Microsoft CEO Satya Nadella
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Microsoft's plan to win the app store wars

Source Code

Good morning! Microsoft announced new app store principles, and slammed its rivals in the process. I’m Nick Statt, and I'm not too proud to admit I totally failed yesterday's Wordle.

Also, we want to know your Super Bowl party plans! More info below, but we want all your favorite recipes, side bets, commercial-watching strategies and everything else. We'll feature some of our favorite answers this Sunday.

Shots fired

Microsoft just made the contentious app store regulatory fight much more interesting. To get ahead of federal regulation and in a bid to smooth out any potential roadblocks to its Activision Blizzard acquisition, the company on Wednesday announced 11 new app store principles.

These commitments align closely with both the U.S.'s proposed Open App Markets Act and similar app marketplace legislation overseas, effectively outlining how the company will more fairly treat developers and avoid anticompetitive conduct.

This could complicate the fight for Apple and Google. Regulators have begun to chip away at the dominant app marketplaces on Android and iOS, though both Apple and Google have fought vigorously to defend their platform policies and restrictions. But the most adversarial legislation is on the horizon.

  • The Open App Markets Act poses a serious challenge by banning certain business tactics Apple and Google have engaged in for years and with which the two companies maintain control over developers and the flow of mobile commerce.
  • Microsoft’s new principles largely align with all the bill’s proposals and similar legislation in countries like the Netherlands and South Korea.
  • That puts pressure on Apple and Google to make similar concessions should they try and compromise before they’re forced to alter their stores and business practices.

Microsoft has little to lose, and a lot to gain. The Windows-maker is one of the most valuable tech companies on the planet, thanks largely to its software and cloud businesses. That’s given Microsoft the leeway to take business risks in areas like digital distribution and gaming that other companies cannot afford.

  • Microsoft is not a leader in PC game distribution; that’s Valve’s Steam. It also no longer runs a mobile app store of its own, after shuttering the Windows Mobile platform. It’s not in the lead in the game console race, either, as it’s lagged behind Sony for years.
  • By adapting to new regulations ahead of any federal mandate to do so, Microsoft isn’t ceding vital ground to competitors while also winning favor with consumers, developers and regulators.
  • This could be crucial to getting its Activision Blizzard deal approved, and the company said as much in its announcement by pledging to keep some of the publisher’s biggest games, like Call of Duty, on competing platforms.

Gaming is becoming a battleground for the future of digital commerce. Because of how large the gaming market is and how fast it's adapting to new technologies and platforms, the industry has become a testing ground for new business models and distribution approaches. These fights today are going to define how business is done on the internet well into the future.

  • Just as Epic Games tried to set new precedent by suing Apple and Google for antitrust violations, the broader showdown over app store policymaking is going to dictate how billions of people access entertainment in the future, be it on AR or VR headsets, mobile phones or through the cloud.
  • Microsoft’s new policies specifically address its desire for a “more open app market.” The company has realigned its gaming business, spearheaded by Xbox chief Phil Spencer, to prioritize the growth of its consumer audience, regardless of what screen they play on. But companies like Apple stand in the way.
  • Though Microsoft is applying its new principles to the PC, mobile and cloud, it is not extending them fully to the Xbox console platform. Right now, Microsoft says it needs Xbox to remain closed for it to make money. The company is pledging to loosen developer restrictions on Xbox over time.

Microsoft President Brad Smith used yesterday’s announcement as a way to slam the company’s rivals. “Too much friction exists today between creators and gamers; app store policies and practices on mobile devices restrict what and how creators can offer games and what and how gamers can play them,” he wrote. “Put simply, the world needs open app markets, and this requires open app stores.”

The company’s motives are clearly not altruistic. But Microsoft is putting the work in today to ensure it benefits in the future if Apple and Google are forced to give up control. Microsoft, more so than perhaps any other tech company, has the experience to know when it’s on the losing end of a regulatory battle, and preemptive compliance may prove to be a much more prescient strategy than defending decade-old app store policies.

— Nick Statt (email | twitter)

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Samba TV operates the world’s largest independent source of first party connected TV data helping brands, agencies and content owners to plan, buy and measure all in one place. The State of Viewership report offers the industry’s most accurate insights into television viewing and advertising engagement. Download the report at www.samba.tv

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People are talking

Elon Musk said halting production of the old Model X back in 2020 was “idiotic”:

  • “We dropped the ball badly regarding [the] new Model X production ramp & still haven’t fully recovered.”

And Tesla's Franz von Holzhausen said Apple's design team has lost its touch:

  • "The sad part about Apple products now is like there’s nothing to look forward to ... It’s just kind of a slight refinement on the same thing, so inspirationally, it’s been hard to get super motivated by what they’re doing."

Medium’s Lauren Newton said using offbeat workplace tools can turn off candidates:

  • “Candidates can be put off — or at least, that'll prompt them to dig in way more on tools and processes.”

Ryan Roslansky said LinkedIn is trying to keep up with an uptick in Gen Z users:

  • “We’re seeing the platform evolve much more to cater to them.”

Making moves

The White House rolled out the beginning of its $5 billion plan for EV charging. All 50 states have to submit proposals for how they'll roll out charging networks, and work should start as soon as this year.

Mark Haseltine is Teachable’s new chief product and tech officer. Haseltine most recently worked at RepTrak in the same role.

Daniel Kisluk is Pendulum’s new CMO. Kisluk recently held the same role at SatoshiPay.

Marc DeBevoise joined Brightcove as CEO. Previously he was the chief digital officer at ViacomCBS.

SpaceX will give an update on Starship, the first since since 2019, at 9 p.m. ET today, Elon Musk said.

In other news

Salesforce is looking into an NFT cloud service, a source told CNBC. The company is looking into a platform to create and sell NFTs, which could erase the need for OpenSea if Salesforce integrates it into its own ecosystem.

Laid-off Peloton workers crashed Barry McCarthy’s first all-hands, sources told CNBC. Both current and former employees flooded the comment section of the virtual meeting with complaints about job cuts and management.

Disney+ is catching up to Netflix. Disney reported big earnings yesterday, including 11.8 million new streaming subscribers, which was more than expected.

Uber also had a big quarter. It seems to have gotten past the pandemic lull in business, though it's still not making money on ride sharing.

Samsung announced new Galaxy S phones at its Unpacked event. The new devices will start shipping Feb. 25.

You can add “pandemic parenting gaps'' to your work terminology. A LinkedIn survey found that companies are beginning to care less about career gaps, especially as parents start to reenter the workforce after taking time off to take care of their kids.

Tesla is dealing with its ninth recall since October. This time, the company is recalling nearly 27,000 U.S. cars because of a defect with some of its windshield defrosting software.

Messenger messages can now disappear. The platform introduced Vanish Mode, alongside a couple other updates like split payments and voice messaging tools.

How do you watch the Super Bowl?

The Super Bowl is a big day for commercial enthusiasts, sports fans and, of course, party hosts. Compared to last year, millions more people plan to throw a banger for the big game on Sunday. If you’re one of the lucky hosts, we want to know: What’s your go-to Super Bowl party trick?

Do you have a favorite game-day appetizer? Do you and your friends use any particular tool to vote on the best commercials? How do you place bets on the winner? Tell us what you’re most excited to do, eat or play this year, and Protocol’s David Pierce will round up our favorites in the Sunday edition of Source Code.

A MESSAGE FROM SAMBA TV

Samba TV operates the world’s largest independent source of first party connected TV data helping brands, agencies and content owners to plan, buy and measure all in one place. The State of Viewership report offers the industry’s most accurate insights into television viewing and advertising engagement. Download the report at www.samba.tv

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