Apple’s lucrative app store was alternately portrayed as a price-gouging monopoly and a hub of world-changing innovation during the preamble to a trial that may reshape the technological landscape.
The contrasting portraits were drawn on Monday as lawyers for Apple and its foe, Epic Games, outlined their cases in an Oakland, California, federal court before U.S. District Judge Yvonne Gonzalez Rogers, who will decide the case.
While Apple depicted its app store as an invaluable service beloved by consumers and developers alike, Epic Games attacked it as a breakthrough idea that has morphed into an instrument of financial exploitation that illegally locks out competition.
The trial, expected to last most of this month, revolves around the 15% to 30% commission that Apple charges for subscriptions and purchases made from apps downloaded from its store — the only one accessible on the iPhone, iPad and iPod.
Epic, the maker of the popular Fortnite video game, laid out evidence drawn mostly from Apple’s internal documents in an attempt to prove the company has built a digital “walled garden” during the past 13 years as part of a strategy crafted by its late co-founder, Steve Jobs. The formula, Epic contends, is designed to make it as difficult as possible for consumers to stop buying its products and services.
“The most prevalent flower in the walled garden is the Venus fly trap,” said Epic lawyer Katherine Forrest. Later, Forrest highlighted expert testimony that will be submitted during the trial that estimated Apple reaped profit margins of 75% to 78% during 2018 and 2019, even though Jobs publicly said the company didn’t expect to make large sums of money from the app store when it opened in 2008.
The app store is now an integral piece of a services division that generated nearly $17 billion in revenue during the first three months of this year alone.
Apple brushed off Epic’s arguments as a case brimming with unfounded allegations made by a company that wants to get rid of the app store commission to increase its own profits while freeloading off an iPhone ecosystem that has cost more than $100 billion to build.
Karen Dunn, Apple’s attorney, pointed to Epic’s internal documents outlining a strategy called “Project Liberty” that paved a way for Fortnite to purposefully breach its app store contract last summer and set up a showdown over the fees.
“Rather than investing in innovation, Epic invested in lawyers, PR and policy consultants in an effort to get all of the benefits Apple provides without paying,” Dunn said.
In sworn testimony, Epic CEO Tim Sweeney acknowledged that the company is trying to increase its current annual revenue of about $5.1 billion through its own app store. The Epic store, which is currently banned from the iPhone and other Apple products, charges a 12% commission on in-app transactions. That model isn’t profitable yet, Sweeney said, but he predicted the Epic store will start making money during the next three or four years.
“Epic is solely seeking changes to Apple’s future behavior,” Sweeney testified so the company won’t have to pay higher commissions and still be able to offer Fortnite and other games on the iPhone. Apple ousted Fortnite from its app store last August after Epic tried to use its own payment system.
Sweeney also acknowledged that Epic decided to brazenly violate its contract with Apple to make a point. “I wanted to show the world through action exactly what the ramifications of Apple’s policies were,” he testified.
In his cross-examination, Apple lawyer Richard Doren repeatedly pressed why Epic seemed to have no problem paying a mandatory 30% commission on payments made on Fortnite through Sony’s PlayStation Microsoft’s Xbox and Nintendo’s Switch consoles as well as other devices. During the same questioning, Doren also highlighted evidence showing those three video game consoles have accounted for about $10.5 billion of the $13.1 billion in revenue that Fortnite has brought into Epic the game’s release in 2017.
Apple CEO Tim Cook — Jobs’ hand-picked successor — will testify during the trial, too, but his appearance isn’t expected until near the end of a courtroom drama that will unfold before only a handful of mask-wearing people being allowed inside each day because of pandemic restrictions.
While the trial will involve moments of high intrigue that could divulge closely guarded secrets, the nuts and bolts of the case will likely hinge on more mundane matters such as market definitions.
Epic contends the iPhone has become so ingrained in society that the device and its peripheral services such as the app store has become a market by itself. As part of that argument, Epic contends the Apple should be forced to open up its walled garden to alternative options, such as allowing other app stores and payment options besides its own.
“The garden could have a door,” Epic lawyer Forrest insisted. “It was artificially closed.”
Apple Inc. is seeking a far more broader market definition that would encompass the consoles, computers and other devices that people use to play video games. To prove that point, the Cupertino, California, company cited an internal Epic analysis done last year that concluded 38% of Fortnite users who play the game on mobile devices also rely on consoles and other devices, as well.
As part of its case, Apple is also highlighting the roughly 2 billion other smartphones that run on Google’s Android software, which allows alternative ways to download apps.
The different way that Google manages apps on Android is one example that Apple believes proves that consumers have other choices, but many of them prefer keeping their digital experiences within a carefully controlled walled garden.
Epic is “asking us to remove our competitive advantage,” Apple lawyer Dunn said. “Epic wants us to be Android, but we don’t want to be.”
Epic also is suing Google in a separate case accusing that company of illegally gouging apps through its Play store for Android devices.
SAN RAMON, Calif. (AP) — By MICHAEL LIEDTKE AP Technology Writer
Global semiconductor market to reach $522 billion in 2021, report finds
While the world came to a screeching halt when the COVID-19 pandemic hit, the semiconductor market performed strongly in 2020. Demand by industry was uneven throughout the year due to global lockdowns, remote work, and education, and shifts in consumer buying behavior.
Worldwide semiconductor revenue grew to $464 billion in 2020, an increase of 10.8 percent compared to 2019, according to the Semiconductor Applications Forecaster (SAF) from International Data Corporation (IDC).
The market research company forecasts the semiconductor market will reach $522 billion in 2021, a 12.5 percent year-over-year growth rate. In parallel, the company anticipates continued robust growth in consumer, computing, 5G, and automotive semiconductors.
Supply constraints will continue through 2021; while shortages initially occurred in automotive semiconductors, the impact is being felt across the board in semiconductors manufactured at older technology nodes.
Much like a traffic jam and the ripple effect, a disruption on the semiconductor supply chain operating close to capacity will impact across the supply chain. “The industry will continue to struggle to rebalance across different industry segments, while investment in capacity now will improve the industry’s resiliency in a few years,” the report said.
Looking forward to 2021, there is a continued strong growth in semiconductor sales worldwide as adoption of cloud technologies and demand for data and services remain unchanged. “Global fiscal and monetary policy remain accommodative and will provide a tailwind for continued capital investments in long term infrastructure,” IDC highlighted.
The market for semiconductors in Computing systems, such as PCs and servers, outpaced the overall semiconductor market, growing 17.3 percent year over year to $160 billion in 2020.
“Demand for PC processors remains strong, especially in value-oriented segments,” said Shane Rau, research vice president, Computing Semiconductors. “The PC processors market looks strong through the first half and likely the whole year.” IDC forecasts Computing systems revenues will grow 7.7 percent to $173 billion in 2021.
Growth in Mobile Phone semiconductors was resilient in 2020. “Mobile phone shipments fell by more than ten percent in 2020, but mobile phone semiconductor revenues grew by 9.1 percent due to a shift to higher priced 5G semiconductors, more memory per phone, sensors, and RF support for more spectrum bands,” said Phil Solis, research director for Connectivity and Smartphone Semiconductors.
“2021 will be an especially important year for semiconductor vendors as 5G phones capture 34 percent of all mobile phone shipments while semiconductors for 5G phones will capture nearly two thirds of the revenue in the segment.” IDC forecasts mobile phone semiconductor revenues will grow by 23.3 percent in 2021 to $147 billion.
The Consumer semiconductor market segment rebounded in 2020. Robust sales of game consoles, tablets, wireless headphones and earbuds, smart watches, and OTT streaming media devices fueled segment growth by 7.7 percent year over year to $60 billion.
“Apple, AMD, and Intel showed exceptional growth as consumers upgraded their digital spaces at home,” said Rudy Torrijos, research manager, Consumer Semiconductors. “New gaming consoles from Microsoft and Sony, continued strong sales of wearables from Apple, and the rise in smart home networks managed by Amazon Alexa and Google Assistant will accelerate growth in 2021 to 8.9 percent year over year.”
“Automotive sales recovered in the second half of 2020, but the supply constraints for the automotive semiconductor market for some products will last through 2021 as fires and fab shutdowns further impacted the automotive semiconductor market and it takes time for chips to move through the automotive ecosystem, specifically in the U.S. and Europe,” said Nina Turner, research manager, Automotive Semiconductors. For 2021, IDC forecasts that automotive semiconductor revenue will grow 13.6 percent.
“Overall, the semiconductor industry remains on track to deliver another strong year of growth as the super cycle that began at the end of 2019 strengthens this year,” said Mario Morales, program vice president, Semiconductors at IDC.
“The markets remain narrowly focused on shortages across specific sectors of the supply chain, but what is more important to emphasize is how critical semiconductors are to every major system category and content growth that remains unabated.”
Army of fake fans online boosts China’s global messaging
China’s ruling Communist Party has opened a new front in its long, ambitious war to shape global public opinion: Western social media.
Liu Xiaoming, who recently stepped down as China’s ambassador to the United Kingdom, is one of the party’s most successful foot soldiers on this evolving online battlefield. He joined Twitter in October 2019, as scores of Chinese diplomats surged onto Twitter and Facebook, which are both banned in China.
Since then, Liu has deftly elevated his public profile, gaining a following of more than 119,000 as he transformed himself into an exemplar of China’s new sharp-edged “wolf warrior” diplomacy, a term borrowed from the title of a top-grossing Chinese action movie.
“As I see it, there are so-called ‘wolf warriors’ because there are ‘wolfs’ in the world and you need warriors to fight them,” Liu, who is now China’s Special Representative on Korean Peninsula Affairs, tweeted in February.
His stream of posts — principled and gutsy ripostes to Western anti-Chinese bias to his fans, aggressive bombast to his detractors — were retweeted more than 43,000 times from Jun. through Feb. alone.
But much of the popular support Liu and many of his colleagues seem to enjoy on Twitter has, in fact, been manufactured.
A seven-month investigation by the Associated Press and the Oxford Internet Institute, a department at Oxford University, found that China’s rise on Twitter has been powered by an army of fake accounts that have retweeted Chinese diplomats and state media tens of thousands of times, covertly amplifying propaganda that can reach hundreds of millions of people — often without disclosing the fact that the content is government-sponsored.
More than half the retweets Liu got from June through January came from accounts that Twitter has suspended for violating the platform’s rules, which prohibit manipulation. Overall, more than one in ten of the retweets 189 Chinese diplomats got in that time frame came from accounts that Twitter had suspended by Mar. 1.
But Twitter’s suspensions did not stop the pro-China amplification machine. An additional cluster of fake accounts, many of them impersonating U.K. citizens, continued to push Chinese government content, racking up over 16,000 retweets and replies before Twitter permanently suspended them for platform manipulation late last month and early this month, in response to the AP and Oxford Internet Institute’s investigation.
This fiction of popularity can boost the status of China’s messengers, creating a mirage of broad support. It can also distort platform algorithms, which are designed to boost the distribution of popular posts, potentially exposing more genuine users to Chinese government propaganda. While individual fake accounts may not seem impactful on their own, over time and at scale, such networks can distort the information environment, deepening the reach and authenticity of China’s messaging.
“You have a seismic, slow but large continental shift in narratives,” said Timothy Graham, a senior lecturer at Queensland University of Technology who studies social networks. “Steer it just a little bit over time, it can have massive impact.”
Twitter, and others, have identified inauthentic pro-China networks before. But the AP and Oxford Internet Institute investigation shows for the first time that large-scale inauthentic amplification has broadly driven engagement across official government and state media accounts, adding to evidence that Beijing’s appetite for guiding public opinion — covertly, if necessary — extends beyond its borders and beyond core strategic interests, like Taiwan, Hong Kong and Xinjiang.
Twitter’s takedowns often came only after weeks or months of activity. All told, AP and the Oxford Internet Institute identified 26,879 accounts that managed to retweet Chinese diplomats or state media nearly 200,000 times before getting suspended. They accounted for a significant share — sometimes more than half — of the total retweets many diplomatic accounts got on Twitter.
It was not possible to determine whether the accounts were sponsored by the Chinese government.
Twitter told AP that many of the accounts had been sanctioned for manipulation, but declined to offer details on what other platform violations may have been at play. Twitter said it was investigating whether the activity was a state-affiliated information operation.
“We will continue to investigate and action accounts that violate our platform manipulation policy, including accounts associated with these networks,” a Twitter spokesperson said in a statement. “If we have clear evidence of state-affiliated information operations, our first priority is to enforce our rules and remove accounts engaging in this behavior. When our investigations are complete, we disclose all accounts and content in our public archive.”
China’s Ministry of Foreign Affairs said that it does not employ trickery on social media. “There is no so-called misleading propaganda, nor exporting a model of online public opinion guidance,” the ministry said in a statement to AP. “We hope that the relevant parties will abandon their discriminatory attitude, take off their tinted glasses, and take a peaceful, objective and rational approach in the spirit of openness and inclusiveness.”
BRUSSELS (AP) — By ERIKA KINETZ Associated Press.
Associated Press researcher Chen Si in Shanghai contributed to this report.
Pandemic gives boost as more states move to digital IDs
The card that millions of people use to prove their identity to everyone from police officers to liquor store owners may soon be a thing of the past as a growing number of states develop digital driver’s licenses.
With the advent of digital wallets and boarding passes, people are relying more on their phones to prove their identity. At least five states have implemented a mobile driver’s license program. Three others — Utah, Iowa and Florida — intend to launch programs by next year, with more expected to follow suit.
Mobile licenses will give people more privacy by allowing them to decide what personal information they share, state officials say. The licenses offer privacy control options that allow people to verify their age when purchasing alcohol or renting a car, while hiding other personal information like their address.
Having a mobile driver’s license will allow people to update their license information remotely without having to go to a state’s Department of Motor Vehicles or waiting for a new card in the mail, said Lee Howell, state relations manager at the American Automobile Association.
While most states with these programs recommend that users still carry their physical driver’s license as a backup, some industry experts estimate that the coronavirus pandemic has sped up the widespread adoption of contactless identification methods by at least a decade.
“Most people want some kind of a hard token for their identity, but I don’t know how long that will last,” said Pam Dixon, executive director of the World Privacy Forum. “I would imagine that at some point, maybe in a generation, maybe less, that people will accept a fully digital system.”
In most states, people’s data will be stored on their phone and with the DMV. People will only be able to access a mobile ID app with a passcode or using a smartphone’s fingerprint or facial recognition scan.
Industry leaders say safeguards will prevent anyone’s information from being stolen, but some critics argue that having so much personal data on a phone is too risky.
“When you have a physical thing in your hand, no one can hack that unless you lose it,” said Shelia Dunn Joneleit, a spokesperson for the National Motorists Association.
Joneleit noted that the new systems aren’t accessible to all Americans because not everyone can afford a smartphone. She said that could eventually produce equity issues because some states require residents to show their driver’s license to vote.
She also said she doesn’t believe drivers should be handing their phones over to police, potentially violating people’s Fourth Amendment rights against unreasonable searches and seizures.
State officials and industry leaders say that moving away from physical IDs that could potentially be fraudulent to cryptographic verification will make it easier to confirm someone’s identity.
“The majority of the way that people verify your identity in person today is by visual inspection of the identity document,” said Matt Thompson, senior vice president of IDEMIA, a technology company working on several states’ mobile ID apps. “As we move to cryptographic verification, it’s a lot easier to verify the authenticity of a document through digital means.”
IDEMIA has launched mobile ID apps in three states this year and expects to launch an additional seven before 2021 ends, said Angie Hamblen, the company’s senior marketing manager.
Oklahoma’s mobile ID app got underway in 2019 but relaunched with IDEMIA in January with new functions, including the ability to pre-enroll for the federally mandated REAL ID security standards. Both Delaware and Arizona launched their own mobile ID apps in March.
In Utah, over 100 people have a pilot version of the state’s mobile ID, and that number is expected to grow to 10,000 by year’s end. Widespread production is expected to begin at the start of 2022, said Chris Caras, director of Utah’s Driver License Division. The app is being produced by another company, GET Group North America.
Caras said the state is following industry standards for digital IDs that were released late last year because Utah wanted to ensure people could use their mobile credentials anywhere in the U.S.
“Our goal is that anywhere that you’re currently using your hard card, you could use your mobile credential,” Caras said.
Colorado and Louisiana were two of the first states that developed digital identification apps, but they don’t follow the newly released standards and aren’t accepted in other states. Louisiana’s digital ID launched in 2018.
Colorado, along with Idaho, Maryland, Wyoming and Washington, D.C., received a grant to test mobile driver’s licenses in 2016. Colorado Gov. Jared Polis issued an executive order in 2019 authorizing businesses and state agencies to begin accepting the digital ID. Colorado State Patrol started accepting them last November.
SALT LAKE CITY (AP) — By SOPHIA EPPOLITO Associated Press/Report for America.
Eppolito is a corps member for the Associated Press/Report for America Statehouse News Initiative. Report for America is a nonprofit national service program that places journalists in local newsrooms to report on undercovered issues.
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