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Apple Can No Longer Force Commission Fees on Developers, Judge Rules

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While the ruling marks a major win for app developers, Epic Games — which brought the lawsuit that sparked the ruling — was ordered to pay $3.5 million for violating its contract with Apple after initially bucking against the commission fee.


Apple Must Allow Multiple Payment Systems

A federal judge ruled Friday that Apple can no longer limit developers it hosts in its App Store to a single, commission-based option.

The decision, handed down by District Court Judge Yvonne Gonzalez-Rogers, comes after Fortnitedeveloper Epic Games filed separate lawsuits against Apple and Google last year for unfair app store practices. In each lawsuit, Epic alleged Apple and Google were engaging in antitrust activities by forcing developers to pay a 30% commission fee on all in-app purchases.

Leading up to the lawsuit, Epic initially implemented a secondary payment method that bypassed the mandatory fee system. Following that, both Apple and Google removed “Fortnite” from their app stores, alleging a breach of contract.

In her Friday ruling, Judge Gonzalez-Rogers provided one win for Epic, issuing Apple an injunction that “permanently restrain[s] and enjoin[s]” it from prohibiting developers to provide access to additional forms of payment in their apps. 

In other words, Apple can continue to implement its commission-based system, but developers don’t have to adhere to it and will be able to introduce new payment systems that allow them to keep a bigger portion of their sales. That will primarily come in the form of links that redirect users from their apps.

Last week, Apple announced that in early 2022, it will begin allowing “reader” apps, or apps with subscription-based models such as Netflix and Spotify, to redirect users to outside methods of payments. The move, a modest concession spurred from an investigation by Japan’s Fair Trade Commission, had no way of hurting Apple’s App Store revenue, unlike Friday’s ruling. That’s because “reader” apps do not currently offer any in-app purchases.

Like Apple’s agreement with Japan, Friday’s injunction is not immediate. Instead, it will take effect in 90 days (Dec. 9) provided a high court doesn’t reverse the decision.

Not a Complete Win for Epic

Epic didn’t walk away from its court battle with Apple completely unscathed. That’s because Judge Gonzalez-Rogers also ruled that Epic was in breach of its contract with Apple when it bucked against the company’s single-payment system.

As a result, she has ordered Epic to pay Apple 30% of all the revenue it has collected since it adopted its secondary payment method. In total, that’s a sum of more than $3.5 million.

Judge Gonzalez-Rogers likewise rejected Epic’s claim that Apple had formed a monopoly, saying, “the court cannot ultimately conclude that Apple is a monopolist under either federal or state antitrust laws.”

“Nonetheless, the trial did show that Apple is engaging in anti-competitive conduct under California’s competition laws,” she added.

Unsurprisingly, Apple has largely focused on the judge’s rulings against Epic rather than its significant loss related to commission fees. 

“Today the Court has affirmed what we’ve known all along: the App Store is not in violation of antitrust law,” a representative told The Verge. “Apple faces rigorous competition in every segment in which we do business, and we believe customers and developers choose us because our products and services are the best in the world. We remain committed to ensuring the App Store is a safe and trusted marketplace.”

What’s Next?

Apple will almost certainly appeal its loss, but if the decision is upheld, that could mean a significant setback for the company, which has long argued that its commission fees act as a way to vet developers and ensure a safe experience for users. The App Store alone reportedly brought in $64 billion for the company in 2020.

The trial for Epic Games v. Google has not yet started, though Judge Gonzalez-Rogers’ ruling could indicate how another judge might rule on the issue. If Friday’s decision is upheld, it’s almost certain that Google’s Play Store would be held to the same standards as Apple’s App Store. Additionally, another lawsuit by 36 state attorneys general has been filed against Google’s app store practices. 

Internationally, South Korea late last month became the first country to pass a bill that bars major app stores from forcing developers to pay commission fees for users’ in-app purchases. Just before Judge Gonzalez-Rogers’ ruling Friday, Epic asked Apple to restore Fortnite to the App Store in South Korea; however, Apple has refused to do so until Epic agrees to “play by the same rules as everyone else.”

According to Axios, Apple will likely only concede to bring “Fortnite” back if ordered to do so by a court. 

See what others are saying: (The Verge) (CNBC) (Axios)

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Instagram Testing New Tools To Verify Users Are Over 18

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The new tools include AI software that analyzes video footage of a person’s face to verify their age.


Instagram Cracks Down on Underage Users

Instagram is testing new features in the United States to verify the age of users who claim to be over 18 years old. 

According to a statement from Instagram’s parent company, Meta, the tools will only apply to users who seek to change their age from under 18 to over 18. The platform previously asked for users to upload their ID for verification in this process, but on Thursday, it announced there will be two new methods for confirming age. 

One of the strategies was referred to as “social vouching.” Using this option, people can request that three mutual Instagram followers over the age of 18 confirm their age on the platform.

The other method allows users to upload a video selfie of themselves to be analyzed by Yoti, third-party age verification software. Yoti then estimates a person’s age based on their facial features, sends that estimate to Meta, and both companies delete the recording. 

According to Meta, Yoti cannot recognize or identify a face based on the recording and only looks at the pixels to determine an age. Meta said that Yoti “is the leading age verification provider for several industries around the world,” as it has been used and promoted by social media companies and governmental organizations. 

Still, some question how effective it will be for this specific use. According to The Verge, while the software does have a high accuracy rate among certain age groups and demographics, data also shows it is less precise for female faces and faces with darker skin tones. 

Issues With Kids on Instagram

Meta argues that it is important for Instagram to be able to discern who is and is not 18, as it impacts what version of the app users have access to.

“We’re testing this so we can make sure teens and adults are in the right experience for their age group,” the company’s statement said. 

“When we know if someone is a teen (13-17), we provide them with age-appropriate experiences like defaulting them into private accounts, preventing unwanted contact from adults they don’t know and limiting the options advertisers have to reach them with ads,” it continued. 

These changes come as Instagram has been facing increased pressure to address the way its app impacts younger users. 

Only children 13 and older are allowed to have Instagram accounts, but the service has faced criticism for not doing enough to enforce this. A 2021 survey of high school students found that nearly half of the respondents had created a social media account of some kind before they were 13.

The company also recently came under fire after The Wall Street Journal published internal Meta documents revealing that the company knew that it harmed teens, including by worsening body image issues for young girls and women.

See what others are saying: (The Verge) (The Wall Street Journal) (Axios)

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Elon Musk Threatens to Fire Employees Unless They Work in Person Full-Time

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The world’s richest man in the world previously suggested that the popularity of remote work has “tricked people into thinking that you don’t actually need to work hard.”


“If You Don’t Show up, We Will Assume You Have Resigned”

On Wednesday, Electrek published two leaked emails apparently sent from Elon Musk to Tesla’s executive staff threatening to fire them if they don’t return to work in person.

“Anyone who wishes to do remote work must be in the office for a minimum (and I mean *minimum*) of 40 hours per week or depart Tesla,” he wrote. “This is less than we ask of factory workers.”

“If there are particularly exceptional contributors for whom this is impossible, I will review and approve those exceptions directly,” he continued.

Musk then clarified that the “office” must be a main office, not a “remote branch office unrelated to the job duties.”

“There are of course companies that don’t require this, but when was the last time they shipped a great new product? It’s been a while,” he wrote in the second email.

Later on Wednesday, a Twitter user asked Musk to comment on the idea that coming into work is an antiquated concept.

He replied, “They should pretend to work somewhere else.”

The Billionaire Pushes People to Work Harder

Musk has a history of pressuring his employees and criticizing them for not working hard enough.

“All the Covid stay-at-home stuff has tricked people into thinking that you don’t actually need to work hard. Rude awakening inbound,” he tweeted last month.

Three economists told Insider that remote work during the pandemic did not damage productivity.

“Most of the evidence shows that productivity has increased while people stayed at home,” Natacha Postel-Vinay, an economic and financial historian at the London School of Economics, told the outlet.

Musk is notorious for criticizing lockdown mandates and went so far as to call them “fascist” during a Tesla earnings call in April 2020.

Not long before that, Tesla announced that it would keep its Fremont, California plant open in defiance of shelter-in-place orders across the state.

In an interview with The Financial Times last month, Musk blasted American workers for trying to stay home, comparing them to their Chinese counterparts whom he said work harder.

“They won’t just be burning the midnight oil. They will be burning the 3 a.m. oil,” he said. “They won’t even leave the factory type of thing, whereas in America people are trying to avoid going to work at all.”

That same day, Fortune published an article detailing how Tesla workers in Shanghai work 12-hour shifts, six days out of the week, sometimes sleeping on the factory floor.

See what others are saying: (CNBC) (Electrek) (Business Insider)

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Apple Raises Worker Pay as Unions Gain Ground

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The company’s vice president of people and retail was caught trying to dissuade employees from unionizing in a leaked video.


Labor Squeezes Apple into Submission

Apple announced Wednesday that its U.S. corporate and retail employees will see a pay increase later this year, with starting wages bumped from $20 per hour to $22, though stores in certain regions may get more depending on market conditions.

Starting salaries are also expected to increase.

“Supporting and retaining the best team members in the world enables us to deliver the best, most innovative, products and services for our customers,” an Apple spokesman said in a statement. “This year as part of our annual performance review process, we’re increasing our overall compensation budget.”

Some workers were told their annual reviews would be moved up three months and that their pay increases would take effect in early July, according to a memo reviewed by The Wall Street Journal. Furthermore, they were told the increased compensation budget would be in addition to pay increases and special awards already received within the past year.

Feeling squeezed by low unemployment and high inflation, tech companies like Google, Amazon, and Microsoft have changed their compensation structures in recent weeks to pay workers more, and Apple is the latest to bend to market pressure.

Unions Gaining Traction

On Wednesday, The Verge received a leaked video of Apple’s vice president of people and retail, Deirdre O’Brien, explicitly dissuading employees from unionizing.

“I worry about what it would mean to put another organization in the middle of our relationship,” she said. “An organization that does not have a deep understanding of Apple or our business. And most importantly one that I do not believe shares our commitment to you.”

She vocalized more anti-union talking points, like the idea that the company will not be able to make important decisions as quickly with a collective bargaining agreement.

O’Brien has been personally visiting retail stores over the past few weeks in an apparent bid to combat budding union activity.

Apple stores in three locations — New York, Georgia, and Maryland — are currently pushing to unionize, with the latter two set to vote in elections on June 2 and 15, respectively. In response to these efforts, Apple has hired anti-union lawyers, given managers anti-union scripts, and held anti-union captive audience meetings.

In the United States, unionized workers make about 13.2% more than non-unionized workers in the same sector, according to the Economic Policy Institute.

As of Wednesday, Apple’s shares had fallen 21% since the start of the year, but sales grew 34% last year to almost $300 billion.

See what others are saying: (The Wall Street Journal) (CNBC) (The Verge)

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