Falling from GraceđȘ
Apple forces Microsoft out of its storesđ€ while regulators push TikTok to sell their business and move onâ. What a time indeedâł
Alone in the Cold
Weâve discussed Microsoftâs strategy with xCloud in previous editions of the newsletter and how they were trying to go around limitations encountered in various storefronts, but the battle-from-a-distance escalated last week. In anticipation of an Apple decision to rejectâand most likely after a talk between the two companiesâ Mircosoft announced theyâre pulling the xCloud APP from the AppStore.
There are two main reasons why Microsoftâs product wonât be released on the AppStore come September the 15th, the launch date for Android, and theyâre both Apple-made submission rules. Well, one and a half rulesâŠ
Thereâs an unwritten rule that all APPs should charge consumers through the store itself, allowing Apple to deduct the 30% commission for every transaction. Whilst this provision isnât embodied anywhere, thereâs not digital ink on digital paper so to speak, Apple guides developers to follow it with the help of other rules.
One of these other rules is that Apple explicitly opposes in the terms and conditions APPs that connect to anything else than a consumerâs own device or their game console âthatâs why Valveâs Steam Link APP currently worksâ, and the two devices also need to be on the same network. The reason why Apple doesnât allow these kinds of products in their store? Because they canât review every independent game to be presented within.
This doesnât really make sense and there are games and other entertainment products in the AppStore that break this âruleâ as we speak.
Individual music tracks available on Spotify or movies and series streamed on Amazon Prime Video or Netflix are not reviewed on a one-by-one case and neither are all the live streams on Twitch. Appleâs argument here is that these products are non-interactive âthis should not matter except for the IAP aspectâ but there are games in the AppStore now that have user-generated content inside them. Fortnite has a strong community of creators making new gameplay in Creator Mode, and Roblox is basically a programming language that relies on players to create the gaming content.
The attack against Appleâs policies is starting to get traction with others as well, Facebook gutted their Facebook Gaming iOS APP as well and left only the game streaming part in after Apple kept them in review purgatory in the past year.
The effects of these past months could come in just a few monthsâ time. When asked by the congressional committee last week if Apple gives all developers the same conditions, Tim Cook replied in the affirmative, itâs now obvious this is not the case. The report coming out in Fall will no-doubt include this ongoing situation unless the company takes measures to adjust their review standards. A big ask for the next two months when theyâre also dealing with releasing the next generation of mobile devices, but certainly not impossible for the company that Steve built.
Appleâs standoff in the matter can only continue for so long, in part because regulators will come down on them sooner or later, but mainly because entertainment products are evolving in a direction they donât cover in their rules. If it proves out that consumers want cloud streaming in the future and Apple devices donât support this feature, said consumers will migrate somewhere else. All that considered, itâs just a question of when Apple shifts, not if.
APPocalypse Now
Well, the ban is official now, so we might as well talk about itâŠ
Letâs go back to last week when rumors became fact and Microsoft confirmed interest in TikTok in that blog post. Disregarding the fact that the company did away with its ordinary secretive ways when it comes to acquisitions and even made such a post in the first place, this contents themselves were pretty run-of-the-mill but the air around them was slightly dystopian. It sounded like some of the pamphlets put out by companies during the Romanian communist regime, endlessly praising the infinite genius of âthe administrationâ. Weâll have to wait a few decades for Satyaâs autobiography to come through in order to find out for sure what prompted this post, but weâre all free to make assumptions nowâŠ
Here come the strange parts in a potential deal. Microsoft would only be buying TikTokâs business âread usersâ in the US, Canada, New Zeeland and Australia. Considering the idea is to have different APPs in those stores and that data needs to be stored in the US after the deal, this would all but neuter a business that relies on network effects and large scale. This would result in a lot lesser value of the product and could as well lead to a change in how people use TikTok in the future.
Thereâs also the question of what Mircosoft would get out of the actual deal. While most people group TikTok with other social networks like Instagram or Facebook, the real value is in the AI-driven algorithm behind the user-generated content. This recommendation AI is on par, if not better, than Netflixâs and itâs the engine driving the virality of the APP.
While acquisition deals for social networks usually value the number of existing users and the growth potential, this is not applicable to TikTok, so what would Microsoft be buying here? Are they getting the algorithm itself and will it continue to be as effective if trained only on data from US consumers? If so, what would stop them from replicating it in other countries that are shy about dealing with Chinese companies, like India? Iâm fairly positive that, if this happens, in the following months and years weâll see a lot more countries becoming comfortable with banning the Chinese APP in the idea that Microsoftâs will be there to satisfy demand.
Things are not looking any better in the case of Tencent and WeChat. Even with the ban confirmed to âonlyâ affect financial transactions involving the messaging platform and not their myriad of investments in entertainment or music, who would want to buy the American operations of a messaging platform that has most of its users in China? Sure, there are three million WeChat users in the US right now, but most of them converse with family back home, sever the connection between them and they have no reason to keep using the APP. The same loss of value as in TikTokâs case would occur with WeChat in the case of such a strange split when it comes to social messaging APPs. Oh, and have I mentioned that whoever is interested in this acquisition needs to decide within the next 45 days before the ban goes into effect?
The fact of the matter is that whatever deal the two companies reach with their acquirers it will be a compromise. The US government is leveraging the fact that the territory under their umbrella represents the highest-paying region in any store, and everyone wants to be a part of it. The recent hard line is giving original developers two choices that are actually one: sell that side of the business and get some money or close up shop. American companies that until now proved incompetent of creating this style of APPs themselves âlike Microsoft, Google, etc.â will look like saviors when handed over the keys to the kingdom and the businesses are almost sure to prosper under them.
We can only hope this doesnât start a pissing contest and China doesnât start demanding Tesla and Apple sell their businesses in the country to local companies. Apple would neverâŠ
Disney announced that the repeatedly-delayed live-action remake of its Mulan IP will skip cinemas altogether and go straight to Disney+ subscribers on September 4th. Weâve seen other movies go straight to streaming this summer, but never such a high-budget product, so you know there must be a catch. And there is. Anyone who wants to stream the movie on Disneyâs streaming service will need to pay $30 on top of the usual monthly fee; a bit steep if you consider the average cinema ticket in the US last year was around $9. The straight-to-DVD release has now become straight-to-streaming and Disney+ has become Disney++đșđș
During last weekâs âState of Playâ presentation where they presented new games coming out in the near future, PlayStation showed quite a few interesting VR games leveraging big franchises like StarWars or Hitman âalong with some interesting non-VR titles as well. Yet, thereâs still no announcement on an upgrade to PSVR coming with the PS5 this Fall. For all of our sakes, I hope this will make for their âone more thingâ moment come the holiday season, the existing headset is starting to show its age despite the smart screen tech inside. None of us can escape time, not event the silicon đźđ”
Nintendo reported a 428% increase in profit in the past quarter compared to the same time last year, and Animal Crossing made a killing. AC: New Horizons shipped 10.6 million copies in the past quarter making for 22 million total copies sold worldwide and more than half the newly acquired consoles over the past three months played Animal Crossing on the first day after purchase. Who would have said, games sell consoles? Also important for Nintendo specifically, whoâve been slow to digitize distribution, is that half the copies of AC were sold digitally. Ring Fit Adventures saw a climb in sales, presumably because people wanted to exercise at home during the quarantine, shipping 1.2M copies last quarter for a total of 4M. Nintendo is definitely on the up right now, letâs see how much longer until the Switch wave crashes into the âSwitch Uâ rocksđđ
You might have heard about the pay disparity scandal within Blizzard over the past week, you can get a sense of it here and if youâre interested in the actual salaries filled in anonymously by employees, you can find that here. After seeing it I kept wondering if that row containing the CEO was filled in by himself or if itâs a dark joke đ°đ°
I was pondering the other night if this a win or a loss for Excel and I still canât figure it out. If thereâs such a thing as âbad PRâ, Iâm not sure this is it đ€·đ€·
If you care to go deeper on TikTok and their product, hereâs a good place to startđ
If you thought portrait-mode movies were over with Quiby, Chazelle says âthink againââŠ
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