⭕️ Benedict's Newsletter: No. 349


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My essays

App stores, trust and anti-trust. The app store model has been a central part of the smartphone revolution, bringing safe, trusted software to billions of people for the first time. Breaking it would be insane. The trouble is, it also means Apple (and Google) aren’t the pirates anymore - they’re the navy, the port and the customs house, so how do they manage that, and how soon do regulators step in? Link

The ecommerce surge. We now have official stats on lockdown ecommerce for the USA and UK, and they're dramatic: the UK went from 20% ecommerce penetration to over 30% in two months. Link

Would breaking up 'big tech' work? Not really. Most of the things we worry about in tech aren't actually competition problems, but even where they are, breakups are unlikely to be effective. Network effects are natural monopolies and breaking them up doesn’t change that. The real answers are in much more detailed and micro work, regulating the internal mechanics of these products, line by line, much as we regulate telcos or credit cards. Link



App Store drama! Epic Games, which makes Fortnite, added an option to buy in-game currency on iOS without using Apple's payment system and so not paying Apple the 30% commission, explicitly breaking the store rules. Apple immediately pulled the app from the store (you can still play it, and indeed buy currency), and Epic filed an anti-trust case and launched a PR blitz. The next day exactly the same thing played out on Google Play, complete with another pre-prepared lawsuit.

  • Epic's court filings don't argue it should pay less commission, but instead demand the court dismantle the entire app store model, allowing any store and any payment mechanism on any device.
  • Epic frames this as being about freedom for users and developers - it's also about removing the trusted app model that's powered an explosion of software use on smartphones and switching to the old Windows model from the 90s, and about removing the level playing field that lets any developer on earth sell a game without worrying if you'll trust them not to break your computer or steal your card. 
  • Right now Epic and Apple/Google are playing chicken, except neither needs to yield soon. Apple already has an EU competition case around this issue and Spotify, but Spotify has a vastly stronger complaint: it can't pay and its actual user experience is damaged as a result, and competes with Apple Music, whereas Epic just doesn't want to pay
  • The App Store model has broader issues: I would argue very strongly it's been very good for users and developers, but Apple execution has sometimes been poor and some behaviour looks like rent-seeking. I'm pretty sure it will have to change its payment model. 
  • I wrote this week's column about this, below, and I will post a version to my website later in the week. 
  • Links: coverage, Epic's PR pitch, court filing (PDF) 

Age of wonders. Google will use the motion sensors in Android phones as a global earthquake detection system. Link

Facebook reorgs payments, again. The whole bitcoinish 'Libra' project has been in flux (TLDR: central banks are a thing), and now FB has another new org structure for all its payment plans. Adding payment takes very obvious sense; making it cross border made sense; adding bitcoin always felt like fashion and FOMO rather than a compelling user problem. Link ($)

Sanctions biting Huawei: it's running out of high-end smartphone chips. Reminder that though most smartphones are mad in China (but see the next item) the high-value components often are not. China wants to create a full-stack semiconductor capability as an urgent strategy priority, and this is why. Lots of skepticism of how long that would take, though, and people talk in terms of a decade or more. Meanwhile, Huawei has a problem. Link

Foxconn rebalances away from China. Foxconn is planning for an 'inevitable' split between US-China markets by building up more and more ex-Shenzhen capacity. We have, or had, a global integrated supply chain, and a lot of that was China, so now what? Link

Mozilla is cutting staff: 90% of revenue comes from Google paying to be the default search engine, and that contract is ending. Interesting point: this summer the UK competition authority said those Google default search deals are anti-competitive for the search market, but guess what - they also subsidise competition in browsers. Link

More pushback on face recognition: UK police lost a court case around deploying it without any real safeguards. (I've written about the issues a lot in the past - see here. We worry what happens if it works and we worry what happens if it doesn't work.) Link

Tiktok censorship: Reuters says ByteDance censored anti-China content in Indonesia until mid-2020. You should mentally insert a Casablanca 'shocked, shocked to discover...' GIF here. Link

Walmart and channel conflict. Apparently, Walmart has asked Vizio, which makes some of its best-selling TVs, to remove the Amazon Prime button from the remote on models it supplies. Vizio is almost certainly getting paid by Amazon for that button. Link ($)

Microsoft fablet? The Surface Duo, a new folding Android device with two separate screens with a gap and a hinge in the middle, goes-on pre-order for $1400. This is... odd. The hardware seems a little left-behind by folding screen devices, which are close to delivering the same size/weight with a proper large screen instead of two separate ones (Not this year, though). But regardless, why does this come from Microsoft, running Android? What's the strategic logic for becoming just another Android OEM? Still, two separate screens means you can run two of Google's messaging apps at once. Link



WSJ: Facebook’s hate-speech rules collide with Indian politics. Link ($)

If US companies aren't allowed to do business with Tencent or WeChat, how do they do business in China, where WeChat is half the internet? A view here of the luxury industry problem, but applies to everyone. Link

PDF presentation explaining Pinduoduo, this week's 'huge Chinese internet company that most people have never heard of'. Link (PDF)

McKinsey exit interview with NYT outgoing CEO Mark Thompson. Subscriptions, and audience relationships. Link

Fascinating long NYT story on how lockdown has catalysed (or just accelerated) a collapsing bubble in the fashion industry. Instagram breaks the fashion season cycle. Link ($)

Interesting thoughts on how much more innovative we could be with screens. Where's the metallic ink? Link

Inside Turkish local delivery. Link


Interesting things

From the slow lane: A Vermont farmer. Link

Link of the week (trust me): the Portsmouth Sinfonia plays Tchaikovsky. Link



Facebook's latest report on takedowns of harmful content. Link

The is the Free edition, which goes out on Tuesdays. The Premium edition went out on Sunday, with more analysis, a full archive, and more. You can upgrade here.
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