Did Apple Win? It’s Complicated

Not a Monopoly but must change payment rules

By Keith Teare • Issue #273 • View online

This week Apple declares victory in defending its app store from claims it is a monopoly while its enemies circle the wagons intent on freeloading on Apple’s infrastructure.



A day late. For that I am sorry. If you sit up waiting for That Was The Week on a Friday afternoon (pacific time), you will have been disappointed. Only joking. That said, my tardiness was rewarded by the release of the news about the judge’s ruling in the Epic vs Apple case. So I took a few extra hours to include the best coverage.

Regular readers will know that I consider the app store to be an important gain for developers and software users worldwide. Last week I pointed out that most apps in the store gain global distribution for free and benefit from the efforts Apple makes to provide them with tools and support.

For the small number of apps that charge, Apple takes a 15% share of revenue (up to $1m a year earned) or 30% above that. As a developer myself I was only too happy to pay that in exchange for the increased market that Apple’s ecosystem made available to me.

And given the existence of the web, and Android, the idea that Apple has monopoly power was always silly in my view.

The judge partly agreed and partly disagreed. Apple was deemed to not be a monopoly. But it was deemed to violate California’s anti-competitive practices rules and told to allow mobile gaming apps to build in alternate ways of selling to players.

I personally disagree with that element of the 180 page ruling. I suspect it could, over time, disincentivize Apple from putting so much effort into developers and damage the entire ecosystem. I am sure Apple will appeal that part of the decision. I hope they win.

Also this week, a lot more on the changes in Venture Capital. Specifically the growing number of private equity players leading late-stage venture deals. But the best of the week is from Mark Suster of UpFront Ventures – a broad-ranging essay on the changing venture landscape.

More in the Video


Did Apple Win? It’s Complicated.

Rulings in Facebook, Apple antitrust cases show how tough it is to define a monopoly in the age of Big Tech

By Cat Zakrzewski

Today at 6:45 p.m. EDT

For the second time in three months, a judge has determined that a major antitrust challenge against a tech giant failed to prove the company was maintaining an illegal monopoly.

From opposite sides of the country, two Obama-appointed judges, in separate decisions in separate cases, have undercut the mounting effort to rein in the power of Big Tech.

Northern California Judge Yvonne Gonzalez Rogers on Friday ruled against the foundational argument of Epic Games’ high-profile antitrust lawsuit against Apple, determining that the Epic had “overreached” in claiming that Apple had exercised monopoly control in its App Store.

Her ruling comes on the heels of D.C. Judge James E. Boasberg’s June decision to dismiss the Federal Trade Commission’s lawsuit against Facebook, finding that the agency had failed to provide enough evidence to prove that Facebook had a monopoly in social networking.

Judge orders Apple to change its App Store practices in long-awaited decision in antitrust trial with Fortnite maker Epic Games

The pair of decisions in two of the most high-profile cases brought against the industry in decades show that while increasingly popular rhetoric asserts that Silicon Valley giants wield monopoly power, the U.S. court system and legal precedent doesn’t agree. That disconnect could constrain the growing movement to break the companies up.


Apple must allow other forms of in-app purchase, rules judge in Epic v. Apple — The Verge

Epic Games had sued Apple over the mandatory transaction fees built into the iOS App Store, in a case that could reshape the basic rules of tech platforms.


After Court’s Apple App Store Ruling, All Eyes on How Gamers Respond — The Information

Friday’s federal court ruling on Epic Games’ lawsuit against Apple opens the door to app developers of all kinds to pitch alternative payment options, getting around Apple’s 30% App Store fee. Whether it has any practical impact on Apple’s bottom line, though, comes down to a single question: …


Apple won’t let Epic bring Fortnite back to South Korea’s App Store — The Verge

Apple says it won’t reinstate Epic Games’ developer account unless the company agrees to abide by App Store guidelines. Epic had asked for permission to re-release Fortnite for iOS in South Korea following the passing of legislation there forcing Apple to allow alternate payment processors.


Apple not required to let Fortnite back on the App Store despite Epic ruling [U]

Judge Yvonne Gonzalez Rogers has finally issued a permanent injunction regarding the Apple vs. Epic Games case, which began in August 2020 after Fortnite was removed from the App Store. However, although Apple has been required to allow alternative payment methods in the App Store, the company will not be forced to let Epic Games bring back Fortnite or other apps to its platforms.

According to Judge Rogers, the termination of Epic’s App Store account is considered valid, as the game company in fact would have violated Apple’s terms and policies. For this reason, the judge will not force Apple to let Epic’s games back into the App Store. Epic Games will also have to pay damages to Apple for the time it sold in-app purchases on the iOS version of Fortnite without paying the App Store’s 30% commission.

(1) damages in an amount equal to (i) 30% of the $12,167,719 in revenue Epic Games collected from users in the Fortnite app on iOS through Epic Direct Payment between August and October 2020, plus (ii) 30% of any such revenue Epic Games collected from November 1, 2020 through the date of judgment; and

(2) a declaration that (i) Apple’s termination of the DPLA and the related agreements between Epic Games and Apple was valid, lawful, and enforceable, and (ii) Apple has the contractual right to terminate its DPLA with any or all of Epic Games’ wholly owned subsidiaries, affiliates, and/or other entities under Epic Games’ control at any time and at Apple’s sole discretion.


Apple Won a Battle to Lose the War | by M.G. Siegler | Sep, 2021 | 500ish

It depends on what your definition of a link is. Or really, in some ways, what your definition of the internet is. If it’s all really just a series of tubes, it’s not entirely clear that a link you…

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Don’t Look Away, Venture is Changing

The Changing Venture Landscape. The world around us is being disrupted… | by Mark Suster | Sep, 2021 | Both Sides of the Table

The world around us is being disrupted by the acceleration of technology into more industries and more consumer applications. Society is reorienting to a new post-pandemic norm — even before the pandemic itself has been fully tamed. And the loosening of federal monetary policies, particularly in the US, has pushed more dollars into the venture ecosystems at every stage of financing.

We have global opportunities from these trends but of course also big challenges. Technology solutions are now used by authoritarians to monitor and control populations, to stymie an individual company’s economic prospects or to foment chaos through demagoguery. We also have a world that is, as Thomas Friedman so elegantly put it — “Hot, Flat & Crowded.”

With the enormous changes to our economies and financial markets — how on Earth could the venture capital market stand still? Of course we can’t. The landscape is literally and figuratively changing under our feet.


Goldman Sachs says hedge funds are increasingly trying to compete with VCs in private deals


  • The investment vehicles, which have traditionally invested in publicly-traded stocks, have become increasingly interested in private funding rounds being raised by fast-growing technology companies.
  • Hedge funds have participated in a record-breaking 770 private deals with an aggregate value of $153 billion since the start of the year.
  • By comparison, hedge funds participated in 753 deals with an aggregate value of $96 billion in 2020.


Hedge funds muscle in to Silicon Valley with private deals

Joshua Franklin in New York and Laurence Fletcher in London SEPTEMBER 8 2021 51 Print this page Hedge funds are elbowing their way into Silicon Valley at an unprecedented rate with a record-smashing $153bn worth of investments in private companies in the first six months of 2021. A report from Goldman Sachs has found that hedge funds have done 770 deals so far this year, already beating the record number set in the whole of 2020, when 753 deals reached a total of $96bn. Just under three-quarters of this year’s agreements were “venture” bets on companies in their infancy. The data from Goldman Sachs Prime Services highlight how hedge funds, typically known for investments in publicly traded assets, have been drawn to private markets in an effort to fire up largely lacklustre returns. It also shows how private equity and venture capital have shot into mainstream finance. The asset class has soared to more than $7tn in value and is expected to double again by 2025, while the number of US public companies has roughly halved since 1996. “What has attracted hedge funds is predominantly a function of the opportunity set,” said Freddie Parker, co-head of Goldman’s prime brokerage insight and analytics team. The bets are concentrated, but they leave a big impact. Hedge funds participated in just 4 per cent of deals in the first six months of 2021 but provided just over a quarter of all capital put into private companies, according to Goldman.


What’s driving private equity’s march on VC? — PitchBook News & Analysis

Traditional venture capital firms have never faced more competition, a dynamic that has given rise to hastier and pricier deals that are frequently led by non-venture investors.

Against this backdrop, private equity firms have ramped up their exposure to startups and are participating in more than half of all US venture capital deals by value, up from 36.9% just two years ago. Growth-focused firms Insight Partners, General Atlantic and OrbiMed are among the most active leaders of this recent wave.

Traditional asset managers like hedge funds and mutual funds aren’t far behind private equity in terms of US VC deal value participation rates, and their presence is growing fastest of all nontraditional investor types, reaching 46.7% today. Meanwhile, corporate venture capital, long a leading source of funding in venture deals, is becoming less prominent.

In part, this is the story of a moment in time when venture returns are highly appealing. But it is also the result of long-running market forces that have made VC increasingly attractive to private equity, hedge funds and other nontraditional investors.


It’s time for venture capital to look beyond equity. | Forward Partners

CEO @brisbourne

In the past 18 months, the global COVID-19 pandemic has wildy accelerated a shift towards greater dependence on our digital economy. The US leapt ten years of digital transformation in just a single quarter last year and in January this year, UK online retail was up 74% from the year before.

(US e-commerce penetration, %)

It’s not just that we’re ordering more online, we’re actually doing almost everything now through an online platform of some kind. More and more of the companies meeting this huge surge in demand are startups — and many of these have extraordinary potential for growth. There are well over ten million eCommerce businesses globally now, as well as hundreds of new software and SaaS businesses born every day, able to operate easily at a low cost from anywhere in the world.

These types of businesses face big challenges though. Payment terms related to scaling inventory and the significant spend needed to grow marketing online (or drive acquisition) can be extremely restrictive.


‘This Is Europe’s Moment’: Lightspeed Venture Partners Hires Paul Murphy To Lead Europe Push

Lightspeed Venture Partners has hired Paul Murphy and Ross Mason to head up its push into Europe as Silicon Valley VCs step up the hunt for deals on the continent. The move from the Menlo Park-based VC fund — which has backed Snapchat, Affirm and Epic Games — to put down roots in London comes as funding raising and the valuation of European startups have skyrocketed in the last year.

Investors have plowed over $50 billion into European startups this year alone with the valuation of the continent’s most valuable startup Klarna leaping to $45.6 billion in June from $10 billion in September. That shift came as investors stopped viewing Europe as an arbitrage play, with valuations typically lower than American rivals, and saw the potential for British and European startups to become global winners, says Murphy.


Goldman lines up $5 bln Petershill private equity asset float — Reuters


  • Petershill Partners invests in alternative asset managers
  • Firm pivoting to post-pandemic investment opportunities
  • Deal could value the business at over $5 billion -source

LONDON, Sept 6 (Reuters) — Goldman Sachs (GS.N) plans to float the assets of its Petershill Partners unit, hoping to cash in on a private equity boom with an IPO valuing the investment vehicle at more than $5 billion.

Petershill, which takes minority stakes in alternative assets managers including private equity, venture capital and hedge funds, will be a standalone company operated by the Goldman Sachs Asset Management team, it said on Monday.

The deal will consist of a sale of around $750 million of new shares as well as existing ones to give Petershill a free float of at least 25% and make it eligible to be included in FTSE indices.

Goldman Sachs declined to give an estimated market value for the unit, but a source close to the deal said analysts put it at in excess of $5 billion.



Banks are an Endangered Species


Crypto’s Rapid Move Into Banking Elicits Alarm in Washington

BlockFi, a fast-growing financial start-up whose headquarters in Jersey City are across the Hudson River from Wall Street, aspires to be the JPMorgan Chase of cryptocurrency.

It offers credit cards, loans and interest-generating accounts. But rather than dealing primarily in dollars, BlockFi operates in the rapidly expanding world of digital currencies, one of a new generation of institutions effectively creating an alternative banking system on the frontiers of technology.

“We are just at the beginning of this story,” said Flori Marquez, 30, a founder of BlockFi, which was created in 2017 and claims to have more than $10 billion in assets, 850 employees and more than 450,000 retail clients who can obtain loans in minutes, without credit checks.

But to state and federal regulators and some members of Congress, the entry of crypto into banking is cause for alarm. The technology is disrupting the world of financial services so quickly and unpredictably that regulators are far behind, potentially leaving consumers and financial markets vulnerable.


Pundits Rage about ‘Skewed’ New York Times Crypto-DeFi Front Page

An article published on the front page of the New York Times (NYT) has claimed that a “boom in companies offering cryptocurrency loans and high-yield deposit accounts” is “disrupting the banking industry” and has left regulators “scrambling to catch up.” But it is an article that has already received no shortage of flak from the crypto community, who have berated factual “inveteracies” and other perceived problems with its “broad-brush” approach to the sector.

In the piece, authors Eric Lipton and Ephrat Livni explained that in recent months, “top officials from the Federal Reserve and other banking regulators have urgently begun what they are calling a ‘crypto sprint’ to try to catch up with the rapid changes.”

These regulators, they added, are looking to “figure out how to curb the potential dangers from an emerging industry whose short history has been marked as much by high-stakes speculation as by technological advances.”


The Metaverse

Here’s why SoftBank just invested in the metaverse

SoftBank has officially entered the metaverse with its latest investment. DNABLOCK, a 3D creation platform for virtual avatars, virtual worlds and other digital content, just announced a $1.2 million seed round from SoftBank’s Opportunity Fund, Twitch co-founder Kevin Lin, Linkin Park member Mike Shinoda and Spacecadet Ventures.

SoftBank’s $100 million Opportunity Fund launched last June in a nod to the fact that Black, Latinx and Native American founders are woefully underfunded in the tech ecosystem. This marks the megafund’s first investment in the metaverse.


Theranos is One of Us?

Silicon Valley’s Hypocrisy Over Elizabeth Holmes — The Information

Theranos founder Elizabeth Holmes is back in the news in Silicon Valley. The jury in her forthcoming trial, in which she stands accused of defrauding investors and the public about the company’s blood tests, was selected this week. The trial starts next week and will last a few months.

I was thinking about Holmes this week as I was processing the slew of reports and social media commentary. And there’s one thing about the reaction to her story that’s never sat well with me.

Since The Wall Street Journal exposed her fraud, Silicon Valley investors, entrepreneurs and tech’s influential chattering types have been quick to distance themselves from Holmes. The attitude they shared again and again was essentially “She really wasn’t one of us.”


Tokens are Better Than Equity

How Will We Value a Crypto Token? by @ttunguz

Imagine you have a dollar to invest and you can choose between two options: a public cloud service or a layer 1 blockchain. How do you decide which is more attractive? How does a token differ from equity?

The answer is that tokens can act remarkably like equity if they are structured in the right way. In addition, tokens offer one benefit beyond equity: utility.


Here’s a table that summarizes the similarities and differences of equity and tokens. They are in fact, very similar.

Voting & Dividends

Many of us have bought and sold equity; it’s familiar. If I buy one share of a public company stock, I can vote in the shareholder decisions and receive dividends if the board elects to issue one.

A token provides voting rights when it is a governance token that governs a DAO (Decentralized Autonomous Organization). A DAO is the governance organization of a crypto company. It functions like a board and shareholder base. A DAO manages the roadmap and the treasury of the business and evaluates ideas for the business that are submitted by the community. Should the DAO elect to distribute profits from the treasury, a token holder would receive a share of those earnings.

Taming Billionaires the Chinese Way

The super-rich, ‘sissy boys’, celebs — all targets in Xi’s bid to end cultural difference | Rana Mitter | The Guardian

Fearful of the growing influence of entrepreneurs and entertainers, the Chinese leader now demands conformity across all of society

Since the 100th anniversary of the Chinese Communist party (CCP) on 1 July, political edicts have been flowing out of Beijing. President Xi Jinping declared that China’s economy would now work to provide “common prosperity”. Social media has read this as a rhetorical assault on the country’s billionaires, who have become used to flaunting their wealth. There has been a well-publicised crackdown on entrepreneurs in the technology sector, in part because of the CCP’s increasing concern that figures such as Alibaba’s founder, Jack Ma, were becoming more prominent than the party itself. New anti-trust legislation may well break up some of the big companies that have dominated the sphere, creating more, smaller companies that the CCP hopes will power innovation through increased competition and also be easier to control politically.

China’s ultra-rich are scrambling to make high-profile philanthropic donations to shore up their reputations and avoid tax inspections, not least as China’s equivalent of HMRC has powers to arrest suspected evaders and hold them incommunicado for months. Technology billionaires are one target, but movie stars are another. Actress Zheng Shuang has been told she faces a $46m (£33m) bill for unpaid taxes and almost all the millions of online mentions of her fellow performer Vicki Zhao Wei have been wiped from China’s internet.


Alibaba vows to give Rmb100bn towards China’s ‘common prosperity’

Alibaba has pledged to give away Rmb100bn ($15.5bn), the equivalent of roughly two-thirds of its net income last year, to projects that support president Xi Jinping’s call for more “common prosperity” as it seeks to defuse Beijing’s scrutiny of the tech sector. The online shopping giant confirmed that it had matched the pledge made by its biggest rival Tencent, which said last month it would double the sum it is donating to social responsibility programmes to Rmb100bn. Pinduoduo, another fast-rising online shopping company, has pledged to give Rmb10bn to farmers from its second-quarter and future profits. Alibaba will spread the money over five years to a number of projects that align with Beijing’s policy goals, including initiatives to bolster digital and medical services in rural areas, the state-backed Zhejiang Daily newspaper reported. Beijing has in recent weeks signaled a broad shift towards “common prosperity”, interpreted by experts as encompassing not only wealth redistribution but also improved rights of workers and consumers. Meanwhile, the pressure on the tech sector increased on Thursday as regulators set the country’s biggest ride-hailing companies, including Didi and Meituan a four-month deadline to “rectify” their treatment of their workers and customers.


Startup of the Week

A Mammoth Becomes A Unicorn: Inside a Scientist-Founder’s Journey from Pre-Seed to Series D

The Early Days of Mammoth

“Back in 2016, when I was still working at Twist Bioscience, I was on the Stanford campus for a demo day. I saw then-27-year-old Trevor Martin present the idea for what would become Mammoth Biosciences. Trevor was just graduating with his Ph.D. in computational biology. I called up NFX’s James Currier and said: ‘You need to meet this guy, and fast.’” — Omri Amirav-Drory

Trevor: Jennifer and I co-founded Mammoth with 2 of the star graduate students from Jennifer’s lab — Janice Chen and Lucas Harrington. We had this idea that by leveraging the diversity of life and all the different organisms that are on this planet, you could find, characterize and develop novel CRISPR systems that go beyond the legacy ones like Cas9. And that’s an audacious goal. At the very beginning of the company, we already had one brand new product application that was enabled by some of these new proteins we were looking at, and that was CRISPR-based diagnostics.

So from day one, we had invented this entirely new field of products that couldn’t exist before. But we always knew that it wasn’t going to stop there. Just as with these new proteins, there’d be all sorts of new uses and applications in therapeutics as well.

The foundation of the company remains that CRISPR protein discovery and development pipeline — and that’s allowed us to build the largest toolbox of CRISPR proteins of any company on Earth. On top of that, we now build products in both diagnostics and in therapeutics as well with new properties that are unlocked by these proteins on the therapeutic side. That’s very unique for a biotech company to be kind of full stack and in both of those areas.

I remember walking around James’s neighborhood in Palo Alto, trying to find your garage, and I didn’t know anything about venture at the time. I was at the beginning of a very steep learning curve. If nothing else, I hope that that can show people that not being steeped in the venture industry or knowing anything about startups definitely should not be a barrier to taking a crack at building something meaningful and impactful.


Tweet of the Week

Tinder CEO Jim Lanzone will be next CEO of Yahoo following Apollo acquisition


  • Investment firm Apollo named Tinder CEO Jim Lanzone as the new chief of Yahoo.
  • Apollo closed its acquisition of Yahoo from Verizon on Sept. 1.
  • Yahoo’s current CEO, Guru Gowrappan, will serve as an advisor to the company.