One the same day as Fortnite maker Epic Games goes to trial with one of the biggest legal challenges to the App Store’s business model to date, it has simultaneously announced the acquisition of the artist portfolio community ArtStation — and immediately lowered the commissions on sales. Now standard creators on ArtStation will see the same 12% commission rate found in Epic’s own Games Store for PCs, instead of the 30% it was before. This reduced rate is meant to serve as an example the wider community as to what a “reasonable” commission should look like. This could become a point of comparison with the Apple App Store’s 30% commission for larger developers like Epic as the court case proceeds.
ArtStation today offers a place for creators across gaming, media, and entertainment to showcase their work and find new jobs. The company has had a long relationship with Epic Games, as many ArtStation creators work with Epic’s Unreal Engine. However, ArtStation has also been a home to 2D and 3D creators across verticals, including those who don’t work with Unreal Engine.
The acquisition won’t change that, the team says in its announcement. Instead, the deal will expand the opportunities for creators to monetize their work. Most notably, that involves the commission drop. For standard creators, the fees will drop from 30% to 12%. For Pro members (who pay $9.95/mo for a subscription), the commission goes even lower — from 20% to 8%. And for self-promoted sales, the fees will be just 5%. ArtEngine’s streaming video service, ArtStation Learning, will also be free for the rest of 2021, the company notes.
The slashed commission, however, is perhaps the most important change Epic is making to ArtStation because it gives Epic a specific example as to how it treats its own creator communities. It will likely reference the acquisition and the commission changes during its trial with Apple, along with its own Epic Games Store and its similarly low rate. Already, Epic’s move had prompted Microsoft to lower its cut on game sales, too, having recently announced a similar 30% to 12% drop.
In the trial, Epic Games will try to argue that Apple has a monopoly on the iOS app ecosystem and it abuses its market power to force developers to use Apple’s payment systems and pay it commissions on the sales and in-app purchases that flow through those systems. Epic Games, like several other larger app makers, would rather use its own payment systems to avoid the commission — or at the very least, be able to point users to a website where they can pay directly. But Apple doesn’t allow this, per its App Store guidelines.
Last year, Epic Games triggered Fortnite’s App Store expulsion by introducing a new direct way to pay on mobile devices which offered a steep discount. It was a calculated move. Both Apple and Google immediately banned the game for violating their respective app store policies, as a result. And then Epic sued.
While Epic’s fight is technically with both Apple and Google, it has focused more of its energy on the former because Android devices allow sideloading of apps (a means of installing apps directly), and Apple does not.
Meanwhile, Apple’s argument is that Epic Games agreed to Apple’s terms and guidelines and then purposefully violated them in an effort to get a special deal. But Apple says the guidelines apply to all developers equally, and Epic doesn’t get an exception here.
However, throughout the course of the U.S. antitrust investigations into big tech, it was discovered that Apple did, in fact, make special deals in the past. Emails shared by the House Judiciary Committee as a part of an investigation revealed that Apple had agreed to a 15% commission for Amazon’s Prime Video app at the start, when typically subscription video apps are 30% in year one, then 15% in year two and beyond. (Apple says Amazon simply qualified for a new program.) Plus, other older emails revealed Apple had several discussions about raising commissions even higher than 30%, indicating that Apple believed its commission rate had some flex.
Ahead of today’s acquisition by Epic Games, ArtStation received a “Megagrant” from Epic during the height of the pandemic to help it through an uncertain period. This could may have pushed the two companies to further discuss deeper ties going forward.
“Over the last seven years, we’ve worked hard to enable creators to showcase their work, connect with opportunities and make a living doing what they love,” said Leonard Teo, CEO and co-founder of ArtStation, in a statement. “As part of Epic, we will be able to advance this mission and give back to the community in ways that we weren’t able to on our own, while retaining the ArtStation name and spirit.”
The European Commission has announced that it’s issued formal antitrust charges against Apple, saying today that its preliminary view is Apple’s app store rules distort competition in the market for music streaming services by raising the costs of competing music streaming app developers.
The Commission begun investigating competition concerns related to iOS App Store (and also Apple Pay) last summer.
“The Commission takes issue with the mandatory use of Apple’s own in-app purchase mechanism imposed on music streaming app developers to distribute their apps via Apple’s App Store,” it wrote today. “The Commission is also concerned that Apple applies certain restrictions on app developers preventing them from informing iPhone and iPad users of alternative, cheaper purchasing possibilities.”
Commenting in a statement, EVP and competition chief Margrethe Vestager, said: “App stores play a central role in today’s digital economy. We can now do our shopping, access news, music or movies via apps instead of visiting websites. Our preliminary finding is that Apple is a gatekeeper to users of iPhones and iPads via the App Store. With Apple Music, Apple also competes with music streaming providers. By setting strict rules on the App store that disadvantage competing music streaming services, Apple deprives users of cheaper music streaming choices and distorts competition. This is done by charging high commission fees on each transaction in the App store for rivals and by forbidding them from informing their customers of alternative subscription options.”
Apple sent us this statement in response:
“Spotify has become the largest music subscription service in the world, and we’re proud for the role we played in that. Spotify does not pay Apple any commission on over 99% of their subscribers, and only pays a 15% commission on those remaining subscribers that they acquired through the App Store. At the core of this case is Spotify’s demand they should be able to advertise alternative deals on their iOS app, a practice that no store in the world allows. Once again, they want all the benefits of the App Store but don’t think they should have to pay anything for that. The Commission’s argument on Spotify’s behalf is the opposite of fair competition.”
Vestager is due to hold a press conference shortly — so stay tuned for updates.
This story is developing…
A number of complaints against Apple’s practices have been lodged with the EU’s competition division in recent years — including by music streaming service Spotify; video games maker Epic Games; and messaging platform Telegram, to name a few of the complainants who have gone public (and been among the most vocal).
The main objection is over the (up to 30%) cut Apple takes on sales made through third parties’ apps — which critics rail against as an ‘Apple tax’ — as well as how it can mandate that developers do not inform users how to circumvent its in-app payment infrastructure, i.e. by signing up for subscriptions via their own website instead of through the App Store. Other complaints include that Apple does not allow third party app stores on iOS.
Apple, meanwhile, has argued that its App Store does not constitute a monopoly. iOS’ global market share of mobile devices is a little over 10% vs Google’s rival Android OS — which is running on the lion’s share of the world’s mobile hardware. But monopoly status depends on how a market is defined by regulators (and if you’re looking at the market for iOS apps then Apple has no competitors).
The iPhone maker also likes to point out that the vast majority of third party apps pay it no commission (as they don’t monetize via in-app payments). While it argues that restrictions on native apps are necessary to protect iOS users from threats to their security and privacy.
Last summer the European Commission said its App Store probe was focused on Apple’s mandatory requirement that app developers use its proprietary in-app purchase system, as well as restrictions applied on the ability of developers to inform iPhone and iPad users of alternative cheaper purchasing possibilities outside of apps.
It also said it was investigating Apple Pay: Looking at the T&Cs and other conditions Apple imposes for integrating its payment solution into others’ apps and websites on iPhones and iPads, and also on limitations it imposes on others’ access to the NFC (contactless payment) functionality on iPhones for payments in stores.
The EU’s antitrust regulator also said then that it was probing allegations of “refusals of access” to Apple Pay.
In March this year the UK also joined the Apple App Store antitrust investigation fray — announcing a formal investigation into whether it has a dominant position and if it imposes unfair or anti-competitive terms on developers using its app store.
US lawmakers have, meanwhile, also been dialling up attention on app stores, plural — and on competition in digital markets more generally — calling in both Apple and Google for questioning over how they operate their respective mobile app marketplaces in recent years.
Last month, for example, the two tech giants’ representatives were pressed on whether their app stores share data with their product development teams — with lawmakers digging into complaints against Apple especially that Cupertino frequently copies others’ apps, ‘sherlocking’ their businesses by releasing native copycats (as the practice has been nicknamed).
Back in July 2020 the House Antitrust Subcommittee took testimony from Apple CEO Tim Cook himself — and went on, in a hefty report on competition in digital markets, to accuse Apple of leveraging its control of iOS and the App Store to “create and enforce barriers to competition and discriminate against and exclude rivals while preferencing its own offerings”.
“Apple also uses its power to exploit app developers through misappropriation of competitively sensitive information and to charge app developers supra-competitive prices within the App Store,” the report went on. “Apple has maintained its dominance due to the presence of network effects, high barriers to entry, and high switching costs in the mobile operating system market.”
The report did not single Apple out — also blasting Google-owner Alphabet, Amazon and Facebook for abusing their market power. And the Justice Department went on to file suit against Google later the same month. So, over in the U.S., the stage is being set for further actions against big tech. Although what, if any, federal charges Apple could face remains to be seen.
At the same time, a number of state-level tech regulation efforts are brewing around big tech and antitrust — including a push in Arizona to relieve developers from Apple and Google’s hefty cut of app store profits.
While an antitrust bill introduced by Republican Josh Hawley earlier this month takes aim at acquisitions, proposing an outright block on big tech’s ability to carry out mergers and acquisitions.
Although that bill looks unlikely to succeed, a flurry of antitrust reform bills are set to introduced as U.S. lawmakers on both sides of the aisle grapple with how to cut big tech down to a competition-friendly size.
In Europe lawmakers are already putting down draft laws with the same overarching goal.
In the EU the Commission has proposed an ex ante regime to prevent big tech from abusing its market power, with the Digital Markets Act set to impose conditions on intermediating platforms who are considered ‘gatekeepers’ to others’ market access.
In the UK, which now sits outside the bloc, the government is also drafting new laws in response to tech giants’ market power — saying it will create a ‘pro-competition’ regime that will apply to platforms with so-called ‘strategic market status’ — but instead of a set list of requirements it wants to target specific measures per platform.
Apple was questioned on its inability to reign in subscription scammers on its App Store during yesterday’s Senate antitrust hearing. The tech giant has argued that one of the reasons it requires developers to pay App Store commissions is to help Apple fight marketplace fraud and protect consumers. But developers claim Apple is doing very little to stop obvious scams that are now raking in millions and impacting consumer trust in the overall subscription economy, as well as in their own legitimate, subscription-based businesses.
One developer in particular, Kosta Eleftheriou, has made it his mission to highlight some of the most egregious scams on the App Store. Functioning as a one-man bunco squad, Eleftheriou regularly tweets out examples of apps that are leveraging fake reviews to promote their harmful businesses.
Some of the more notable scams he’s uncovered as of late include a crypto wallet app that scammed a user out of his life savings (~$600,000) in bitcoin; a kids game that actually contained a hidden online casino; and a VPN app scamming users out of $5 million per year. And, of course, there’s the scam that lit the fire in the first place: a competitor to Eleftheriou’s own Apple Watch app that he alleges scammed users out of $2 million per year, after stealing his marketing materials, cloning his app, and buying fake reviews to make the scammer’s look like the better choice.
Eleftheriou’s tweets have caught the attention of the larger app developer community, who now email him other examples of scams they’ve uncovered. Eleftheriou more recently took his crusade a step further by filing a lawsuit against Apple over the revenue he’s lost to App Store scammers.
Though Eleftheriou wasn’t name-checked in yesterday’s antitrust hearing, his work certainly was.
In a line of questioning from Georgia’s Senator Jon Ossoff, Apple’s Chief Compliance Officer Kyle Andeer was asked why Apple was not able to locate scams, given that these fraudulent apps are, as Ossoff put it, “trivially easy to identify as scams.”
He asked why do we have rely upon “open source reporting and journalists” to find the app scams — a reference that likely, at least in part, referred to Eleftheriou’s recent activities.
Eleftheriou himself has said there’s not much to his efforts. You simply find the apps generating most revenues and then check them for suspicious user reviews and high subscription prices. When you find both, you’ve probably uncovered a scam.
Andeer demurred, responding to Ossoff’s questions by saying that Apple has invested “tens of millions, hundreds of millions of dollars” in hardening and improving the security of its App Store.
“Unfortunately, security and fraud is a cat and mouse game. Any retailer will tell you that. And so we’re constantly working to improve,” Andeer said. He also claimed Apple was investing in more resources and technologies to catch wrong-doers, and noted that the App Store rejected thousands of apps every year for posing a risk to consumers.
The exec then warned that if Apple wasn’t the intermediary, the problem would be even worse.
“…No one is perfect, but I think what we’ve shown over and over again that we do a better job than others. I think the real risks of opening up the iPhone to sideloading or third-party app stores is that this problem will only multiply. If we look at other app stores out there, we look at other distribution platforms, it scares us.”
Ossoff pressed on, noting the sideloading questions could wait, and inquired again about the scam apps.
“Apple is making a cut on those abusive billing practices, are you not?,” he asked.
Andeer said he didn’t believe that was the case.
“If we find fraud — if we find a problem, we’re able to rectify that very quickly. And we do each and every day,” he said.
But to what extent Apple was profiting from the App Store scams was less clear. Ossoff wanted to know if Apple refunded “all” of its revenues derived from the scam billing practices — in other words, if every customer who ever subscribed got their money back when a scam was identified.
Andeer’s answer was a little vague, however, as it could be interpreted to mean Apple refunds customers who report the scam or file a complaint — procedures it already has in place today. Instead of saying that Apple refunds “all customers” when scams are identified, he carefully worded his response to say Apple worked to make sure “the customer” is made whole.
“Senator, that’s my understanding. There’s obviously a dedicated team here at Apple who works this each and every day. But my understanding is that we work hard to make sure the customer is in a whole position. That’s our focus at the end of the day. If we lose the trust of our customers, that’s going to hurt us,” he said.
For what it’s worth, Eleftheriou wasn’t buying it.
“Apple’s non-answers to Senator Ossoff’s great questions in yesterday’s hearing should anger all of us. They did not offer any explanation for why it’s so easy for people like me to keep finding multi-million-dollar scams that have been going on unchecked on the App Store for years. They also gave no clear answer to whether they’re responsible for fraudulent activity in their store,” he told TechCrunch.
“Apple appears to profit from these scams, instead of refunding all associated revenues back to affected users when they belatedly take some of these down. We’ve been letting Apple grade their own homework for over a decade. I urge the committee to get to the bottom of these questions, including Apple’s baffling decision years ago to remove the ability for users to flag suspicious apps on the App Store,” Eleftheriou added.
Apple did not provide a comment.
In today’s antitrust hearing in the U.S. Senate, Apple and Google representatives were questioned on whether they have a “strict firewall” or other internal policies in place that prevent them from leveraging the data from third-party businesses operating on their app stores to inform the development of their own competitive products. Apple, in particular, was called out for the practice of copying other apps by Senator Richard Blumenthal (D-CT), who said the practice had become so common that it earned a nickname with Apple’s developer community: “sherlocking.”
Sherlock, which has its own Wikipedia entry under software, comes from Apple’s search tool in the early 2000s called Sherlock. A third-party developer, Karelia Software, created an alternative tool called Watson. Following the success of Karelia’s product, Apple added Watson’s same functionality into its own search tool, and Watson was effectively put out of business. The nickname “Sherlock” later became shorthand for any time Apple copies an idea from a third-party developer that threatens to or even destroys their business.
Over the years, developers claimed Apple has “sherlocked” a number of apps, including Konfabulator (desktop widgets), iPodderX (podcast manager), Sandvox (app for building websites) and Growl (a notification system for Mac OS X) and, in more recent years, F.lux (blue light reduction tool for screens) Duet and Luna (apps that makes iPad a secondary display), as well as various screen-time-management tools. Now Tile claims Apple has also unfairly entered its market with AirTag.
During his questioning, Blumenthal asked Apple and Google’s representatives at the hearing — Kyle Andeer, Apple’s chief compliance officer and Wilson White, Google’s senior director of Public Policy & Government Relations, respectively — if they employed any sort of “firewall” in between their app stores and their business strategy.
Andeer somewhat dodged the question, saying, “Senator, if I understand the question correctly, we have separate teams that manage the App Store and that are engaged in product development strategy here at Apple.”
Blumenthal then clarified what he meant by “firewall.” He explained that it doesn’t mean whether or not there are separate teams in place, but whether there’s an internal prohibition on sharing data between the App Store and the people who run Apple’s other businesses.
Andeer then answered, “Senator, we have controls in place.”
He went on to note that over the past 12 years, Apple has only introduced “a handful of applications and services,” and in every instance, there are “dozens of alternatives” on the App Store. And, sometimes, the alternatives are more popular than Apple’s own product, he noted.
“We don’t copy. We don’t kill. What we do is offer up a new choice and a new innovation,” Andeer stated.
His argument may hold true when there are strong rivalries, like Spotify versus Apple Music, or Netflix versus Apple TV+, or Kindle versus Apple Books. But it’s harder to stretch it to areas where Apple makes smaller enhancements — like when Apple introduced Sidecar, a feature that allowed users to make their iPad a secondary display. Sidecar ended the need for a third-party app, after apps like Duet and Luna first proved the market.
Another example was when Apple built screen-time controls into its iOS software, but didn’t provide the makers of third-party screen-time apps with an API so consumers could use their preferred apps to configure Apple’s Screen Time settings via the third-party’s specialized interface or take advantage of other unique features.
Blumenthal said he interpreted Andeer’s response as to whether Apple has a “data firewall” as a “no.”
Posed the same question, Google’s representative, White, said his understanding was that Google had “data access controls in place that govern how data from our third-party services are used.”
Blumenthal pressed him to clarify if this was a “firewall,” meaning, he clarified again, “do you have a prohibition against access?”
“We have a prohibition against using our third-party services to compete directly with our first-party services,” White said, adding that Google has “internal policies that govern that.”
The senator said he would follow up on this matter with written questions, as his time expired.
Tecton, the company that pioneered the notion of the machine learning feature store, has teamed up with the founder of the open source feature store project called Feast. Today the company announced the release of version 0.10 of the open source tool.
The feature store is a concept that the Tecton founders came up with when they were engineers at Uber. Shortly thereafter an engineer named Willem Pienaar read the founder’s Uber blog posts on building a feature store and went to work building Feast as an open source version of the concept.
“The idea of Tecton [involved bringing] feature stores to the industry, so we build basically the best in class, enterprise feature store. […] Feast is something that Willem created, which I think was inspired by some of the early designs that we published at Uber. And he built Feast and it evolved as kind of like the standard for open source feature stores, and it’s now part of the Linux Foundation,” Tecton co-founder and CEO Mike Del Balso explained.
Tecton later hired Pienaar, who is today an engineer at the company where he leads their open source team. While the company did not originally start off with a plan to build an open source product, the two products are closely aligned, and it made sense to bring Pienaar on board.
“The products are very similar in a lot of ways. So I think there’s a similarity there that makes this somewhat symbiotic, and there is no explicit convergence necessary. The Tecton product is a superset of what Feast has. So it’s an enterprise version with a lot more advanced functionality, but at Feast we have a battle-tested feature store that’s open source,” Pienaar said.
As we wrote in a December 2020 story on the company’s $35 million Series B, it describes a feature store as “an end-to-end machine learning management system that includes the pipelines to transform the data into what are called feature values, then it stores and manages all of that feature data and finally it serves a consistent set of data.”
Del Balso says that from a business perspective, contributing to the open source feature store exposes his company to a different group of users, and the commercial and open source products can feed off one another as they build the two products.
“What we really like, and what we feel is very powerful here, is that we’re deeply in the Feast community and get to learn from all of the interesting use cases […] to improve the Tecton product. And similarly, we can use the feedback that we’re hearing from our enterprise customers to improve the open source project. That’s the kind of cross learning, and ideally that feedback loop involved there,” he said.
The plan is for Tecton to continue being a primary contributor with a team inside Tecton dedicated to working on Feast. Today, the company is releasing version 0.10 of the project.
Security researchers say APKPure, a widely popular app for installing older or discontinued Android apps from outside of Google’s app store, contained malicious adware that flooded the victim’s device with unwanted ads.
Kaspersky Lab said that it alerted APKPure on Thursday that its most recent app version, 3.17.18, contained malicious code that siphoned off data from a victim’s device without their knowledge, and pushed ads to the device’s lock screen and in the background to generate fraudulent revenue for the adware operators.
But the researchers said that the malicious code had the capacity to download other malware, potentially putting affected victims at further risk.
The researchers said the APKPure developers likely introduced the malicious code, known as a software development kit or SDK, from an unverified source. APKPure removed the malicious code and pushed out a new version, 3.17.19, and the developers no longer list the malicious version on its site.
APKPure was set up in 2014 to allow Android users access to a vast bank of Android apps and games, including old versions, as well as app versions from other regions that are no longer on Android’s official app store Google Play. It later launched an Android app, which also has to be installed outside Google Play, serving as its own app store to allow users to download older apps directly to their Android devices.
APKPure is ranked as one of the most popular sites on the internet.
But security experts have long warned against installing apps outside of the official app stores as quality and security vary wildly as much of the Android malware requires victims to install malicious apps from outside the app store. Google scans all Android apps that make it into Google Play, but some have slipped through the cracks before.
TechCrunch contacted APKPure for comment but did not hear back.
The pandemic upended the way people shop for their everyday needs, including groceries. Online grocery sales in the U.S. are expected to reach 21.5% of the total grocery sales by 2025, after leaping from 3.4% pre-pandemic to 10.2% as of 2020. One business riding this wave is Mercato, an online grocery platform that helps smaller grocers and speciality food stores get online quickly. After helping grow its merchant sales by 1,300% in 2020, Mercato has now closed on $26 million in Series A funding, the company tells TechCrunch.
The round was led by Velvet Sea Ventures with participation from Team Europe, the investing arm of Lukasz Gadowski, co-founder of Delivery Hero. Seed investors Greycroft and Loeb.nyc also returned for the new round Gadowski and Mike Lazerow of Velvet Sea Ventures have also now joined Mercato’s board.
Mercato itself was founded in 2015 by Bobby Brannigan, who had grown up helping at his family’s grocery store in Brooklyn. But instead of taking over the business, as his Dad had hoped, Brannigan left for college and eventually went on to bootstrap a college textbook marketplace, Valore Books, to $100 million in sales. After selling the business, he returned his focus to the family’s store and found that everything was still operating the way it had been decades ago.
Image Credits: Bobby Brannigan of Mercato
“He had a very basic website, no e-commerce, no social media, and no point-of-sale system,” explains Brannigan. “I said, ‘I’m going to build what you need.’ This was my opportunity to help my dad in an area that I knew about,” he adds.
Brannigan recruited some engineers from his last company to help him build the software systems to modernize his dad’s store, including Mercato’s co-founders Dave Bateman, Michael Mason, and Matthew Alarie. But the team soon realized could do more than help just Brannigan’s dad — they could also help the 40,000 independent grocery stores just like him better compete with the Amazon’s of the world.
The result was Mercato, a platform-as-a-service that makes it easier for smaller grocers and speciality food shops to go online to offer their inventory for pickup or delivery, without having to partner with a grocery delivery service like Instacart, AmazonFresh or Shipt.
The solution today includes an e-commerce website and data analytics platform that helps stores understand what their customers are looking for, where customers are located, how to price their products, and other insights that help them to better run their store. And Mercato is now working on adding on a supply platform to help the stores buy inventory through their system, Brannigan notes.
“Basically, the vision of it is to give them the tech, the systems, and the platform they need to be successful in this day and age,” notes Brannigan.
He likens Mercato as a sort of “Shopify for groceries,” as it gives stores their own page on Mercato where they can reach customers. When the customer visits Mercato on the web or via its app, they can enter in their zip code to see which local stores offer online shopping. Some stores simply redirect their existing websites to their Mercato page, as they can continue to offer other basic information, like address, hours, and other details about their stores on the Mercato-provided site, while gaining access to Mercato’s over 1 million customers.
However, merchants can also opt for a white-label solution that they can plug into their own website, which uses their own branding.
The stores can further customize the experience they want to offer customers, in terms of pickup and delivery, and the time frames for both they want to commit to. If they want to ease into online grocery, for example, they can start with next-day delivery services, then speed thing up to same-day when they’re ready. They can also set limits on how many time slots they offer per hour, based on staffing levels.
Image Credits: Mercato
Unlike Instacart and others which send shoppers to stores to fill the orders, Mercato allows the merchants themselves to maintain the customer relationship by handling the orders themselves, which they can receive via email, text or even robo-phone calls.
“They’re maintaining that relationship,” says Brannigan. “Usually, it’s a lot better if it’s somebody from the store [doing the shopping] because they might know the customer; they know the kind of product they’re looking for. And if they don’t have it, they know something else they can recommend — so they’re like a really efficient recommendation engine.”
“The big difference between an Instacart shopper and the worker in the store is that the worker in the store understands that somebody is trying to put a meal on the table, and certain items could be an important ingredient,” he notes. “For the shoppers at Instacart, it’s about a time clock: how quickly can they pick an order to make the most money.”
The company contracts with both national and regional couriers to handle the delivery portion, once orders are ready.
Mercato’s system was put to test during the pandemic, when demand for online grocery skyrocketed.
This is where Mercato’s ability to rapidly onboard merchants came in handy. The company says it can take stores online in just 24 hours, as it has built out a centralized product catalog of over a million items. It then connects with the store’s point-of-sale system, and uploads and matches the store’s products to their own database. This allows Mercato to map around 95% of the store’s products in a matter of minutes, with the last bit being added manually — which helps to build out Mercato’s catalog even further. Today, Mercato can integrate with virtually all point-of-sale (POS) solutions in the grocery market, which is more than 30 different systems.
As customers shop, Mercato’s system uses machine learning to help determine if a product is likely in stock by examining movement data.
“One of the challenges in grocery is that most stores actually don’t know how many quantities they have in stock of a product,” explains Brannigan. “So we launch a store, we integrate with the POS. And with the POS we can see how quickly a product is moving in-store and online. Based on movement, we can calculate what is in stock.”
This system, he says, continues to get smarter over time, too.
“We’re certainly three to five years ahead, and we’re not going back,” says Brannigan of the COVID impacts to the online grocery business. “It’s very plentiful now in many places, in terms of e-commerce offerings. And the nature of retail businesses is competitive. So if 1% of people are online, it might not drive other people. But if you have 15% of stores online, then other stores have to get online or they won’t be able to compete,” he notes.
Mercato generates revenue both from its consumer-facing membership program, with plans that range from $96/year – $228/year, depending on distance, and from the merchants themselves, who pay a single digit percentage transaction fee on orders — a lower percentage than what restaurant delivery companies charge.
The company has now scaled its service to over 1,000 merchants across 45 U.S. states, including big cities like New York, Chicago, L.A. D.C., Boston, Philadelphia, and others.
With the additional funding, Mercato aims to expand its remotely distributed team of now 80 employees, as well as its data analytics platform, which will help merchants make better decisions that impact their business. It also plans to refresh the consumer subscription to add more benefits and perks that make it more compelling.
Mercato declined to share its valuation or revenue, but as of the start of the pandemic last year, the company had said it was reaching a billion in sales and a $700 million run rate.
Apple has launched a new app, Find My Certification Asst., designed for use by MFi (Made for iPhone) Licensees, who need to test their accessories’ interoperability with Apple’s Find My network. The network helps users find lost Apple devices — like iPhones, AirPods, and Mac computers, among other things — but is poised to add support for finding other compatible accessories manufactured by third parties.
The launch of the testing app signals that Apple may be ready to announce the launch of the third-party device program in the near future.
According to the app’s description, MFi Licensees can use Find My Certification Asst. to test the “discovery, connection, and other key requirements” for their accessories that will incorporate Apple’s Find My network technology. It also points to information about the Find My network certification program on Apple’s MFi Portal at mfi.apple.com, which currently references Find My network as a MFi program technology that’s “launching soon.”
The new app’s screenshots indicate it allows device makers to run a wide variety of tests in areas like connectivity, sound (for example, if the item can make a noise when misplaced), firmware, key management, NFC, power, and more.
Image Credits: App Store screenshot
The app became publicly available on Sunday, April 4th on the iOS App Store, according to Sensor Tower data. It’s brand-new so is not yet ranking in any App Store categories, including its own, “Developer Tools,” or others. It also has no ratings and reviews at this time.
The app’s launch is step towards the larger goal of opening up the Apple Find My network to third-parties and Apple’s planned launch of its own new accessory, AirTags.
Apple at last year’s Worldwide Developer Conference had first announced it would open up Find My to third-party devices after facing pressure from regulators in the U.S. and Europe who had been looking into, among other things, whether Apple had been planning to give itself an advantage with its forthcoming launch of AirTags, a competitor to Tile’s lost-item finder.
Image Credits: screenshot of FMCA app
A prominent Apple critic, Tile had complained that AirTags would be able to connect with Apple’s U1 chips, which use UWB (ultra-wideband) technology for more precise finding capabilities, and at a Congressional hearing noted that AirTags would work with Apple’s own Find My app, which ships by default on Apple devices. This, Tile believed, would give Apple a first-party advantage in the lost-item finder market that Tile had successfully established and dominated for years.
Apple, in response, opened up third-party developer access to its U1 chip via its “NearbyInteraction” framework last year. As a result, Tile in Jan. 2021 announced its plan to launch a new tracker powered by UWB.
More recently, Apple updated its Find My app to include a new tab called “Items” in preparation for the app’s expanded support for AirTags and other third-party accessories, like those from Tile and others. This “Items” tab is enabled in latest Apple’s iOS 14.5 beta release, where the app explains how the Find My app will now be able to help users keep track of their everyday items — including accessories and other items that are compatible with Find My.
However, Tile (and likely others) feel that Apple’s concessions still disadvantage their businesses because participation in Apple’s FindMy program means that the third-party device maker would have to abandon its existing app and instead require its customers to use Apple’s FindMy app — effectively turning over its customers and their data to Apple.
It’s worth noting that, upon launch, the app features an icon that shows three items: headphones, a backpack and a suitcase. Not coincidentally, perhaps, Tile’s first integrations were with Bose headphones and luggage and bag makers, Away and Herschel.
Apple has not responded to a request for comment about the new app’s launch.
U.S. consumers spent an average of $138 on iPhone apps last year, an increase of 38% year over year, largely driven by the pandemic impacts, according to new data from app store intelligence firm Sensor Tower. Throughout 2020, consumers turned to iPhone apps for work, school, entertainment, shopping and more, driving per-user spending to a new record and the greatest annual growth since 2016, when it had then popped by 42% year over year.
Sensor Tower tells TechCrunch it expects the trend of increased consumer spend to continue in 2021, when it projects consumer spend per active iPhone in the U.S. to reach an average of $180. This will again be tied, at least in part, to the lift caused by the pandemic — and, particularly, the lift in pandemic-fueled spending on mobile games.
Image Credits: Sensor Tower
Last year’s increased spending on iPhone apps in the U.S. mirrored global trends, which saw consumers spend a record $111 billion on both iOS and Android apps, per Sensor Tower, and $143 billion, per App Annie, whose analysis had also included some third-party Android app stores in China.
In terms of where U.S. iPhone consumer spending was focused in 2020, the largest category was, of course, gaming.
In the U.S., per-device spending on mobile games grew 43% year over year from $53.80 in 2019 to $76.80 in 2020. That’s more than 20 points higher than the 22% growth seen between 2018 and 2019, when in-game spending grew from $44 to $53.80.
U.S. users spent the most money on puzzle games, like Candy Crush Saga and Gardenscapes, which may have helped to take people’s minds off the pandemic and its related stresses. That category averaged $15.50 per active iPhone, followed by casino games, which averaged $13.10, and was driven by physical casinos closures. Strategy games also saw a surge in spending in 2020, growing to an average of $12.30 per iPhone user spending.
Image Credits: Sensor Tower
Another big category for in-app spending was Entertainment. With theaters and concerts shut down, consumers turned to streaming apps in larger numbers. Disney+ launched in late 2019, just months ahead of the pandemic lockdowns and HBO Max soon followed in May 2020.
Average per-device spending in this category was second-highest, at $10.20, up 26% from the $8.10 spent in 2019. For comparison, per-device spending had only grown by 1% between 2018 and 2019.
Other categories in the top five by per-device spending included Photo & Video (up 56% to $9.80), Social Networking (up 41% to $7.90) and Lifestyle (up 14% to $6.50).
These increases were tied to apps like TikTok, YouTube, and Twitch. Twitch saw 680% year-over-year revenue growth in 2020 on U.S. iPhones, specifically. TikTok, meanwhile, saw 140% growth. In the Lifestyle category, dating apps were driving growth as consumers looked to connect with others virtually during lockdowns, while bars and clubs were closed.
Overall, what made 2020 unique was not necessarily what apps people where using, but how often they were being used and how much was being spent.
App Annie had earlier pointed out that the pandemic accelerated mobile adoption by two to three years’ time. And Sensor Tower today tells us that the industry didn’t see the same sort of “seasonality” around spending in certain types of apps, and particularly games, last year — even though, pre-pandemic, there are typically slower parts of the year for spending. That was not the case in 2020, when any time was a good time to spend on apps.
Launched in only November last year, the Craft Docs app — which was built from the ground up as an iOS app for collaborative documents — has secured an $8 million Series A round led by Creandum. Also participating was InReach Ventures, Gareth Williams, former CEO and co-founder of Skyscanner, and a number of other tech entrepreneurs, many of whom are ex-Skyscanner.
Currently available on iOS, iPadOS and MacOS, Craft now plans to launch APIs, extended integrations, and a browser-based editor in 2021. It has aspirations to become a similar product to Notion, and the founder and CEO Balint Grosz told me over a Zoom call that “Notion is very much focused around writing and wikis and all that sort of stuff. We have a lot of users coming from Notion, but we believe we have a better solution for people, mainly for written content. Notion is very strong with its databases and structural content. People just happen to use it for other stuff. So we are viewed as a very strong competitor by our users, because of the similarities in the product. I don’t believe our markets overlap much, but right now from the outside people do switch from Notion to us, and they do perceive us as being competitors.”
He told me this was less down to the app experience than “the hierarchical content. We have this structure where you can create notes within notes, so with every chunk of text you add content and navigate style, and add inside of that – and notion has that as well. And that is a feature which not many products have, so that is the primary reason why people tend to compare us.”
Craft says it’s main advantages over Notion are UX; Data storage and privacy (Craft is offline first, with real-time sync and collaboration; you can use 3rd party cloud services (i.e. iCloud); and integrations with other tools.
Orosz was previously responsible for Skyscanner’s mobile strategy after the company acquired his previous company, Distinction.
Fredrik Cassel, general partner at Creandum, said in a statement: “Since our first discussions we’ve been impressed by both the amount of love users have for Craft, as well as the team’s unique ability to create a product that is beautiful and powerful at the same time. The upcoming features around connectivity and data accessibility truly set Craft apart from the competition.”
Craft iPad app. Image Credits: Craft
Roberto Bonanzinga, co-founder at InReach Ventures, added: “We invested in Craft on day zero because we were fascinated by the clarity and the boldness of Balint’s vision – to reinvent how millions of people can structure their thoughts and write them down in the most effective and beautiful way.”
The launch and funding of the Craft startup suggests there is something of a “Skyscanner Mafia” emerging, after its acquisition by Trip.com Group (formerly Ctrip), the largest travel firm in China, $1.75 billion in 2016.
Other backers of the company include Carlos Gonzalez (former CPO at Skyscanner, CTPO at GoCardless), Filip Filipov (former VP Strategy at Skyscanner), Ross McNairn (former CEO at Dorsai, CPO at TravelPerk), Stefan Lesser (former Technology and Partnership Manager at Apple) and Akos Kapui (Former Head of Technology at Skyscanner, VP of Engineering at Shapr3D).
The gaming sector has never been hotter or had higher expectations from investors who are dumping billions into upstarts that can adjust to shifting tides faster that the existing giants will.
Bay Area-based Manticore Games is one of the second-layer gaming platforms looking to build on the market’s momentum. The startup tells TechCrunch they’ve closed a $100 million Series C funding round, bringing their total funding to $160 million. The round was led by XN, with participation from Softbank and LVP alongside existing investors Benchmark, Bitkraft, Correlation Ventures and Epic Games.
When Manticore closed its Series B back in September 2019, VCs were starting to take Roblox and the gaming sector more seriously, but it took the pandemic hitting to really expand their expectations for the market. “Gaming is now a bonafide super category,” CEO Frederic Descamps tells TechCrunch.
Manticore’s Core gaming platform is quite similar to Roblox conceptually, the big difference is that the gaming company is aiming to quickly scale up a games and creator platform geared towards the 13+ crowd that may have already left Roblox behind. The challenge will be coaxing that demographic faster than Roblox can expand its own ambitions, and doing so while other venture-backed gaming startups like Rec Room, which recently raised at a $1.2 billion valuation, race for the same prize.
Like other players, Manticore is attempting to build a game discovery platform directly into a game engine. They haven’t built the engine tech from scratch, they’ve been working closely with Epic Games which makes the Unreal Engine and made a $15 million investment in the company last year.
A big focus of the Core platform is giving creators a true drag-and-drop platform for game creation with a specific focus on “remixing” allowing users to pick pre-made environments, drop pre-rendered 3D assets into them, choose a game mode and publish it to the web. For creators looking to inject new mechanics or assets into a title, there will be some technical know-how necessary but Manticore’s team hopes that making the barriers of entry low for new creators means that they can grow alongside the platform. Manticore’s big bet is on the flexibility of their engine, hoping that creators will come on board for the chance to engineer their own mechanics or create their own path towards monetization, something established app store wouldn’t allow them to.
“Creators can implement their own styles of [in-app purchases] and what we’re really hoping for here is that maybe the next battle pass equivalent innovation will come out of this,” co-founder Jordan Maynard tells us.
This all comes at an added cost, developers earn 50% of revenues from their games, leaving more potential revenue locked up in fees routed to the platforms that Manticore depends on than if they built for the App Store directly, but this revenue split is still much friendlier to creators that what they can earn on platforms like Roblox.
Building cross-platform secondary gaming platforms is host to plenty of its own challenges. The platforms involved not only have to deal with stacking revenue share fees on non-PC platforms, but some hardware platforms that are reticent to allow them all, an area where Sony has been a particular stickler with PlayStation. The long-term success of these platforms may ultimately rely on greater independence, something that seems hard to imagine happening on consoles and mobile ecosystems.
Independent music distribution platform and tool factory UnitedMasters has raised a $50M series B round led by Apple. A16z and Alphabet are participating again in this raise. United Masters is also entering a strategic partnership with Apple alongside this investment.
If you’re unfamiliar with UnitedMasters, it’s a distribution company launched in 2017 by Steve Stoute, a former Interscope and Sony Music executive. The focus of UnitedMasters is to provide artists with a direct pipeline to data around the way that fans are interacting with their content and community, allowing them to connect more directly to offer tickets, merchandise and other commercial efforts. UnitedMasters also generally allows artists to retain control of their own masters.
Neither of these conditions are at all typical in the music industry. In a typical artist deal, recording companies retain all audience and targeting data as well as masters. This limits an artist’s ability to be agile, taking advantage of new technologies to foster a community.
While Apple does invest in various companies, it typically does so out of its Advanced Manufacturing Fund to promote US manufacturing or strategically in partners that make critical components of its hardware like silicon foundries or glass manufacturing. Apple does a lot more purchasing than investing, typically, buying a company every few weeks or so to supplement one product effort or another. UnitedMasters, then, would be a relatively unique partnership, especially in the music space.
I spoke to UnitedMasters CEO Steve Stoute about the deal and what it means for the businesses 1M current artists and new ones. Stoute credits Apple executive Eddy Cue having a philosophy aligned with the UnitedMasters vision with getting this deal done.
“We want all artists to have the same opportunity,” says Stoute. “Currently, independent artists have less opportunity for success and we’re trying to remove that stigma.”
This infusion, Stoute says, will be used to hire talent that are mission oriented to take UnitedMasters global. They’re seeking local technical talent and artists talent to build out the platform worldwide.
“Every artist needs access to a CTO,” Stoute says. “Some of the value of what a manager is today for an artist needs to be transferred to that role.”
Currently, UnitedMasters has deals with the NBA, ESPN, TikTok, Twitch and others that allow artists to tap big brand deals that would normally be brokered by a label and manager. It also has a direct distribution app that allows publishing to all of the major streaming services. Most importantly, they can check stream, fan and earnings data at a glance.
“Steve Stoute and UnitedMasters provide creators with more opportunities to advance their careers and bring their music to the world,” said Apple’s Eddy Cue in a release statement. “The contributions of independent artists play a significant role in driving the continued growth and success of the music industry, and UnitedMasters, like Apple, is committed to empowering creators.”
“UnitedMasters has completely transformed the way artists create, retain ownership in their work, and connect with their fans,” said Ben Horowitz, Co-Founder and General Partner of Andreessen Horowitz in a release. “We are excited to work with Steve and team to build a better, bigger, and far more profitable world for musical artists.”
We are currently at an inflection point in the way that artists and fans connect with one another. Though there have been seemingly endless ways for artists to get their messages out or speak to fans using social media and other platforms, the actual business of distributing work to a community and making money from that work has been out of their hands completely since the beginning of the recording industry. Recent developments like NFTs, DAOs and social tokens, as well as an explosion of DTC frameworks have begun to re-write that deal. But the major players have yet to make the truly aggressive strides they need to in order to embrace this ‘artist centric’ new world.
The mechanics of distribution have been based on a framework defined by DRM and the DMCA for decades. This framework was always marketed as a way to protect value for the artist but was in fact architected to protect value for the distributor. We need a rethinking of the entire distribution layer.
As I mentioned when reporting the UnitedMasters + TikTok deal, it’s going to be instrumental in a more equitable future for artists:
It’s beyond time for the creators of The Culture to benefit from that culture. That’s why I find this UnitedMasters deal so interesting. Offering a direct pipeline to audiences without the attendant vulture-ism of the recording industry apparatus is really well-aligned with a platform like TikTok, which encourages and enables “viral sounds” with collaborative performances. Traditional deal structures are not well-suited to capturing viral hype, which can rise and fall within weeks without additional fuel.
In music, Apple is at the center of this maelstrom along with a few other major players like Spotify. One of the big misses in recent years for Apple Music, in my opinion, was Apple’s failure to turn Apple Music Connect into an industry-standard portal that allowed artists to connect broadly with fans, distribute directly, sell tickets and merchandise but — most importantly — to foster and own their community.
A UnitedMasters tie up isn’t a straight line to that goal, but it’s definitely got the ingredients. I’m looking forward to seeing what this produces.
Image Credits: Steve Stoute
The pandemic-induced growth of e-commerce is, by now, now well documented.
What is happening in the app ecosystem that supports e-commerce? Is it growing? Are we likely to see consolidations or IPOs? Are there superapps that will emerge?
This post is less about conclusions and more about taking you along while I go through the rabbit hole to satiate my own curiosity.
I see all three trends forming:
The closest match to the growing e-commerce stack is the marketing automation stack. While there are significant overlaps, it’s fascinating to compare and contrast the growth of these ecosystems and what drives consolidation.
The closest match to the growing e-commerce stack is the marketing automation stack. While there are significant overlaps, it’s fascinating to compare and contrast the growth of these ecosystems and what drives consolidation.
Between 2015 and 2021, the martech stack grew from 1,800 to 8,000, meaning it roughly doubles every three years.
The explosion of the martech stack is common knowledge and is well documented by Scott Brinker and his famous supergraphics. What’s worth noting is that the consolidation we expected to happen is happening, and yet the pace of new companies coming up in the space makes up for the consolidation — and some more.
According to Brinker, the martech landscape grew 5,233% between 2011 and 2020. The fastest-growing category within martech in 2020 is data and governance, which grew in numbers by 25%. The martech app ecosystem more than tripled between 2015 to 2018, powered by the growth of SaaS and e-commerce industries.
I am an avid tracker of this space, but I am also interested in how we can apply martech’s evolution to the e-commerce stack. The e-commerce stack also grew 3.5 times between 2017 and 2020. But much of the growth is ahead, and so is the upcoming consolidation.
A proposed witness list filed by Apple for its upcoming trial against game-maker Epic reads like a who’s who of executives from the two companies. The drawn out battle could well prove a watershed moment from mobile app payments.
The two sides came to loggerheads when the Fortnite maker was kicked out of the App Store in August of last year after adding an in-game payment system designed to bypass Apple’s – along with Apple’s cut of the profiles.
Epic has accused Apple of monopolist practices pertaining to mobile payment. Apple, meanwhile, has argued that Epic broke the App Store agreement in order to increase its revenue.
Filed late last night by the hardware giant, the document includes top executives from bot sides. For Apple, the list includes CEO Tim Cook, Software Engineering SVP Craig Federighi and Apple Fellow, Phil Schiller. On team Epic, it’s Tim Sweeney and VP Mark Rein. Executives from Microsoft, Facebook and NVIDIA are also included, for good measure.
In a statement provided to TechCrunch, Apple notes,
Our senior executives look forward to sharing with the court the very positive impact the App Store has had on innovation, economies across the world and the customer experience over the last 12 years. We feel confident the case will prove that Epic purposefully breached its agreement solely to increase its revenues, which is what resulted in their removal from the App Store. By doing that, Epic circumvented the security features of the App Store in a way that would lead to reduced competition and put consumers’ privacy and data security at tremendous risk.
The trial is expected to kick off May 3. We’ve reached out to Epic for additional comment.
Squarespace has raised $300 million in a round of funding that values the company at a staggering $10 billion valuation.
New backers include Dragoneer, Tiger Global, D1 Capital Partners, Fidelity Management & Research Company, funds and accounts advised by T. Rowe Price Associates, Inc. and Spruce House. Existing backers Accel and General Atlantic also participated.
Squarespace founder & CEO Anthony Casalena said the fresh capital will advance the company’s growth initiatives and help it scale its product suite.
The move comes less than two months after the company filed confidentiality to go public via a direct listing or initial public offering.
Squarespace, which has helped millions create their own websites, was founded in 2003 and bootstrapped until a $38.5 million Series A in 2010 that was co-led by Accel and Index Ventures.
The online website creation and hosting service — which has now expanded into e-commerce by hosting online stores — then raised another $40 million round in 2014. But it is perhaps best known for its epic 2017-era $200 million secondary round that General Atlantic financed. That round was raised at a $1.5 billion pre-money valuation.
At that time, TechCrunch reported that Squarespace was a profitable company, with revenues increasing 50% in the prior year, to about $300 million. Execs are declining to comment on the company’s latest funding round beyond a post on its website.
New York City-based Squarespace has over 1,200 employees spread across its headquarters and offices in Dublin, Ireland; Portland, Oregon; and Los Angeles, California.
Google will lower its Play commissions globally for developers that sell in-app digital goods and services on its marquee store, the company said, following a similar move by rival Apple late last year.
The Android-maker said on Tuesday that starting July 1, it is reducing the service fee for Google Play to 15% — down from 30% — for the first $1 million of revenue developers earn using Play billing system each year. The company will levy a 30% cut on every dollar developers generate through Google Play beyond the first $1 million in a year, it said.
Citing its own estimates, Google said 99% of developers that sell goods and services with Play will see a 50% reduction in fees, and that 97% of apps globally do not sell digital goods or pay any service fee.
Google’s new approach is slightly different from Apple, which last year said it would collect 15% rather than 30% of App Store sales from companies that generate no more than $1 million in revenue through the company’s platform. That drop doesn’t apply to iOS apps if a developer’s revenue on Apple platform exceeds $1 million.
“We’ve heard from our partners making $2 million, $5 million and even $10 million a year that their services are still on a path to self-sustaining orbit,” wrote Sameer Samat, VP of Android and Google Play, in a blog post.
“This is why we are making this reduced fee on the first $1 million of total revenue earned each year available to every Play developer that uses the Play billing system, regardless of size. We believe this is a fair approach that aligns with Google’s broader mission to help all developers succeed.”
The move comes months after changes in Google billing system charges rattled many startups in India. More than 150 startups banded together last year after Google said it will collect as high as 30% cut on in-app purchases in a range of categories made by Android apps.
Following the backlash, Google delayed mandating the planned Play Store payments rule in India to April 2022 and had reached out to several firms in recent months in the country to better understand their concerns, people familiar with the matter told TechCrunch.
Vijay Shekhar Sharma, founder and chief executive of mobile payments provider Paytm, India’s most valuable startup, dismissed Google’s move today as a “PR stunt.”
In an interview with TechCrunch, Sharma said established firms like his will still have to pay an exorbitant amount of fee to Google. Today’s announcement by Google, he said, further raises the question whether Google plans to address concerns raised by serious internet firms at all.
The biggest concern firms face today is the inability to use a third-party payments service for billing, he said. “They are basically saying that as soon as you build a business larger than $1 million — which is a very low bar — you are going to pay a 30% fee, which after taxes, becomes 44%,” he said.
A 30% sales cut and the inability to use third-party billing system have been points of contention between many developers and app store operators — Apple and Google — and led to a lawsuit by Fortnite-maker Epic Games against the iPhone-maker last year. Epic CEO Tim Sweeney had alleged that Apple’s move to lower the App Store fee for smaller developers was orchestrated to sow division among app creators.
Sharma said he was hopeful that Google will address other concerns, especially because in a country like India “we don’t have any other operating system, or distribution platform. They effectively control the destiny of every app developer in the country.”
Android commands 99% of the smartphone market in India, according to research firm Counterpoint. “Earlier India was powered by Android, then we became dependent on Android, and now it is controlled by Android,” said Sharma, whose payments app competes with Google Pay in the world’s second largest internet market.
Google’s Samat said,”We look forward to seeing more businesses scale to new heights on Android, and to further discussions with the Indian developer community to find new ways to support them technically and economically as they build their businesses.”
“Once developers confirm some basic information to help us understand any associated accounts they have and ensure we apply the 15% properly, this discount will automatically renew each year,” he wrote.
Welcome back to This Week in Apps, the weekly TechCrunch series that recaps the latest in mobile OS news, mobile applications and the overall app economy.
The app industry is as hot as ever, with a record 218 billion downloads and $143 billion in global consumer spend in 2020.
Consumers last year also spent 3.5 trillion minutes using apps on Android devices alone. And in the U.S., app usage surged ahead of the time spent watching live TV. Currently, the average American watches 3.7 hours of live TV per day, but now spends four hours per day on their mobile devices.
Apps aren’t just a way to pass idle hours — they’re also a big business. In 2019, mobile-first companies had a combined $544 billion valuation, 6.5x higher than those without a mobile focus. In 2020, investors poured $73 billion in capital into mobile companies — a figure that’s up 27% year-over-year.
This week, we’re taking a look at some of the buzzier stories from the world of apps, including the latest around Parler’s attempted return to the App Store, a review of Walmart’s second livestream shopping event, and Instagram Lite’s global rollout. We also have new Clubhouse data on its total installs and its global footprint and info about Disney’s new service that could replace your MagicBand, among other things.
The right-wing social app was booted from the App Store, Google Play and Amazon AWS following the U.S. Capitol riot, for violations of community guidelines. Apple had specifically asked Parler to change its moderation policies, which had been fairly hands-off prior to its removal from the App Store. Though Apple has a number of rules about what apps can and cannot do, Parler’s own policies were guided by the First Amendment’s approach to free speech — basically, users could say almost anything without consequence.
According to documents obtained by Bloomberg, Parler again tried to gain entry into the App Store after the original ban, and was again denied. Following the new review, Apple reportedly told Parler’s chief policy officer on Feb. 25, there was no place for “hateful, racist, discriminatory content” on the App Store. The review had also included several offensive images, including profile pictures with swastikas and other white nationalist imagery, as well as misogynistic, homophobic and racist usernames and posts.
Parler last month had said negotiations with Apple were underway, and it expected to get back in the App Store. But with this new rejection, Parler cut its three remaining iOS developers from its team, out of a total of seven who were let go, Bloomberg reported.
The controversy around Parler is reflective of a larger conversation underway in the U.S. over tech’s responsibility to moderate the content on its platforms, as users’ posts and comments are increasingly leading to real-world violence. The U.S. government has not yet regulated these platforms, leaving decisions like this up to tech itself. Parler, in a statement, said it had added filters and human review to address threats of violence, as well as optional tools that let users filter and block certain kinds of hate speech. But this didn’t go far enough to address Apple’s claims about hate symbols and offensive speech still present on the network.
Apple released important security patches across all platforms. The patches fix a vulnerability — a memory corruption bug in WebKit, the engine that powers Apple’s Safari browser. An attacker can exploit the vulnerability via a malicious web page.
Image Credits: Walmart
Walmart again teamed up with TikTok to host a new livestream shopping event on Thursday night. The event, co-hosted by Gabby Morrison and Nabela Noor, focused on beauty products, offering demos and tutorials where viewers could buy the products through an integrated shopping cart. The content itself was engaging, feeling very much like the makeup tutorials and “get ready with me” vlogs users already watch across social media platforms. Gabby, who demoed all the products, was adept at balancing the more casual makeup try-on portions of the live event with the QVC-like call-to-action to actually buy the item being shown.
At times, there were as many as 8,000+ concurrent viewers participating in the live event, we noticed during our viewing. (We joined about 20 mins. after its start). During the event, we saw high engagement in the stream’s comments, including a number of positive comments — like jokes from users who lamented they were buying everything, shout-outs from those who just added an item to their cart, or compliments directed at the hosts. But there were also some trolling remarks that should have violated TikTok’s guidelines over cyberbullying, which were not moderated out — an issue TikTok will need to address as these events grow larger and more common.
Image Credits: screenshot of Walmart’s account on TikTok
Walmart last year had run an apparel-focused live shopping holiday event — the first pilot of TikTok’s live shopping feature in the U.S. The retailer has not commented on sales from its first event, but says they hit Walmart’s projections. Walmart also said the event drove a 25% increase in TikTok follower growth, and 7x more views than anticipated.
Facebook is targeting emerging markets with launch of Instagram Lite, a lightweight Android version of the app that takes up just 2MB of space. The app was made available across 170 countries this week, offering the ability to view and share photos and videos, Stories, IGTV, discover content through Explore, and more. However, the app lacks the ability to film Reels — Instagram’s TikTok rival — users can only view them.
Image Credits: Facebook
The app is not Facebook’s first attempt to develop a lightweight version of Instagram. The company previously released an Progressive Web App, which was pulled in 2020. A new app was then launched in December in India in a limited test, ahead of this broader release.
Clubhouse has now reached 12 million worldwide downloads, an increase of 600K since March 1, according to new data from App Annie. The largest market for the app is still the U.S. which accounts for 3.1 million downloads. But the app has a strong global footprint, with 1.8m downloads in Japan, 710K in Germany, 600K in Brazil, 505K in Russia, 420K in Italy, 375K in the U.K., 370K in South Korea, 350K in Turkey, and 107K in France, the firm said. Clubhouse was said to have 8 million global downloads just in February, so this is notable growth.
Facebook expands creator monetization options with the addition of ads for short-form video content — including videos as short as 1 minute, instead of previous minimum of 3 minutes. Those ads will now play 30 seconds after the start of a shorter video. It also opened its in-stream ads program for Live videos out of invite-only mode. The move could encourage creators to make content for Facebook instead of rival platforms like TikTok, by wooing them with more money-making opportunities.
TikTok rolled out new commenting features aimed at preventing bullying. Creators will now be able to control which comments can be posted on their content, before those comments go live. Another new addition, aimed at users who are commenting, will pop up a box that prompts the user to reconsider posting a comment that may be inappropriate or unkind.
Image Credits: TikTok
Pakistan again bans TikTok over “immoral and objectionable” videos. The app, which has around 33 million users in the country, was blocked by the Pakistan Telecom Authority after Peshawar High Court’s Chief Justice Qaiser Rashid Khan said some TikTok videos were “unacceptable for Pakistani society,” and were “peddling vulgarity.”
A new app called Limit App is offering an Instagram-like service but only for those ages 18 to 25. Reviewed by Geekwire, the app’s creator said it’s not about ageism, but rather about giving young people a place to be themselves. The app uses a secure ID and age verification process to onboard users and, when they turn 26, they’re giving 30 days to download their content before being booted out. Begone, boomers.
Pinterest saw over 193M downloads worldwide in 2020, according to App Annie — a 50% YoY increase, driven by consumers using the platform for product discovery, design ideas, and shopping.
Instagram can now automatically add captions to Stories for better accessibility. Captions are already a commonly used feature on Instagram rival, TikTok, not only for accessibility but also because many people now prefer to have captions on when watching video content.
Facebook tests a feature in India that will share Instagram Reels on the Facebook News Feed. The move is an indication of how seriously Facebook is taking the TikTok threat — it’s now leveraging not just one, but two of the world’s largest social networks to fight back.
TikTok in the U.K. launched a new “music hub” that highlights trending artists and tracks. The company has already been driving music streams and sales through the social app, and the hub will now offer a dedicated section to keep up with what’s currently trending.
Twitter’s head of consumer product, Kayvon Beykpour, defended Apple’s App Store commission rates in recent interview. The exec said the commission isn’t a “highway tax,” but reflects the cost and effort that goes into accepting online payments, including issues with fraud and risk, and the customer service flow around refunds.
India’s government threatened to jail Facebook, WhatsApp and Twitter employees if they don’t comply with data and takedown requests related to the protests by Indian farmers over agricultural law changes.
Image Credits: Twitter
Twitter began a test to make photos look better on its platform. The company is trying out a new way to display images which offer sa more accurate preview of what the photo looks like, instead of automatically cropping the image as before. The change, in part, is also meant to address issues around the baked-in racial bias in Twitter’s algorithm that decided which part of the image to focus on when cropping.
Google will link Android phones with Chromebooks through a new Phone Hub feature, allowing Chrome OS users to respond to texts, check their battery life, enable a Wi-Fi hotspot and locate a misplaced device, among other things.
Bumble launched “Night In,” a new feature in the U.S. and Canada that lets online daters play games together from the app. At launch, users can play trivia games but the company says it plans more virtual experiences in the future. The timing of the launch is interesting — it comes a year into the pandemic which has forced people to stay home and social distance. But as “Night In” arrives, vaccinations are ramping up and, likely, so will real-world, in-person dating. That Bumble still invested in virtual dating experiences indicates the company sees the feature as something with longer-term potential, rather than a temporary stand-in for that first drink or coffee date.
Bumble also filed its first quarterly report since its Feb. 2021 IPO, topping Wall St. estimates with $165.6 million in revenue and 2.7 million paid users (up 32.5% YoY) in the fourth quarter.
Amazon adds a merch store to its streaming music app. The company’s Amazon Music app is now offering in-app product sales from Billie Eilish, Selena Gomez, and other artists via a Merchbar integration. (Just wait until it actually remembers it has a whole retail website it could connect.)
YES Network debuts an app that will live stream New York Yankees, Brooklyn Nets, NYFC, and New York Liberty games via a TV Everywhere integration. This is the first live streaming app from the network. Sure, we need another one.
Apple Podcasts is replacing the “subscribe” button with a “follow” button for keeping up with favorite podcasts. The change, first reported by Podnews, came about because people increasingly think of subscribe as referring to a paid option. I’m sure they didn’t get that idea from…THE APP STORE.
Spotify this week updated its app with support for 36 new languages, as promised during last month’s “Stream On” event, including: Afrikaans, Amharic, Azerbaijani, Bengali, Bhojpuri, Bulgarian, Simplified Chinese, Croatian, Danish, Estonian, Filipino, Gujarati, Hindi, Icelandic, Kannada, Latvian, Lithuanian, Malayalam, Marathi, Nepali, Norwegian, Odia, Persian, Portuguese for Portugal, Eastern Punjabi, Western Punjabi, Romanian, Serbian, Slovak, Slovenian, Swahili, Tamil, Telugu, Ukrainian, Urdu, and Zulu. The app is now available in 62 languages in total, and is expanding to over 80 global markets.
New streaming service Paramount+ saw its app downloaded 277K+ times in the first 5 days, reports Apptopia. The app launched similarly to how HBO Max did — it took an existing app and transitioned it to a new one. In its case, the CBS All Access app transitioned to Paramount+. This impacts the number of early downloads, as many users are just upgraded. Thanks to a pre-launch sale, the app also saw $86.7K in IAP revenue on March 2, the highest single-day revenue to date.
Image Credits: Apptopia
Epic Games takes its app store legal fight to Australia with a new anti-competitive claim against Google, over the 30% commissions on in-app purchases. The company is fighting Apple and Google in many markets now, including the U.S., E.U., and U.K.
The average size of the U.S. App Store’s top games has grown 76% in the past 5 years, says Sensor Tower. The average game file size in 2016 was approximately 264 megabytes across the top 100 revenue generating games on the U.S. App Store. This has grown to 465 MB in 2020. Top games driving the file size growth include DoubleDown, Fortnite, Clash of Clans, Roblox and Homescapes.
Image Credits: Sensor Tower
Data from App Annie indicates app sessions in food and drink apps grew 105% YoY in 2020, as the pandemic led to a surge of adoption for food delivery apps. Deliveroo in particular had a standout year in 2020, as the No. 2 “breakout” food & drink app in France and No. 3 in the U.K. — a metric App Annie uses to track growth in total sessions. App sessions grew from their lowest point of 1.81 billion on March 22, 2020 to 3.02 billion by the end of Dec. 2020, the firm said.
Disney is bringing the service that powers its existing MagicBands to Apple devices with the launch of Disney MagicMobile. The service, which will launch in phases starting later this year, will allow guests to create a mobile pass using the My Disney Experience app, then add it to their smart device’s digital wallet. Users can then hold up their smart device, including their Apple iPhone or Watch, to check into rides at the access points.
Image Credits: Disney
This doesn’t necessarily mean the end for MagicBands, though. The bands still make sense for kids without devices or for anyone who doesn’t want to worry about pulling out their phone for every ride (or who doesn’t own an Apple Watch). Plus, some Disney fans like collecting MagicBands in new styles. Disney said it will soon release a new set with favorite characters.
India’s Paytm will turn Android phones into POS terminals by introducing a card acceptance feature in the NFC-enabled Paytm Business app. Once activated, merchants will be able to process transactions by tapping a payment card to their smartphone.
The new Google Pay app exited beta this week, to replace the older version that will close down on April 5 in the U.S. The updated version include NFC tap-to-pay functionality and p2p payments, but an Ars Technica review slams the app as being less convenient and laden with more fees, among other things.
Chinese beauty app Meitu bought $40 million worth of cryptocurrency, including 15,000 units of Ether and 379.1214267 units of Bitcoin — worth around $22.1 million and $17.9 million, respectively. Meitu chairman Cai Wensheng has been bullish on cryptocurrency and believes in diversifying beyond holding just cash.
Apple must face a consumer lawsuit over FaceTime and iMessage privacy in court, not through private arbitration. The case, Ohanian v Apple Inc. focuses on an iOS bug coupled with T-Mobile’s approach to recycling phone numbers that gave third-parties access to users’ communications, despite Apple’s marketing of iMessage and FaceTime as secure features.
Apple is also now facing a privacy complaint in Europe from startup lobby group, France Digitale. The complaint focuses on the IDFA changes, which will required third-party apps to have to ask to track users, while Apple’s own apps are able to track user activity and run personalized ads by default without a similar opt-in pop-up, giving it an unfair advantage.
Social networking app Wefarm, aimed at independent farmers in Africa, raised $11 million in an extension of its 2019 Series A led by Octopus Ventures. The London-based company now has 2.5 million users and has hosted over 37 million conversations via SMS.
Gaming platform Roblox made its stock market debut on Wednesday under the ticker symbol RBLX. The stock closed the day at $69.50 per share, giving the business a market cap of $38.26 billion. The cross-platform gaming service works across a range of devices, including mobile.
Chatbot startup Heyday raised $5.1 million from existing investors Innovobot and Desjardins Capital for its system that lets businesses respond to customers’ messages across apps like Facebook Messenger, WhatsApp, Google Business Messages or even email.
Songclip raised $11 million in new funding to bring music to more social media apps. The company is working to popularize the short audio clip media format, and make it accessible across a range of services.
Real estate software and data firm VTS acquired Chicago-based Rise Buildings, the makers of a property tech mobile app used in over 130 million sq ft of office space.
Japan’s SoftBank Group announced this week it will invest $4.7 billion into Tokyo-based messaging app Line, owned by Naver. The investment aims to help develop Line into a “super app,” similar to China’s WeChat, by integrating online news and entertainment from Yahoo Japan (which it owns) as well as financial services from SoftBanks’s mobile payments app PayPay, and more.
Mobile payments service PayPal to acquire cryptocurrency security startup Curv in a deal valued at less than $200 million. PayPal has recently partnered with Paxos to allow U.S. users to buy, hold and sell cryptocurrencies in its app.
TikTok competitor Triller bought livestream music competition Verzuz, created by Timbaland and Swizz Beatz. To date, the competition has hosted 43 artists including RZA, Nelly, Ludacris, 2 Chainz, DMX, and Gucci Mane. The program will continue to air on IG Live in addition to now, Triller.
Detail raised $2 million in pre-seed funding led by Connect Ventures for its app that that will turn your iPhone into a software-optimized camera for live video.
Krafton, the developer of PUBG Mobile, invested $22.4 million into the Indian esports firm Nodwin Gaming, a subsidiary of gaming giant Nazara and one of the largest esports firms in India.
Eco, a startup building a personal finance app for saving and spending money, raised $26 million led by a16z Crypto. Uber co-founder Garrett Camp came up with the idea and now advises Eco as a board member. His startup studio, Expa, is also an investor, Fortune reported.
Runway gets YC backing for its service aimed at streamlining mobile app releases. The app was built by the first iOS team for Rent the Runway, and focuses on automating many common pain points that can stop an app release’s progress.
Image Credits: WildWorks
A new game, Fer.al, has entered the market to compete for Gen Z’s time and attention which is currently spent in virtual worlds like Roblox, Minecraft and Fortnite. The game was developed by WildWorks, the makers of what’s often kids’ first virtual world game, Animal Jam. It also continues the animal-as-avatar metaphor, but this time with fantasy creatures you customize yourself, and a storyline about a animal-themed reality show, dueling queens, factions, and adventures. The game is available across platforms including Mac, PC, iOS and Android.
Last week, “deep nostalgia” was going viral as people animated their long-lost relatives or even closer family members using apps like MyHeritage or TokkingHeads. But this week, everyone’s trying out Wombo — an AI-powered deepfake app that can animate any face to lip sync to songs like “Thriller” or “I Will Survive,” as well as many meme songs, like “Never Gonna Give You Up” or “Numa Numa.” The results are…ugh, cringe. But the attention sent a surge of downloads to the app, moving it up to (as of the time of writing) No. 30 Overall on the App Store. Since its Feb. 2020 launch, the app has been downloaded 2M+ times across iOS and Android.
Google has suspended the Trump 2020 campaign app from the Google Play Store for policy violations, the company confirmed, following a report from Android Police which noted the app was unable to load any content and appeared to have been taken down. Both the Android version of the app and its iOS counterpart have been left online since the November 2020 elections, but hadn’t received recent updates — which likely contributed to the app’s stability issues.
The Play Store version hadn’t been updated since October. 30, 2020, for example, according to data from Sensor Tower.
According to Android Police’s report, the app was hanging and couldn’t load content, and it reported connectivity issues. We understand the issue was as they described — when users downloaded the app, it would either hang on the initial loading screen with a spinning “T” logo or it would immediately report a server error at startup. In either case, it would never load the app experience at all.
Recent user reviews on the Play Store noted these issues, saying things like “will not open,” “the app doesn’t even work,” “absolutely terrible doesn’t even work,” “wouldn’t open keep saying check connections,” and more. One user even asked the developer to respond to the numerous complaints, saying “please reply to people commenting. It’s not loading.” Another implied the issues were Google’s fault, noting “worked great, until Google canceled it.”
Google, though, did not cancel it. The Trump 2020 Android app has actually been experiencing problems for some time before Google took this action.
For example, a tweet from around a month ago described a similar set of issues:
— TexanForTrump. God Bless Trump (@BlueWaterPalms) January 18, 2021
Google told with TechCrunch the app has not been banned from the Play Store, only suspended for its non-functionality. It can be reinstated if the problems are addressed. The company also said it attempted to reach out to the app’s developer before taking the app down, but never received a response.
“The Trump 2020 campaign app recently stopped working and we reached out to the developer multiple times in an attempt to get them to address the issue,” a Google spokesperson said. “People expect that apps downloaded from Google Play provide a minimum level of functionality and our policy is to remove non-working apps from the store if they are not fixed.”
Despite the issues on Android, we found the iOS version was still able to load upon first launch, and could send confirmation codes to a phone number at sign-up. But when you visited the app’s main screens, it also now presents an error message. This error doesn’t affect your ability to browse through the past content on iOS, however.
Image Credits: Trump 2020 screenshot on iOS
According to date from Sensor Tower, the Android version hadn’t seen any new installs since Feb. 7, 2021. The firm also noted the Trump 2020 Android app had around 840,000 installs compared with close to 1.5 million on iOS.
This is not the first time the Trump 2020 app’s issues have made headlines.
In the months leading up to last year’s presidential election in the U.S., a number of TikTok users decided to troll the app in its user reviews. (For some reason, Gen Z users believe a lowly-rated app will be automatically removed from the app stores. That’s not true.) Their efforts at the time were able to bring the app’s overall star rating down to just 1.2 stars, and eventually forced the Trump 2020 campaign to reset the app’s ratings.
Though the election is long over, users have still been leaving bad reviews on the app along with their 1-star ratings. Sometimes, the trolls even attempt a bit of humor in the process.
“App attempted a coup to overthrow my phone’s operating system,” said one Play Store reviewer. “I’ve suffered enough since 2016,” said another on iOS.
New Space startup Astra, which is currently focused on commercial rockets, but which plans to eventually build satellites, too, has hired one of Apple’s key engineering leaders to head its own engineering efforts. Benjamin Lyon spent over two decades at Apple, where he worked on everything from the iPhone, to input devices and sensor hardware, to special projects: the department at Apple working on autonomous vehicle technology.
“When I’ve looked at what to do next at Apple, it has always been this combination of ‘What is the most impactful thing that I can do for humanity?’ – the iPhone was very much one of these,” Lyon told me in an interview. “Phones were awful [at the time], and if we could fundamentally come up with a new interface, that would completely change how people interact with devices.”
Creating a mobile device with an interface that was “completely flexible and completely customizable to the application” was what seemed so transformative to Lyon about the iPhone, and he sees a direct parallel in the work that Astra is doing to lower the barrier of access to space through cheap, scalable and highly-efficient rocketry.
“Astra me feels very, very much like redefining what it means for a phone to be smart,” Lyon said. “I think the Astra vision is this magical combination of fundamentally taking the rocket science out of space. How do you do that? Well, you better have a great foundation of a team, and a great foundation of core technologies that you can bring together in order to make a compelling series of products.”
Foundations are the key ingredient according not only to Lyon, but also to Astra co-founder and CEO Chris Kemp, who explained why an experienced Apple engineer made the most sense to him to lead a rocket startup’s engineering efforts.
“We did not want anyone from aerospace – I’ll just I’ll say that out of the gate,” Kemp told me. “Aerospace has not figured out how to build rockets at scale, or do anything profitably – ever. So I found no inspiration from anyone I talked to who had anything to do with with any of the other space-related companies. We do feel that there are people that are at SpaceX and Blue Origin who are really good at what they do. But in terms of the culture that we’re trying to establish at Astra, if you look back at Apple, and the things that that Benjamin worked on there over many decades, he really took on not only designing the the thing, but also designing the thing that makes the thing, which was more important than the thing itself.”
Kemp’s alluding to Apple’s lauded ability to work very closely with suppliers and move fundamental component engineering in-house, crafting unique designs for things like the system-on-a-chip that now powers everything from the iPhone to Macs. Apple often designs the processes involved in making those fundamental components, and then helps its suppliers stand up the factories required to build those to its exacting specifications. Astra’s approach to the space industry centers around a similar approach, with a focus on optimizing the output of its Alameda-based rocket factory, and iterating its products quickly to match the needs of the market while keeping pricing accessible.
And Astra’s definition of ‘iteration’ matches up much more closely with the one used by Silicon Valley than that typically espoused by legacy aerospace companies – going further still in questioning the industry’s fundamentals than even watershed space tech innovators like SpaceX, which in many ways still adheres to accepted rocket industry methods.
“You don’t do the iPhone X at iPhone 1 – you start with the iPhone 1 and you work your way to the iPhone X,” Lyon told me. “You’re going to see that with Astra as well, there’s going to be this amazing evolution, but it’s going to be tech company-rate evolution, as opposed to an ‘every 20 years’ evolution.”
That sentiment lines up with Astra and Kemp’s approach to date: The company reached space for the first time late last year, with a rocket that was the second of three planned launches in a rapid iteration cycle designed to achieve that milestone. After the first of these launches (Rocket 3.1 if you’re keeping track) failed to make space last September, Astra quickly went back to the drawing board and tweaked the design to come back for its successful attempt in December (Rocket 3.2) – an extremely fast turnaround for an aerospace company by any measure. The company is now focused on its Rocket 3.3 launch, which should only require software changes to achieve a successful orbit, and put it on track to begin delivering commercial payloads for paying customers.
Astra’s rocket production facility in Alameda, California.
Astra’s rocket is tiny compared to the mammoth Starship that SpaceX is currently developing, but that’s part of the appeal that drew Lyon to the startup in the first place. He says the goal of “design[ing] a rocket to match the application,” rather than simply “design[ing] a rocket to end all rockets” makes vastly more sense to serve the bourgeoning market.
“And that’s just the beginning,” he added. “Then you’ll take the next step, which is if you look at the technology that’s in a satellite, and a bunch of the smart technology that’s in a rocket, there’s a tremendous amount of duplication there. So, get rid of the duplication – design the rocket and the satellite together as one system.”
Eventually, that means contemplating not only launch and satellite as a single challenge, but also managing “the entire experience of getting to space and managing a constellation” as “a single design problem,” according to Lyon, which is the level of ambition at Astra that he views as on par with that of Steve Jobs at Apple at the outset of the iPhone project.
Ultimately, Astra hopes to be able to provide aspiring space technology companies with everything they need so that the actual space component of their business is fully handled. The idea is that startups and innovators can then focus on bringing new models and sensing technologies to Astra, worrying only about payload – leaving launch, integration and eventually constellation management to the experts. It’s not unlike what the App Store unlocked for the software industry, Lyon said.
“We’re trying to do something that’s never been done before in aerospace, which is to really scale the production of rockets, and also focus on the overall economics of the business,” Kemp explained about additional advantages of having Lyon on board. “As we become a public company, in particular, we have very aggressive EBITDA targets, and very aggressive production targets, much the same way Apple does. We also want to have a new rocket every year, just like [the iPhone] and so to some degree, we found every aspect of Benjamin’s ethos aligned with our values, and the culture that we’re creating here at Astra of relentless, constant innovation and iteration.”
Epic Games has taken its fight against Apple’s App Store rules to the European Union where it’s lodged a complaint with the bloc’s antitrust regulators.
In a blog post today the maker of the popular online game Fortnite said it’s extending its battle for what it dubbed “fairer digital platform practices for developers and consumers” to Europe, noting the bloc is already looking into competition concerns attached to the Apple App Store and its payment service, Apple Pay.
The EU opened a formal probe into certain Apple practices last year.
Regional lawmakers have also recently set out a plan to expand platform regulation to put specific strictures on ‘gatekeeper’ platforms with the aim of ensuring fairness and accountability vis-a-vis third parties. And the issue of platform power is certainly one that’s now under close scrutiny by regulators and lawmakers around the world.
We’re bringing our fight to end Apple’s App Store monopoly to Europe. Apple’s practices are harming consumers and app developers in Europe and around the world, and we’re joining the #EU’s ongoing investigation into Apple’s abuse of its dominant position https://t.co/LIb346QmEi
— Epic Games Newsroom (@EpicNewsroom) February 17, 2021
“The complaint, filed with the European Commission’s Directorate-General for Competition, alleges that through a series of carefully designed anti-competitive restrictions, Apple has not just harmed but completely eliminated competition in app distribution and payment processes,” Epic writes, adding: “Apple uses its control of the iOS ecosystem to benefit itself while blocking competitors and its conduct is an abuse of a dominant position and in breach of EU competition law.”
It’s not seeking damages against Apple but wants EU competition authorities to impose remedies against what it describes as the iPhone maker’s “monopoly channels”.
“What’s at stake here is the very future of mobile platforms,” said Epic Games founder and CEO, Tim Sweeney, in a statement. “Consumers have the right to install apps from sources of their choosing and developers have the right to compete in a fair marketplace. We will not stand idly by and allow Apple to use its platform dominance to control what should be a level digital playing field. It’s bad for consumers, who are paying inflated prices due to the complete lack of competition among stores and in-app payment processing. And it’s bad for developers, whose very livelihoods often hinge on Apple’s complete discretion as to who to allow on the iOS platform, and on which terms.”
Epic launched a US lawsuit against Apple last August after Apple banned Fortnite from the App Store.
The tech giant made the move after Epic tried to bypass its in-app purchase framework (and the cut Apple takes) by adding its own payment mechanism to Fortnite to let users purchase in-game currency directly — in direct contravention of Apple’s rules.
As well as banning Fortnight, Apple said it would go further and revoke Epic’s developer account and access to developer tools for its Unreal Engine — a move that would have affected third party app makers that rely on Epic’s engine. However it was barred from going that far.
A US judge quickly denied Epic’s motion to force Apple to unblock the game but Cupertino was ordered not to block Epic’s ability to provide and distribute its Unreal Engine on iOS — limiting Apple’s ability to take a scorched earth approach to try to shut Epic’s battle down.
Since then Epic has filed legal complaints against Apple in Australia and the UK. It’s now also petitioning EU regulators.
The EU’s antitrust division opened a formal investigation of Apple last summer — more than a year after the Europe-based music streaming service Spotify had made a similar complaint over ‘restrictive’ App Store rules and the 30% cut Cupertino takes on iOS in-app payments.
The Commission said at the time that an unnamed e-book/audiobook distributor had also complained about the impact of App Store rules on competition.
It confirmed today that it has received a complaint by Epic Games against Apple. “We will assess it based on our standard procedures,” a Commission spokesperson told us.
Epic’s argument is that Apple is denying Fortnight users on iOS a choice between Apple payment and Epic direct payment — claiming savings would be passed to direct purchasers (although Epic of course stands to gain money if it can open up a channel that bypasses Apple’s cut on in-app payments).
Epic has also tried to push Apple to let it operate an Epic Games Store on iOS — a move Apple refused, citing the “exacting standards for security, privacy, and content” which it argues are predicated on the App Store rules (although Apple’s claims of curation equaling ‘quality’ don’t always live up to the reality of what it allows to operate on its App Store).
Back in 2019, Apple also launched its own gaming distribution service, Apple Arcade — a pure-play content play that offers access to new and exclusive games playable across Apple’s device ecosystem.
That move was perhaps the straw the broke the camel’s back vis-a-vis Epic Games deciding to go all in on an antitrust brawl with Apple. (Its blog post references Apple Arcade, and notes that Apple has barred competitors, including itself, from doing the same).
It’s worth noting that Epic has also squared up to Google, which similarly takes a cut of in-app payments of Android apps distributed via its Play Store — and which also removed Fortnight from the Play Store last year.
However Google’s Android platform allows sideloading of third party apps and alternative app stores, arguably making it harder to make an antitrust case stick vs the tighter restrictions applied by Apple.
At the same time, Android dominates smartphone marketshare — while Apple’s cut of the global market is less than a fifth.