Week in Review - Apple gears up for a fight they won't win

Saturday, August 08, 2020 • By Lucas Matney

Hey friends, welcome back to Week in Review. Well, last week, I wrote about the potential TikTok/Microsoft deal and this week I’m digging in to Apple’s reluctance to embrace cloud gaming.

If you’re reading this on the TechCrunch site, you can get this in your inbox here, and follow my tweets here.

The Big Story

Note: this was supposed to be a lot shorter but I got a little passionate while I was writing it yesterday and it quickly ballooned, I think I’ll publish an expanded version of this on the site over the weekend so keep an eye out :)

Apple is gearing up for a fight that it’s probably not equipped to win. The company made the news a couple times late this week for App Store approvals. Once for denying a gaming app, and another time for approving one.

The denial was Microsoft’s xCloud gaming app, something the company wasn’t too psyched about. Microsoft xCloud is one of the Xbox’s most substantial software platform plays in a while, allowing gamers to live-stream titles from the cloud and play console-quality games on a number of devices. It’s a huge effort that’s been in preview for a bit, but is likely going to officially launch next month. The app had been in a Testflight preview, but as Microsoft looked to push it to primetime, Apple said not so fast.

The app that was approved was the Facebook Gaming app which the company has been trying to shove through the App Store for months to no avail. It was at last approved Friday after the company stripped one of its two central features, a library of playable mobile games. In a curt statement to The New York Times, Facebook COO Sheryl Sandberg said, “Unfortunately, we had to remove gameplay functionality entirely in order to get Apple’s approval on the stand-alone Facebook Gaming app.”

Microsoft’s Xbox team also took the unusually aggressive step of calling out Apple in a statement that reads in-part, “Apple stands alone as the only general purpose platform to deny consumers from cloud gaming and game subscription services like Xbox Game Pass. And it consistently treats gaming apps differently, applying more lenient rules to non-gaming apps even when they include interactive content.”

There are a few things about cloud gaming apps that seem pretty fundamentally at odds with some of the App Store’s rules, yet these rules are, of course, just guidelines written by Apple that aren’t to my knowledge directly etched in stone.

For Apple’s part, they basically said that the App Store had curators for a reason and that approving apps like these compromises means they can’t individually review the apps. That is not untrue, but to say that’s “the reason” is kind of bullshit because I seriously doubt Apple cares about the “review” process for Xbox’s curated GamePass service so much as they care about the keeping their own money straight.

Now, they can’t really say that because if these platforms launch with zero iOS support, millions of consumers are actually going to be pissed that their iPhone can’t do something that their friend’s Android phone can. There are about 90 million Xbox Live users out there, a substantial number of which are iPhone owners I would imagine.

I’ve seen enough of these sagas to realize that sometimes parties will kick off these fights purely as a tactic to get their way in negotiations and avoid workarounds, but it’s a tactic that really only works when consumers care. Most of the bigger App Store developer spats have played in the background and come to light later, but at this point the Xbox team undoubtedly sees that Apple isn’t positioned all that well to wage an App Store war in the midst of increased antitrust attention, all while consumers clamor in the background.

CEO Tim Cook spent an awful lot of time in his Congressional Zoom room answering question about perceived anticompetitiveness on the company’s application storefront.

The big point of tension I could see happening behind closed doors is that plenty of these titles offer in-game transactions and just because that in-app purchase framework is being live-streamed from a cloud computer, it doesn’t mean that a user isn’t still using experiencing that content on an Apple device. I’m not sure whether this is actually the point of contention, but it seems like it would be a major threat to Apple’s ecosystem-wide in-app purchase raking.

Analysis from CNBC pinned Apple’s 2019 App Store revenue at $50 billion. Apple has repeatedly noted that the “Games” section is the most popular category on the App Store.

Microsoft is still a $1.61 trillion company so don’t think I’m busting out the violin for them, but iOS is also the world’s largest gaming platform, something CEO Tim Cook proudly proclaimed when the company launched its own game subscription platform, Apple Arcade, last year. Apple likes to play at its own pace, but all of these game-streaming platforms popping up at the same time seems poised to overwhelm them.

*The App Store also does not currently support cloud gaming on Nvidia’s GeForce platform or Google’s Stadia which are also both available on Android phones.

Image Credits: SkinStyler, Zeeshan Ahmed, Rizki Kurniawan

Trends of the Week

Trump takes some real action on TikTok
Trump added some fuel to the “ban TikTok” fire this week with a hasty executive order that seems designed to accelerate a deal between ByteDance and Microsoft or some other American company. The EO bans American businesses from doing any business with TikTok by a certain date. There’s a lot going on. Read more about it here.

macOS 11.0 preview
Your MacBook is about to look a lot more like your iPhone, at least its operating system will. My colleague Brian went hands-on with a preview of macOS Big Sur and chronicled its mobile influences. Read more about it here.

Twitter locks Trump out of his account
Twitter and Facebook both fires shots across the bow of the Trump administration’s social team this week as his account shared a video where the President suggested that kids were “almost immune” to COVID-19, something that isn’t really supported by the medical community. Read more here.

Gmail designer talks design influence
There are few products we all use more than Gmail, but even as more bespoke email apps pop up, there’s still a lot we can learn about the service designed for billions of email readers and senders. Read more about it here.

Image Credits: Chesnot/Getty Images / Getty Images

TechCrunch Disrupt

Let’s just say it has been a year. While a few ambitious startups like InVision and GitLab built their corporate cultures and talent hiring with a remote-first mentality, the reality is that the vast majority of founders never thought they would have to be socially distant from all of their employees. And it isn’t going to change: Google recently announced that all of their employees will be work from anywhere until summer 2021. We are only getting started with this new model of work.

Culture, productivity and speed are absolutely vital to the survival of early-stage startups, but how do you build growth and momentum in a remote-only world? And how are investors approaching this new environment and the opportunities that our changing patterns of work mean for us?

These are critical questions, which is why we are hosting a panel of VC investor superstars to talk more about them on the Extra Crunch stage at TechCrunch Disrupt 2020.