Newsletter #14: Epic Games are suing Apple for monopolistic behaviour in the AppStore. Ethereum hits an all-time high. CBDCs are coming. And Lemonade, the true disruptors in Insurance?
Wiser! Newsletter 7th May 2021...plus stories on Crypto, Lemonade Insurance, Facebook, Spotify, and Peloton
Apple and the 30% App Store Tax
When you own the rails, you make the rules.
In Apple’s case, the railway line is the App Store. And it’s the only way an App developer can get to their destination of choice: your iPhone.
So, when you control what goes onto the billion iPhones in the world, your rules will face close scrutiny.
The rule that’s causing Apple the most scrutiny is the one that forces all Apps to use Apple’s payment system. This is where Apple takes 30% of all in-app spend.
Apple’s defence is that they have created a safe, stable, and scalable ecosystem that allows apps like Fortnite to prosper. Epic reported that Fortnite made more than $9bn in its first 2 years (2018-19).
For Apple, they’re fighting their corner on 2 fronts right now.
Epic Games v Apple
Epic are the makers of Fortnite, the post-apocalyptic, zombie-infested video game played by over 350 million users, mostly men under the age of 34. It is one of the most played video streaming games in the world.
Epic didn’t like paying the 30% App Store tax. So last Autumn, they tried to get around it by changing the way their users spent money on the game.
Apple didn’t like what Epic was doing and, after some pushing and shoving, kicked Epic off the App Store.
Epic responded with this 1984-style #FreeFortnite video and a “see you in court!” notice.
The case started this week and commentators are mixed on predicting the outcome.
But IMHO, Apple loses either way.
Apple is the most valuable company in the world. Their App Store revenue is estimated at $60bn this year. In the court of public opinion, it is hard to see how Apple come out as winners.
The EU v Apple
Meanwhile, over in Europe, the European Union is after Apple for anti-competitive practices regarding the App Store. This is not a court case (like the Epic trial in the US), this is an investigation.
The center of interest for the EU is Spotify, which happens to be of Swedish origin. The EU has issued this strongly worded statement outlining their case against Apple.
If the EU commission concludes their investigation based on this statement, Apple can expect a hefty fine (although, in Apple´s case, what constitutes a “hefty” fine is a moot point).
BTW, Google faces similar issues and scrutiny. The Playstore has the same 30% tax rate as Apple and Google face multiple anti-trust/anti-competition investigations and court cases on both sides of the Atlantic.
The EU fined Google $9bn between 2017 and 2019 for anti-competitive violations. However, when their revenues were over $400bn in the same period, it had about the same impact as a parking ticket.
ETHER hits all-time high
A key milestone for Ethereum was passed earlier this week when Ether, the crypto that fuels the Ethereum network, passed the $3k price point for the very first time. The world’s second-largest cryptocurrency was bumping up to $3,500 as I put this article to bed.
Ethereum is often referred to it as the next internet, the so-called Web 3.0. This is because of the programmable nature of the underlying technology, which is called a blockchain.
These are still early days for Ethereum (think the Internet in 1995). Much of the possibilities and potential centre on decentralised apps, called dapps.
Especially in the area of decentralised financial services, known as DeFi. Imagine taking out a legitimate loan without a bank being involved. That´s DeFi. (For a technical explanation, read this assessment by the Federal Reserve Bank of St. Louis).
DogeCoin was created as a joke!
The logo features the face of the Shiba Inu dog from the “Doge” meme, hence the name DogeCoin.
The 2 software engineers behind DogeCoin created it with no real utility in mind, other than as a parody of crypto.
However, it has developed cult status, enhanced by tweets from Elon, and has developed traction as a payment mechanism free of bank fees.
It is now the 4th most valuable crypto!
Watch this 2 min short from Bloomberg Quicktakes for the story of DogeCoin.
Read this article called “Why is Doge going up?” Source: The Last Futurist
Interesting Snippet: DogeCoin co-creator Billy Markus sold all of his crypto in 2015 to buy a Honda Civic. Today, Doge is worth more than the whole of Honda!
Central Bank Digital Currencies
Next week’s newsletter will be a WiserIn5! special on CBDCs. This is a hugely important subject for you to know about…because it´s coming your way!
To go with it, there will be a 1 hour (or so) video and podcast discussion with Richard Turrin, the author of Cashless. This is an awesome book and tells the story of China´s shift to a cashless society and their adoption of a CBDC.
I´m excited for you…(it’s already recorded and I’ve seen what’s coming!)
Updated 27 July 2021 - This is the link to the YouTube on CBDCs.
CRYPTO HEALTH WARNING: If you’re thinking of getting into crypto, be careful. The massive gains also carry massive risk (what investment doesn’t?).
If you are new to crypto, the easiest place to start is with Coinbase or Binance, the 2 largest crypto exchanges.
This is a referral link to Coinbase that pays you and me $10 in Bitcoin when you invest $100.
“I’ve seen a lot of press about Lemonade and how they are disrupting the insurance market. What is it that makes Lemonade so special?”
Our first-ever Reader Question comes from Craig in the UK. And it´s a great one for me because I happen to have known the founder and CEO, Daniel Schreiber, since before Lemonade launched in Sept 2016. Theirs is a phenomenal story.
So, what´s so special about Lemonade?
- They’re a tech company that does insurance. Around a third of the insurance claims are paid using AI. Much of the customer service is provide by chatbots. Being a tech company is important in understanding their motivation to build a digital solution totally centred around the customer.
- In less than 5 years they have over a million customers. They attract customers who have never bought insurance before. As the customer moves to a bigger home, they upgrade the insurance with Lemonade. They get a dog and add them into the insurance. Lemonade now provides Life Insurance, and just announced Car Insurance (MSN). The key point is that every time a customer adds more insurance into their cover, the cost of sale for Lemonade is zero.
- They´re vertical (think Tesla). This means that they control everything about the customer journey themselves: from the technology and administration to sales and distribution, through to customer service and paying claims. As Lemonade gets bigger and achieves Big League scale, this vertical strategy will be a significant moat for them.
- They´re an all-in-one subscription service. Instead of having multiple insurance policies that renew at different times, with Lemonade you pay altogether, flexibly adding and removing cover as needed. This creates a recurring revenue model, which is superior to the transactional model of traditional insurers. Customers tend to stick with Lemonade and not shop around (churn) every year.
- They have built trust into the brand proposition. Lemonade has separated the pot of money that pays claims from a pot of money that runs the business and makes a profit. Money that is leftover in the claims pot is given to charity, not to shareholders. It gets at the heart of why many people believe it to be fair game to embellish an insurance claim. If you knew that the Rolex you never had, which you (fraudulently) added to your claim, was taking money away from the local hospice rather than the shareholders of an insurance company, would you still add on the Rolex? This is the gangster move that separates Lemonade from the industry!
Later this year, to coincide with the 5 year anniversary of Lemonade, Daniel Schreiber has kindly agreed to make a feature article with me. Watch this space!
Reader Question…do you have one?
Submit it here and the Wiser! algorithms will apply sophisticated machine learning techniques to provide an answer for you.😎
Facebook continues ban on Trump
In the first 3 months of 2021, Facebook booked nearly $11bn in profits, almost entirely from displaying targeted ads to billions of users (a third of the world’s population is on Facebook). The subject of Facebook’s approach to moderating the content that keeps the 1.8bn people who visit Facebook every day engaged was under scrutiny this week when the Facebook Oversight Board reviewed, and renewed, the ban on Trump. Find out more here. 👉 Source: Judd Legum
Peloton stock crashes in a bad week for them!
After spending weeks arguing their products are safe, Peloton has turned about-face and recalled all treadmills. In the same week, a flaw in the Peloton software has been exposed, making user data vulnerable to “scraping attacks”, where bad actors help themselves to tons of user data. Peloton stock was down -21% this week! Source: TechCrunch
NYPD terminate the Boston Dynamics RobotDog
The New York Police department has terminated the $94,000 contract to trial the robot from Boston Dynamics, nicknamed “DigiDog”. Critics accused the NYPD of overly aggressive and dystopian policing. Source: New York Times
Spotify announces paid podcasts via Anchor
Spotify bought the podcast platform two years ago for around $140m. Now, they’ve announced Anchor as their platform for paid podcasts in response to the new Apple podcast subscription service. Anchor works by recording each end of the conversation directly into your mobile phone. When the podcast is over, each individual recording is uploaded into the Anchor cloud, where it is synchronised into a single recording. It´s a modern solution to a traditional technique of recording voices from different places. Expect Podcasts to be a major battleground! Source: Stratechery (a long read, but worth it)
iOS 14.5 opt-in rates at 13%
Two weeks after the rollout of Apple’s new iOS privacy features, this survey found that the global opt-in rate is 13% (that’s users agreeing to allow apps to track them). (For more on this read last week’s WiseIn5!) Source: Flurry
2/3’s of school apps sending student data to 3rd party advertising platforms
Meanwhile, this survey covering half a million people in the US found high rates of publicly funded school apps sending student data to third-party ad platforms. The most worrying finding was 18% of public-school apps sent data to “very high risk” third parties. Source: Me2B
Toyota develop a hydrogen-fuelled internal combustion engine as an alternative to EV
For the ecologically minded petrol heads who love to hear the roar of the engine and save the planet at the same time, Toyota have the answer. This is an engine fuelled 100% by hydrogen (with zero fossil fuels or gasoline content). With almost, but not quite, zero CO2 emissions, the Toyota engine offers an environmentally friendly alternative to Electric Vehicles. Source: Slash Gear (you can hear the sound of the hydrogen engine in a video in the article)
Belgian government network hit by massive cyberattack…
Surprisingly (to me anyway), this story didn’t appear to make MSM. On Tuesday this week, the majority of the Belgium Government’s IT network was knocked offline by a cyberattack. Source: The Record
…in the same week that DarkTrace, the British cybersecurity AI firm went public at $2.4bn
DarkTrace uses “unsupervised machine learning” to second guess the next cyber attack. They provide AI-enabled cyber defenses for corporate clients like Coca-Cola, Prudential, and Jimmy Choo. Source: Morning Brew
More than 7 in 10 Americans use social media daily
Read, Watch, Listen
Spotify is 15 years old. In this long read on the History of Spotify, Variety Magazine tells the story of how Spotify has redefined the music industry. From ending Apple´s monopoly and seeing off piracy, to introducing subscriptions, streaming and autoplay (which we all take for granted now).
Kara Swisher moderates a conversation between Yuval Noah Harari and Daniel Kahneman about the trends that impact the future of humankind.
In this podcast, Philosophy of Bitcoin from First Principles, Robert Breedlove, a decentralised finance entrepreneur, talks about money, human behaviour, economics, and cryptocurrency. Warning: this is a 4 hour podcast!
3 ways you can support us
There are 3 ways that you can support us (so that we get better at what we do for you.)
1 - Spread the word (we have more than 600 subscribers now, growth is good!).
Forward this email to 5 of your friends, enemies or colleagues, or share on social media.👇 👇 👇 👇 👇
2 - Buy us a coffee 🤗 🙏
It´s a couple of Euros and goes towards funding the giant computer that creates all this stuff.
3 - Leave us a comment and let us know what you think (it’s good to get feedback) 🤔
Leave a comment (to be set up on Ghost)
Thanks for reading!
Till next week, Rick
P.S And remember; Insight and Information gives you Leverage!