The Big Story

The end of an app store era

The App Store and Google Play as we know them may not be long for this world. The mobile marketplaces of Apple and Google are currently facing a wave of assaults from regulators, governments and the courts both at home and overseas. The latest challenge: a landmark law passed in South Korea on Tuesday allowing the use of alternative payment systems for in-app purchases, in effect threatening the ever-lucrative 30% cut.

The South Korean law is a fierce repudiation of the mobile app store business model, and also offers a roadmap for regulators in the EU and the U.S. to adopt similar approaches to reining in Big Tech.

• At the heart of the antitrust battle around Apple and Google is the level of control the companies exert over the financial livelihood of their developers, with the sticking point being the 30% cut that keeps profits flowing to store owners in perpetuity.
• The legislation in South Korea, which is expected to be signed into law in short order by President Moon Jae-in, would open the door to alternative payment systems. Those would let developers transact directly with consumers, bypassing the commission.
• It's not clear how Apple and Google will adjust their businesses. Google said it would "reflect on how to comply with this law," while Apple said only that the law would make it difficult to combat fraud and protect user privacy.

Apple and Google have become prime antitrust targets as a result of their mobile duopoly. Both companies enjoyed little to no interference with their mobile operating systems over the years, allowing them to amass billions of users and clear the playing field of competitors. But the tides are turning.

• Apple is currently embroiled in an antitrust lawsuit with Fortnite maker Epic Games, which is awaiting a verdict from the judge after it went to trial in May.
• The iPhone maker also just settled a class action lawsuit with developers, though it came out unscathed while making only minor concessions. Apple is still tangling with the EU, too, which slapped antitrust charges on it back in April.
• Google is in worse shape. The company is facing numerous antitrust lawsuits from the U.S. Department of Justice and dozens of state attorneys general, and it's also been subject to a handful of fines in the EU over the years (some it's still currently battling on appeal).
• Google is also in a legal fight with Epic that's revealed some rather unsavory business tactics that the search giant has used to protect Android and the Play Store.

And Big Tech may only be delaying the inevitable. Both companies have gigantic legal and PR teams, and Apple in particular has been masterful at shaping public opinion in the past to downplay its market power and align itself with public goods like user privacy. Yet their list of allies is diminishing.

• A number of state legislatures attempted to pass app store bills — which were similar to South Korea's new law — over the past year, most prominently in Arizona. Apple and Google deployed devastating lobbying efforts to crush them.
• The same strategies failed the companies in Seoul, and The New York Times reported last week that the Biden administration, which itself is taking an aggressive stance toward tech regulation, largely declined to step in and help. Earlier this month, Congress introduced an app store bill of its own.
• Both companies have tried to appease regulators by lowering their commissions for small developers. But Apple and Google's biggest opponents — many of them gaming and media companies like Epic and Spotify — also happen to pay the most in commission fees and don't qualify for such reductions.

There exists a world where the mobile app commissions stay in place and exist alongside alternative third-party options and it's up to the user to choose. Or Apple and Google could take adversarial stances and simply charge developers a new monthly fee to distribute software on their respective platforms. Either option would be better than the status quo in the eyes of some developers, and there may be other ideas too.

Thanks to the Epic trial, we know Apple executive Phil Schiller once asked Steve Jobs via email back in July 2011, "Do you think our 70/30 split will last forever?" However you look at it, it's increasingly starting to look like the answer is no.

— Nick Statt (email | twitter)

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PROTOCOL EVENT

The future of voice

From speakers to phones to cars, voice control has quickly become ubiquitous. How can the entertainment industry craft new voice-powered experiences, what kind of new business models are emerging in a voice-first world and how will voice control evolve in a world with multiple assistants?

On Sept. 9 at 12 p.m. PT / 3 p.m. ET, Protocol's Janko Roettgers will gather a panel of experts from across the industry to discuss what's next for voice. RSVP here.

People Are Talking

The post-pandemic era is hitting Zoom, but JPMorgan's Sterling Auty isn't concerned:

• "Listen, we still believe Zoom is a very good franchise with a tremendous amount of growth in its future, but we expect the market will need to rationalize a different level of growth post-pandemic into their valuation expectations."

Mobile phone companies need to work together during a crisis like Hurricane Ida, Public Knowledge SVP Harold Feld said:

• "We're depending on voluntary cooperation … We need to have a mandatory structure."

Young gamers aren't happy with China's new restriction. One Weibo user wrote:

• "This group of grandfathers and uncles who make these rules and regulations, have you ever played games?"

On Protocol | Workplace: Educating tech workers in a traditional college classroom won't always work, Udacity's Sebastian Thrun thinks:

• "You can find really amazing engineers in their 40s that by nature could not have learned about self-driving cars in college."

Making Moves

DiDi and JD.com are both setting up unions. They're two of the largest tech companies in China — or anywhere — to have companywide unions.

Beverly Hills, that's where CryptoPunks want to be. The NFT project signed with United Talent Agency for representation across platforms like film and TV.

Windows 11 will be released Oct. 5, which is six years after its predecessor hit the market. Microsoft will continue to support Windows 10 through 2025.

ServiceNow poached Jon Sigler, former EVP at Salesforce. Sigler will help lead product development for the company's Now Platform.

In Other News

• Amazon is reportedly getting into live audio, and this is how it could work: The company would pay podcast networks, musicians and celebrities to use the tool, which would focus on live music at first but could eventually grow to include radio shows and podcasts.
• Facebook has a secretive relationship with Accenture, which is paid hundreds of millions of dollars to sort through violent and graphic content, according to The New York Times. The work comes with a psychological cost that has left some Accenture execs debating whether it's worth the money.
• Google is reportedly planning to build its own Chromebook chips. It would make sense, given the company's push with Pixel and other devices, but it would be a big shakeup in the PC chip world.
• Facebook wants to show less political content. The company is adding four more countries to an ongoing test that limits the number of political posts in News Feed, and it's modifying the News Feed algorithm to de-emphasize comments and shares.
• Apple employees can't talk about pay equity on Slack. The company won't allow them to create a channel to discuss the topic, saying it would break Apple's Slack Terms of Use.
• Google delayed its return-to-office date. Again. Employees now won't head back until Jan. 10. After that date, offices in different countries and locations will decide when to head back based on conditions in the local area.
• Need another reminder to mute yourself on Zoom? Almost one in four execs have dismissed a staffer for making mistakes during video and audio calls, according to a survey that Bloomberg reported.
• On Protocol: Burning Man moved to the metaverse. The event is being held for a second year through several virtual gatherings, proving the metaverse can pull off a massive, multiday event.

One More Thing

...ack?

Does "ack" translate to "oof"? Is it some way of saying "yikes"? Does it mean your colleagues need to regroup on Nantucket? At Twitter, it turns out the abbreviation just means "acknowledged." One employee tweeted about it, and it clarified things for a lot of co-workers (including one who thought it meant panic).

For the nerds, "ack" is one of several message types used in the Transmission Control Protocol, or TCP: The message "syn" means someone established a connection, and "ack" confirms the syn was received. There's also "fin," which means the connection has ended. If you're confused, a lot of Twitter employees can relate.

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