Boxed In

Big news coming out of SCOTUS this morning: The Supreme Court ruled 5-4 against Apple in case involving its App Store, allowing iPhone users to move forward with an antitrust suit against the company.

According to a report from CNBC, the iPhone users argue that Apple’s 30 percent commission on sales through the App Store was passed along to consumers, an unfair use of monopoly power.

Apple argued that only app developers, and not users, should be able to bring such a lawsuit:

“Apple’s line-drawing does not make a lot of sense, other than as a way to gerrymander Apple out of this and similar lawsuits,” [Justice] Kavanaugh wrote.

Shares of Apple, already battered by trade concerns, were down more than 5%, lagging the broader market.

The result of the iPhone users’ litigation could affect the way that Apple, as well as other companies that operate electronic marketplaces like Facebook, Amazon and Alphabet’s Google, structure their businesses. For Apple, hundreds of millions of dollars in penalties could hang on the outcome.

And if you’re worried about becoming boxed in by looming new automation technologies, you might want to steer clear of the Amazon warehouses. 

Reuters is reporting that Amazon is rolling out machines to automate a job held by thousands of its workers: boxing up customer orders.

The company started adding technology to a handful of warehouses in recent years, which scans goods coming down a conveyor belt and envelopes them seconds later in boxes custom-built for each item, two people who worked on the project told Reuters.

Amazon has considered installing two machines at dozens more warehouses, removing at least 24 roles at each one, these people said. These facilities typically employ more than 2,000 people.

That would amount to more than 1,300 cuts across 55 U.S. fulfillment centers for standard-sized inventory. Amazon would expect to recover the costs in under two years, at $1 million per machine plus operational expenses, they said.

A video shot by Reuters accompanying the story suggested the human workforce decline would come through attrition: Amazon would simply “refrain” from refilling packing roles over time, a job that already has huge turnover work for its 10-hour shifts.

On the man v. machine front, it sounds as though the machine boxes that box the boxes themselves will eventually beat the humans hands down.

My question is, will the boxing machines ever buy anything from the company store?  

Will Amazon give them a discount for being so efficient at their jobs??  A promotion??

Maybe a corner office on the warehouse floor??

Game On

Happy Hump Day.

As Steve Ballmer once said on a Microsoft event stage, “Developers, developers, developers.”

He was huffing and puffing and sweating profusely when he said it, but the sentiment remained the same.

And still relevant.

By way of example, earlier today Bloomberg reported that Apple is working on a new initiative entitled “Marzipan” which is intended to make it easier for developers to build apps, games, etc. for all its main devices “in one fell swoop.” 

In other words, developers will have a new software development kit that will allow them to port their iPad apps to Macs, as opposed to having to write the underlying code twice.

Bloomberg also reports that in 2020 Apple will plan to expand the kit so that iPhone apps can be converted into Mac apps similarly.

By 2021, the idea is that developers will be able to merge iPhone, iPad, and Mac apps into a “single binary,” which would in turn prevent them from having to submit their efforts to different Apple app stores.

On the gaming front, Fortune is reporting that Google is expected to announce a new game streaming service at next month’s Game Developer’s Conference. 

The gaming unit is expected to be a Netflix-like streaming service, building on the success of Project Stream. Games are run on cloud servers and streamed directly to players’ PCs, tablets, TVs, or pretty much anything with a screen. That’s fairly typical with films and programs these days, but the interactive nature of games (and the historically laggy qualities of most internet connections ) have made it impractical.

Lots of competition in them thar game streaming hills: Steam, Epic Games, Sony Playstation, etc.

But it was also a $36 billion business in 2017, according to the Entertainment Software Association, and more and more games will be moving out of retail and into the cloud.

In other words, game on.

Apple’s Golden Eggs

Good morning and Happy Tuesday.

Here’s hoping you got everything you wished for on Black Friday and Cyber Monday.

I bought some coffee, which isn’t very cyber, I know, but hey, a man’s gotta have his caffeine.

You know who else might need some caffeine soon?

Tim Cook, CEO of Apple.

Yesterday, justices of the U.S. Supreme Court (hereafter referred to as “SCOTUS”) appeared open to letting a lawsuit proceed against Apple that accused it of breaking federal antitrust laws by monopolizing the market for iPhone software applications and causing consumers to overpay.

According to a report from Reuters:

The nine justices heard an hour of arguments in an appeal by the Cupertino, California-based technology company of a lower court’s decision to revive the proposed class-action lawsuit filed in federal court in California in 2011 by a group of iPhone users seeking monetary damages.

The lawsuit said Apple violated federal antitrust laws by requiring apps to be sold through the company’s App Store and then taking a 30 percent commission from the purchases.

Reuters points out that while developers set the prices of their apps, Apple collects the payments from iPhone users and keeps 30 percent commission on each purchase. Developers earned more than $26 billion from the store in 2017, a 30 percent increase from the year before.

Goose. 

Golden.

Eggs.

Don’t.

Kill.

App Store Up and Away

Apple recently reported its latest update on the Apple App Store, reporting that iOS developers earned $26.5 billion last year.

A year ago that number was roughly $20B, so a growth rate of 33 percent.

But as Asymco’s post observes, Apple keeps 30 percent of revenue, so this figure doesn’t account for actual spending by customers.

Which would then assume a run rate of closer to $120B/year!

To put that in perspective, the $25B/year run rate is higher than the revenue of McDonald’s, and the App Store spend has gone up consistently by ~ $5B/year since 2011.

Read the full post about the iOS Economy here.