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Why is Apple being Investigated?

Smartphones have become an integral part of our lives. People have begun to question the wisdom of allowing just two companies to control access to billions of devices globally.

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From the moment Steve Jobs unveiled the original iPhone, forever changing the way we interact with people and information, smartphones have become an integral part of our lives. We use them in every aspect of our lives, from communication and entertainment to health and fitness. It is of little wonder then, that people have begun to question the wisdom of allowing just two companies to control access to billions of devices globally, with the European Commission (EC) today announcing charges against Apple over concerns of its App store rules, just a week after a hearing before Congress on similar concerns.

While Apple’s iOS only has a 27% share of the global mobile devices market, compared to the dominant 72% that Google’s Android commands, the media, app developers, competitors and even governments tend to focus on the Apple App Store when it comes to Anti-Trust, sometimes also mentioning Google’s Play Store. You might think this is because Google allows Android users to download apps from other stores or even directly, known as side-loading, but actually there is a bigger reason – money. In 2020, iOS App Store revenue was almost double that of the Google Play Store, making it much more lucrative. So, lawsuits and Anti-Trust investigations have all the more reason to go after Apple.

Epic Battle

For those of you wondering about Epic’s battle with Apple over the ban of Fortnite, that particular case is a bit more clear cut, as Epic deliberately broke App Store rules by adding its own in-app payment system, specifically to prompt Apple and Google to ban the game, thereby enabling them to go to court. Epic doesn’t want to pay Apple the 30% commission and perhaps also wants more access to customer data. Interestingly, Epic happily pays Sony and Microsoft the same 30% commission for the same games on Playstation and Xbox consoles, but argues that the relationship is different.

A better example is Spotify who are mostly pushing for an equal footing with Apple Music. They filed a complaint with the European Commission in 2019, arguing that Apple “purposely limit choice and stifle innovation at the expense of the user experience”. But more on them later.

Changing Landscape

The contentious 30% commission was welcomed by many developers and the industry in general back in 2008 when the App Store was launched, given that it better reflected the cost of providing the digital service rather than the 55%+ taken by brick-and-mortar stores at the time. But since then, the model and dynamic of apps has changed significantly, with users less accepting of apps that charge an upfront price to purchase. In-App purchases are now the norm, as developers, particularly game publishers, have cottoned onto the fact that consumers, while reluctant to pay for an app, will happily keep paying for benefits and perks within it, once they are hooked.

When Apple introduced its own In-App Purchase system in 2009 and subscriptions in 2011, it brought that same 30% commission for them, although the latter goes down to 15% after the first year now. This poses several complicated problems. The first problem is that commission for services that are themselves commission-based, effectively compound the percentage the actual content-creator is paying. One example is the super-chats feature on YouTube, which itself takes a 30% cut, meaning the actual YouTuber is paying a total commission of 49%, so they only see half the money the user paid. But for apps that aren’t owned by large corporations, 30% off the top of the net sale price can be a genuine blocker, especially for businesses that are themselves a middleman. If your margins are less than 30% in the first place, the App Store simply isn’t an option and therefore, you effectively cannot address one of the most important consumer markets on the planet.

Questionable Terms

There are many terms and conditions every App developer must adhere to, but one of the most questionable ones prohibit them from even acknowledging the ability to pay or subscribe somewhere else, such as their own website. It is for this reason that the Netflix app only has an option for sign-in and no registration or clue as to how a user can gain access to the service. When Apple states time and time again that its own In-App purchase system is the best and most convenient way for customers to pay, it seems indefensible and to many, anti-competitive, that apps cannot so much as direct users to their own websites. This is one area that is difficult for Apple to argue on, but it continues to try, as allowing this would see many of the larger, more lucrative companies to do just that.

Which brings us to an important point. Most of the revenue from the App Store comes from In-App purchases and subscriptions from a relatively small number of large companies. A quick look at the highest grossing apps shows apps like YouTube, Disney+, Call of Duty and other such apps from big corporations consistently featuring in the top 20 and this is why Apple was able to introduce a lower 15% rate last year for App Store developers that make less than $1 million per year from app sales.

Why Not Just Open Up the Platform?

For those unfamiliar with how the internet and digital goods are actually delivered, it might seem like Apple, with its hundreds of billions of dollars from expensive phones and computers, could just provide the App Store as an open platform. After all, the App Store accounts for less than a fifth of Apple’s revenue. However, the reality is that, while it certainly doesn’t cost anywhere near as much as it makes from the App Store to run it, there are still significant expenses. Apple runs its own data centres, which are incredibly costly to build and run and even if it didn’t, it would likely pay even more to someone like Amazon to use theirs. Then there are the people, from the submission teams delivering a 2-day turnaround on what Apple says are over 100,000 submissions a week, to the developers that build and maintain the Apps and tools such as Xcode, Apple Store Connect and of course, the App Store apps themselves, as well as the curators, security teams, etc. Opening up the platform or even allowing apps to be side-loaded would open up a maelstrom of malware. Hence, Providing this platform is not a small task.

Clearly, these platforms do provide an invaluable service that could not realistically be replicated by smaller (but still big) companies with the same level of convenience. The same can be said of features Apple includes in its products that have been called out as anti-competitive. Tile for example, has been arguing that Apple’s new AirTags, announced last week, have an unfair advantage with the use of the Ultra Wide-Band (UWB) chip that enables tracking with incredible accuracy, as well as tight integration with the built-in FindMy app. Apple says it cannot completely open up the UWB chip due to privacy concerns, which sounds plausible, given the accuracy with which it can track devices. 

The iPhone maker does have a program for third-parties to use the UWB chip with FindMy integration, but of course, with conditions attached, to certify that products meet privacy and other standards. It’s worth noting that AirTags were actually ready over a year ago, but Apple waited until the partner program and functionality was ready before releasing them. Tile hasn’t signed up to the program, as it has built its own ecosystem around its products and its own app. But the fact is, the UWB features wouldn’t exist if Apple hadn’t developed them around a product, as not only would they have no reason to spend the substantial amount of money required for R&D, it wouldn’t be as good without AirTags to focus development of the technology.

Home Advantage

On any platform, the holder will always have an advantage, but it is the extent of that advantage that is the real issue. The biggest issue Apple faces is the perception of many users that any performance or usability issues are down to the device maker or platform holder, some even think Apple makes all the apps in the App Store. Apple not offering default apps for things like web browsing, email, music and maps simply isn’t a viable option, as it would cause confusion for a large proportion of its billion active users. Providing a selection for each category during setup would not only make the already long setup process significantly longer, it will also beg the question of which apps would be included in the selection and who would decide?

Apple has been slowly adding support for changing default apps, enabling app developers to include themselves as an option for the default in a given category once the user has downloaded it. Which brings us back to Spotify, who have long argued that Apple’s default Music app puts them at a huge disadvantage. But simply having the choice to make Spotify the default music app on a user’s device doesn’t take away that home advantage. The Music app is still the default app when you buy the device. Perhaps Spotify’s biggest issue though, is how the Apple Music streaming service, a direct competitor to Spotify, is pushed heavily in the default Music app, with the app now more focussed on the streaming service than a user’s own library. Spotify has also alleged that Apple tried to get Spotify to shut down their free, ad-supported tier. Having a default Music app makes sense, but does using it to push Apple Music so heavily abuse its home advantage? The European Commission believes it does.

Government Intervention

The EC has just announced it is issuing ‘charges against Apple over concerns that the rules it sets for developers on its App store break EU law’. Last week, Apple and Google, along with competitors Spotify, Tile and Match.com owners IAC, testified at an anti-trust hearing before a US Congress committee. In addition to the issues we’ve already touched on, there was also discussion around ‘exclusionary conduct’, with Apple particularly accused of refusing to negotiate with Tile, as well as the platform holders’ tendency to incorporate features from other companies into its own products or ‘Copy and Kill’ as one US Senator put it. 

Google’s representative said they value relationships with all their App Store ‘partners’ including the ‘small, but vocal set of primarily large companies’, referring to those testifying at the hearing and others like them. This is actually an interesting point, as the effect on consumers may well be negative depending on the actions these government bodies eventually take. Apple’s do-it-all ecosystem is one of the primary reasons many users buy Apple products and making any part of that disjointed could have severe implications for the platform, potentially making it even more difficult for actual small and independent app developers to reach users. There are so many issues and questions we just don’t have an answer to and Governments must decide how far they are willing to go. Should companies be judged differently once they reach a certain size? What is that size and how should it be measured?

Not Black and White

Even less clear cut is the issue of user data and access to it, as clearly it is a huge issue for many businesses which are unable to identify key attributes they need, but conversely many users would prefer to keep that data in as few places as possible. A middle-ground might be to give users more specific controls around which apps can see which data, but this starts to get very messy and the majority of users wouldn’t have a clear understanding of what they are allowing.

Capitalism is a game that is rarely won, but when it is, governments grapple with conflicting principles, a free-market economy or the appearance of open competition and a “level playing field”. Apple and Google’s App Stores can only exist in their present, convenient form because of the whole package, a synergy resulting from different areas of their respective businesses working together. But that convenience comes at a price and the holder of any given platform will always have some sort of advantage. The question for governments and society as a whole, is what is more important – accessibility of features and services to all, or the freedom of large companies to compete on an even keel?

But in the lawsuits, investigations and hearings, the consumer is forgotten in all but name. The real question is, would addressing some or all of these problems with the App Stores that Apple and Google provide, result in a better or worse experience for users? Having a single storefront for all apps available for a device is undoubtedly more convenient and few would argue that should change. But conditions such as those preventing app developers from enabling users to pay or subscribe on their own websites need to be looked at by governments, as only they can mandate change in this area and the financial incentives mean that companies won’t do it on their own. Governments must focus on the consumer perspective and not fall into the trap of seeing large corporations with hundreds of millions of users as their primary responsibility. This is only the beginning of a process that will literally shape the everyday lives of billions. Make no mistake, this is one of the biggest issues of our time.

All views expressed in this editorial are solely that of the author, and are not expressed on behalf of The Analyst, its affiliates, or staff.

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Elon Musk Acquires Twitter for $40 Billion

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Elon Musk’s offer to buy Twitter has been accepted by the company this Monday for over $40 billion. “The Twitter Board conducted a thoughtful and comprehensive process to assess Elon’s proposal with a deliberate focus on value, certainty, and financing. The proposed transaction will deliver a substantial cash premium, and we believe it is the best path forward for Twitter’s stockholders,” representative Bret Taylor of the Independent Board Chair released in a statement. Stockholders of Twitter will now receive $54.50 for each stake in the company. 

Musk had previously stated a $46.5 billion set aside to acquire Twitter, prompting the company to look into his offer. Twitter’s board has already accepted the deal, which is expected to become concrete by the end of the year following approval from Twitter stockholders and regulators. 

As a frequent user with over 84 million followers on the social media site, the CEO of Tesla Motors holds a controversial platform, ranging from discussing business to criticizing politics and making insulting remarks. He has already been under investigation from the SEC in 2018 for fraudulent claims. Some users fear a rise of dissent following the transition of power.

In response to this, Musk stated: “Free speech is the bedrock of a functioning democracy, and Twitter is the digital town square where matters vital to the future of humanity are debated.” He also stated his hope to “make Twitter better than ever by enhancing the product with new features, making the algorithms open source to increase trust, defeating the spam bots, and authenticating all humans. Twitter has tremendous potential.”

The drive for free speech comes with its own concerns, however, as critics fear it may allow for hateful speech, misinformation, and other harmful content which Twitter has been working to silence.  Musk had also previously commented on preferring the company enforce “time-outs” over permanent bans, indicating future decisions which may allow the return of users such as Donald Trump. Decisions such as these could greatly affect politics and future elections. 

If the deal is fully approved, one of the world’s wealthiest individuals will be owning the company. The future is unclear for current CEO Parag Aragwal, who was appointed just last year in place of Jack Dorsey in a slew of CEOs over the years. With the news, Aragwal stated that he was “Deeply proud of our teams” and “inspired by the work that has never been more important.” 

All views expressed in this editorial are solely that of the author, and are not expressed on behalf of The Analyst, its affiliates, or staff.

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Russia Looks to Brazil for Support to Prevent Expulsion from IMF

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The Kremlin has requested Brazil’s support in the International Monetary Fund, G20 group, and World Bank to help it counter crippling sanctions from invading Ukraine. Russian Finance Minister Anton Siluanov wrote to Brazil’s Economy Minister Paulo Guedes claiming that, “behind the scenes work is underway in the IMF and World Bank to limit or even expel Russia from the decision-making process”. Siluanov then went on to request support from Brazil “to prevent political accusations and discrimination attempts in international financial institutions”.

Russia is facing immense backlash for its actions against Ukraine, especially from the US and its allies. According to Siluanov, Russia is facing financial difficulties and economic turbulence due to international sanctions which have frozen almost half of the Kremlin’s international reserves and foreign trade transactions. The Russian minister added that the US is attempting to isolate Moscow from the international community. 

US Treasury Secretary Janet Yellen stated last week that the US will not participate in any G20 meetings in which Russia is present, citing the Ukraine wa as the reason. Brazilian Foreign Minister Carlos Franca has previously stated that Brazil opposes the expulsion of Russia from the G20 group. Franca further explained that, “The most important thing at this time is to have all international forums, the G20, WTO, FAO, functioning fully, and for that all countries need to be present, including Russia”.

As reports of Russian war crimes make headlines and the economic consequences of the Ukraine War begin to pile up, more countries appear to be standing against the Kremlin’s involvement in international affairs. The US is the main proponent for Russia’s expulsion, however this could partly be due to the personal benefit the White House would receive from the removal of Moscow’s influence from global politics and economics. Russia’s actions in Ukraine warrant severe consequences and Moscow’s removal from international financial groups could serve as a warning for other countries against initiating offensive military action.

All views expressed in this editorial are solely that of the author, and are not expressed on behalf of The Analyst, its affiliates, or staff.

Saira Shah
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Saira is a Muslim American with a passion for writing, economics, and justice.  With a background as a UC Berkeley graduate with a bachelors in economics allows her to quantitatively analyze critical developments from around the globe as well as their long term impacts on financial systems and social welfare. She is dedicated to reporting in an investigative, honest and compassionate manner to give voice to those who need it most.

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Could the Covid-19 Pandemic Bring an End to Supply Chain Capitalism?

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The global economy has long depended on supply chains to fuel profits through low prices, fast service, and cross-country inequality. These chains of production have extended across borders and seas to unify the global economy. However if supply chains are meant to lower prices and connect production across the globe, why are we now seeing some of the worst shipping backlogs, product shortages and inflation rates in decades?

Several reports place the blame for these economic shocks on the coronavirus pandemic or war in the East, however the true culprit is the supply chain itself. The White House Council of Economic Advisers released a report on Thursday supporting this view. The report argues that recent shocks have not created supply chain failures rather they have exposed the overall frailty of the current production process. 

In essence, supply chains separate product manufacturing into distinct steps which are then outsourced to the regions that can complete the steps at the lowest price. Outsourcing allows firms to shift work to companies in different countries and thereby lower labor costs. Companies in the chain have their own legal autonomy, however they work together as a whole to lower production costs and maximize profits. In exchange for decreased production costs, the supply chain sacrifices security. Crises in any region of the world can halt the entire chain and cause backlogs which lead to product shortages and inflation. 

The coronavirus pandemic sent ripples through the global supply chain as several companies struggled to manufacture and sell under strict government lockdowns. Factories and docks also suffered from labor shortages brought on by high death tolls, social distancing practices and union strikes demanding better compensation and benefits for working through the pandemic. While these may seem like temporary shocks to the system, they will likely influence future rhetoric concerning global manufacturing and trade. Now that the global economy has experienced extreme supply chain failures, individual countries will likely look for methods that will protect them from such economic vulnerability in the future. Even the United States has warned that frailty in the supply chain will not go away once the pandemic has ended. The world’s largest capitalist economy admitting such a critical flaw in the commodity manufacturing system definitely begs the question, will the Covid-19 pandemic bring an end to the era of global supply chain capitalism?

All views expressed in this editorial are solely that of the author, and are not expressed on behalf of The Analyst, its affiliates, or staff.

Saira Shah
+ posts

Saira is a Muslim American with a passion for writing, economics, and justice.  With a background as a UC Berkeley graduate with a bachelors in economics allows her to quantitatively analyze critical developments from around the globe as well as their long term impacts on financial systems and social welfare. She is dedicated to reporting in an investigative, honest and compassionate manner to give voice to those who need it most.

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Multinational Gas and Oil Company Shell to Face $5 Billion Writedown of Assets as They Leave Russia

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  • Shell is expected to announce their earnings report on May 5th, and they promise that post-tax impairments will not impact their earnings.
  • Russia’s invasion of Ukraine pushed gas and oil companies out of Moscow causing the opening of the 2022 trading year to be one of the most turbulent ever seen.
  • Fear of what will become of Shell and other gas companies as they exit a major financial support like Russia has left many in doubt.

Despite oil and gas prices skyrocketing during the first quarter of trading activities, Shell is still expected to write down up to $5 billion due to its decision to exit Russia. Shell is expected to announce its earnings report on May 5th, and they promise that post-tax impairments will not impact its earnings. Shell’s initial $3.4 billion write-down was driven up by credit losses in Russia, writedowns of receivables, and other factors. 

Oil prices hit an average of $100 a barrel, the most since 2014. The United Kingdom also hit record numbers for gas prices following Russia’s aggression and the consequential sanctions. 

Shell’s shares have been down nearly 2% since the start of London trading. Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, stated “Despite the eye-watering costs, the share price should continue to stay reasonably resilient given the divestment far outweighs the reputational damage which could be caused had it not pulled out.”

Multi-Billion dollar businesses are now watched as closely as ever before, with the accessibility provided by social media and online news agencies. Reputation and activism are heavily scrutinized, pushing companies to act in the most ‘humanitarian’ ways possible. Economic powerhouses such as gas companies are likely to continue down the most ‘politically correct’ way until profits show otherwise. 

All views expressed in this editorial are solely that of the author, and are not expressed on behalf of The Analyst, its affiliates, or staff.

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Skin-lightening & anti-ageing creams sold online may contain dangerous levels of mercury

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The Zero Mercury Working Group (ZMWG), an international coalition of non-governmental organisations from over 55 countries, working to eliminate mercury exposure, has found extremely high mercury levels in skin-lightening and anti-ageing products sold on platforms including Amazon, Ebay and Flipkart amongst others.

With the legal limit of mercury concentration in the US being 1 part per million (ppm), levels as high as 65,000ppm were detected in about half of the 271 online products that were purchased and tested from 40 e-commerce sites.

Michael Bender, director and co-founder of the Mercury Policy Project and co-coordinator of the ZMWG, said: “We’re not finding 1 ppm – we’re finding products that are hundreds or thousands or tens of thousands of times above [1 ppm]. These levels are astronomical.”

Although this is the third report by the ZMWG to reveal the global availability of skin products containing high and toxic levels of mercury, this most recent analysis is the first to solely focus on the online sale of these products.

“Despite being illegal, our findings show the same high mercury skin lighteners continued to be offered for sale on the internet,” Bender elaborated. “What’s illegal domestically should be illegal online. E-Commerce must be held to the same standards.”

Products tested were mostly manufactured by brands from Pakistan, Thailand, China and Taiwan.

“These hazardous and illegal products pose a serious mercury exposure risk, especially to repeat users and their children,” said Dr. Shahriar Hossein, a member of the ZMWG. “We welcome the opportunity to work collaboratively with the authorities to stop the toxic trade in high mercury skin lightening creams.”

Mercury is classified by the World Health Organization (WHO) as one of the top ten chemicals of major public health concern. This metal element is known to result in lighter skin as it inhibits melanin pigment production. Above safe levels, mercury is highly toxic to humans, particularly to the nervous system. The developing nervous system before birth is especially susceptible to mercury poisoning, and this makes its exposure a hazardous threat to the developing child in pregnancy. Compounds of mercury are also possibly carcinogenic according to the International Agency for Research on Cancer. Mercury poisoning can lead to tremors, memory loss, neuromuscular changes, insomnia and headaches, as well as adverse effects on the kidneys and lungs which can be fatal. Some mercury compounds are also corrosive to the skin, eyes and the digestive system.

Following a lawsuit against Amazon, the California Court of Appeals ruled the company must warn consumers when selling mercury-contaminated products or other toxin-containing products.

Michael Bender noted that the ruling only affects products sold in California and that there is a need for global strategies. He therefore welcomed the Minamata Convention – a recent global treaty to ban the manufacture and trade of cosmetics containing more than 1 ppm of mercury.

“We really need international cooperation,” he said. 137 countries have committed to ‘phase out and limit mercury’ under the treaty, perhaps paving a potential pathway to progress in this specific mission of the ZMWG – ‘to eliminate where feasible, and otherwise minimise, the global supply and trade of mercury.’



All views expressed in this editorial are solely that of the author, and are not expressed on behalf of The Analyst, its affiliates, or staff.

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First Union Forms at Online Retail Giant Amazon

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  • Multinational tech giant Amazon Inc reached another milestone today when workers at its New York warehouse formed the company’s first ever union.
  • 2,654 workers voted in favor of unionization, and 2,131 opposed the action.
  • Amazon is considering various legal options to challenge the results, priding itself on direct communication between the company and employees, versus negotiating through a bargaining unit.
  • Meanwhile, labor advocates celebrated Friday’s vote, excited for what it may portend for other aspects of operations at Amazon.
  • Amazon Inc is the country’s second largest private employer.

All views expressed in this editorial are solely that of the author, and are not expressed on behalf of The Analyst, its affiliates, or staff.

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