Cambridge Artificial Pancreas Proves Life Changing For Young Diabetics

Management of type 1 diabetes is a difficult balancing act that involves finger-prick sampling and insulin injections to keep blood glucose levels in check, but the notion of an “artificial pancreas” promises to lighten the load.

Scientists at the University of Cambridge have been pushing the boundaries of this technology for more than a decade and have now reported promising findings from trials in very young children, where their solution produced “life-changing” results.

Back in 2020, University of Cambridge scientists launched what was billed as the world’s first licensed, downloadable artificial pancreas smartphone app for type 1 diabetes.

Like other artificial pancreas technologies under development, the idea is to fulfill the role of the pancreas in diabetes sufferers, where it is no longer able to produce the insulin needed to absorb glucose from the blood.

The team’s CamAPS FX smartphone app works with a glucose monitor and pump, using a complex algorithm to determine when the user is in need of insulin and delivering it as needed.

The newly published study was designed to investigate how the technology can benefit young children, in which type 1 diabetes management is particularly problematic due to irregular eating and activity, along with high variability in the amount of insulin they require.

The study involved 74 children with type 1 diabetes, aged one to seven, with all subjects using the CamAPS FX artificial pancreas system for 16 weeks.

They then used current technology called sensor-augmented pump therapy, in which parents monitor their child’s glucose levels and manually adjust insulin delivery via a pump, also for 16 weeks. This allowed the scientists to compare the performance of the two.

“CamAPS FX makes predictions about what it thinks is likely to happen next based on past experience,” explains study author Professor Roman Hovorka. “It learns how much insulin the child needs per day and how this changes at different times of the day.

It then uses this to adjust insulin levels to help achieve ideal blood sugar levels. Other than at mealtimes, it is fully automated, so parents do not need to continually monitor their child’s blood sugarlevels.

“CamAPS FX makes predictions about what it thinks is likely to happen next based on past experience,” explains study author Professor Roman Hovorka. “It learns how much insulin the child needs per day and how this changes at different times of the day.

It then uses this to adjust insulin levels to help achieve ideal blood sugar levels. Other than at mealtimes, it is fully automated, so parents do not need to continually monitor their child’s blood sugar levels.”

When using the CamAPS FX app, the children spent 71.6 percent of their day in the target range for glucose levels, around nine percentage points, or 125 additional minutes, higher than the control.

They also spent 22.9 percent of the time with raised blood sugar levels, nine percentage points lower than the control, and also exhibited lower average blood sugar levels, reducing their risk of diabetes-related complications.

“Very young children are extremely vulnerable to changes in their blood sugar levels,” said Dr. Julia Ware, the study’s first author. “High levels in particular can have potentially lasting consequences to their brain development. On top of that, diabetes is very challenging to manage in this age group, creating a huge burden for families.

CamAPS FX led to improvements in several measures, including hyperglycemia and average blood sugar levels, without increasing the risk of hypos. This is likely to have important benefits for those children who use it.”

This study marks the first time the CamAPS FX system has been proven effective in very young children over a period of several months, with parents describing it as “life-changing.”

As it stands, the technology is available through certain hospital trusts in the UK, but the scientists hope as it continues to prove itself through these types of trials, it can change the lives of more and more sufferers of the condition.

From the first clinical trials of our algorithms to today’s findings has taken well over a decade, but the dedication of my team and the support of all the children and families who have taken part in our studies, has paid off,” Hovorka said. “We believe our artificial pancreas will transform the lives of families with very young children affected by type 1 diabetes.”

Nick Lavars

By:Nick Lavars

Source: Cambridge artificial pancreas proves “life-changing” for young diabetics

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Diabetes Fact sheet N°312”. World Health Organization. August 2011. Archived from the original on 26 August 2013. Retrieved 2012-01-09.

“Diabetes Blue Circle Symbol”. International Diabetes Federation. 17 March 2006. Archived from the original on 5 August 2007.

“Diagnosis of Diabetes and Prediabetes”. National Institute of Diabetes and Digestive and Kidney Diseases. June 2014. Archived from the original on 6 March 2016. Retrieved 10 February 2016.

Hyperosmolar hyperglycemic state: a historic review of the clinical presentation, diagnosis, and treatment”. Diabetes Care. 37 (11): 3124–31. doi:10.2337/dc14-0984. PMC 4207202. PMID 25342831.

“Causes of Diabetes”. National Institute of Diabetes and Digestive and Kidney Diseases. June 2014. Archived from the original on 2 February 2016. Retrieved 10 February 2016.

What’s The True Cost of Amazon’s Low Prices? The FTC and Congress Have Antitrust Concerns

This story is part of a Recode series about Big Tech and antitrust. Over the next few weeks, we’ll cover what’s happening with Apple, Amazon, Facebook, Google, and Microsoft.

On the heels of yet another year of record sales, Amazon is dealing with a couple of unwelcome updates in the new year. The Senate Judiciary Committee has announced it will soon be marking up the American Innovation and Choice Online Act, an antitrust bill targeting Amazon and other Big Tech companies. This follows reports that the Federal Trade Commission is ramping up its years-long antitrust investigation into Amazon’s cloud computing arm, Amazon Web Services, or AWS.

It’s clearer now than ever that Amazon, which was allowed to grow mostly unhindered for more than two decades, is caught in the middle of an international effort to check Big Tech’s power.

The Senate bill, one of several bipartisan antitrust bills in Congress, would prohibit Amazon from giving its products preferential treatment, among other things. It’s the bill that would affect the company the most, and the one it has been fighting hardest against. Meanwhile, the renewed scrutiny from the FTC about alleged anti-competitive behavior from AWS, which represents a significant and largely invisible source of Amazon’s profits, could threaten Amazon’s long-term dominance in a number of industries.

Just because a company is successful and dominates a market (or even several markets) doesn’t mean it’s violating any antitrust laws. But Amazon’s critics say it illegally uses its power to harm competition and consumers, particularly with its Marketplace, where outside, or third-party, businesses can sell their products to Amazon customers alongside Amazon’s own wares.

Amazon has been accused of copying popular products to sell under its own labels, using non-public seller data to inform its own decisions, and forcing sellers into agreements that essentially prohibit them from offering lower prices elsewhere. Amazon denies some of these allegations and says other actions are simply meant to provide the services its customers want at the best price.

Some of these complaints have been around a while, but 2022 may be the year that Amazon faces meaningful and real consequences for them. There are still caveats. State attorneys general are rumored to be looking into some of Amazon’s business practices, but only one has filed a lawsuit so far.

The FTC is still waiting for the confirmation of a fifth Democratic commissioner who would break up the deadlock of two Republican and two Democratic commissioners. And while antitrust bills are making progress in Congress, Democratic lawmakers currently seem focused on other initiatives ahead of the midterm elections — elections that could give Republicans a majority in one or both houses of Congress.

Amazon isn’t the only Big Tech company that’s been targeted, but it might have more reason than anyone else to worry about the FTC in particular. One of two federal agencies that enforce antitrust laws, the FTC is now run by Lina Khan, who basically built her career on research surrounding her 2017 Yale Law Journal paper, “Amazon’s Antitrust Paradox.”

The paper detailed how Amazon’s rise showed the flaws in antitrust laws and led to Khan becoming known as Amazon’s antitrust antagonist. Since her appointment to the FTC last June, it hasn’t seemed like the question is whether the agency will take on Amazon, but rather when and how. Amazon, meanwhile, has asked that Khan recuse herself from any antitrust matters involving the company.

Khan “is best suited to understand the various issues and problems with Amazon,” said Alex Harman, a competition policy advocate at Public Citizen, a consumer advocacy group. “And we are very excited that she will be able to bring a significant action against them.”

Khan has a lot to choose from. It’s hard to overstate Amazon’s role in the economy, or how many roles it has. It’s a technology company. It’s a delivery service. It’s an advertising platform. It powers about a third of the internet. It’s a movie studio and a streaming service. It’s a health care provider. It’s a surveillance machine and a data harvester. It’s one of the largest employers in the world and one of the most valuable companies. Also, it sells books.

In response to questions about whether its size and market share were too big in too many sectors, Amazon told Recode it faces “intense competition” in all of its lines of business. It says its expansion is part of a long-running strategy to make “big bets over the long term to reinvent the customer experience.”

Sarah Miller, executive director of the American Economic Liberties Project, an anti-monopoly advocacy group, sees it differently: “Amazon leverages its power in one space to take over a new space, which is core to their business practice. They have the ability to combine the competitive advantages of different aspects of their business to take over new sectors of the economy.”

While the FTC, for now, seems interested in AWS (and Amazon’s attempt to buy MGM), most of the antitrust attention we’ve seen elsewhere is focused on Amazon’s retail business and how it treats the businesses that sell products through its Marketplace platform. Critics say Amazon uses its power to give its own wares an unfair advantage over third-party sellers, and effectively forces them to pay for extra services and make agreements that could inflate prices everywhere.

“That’s where there’s a lot of obvious harms, and where you have businesses who are unhappy with how they’re being treated,” Miller said.

Consumers may be paying more and missing out on new products, companies, and innovations that a more competitive retail space would have produced. And that may be a violation of the antitrust laws we have now, or those to come.

How Amazon’s power might lead to higher prices

Many antitrust complaints about Amazon’s practices are based on its position as both a platform and a seller on that platform. This gives Amazon a great deal of power over the companies it’s competing against, as well as an incentive to favor its products over theirs. About 60 percent of Amazon’s online sales come through Marketplace.

This can be a mutually beneficial relationship. Marketplace’s sellers — currently more than 2 million of them — get access to Amazon’s huge customer base, and Amazon gets a vastly expanded selection that has helped make it the first and only website many online shoppers visit.

This model brings in hundreds of billions of dollars in revenue every year for Amazon, which now has an estimated 40 percent share of the e-commerce market in the United States. The company with the second-largest e-commerce market share, Walmart, has just 7 percent.

At the same time, Amazon likes to say it has but a small sliver — 1 percent — of a competitive global retail market. But that’s online and offline combined, and it includes many industries in which Amazon doesn’t sell anything at all. Amazon is also on track to edge out Walmart and become the most dominant retailer, online and off, in the United States as soon as this year.

No company has the kind of ecosystem Amazon built around its retail business beyond Marketplace. Amazon collects tons of data about its shoppers — data it uses to optimize its services and to fuel its burgeoning and increasingly lucrative advertising business.

Meanwhile, Amazon Prime and its fast free shipping has not only created an intensely loyal customer base but also compelled Amazon to build up its own shipping and logistics arm, Fulfillment by Amazon, to reduce its reliance on outside services and give it more control over its sellers. Many of Amazon’s rival retailers — namely, Walmart and Target — do some or all of these things to a lesser extent, but they’re just playing catch-up.

Smaller companies simply don’t have the scale or money to offer such services. Amazon, which has turned itself from a bookstore to an “everything store” to an everything platform, is in a class by itself.

“There are dynamics in digital that are fundamentally different,” Andrew Lipsman, principal analyst at eMarketer, told Recode. “Access to data is fundamentally different than we’ve ever had before. And all the other things that has enabled — all these digital businesses that Amazon has spun off — are underpinned by completely different economics than traditional retail economics.”

Amazon is happy to tell you how good it’s been for the small- and medium-sized businesses making money using its platform and how proposed antitrust actions could harm them. Others argue that Amazon makes even more money off of third-party sellers who have to play by Amazon’s rules because their businesses wouldn’t survive without the e-commerce giant and its customer base. And those rules, they say, aren’t always fair.

Last May, the attorney general of Washington, DC, Karl Racine, sued Amazon for antitrust violations over its treatment of Marketplace sellers. In September, he amended that lawsuit to include the wholesalers, or first-party sellers, from which Amazon buys products before selling them to its customers.

Racine told Recode that he started to wonder what the price of Amazon’s much-touted “customer obsession” was, especially after seeing accusations that Amazon copied popular products on its platform and then sold its own similar products for a lower price. (Amazon says it’s standard practice for retailers to use data about customers’ interests to help determine what to make for their own private labels.)

“I found that offensive,” Racine told Recode. “I felt like Amazon was just a copycat and burying a creative source. They were not focused only on the customer. They were also focused on their bottom line.”

The DC attorney general’s office investigated and found that “Amazon, the dominant player, seeks to maximize its profits at the expense of consumers, third-party sellers, and wholesalers,” Racine said. “It’s kept prices for goods artificially high, hampered competition, stifled innovation, and illegally tilted the playing field, all in its favor.”

Racine’s suit echoes some of the issues raised in other lawsuits and investigations as well as those identified in a recent report from the Institute for Local Self-Reliance, a nonprofit that advocates for locally owned businesses.

The big sticking point is that Amazon’s policies can effectively force other companies to give Amazon the lowest price for their goods. This is due to Amazon’s “fair pricing” policy, which says it can downgrade or stop sales of third-party sellers’ products if they’re priced “significantly higher” on Amazon than at other outlets.

Meanwhile, wholesalers have to agree to give Amazon a certain cut of their products’ sales. But Amazon also sets the prices of those products. If it reduces them to price match another outlet, the wholesaler may end up eating the difference and even losing money. That keeps wholesalers from selling their wares to anyone else for less.

Amazon sees all this as looking out for its customers and making sure they’re getting the lowest prices. But Racine and those who have filed similar lawsuits believe sellers and wholesalers are being stopped from selling their products for lower prices in other stores.

Because of this, competitors can’t offer lower prices to get an advantage over Amazon, and customers end up paying Amazon’s prices even if they don’t shop at Amazon — and paying more. Sellers and wholesalers can choose not to sell to Amazon, but few of them have the size and brand recognition needed to survive in a world where so many shoppers do most, if not all, of their online shopping on Amazon.

“That’s the power of brands: Nike is able to say, ‘You know what, Amazon? We don’t need you,’” Lipsman said. “The more commoditized your product is, the more likely you have to sell through Amazon, and you’re dependent on that channel.”

Amazon has filed a motion to dismiss the DC attorney general’s lawsuit, arguing that it’s simply making sure its customers are getting the lowest prices. The policies don’t force sellers to offer the lowest price on Amazon, Amazon says; they simply discourage them from offering higher prices on Amazon than they do elsewhere. But this hasn’t always been the case.

Just a few years ago, Amazon had a price parity policy, which more explicitly said sellers couldn’t offer lower prices anywhere else. Amazon ended this practice in Europe years ago amid scrutiny there, and then did the same thing in the United States in 2019. Racine says the fair pricing policy that replaced it serves the same function and is similarly anti-competitive.

How Amazon uses its power over sellers to squeeze them for money and data

Even though one of Amazon’s selling points is its low prices, critics say those aren’t necessarily the lowest prices possible, in part due to the increasing costs to sell on Marketplace. Amazon charges sellers a referral fee, typically 15 percent, for items sold. Then it piles on optional services that many sellers feel compelled to buy if they want their businesses to survive, cutting into their margins and forcing some to raise their prices to maintain a profit.

Fulfillment by Amazon, or FBA, is one example of this. Amazon doesn’t require that its sellers use its fulfillment and shipping service, but doing so makes them eligible for Prime, and it’s exceedingly difficult to qualify for Prime if they don’t.

That recognizable Prime badge is important. There’s a higher likelihood that Amazon’s customers will buy Prime products, because the shipping is free for Prime members and because Amazon gives preference to Prime items when it assigns what’s known as the “Buy Box.” When multiple sellers offer the same product, the Buy Box winner is added to carts when customers click “buy.” More than 80 percent of an item’s sales go to the Buy Box winner, so sellers are very motivated to do everything possible to get it. That may include using FBA even if it costs them more than shipping items themselves.

This practice has already gotten Amazon into trouble abroad. In December, Italy’s antitrust regulators fined Amazon about $1.3 billion for giving sellers who use FBA benefits over those who don’t. Amazon says it’s planning to appeal the decision, but more trouble could be on the way: The company is facing a similar investigation from the European Union’s European Commission, and India is also investigating Amazon for violating its antitrust laws.

Sellers have also complained about ads, which give their items better placement in search results. Reports say that Amazon has increased the number of ads, upping its revenue and pushing organic results down even further — which, in turn, compels sellers to buy ads to regain the prominent placement they used to get for free. Amazon told Recode that sellers wouldn’t use FBA or buy ads if those services didn’t add value or come at the best price, as they can always use other fulfillment services and buy ads elsewhere.

But it’s not just fees that Amazon gets from its sellers. Critics say the company uses data it collects from third-party sellers to give itself a competitive advantage. This was the subject of a “statement of objections” from the European Union, and as the DC attorney general has made clear, Amazon is notorious for creating its own versions of popular products sold by third parties.

The company recently opened up some of its data to sellers, possibly in an effort to ward off some of this criticism, and says it prohibits the use of non-public data about individual sellers to develop its own products. But founder Jeff Bezos told Congress he couldn’t guarantee that policy has never been violated, and multiple press reports suggest that it has.

The company has also been accused of self-preferencing, or giving its products preferential treatment — and a competitive advantage — over those sold by third parties. This could take the form of giving its own products the Buy Box or prominent search rankings they didn’t earn. Amazon has total control over its platform, so the company can really do whatever it wants, and there isn’t much sellers can do about it.

Self-preferencing has become a catch-all term for many of Amazon’s alleged anti-competitive practices. It’s attracted the most attention from regulators so far. The company denies that it gives preference to its own items in search results and says the reports that it does are inaccurate. Many legislators aren’t buying that and have proposed bills forbidding self-preferencing, with Amazon specifically in mind.

How Amazon could be changed by new antitrust laws

Per its policies, the FTC has stayed mum on what, if anything, it’s investigating on Amazon. Congress, on the other hand, has been very public.

The House Judiciary Committee spent 16 months looking into competition and digital markets, focusing on Amazon as well as Apple, Google, and Facebook. Last year, a bipartisan and mostly bicameral group of lawmakers proposed a package of Big Tech-focused antitrust bills. The House’s bills made it through committee markup last June, but have yet to be put to a vote.

The American Innovation and Choice Online Act is the only Senate bill to be scheduled for markup so far. The House’s Ending Platform Monopolies Act, which still doesn’t have a Senate equivalent, is likely the most expansive of the bills in the antitrust package, forbidding dominant digital platforms from owning lines of business that incentivize them to give their own products and services preference over third parties. Should that bill become law, it could have a huge impact on Amazon, forcing it to split off its first-party store from its sales platform.

Amazon has fought back against the bills. It has sent emails to certain sellers and set up an informational website warning them about how the bills, if they become law, could negatively impact them. Amazon claims that it might have to shut down Marketplace or limit its ability to offer Prime services. The bills’ supporters say that companies would still be able to offer all of those services, but could finally compete on a level playing field.

“We urge Congress to consider these consequences instead of rushing through this ambiguously worded bill,” Brian Huseman, Amazon vice president of public policy, told Recode in a statement. He added that the bills should apply “to all retailers, not just one.”

While Amazon waits to see what the FTC and Congress do, its antitrust battles, real and potential, haven’t seemed to harm its bottom line. Business is good, growing, and disruptive. Amazon is even reportedly preparing to take on Shopify, a platform that helps businesses create their own online shops and has grown exponentially during the pandemic, with a similar offering that could come out as early as this year. If true (Amazon wouldn’t comment), it shows that Amazon isn’t afraid of going after potential threats even while under more scrutiny than it’s ever experienced.

That’s exactly the attitude Racine, the DC attorney general, takes issue with. “Amazon claims to be all about consumers,” he said. “What our evidence shows is that Amazon is all about more profit for Amazon, at the cost of competition and at the expense of consumers. And we’re looking forward to proving that in court.

Sara Morrison

Sara Morrison covers Big Tech and antitrust regulation, in addition to personal data and privacy. She previously covered technology’s impact on the world for Vocativ. Her work has also appeared in the Atlantic, Jezebel, Boston.com, Nieman Reports, and Columbia Journalism Review, among others.

Source: What’s the true cost of Amazon’s low prices? The FTC and Congress have antitrust concerns. – Vox

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Why Stock Buybacks Are Dangerous for the Economy

Even as the United States continues to experience its longest economic expansion since World War II, concern is growing that soaring corporate debt will make the economy susceptible to a contraction that could get out of control.

Even as the United States continues to experience its longest economic expansion since World War II, concern is growing that soaring corporate debt will make the economy susceptible to a contraction that could get out of control. The root cause of this concern is the trillions of dollars that major U.S. corporations have spent on open-market repurchases — aka “stock buybacks” — since the financial crisis a decade ago.

In 2018 alone, with corporate profits bolstered by the Tax Cuts and Jobs Act of 2017, companies in the S&P 500 Index did a combined $806 billion in buybacks, about $200 billion more than the previous record set in 2007. The $370 billion in repurchases which these companies did in the first half of 2019 is on pace for total annual buybacks that are second only to 2018. When companies do these buybacks, they deprive themselves of the liquidity that might help them cope when sales and profits decline in an economic downturn.

Making matters worse, the proportion of buybacks funded by corporate bonds reached as high as 30% in both 2016 and 2017, according to JPMorgan Chase. The International Monetary Fund’s Global Financial Stability Report, issued in October, highlights “debt-funded payouts” as a form of financial risk-taking by U.S. companies that “can considerably weaken a firm’s credit quality.”

It can make sense for a company to leverage retained earnings with debt to finance investment in productive capabilities that may eventually yield product revenues and corporate profits. Taking on debt to finance buybacks, however, is bad management, given that no revenue-generating investments are made that can allow the company to pay off the debt.

In addition to plant and equipment, a company needs to invest in expanding the knowledge and skills of its employees, and it needs to reward them for their contributions to the company’s productivity. These investments in the company’s knowledge base fuel innovations in products and processes that enable it to gain and sustain an advantage over other firms in its industry.

The investment in the knowledge base that makes a company competitive goes far beyond R&D expenditures. In fact, in 2018, only 43% of companies in the S&P 500 Index recorded any R&D expenses, with just 38 companies accounting for 75% of the R&D spending of all 500 companies. Whether or not a firm spends on R&D, all companies have to invest broadly and deeply in the productive capabilities of their employees in order to remain competitive in global markets.

Stock buybacks made as open-market repurchases make no contribution to the productive capabilities of the firm. Indeed, these distributions to shareholders, which generally come on top of dividends, disrupt the growth dynamic that links the productivity and pay of the labor force. The results are increased income inequity, employment instability, and anemic productivity.

Buybacks’ drain on corporate treasuries has been massive. The 465 companies in the S&P 500 Index in January 2019 that were publicly listed between 2009 and 2018 spent, over that decade, $4.3 trillion on buybacks, equal to 52% of net income, and another $3.3 trillion on dividends, an additional 39% of net income. In 2018 alone, even with after-tax profits at record levels because of the Republican tax cuts, buybacks by S&P 500 companies reached an astounding 68% of net income, with dividends absorbing another 41%.

Why have U.S. companies done these massive buybacks? With the majority of their compensation coming from stock options and stock awards, senior corporate executives have used open-market repurchases to manipulate their companies’ stock prices to their own benefit and that of others who are in the business of timing the buying and selling of publicly listed shares.

Buybacks enrich these opportunistic share sellers — investment bankers and hedge-fund managers as well as senior corporate executives — at the expense of employees, as well as continuing shareholders.

In contrast to buybacks, dividends provide a yield to all shareholders for, as the name says, holding shares. Excessive dividend payouts, however, can undercut investment in productive capabilities in the same way that buybacks can.

Those intent on holding a company’s shares should therefore want it to restrict dividend payments to amounts that do not impair reinvestment in the capabilities necessary to sustain the corporation as a going concern. With the company plowing back profits into well-managed productive investments, its shareholders should be able to reap capital gains if and when they decide to sell their shares.

Stock buybacks done as open-market repurchases emerged as a major use of corporate funds in the mid-1980s after the Securities and Exchange Commission adopted Rule 10b-18, which gives corporate executives a safe harbor against stock-price manipulation charges that otherwise might have applied. As a mode of distributing corporate cash to shareholders, buybacks surpassed dividends in 1997, helping to elevate stock prices in the internet boom.genesis3-2-1-1-1-1-1-2-1-1-1-1-1-1-2-1-1-1-1-1-2-1-1-1-1-1-1-1-2-1-1-1-1-1-1-1-1-1-1

Since then, buybacks, which are much more volatile than dividends, have dominated distributions to shareholders when the stock market is booming, as companies have repurchased stock at high prices in a competition to boost their share prices even more. As shown in the exhibit “Buying When Prices Are High,” major companies have continued to do buybacks in boom periods when stock prices have been high, rendering these businesses more financially fragile in subsequent downturns when abundant profits disappear.

JPMorgan Chase has constructed a time series for 1997 through 2018 that estimates the percentage of buybacks by S&P 500 companies that have been debt-financed, increasing the financial fragility of companies. In general, the percentage of buybacks that have been funded by borrowed money has been far higher in stock-market booms than in busts, as companies have competed with one another to boost their stock prices.

In 2018, however, as stock buybacks by companies in the S&P 500 Index spiked to more than $800 billion for the year, the proportion that were financed by debt plunged to about 14% in the last quarter. Why was there a sharp decline in 2018, when the dollar volume of buybacks far surpassed the previous peak years of 2007, 2014, and 2015?

The answer is clear: Corporate tax breaks contained in the Tax Cuts and Jobs Act of 2017 provided the corporate cash for the vastly increased level of buybacks in 2018. First, there was a permanent cut from 35% to 21% in the tax rate on corporate profits earned in the United States.

Second, going forward, the 2017 law permanently freed foreign profits of U.S.-based corporations from U.S. taxation (Under the Act, the U.S. Treasury has been reclaiming some tax revenue lost because of a tax concession dating back to 1960 that had enabled U.S.-based corporations to defer payment of U.S. taxes on their foreign profits until repatriating them).

In 2018 compared with 2017, corporate tax revenues declined to $205 billion from $297 billion, hypothetically increasing the financial capacity of U.S.-based corporations to do as much as $92 billion more in buybacks in 2018 without taking on debt. Given that from 2017 to 2018 stock buybacks by S&P 500 companies increased by $287 billion (from $519 billion to $806 billion), the reality is that, through the corporate tax cuts, the federal government essentially funded $92 billion in buybacks by issuing debt and printing money to replace the lost corporate tax revenues.quintex-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-2-1-1-1-1-2-2-1-1-1-1-1-1-1-1-768x114-1-1-2-1-1-4-1-2-2-1-2-1-1-1-1-1-1-1-1

Since the total federal government deficit increased by $114 billion (from $665 billion in 2017 to $779 billion in 2018), we can (again hypothetically) think of $92 billion of this additional government debt as taxpaying households’ gift to business corporations to enable them to do even more buybacks debt-free, shifting the debt burden of stock buybacks from corporations to taxpayers.

If, as a “transfer payment,” we add $92 billion to the $150 billion in debt that, according to the JPMorgan data, S&P 500 companies used to fund buybacks in 2018, the percentage of their 2018 buybacks that were debt-financed rises to 30%, greater than the proportion of 29% for 2017. But because of corporate tax cuts, in 2018 taxpaying households were burdened with about 38% of the combined government and business debt that enabled corporations to do buybacks.

Whether it is corporate debt or government debt that funds additional buybacks, it is the underlying problem of the corporate obsession with stock-price performance that makes U.S. households more vulnerable to the boom-and-bust economy. Debt-financed buybacks reinforce financial fragility. But it is stock buybacks, however funded, that undermine the quest for equitable and stable economic growth. Buybacks done as open-market repurchases should be banned.

By: William Lazonick,Mustafa Erdem Sakinç,Matt Hopkins

Source: Why Stock Buybacks Are Dangerous for the Economy

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The 7 Weaknesses That Could Be An Entrepreneur’s Hidden Strengths

 

Have you ever been told to turn it down a notch? To back down or chill out? To be less loud, less daring, less weird? Have you ever been worried you’re too much to handle or that you come across as a tad full on? Have you ever been called intense, obsessed or rebellious?

In a world mired in conformity, standing out makes you a target. Most people just want to keep their head down and be part of the herd, so those who dare to be different often find themselves on the receiving end of disapproval, even punishment.

Schooling teaches us to stay in line. Social media stomps on anyone who expresses an unpopular opinion. Managers flag personality quirks as weaknesses and advise you to “work on them” in performance reviews. After a while, even if you have brilliant visions of the future and the execution to match, it can become tempting to keep your head down and your dreams small.

But what if those perceived weaknesses were actually your biggest source of strength? What if the qualities that seem provocative are really your superpowers? That’s what Sunny Bonnell and Ashleigh Hansberger think, and in their book RARE BREED: A Guide to Success for the Defiant, Dangerous, and Different, they make the case that the world’s oddballs, mavericks and troublemakers are often its creative geniuses and change agents.

As founders of leadership and brand consultancy, Motto, that has worked with brands including Virgin, Google, Microsoft, Hershey’s and Twentieth Century Fox, Bonnell and Hansberger put forward that such weaknesses should be celebrated, and that entrepreneurial geniuses tend to be the ones who don’t fit in and aren’t afraid to stand up and speak their minds.

Bonnell and Hansberger call these people Rare Breeds. The duo says that thinking with a rare breed mindset enables entrepreneurs to demand more of themselves, their careers, and their companies. I interviewed Bonnell about the seven rare breed virtues often considered vices.

Rebellious

The rebellious kids in school often found themselves in detention. They were reprimanded for disturbing others, labelled as difficult and their prospects were limited because they couldn’t sit still, be quiet or follow instructions. In business, however, a rebellious streak can be a huge advantage.

“Rebel leaders have zero tolerance for ‘we’ve always done it this way’ thinking,” explained Bonnell. “They push against authority, precedent, and tradition. They hurl themselves against the walls of business-as-usual to see what breaks and they hold the key to innovation.” Rebels question and test with no regard for ego, leading to the breakthroughs that others miss.

Audacious

Cheeky, cocky, above their station. Audacity can be synonymous with arrogance, not an endearing trait for winning friends and influencing people. But Bonnell says it’s a key tool in the entrepreneur’s toolbox, held by rare breeds, who are “brimming over with nerve and audacity.”

This unashamed audacity means they “see realities other people can’t see. They have the sense that they have capabilities others lack and they’ll gleefully dare the impossible, especially if you tell them it’s impossible.” Daring to attempt the impossible is what separates those who create the future from those who are surprised by it.

Obsessed

Not only is obsessed a word the lazy use to describe the dedicated, but the term is also synonymous with entrepreneurs who go on to be successful. Obsession is a badge of honour they wear with pride, not something to be embarrassed by.

According to Bonnell, obsessed rare breed entrepreneurs “are the ones all-in, always on, 24/7” and it shows in everything they do, whether it’s “practicing pitch lines in the shower, scribbling equations on the walls of the shower, or agonizing over punctuation.” This obsession, over time, leads to greatness.

Hot-blooded

Villains in movies are hot-blooded. The phrase is usually associated with violence, anger and a lack of control. But for rare breed entrepreneurs, explains Bonnell, this trait can work in their favour. Hot blooded individuals have “passions that run so deep nothing else matters. They’re activists, champions, avengers, and people you don’t want to cross.”

No one sleepwalked their way to changing the world. No one passively made a huge difference. No one reached new heights with zero effort. Hot-bloodedness, a hunger for more and being raring to go, when channelled in the right way, can be a resounding advantage. How are you using your drive?

Weird

Throughout schooling, being labelled as weird was social suicide. Weird was not the goal, mainstream was. Popular, universally liked, with plenty of friends. Weirdness meant eating alone, being picked last and having no date for prom.

In entrepreneurship, however, weird is desirable. According to Bonnell, weird rare breeds are often “unapologetic oddballs who hang out at maker fairs and comic cons. They see the world from odd angles and through strange filters, they think around corners and make ridiculous intuitive leaps.” They don’t care about fitting in and being normal, they feel lonely in crowds but at home with fellow geeks. Geeky and weird are the new cool, but not all are confident enough to embrace their quirks.

Hypnotic

Intense and severe with a penetrating gaze sounds more like a scary headmaster than an inspirational entrepreneur. Whilst leaders might wish to seem relaxed, friendly and in touch with reality, the best can apply their hypnotic charm.

Many great entrepreneurs were said to be hypnotic in their approach. Steve Jobs had his “reality distortion field,” which convinced his team to achieve the impossible on many occasions. Whilst this can be interpreted as manipulative, it wasn’t intentional.

His unwavering passion made hypnosis inevitable. Bonnell said hypnotic rare breed entrepreneurs often have “disconcerting levels of charisma” and “find it easy to sway and spellbind others up to—and sometimes, beyond—the point of manipulation.” Leaning into your hypnotic powers might bring your team to your level of certainty in your cause.

Emotional

Emotional, in business, has connotations of irrational and unreasonable. If you argue with your heart, you lose your head. Remaining cool, calm and collected in the boardroom is seen as desirable. Losing your temper, crying at work or being affected by news are weaknesses to be strengthened.

Bonnell puts forward that wearing their heart on their sleeve could be an entrepreneur’s hidden strength. Leaders who “weep at everyone’s pain but also find joy in the small things” might unlock new ways of amassing a tribe, inspiring a team and creating a culture of openness. Emotion, empathy and vulnerability could be the source of leaps forward in your business.

Navigating your notorious personality traits can lead to incredible breakthroughs and triumphs in business and in life. Reframing your weaknesses as strengths might be the source of unlimited success and the happiness you didn’t know was possible.

Follow me on Twitter or LinkedIn. Check out my website or some of my other work here.

I founded a digital agency in 2011 that was acquired in 2021 and write books and articles on entrepreneurship. Books include Daily Me, Stop Acting Like You’re Going to Live

Source: The 7 Weaknesses That Could Be An Entrepreneur’s Hidden Strengths

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Principles and Practice of Stress Management, Third Edition. pp. 46–47. ISBN978-1-59385-000-5. Leubner, D; Hinterberger, T (2017).

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How Much Control Should Apple Have Over Your iPhone and The App Store

This story is part of a Recode series about Big Tech and antitrust. Over the next few weeks, we’ll cover what’s happening with Apple, Amazon, Facebook, Google, and Microsoft.

We love our mobile apps. It’s hard to think of something that at least one of the nearly 12 million apps out there can’t do. Order a taxi, buy clothes, get directions, play games, message friends, store vaccine cards, control hearing aids, eat, pray, love … the list goes on. You might be using an app to read this very article. And if you’re reading it on an iPhone, then you got that app through the App Store, the Apple-owned and -operated gateway for apps on its phones. But a lot of people want that to change.

Apple is facing growing scrutiny for the tight control it has over so much of the mobile-first, app-centric world it created. The iPhone, which was released in 2007, and the App Store, which came along a year later, helped make Apple one of the most valuable companies on the planet, as well as one of the most powerful. Now, lawmakers, regulators, developers, and consumers are questioning the extent and effects of that power — including if and how it should be reined in.

Efforts in the United States and abroad could significantly loosen Apple’s grip over one of its most important lines of business and fundamentally change how iPhone and iPad users get and pay for their apps. It could make many more apps available. It could make them less safe. And it could make them cheaper.

The iPhone maker isn’t the only company under the antitrust microscope. Once lauded as shining beacons of innovation and ingenuity that would guide the world into the 21st century, Apple is just one of several Big Tech companies now accused of amassing too much power over parts of the economy that have become as essential as steel, oil, and the telephone were in centuries past.

These companies have a great deal of control over what we can do on our phones, the items we buy online and how they get to our homes, our personal data, the internet ecosystem, even our online identities. Some believe the best way to deal with Big Tech now is the way we dealt with steel, oil, and telephone monopolies decades ago: by using antitrust laws to place restrictions on them or even break them up. And if our existing laws can’t do it, legislators want to introduce new laws that target the digital marketplace.

In her book Monopolies Suck, antitrust expert Sally Hubbard described Apple as a “warm and fuzzy monopolist” when compared to Facebook, Google, and Amazon, the other three companies in the so-called Big Four that have been accused of being too big. It doesn’t quite have the negative public perception that its three peers have, and the effects of its exclusive control over mobile apps on its consumers aren’t as obvious.

For many people, Facebook, Google, and Amazon are unavoidable realities of life on the internet these days, while Apple makes products they choose to buy. But more than half of the smartphones in the United States are iPhones, and as those phones become integrated into more facets of our daily lives, Apple’s exclusive control over what we can do with those phones and which apps we can use becomes more problematic. It’s also an outlier; rival mobile operating system Android allows pretty much any app, though app stores may have their own restrictions.

Apple makes the phones. But should Apple set the rules over everything we can do with them? And what are iPhone users missing out on when one company controls so much of their experience on them?

Apple’s vertical integration model was fine until it wasn’t

Many of the problems Apple faces now come from a principle of its business model: Maintain as much control as possible over as many aspects of its products as possible. This is unusual for a computer manufacturer. You can buy a computer with a Microsoft operating system from a variety of manufacturers, and nearly 1,300 brands sell devices with Google’s Android operating system. But Apple’s operating systems — macOS, iOS, iPadOS, and watchOS — are only on Apple’s devices. Apple has said it does this to ensure that its products are easy to use, private, and secure. It’s a selling point for the company and a reason some customers are willing to pay a premium for Apple devices.

Apple doubled down on that vertical integration strategy when it came to mobile apps, only allowing customers to get them through the App Store it owns and operates. Outside developers have to follow Apple’s approval process and abide by its rules to get into the App Store. Apple has a lot of content restrictions for apps that the company says are intended to keep users safe from, for instance, “upsetting or offensive content.” Apple says in its developer guidelines, “If you’re looking to shock and offend people, the App Store isn’t the right place for your app.” But that means Apple mobile devices — more than 1 billion of them worldwide — aren’t the right place for your app, either.

Developers whose apps do make it into the App Store may also find themselves paying Apple a hefty chunk of their income. Apple takes a commission from purchases of the apps themselves as well as purchases made within the apps. That commission is up to 30 percent and has been dubbed the App Store tax. There’s no way for apps to get around the commission for app purchases, and users have to pay for goods and services outside of the app to get around the in-app payment system’s commission.

Some of those developers are also competing with Apple when it comes to making certain kinds of apps. Developers have accused Apple of “Sherlocking” their apps — that’s when Apple makes an app that’s strikingly similar to a successful third-party app and promotes it in the App Store or integrates it into device software in ways that outside developers can’t. One famous example of this is how, after countless flashlight apps that used the iPhone’s camera flash became popular in the App Store, Apple built its own flashlight tool and integrated it into iOS in 2013. Suddenly, those third-party apps weren’t necessary.

Apple has also been accused of abusing its control to give it an advantage over streaming services. Spotify has complained for years that Apple has given an unfair competitive advantage to its Apple Music service, which came along a few years after Spotify. After all, Apple doesn’t have to pay an App Store tax for its own Music app, which comes pre-installed on iPhones and iPads, or the streaming service, which Apple can and does promote on its devices. (Apple points out that it only has 60 of its own apps, so clearly it’s not competing with every single third-party app in its store, or even the vast majority of them.)

“What Apple realized is that if they could control the App Store, they really control the rest of the game,” Daniel Hanley, senior legal analyst at Open Markets Institute, an anti-monopoly advocacy group, told Recode. “They don’t just control the hardware, now they control the software. They control how apps get on — it’s unilateral.”

This has all been a big moneymaker for Apple. Apple won’t say how big, but an expert said he believes the App Store alone made $22 billion in 2020, about 80 percent of which was profit. That profit margin estimate suggests that the mandatory commissions Apple takes from those apps far exceed the company’s costs for maintaining the App Store.

Because Apple refuses to allow alternate app stores or in-app payment systems, there’s no competition that might motivate it to lower those commissions — which could, in turn, allow developers to charge less for apps and in-app purchases. The House Judiciary Subcommittee on Antitrust’s report from the Democratic majority cited numerous examples of developers claiming that they had to raise their own prices to consumers to compensate for Apple’s commission.

Apple disputes some of these numbers but, again, refuses to give its own. Its financial statements lump the App Store in with other “services,” including iCloud and Apple’s TV, Music, and Pay. Even so, there’s little doubt that the App Store’s success has helped, if not driven, Apple’s transition from being primarily a hardware company to a goods and services provider.

“It’s a nice, fat [revenue] stream where they don’t have to do a ton of R&D,” Brian Merchant, technology journalist and author of The One Device: The Secret History of the iPhone, told Recode. “All they have to do is protect their walled garden.”

The case for only one App Store (Apple’s)

Apple says the security and privacy features its customers expect are impossible to provide without having this control over the apps on its phone. The company calls this a “trusted ecosystem.”

Craig Federighi, Apple’s senior vice president of software engineering, recently said that allowing Apple users to get apps through third-party app stores or by downloading them directly from the open internet (a practice known as sideloading) would open them up to a “Pandora’s box” of malware, though iPhones aren’t exactly immune to spyware. Similarly, Apple says its in-app payment systems are secure and private, which it can’t guarantee of anyone else’s.

These arguments aren’t necessarily wrong — there are plenty of malicious apps out there — but they don’t account for the fact that Apple doesn’t seem to have any problem with its Mac computers getting their apps from third-party app stores or through sideloading.

As for those commissions, Apple is quick to point out that the vast majority of apps, which are free, don’t pay Apple anything at all and still get all of the App Store’s benefits. Many apps are funded by selling ads and user data, which they don’t have to share with Apple, though Apple has recently tried to make this outside revenue stream less lucrative for developers by introducing anti-tracking features into iOS.

Those measures, which Apple says are designed to improve user privacy, could ultimately force developers to charge users for apps (more money for Apple!). So when Apple decided to stop much of that data flow, it upended an entire ecosystem worth hundreds of billions of dollars a year — Facebook was even reportedly considering filing an antitrust lawsuit over it. That’s how much control Apple has over its devices and, by extension, a considerable part of the global economy.

A privacy pop-up on an Apple iPhone reads, “Allow Facebook to track your activity across other companies’ apps and websites? This allows Facebook to provide you with a better ads experience. Ask app not to track. Allow.”
A privacy notice on an iPhone allows the user to decide whether to permit cross-app tracking.
Christoph Dernbach/picture alliance via Getty Images

The App Store tax is also in line with what other app stores charge, per an independent report that Apple commissioned last year. Apple, the app store pioneer, was the one that set that 30 percent app store commission rate in the first place.

And Apple does allow for ways to get around some of its App Store taxes. People can purchase subscriptions and certain in-app services outside of apps if they have an account with the developer, which means no App Store tax to either raise prices or cut into the developer’s profit margin. Going to the developer’s website to pay also takes several more steps and more time on the part of the customer to do it.

But in the US, Apple’s best defense against accusations that its App Store is an illegal monopoly may be to simply point to existing antitrust laws, or at least how courts interpret them. Apple does have a monopoly on app stores on Apple devices, but there’s nothing necessarily illegal about that. Monopolies are only illegal if they operate in anti-competitive ways, and the bar to proving even that is pretty high. For the last four decades, courts have interpreted the law as protecting competition (and, by extension, the consumers who supposedly benefit from it), not competitors.

“Our law is very, very conservative,” Eleanor M. Fox, a professor of antitrust law and competition policy at New York University, told Recode. “Companies — even monopoly companies — do not have a duty to deal, and they don’t have a duty to deal fairly.”

We’ve seen this precedent at work in the Epic Games v. Apple case. In August 2020, Epic Games, the developer behind the popular game Fortnite, sued Apple over its refusal to allow alternate app stores and payment systems, as well as its anti-steering policy that forbids developers from linking out to alternate ways to pay for app services or even telling users that other payment methods are possible. Apple kicked Fortnite out of its App Store when Epic tried to flout its rules. A federal judge ruled in September that Apple was well within its rights to do so.

The judge noted that the App Store had “procompetitive justifications.” Even though she found that Apple had a large part of the mobile gaming transactions market and that the App Store’s profit margins were “extraordinarily high,” she didn’t think it created a barrier to entry for developers, nor that it was harming innovation. (Epic has appealed this ruling.)

“Success is not illegal,” the judge wrote.

Epic’s only victory was that the judge ordered Apple to allow developers to link out to and inform users about other ways to pay for app services. Apple was able to delay that particular ruling, and according to a court filing, the company may even try to charge commissions on purchases made through the alternate payment systems if it’s forced to let developers link out to them. Even when Apple loses, it tries to find a way to win.

A person in a dark suit carries two large binders full of papers.
Legal staff representing Epic Games carry documents for trial at the United States District Court in Oakland, California, in May.
Philip Pacheco/Getty Images

Apple’s attempts to avoid antitrust actions

While Apple insists that it isn’t doing anything wrong, the company appears to be concerned that its control over its devices faces some real threats. Apple historically refuses to give up ground on just about everything, yet it’s already made notable adjustments to some of its more controversial policies that could make some apps or services cheaper, or at least easier for the user to find cheaper ways to pay for them. Some of these changes were mandatory, yes, but others appear to be an effort to ward off harsher regulations or judgments.

For instance, Apple loosened its notoriously tight grip on repairs to its devices, allowing more independent shops and, very recently, individual consumers, to have access to the parts and instructions necessary to make certain fixes. This comes in the midst of a push for “right to repair” laws and pressure from the Biden administration and the Federal Trade Commission. But Apple still requires that its own parts be used for these repairs and sets the prices for them.

The stickiness and required usage of Apple’s native apps has long been a gripe from many iPhone users and a bad look for the company from an antitrust perspective. So this year, Apple started allowing users to select their own default apps for web browsing and mail; previously, Apple’s Safari and Mail apps were the mandatory default. Users have been able to delete most of the Apple apps that come pre-installed on their phones since 2018.

Apple has also given some developers a break on the App Store tax and anti-steering policies, which could reduce prices for consumers. Developers who make less than $1 million a year now only have to pay a 15 percent App Store tax. This came about as part of a settlement of a class action lawsuit, but Apple has presented it as a “Small Business Program” that’s “designed to accelerate innovation” (a phrase that could be read as implying that the 30 percent commission decelerated innovation).

Apple is also going to let developers contact customers outside of the app to let them know about alternate payment methods. As part of an agreement with the Japan Fair Trade Commission, Apple will soon let “reader” apps (that is, apps like Netflix and Spotify that offer media for purchase or subscription) link out to their own websites to make it easier for users to purchase subscriptions outside of Apple’s in-app payment system.

In 2016, Apple also cut its commission to 15 percent for subscription apps after the first year. Of course, this change was revealed at the same time as Apple’s announcement that it would sell search ads in its App Store, giving itself yet another exclusive source of revenue (and giving users a bunch of ads when they search the App Store).

But these concessions do nothing for the source of the vast majority of the App Store’s commissions: games from developers that make more than $1 million a year. And Apple hasn’t wavered on the practices that have drawn the bulk of the accusations that Apple’s practices — including the company not allowing alternate App Stores or sideloading, and not allowing alternate payment systems — are anti-competitive, increase prices for consumers, and reduce their choice. It seems unlikely that Apple will give way any time soon. Unless, of course, it has to.

How does Apple’s walled garden grow — or die?

There are plenty of reasons why Apple might have to change its ways. The company may have won most of the Epic Games lawsuit (pending Epic’s appeal), but it still faces antitrust action on several fronts that will play out over the coming years.

Margrethe Vestager speaking onstage in front of a wall that reads, “Antitrust: Apple App Store practices Music streaming.”
Margrethe Vestager, European commissioner for competition, speaks during an online news conference on the Apple antitrust case at EU headquarters in Brussels, in April.
Francisco Seco/AFP via Getty Images

A growing number of countries have introduced or proposed laws that specifically target certain App Store practices, or are investigating Apple for potential violations of their competition rules. These include but are not limited to the European Union, the United Kingdom, Germany, the Netherlands, Japan, South Korea, and Australia.

Those could result in fines, which Apple, a $2 trillion company, probably isn’t too worried about. It also wouldn’t be the first time Apple has paid a considerable sum over antitrust violations. Another outcome — one that would be a much more troubling prospect for Apple — would be if the company were forced to change its business practices in order to keep operating in those countries.

But in the United States, courts haven’t seemed too bothered by Apple’s App Store rules. A federal judge recently threw out a class action lawsuit from developers that said Apple was abusing its monopoly power by refusing to allow their apps in the App Store. As the Epic Games ruling indicates, American antitrust laws (and most courts’ interpretation of them) haven’t done much to change or force change on Big Tech companies. If you’re a lawmaker who is concerned about Big Tech’s considerable power, that’s a green light to propose laws that will.

Sen. Amy Klobuchar (D-MN), for example, said the ruling showed that “much more must be done” about the “serious competition concerns” app stores raise. As chair of the Judiciary Committee’s Subcommittee on Antitrust, as well as a member of the Commerce Committee, she’s in a pretty good position to push through bills that do just that.

Klobuchar is a co-sponsor of the Open App Markets Act, a bipartisan, bicameral bill that would do most of what Epic Games wanted. The legislation would force Apple to allow third-party app stores and the sideloading of third-party apps, require that app stores allow alternate payment systems, and forbid anti-steering policies. It would also ban app stores from giving their own apps special treatment or using non-public data from third-party apps to develop their own, competing apps.

The Open App Markets Act isn’t the only bill that could drastically change how Apple runs its App Store. Several more are currently making their way through both houses of Congress as part of its package of antitrust bills that target Big Tech. If passed, they’d also force Apple to include other app stores on its devices and forbid it from giving its own apps special treatment. One bill, the Ending Platform Monopolies Act, would even force Apple to break up its App Store and app development units into separate businesses.

All of these bills are bipartisan, but it’s far from certain that any of them will become law. If they do, and in something close to their current form, they could benefit consumers by giving them more choice of apps on their phone, and it could make those apps cheaper. It may also subject iPhone users to additional safety and security threats, as Apple alleges, while prices stay largely unchanged.

Apple says it supports updates to laws and regulations that benefit consumers, like privacy legislation — which the current bills on the table don’t do much to directly address.

The Department of Justice, which has been investigating Apple since 2019, is reportedly preparing a lawsuit concerning the App Store. It and the FTC enforce America’s antitrust laws. Both agencies are headed up by people who have accused Apple of anti-competitive actions or worked for firms that have. Lina Khan, a Big Tech critic who helped write the House’s report, is now the chair of the FTC, and Jonathan Kanter, who advised Spotify when it lobbied Congress to take action against Apple, leads the DOJ’s antitrust division. Both agencies may get a major, needed funding boost if the Build Back Better Act and a bill that increases merger fees for large companies pass.

With all of this said, Apple, “the warm and fuzzy monopolist,” is probably in a better position with its ongoing antitrust problems than its fellow Big Tech titans are with theirs. It has, so far, faced relatively less criticism in general, and many of the proposed bills and regulations don’t threaten its business model as much as they do that of the other companies. If Apple were forced to allow other app stores on its devices tomorrow, it would still have plenty of very healthy revenue streams.

Those may still include the App Store. It’s not clear that many of Apple’s users would even use or want another app store. The fact that they use an iPhone and not an Android speaks to this. They could prefer or trust the security and privacy protections in the App Store over those of, say, a Facebook app store. Then again, if those other app stores took a lower commission from developers, allowing them to charge less than the Apple App Store does, Apple’s customers may well vote with their wallets, and developers might only offer their apps in stores that give them a better margin. In which case, Apple might just find itself finally having to compete for apps and customers — and maybe even lowering the App Store tax to do it. Apple wouldn’t be thrilled, but it would be just fine.

Update, December 9, 3:50 pm ET: This article has been updated to reflect that Apple won its appeal to delay implementing the court order to allow apps to link out to other payment methods.

Sara Morrison

 

Source: How much control should Apple have over your iPhone and the App Store? – Vox

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