a $2 trillion market cap.

“Apple has put itself in a situation of trying to apply fair policy to an admittedly arbitrary set of rules,” Jacob Eiting, the CEO of in-app subscription platform RevenueCat, told CNBC last week. He added that every interaction with an iPhone “is an experience owned by Apple.”

Meanwhile, regulators are also piling pressure on online platforms to pay news outlets for the distribution of their content. Last month, Australia’s competition watchdog set out new rules that would require Google and Facebook to pay for news content in a world first. France’s competition regulator ruled that Google must pay publishers for reusing their content.

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Apple's battle with Epic Games could lead to big changes in iPhone apps – CNET

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Apple’s smackdown with Epic is just getting started.


CNET

Apple’s iPhone is already one of the world’s most litigated devices. Apple fought its No. 1 rival,  Samsung, and others over the iPhone’s design. It’s fought phone giant Nokia and chipmaker Qualcomm over patent royalties. Before the smartphone first went on sale in 2007, Apple even fought networking giant Cisco over the iPhone name.

On Monday, Apple meets a new combatant in court. This time, it’s fighting Epic Games, maker of the online gaming phenomenon Fortnite, which has  more than 350 million players. Epic sued on Aug. 13, alleging that the iPhone maker’s rules for how big a cut of app sales developers need to pay Apple, and how they can even make money on the popular App Store, are anticompetitive. The suit effectively forces Apple to defend the way it operates its App Store, the only gateway for developers who want to have their apps made available for download on the iPhone. 

To prove its point, Epic intentionally broke Apple’s rules that say that for in-app purchases, app developers can only use Apple’s payments processing service. In-app purchases are the add-ons, like digital tokens, that users can buy to get different clothes or designs for their digital characters and weapons. Developers, especially the ones who offer free-for-download apps like Fortnite, rely on those in-app purchases as a key source of income. On that August Thursday, Epic turned on hidden code in its Fortnite battle game, letting users buy items directly from Epic at a discount, rather than pay full price through Apple’s payments service.


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By letting users pay Epic directly, and avoiding Apple’s payment service, Epic also circumvented the up to 30% commission on each sale that Apple charges developers for the privilege of their wares being available to iPhone users on the App Store. 

Apple quickly banned Fortnite from its App Store and Epic sued in response, kicking off a legal battle that’s grabbed the attention of both the game industry and millions of app developers, all of whose businesses could change as a result of whatever happens. The App Store, launched in June 2008, has grown to more than 1.85 million apps, according to September data from research firm Statista. It’s attracted more than 27 million app developers, whose programs have been downloaded by about 1 billion people across 175 countries. Apple is estimated to have paid out $37 billion to developers last year, according to industry watcher Sensor Tower. Assuming Apple took a 30 percent cut, that puts App Store sales at about $55.5 billion. 

“There’s good arguments on both sides,” said David Olson, a professor at Boston College Law School who closely tracks antitrust, intellectual property and patent law. What makes this case in particular stand out, he said, is it raises thorny questions around how much Apple is allowed to control its platform, an issue that’s been debated online for years but not so much in the courts. “This could be huge.”

Apple and Epic didn’t respond to requests for comment.

What’s at stake for Apple is how apps are distributed and monetized across mobile devices. Apple, in particular, has demanded it approve every app that’s offered for sale for its iPhone since the beginning, with its App Store serving as the only distribution platform for iPhone app developers. Apple also touts that control as a feature in its marketing, promising iPhone users they can trust any app they download from the App Store because it’s already been vetted.

Apple App Store icon

Apple’s App Store has become a behemoth of the tech industry. Some developers say Apple has taken too much control.


Apple; illustration by Stephen Shankland/CNET

Aside from charging an up to 30% fee for in-app purchases, Apple requires app developers to follow policies against what it deems objectionable content, such as pornography, encouraging drug use, or realistic portrayals of death and violence. Apple also scans for security issues, spam and apps that could be used to take data from people’s phones without their consent.

“Apple’s requirement that every iOS app undergo rigorous, human-assisted review — with reviewers representing 81 languages vetting on average 100,000 submissions per week — is critical to its ability to maintain the App Store as a secure and trusted platform for consumers to discover and download software,” the company said in one of its filings.

That trust, and the App Store brand, is so important to Apple that it even fought Amazon and Microsoft over the use of the name “App Store.” (Apple ultimately backed down.)

The App Store’s policies have almost always been at the center of controversy for Apple too. Apple’s tight control is an instinct that came from its co-founder and former CEO Steve Jobs, who micromanaged the look and feel of the company’s software and hardware, sometimes down to the smallest dot on the screen, the angle of the curves on its devices and the satisfying click-feeling you get when you plug in a cord.

That obsessively controlling approach has ticked off developers over the years. They say Apple’s inflexible rules over everything from content (Apple once banned an app from a Pulitzer-winning cartoonist) to the ways programs talk to the internet, give the iPhone maker too much control over other companies. And in July, legislators on Capitol Hill called in Apple CEO Tim Cook, alongside leaders of Facebook, Amazon and Google parent Alphabet, to defend those and other policies. 

Cook said Apple’s approach helps attract more people and developers to its platform, not less. “Clearly, if Apple is a gatekeeper, what we have done is open the gate wider,” he said. “We want to get every app we can on the store, not keep them off.”


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Epic isn’t the only developer that disagrees with Apple. More than a dozen companies, including music service Spotify and dating app maker Match Group, joined with Epic to found a group called the Coalition for App Fairness to take on Apple’s rules

“As enforcers, regulators, and legislators around the world investigate Apple for its anti-competitive behavior, The Coalition for App Fairness will be the voice of app and game developers in the effort to protect consumer choice and create a level playing field for all,” Horacio Gutierrez, head of global affairs at Spotify, said in a statement on Thursday. Spotify also helped kick off EU investigations of Apple this summer after the music service complained to European regulators about the company’s policies.

On Monday, Apple and Epic Games are set to meet in an online version of what would’ve been an Oakland, California, court room, a reminder that despite the coronavirus pandemic that’s infected more than 32 million people and killed at least 990,000 patients around the world, big fights between big tech companies still go on.

Epic argues that Apple’s strict control of its App Store is anticompetitive and that the court should force the company to allow alternative app stores and payment processors on its phones, remaking the way people get and pay for iPhone apps. “Apple is bigger, more powerful, more entrenched and more pernicious than monopolies of yesteryear,” Epic said in an August legal filing. “Apple’s size and reach far exceeds that of any technology monopolist in history.”

Apple responded, saying Epic’s lawsuit is just a disagreement over money. “Although Epic portrays itself as a modern corporate Robin Hood,” Apple wrote in its legal response, “In reality it is a multibillion-dollar enterprise that simply wants to pay nothing for the tremendous value it derives from the App Store.”

Epic battle

Apple and Epic Games used to be friends. A decade ago, Apple invited the software developer on stage at one of its events to show off Project Sword, a game later called Infinity Blade, designed to show off how Epic’s Unreal Engine tools could be used to create beautiful and intricately designed games.

“We’re using the same lighting and motion-captured animation techniques you see in top films,” Mike Capps, then president of Epic Games, said while demonstrating a fantasy game battle between a knight and a massive brute on the then-newly announced iPhone 4 in 2010.

Apple brought Epic back on stage in 2011 to show off its sequel, Infinity Blade 2. And then again in 2013 for the second sequel, Infinity Blade 3. Each game was considered a success, and largely well received. 

“Of all the many thousands of games to hit iOS over the years, Infinity Blade and Infinity Blade II were among the few that aspired to be something greater than mere mobile games,” CNET sister site GameSpot’s Mark Walton wrote in his 2013 review of the games. “Their visuals were — and indeed still are — some of the most impressive to grace the platform, and both offered a surprising amount of depth behind their flashy touchscreen swordplay.”

As Epic grew into a multibillion dollar company, it began using its size to push for change within the game industry. In 2015, Epic began offering its Unreal Engine game development tools for free, taking a 5% royalty fee on games sold. This year, it said it would charge game royalties only after a developer’s first $1 million in revenue.

“They want to be a company that empowers creators,” said Ben Wiley, program director of game production at, who formerly worked at Warner Bros. 

Epic’s most controversial move came in 2018, when the company opened its Epic Games Store for PCs, a competitor to the industry-leading Valve Steam store. Though the Epic store didn’t have the same social networking, reviews and other features Valve’s did, it asked for only a 12% commission from game developers, less than half the industry standard 30%. 

To win over developers even further, Epic started paying for and securing exclusivity deals for PC games, effectively locking the titles to its Epic Games Store usually for a year. Some of those exclusives were highly anticipated titles like Gearbox Software’s sci-fi shooter Borderlands 3, Deep Silver’s postapocalyptic thriller Metro: Exodus, and the epic story game Shenmu 3.

As Epic’s roster of exclusive titles grew, some gamers bristled at being forced to sign up for yet another game service in order to play games they’re excited about.

“I wish there were a more popular way to do this,” Tim Sweeney, Epic’s CEO, said in a 2019 interview with CNET. But a survey by the Game Developers Conference, released just before our interview, underscored Sweeney’s point, finding, among other things, that a majority of game developers weren’t sure Valve’s Steam justified its 30% cut of revenue. “I feel like the ends are more than worth the means,” Sweeney said.

Now Epic is taking its fight to Apple, and fighting a different app store for mobile devices. In emails between the two companies before the lawsuit was filed, Sweeney asked Apple to allow Epic to create its own app store for mobile devices too, and to use its own payment processing service. Apple refused.

Apple fight

Epic isn’t just fighting Apple in the courts. It’s also devised a PR campaign to bring that fight to the public.

The same day Fortnite was kicked off the App Store, and after Epic sued, the company released an ad parodying Apple’s famous Ridley Scott-directed 1984 Macintosh Super Bowl ad. The original positioned Apple as a revolutionary, fighting back against a Big Brother conformist overlord-type figure. 

Epic’s remaking, called Nineteen Eighty-Fortnite, paints Apple as the domineering Big Brother, and shows a Fortnite character fighting back.

“Epic Games has defied the App Store Monopoly. In retaliation, Apple is blocking Fortnite from a billion devices,” Epic wrote at the end of its 48-second video. “Join the fight to stop 2020 from becoming ‘1984’” In the month since the video’s release, it’s been watched more than 6 million times.

Apple says the commission it charges pays for the tools, people and computing costs to run its App Store. The company also says its control protects users from potentially bad behavior and fraud, too.

Neither company’s arguments appear to have swung the court of public opinion much. Analysts say the whole thing really boils down to a slap-fight over money between a multitrillion-dollar company and a multibillion-dollar company. 

“Epic’s being self-serving by saying it’s protecting the little guy, and Apple’s being self-serving by saying it’s protecting consumers,” said Joost van Dreunen, a professor at NYU Stern School of Business and author of the upcoming book One Up: Creativity, Competition, and the Global Business of Video Games. Regardless of how this lawsuit goes, he said, Apple’s continuing challenge will be to convince developers the App Store is worth that 30% fee.

In the game industry, console makers justify their cut of games sold by using the money to help market their products and grow the number of people playing even more, van Dreunen said. Console makers also tend to take less of a cut the larger a company’s sales get.

fortnite-thumb

Epic has continued its PR war against Apple, holding a #FreeFortnite tournament in August.


Epic

“It’s baked into the habit of the industry that it’s acceptable,” he added. But van Dreunen said that now, with more than a decade of Apple being as inflexible as developers have said it is, pushback is inevitable.

Apple isn’t the only company Epic targeted in its Fortnite battle. The same day Epic broke Apple’s App Store rules, it adding the same with its game on the Google Play Store, for devices powered by Google’s Android software. Google kicked Fortnite out of its store too, and Epic sued, arguing that Google has strayed from the Don’t Be Evil mantra of its early years

Google has since reportedly begun plans to tighten its app store rules, in seeming support of Apple. A report in Bloomberg last week said the company is planning to tell developers they need to use Google’s payments processing service, which has an up to 30% commission just like Apple’s App Store.

In the meantime, the first court skirmishes between Apple and Epic have scored legal wins for both companies. In an emergency hearing in August, a district judge in Northern California agreed that Apple could keep Fortnite off its App Store during the lawsuit. She also ruled that Epic should be able to continue distributing its Unreal game tools to developers without interference from Apple, for now.

The risk that Apple could lose the case and potentially set a precedent that upends how all app stores work across the tech industry will likely drive the company to settle. But it’s also why Olson, the law professor, is hoping for the case to drag on a bit. He wants to see how Apple, Epic and the court attempt to apply antitrust laws from decades ago to modern day tech. 

“Antitrust needs to catch up with the world some,” he said. And cases like this help it to do that.

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The one-off Ferrari Omologato is the closest we'll get to a new GTO – Driving

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A unique Ferrari one-off has been lapping the marque’s Fiorano test track, and now we’re finally getting a good look at it — and it’s stunning.

The one-off creation is called the Omologata, and it’s basically a modern rendition of one of Ferrari’s absolute all-stars, the 250 GTO. “GTO” stands for Grand Touring Omologato, and given the styling, it’s safe to say this is a direct homage to that famous race car.

Featuring voluptuous curves and half-moon-shaped intakes, the lineage of this one-off is unquestionable. We would have thought it impossible to make a modern car that looks better than the 812 the Omologato is based on, but this seems to have taken the cake.

The designers changed every facet of the 812 except for the windshield and the headlights, even though every change might not be immediately visible. Around back, the rear window has been swapped out for a set of louvers, and the tail of the vehicle now sweeps up with a small spoiler.

Under that extremely long hood is still the 812’s beautiful 6.2-litre V12, which produces a sound so beautiful it’ll turn horsepower and other output figures into afterthoughts.

The car marks the tenth one-off creation that Ferrari has built, with the first being the 2009 P540 Superfast Aperta.

The commissioner isn’t known, but whomever they are, we must say “well done,” for this is one exquisite vehicle. A regular Ferrari 812 isn’t exactly a cheap car, and we’re guessing this was, well, even less cheap than usual.

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Apple's Battle Royale With Epic Games Starts for Real Next Week – BNN

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(Bloomberg) — The legal fight between Apple Inc. and Epic Games Inc. kicks into full gear on Monday with decisions that will influence the future of app stores in the U.S. and how the world’s largest technology platforms make money from developers.

U.S. District Judge Yvonne Gonzalez Rogers will decide whether to force Apple to let battle royale video game Fortnite back into the App Store with Epic’s in-house payment option. She will also rule if Apple can block third-party apps using Epic’s Unreal Engine development software.

Most legal experts expect the judge to extend her temporary injunction for Unreal Engine, but not reinstate Fortnite in the Apple App Store.

“Epic faces an uphill battle,” said Mark Lemley, a professor at Stanford Law School. “Apple’s pricing policies are problematic, and antitrust law should probably do something about it. But courts are very reluctant to dictate who a company, even a monopolist, has to do business with.”

The decisions will have far-reaching consequences especially as authorities across the globe examine whether tech giants including Apple and Alphabet Inc.’s Google have broken antitrust rules. On Monday, the judge will consider if Epic is likely to succeed on the merits of its antitrust claims and whether the company will suffer irreparable harm if she doesn’t issue an injunction.

At stake is Apple and Google’s ability to charge fees of up to 30% to developers using their app stores. Consumers spent $50 billion worldwide on the App Store and Google Play in the first half of 2020, according to Sensor Tower estimates. That generates billions of dollars in highly profitable revenue for the companies. Some developers deride this an unfair and unwarranted tax. Epic and its Founder Tim Sweeney have led the backlash this year.

Google may change its policies if the Fortnite case ends up favoring Apple, said Lewis Ward, an analyst at researcher IDC. No matter the outcome, Epic has gained a lot of goodwill among gamers and other developers.

“In the larger court of public opinion, in the U.S., my sense is that Epic is generally viewed as the good guy here, and Apple is viewed as the bad guy,” Ward said.

“It has raised the profile of Epic from an already well-respected game company to one that has a philosophy or a vision of where the games industry should go over time,” Ward added. “That vision is one that is more aligned with how the internet began, which was open and free and cheap.”

Read more: Epic’s Battle With Apple and Google Has Roots in the Pac-Man Era

The impact on Epic’s business so far has been “fairly negligible,” said Doug Clinton, co-founder at Loup ventures — tens of millions of dollars in lost revenue. While players can no longer download Fortnite on their Apple devices, many of them have simply shifted their playing to consoles and PCs. Fortnite climbed SuperData’s rankings of top-grossing titles among console games in August, reaching third place. It ranked sixth in July, before the legal spat between Epic and Apple began.

Financially, Apple doesn’t have much to lose by kicking Fortnite out. The company has taken in about $350 million in revenue from Fortnite since the game launched on the iPhone in 2018, according to Sensor Tower data. Apple pulled in sales of more than $250 billion in its latest fiscal year.

Read more: Spotify, Match Launch Coalition to Protest App Store Rules

If the court forces Apple to keep distributing Unreal Engine, that could be positive for the iPhone maker. The decision would let other games that use the tools continue distributing their software via Apple’s platform, resulting in a 30% cut for each sale or in-app purchase. However, Apple argues that the continued distribution of Unreal Engine by what it considers to be a rogue developer could harm consumer security.

There are broader risks for Apple from the case, though. If Epic continues to paint Apple as the bad guy to younger iPhone and iPad owners who play Fortnite, that could twist the perception of these users toward Apple as a whole. If Epic wins key decisions, that would make it more difficult for Apple to impose its App Store payment system on other developers, curbing a high-margin source of revenue.

The lawsuit might also spur Apple to continue tweaking its store. While the company isn’t budging on its 30% cut, it has loosened some restrictions recently, letting a small handful of apps avoid the fee.

Read more: Apple Loosens App Store Rules a Bit After Developer Backlash

©2020 Bloomberg L.P.

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