Facebook says post that cast doubt on covid-19 vaccine was most popular on the platform from January through March. The fact that this article was published on a Saturday means that Facebook doesn’t want too many people to see it. I honestly can see the bull case for Facebook. However, it will be remiss to not mention the monumental challenge of content moderation that the company has to face. Because when false information runs rampage on its platforms, it may affect the engagement of users; which in turn can adversely affect advertising that is Facebook’s bread and butter.
Why You Can’t Find Everything You Want at Grocery Stores. Retailers are suffering from supply shortages; which is exacerbated by higher-than-expected demand. But if these hiccups are overcome, it means that there will be a growing retail segment in the coming months and by extension, likely, a healthy economy.
Diem: A Dream Deferred? Facebook has a lot going to their advantage: almost limitless resources, four of the most popular social networks in the world, 1/3 of the global population are its users, a money printing machine that is growing at a scary clip. But there are a couple of challenges that Facebook will have a hard time to overcome. First, it’s content moderation. Should I say: content moderation without pissing off anybody. As you can see, the task sounds almost impossible. When you moderate content by people with vastly different ideologies, you are almost certain to upset somebody. Facebook doesn’t have the luxury of having upset users or lawmakers. Hence, it’s not a problem that Facebook will easily solve. Second, public trust. The company has been around for almost 20 years and it has not garnered a lot of trust. As long as it continues to rely on advertising, capturing data and more importantly be embroiled in misinformation, the public trust will likely continue to evade them. As the article from Coindesk pointed out, trust is paramount in the payments/finance world. How on Earth would Facebook succeed in it?
The Digital Payment Giant That Adds Up. Merchants are going down the omni-channel route that allows shoppers to shop in multiple ways. This will be the key to Adyen’s growth. I like the fact that they prefer building in-house and maintaining the one-ness of their platform to acquiring capabilities from other companies through M&A and bundling different tech stacks into one. Working at a company that suffers from systems not talking to each other, I know first-hand how that could become a significant problem in no time. In addition, I really look forward to Adyen coming to the U.S with a banking license. I am not sure the folks at Marqeta share my enthusiasm.
An immense mystery older than Stonehenge. It’s profoundly impressive to me that prehistoric people could transport stones that weighed tons to the top of a hill 6000 years ago. Think about that for a second. They must not have had all the tools that we came up with up hundreds of years later. It’s just extraordinary. If I ever have enough money and time, Gobekli Tepe, Machu Picchu, Egypt and Greece are where I wish to go.
European Sleeper Trains Make a Comeback. I really wish that Americans would share the same enthusiasm about travelling by train as Europeans do. Personally, I enjoyed the train ride from Chicago to Omaha. If there were a reliable Wifi, I’d take trains every single time over flights and especially driving.
Apparently, there is a 2021 Global Crypto Adoption Index and Vietnam is ranked as #1. Below are the two reasons that experts say are why Vietnam’s adoption is so high. I am not sure how I should feel about it. On one hand, this index is not negative in nature. Hence, the #1 ranking certainly feels good. On the other hand, the alleged reason that young people don’t know what to do with ETF is alarming. That implies a lack of understanding in investing and a tendency to gamble in cryptocurrencies.
“We heard from experts that people in Vietnam have a history of gambling, and the young, tech-savvy people don’t have much to do with their funds in terms of investing in a traditional ETF, both of which drive crypto adoption,”
Written by two award-winning New York Times journalists Sheera Frenkel and Cecilia Kang, An Ugly Truth covers Facebook’s battle with misinformation and how the company, in my opinion, has failed so far in preventing bad actors from abusing Facebook’s platforms for their agendas. The book draws from hundreds of interviews with sources, including former & current employees who courageously put their career in danger to speak the truth, and takes readers inside the company and throughout the past few years when the conflicting interests came to their heads. Facebook has perfect recipes for a disaster.
The company’s purpose is to connect everybody on Earth. It means that you’ll connect not only the good guys, but also the bad guys. To Facebook, the engagement level is always one of the high priorities. The more engaged users are, the more money the company can make from advertising. As a consequence, any idea or initiative, no matter how constructive or beneficial to the company, would be shelved if it was considered hurting the user engagement. Additionally, the company is Mark Zuckerberg’s, plain and simple. He can fire the Board of Directors if he wants to and there is nothing anybody can do about it. At first, Mark didn’t seem to believe that his creation could be leveraged for harmful purposes. He seemed to actually believe that Facebook was a positive contributor to the world in a sense that since everyone should have the freedom of expression, his platforms were there to facilitate it. It is this belief that led to some of his controversial decisions when it came to content moderation. Last but not least, the bureaucracy and office politics at Facebook also played a role in this mess. Take Stamos and his threat intel team as an example. Alex Stamos was hired by Facebook to be its Chief Security Officer. Along with his team, Stamos unearthed how Russia misused Facebook to interfere in the U.S election. They tried to sound the alarm for months, but their efforts were thwarted and ignored by the upper management team. When they finally got a meeting with Mark and Sheryl, Stamos suddenly became the culprit and scapegoat.
Combine all of those factors together and you can see why Facebook was always poised for a disaster. There are other stories in the book that could highlight how efforts to rein in misinformation always took a back seat at Facebook for various reasons. While the theme of the book may not be anything new, the behind-the-scenes stories are riveting and interesting. If you want an easy read and like to learn about the inner workings at Facebook, this should be a good one to pick up.
Product positioning is hard. It’s virtually impossible to create a completely new product or service without any direct or indirect alternatives. The challenge then becomes: how can you position your product so that your customers know what it stands for, among all the noises and distractions? In this book, positioning expert April Dunford offers 10 concrete steps to address your positioning problems, along with specific case studies to make her points. As a business student at bachelor and Master’s degree level, I learned about marketing and positioning. So, some of the points April made are not novel to me. Yet, it’s still interesting to look at positioning from her point of view and it’s great to brush upon what I learned in the past. Personally speaking, I think this book is more suitable for B2B products/services than B2C.
Her writing is easy to understand and doesn’t involve a lot of jargon. It’s quite witty in some parts; which makes the experience more enjoyable. I kinda like the book. You can learn quite a lot from a $7 book (the Kindle version), a cost-effective option compared to hundreds of dollars spent on a few credits in college.
Jawad Mian hails from Pakistan and is the founder of Stray Reflections, a macro research firm. Two of his obsessions are writing and finding truth in life; which are the inspiration for this book. In it, Jawad shares with readers some of his intimate personal experiences, from growing up in Pakistan to adulthood and fatherhood, as well as important lessons about life that he picked up along the way. In addition to his stories, the author puts to great use some excerpts from classic literature by historical figures. In a busy society full of angst and distractions, this small book helps readers pause, catch their breath and reflect on what matters in life. Reading it was invigorating and refreshing for my soul.
“No distance of place or lapse of time can lessen the friendship of those who are thoroughly persuaded of each other’s worth.”
I’ve grown up to believe there are no coincidences in life. We are always in the right place, and everything happens at exactly the right time. Instead of obsessing about our goals or destination, maybe we should remain in the present moment and just let the universe move about. Like the river, life has its own flow; we cannot impose our own structure on it. We can’t control it—all we can do is listen to its current. Sometimes, when the outside noise dulls down, the quietness within reveals a lot, but only if you listen intently.
I beg you, to have patience with everything unresolved in your heart. Try to love the questions themselves as if they were locked rooms or books written in a foreign language. Don’t search for the answers, which could not be given to you now, because you would not be able to live them. And the point is to live everything. Live the questions now. Perhaps then, someday far in the future, you will gradually, without even noticing it, live your way into the answer.
Life is a journey, and we are all just travelers. It’s okay to fall down or not know where you’re going. Nature has marked out a path for each of us, and it won’t let us stray too far from our course. There is no shame in falling, only in failing to rise and get back up on our feet. As Paulo Coelho said, the secret of life is to fall seven times and to get up eight times. Even success, it has been well said, is nothing more than moving from one failure to the next with undiminished enthusiasm.
Facebook Users Said No to Tracking. Now Advertisers are Panicking. There seems to be a genuine angst from developers and advertisers over Apps Transparency Tracking (ATT). The thing is that when it comes to tracking, the interests of developers and consumers aren’t necessarily aligned. In that case, Apple has to pick a side and it decided to side with consumers; which is an understandable decision for two reasons: 1/ it’s what Apple has always been about and 2/ Consumers are ultimately their source of income and profit. Sure enough, it’s in Apple’s interest to have a great relationship with developers. But when it comes to the list of top reasons why Apple exists, I don’t think assisting all developers for free is anywhere near the top. The whole situation seems like when oil companies complain about governments’ policies that curb oil extraction in order to protect everyone else.
Inside Facebook’s Data Wars. When you allow misinformation to spread frictionlessly, it’s kinda hard to convince others that you are not an echo chamber of misinformation
Is a Graduate Degree Worth the Debt? Check It Here. The debate over whether a university degree is worth the financial investment is very nuanced and it’s not just about the money. However, it’s undeniable that what one can learn from the Internet for much less money increasingly puts in the spotlight the high tuition fees and all the nonsensical charges that schools levy on students
The World Relies on One Chip Maker in Taiwan, Leaving Everyone Vulnerable. The whole tech industry relies so much on TSMC and the story is likely to continue in the near future. It’s expensive and time-consuming for other countries to build anything that can compete with TSMC. On the other hand, this puts TSMC in an awkward position where it has to deftly navigate the complex political conflicts between superpowers.
Shop Pay available to all businesses on Facebook and Google. I think Shopify is trying to do two things here with this move: 1/ it’s trying to use Shop Pay as an acquisition tool. By making the checkout option available to even non-Shopify merchants on Facebook and Google, it is hoping that the tool can lure these merchants into selling on their platform. 2/ Obviously, this is going to also help Shopify increase revenue. Even though Shopify’s GMV has grown seriously in the last few years, GMV of non-Shopify merchants should be a lot bigger. Taking a slice of every non-Shopify transaction can be a lucrative business
Facebook officially launched audio rooms and podcasts in the U.S. Facebook is an extremely fast follower that is quite often deadly and effective at scaling what others made known. How they are going to make these new features will be interesting. I mean I am not an active Facebook user and neither are most of the people in my circle. Who will use these features to create content? Will celebrities and people that have a following choose to host their content on Facebook? Especially given that they should already have a home on either Twitter or Clubhouse? One big advantage that Facebook has over Twitter and especially Clubhouse is that it is much more famous and the network effect is easier to scale.
This one email explains Apple. The article does a good job of fleshing out a very interesting email exchange that could well be the foundation of the App Store
Marc Andreessen just had a very interesting interview recently. In response to the question of what advice he would give to a 23-year-old, here is what he had to say
Don’t follow your passion. Seriously. Don’t follow your passion. Your passion is likely more dumb and useless than anything else. Your passion should be your hobby, not your work. Do it in your spare time.
Instead, at work, seek to contribute. Find the hottest, most vibrant part of the economy you can and figure out how you can contribute best and most. Make yourself of value to the people around you, to your customers and coworkers, and try to increase that value every day.
It can sometimes feel that all the exciting things have already happened, that the frontier is closed, that we’re at the end of technological history and there’s nothing left to do but maintain what already exists. This is just a failure of imagination. In fact, the opposite is true. We’re surrounding by rotting incumbents that will all need to be replaced by new technologies. Let’s get on it.
An interesting presentation on Mistakes of Omission. If you are into investing, this presentation can be very thought-provoking. One of the things that I keep thinking about is whether I am paying too much for a business and whether I unnecessarily increase my average price. I haven’t invested for a long time, but so far, most of my biggest winners happen when I decided to increase my average
A look inside Google’s first store. I hope that Google will use these stores as a showroom to demonstrate to the end users the awesome features it releases every year. Yes, the company isn’t known for making great hardware like Apple is, but the stores’ functionality doesn’t need to be restricted to hardware only. They can be a place to bolster customer relationships and educate end users on a variety of Google services. How many Google features do you not know? How many do you actually know about but haven’t used because they all seem abstract and complex at first glance?
PayPal lowers their rates for U.S merchants on Visa/Mastercard transactions and raised rates for their own products. This is quite a bold move to compete with Stripe, Square and Authorize.net as well as to clearly showcase their position. PayPal is confident enough in the appeal of their own offerings that they think a rate hike is justified. Recently, PayPal has been very aggressive on multiple fronts: engaging merchants and acquiring new users. I got multiple offers from PayPal and Venmo recently from $5 to download the app, $10 to reactivate my Venmo account or $10 to refer a friend.
A couple of interesting posts by CNBC on Roku here and here. I am not working at Roku, so I don’t know what the culture is like. Even if I knew what it was like, it would still be difficult to make a generalization as a culture works for many but doesn’t for others. Still an interesting case study
In this post, I’ll talk about App Tracking Transparency (ATT), how Apple is different from Facebook and how Apple’s own advertising business is seemingly exempted from it
What is App Tracking Transparency?
Starting iOS14.5, apps have to ask explicit consent from users if they want to track users across different apps and websites. At the heart of the matter is whether advertising platforms such as Facebook should have automatic access to Apple users’ Identifiers for Advertisers (IDFA). IDFA is a unique identifier for your device. It is to your device what Social Security Number is to you personally. Traditionally, the likes of Facebook did have access to IDFA by default. Users had to opt out of cross-app tracking. Facebook used IDFA to deliver personalized ads. For instance, after learning that you just bought some sporting gears from Scheels, they could serve you ads for sporting equipment from other retailers. Also, IDFA helped Facebook measure the effectiveness of their ads. If you get served an ads from a chocolate brand and proceed to actually buy some from it, Facebook can tell the brand that their ads helped convert you into a buyer.
With the introduction of App Tracking Transparency (ATT), access to IDFA by default was severed. Developers now have to seek explicit consent from users whenever they want to regain such access. In a popup, developers can tailor their message to users and make their case as to why allowing tracking is to the users’ benefit.
How Apple and Facebook differ in their approach to advertising
Before we proceed, let’s take a moment to talk about how Apple defines tracking. Here is Apple:
Tracking refers to the act of linking user or device data collected from your app with user or device data collected from other companies’ apps, websites, or offline properties for targeted advertising or advertising measurement purposes. Tracking also refers to sharing user or device data with data brokers.
Examples of tracking include, but are not limited to:
– Displaying targeted advertisements in your app based on user data collected from apps and websites owned by other companies.
– Sharing device location data or email lists with a data broker.
– Sharing a list of emails, advertising IDs, or other IDs with a third-party advertising network that uses that information to retarget those users in other developers’ apps or to find similar users.
– Placing a third-party SDK in your app that combines user data from your app with user data from other developers’ apps to target advertising or measure advertising efficiency, even if you don’t use the SDK for these purposes. For example, using an analytics SDK that repurposes the data it collects from your app to enable targeted advertising in other developers’ apps.
The following use cases are not considered tracking, and do not require user permission through the AppTrackingTransparency framework:
– When user or device data from your app is linked to third-party data solely on the user’s device and is not sent off the device in a way that can identify the user or device.
– When the data broker with whom you share data uses the data solely for fraud detection, fraud prevention, or security purposes. For example, using a data broker solely to prevent credit card fraud.
– When the data broker is a consumer reporting agency and the data is shared with them for purposes of (1) reporting on a consumer’s creditworthiness, or (2) obtaining information on a consumer’s creditworthiness for the specific purpose of making a credit determination.
Long story short, Apple allows that an app can track you within its property and your data doesn’t leave your phone. It’s also not tracking if the data sharing is for an official purpose that is not ads-serving. Think about it this way. When you walk into a Walmart and walk around the aisles, the cameras inside the store can tell Walmart what you like and what you don’t. I rarely venture into a Walmart’s candy or cheese aisle. I am fine with Walmart knowing it because the store is their property and I have a direct relationship with them whenever I shop there. However, it would be not OK if Walmart struck a deal with Starbucks that allows the two companies to share my shopping behavior in their stores with each other without my consent. It would be really creepy.
The same goes for our data on mobile device. Facebook can serve us ads based on our behavior on their properties, including the big blue app, Messenger, Instagram or Whatsapp. To Apple, that’s possible and allowed. However, it is no longer allowed that Facebook follows users across websites & apps, and uses such knowledge to serve ads without our consent. A permission has to be granted first.
Shortly after the introduction of ATT, Apple debuted their Apple Search Ads. Apple Search Ads enables developers to serve users ads on the Search Tab of the App Store. According to the company, 70% of App Store users used the Search tab to find apps and 65% of searches result in downloads. Hence, it’s a valuable real estate to both Apple and developers. To enable targeted ads, Apple groups customers into segments based on data that they retrieve from:
Apple ID: name, age, location, gender, or anything that you list on your Apple ID
Device information: language setting, device type, OS version, mobile carrier
Apple News & Stocks: topics and categories that you interact with
App Store: searches on the App Store. Downloads from the App Store and in-app purchases are only allowed when the targeting is done by the app’s developer. Said another way, the fact that you downloaded Call of Duty and the stuff you bought inside the app can only be used for targeting by Call of Duty itself, not somebody else
Apple has received a lot of criticisms since the introduction of Apple Search Ads. Some critics say that Apple has a double standard for its own advertising business because there is no popup to ask for users’ permission with Apple Search Ads. The criticism is misguided in my opinion. The reason why there is no permission seeking from Apple is that the company uses only first-party data (data that users already give Apple and data that is created & gathered on Apple’s apps) for targeting. It doesn’t use data gathered on other apps to serve you ads on the App Store. Based on how Apple defines tracking as I laid out above, it is not tracking. In fact, Apple’s definition of tracking is similar to that of World Wide Web:
Tracking is the collection of data regarding a particular user’s activity across multiple distinct contexts and the retention, use, or sharing of data derived from that activity outside the context in which it occurred. A context is a set of resources that are controlled by the same party or jointly controlled by a set of parties.
In the case of Facebook, it wants to get users’ data OUTSIDE its property apps for targeting. With ATT, Apple wants their rival to at least ask us, the users, for permission to use our own data. To Facebook, it’s unfortunately a bridge too far. I mean, I am not naive enough to think that financial benefits aren’t in Apple’s calculations when they plan out ATT and Search Ads. The difference here is that while Facebook makes money at the expense of user privacy, Apple found a way to generate more revenue and still honor our privacy. Other critics say that Apple creates its own advantage because, with ATT and the new Search Ads, Apple is likely the only party that can track app download conversion. It is true that Apple will likely be the only advertiser that can tell developers whether their ads are effective. But does Apple have a duty to allow Facebook to track users and know the conversion from the App Store in the first place? If a native Facebook shop that lives entirely on Facebook runs a Google ads to get people to come to the store and make purchases, will Facebook let Google know whether and when a purchase is made? I don’t think so. Hence, why does Facebook want something from others that it doesn’t want to do in the first place? Plus, whether we download an app is our data. Why should Facebook’s desire to know that be put above our privacy? It’s a weird criticism, if you ask me.
In short, Apple has been a company with a perspective and excellent, like wealthiest-in-the world excellent, at making money with their products and services true to that perspective. In this case, Apple thinks it can deliver targeted ads while respecting users’ privacy and making, I assume, a great deal of money in the process. If there is anything I think Apple could have done better, it’s the communication and the timing of ATT and Apple Search Ads. But overall, I think I agree with this Twitter user
Disclosure: I have a position on both Facebook and Apple (I know, I know)
Amazon Keeps Getting Sued for Paying Drivers Less Than Minimum Wage. It baffles me to see that minimum wages can be such a polarizing issue or that it doesn’t garner more public support. In my mind, the US retail market is too big for any company like Amazon to abandon. Hence, if all the states and the federal government enacted a minimum wage law, what would Amazon do? Leaving the US retail market? Moving their operations to California or Mexico while paying import taxes and incurring more transportation expenses?
An interesting read on the e-signature market. All the companies that sell software to companies should really beware Microsoft. If Microsoft decides to invest in its own e-signature product and embed it for free in Microsoft 365, it will be a huge threat to the likes of Docusign.
How Nike is using DTC and data to expand its empire. For a legendary brand that has always been technologically competent like Nike, the pandemic is perhaps a blessing in disguise as it spurred consumers towards shopping online and exploring what the company has to offer.
Perseverance and redemption can be a wonderful combination, you know? Pierre Gasly is a young French F1 driver. Admittedly, I wasn’t a fan of his, but he grew on me. He got promoted to a top team in his 2nd or 3rd season in F1, only to get demoted half way to the season to an inferior team. He was brutally criticized and doubted in the media. And his best friend died in a tragic incident shortly before his demotion news. Yet, Pierre persevered and has shone brightly after his demotion. He had his maiden F1 win last year in Italy. Sweet sweet redemption. Here is what he wrote on the Players’ Tribune.
The highest court in UK ruled that Uber drivers have to be classified as employees. Uber cannot appeal further in the UK; as a result, unless it wishes to exit the UK market, especially London, operating expenses will likely increase from now on. Another interesting detail from the ruling is that workers should get paid whenever they are logged into Uber’s system and poised to accept rides. On the other hand, Uber argued that the ruling would only apply to Uber’s Mobility, not Uber’s Delivery. I don’t know if that’s factually true, but I don’t like their chances.
Jacquard by Google. The product category may be interesting, but I am not sure that folks are ready for it. It’s bad enough that we carry around our phone with us every single waking moment in this digital life. Whether consumers agree to carry another device, no matter how small, remains to be seen, especially when the device comes from a company like Google, which is notorious for tracking users.
Humans form relationships with one another. Between two people, a relationship is only strong when each side benefits from it and strives to strengthen the bond over time. If a friend betrays you or harms you, there likely won’t be a friendship any more, right? Once a relationship is formed, the stronger it is, the less it is less effected by others and the more trust there is. If a romantic relationship between you and your boyfriend/girlfriend is strong, you are less likely to be swayed by the opinion of your friends or family. And the people with whom you have the best relationship are the folks you trust the most.
Why do I need to state such an obvious observation? Because it is the same deal between companies and customers.
Relationship between companies and customers
When there is a transaction between a customer and a company, the two parties form a relationship. However and whether the relationship lasts depends on many factors: Is the customer happy? Is the company happy? Are there efforts involved to strengthen the relationship over time? Is there trust? A company like Amazon gains the trust of its customers through Prime & an increasing host of benefits, a variety of choices, quick delivery, easy return and consistency. From Amazon perspective, they have been investing a lot of time, effort and money into cultivating the relationship with its customers. In return, customers like and trust them. Millions of people shop at Amazon. Many, by default, head to the site to look for products. Such a relationship is so strong that it’s not much affected by 3rd parties or suppliers that depend on Amazon. They don’t form much of a bond with customers or the bond isn’t as strong as Amazon’s. The same goes with governments. Consumers, especially in America, don’t usually have the greatest of relationships with governments. Hence, it’s not a high bar to cross for Amazon in this regard. Additionally, because there is trust and a great relationship, Amazon customers stay loyal and locked in (intentionally or unintentionally through Prime), saving the company some trouble from competitors in the retail industry.
I picked Amazon because it’s a household name and an easy example. But the logic applies to every company. I drew a little diagram below. Inside the blue bubble that stands for a relationship, two parties work to build it over time. Outside the bubble, there are factors that can influence it. The stronger the relationship/bubble, the smaller the potential influence. Companies lose competitive advantages because the relationship isn’t as strong any more. Kodak didn’t offer consumers the benefits that digital cameras did; therefore, their relationship was strayed, paving the way for their demise. Nokia had nothing but inferior products and customer experience to offer. That’s why they lost the relationship to other phone manufacturers like Apple or Samsung. Barnes and Nobles lost the relationship to Amazon in the same way.
Imagine that your best friend or spouse is an executive at a company with an opening and an acquaintance reached out to your for help with an introduction. Under normal circumstances like (99% of the time!), however you make the introduction or whether you choose to make it at all is up to you. That is because within the relationship between you and the executive, the two parties determine the rules and whoever wants to leverage it has to respect and follow them. Think about it this way. Advertisers who want to reach Facebook users have to comply with Facebook guidelines. Apps that want to reach Apple users have to comply with Apple. Brands that want to sell to Walmart’s customers in Walmart’s stores, you guess it, have to comply with Walmart. The farther away from customers and the weaker a relationship, the less say a company has on its fate and the more it has to rely on others.
Which brings me to Apple. I want to talk about it using the relationship logic above because the debate is interesting and offer a lot of nuances.
Apple vs Facebook
Facebook’s main business is to sell ads. To be able to help advertisers sell personalized ads, Facebook needs to track users. In the past, Apple allowed Facebook as well as other apps to track users through Identifier for Advertisers (IDFA), which is unique for every device even though users’ identity isn’t disclosed. A few months ago, Apple announced its plan to stop the practice with the launch of iOS14. Specifically, advertisers now have to ask users’ permission to continue to track them across different apps and users have the choice to grant or decline that request. Facebook attacked Apple for being a monopolist and anti-competitive practices. Some said that Apple’s action was self-serving and hypocritical because it is building its own ads machine and it’s likely that Apple’s own ads engine isn’t subject to Apple’s rules as others. Apple critics piled on the criticisms by saying that Apple wields too much power and impedes the growth of the future Internet. Let’s unpack then by looking at the relationship between consumers, Apple, Facebook and other parties.
Facebook has a relationship with its users through its portfolio apps such as the Blue App, Whatsapp, Messenger or Instagram. Advertisers that want to reach the users on those platforms have to adhere to Facebook’s rules and guidelines because they are leveraging a relationship that is not theirs. Obviously, I don’t imagine Facebook would be happy if advertisers wanted to dictate how the relationship should be. After all, they own the closest relationship with their users.
Unfortunately for Facebook, in the case of Facebook users on iOS platforms, they aren’t necessarily the one that owns the closest relationship. Apple does. Hence, using the same logic laid out above, Facebook has to adhere to Apple’s rules and guidelines, in the same way that advertisers have to listen to Facebook. When Apple changed the rules to make cross-app tracking more challenging because they want to bolster their own relationship with their consumers, who is Facebook to say what Apple should or should not do? Would they be happy if advertisers wanted to dictate ads rates with them on their ads platforms?
The same goes with app developers who want to reach out to millions of iOS users. If Apple doesn’t want to have certain apps on their App Store (Overtly sexual or pornographic material/ Realistic portrayals of people or animals being killed, maimed, tortured, or abused, or content that encourages violence / Depictions that encourage illegal or reckless use of weapons and dangerous objects) or if they want to remove Parler in the aftermath of the insurrection on the 6th of Jan 2021 because that’s how they want the relationship to be (for good reasons), they should be within their rights to do so. If they want to charge commission on certain apps to be in the App Store, that’s their rights as well.
Companies love to lock in customers with exclusive service or products that grant them exclusive rights. That makes sense. If you spend money and resources to cultivate that relationship, you should reap your rewards. The same should for Apple. It spends money and resources on building and maintaining not only the App Store, but also hardware and software, why should it not be able to dictate their own relationship with iOS users?
But Apple wields too much power!
Indeed they do. There are currently more than 1.5 billion Apple devices in circulation, 1 billion of which are iPhones. In the US, about 60% of mobile devices are iPhones. That’s extraordinary power that one company possesses. It’s a legitimate concern that a company should not have that much power, especially given the tight grip that the company has on its proprietary hardware and software. However, it’s worth noting that Apple is in this position today because of their own efforts and the lack of competition. Which of its competitors can offer the same integration of services, hardware and software? Amazon is legendary in devotion to customer services, but they aren’t great at mobile production or software. Google owns Android, but they haven’t been great at hardware or customer services. Samsung manufactures phones, but they do not own Android. Hence, it’s not entirely fair to blame it all on Apple. If there is no challenger that can offer the same benefits to drive the end users from the relationship with Apple, it’s hardly 100% Apple’s fault that it happens, is it?
But Apple impedes innovation!
When we look at the fact that there are 1.5 billion Apple devices in circulation, the company can be bottleneck that impedes innovation. I am no app developer, but I can imagine the scenario that developers complain the tools Apple forces them to use aren’t advanced enough to let them do what they want. If that’s the case in reality, it’s a legitimate concern. But if Android were that much better at fostering innovation, why are we still in this situation, given that Android has a bigger market share than iOS globally? Why do we debate on the power of Apple, and not of Samsung or other phone manufacturers? As I imagine, if the operating system were so innovative that users would have no choice but to flock to Android devices, Apple wouldn’t have the power that they have today. In essence, while this can be a legit concern, there isn’t much proof of that.
Imagine that you are in a relationship and someone comes and tells you: well you know, the person you are dating with is what stops you from even better days and more happiness in the future. I mean, that can happen, but you kinda need some proof.
But their privacy policies are self-serving!
But Apple doesn’t apply their own policies consistently and to their own apps!
I do agree that Apple can do better both in applying their rules consistently and in showing whether their own apps are subject to the same rules. With the regard to the first part, Apple does have a relationship with app developers, even though when it comes to shove, the relationship with the end users allows Apple to wield more bargaining power. Nonetheless, it is important for the company to foster the bond with developers. One way to do so is to be more transparent with the App Store guidelines, especially in its actions, and more consistent in their application of these guidelines.
Disclosing the extent to which their own apps are subject to the same App Store rules is a bit more nuanced in my opinion. I don’t think it would change anything if Apple told us Apple’s digital content or subscriptions were subject to the same 15%/30% commission rule. After all, Apple would pay that money back to themselves. If their overall business continues to grow and their margin stays flat like it has for the past few years, does it really matter if a few of their services are unprofitable or not? With that being said, I really think Apple should subject themselves to the guidelines that other apps are and show it to developers. It’s fair to do so and it will help build the relationship with developers. Indeed, pre-loading their own apps such as Apple Music gives it more advantage over Spotify. But as long as Apple doesn’t outright block Spotify or do anything that prevents their competitors’ apps from being downloaded for no reasons, it’s not an egregious abuse of power. That’s just Spotify being subject to the rules of Apple when leveraging the relationship with iOS users.
In sum, Apple is at the peak of their power and having the best relationship ever with users, a relationship that involves other parties such as app developers. The company invests a lot of resources into cultivating the relationship with both end users and app developers. As long as the former is strong (apparently it is now given its strong financial results), it gives Apple enormous bargaining power over anyone who wants to leverage such a relationship. To reduce Apple’s power, the most logical way is to weaken the bond they have with the end users by offering a better alternative, though it’s by no means an easy ask.
In my opinion, relationships with customers become more difficult to maintain over time. Customer preferences change. Old competitors compete harder. New competitors come in to disrupt. Regulations can be detrimental. Culture and leadership can weaken over time. Freak events like Covid-19 can happen. All sorts of problems to tackle. A strong position today doesn’t warrant a strong position in the future. The same applies to Apple. If they labor to maintain their competitive advantages in the future, kudos to them and we should be as generous in our appreciation for such an achievement as in our effort to criticize them and to keep them honest.
Disclosure: I own Apple, Facebook, Amazon and Spotify stocks in my portfolio.