May 7, 2021

Axios Login

"Axios on HBO" returns this Sunday! National political correspondent Jonathan Swan goes on the road with Sen. Bernie Sanders. .. co-founder Mike Allen sits down with White House chief of staff Ron Klain ... business reporter Hope King meets Shell CEO Ben van Beurden at The Hague ... and I sit down with GLAAD CEO Sarah Kate Ellis to talk about its inaugural social media safety index. (See a clip of Swan and Sanders.)

  • Tune in Sunday at 6pm ET/PT on HBO and HBO Max.

Today's newsletter is 1,358 words, a 5-minute read.

1 big thing: Epic's long game against Apple

Illustration: Sarah Grillo/Axios

Epic's Apple lawsuit is costing the company dearly, but the game developer has its eye on a valuable long-term goal: prying tomorrow's virtual worlds loose from the grip of app store proprietors like Apple.

Between the lines: Epic isn't spending a fortune in legal fees and foregoing a ton of revenue just to shave some costs off in-app purchases on today's phones. Rather, it's planning for a future of creating virtual universes via augmented and virtual reality — without having to send a big chunk of their economies to Apple or Google.

Catch up quick: Epic added its own in-app payment system to the Android and iOS versions of Fortnite last year, knowing that it was likely to be kicked out of Google and Apple's respective app stores.

What's at stake: Epic is asking a judge to rule that Apple is violating antitrust law by insisting that app developers exclusively use its payment system.

  • To get to this point, though, Epic has had to forego hundreds of millions of dollars from iPhone owners who now can't use "Fortnite" on their phones. It's also paying an unspecified amount in legal bills to sue Apple and Google in courtrooms around the world.
  • While it's hard to say exactly how much revenue the firm has lost, since some "Fortnite" players have moved to other devices, Epic said in court documents its data shows that more than 70 million players (64% of those on iOS) did played exclusively on Apple devices. From March 2018 through July 2020, those iOS-only players spent on the order of half a billion dollars.

Many legal scholars believe Epic faces an uphill battle to convince a court to change the way the App Store works.

  • However, Epic could still win in the long term if government regulators force Apple to change its business practices, or if Epic can create enough pressure to cause Apple to change course.

The big picture: In previous interviews and in his trial testimony this week, Epic CEO Tim Sweeney talked about the company's ambition to build a "metaverse" — essentially, a full-on virtual universe encompassing multiple game worlds. To succeed at that, its product needs to be available on all the major platforms.

  • While Apple's 30% cut of in-app payments is similar to what other platform owners take, including Android and the major game consoles, Epic is hoping to change the status quo now, before the existing arrangements propagate from phones and consoles to new platforms, such as VR headsets and augmented reality glasses.
  • Epic believes it can offer a more compelling proposition to both developers and players if it doesn't have to pay the "Apple tax" of 30% off the top.

Yes, but: Epic may want to play a very similar role in its metaverse that Apple plays in the iOS universe.

  • Epic appears to be laying the groundwork for developers to create their own experiences inside "Fortnite" and collect revenue from users.
  • The company will presumably expect these developers to fork some of their income over to Epic along the way.

Of note: "Roblox" already does this — running a universe for developers to build in and splitting the revenue it makes with developers.

  • However, "Roblox" is doing so within the existing app store payment rules.
2. Industry paid for fake FCC comment flood, N.Y. says

A New York Attorney General investigation Thursday found that 18 million of the 22 million comments submitted to the FCC during the 2017 rollback of federal net neutrality rules were fake. And millions of the fraudulent comments were funded by a broadband industry campaign, Axios' Margaret Harding McGill reports.

Why it matters: Federal agencies are required to take public comments into account while developing regulations, but gaming the system with fake comments distorts public opinion and compromises the process' integrity.

Driving the news: New York Attorney General Letitia James outlined a "secret campaign" by an industry trade group and three companies to influence the Federal Communications Commission's repeal of the net neutrality rules in 2017.

  • According to her report, Broadband for America — a coalition of major internet service providers and trade groups — paid $4.2 million to generate and submit 8.5 million fake comments.
  • BFA hired six companies, known as lead generators, that were supposed to solicit comments by using prizes like gift cards. Instead, the AG's office found, the lead generators fabricated responses using real consumer names without their consent.
  • The AG's office notes that it has not found evidence that the broadband companies involved in the campaign "had direct knowledge of fraud."
  • Three lead generators — Fluent, React2Media and Opt-Intelligence — agreed to a $4.4 million settlement with the AG's office as well as behavioral changes.

Yes, but: There was fraud on both sides. The office said a 19-year-old college student submitted 7.7 million comments using fake names in support of the net neutrality rules using automated software.

What's next: The report also recommends policy changes to deter fraudulent comments in future rulemakings.

3. Twitter adds a digital "tip jar"

Twitter on Thursday introduced Tip Jar, a feature that allows users to send and receive monetary support on the platform, Axios' Shawna Chen and I report.

What they're saying: "Tip Jar is an easy way to support the incredible voices that make up the conversation on Twitter," the company said. "This is a first step in our work to create new ways for people to receive and show support on Twitter — with money."

How it works: Starting Thursday, people who use Twitter in English will be able to send tips on iOS and Android.

  • An account's Tip Jar is enabled if its profile page shows the Tip Jar icon next to the "Follow" button.
  • Once you've tapped the icon, you'll be able to choose your preferred payment platform: Bandcamp, Cash App, Patreon, PayPal and Venmo. The actual tip transaction takes place on the payment service's site and uses their existing systems.

Of note: While Twitter takes no cut, different payment systems may take a share before putting money in the jar. And, as tippers quickly noticed, if you use PayPal, the person you are trying to slip a couple bucks to may also get the address you have on file.

The big picture: Right now, Twitter is only allowing a select group of people to add Tip Jar to their profile, including creators, journalists, experts and nonprofits.

  • The company said it plans to expand the group and launch Tip Jar in more languages in the future.

My thought bubble: I'm not looking for these kind of tips, but if you have a tip on a good story, my inbox is open:

4. Driver shortage is pushing rideshare prices up

Illustration: Sarah Grillo/Axios

It's not just you: Uber and Lyft rides are more expensive, company executives said this week.

Why it matters: Demand for rideshare is roaring back as the economy starts to reopen, but the same can't be said for drivers on the apps, Axios' Courtenay Brown reports. That means fewer cars on the road, causing a supply gap that's pushing up prices.

What's going on: Lyft says stronger rider demand began to outpace driver supply at the end of February.

  • One reason for the driver deficit: safety concerns and fear of contracting the virus, Uber CEO Dara Khosrowshahi told CNBC on Thursday.

What they're saying: "We've told our investors we are going to lean into driver supply. We are going to put up our capital to bring more drivers into the system" to alleviate pricing pressure, Khosrowshahi said.

  • "As the vaccine rollout continues, driver availability should naturally improve," Lyft CEO John Zimmer said on a call with Wall Street analysts, though the company expects to invest in incentives to help move the ball along.
5. Take note

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6. After you Login

Since we talked palindromes earlier this week, I decided to find out the longest palindromic word. According to Guinness World Records, it's saippuakivikauppias, a 19-letter Finnish word for one who deals in the caustic soda lye.

  • Ole hyvä! (That's not a palindrome, but is Finnish for "you're welcome.")