Jun 25, 2021

Axios Login

Hmm. What can I say that hasn't already been said? The flapjacks did a handstand on their way to the circus. Well, that's something.

Today's newsletter is 1,294 words, a 5-minute read.

1 big thing: Windows 11 takes aim at Apple and Google

Image: Microsoft

In debuting Windows 11 on Thursday, Microsoft revealed not only a new operating system, but also its sharpest attack yet on the business practices of rivals Google and Apple.

Why it matters: Microsoft still holds the lion's share of the personal computer market. However, it is now trailing in the broader, three-way battle to power all the devices we use to access the internet.

The big picture: Alongside a significant visual revamp, Windows 11 brings a number of business changes that take direct aim at Microsoft's nearest rivals.

  • With Windows 11, developers can put a wide variety of apps in Microsoft's store, including web apps alongside traditional and modern Windows programs.
  • Microsoft is reducing its cut from apps that use its payment platform from 30% to 15%, expanding on a prior move to cut fees on games sold through the store.
  • Those that want to use their own payment system can do so and pay nothing to Microsoft.
  • Windows 11 will also support Android apps via Amazon's App Store. (More on that in the next item below.)

Between the lines: The moves are designed primarily to appeal to developers, but could also increase pressure on rivals to lower their App Store fees.

  • CEO Satya Nadella told Axios last month that he wanted to see lower App Store fees in general and hinted that the next version of Windows would up the pressure on that front.
  • Regulators around the globe have also been investigating Apple and Google's App Store policies and practices, while "Fortnite" developer Epic is suing both companies in an effort to force them to allow rival in-app purchase mechanisms.

What they're saying: Nadella drew a sharp contrast between Microsoft and rivals in his closing remarks Thursday, although he did so in his typically non-confrontational style.

  • "Windows has always stood for sovereignty for creators and agency for consumers, and with Windows 11 we have a renewed sense of Windows’ role in the world," Nadella said.

Yes, but: Critics were quick to point out that Windows 11 bundles in the video and text features from Teams.

  • The bundling of additional features into Windows was at the heart of the government's epic antitrust case against Microsoft two decades ago.
  • The company has largely avoided antitrust scrutiny in recent years, but critics and rivals may use this to try to make sure that Microsoft isn't left out of new legislation.
  • Although Microsoft isn't bundling all of Teams into Windows, the move is unlikely to sit well with companies such as Slack and Zoom.

My thought bubble: The platforms that Microsoft competes with, including Mac, iOS and Android, already bundle far more features and services with their operating systems than Microsoft does. Windows also puts competing apps on a far more level playing field.

2. Microsoft rolls dice on support for Android

Image: Microsoft

The addition of support for Android apps in Windows 11 represented not only the biggest surprise at Microsoft's Thursday event, but also the biggest risk the company is taking with the new operating system.

Why it matters: The move instantly gives Windows the chance to offer thousands of key apps that prior versions didn't support, bolstering its utility, especially when in tablet mode. However, it also risks giving developers less incentive to create Windows-specific apps.

How it works: Microsoft is working with partners to deliver Android apps on Windows 11 PCs.

  • Intel is helping on the technical front, while users will obtain the apps through Amazon's App Store.
  • That means, barring a separate deal, Windows 11 won't run Google's suite of Android apps, including YouTube, Gmail and Google Maps.
  • Microsoft will also make it easier for users to access web-based apps directly from Windows and has already added support for Linux as well.

Gartner analyst Stephen Kleynhans told Axios that Microsoft has been positioning Windows as the "do everything" OS for some time, a move boosted by the addition of Android.

  • "One obvious hole was the lack of mobile applications," Kleynhans said. "With this announcement Microsoft can now claim that Windows can run pretty much any application regardless of what platform it was written for (except of course for Apple's platforms)."

Yes, but: In the long term, Microsoft needs not just lots of apps, but also ones that fully take advantage of Windows.

What they're saying: In an interview, longtime Microsoft executive Yusuf Mehdi said, "By having Android apps on the platform, we think that makes Windows that much more relevant."

  • At the same time, he acknowledged that it will be on Microsoft to convince all developers that Windows is a platform worth writing for. "The onus is on us," he said.
3. Charted: Microsoft is very much Big Tech
Expand chart
Data: YCharts; Chart: Axios Visuals

Although it has been largely left out of the most recent discussions on reining in Big Tech, Microsoft remains one of the largest players in the industry. It recently became only the second company, after Apple, to top a $2 trillion market cap.

Why it matters: Microsoft's hold on the computing business may not be what it once was, but the company remains too big and too successful to be forgotten by rivals or regulators.

4. Google gives cookies a two-year reprieve

Shares for ad tech firms soared Thursday following news from Google that it would continue support for tracking cookies in its Chrome browser for two more years, postponing a long-planned move to end the practice, Axios' Sara Fischer reports.

Why it matters: The end of third-party tracking cookies represents a fundamental shift toward privacy in the internet world. But the advertising industry is woefully unprepared.

Details: Google originally said in early 2020 it planned to phase out support for third-party cookies entirely by the end of 2022. Now, Google says the plan is to begin phasing out cookies in mid-2023 and finish in late 2023.

Be smart: Thousands of ad agencies, brands and tech companies now have two more years to figure out how to come up with a replacement for personal tracking that still makes advertising relevant online.

  • While some ad executives are lauding Google for taking the time to further evaluate cookie replacement proposals, others see it as a blow to the ad industry, which will remain in limbo for many more months.

The big picture: Over the past two years, states have begun introducing their own internet privacy laws, putting pressure on tech giants to come up with better solutions for digital advertising.

  • On desktop, phasing out support for cookies has been the primary way that desktop web browsers, like Google's Chrome, Apple's Safari and Mozilla's Firefox, are trying to be more privacy focused.
  • On mobile, Apple has introduced a new policy to make it harder for people to be tracked across different apps.

Almost every proposed solution has caused drama, because they all require at least one group to give up critical parts of their business.

  • Facebook argues Apple's moves will prevent small businesses from buying ads, which in turn hurts its bottom line. Rival tech firms say Google's efforts are half-baked and self-serving.

The bottom line: Google's delay "should not give anyone the illusion that we have the luxury of time," said Bill Tucker, executive director of the Partnership for Responsible Addressable Media.

  • Eventually, the industry is going to have to figure this out.
5. Take note

On Tap

Trading Places

  • Family benefits company Cleo has hired former Virgin Pulse engineer Tyler Hoersch as VP of Engineering.


6. After you Login

It's Friday, so I wanted you to have something extra special. How about ... John Oliver and Cookie Monster. Wait, you want outtakes too? OK.