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Apple to cut app store fees as legal scrutiny intensifies

Inside Telecom Staff

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Apple to cut app store fees as legal scrutiny intensifies

Apple will cut its app store commissions in half for most developers beginning next year amid an intensifying debate about whether the iPhone maker has been using the fees to unfairly fatten its profits and stifle rivals competing against its own music, video, and other subscription services.

The concession announced Wednesday will lower Apple’s commissions for in-app subscriptions and other purchases from the 30% rate that has been in place since 2008 to 15%, effective Jan. 1. But the discount will only apply to developers with app store revenue up to $1 million annually — a threshold that excludes the makers of some of the most popular apps downloaded on iPhones, iPads and other Apple devices.

That group includes two of Apple’s fiercest critics, music streaming service Spotify, and Epic, the maker of the popular Fortnite video game.

Both those companies have helped spur increasing scrutiny of Apple’s app store practices among lawmakers and regulators in the U.S. and Europe. Apple sells music streaming and video services that have been helping to offset a slowdown in iPhone revenue in recent years.

The app store commissions feed Apple’s services division, which saw its revenue climb 16% to nearly $54 billion during the company’s last fiscal year ending in September. Only iPhone sales generate more revenue for Apple than services.

Apple is framing its fee reduction as a way to help most of the companies that make the roughly 1.8 million apps in its store during the tough economic times brought on by the pandemic. About 98% of the app developers generate less than $1 million in revenue annually, according to the mobile analytics firm SensorTower.

But the reduced commission probably won’t leave much of a dent in Apple’s revenue. That’s because the small developers in line to qualify for the cut only contribute about 5% of Apple’s app store revenue, based on SensorTower’s estimates.

Moody’s analyst Raj Joshi predicted the reduced commission will pare Apple’s annual revenue by less than 1% while buying the company more goodwill from app developers and perhaps regulators, too. “The move will alleviate risks to some degree from the growing global regulatory scrutiny of the App Store’s pricing and business model,” Joshi said.

That’s probably one reason investors seemed unfazed by Apple’s forthcoming fee cut. The company’s shares slid 1% to close Wednesday at $118.03.

Spotify scoffed at Apple’s lower commissions as “window dressing” designed to discourage regulators from cracking down on its practices. “This latest move further demonstrates that their app store policies are arbitrary and capricious,” Spotify said in a statement.

The Match Group, which owns popular online dating sites, also lashed out at Apple in a statement questioning how much the lowered commissions will help. “If you manage to grow your revenue over $1 million, they then double their cut — arbitrarily — making it even harder for the startup to continue to grow,” Match said.

Epic is continuing to pursue a lawsuit it filed against Apple earlier this year in an effort to win the right to sell products within its apps without having to pay Apple’s fees.

Meanwhile, a group called the Coalition for App Fairness, a Washington-based nonprofit, is calling for “fair treatment” in the way the tech giants run their app stores. Its members include Epic, Spotify, online dating app maker Match Group, and other members including Tile, Basecamp, ProtonMail and European media industry associations.

And European regulators are investigating Apple’s mobile app store and payment platform over concerns its practices distort competition, part of the EU’s battle against the dominance of big tech companies.

Apple CEO Tim Cook cast the fee reductions as a mutually beneficial move everyone involved.

“We’re launching this program to help small business owners write the next chapter of creativity and prosperity on the app store,” Cook said in a statement.

More details about the reduced commissions will be released next month.


SAN RAMON, Calif. (AP) — By MICHAEL LIEDTKE AP Technology Writer

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AstraZeneca manufacturing error clouds vaccine study results

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AstraZeneca and Oxford University on Wednesday acknowledged a manufacturing error that is raising questions about preliminary results of their experimental COVID-19 vaccine.

A statement describing the error came days after the company and the university described the shots as “highly effective” and made no mention of why some study participants didn’t receive as much vaccine in the first of two shots as expected.

In a surprise, the group of volunteers that got a lower dose seemed to be much better protected than the volunteers who got two full doses. In the low-dose group, AstraZeneca said, the vaccine appeared to be 90% effective. In the group that got two full doses, the vaccine appeared to be 62% effective. Combined, the drugmakers said the vaccine appeared to be 70% effective. But the way in which the results were arrived at and reported by the companies has led to pointed questions from experts.

The partial results announced Monday are from large ongoing studies in the U.K. and Brazil designed to determine the optimal dose of vaccine, as well as examine safety and effectiveness. Multiple combinations and doses were tried in the volunteers. They were compared to others who were given a meningitis vaccine or a saline shot.

Did Researchers Mean to Give a Half Dose?

Before they begin their research, scientists spell out all the steps they are taking, and how they will analyze the results. Any deviation from that protocol can put the results in question.

In a statement Wednesday, Oxford University said some of the vials used in the trial didn’t have the right concentration of vaccine so some volunteers got a half dose. The university said that it discussed the problem with regulators, and agreed to complete the late stage trial with two groups. The manufacturing problem has been corrected, according to the statement.

What About the Results Themselves?

Experts say the relatively small number of people in the low dose group makes it difficult to know if the effectiveness seen in the group is real or a statistical quirk. Some 2,741 people received a half dose of the vaccine followed by a full dose, AstraZeneca said. A total of 8,895 people received two full doses.

Another factor: none of the people in the low-dose group were over 55 years old. Younger people tend to mount a stronger immune response than older people, so it could be that the youth of the participants in the low-dose group is why it looked more effective, not the size of the dose.

Another point of confusion comes from a decision to pool results from two groups of participants who received different dosing levels to reach an average 70% effectiveness, said David Salisbury, and associate fellow of the global health program at the Chatham House think tank.

“You’ve taken two studies for which different doses were used and come up with a composite that doesn’t represent either of the doses,” he said of the figure. “I think many people are having trouble with that.”

Why Would a Smaller First Dose Be More Effective?

Oxford researchers say they aren’t certain and they are working to uncover the reason.

Sarah Gilbert, one of the Oxford scientists leading the research, said the answer is probably related to providing exactly the right amount of vaccine to trigger the best immune response.

“It’s the Goldilocks amount that you want, I think, not too little and not too much. Too much could give you a poor quality response as well,” she said. “So you want just the right amount and it’s a bit hit and miss when you’re trying to go quickly to get that perfect first time.”

What Are the Next Steps?

Details of the trial results will be published in medical journals and provided to U.K. regulators so they can decide whether to authorize distribution of the vaccine. Those reports will include a detailed breakdown that includes demographic and other information about who got sick in each group, and give a more complete picture of how effective the vaccine is.

Moncef Slaoui, who leads the U.S. coronavirus vaccine program Operation Warp Speed, said Tuesday in a call with reporters that U.S. officials are trying to determine what immune response the vaccine produced, and may decide to modify the AstraZeneca study in the U.S. to include a half dose.

“But we want it to be based on data and science,” he said.

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EU plans new rules giving Europeans more control of data

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The European Union is laying out new standards for data giving Europeans more control over their personal information as it seeks to counter the power of U.S. and Chinese tech companies.

The EU’s executive Commission on Wednesday proposed new rules on the handling of data that would aim to give people, businesses and government bodies the confidence to share their information in a European data market.

The proposed legislation would would spell out how industrial and government data – normally off limits because of intellectual property rights, commercial confidentiality or privacy rights – could be shared to help society or boost the economy. The bloc’s strict privacy rules would still apply, with mechanisms in place to preserve confidentiality or anonymity.

The aim is to drive innovation in areas such as health care or climate change by allowing data to be more easily shared with companies or researchers.

Individuals could choose to donate their data for altruistic reasons – for example, a person with a rare disease providing their health information to medical researchers. Or people could allow access for a fee or use of a service. The new rules could pose a challenge to big tech companies like Google and Facebook that currently make billions in revenue by using data to sell ads and other services.

The proposal, known as the Digital Governance Act, calls for raising trust in data sharing by setting up a new system involving neutral and trustworthy middlemen who act as brokers of pools of data.

Europeans would be able to get more control of their data through “personal data spaces” that have tools and services that let them decide who can access their data and for what purpose.

“The framework offers an alternative model to the current data handling practices offered by big tech platforms,” the EU’s Executive Vice President Margrethe Vestager said at a press briefing in Brussels.

Thierry Breton, the EU’s internal market commissioner, said the regulations would help Europe become the world’s No. 1 “data continent.”

“With the ever-growing role of industrial data in our economy, Europe needs an open yet sovereign Single Market for data,” he said.

LONDON (AP) — By KELVIN CHAN Associated Press.

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UK telecom companies face big fines under new security law

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Telecom companies in Britain face hefty fines if they don’t comply with strict new security rules under a new law proposed in Parliament on Tuesday that is aimed at blocking high-risk equipment suppliers like China’s Huawei.

The Telecommunications (Security) Bill tightens security requirements for new high speed 5G wireless and fiber optic networks, with the threat of fines of up to either 10% of sales or 100,000 pounds ($134,000) a day for companies that don’t follow the rules.

The draft law paves the way for the U.K. government to formalize Prime Minister Boris Johnson’s decision in July prohibiting Huawei from building Britain’s 5G mobile phone networks because of security concerns.

The British government said it was bringing in the ban – reversing an earlier plan to give Huawei a limited role – because U.S. sanctions made it impossible to ensure the security of its networking gear. Wireless carriers were also ordered to rip out any existing Huawei 5G equipment from their networks by 2027. The Chinese company is one of the flashpoints in a broader global battle between Washington and Beijing over trade and technology.

The new rules are a major step to protecting the U.K. from hostile cyber activity by state actors or criminals, the government said, citing previous cyberattacks attributed to Russia, China, North Korea and Iran.

“This groundbreaking bill will give the U.K. one of the toughest telecoms security regimes in the world and allow us to take the action necessary to protect our networks,” Digital Secretary Oliver Dowden said.

The bill, which needs to be approved by Parliament, spells out tougher security standards for the electronic equipment and software at mobile phone mast sites and in telephone exchanges that handle internet traffic and telephone calls.

Huawei said it was disappointed that the U.K. government was looking to exclude it from the 5G rollout.

“This decision is politically-motivated and not based on a fair evaluation of the risks,” said Vice President Victor Zhang. “It does not serve anyone’s best interests as it would move Britain into the digital slow lane and put at risk the government’s levelling up agenda.”

LONDON (AP).

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