Aug 14, 2020

Axios Login

By Ina Fried
Ina Fried

Join Axios’ Margaret Talev and Kim Hart at the DNC on Tuesday for a live, virtual event on Wisconsin’s economic recovery amidst COVID-19, featuring Green Bay Packers president and CEO Mark Murphy, Rep. Gwen Moore (D-Wis.) and 5 Lakes Institute executive director Kathleen Gallagher

Today's Login is 1,426 words, a 5-minute read.

1 big thing: Apple's antitrust fight turns Epic

Illustration: Aïda Amer/Axios

Millions of angry gamers may soon join the chorus of voices calling for an antitrust crackdown on Apple, amid a standoff-turned-legal battle between the iPhone maker and Epic Games, creator of Fortnite, Axios' Kyle Daly, Ashley Gold and Sara Fischer report.

Why it matters: Apple is one of several Big Tech firms accused of violating the spirit, if not the letter, of antitrust law. A high-profile lawsuit could become a roadmap for either building a case against tech titans under existing antitrust laws or writing new ones better suited to the digital economy.

What's new: Epic launched an effort on Thursday to put Apple on its back foot in the courts of both law and public opinion over the up-to-30% commission it takes on in-app purchases and subscriptions and policies that block most developers from skirting that tax.

  • Epic added an option for Fortnite players to either pay it directly to buy in-app currency or pay a premium to go through Apple. The move seemed to be a ploy to get Apple to do exactly what it did next: pull Fortnite from the App Store for breaking in-app payment rules.
  • Almost immediately after, Epic revealed it's suing Apple, asking a federal judge to force Apple to relax the restrictions it places on payments and let developers offer their own payment options. Epic argues Apple is unfairly monopolizing the markets for both iOS app distribution and in-app payments.
  • Epic also debuted a marketing campaign centered around a video parodying Apple's famous "1984" ad — this time, with Apple itself as the Big Brother figure and a Fortnite character as the iconoclast trying to tear down the system.

The big picture: Apple is now facing antitrust scrutiny at home and abroad, and Epic is just one of several developers clashing with Apple. Others include Spotify, Tinder parent Match Group and the makers of email app Hey.

  • They all argue Apple is shaking down entire industries, in some cases putting direct competitors at a disadvantage. (Apple Music, for instance, is a rival service to Spotify.)

Meanwhile: The gaming industry is already upset with Apple.

  • Many mobile game makers have built a sizable chunk of their growth strategy around an iOS feature that lets app makers track user activity to, for instance, target would-be users by interest and see if they actually clicked on a mobile ad directing them to install a particular app.
  • iOS 14, set for a September release, is poised to change that feature so that users have to expressly opt in to let an app track them. A number of gaming publishers told Axios they expect only 20–30% of users to do so.
  • This will make it much harder for gaming publishers, especially smaller ones, to attract new users. (It will also serve as a blow to platforms like Facebook, Instagram, Snapchat and others that rely on app-install ads for revenue.)

Plus: Media companies are grumbling about a recent change Apple made to its mobile and desktop operating systems to send news readers to Apple News+ to read stories, rather than publishers’ own websites. The grievance adds to the pile of antitrust concerns around how Apple operates its platforms.

Between the lines: Epic is marshaling a considerable mass of pent-up frustration with Apple in an effort to deal serious damage to the company. Even if it loses its court case, it could draw public attention and stepped-up regulatory scrutiny to Apple's practices.

Kyle, Ashley and Sara have more here.

2. Fortnite's owner is suing Google, too

It's not just Apple that Epic Games has a beef with. A similar sequence played out with Google Thursday, as Epic added an in-app purchase system to the Android version of Fortnite and was suing Google before the day was through.

Between the lines: Google is less restrictive than Apple in terms of how smartphone users get their apps. Epic is setting that distinction aside and taking aim at the whole model of app distributors extracting hefty commissions from developers.

There are some differences in how the tech giants manage their mobile platforms, along with some similarities.

What's similar:

  • Apple says anyone offering in-app purchases has to use its payment system to have their app in the store. Google has the same requirement.

What's different:

  • With Android, developers have the option of distributing their app outside of the Google Play store, and are then free to process payments on their own. Apple does not allow apps to be loaded outside of its App Store.
  • That means you can still install Fortnite on an Android device, via Epic's website or Samsung's store, for instance. Whereas iPhone customers who didn't already have Fortnite downloaded before the App Store ban came down are out of luck.

Yes, but: Fortnite was originally available to Android users exclusively through Epic's site and was only brought to the Play Store grudgingly. Epic said as it did so that Google puts too many obstacles on apps downloaded outside the Play Store, including various security warnings that people have to go through to install apps in that way.

  • It made that same contention in its suit, arguing Android isn't the open alternative to iOS that Google claims it is.

Meanwhile: A number of companies defended Epic for taking on Apple, including Match Group and Spotify, both of which have previously spoken out against Apple's practices.

3. Uber, Lyft threaten to suspend Calif. services

Uber and Lyft are ratcheting up the fight with California's state government over the classification of drivers with a move that would deprive Californians of their ride-hailing services (and halt driver income), Axios' Kia Kokalitcheva reports.

Driving the news: On Wednesday, both companies said if a court doesn't overturn or further pause a new ruling forcing them to reclassify California drivers as employees, they'll suspend their services in the state until November's election, when voters could potentially exempt them by passing a ballot measure. On Thursday, the court declined to delay its injunction beyond its initial 10-day stay.

Between the lines: Many critics suggested the companies are bluffing, but Kia says she's not so sure. A few reasons...

  1. The logistics for turning contractors into employees aren’t trivial. They'd have to figure out staffing needs and a schedule, hire however many drivers they need, and onboard everyone.
  2. They'll have to reverse all of the above if they prevail on November's ballot initiative.
  3. Depriving customers of these services could get them more support in November. The companies have, in the past, successfully turned customers into their political advocates.
  4. Even if they could make these shifts quickly, it's unlikely the companies want to give drivers a taste of employee life and risk sabotaging their ballot measure.
  5. Lastly: They've done it before. In 2016, when Austin passed new rules requiring driver fingerprinting, Uber and Lyft suspended operations and didn't return until Texas overrode the rules a year later.
4. Charted: The state of the streaming services
Data: Company filings; Chart: Naema Ahmed/Axios

Facing saturation and stiff competition in the U.S., media giants are planning to launch new streaming services internationally to accrue more subscribers, Axios' Sara Fischer reports.

The big picture: Growth in streaming video is exploding, particularly since the pandemic began. Streaming made up 25% of TV usage last quarter, up from 19% at the same time last year, according to Nielsen's latest total audience report.

Driving the news: A slew of TV networks announced new international streaming plans this week. Others offered more details about existing international plans.

  • Fox News says it's launching Fox News International, a new live streaming service with programming from Fox News and Fox Business, for $6.99 monthly. It will debut in Mexico Aug. 20 and Spain, Germany and the U.K. Sept. 17, with plans to be in 20 countries by year's end.
  • ViacomCBS said it plans to launch a paid international streaming service in early 2021, starting with Australia, Latin America, and Nordic countries. The service will include exclusive premieres of all new Showtime and CBS All Access programming.
  • Disney plans to launch a new entertainment streaming service overseas in 2021, to include content from ABC, FX, Freeform, Searchlight and 20th Century Studios.
  • Discovery recently announced plans for a streaming service for non-fiction and unscripted content. The media giant has always had lots of streaming properties abroad, but it's unclear whether the new service will be domestic, international, or both.

Yes, but: Growing international audiences presents challenges, like obtaining programming rights for different markets overseas. And even big media companies will still need to compete with tech giants like Netflix which have been investing in overseas expansions for years.

5. Take Note

On Tap

  • It's 2020, so guessing some combination of an alien invasion, newly identified insect with violent tendencies and (spins wheel) a tornado flood, whatever that is.

Trading Places

  • Oracle has promoted Clay Magouyrk to executive VP of cloud infrastructure, per GeekWire.

ICYMI

  • Labor Secretary Eugene Scalia broke with tradition in pushing for a smaller settlement in a discrimination complaint against Oracle, which is cozy with the Trump White House, a department lawyer says. (NYT)
  • An appeals court ruled that Amazon can be held liable for defective products sold through its marketplace. (The Verge)
  • Google won't take data requests from Hong Kong officials after China's passage of a sweeping security law there. (Washington Post)
6. After you Login

I had other plans for After you Login, but yesterday was a long day and I needed a cute animal video.

Ina Fried

Have a good weekend and hope you get some rest!