Tech Brew Ride Home - Fri. 01/26 – CRACK! The App Store Opens Up. Or Does It?

Episode Date: January 26, 2024

Apple has announced major changes to the App Store. In the EU, alternative app marketplaces, but does the new Core Technology Fee mean it’s still a shell game? Also in Europe, alternative default browsers. And for everyone, game streaming apps are now permissible. Also, cheaper GPT from OpenAI. And is Cruise in trouble with the Feds? Links: iOS 17.4 Introduces Alternative App Marketplaces With No Commission in EU (MacRumors) Apple will prompt users to set default browsers and allow third-party web engines on iPhone in the EU (9to5Mac) Apple opens App Store to game streaming services (The Verge) Apple's EU Core Technology Fee Could Bankrupt Freemium App Developers (MacRumors) OpenAI drops prices and fixes ‘lazy’ GPT-4 that refused to work (TechCrunch) DOJ and SEC investigate GM-owned self-driving car company Cruise (WashingtonPost) Baratrunde Thurston Bonus Episode Video On YouTube Learn more about your ad choices. Visit megaphone.fm/adchoices

On April 4th, 2023, around 2 in the morning, a man was found stabbed multiple times on a sidewalk in downtown San Francisco. Hey, who did this to you? What happened next turned the story into a political firestorm. Reports have identified the victim as Bob Lee, the founder of Cash App. From Bloomberg Podcasts, this is Foundering, the Killing of Bob Lee, beginning April 16. Welcome to the Tech meme right home for Friday, January 26, 24. I'm Brian McCullough today. Apple has announced major changes to the App Store. In the EU, alternative app marketplaces, but does the new core technology fee mean it's still a shell game? Also in Europe, alternative default browsers, and for everyone,

game streaming apps are now permissible. Also, cheaper GPT from OpenAI and is cruise in trouble with the feds. Here's what you miss today in the world of tech. Okay, it's happened, people. Apple has finally cracked open its app store. Not completely. but this is the biggest overhaul of the App Store we've seen literally ever. Let me summarize the headlines and then dive quick into each detail. First, Apple announced support for alternative app marketplaces in the EU charging a 0% commission and a 50 cent core technology fee per install per account annually. We knew that was coming.

They had to get ahead of the DMA changes in the EU. Second, Apple plans to allow third-party default browsers and web engines, including Chrome in the EU with iOS17.4, prompting users on the first launch of Safari. Now, again, Apple won't offer these App Store updates, quote, outside of the EU because this is not the safest system for our users, end quote, and highlights, quote, new threats the DMA introduces. But I believe this part is global. Apple will also begin allowing game streaming apps and services worldwide, meaning Xbox cloud streaming, Nvidia, Gforce Now, and others will be able to offer full apps. Let's start with the EU stuff, quoting Mac rumors. Alternative app marketplaces will function as an iOS app

that is able to install other iOS apps on an iPhone or iPad. Any developer can create an app marketplace so long as they meet Apple's criteria for customer experience, fraud prevention, customer support, and more. Apple is creating new APIs to build marketplaces on iOS to distribute apps to users. In the EU, when an app developer submits an app to Apple for distribution, they can choose the App Store or any alternative app marketplaces. This includes distribution through multiple alternative app marketplaces or through both the App Store and an App Marketplace.

Apps installed through alternative app stores will need to go through a notarization process that includes safety and security checks, which is how Mac apps work. Apple will not charge a commission on apps installed through alternative marketplaces, nor will it charge commission for alternative payment systems, which are also allowed under the App Store updates in the European Union. can integrate an alternative payment processor into their app that allows a user to make a purchase and check out entirely in-app, or developers can link out to their websites where users can make a purchase. While there are no commissions for alternative app marketplaces and alternative payment

systems, there is a core technology fee that is 50 cents per install per account on an annual basis. The first one million installs are free for all developers, but after one million installs, the fee comes into play. App developers who choose to continue to distribute under the App Store will pay Apple reduced commissions with new terms. Apple is dropping the 30% commission to 17% and the 15% commission paid for subscriptions over a year old or by small businesses will drop to 10%. Apple says the vast majority of apps will qualify for the 10% rate. Developers have a choice between opting into the new business terms in the EU or sticking with the App Store terms as they are today. Developers who choose to maintain the status quo will pay the fees.

They pay now 15 to 30% commission. Developers, who opt for the updated business terms, will pay the reduced commissions, will have access to alternative app stores, and will also be subject to the core technology fee. There is also an additional 3% payment processing fee for those who choose to continue to use Apple's integrated payment system rather than an alternative payment system under the new terms, end quote. On to the web browsers, again, only for the EU, quoting 9 to 5 Mac. Third-party browsers have been a thing on the app store for ages, but links always open in Safari by default. developers have workarounds that let you see other browsers like Chrome as your browser when

opening links within their apps, but it's not system-wide. Starting with iOS17.4, launching Safari for the first time will prompt users to set a default browser. Third-party browser examples include Microsoft Edge, Brave, Firefox, Google Chrome, Opera, and Duck, Do. This will effectively let users interact with third-party browsers on the same level as Safari. Like with mail, the key behavior change when setting a default browser is how it affects links. Third-party browsers to date have had control over appearance and feature sets, but the WebKit engine behind Safari was the only web engine approved by Apple. Chrome, for example, only uses WebKit on iOS. Blink is the web engine used by Chrome on all other platforms. As part of iOS17.4, Apple is introducing new

APIs that will enable developers to take advantage of these new features, including in-app browsers. Customers in the United States and other countries not in the EU will continue with the status quo, no third-party default browsers, and no alternative web engines, end quote. And finally, on to the game streaming apps, which again will be global, quoting the verge. Starting today, Apple is opening up the App Store to allow game streaming apps and services. This means that services like Xbox Cloud Streaming and GForce Now, which previously were only accessible on iOS via a web browser, will be able to offer full-featured apps. Developers can now submit a single app with the capability to stream all of the games

offered in their catalog, Apple wrote in a blog post. These changes apply, quote, worldwide, according to the company. In 2020, Apple appeared to have carved out a space for these cloud gaming services in the App Store, but that turned out not to be the case, as all games available through each service had to be submitted and reviewed as a standalone app. So the shift to allow one app with a large catalog of games marks a major change. As part of today's announcement, Apple said that, quote, each experience made available in an app on the App Store will be required to adhere to all App Store review guidelines, and its host app will need to maintain an age rating of the highest age-rated content

included in the app, end quote. Apple also says that developers will now, quote, be able to provide enhanced discovery opportunities for streaming games, mini-apps, mini-games, chatbots, and plugins that are found within their apps, and that, quote, mini-gams, chatbots, and plugins will be able to incorporate Apple's in-app purchase system to offer their users paid digital content or services for the first time, such as a subscription for an individual chatbot, end quote. Okay, that was a summary of the announcements. Now for some analysis of the details.

Lots of folks are saying that this is, again, Apple obeying the letter of the law in a way that basically preserves as much of the status quo as possible. Some are even suggesting that the EU might not accept the European App Store changes and might ask Apple to revisit them or make further changes or even find them. Here's Epic CEO. Tim Sweeney on X. Quote Apple's plan to thwart Europe's new Digital Markets Act law is a devious new instance of malicious compliance. They are forcing developers to choose between App Store exclusivity and the store terms, which will

be illegal under DMA or accept a new also illegal anti-competitive scheme, rife with new junk fees on downloads and new Apple taxes on payments they don't process. Apple proposes that it can choose which stores are allowed to compete with their app store. They could block Epic from launching the Epic Games store, and distributing Fortnite through it, for example, or block Microsoft Valve good old games or new entrants. Epic has always supported the notion of Apple notarization and malware scanning for apps, but we strongly reject Apple's twisting this process to undermine competition and continue imposing Apple taxes on transactions they're not involved in. There's a lot more hot garbage

in Apple's announcement. It will take more time to parse both the written and unwritten parts of this new horror show, so stay tuned, end quote. Tell us what you really think there. Having said that, we do have confirmation that Epic Games plans to launch its Epic Games store on the iPhone in the EU in 2024, which will include its popular game Fortnite, so it looks like they're going to test the waters while still roiling the waters at the same time. Some devs are accusing Apple of pulling a Unity, quoting Game Developer. Some developers claim the core technology fee is eerily similar to the controversial runtime fee that was being touted by Unity last year.

The original version of that initiative would have seen Unity charge its developers a per-install fee that scaled depending on how many installs they achieved. The engine maker eventually reworked that plan after a huge backlash. Responding to the news, Nikita Beyer, creator of Discord-owned social app gas, suggested the CFT could result in some developers becoming indebted to Apple. Quote, under the App Store's new fee structure for Europe, if you make 10 million in sales, Apple's cut is 6.2 million annually, assuming you have no. no operating costs or salaries, your take-home amount, $2 million after tax or 20% of your sales, he wrote on X, sharing a screenshot of his own fee calculations, I will never launch an app in Europe,

end quote. If you make less than 57 cents per user, which is most apps, you will end up negatively and you will owe Apple money, he added. But to pick up on a couple things Sweeney mentioned in his tweet, Apple does intend to notarize iOS apps distributed via third-party app stores. Apps will need to meet basic platform requirements like getting scanned for malware and such. Fair enough, but Apple says anyone looking to develop an alternative app marketplace needs to submit a $1 million, quote, letter of credit to, quote, guarantee support for developers and customers. And by some estimates, Apple's 50 cent core technology fee in the EU would lead to a free or freemium app with 2 million annual first installs paying more than $500,000 a year, even if no money is earned.

Quoting Mac rumors, that's an unsustainable model for free apps and freemium apps would need to be earning at least 50 cents per user to break even with the fee. A freemium app with thousands of installs from non-paying users could end up owing far more than is made. Developers will likely need to charge up front to ensure their apps make enough money to pay the CTF as offering a free-to-download app could be risky if downloads exceed 1 million. Free and freemium app developers can, however, choose to stick with Apple's current App Store business terms instead of opting for the new terms. In that situation, nothing would change, and app developers would continue to pay a 15 to 30% commission to Apple, end quote. And on the App Store now permitting streaming games front, I thought this clarification

and analysis from Sarah Perez in TechCrunch was astute, quote, According to an announcement, Apple published on Thursday, developers globally can now submit a single app that has the capability of streaming all the games offered in their catalog. This is a change from the prior rules which said that every game offered to iOS users had to be listed on its own separate App Store page. A requirement Apple said was necessary in order to properly review and vet each app's age rating and compliance with the App Store review guidelines. The goal most likely is to encourage companies that would rather launch an independent app store for gaming, now that it's permitted in the EU by the DMA to do so on Apple's App Store instead, where Apple takes a cut of the in-app purchases.

Microsoft notably had been weighing the option of launching its own mobile gaming store it was reported last year. But in addition to allowing single apps to host streaming games, Apple says that mini-games, mini-apps, chatbots, and plugins will also now be able to incorporate Apple's in-app purchase system in their apps. This adjustment seems to be focused on the concerns emerging over OpenAI's GPT store, which functions like an app store of sorts for custom AI chatbots that work similarly to chat GPT but are designed for specific purposes. With the GPT store and the rise of AI more broadly,

Apple could lose a potential source of revenue if users were to browse and discover paid or subscription-based chatbots from within a larger app. This move cements that even those types of services will be subject to Apple's in-app purchase rules and the 15 to 30% commissions it takes. Apple noted that each mini-app in-app game or in-app experience will still have to adhere to its App Store review guidelines, meaning Apple would need to review the AI chatbots or GPTs if OpenAI decided to bring them to iOS users instead of only those on the web, end quote. Hmm, getting ahead of where the market is going, are we Apple, and making sure you're there to take your cut again. Also, what would you say the odds are that once Apple finds a way to run language models, On device we see an Apple GPT store or something similar. If they did that, they'd need to lay plausible

deniability down for anti-competitive charges then as well, right? They did say their main goal was to get the prices to come down. And indeed, Open AI has announced 25 to 50 percent lower GPT 3.5 turbo prices. Also a GPT4 turbo preview model to reduce cases of laziness. Remember, developers were complaining the model is slowly degrading. Also, improved text-embedding models and more, quoting TechCrunch. Paying users will be pleased to hear that input prices are dropping by 50% and output by 25% to 0.005 per thousand tokens in and 0.015 per thousand tokens out. GPT4 Turbo gets a new preview model for API use.

Also, this has an interesting fix. This model completes tests like code generation more thoroughly than the previous preview model, is intended to produce cases of laziness where the model doesn't complete a task." Perhaps the model learned the wrong lessons from the developers whose habits it ingested and embodied. Maybe AI is already quiet quitting. Good for AI. This is still in preview mode, but GBT4 Turbo with Vision, i.e. GPT4V, will launch to general availability, quote, in the coming months, end quote. And I do want to note this real quick in case it becomes something. Cruise says the U.S. Department, Department of Justice and the Securities and Exchange Commission are probing the company over that October

20-23 incident where one of its autonomous vehicles hit and dragged a pedestrian 20 feet, quoting the Washington Post. The company released a more than 100-page report from law firm Quinn Emmanuel, Urquhart, and Sullivan regarding the October 2nd incidents and cruises subsequent interactions with government officials. In the report, Quinn Emmanuel said that cruise executives were aware when they briefed officials the next day on the accident that its vehicle had dragged the woman 20 feet, but they didn't mention it. The report said Cruz's response reflects, quote, deficient leadership at the highest levels of the company that led to a lack of coordination, mistakes of judgment, misapprehension of regulatory requirements and expectations, and inconsistent disclosures and discussions of material facts

at critical meetings with regulators and other government officials, end quote. The federal probe is the latest development in a tumultuous couple of months for the General Motors subsidiary, which achieved a major milestone this summer when it received permits to offer 24-7 robotaxies service in San Francisco. That expansion, seen as a pivotal moment for the self-driving car industry, was short-lived, though, as California revoked the company's permits immediately after the October collision, end quote. So you might have noticed no weekend long-read suggestions this week, number one, because I checked my file, and there just wasn't anything that caught my eye this week. Number two, there was so much to dissect with the App Store news. I wanted to give that its proper

do an analysis. That's also why I'm releasing the show a tad early today, so you can know everything quicker. Also, that was why I produced a quick video of that first segment last night so that subscribers to the YouTube channel were in the know overnight. This weekend, we've got a weekend bonus episode with the great Baratunde Thurston. We talked to him about his hands-on demo with the Vision Pro, and then Baratunday and Chris poke holes in my shower revelation that Google will deprecate Google search within a decade. Great conversation, and it will come to your podcast feeds Saturday as always. But if you don't want to wait, the video with Baratune Day is live on YouTube. Final link in the show notes today. Talk to you on Monday.