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The battle of the Tims, Snapchat & blood diamonds

Legit. | Legal News
Legit. | Legal News
Good Monday afternoon! Straight into it today:
  • Epic v Apple winds down
  • Snap drops $500m on a startup
  • Pink diamonds = blood diamonds?

Epic v. Apple comes to end
Image: Fortnite's Apple skin
Image: Fortnite's Apple skin
The Epic v. Apple trial ended how it started: with a Tim.
On Friday, Apple called CEO Tim Cook to the stand, three weeks after Epic CEO, Tim Sweeney, testified as the trial’s first witness. What followed was a tense exchange between Cook and Judge Rogers. 
Refresher. Apple booted Fortnite from its App Store last year after Epic adopted an in-app payment system that skirted the App Store’s 30% commission fee. Epic marched to court, arguing iOS is a monopolistic “walled-garden” that should be opened up to third-party app stores.
In the hot seat, Cook used two shields to defend the App Store’s business model.
Shield #1: user safety. Cook argued third-party app stores would open up a pandora’s box of privacy and safety concerns. 
“Technology has the ability to vacuum up all kinds of data from people, and we like to provide tools to circumvent that.” Potentially insecure third party marketplaces, explained Cook, would splinter Apple’s “integrated solution of hardware, software, and services.”
Shield #2: profit. When asked why developers can’t use other payment methods to sell in-app purchases, Cook was pretty blunt about Apple’s motivation: “we would be giving up a total return on our IP.”
Apple has repeatedly argued its multibillion-dollar research to maintain the App Store helps developers, and it’s accused companies like Epic of wanting a free ride by ducking commission fees.
Judge Rogers, though, flipped the script. She argued in-app game purchases – like Fortnite V-Bucks and Candy Crush gold – were subsidizing the rest of the App Store.
“I understand this notion that somehow Apple’s bringing the customers to the users. But after that first time, after that first interaction, developers are keeping the customer with the games. Apple’s just profiting off that, it seems to me.”
Rogers twisted the knife further yet, saying it doesn’t sound like Apple’s recent App Store price drops were motivated by competition — just fear of regulation.
Judge Rogers’ was noticeably quiet on the possibility of opening up iOS to third party app stores. Instead, her line of questioning focused obsessively on allowing in-app purchases. Could this be indicative of how she’ll rule? Maybe, maybe not.
Either way, a judgement that forces Apple to allow in-app purchases may look good on paper compared to the alternative of opening up iOS - but it would effectively slaughter Apple’s cash cow.
My opinion: it’s not weird that Apple, a business with a beating capitalist heart, wants to profit from the money it pours into developing the App Store. But thicker margins have no bearing on consumer welfare – the key standard in antitrust trials.
P.S. the rematch in Europe is yet to come.
Snap’s biggest deal yet
Snap is acquiring AR startup WaveOptics for over $500 million, The Verge reported on Friday.
WaveOptics, an Oxford-based company backed by Bosch and Octopus Ventures, supplies the waveguides and projectors used in Spectacles, Snap’s AR glasses.
According to TechCrunch, the tech that WaveOptics uses drastically compresses the size and load of the hardware needed to process and display images, resulting in a much more flexible and varied range of use cases for AR hardware.
For Snap, benefits abound. The purchase a) aligns Snap with a pioneer in the nascent augmented reality industry b) could offer the opportunity to make WaveOptics’ tech exclusive to Snap - either wholly, or partly on custom optical hardware.
Snap has been scooping up startups left, right and centre since January; it purchased Fit Analytics for an AR-fuelled move into e-commerce, and Pixel8Earth and StreetCred for mapping tools.
WaveOptics, though, is the jewel in Snap’s crown. Aside from the premium price tag, the deal outlines Snap’s commitment to outpacing the competition (cough Facebook cough Apple) in the race to build the next frontier of AR devices.
Essentially, Snap is consciously uncoupling from its bubblegum image of a social app that merely uses AR, and is instead putting its stock into AR hardware - commanding its design, development, and use.
In other M&A news: AT&T announced a huge $43bn deal to merge WarnerMedia with Discovery last week.
Blood diamonds
Ending today’s newsletter with something less tech-y: British mining company Petra Diamonds has paid $4.3m to settle allegations of human rights abuses at its mine in Tanzania, famous for producing a flawless pink diamond for the Queen.
The allegations. 71 Tanzanian claimants in London’s High Court alleged grave human rights violations, including being shot, beaten, stabbed, detained in filthy holding cells, and being handcuffed to hospital beds.
The abuses were allegedly carried out by security personnel contracted by Petra’s subsidiary company, and by Tanzanian police who worked at the mine.
Petra, who calls itself an “ethical diamond seller”, admits no liability under the settlement, but has pledged to appoint a new security contractor to “prevent the possibility of future incidents.”
The global diamond market has been notoriously tainted by human rights abuses, like child labour and forced labor, as well as conflict, environmental damage, and corruption for decades.
The blame lies not only with mining companies, but also upmarket jewelry brands who fail at the sourcing stage of the diamond pipeline. According to HRW, they “don’t know where their gold and diamonds come from, and don’t do enough to assess human rights risks.”
Petra’s case and settlement is a step, albeit a very tiny one, in controlling and formalizing the diamond mining industry.
  • Oatly IPO’d last week. Its stock popped as much as 20%.
  • Bitcoin sinks 30% as China cracks down on privately mined cryptocurrencies.
  • Baker McKenzie ups its bet on machine learning and AI.
  • An FTC lawsuit says Frontier lied about internet speeds.
  • European Parliament supports freeze on EU-China investment agreement.
  • Sri Lanka approves law to install a commission to administer a Chinese-built port city.
  • Elizabeth Holmes’s extravagant lifestyle is fair game in Theranos trial, rules judge.
  • New inquiry finds Martin Bashir got Princess Diana interview by faking documents.
  • Long read: Big Candy is angry.
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Legit. | Legal News
Legit. | Legal News @anniamirza

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