Monday Moves v1.8: Highway Robbery on the App Store
Raj: “The things you own end up owning you.” Tyler Durden’s quote from Fight Club seems more relevant by the day, especially in a landscape where objects that tend to accumulate in our houses, our minds, and our devices are touted as “free.” It pays to pay attention to the media you’re consuming, and we’re glad that you choose to pay attention to us every week!
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Raj: Apple’s longstanding practice of highway robbery via the App Store has been exposed.
DHH, the founder of Ruby on Rails, has caused quite the uproar on Twitter. His new email service Hey was under threat of rejection from the App Store because Apple wanted a ridiculous 30% cut out of its revenue. Take some time to read DHH’s thread where he describes Apple’s behavior, and tell me it isn’t eerily similar to a shakedown. TechLead, who is one of my favorite YouTubers, has put out a terrific breakdown of this situation along with the host of similar controversies surrounding Apple’s greedy App Store practices over the years. 30% is a huge chunk, and a team that already needs to pay for taxes, ads, and other expenses has very little left for the actual creators.
Apple has exploited its status as a near-monopoly for a long time. It’s a shame because Apple rose to such heights largely by virtue of being receptive to the developer community. Sadly, the era of “there’s an app for that” is long behind us. Most people nowadays spend their time only on the handful of the biggest apps, and the ecosystem is not friendly to indie Apple developers. The signal that Apple projects is clear: the App Store is not a straightforward platform for developers to earn a profit. To make matters worse, Apple actually forbids apps from telling users that they can buy the service on an external website.
A weird distinction Apple makes is allowing “Reader” apps (Netflix, Dropbox) as long as they don’t let users sign up. But an email or messaging app, e.g. Hey, doesn’t qualify as a “Reader” app. Letting Netflix somehow qualify as “Reader” makes little sense, and this merely serves to entrench established apps while punishing smaller ones.
Thankfully, DHH’s thread has generated enough of a buzz that the government has finally taken note. House Antitrust Committee Chair David Cicilline has called Apple’s fees “highway robbery”. Following the outcry, Apple has agreed to changes allowing developers to challenge App Store guidelines, so there may be hope yet for the developer community.
Raj: Apple’s shady practices have been part of a curiously jam-packed week that has seen people of all political affiliations lose trust in Big Tech.
Matt Stoller writes a terrific newsletter on the topic of Big Tech. In a recent post, Stoller has chronicled a compelling collection of the anger over the past week. Joe Scarborough, who tends to be as conventional as politics gets, chastised Zuckerberg and Sandberg for sacrificing American democracy and “lying to the American People.”
And representing a different faction of modern American politics, Tucker Carlson berated Google for kicking out The Federalist and ZeroHedge from its ad service, which dominates 70% of online ads. Google’s action would effectively demonetize both sites for apparently not having a moderated comment section. But we know this is really just political censorship. You can read in v1.6 that for Google, moderating a comment section means removing comments critical of the Chinese government.
These conflicts often get reported as technical, but they are really about money and power. In the future, we may look back at this week as a watershed moment in the battle to pass newer, savvier antitrust laws.
Sam: Ahh yes Twitter, thank you for the features nobody asked for.
Twitter seems to be picking up some vibes from Quibi and has plans to introduce features nobody wants or needs. First up are Voice Tweets, which are simply voice recordings that users can easily tweet out. The feature is only available to some users on iOS for now, but will be rolling out more widely soon. So far it only seems to have been used for memes about the feature itself, as outlined in this in depth article I suggest if you need a laugh.
Up next is the ability for users to limit who can reply to their tweets. This feature has been available for a few weeks now, but we are only now starting to see how it can be used. Some people have been using the feature to streamline interviews on Twitter (which seems like the strangest way to conduct an interview) without the clutter of thousands of replies. The other use might be to prevent spoilers for TV shows, movies, and games, which people often leave in the comments; however, I think it would be easier for users to simply not open the tweet. The feature could also be used by accounts that are geared towards announcements, such as a police department or school. I think the feature is unnecessary, and only limits the conversations which make Twitter the dynamic place we enjoy.
The final and most useless feature Twitter is testing is a feature that Facebook and Instagram stole for Snapchat years ago, stories! Popularized by Snapchat, the feature allows users to post content which disappears after 24 hours. The feature is still being tested by various markets including Brazil and India, but I am sure it will be released globally soon. Why does Twitter need to implement a feature that is already covered by other apps and is more geared towards image sharing anyways?
Sam: The SpongeBob movie is the latest “victim” of the movie theater crisis
The latest SpongeBob movie will not be on the big screen anytime soon. The producers have decided to release the film on streaming marketplaces before it lands on CBS’s new exclusive streaming service, CBS All Access. SpongeBob is only the most recent in a group of movies who have skipped their theatrical runs due to coronavirus. With theaters closed, studios have opted to release movies on rental services (like Amazon, iTunes, and Redbox) instead. The revenue is not as strong as a traditional theatrical run, but the demand from consumers for streaming content has never been higher. Many of the larger studio releases that cater to more adult audiences such as Tenet, Wonderwoman, or James Bond, have continually pushed back release dates as movie theaters begin to reopen. Will they make it to the big screen? Or will setbacks from a struggling theater business have them skipping the box office? For many consumers, streaming is the preferred method of watching movies including new releases. Perhaps in an ever-changing media landscape more studios will decide on a digital run rather than theaters. For now the theater model still brings in more revenue, and the audiences (including me) want the big screen experience. With theaters starting to reopen across the country we will have to see how new policies on social distance, along with societal norms, impact the movie going experience and, in turn, the revenue stream.
Raj: The new shiny thing in web development is React. The framework’s embrace by web developers has generated debates on various vectors.
Reading this piece on React by Chris Stokel-Walker has made me think about the state of web development today. Web development has changed dramatically from the 90s to the present day, and so has the aesthetic of the Internet. Sites back in the day used to be simple and unique, albeit often garish and maximalist. Today, a lot of websites use a lot of the same libraries and standards, leading to the ubiquity of rounded corners, inoffensive colors, and hamburger menu icons across the Internet.
I use React every day for work, and while it’s great for my company’s website it doesn’t make sense for my personal portfolio. This is something developers should keep in mind: if the website you are working on is not very big, and especially if it’s just a personal website, there may not be much to gain from extreme modularity. Remember, React is maintained primarily for Facebook, which has a TON of individual components on each page and hence needs extreme modularity. Plus, using React may make it tougher to display your streak of individuality, not just in design decisions but also because big-picture decisions like patent infringement are out of your control.
Despite these considerations, I don’t think React will fall out of favor anytime soon. It takes fighting back against a lot of inertia for a rebellious individualistic developer to strike out against React and the other dominant frameworks. And while purists hammer away about the importance of basics, software development has always been about learning new ways to build on old knowledge; abstractions upon abstractions drive progress and allow developers to come up with radically new applications.
Raj: “Payment for order flow” is in the news, but it isn’t anything new. It’s just a new reason for the Twitter mob to pile onto Robinhood while excusing more established brokers.
Speaking of ZeroHedge, the “Tyler Durden-run” blog made a splash this past week as it returned to Twitter after its ban from the social media site in February was deemed an error. It took no time at all to stir up new controversy, this time involving the popular commission-free investing platform Robinhood which is quickly gaining popularity among young traders. ZeroHedge reported that daytraders on Robinhood are seemingly having disproportionate impacts on markets because Robinhood sells its order flow data to high-frequency trading firms. These firms, such as Citadel Securities, are able to use this order flow data to “front run” trades and generate momentum behind them. Per ZeroHedge, the payment that Robinhood received for this data varies based on type of security, time of order placement, and underlying price. In total, Robinhood made ~$100 million in Quarter 1 from this practice, with Citadel accounting for 40% of the share. This is what makes commission-free trading possible.
Broadly, payment for order flow refers to a process where trading firms (called “market makers”) pay brokers a fee for data on a retail order and in turn guarantee the execution of the order at or better than the market price. Many have pointed out that this isn’t a new practice--nor is it restricted to Robinhood (Fidelity, Charles Schwab, and more participate). In fact, payment for order flow was pioneered by Bernie Madoff.
It’s certainly a shady practice for brokers to route orders through market makers and not directly to exchanges, with an oligopoly making the book at the end of the day. But it also provides individuals and brokers with a guarantee of the best execution on orders. The truth lies somewhere in the middle. The best lesson to take home is what Sam and I have written about numerous times in Monday Moves: if a service is free then your data is the product.
Who’s Making Moves?
↗ UP: Robintrack, which records how many Robinhood users hold a particular stock over time, has gotten a lot of recent attention. It’s useful to keep track of the increasing (and at times mob-like) effect Robinhood users are having on the market. (It’s also good to know what NOT to buy…)
↘ DOWN: American Airlines stock is down on news that it plans to raise $3.5 billion in financing. Was Warren Buffet right to dump all airline stocks?
🦘 KANG: Urban One is a black-owned radio station conglomerate. Their stock rocketed up this week and has since been “kangarooing” around. It is just one example of a company who has seen an increase of interest due to the current political climate.
That’s all for this week. Keep on moving.
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Until next Monday,
Raj & Sam