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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iPhone 13 Pro Hacked, Tianfu Cup, China Hackers, iOS 15 jailbreak

Ever since the Chinese government invoked regulations to prevent security researchers from taking part in international hacking competitions such as Pwn2Own, the annual Tianfu Cup, held in Chengdu, has been the place for the best hackers in China to demonstrate their collective prowess.

This past weekend saw the latest competition take place and the newest iPhone, the iPhone 13 Pro running the latest and fully patched version of iOS 15.0.2 to be precise, was hacked in record time. Twice.

The Kunlun Lab team, whose CEO is a former CTO of Qihoo 360, was able to hack the iPhone 13 Pro live on stage using a remote code execution exploit of the mobile Safari web browser. And do so in just 15 seconds flat.

Of course, months of preparation were likely involved in getting to this point, but the result was devastating and devastatingly fast. However, full details of the vulnerability or vulnerabilities exploited have yet to be revealed.

Kunlun Lab wasn’t the only team to hack the iPhone 13 Pro, though. Team Pangu, which has a history of Apple device jailbreaking, cemented its reputation in this regard by claiming the top $300,000 cash reward for remotely jailbreaking a fully patched iPhone 13 Pro running iOS 15.

While, again, the full detail of how this was achieved has not been made public, reports suggest it involved a one-click link triggering a remote code exploit that bypassed Safari security mechanisms.

The good news is that hacking is not a crime, as I have repeated time and time again.

Indeed, these hacking teams will turn the details of their exploits over to Apple so that it can release patches for these vulnerabilities. I would expect to see these in either iOS 15.1 or a forthcoming iOS 15.0 security update.

The not so good news is that there have been reports in the past of Chinese state actors using some of these exploits for espionage or surveillance purposes before patches can be released.

It should also be said that Apple products weren’t the only target at the Tianfu Cup 2021 event. Security researchers also successfully launched exploits against Windows 10, Microsoft Exchange and Google Chrome, among others. I’ll bring you more news of those as detail emerges.

I have reached out to Apple for comment and will update this article in due course.

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

Davey is a three-decade veteran technology journalist and has been a contributing editor at PC Pro magazine since the first issue in 1994. A co-founder of the Forbes Straight Talking Cyber video project, which has been named ‘Most Educational Content’ at the 2021 European Cybersecurity Blogger Awards, Davey also won the 2020 Security Serious ‘Cyber Writer of the Year’ title. A three-time winner of the BT Security Journalist of the Year award (2006, 2008, 2010) I was also fortunate enough to be named BT Technology Journalist of the Year in 1996 for a forward-looking feature in PC Pro called ‘Threats to the Internet.’ In 2011 I was honored with the Enigma Award for a lifetime contribution to IT security journalism. Contact me in confidence at davey@happygeek.com if you have a story to reveal or research to share.

Source: iPhone 13 Pro Hacked, Tianfu Cup, China Hackers, iOS 15 jailbreak..

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Facebook Still ‘Secretly’ Tracks Your iPhone This Is How To Stop It

Despite Apple’s public crackdown on Facebook data harvesting, the social media giant will store your iPhone’s location even when you have set it “never” to do that. Now you can stop Facebook in its tracks, ensuring your phone can’t be secretly tracked.

Facebook is reeling as it becomes clear that Apple’s privacy innovations are throttling some of its most lucrative revenue streams. But while stopping cross-app and cross-site tracking is a huge plus for a billion-plus iPhone users, when you use apps provided by the likes of Facebook and Google, you still share way too much of your data.

This should be well understood—there have been enough warnings. But even when users think they’ve done the right things—changed settings to opt for privacy, there are still backdoors, such as with private photos you upload to Facebook and Instagram.

The photos you take on your iPhone include metadata, data about the photos that is embedded into the photo file itself. When you send the photo in its original form, the metadata goes along. That data includes the model of your phone, the way your camera was set up, the date and time the photo was taken, and, critically, where it was taken.

That location data is very precise—and it’s very useful, because you can search photos on your phone by place, logically collating your memories. But when you upload photos to Facebook or Instagram, that metadata is stripped away. If you save photos from either back to your device, you’ll see that there is no embedded location data.

So, does Facebook delete the location data after it has been stripped? No, of course not. Why would the world’s most avaricious data harvester throw away valuable information that it can use to monetize you even further? Facebook stores the data in its multi-billion-dollar data vault, against your profile.

No surprises there. What is surprising, though, is that Facebook strips and stores this data even when you’ve told the platform (both online and on your iPhone) “never” to track your location. Why Facebook thinks this is okay, I fail to understand.

You can see this for yourself. If you upload a photo to Facebook and then download “your Facebook information,” you will see Facebook has stored the exact GPS location stripped from the photo, as well as your IP address when you uploaded the image.

The data “we collect,” Facebook says in its privacy policy, “can include information in or about the content that you provide (e.g., metadata), such as the location of a photo or the date a file was created.” This location data is used “to provide, personalize and improve our products, including ads.

Until now, fixing this issue has been painful. You need to either disable your iPhone camera’s photo location tagging or use a third-party app to strip the metadata before uploading images. Thankfully, Apple has just fixed the problem.

In your photo album, swipe up any image or select the “i” in the bottom menu bar, and select “Adjust.” You can then change the location to one of your choice or delete it.

This isn’t just a great option for Facebook, of course. While many messaging apps, including WhatsApp and Signal, strip (but don’t save) metadata, iMessage and email attachments retain embedded data, as do photos added to shared albums.

If you’re sharing photos, there are many reasons you might not want to share the exact location. Putting safety aside, many a person has been caught out by inadvertently revealing where they are (and where they are not) via this invisible metadata.

I have warned on this Facebook and Instagram loophole before, and when I have asked Facebook about this, it has confirmed that the platform “collects and processes” such data. When asked if this is used for advertising, “regardless of the privacy settings selected by a user,” I was told it was fine to proceed with those assumptions.

Facebook has enough of your data. This is a great example of where you can hold something back without any detrimental impact to you whatsoever. If you’ve taken the trouble to stop Facebook capturing your location, make sure it’s doing as it’s told.

Zak is a widely recognized expert on surveillance and cyber, as well as the security and privacy risks associated with big tech, social media, IoT and smartphone platforms. He is frequently cited in the international media and is a regular commentator on broadcast news, with appearances on BBC, Sky, NPR, NBC, Channel 4, TF1, ITV and Fox, as well as various cybersecurity and surveillance documentaries.

Zak has twenty years experience in real-world cybersecurity and surveillance, most recently as the Founder/CEO of Digital Barriers, which develops advanced surveillance technologies for front line security and defense agencies as well as commercial organizations in the US, Europe and Asia. The company is at the forefront of AI-based surveillance and works closely with flagship government agencies around the world on the appropriate and proportionate use of such technologies. As well as analyzing security and surveillance stories, Zak is co-creator of Forbes’ award winning Straight Talking Cyber video series. Zak can be reached at zakd@me.com.

Source: Facebook Still ‘Secretly’ Tracks Your iPhone—This Is How To Stop It

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Apple Pay Fees Vex Credit-Card Issuers

Banks are nudging Visa to change the way it processes some Apple Pay transactions, according to people familiar with the matter.

According to people familiar with the matter, banks are pressing Visa to change the way some Apple Pay transactions are processed. Some banks are pushing back, weakening the card network Visa Inc.

To change the way some Apple Pay transactions are processed, according to some. This change will reduce the fees that banks pay to Apple.

According to people familiar with the matter and a document seen by Businesshala, Visa plans to implement the change next year. Apple executives have told Visa officials they oppose the change, the people said. The two companies are in discussion and it is possible that the planned change will not start.

Currently, banks pay the fee to Apple when their cardholders use Apple Pay. Under the new process planned, the fee will not apply to automatic recurring payments such as gym memberships and streaming services.

The dispute reflects a long-running tension between the tech and finance giants. Companies like Apple and Amazon.com Inc.

Consumer payments have been expanding over the years. Banks often bargain with them for fear of being left behind. But deals don’t always work out: Alphabet Inc. NS

For example, Google is dropping plans to introduce bank accounts to users. Apple said in a statement that “our banking partners are an important part of the growth of Apple Pay.”

The company said, “Our bank partners continue to see the benefits of providing Apple Pay and invest in new ways to implement and promote Apple Pay for our customers for secure and private in-store and online purchases. “

Major networks including Visa and MasterCard Inc.

There are effective gateways between banks and Apple Pay, as they help to load banks’ cards into mobile wallets. The change will apply to Visa-branded cards, though other networks may follow suit.

Mobile wallets are smartphone apps on which people can load their debit or credit-card credentials and use their phones instead of tangible cards to make payments. The transaction fee is charged to the buyer’s card.

When Apple introduced Apple Pay in 2014, the iPhone had already discontinued the music player, camera, and GPS system. Banks and card networks are worried it will displace card payments as well.

Banks agreed to pay 0.15% to Apple for every purchase made by their credit cardholders. (They pay a separate fee on debit-card transactions.) Those charges account for most of the revenue Apple makes from its digital wallet, according to people familiar with the matter.

The terms had the potential to be uniquely attractive to Apple. Banks do not charge Google for its Wallet.

Visa and MasterCard also agreed to make an unusual concession to Apple: Apple will be able to choose which issuers it will allow on Apple Pay and which issuers will accept cards, according to people familiar with the matter. Visa and MasterCard generally require that all entities that accept their credit cards must accept them. Apple agreed not to develop the card network to compete against Visa and MasterCard, the people said.

But since then, customers have been slower to adopt Apple Pay than bank and card network executives expected. And some bank executives were outraged when Apple launched its own credit card with Goldman Sachs Group in 2019 Inc.,

People familiar with the matter said, because it made Apple a direct competitor.

Apple said in a statement that it “works closely with approximately 9,000 banking partners to offer Apple Pay to customers in approximately 60 countries and territories.”

Visa has shared its planned technological change with at least a few banks in recent months. A document reviewed by the Journal explains the new process that doesn’t mention fees, but details a change to so-called tokens issued by Visa for mobile-wallet payments.

When consumers load their credit cards on Apple Pay, Visa issues a special token that replaces the card number. This allows the card to work on Apple Pay and also helps protect the card in a potential data breach, among other benefits.

Visa is planning to start using a separate token on recurring automatic payments. This effectively means that after making the first payment on the subscription, Apple will not receive a fee on the following transactions.

According to people familiar with the matter, some of the larger banks first tried to lower their Apple Pay fees around 2017, but were not successful.

By: AnnaMaria Andriotis

AnnaMaria Andriotis reports on credit cards for The Wall Street Journal. She covers Visa, Mastercard, American Express and Discover as well as the big banks’ credit-card divisions. She also writes about consumer credit broadly, with a focus on issues that have a big impact on U.S. borrowers. She has been a reporter with The Wall Street Journal since 2014 and got her start at Dow Jones more than 10 years ago. You can email AnnaMaria at annamaria.andriotis@wsj.com and follow her on Twitter @AAndriotis.

Source: Businesshala News Exclusive | Apple Pay Fees Vex Credit-Card Issuers

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5 Reasons Why You Should Care About iOS 15

Surprisingly, last week is the first in a while that Apple Beta Program participants didn’t see a new build of iOS 15. Public Beta 8 was released two weeks ago, with the anticipation that the golden master would be released to testers a week after.

That didn’t happen. Instead, all signs point to the golden master being released this week in conjunction with the Apple iPhone event happening tomorrow, September 14. It might even skip “golden master” altogether and go straight to public release later this week.

So soon, everyone will get their hands on iOS 15. Some of the tentpole features, like the updated Maps app, redesigned Safari, and “all new” Notifications are either underwhelming or controversial. Plus one of its biggest features, Shareplay, which lets you share your media during FaceTime calls, is sidelined till iOS 15.1. So why should you care about the latest OS from Apple?

Here are five things that you’ll actually use that make iOS 15 worth getting excited about.

1. iCloud+ Makes Browsing More Secure

OK, boring stuff out of the way first. Everyone says they want to be more secure but no one actually cares. They share their email. They reuse passwords. They connect to any WiFi hotspot, even if its name is “H4CK3R-4-LYFE.”

Apple’s iOS has had strong password suggestions for a while now, but iOS 15 goes even further to keep you from your own worst habits. iCloud+ has a Private Relay feature that acts like a virtual private network (VPN). Basically, it hides the location of where you’re connecting  to the internet and who you are, even from Apple. You can’t use it like a regular VPN to spoof a location (say, if you’re trying to convince Netflix you’re in a different global region). But if you’re advanced enough to be doing that, you probably don’t need Private Relay to begin with. This feature is for those who want to be safer online but don’t want to mess with the nuts and bolts.

Hide My Email is the iCloud+ feature that you’ll actually notice and use. Rather than provide your real email to every random form and newsletter on the internet, this will let you mask your email with a fake address that’s then routed to your iCloud email address.

2. It’s Easier To Find Things Shared With You

“Oh, I’ve seen that trailer. My buddy shared it with me. One sec.”

Scroll, scroll, scroll

“Hmm. Maybe not him? Maybe my brother?”

Scroll, scroll, scroll

“Not him either. Huh. Um. I know I’ve got it. Hold on…”

Sound like a familiar scenario? With so many links, photos, and videos being shared with us on a daily basis, it’s easy to lose track of just what we’ve received and from whom. That’s why the persistent Shared With Me category in iOS 15 is an absolute gift. Now, there’s a whole list of shared links available when opening a new tab in Safari. Looking for pictures?

The Photos app has a shared category as well. Same with the TV and Music apps. Granted, the last two probably won’t see as much use but it’s still nice to have a convenient list of things that you want to check out in the app where you’ll most likely use it.

Speaking of sharing, if you frequently share multiple photos in Messages, they’re now organized in an aesthetically-pleasing stack. It’s a minor, but welcome, change.

3. Photos Are Way Better

The Photos app gets some major quality of life improvements in iOS 15. The auto-generated memories are better and seem to surface more of the images you care about. They can also use real music from your Music app! Now if you want to use Queen’s “You’re My Best Friend” for that memory about your dog, you can, rather than being stuck with generic upbeat instrumental music.

Photos are smarter as well, letting you dive deep into images and identify things like animals, plants, locations, and people. Plus you can finally copy text from images! No more flipping back and forth between an image and Safari to enter the name of that weird restaurant that you took a picture of. Select the text in the image, then copy, paste, and search. It’s especially useful for those acquaintances that love to send you screenshots of web pages rather than the actual web page address.

4. Anyone Can Join FaceTime Calls

FaceTime is a lot of fun but until now it’s been an Apple-only affair. With iOS 15 you can create a share link that lets anyone join your FaceTime call from their browser, no matter what device they’re on. Of course, if you’re joining that FaceTime call from an iOS device, there are all kinds of new enhancements to calls – better audio, video, and, eventually, real-time screen sharing. It’s like Zoom, but more focused on the social. If you prefer to do your FaceTime calls via Memoji, you’ll appreciate the new clothing options (among other new customizations).

5. Focus Lets You Instantly Transform Your Phone

Do Not Disturb and Sleep Mode were wonderful innovations that helped us wrest time back from our phones. The new Focus mode is like that, but with even more utility. Now, instead of just silencing notifications, you can create an entire home screen just for that mode.

Want to have a Fitness mode that surfaces weather, workout, and health widgets, plus your fitness and music apps? Create it and when you activate the Fitness focus mode, your phone will transform. You can also set it to let people know that you’re working out (or driving or whatever). And while there are several different types recommended, you can also make your own. It’s an easy way to embrace task-based layouts.

And this is just the tip of the iceberg. There are even more features coming to your phones when iOS 15 is released to the public later this week. Be sure to tune in to the Apple keynote tomorrow to check out the iOS 15 release announcement (and all the new iPhones!).

Follow me on Twitter or LinkedIn. Check out my website.

I’ve been writing about technology, gadgets, and pop culture back before Apple had even thought of the iPhone. I’ve seen the rise and fall (and rise again) of Apple. I’ve watched c-beams glitter in the dark near the Tannhäuser Gate… In addition to Forbes.com, I am a contributor at TheRoarbots.com. As a technical writer, I specialize in deciphering the undecipherable, untangling the kraken-like documentation tangles that software companies find themselves in, and teaching users how to successfully navigate their products on the other side. I also enjoy playing in superheroic worlds of my own creation (you can find out more about my fiction endeavors at AnthonyKarcz.com). You can find me on Twitter (@sunstreaker84), Facebook, and Google . If there’s something you want to see me tackle, drop me an email at: anthonyATanthonykarczDOTcom.

Source: 5 Reasons Why You Should Care About iOS 15

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