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Why are Apple and Epic going to court over Fortnite currency? | Apple

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Apple and Epic Games will go head to head in court in front of a US federal judge on Monday, the latest stage in the Fortnite maker’s campaign to break open the iPhone’s walled garden.

The feud has been growing since last August, when Epic set in motion a plan – known internally as “project liberty” – to try to get past the restrictions Apple places on software made for iPhones and iPads. Here is what brought the two companies to this point.

What is Epic’s problem with Apple?

The App Store is the only way to install software on iPhones and iPads, but companies have to play by Apple’s rules if they want to be included. Those rules are byzantine, controlling everything from adult content to security practices, but Epic’s main issue is with the rules controlling how it can charge customers for “V-bucks”, the in-game currency used to buy items in Fortnite.

Apple requires large companies to pay 30% of the money they receive for such sales of digital goods – since last December, smaller companies can apply for a discounted rate – a cut which Epic’s founder and chief executive, Tim Sweeney, had long complained was extortionate.

How did Epic kick off the fight?

Sweeney sent Apple a behind-the-scenes ultimatum: allow Epic to run its own App Store for iPhones, where it could take payments without a cut.

Apple rejected Epic’s terms, and on 13 August Epic unilaterally updated Fortnite to allow users to buy V-bucks direct, and offered a discount for those who did. Apple and Google, whose Google Play app store rules were also circumvented, retaliated within hours by removing the game. Epic took the fight public, reworking Apple’s famous 1984 commercial to pitch the company under Tim Cook as the new villain.

Does Epic have history with this sort of thing?

The showdown with Apple has echoes of past Epic campaigns, which have had mixed results. It successfully forced Sony’s hand in 2017 in a nearly identical playbook. Fortnite was updated to allow “cross play”, letting Microsoft Xbox and Nintendo Switch players compete directly, but Sony refused to allow PlayStation owners to join. That autumn, a brief software update – which Epic said was a mistake – enabled the feature for PlayStation owners, proving that it was possible and casting Sony as the sole holdout. The company panicked, fearing it could lose its reputation as the console platform “for the players”, its tagline at the time, and relented.

Another attempt to bypass controls was less successful. Epic launched the Epic Games Store on Android in 2018, using a technical feature of Google’s mobile platform to legitimately bypass the company’s control. The store ran for two years, but was eventually shuttered because, Epic said: “Google puts software downloadable outside of Google Play at a disadvantage, through technical and business measures such as scary, repetitive security pop-ups.”

What has Apple’s response been?

Apple has held fast. The company not only removed Fortnite from the App Store, as Epic expected, but initially tried to go further by threatening Epic’s ability to publish software for Macs too. That would have harmed another wing of Epic’s business, where the company makes the Unreal engine, a popular tool for developing 3D graphics for the gaming, film and design industries. The courts blocked that salvo after Microsoft joined in on Epic’s side.

Apple insists there is no room for negotiation, and that the rules the App Store runs on are there to ensure the safety and security of its users. Requirements to funnel payments through Apple protect users against financial scams, and a ban on installing alternative app stores prevents malware from running rampant on the platform.

Does Epic have any supporters?

A whole load. Shortly after the case was launched, a new body, the Coalition for App Fairness appeared, with members including Epic, Spotify and the Tinder owner Match Group. CAF is firmly aimed at Apple, and argues that the company’s 30% cut “represents an enormous portion of their revenue, in many cases an untenably large one”. The Guardian is a member of the News Media Association, itself a member of News Media Europe, which in turn is part of CAF.

Other CAF members have similar complaints about different parts of the App Store. makes gadgets which can track lost items, a market Apple entered in April. Tile argues Apple has an unfair advantage, because it allows its AirTags software capabilities that Tile was barred from using.

What is the legal case likely to turn on?

According to court filings, Epic will present Apple’s restrictions as the acts of a monopoly player that is extracting unfair payments from companies with no option but to accede. Apple will argue that the success of other mobile phone makers shows that it is not a monopolist, and that the small portion of Epic’s business that occurs on iOS – reportedly less than 10% of Fortnite’s revenues before it was pulled – further supports the idea that the two companies are equals.

Are there any surprises in store?

It is rare that battles between companies this big make it to open court, because the incentive to settle beforehand is so big. The list of executives lined up to testify includes Tim Cook and Tim Sweeney, Apple’s Eddy Cue and Craig Federighi, the former App Store boss Scott Forstall and witnesses from Facebook and Microsoft. Testimony under oath extracted by skilled lawyers could produce some uncomfortable disclosures from everyone.

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Stripe investors cash in on $1bn worth of shares

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The Wall Street Journal reported that some existing shareholders in the fintech company sold their shares to other investors.

Stripe shareholders recently sold off around $1bn in shares, according to media reports, as more investors seek a stake in the company.

The Wall Street Journal reports that the Collison brothers’ company ran a tender offer for existing shareholders to sell their stakes.

It received bids up to $4bn from investors but around $1bn was sold in the end. The company has not commented on the investments.

Shopify, Sequoia Capital, Silver Lake and Capital Group purchased stakes in the company as part of this latest transaction, according to the report. In some cases, these investors increased their existing holdings in the fintech giant.

Meanwhile long-standing employees may have sold their shares in the company before their share options expire, which is typically a 10-year window.

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Rumours and speculation continue to swirl around Stripe going public with 2022 touted as the year that the company makes the leap, 12 years after it was founded. For shareholders, a Stripe flotation could make for a hefty payday. For now, investors are looking to shore up bigger stakes in the company.

Stripe raised $600m in an investment round in March that valued it at $95bn.

The company’s recent moves give some indication of the broad plans that the company has.

Seemingly every week the company is rolling our new or expanded products that go beyond its core payments processing functions. On Monday (14 June), it released Stripe Identity, an AI-powered tool for verifying a person’s identity in a payment transaction and last week it released Stripe Tax to automate businesses’ calculation and collecting of VAT and sales taxes.

Stripe has a mission to be an all-encompassing payments and banking infrastructure company. It has become a frequent investor in fintech start-ups in recent years as well, keeping tabs on what might be the next big thing in finance, payments and banking tech.

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Bitcoin price back above $40,000 after Elon Musk comments | Bitcoin

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The price of bitcoin hit a three-week high on Monday, climbing back above $40,000 after Elon Musk said that Tesla would resume allowing transactions made in the digital currency once crypto mining becomes greener.

The electric car company’s latest change of direction on its acceptance of bitcoin once again highlighted the continuing ability of Tesla’s billionaire chief executive to influence the price of bitcoin and other cryptocurrencies.

“When there’s confirmation of reasonable (~50%) clean energy usage by miners with positive future trend, Tesla will resume allowing bitcoin transactions,” Musk said in a tweet on Sunday.

The price of one bitcoin climbed to a high of $41,033 (£29,063) on Monday before slipping back to $40,580, still up more than 12% from its price before Musk’s tweet.

Musk, one of the most high-profile proponents of cryptocurrencies, also said that Tesla sold about 10% of its holdings to confirm bitcoin could be liquidated easily without moving the market.

He announced in May that Tesla would no longer accept bitcoin for car purchases, citing long-brewing environmental concerns for a swift reversal in the company’s position on the cryptocurrency. In February, Tesla revealed it had bought $1.5bn of bitcoin and would accept it as a form of payment for cars. But the cryptocurrency’s production is at odds with the company’s mission toward a “zero-emission future”.

Bitcoin fell more than 10% after Musk’s tweet in May. He said that he believed cryptocurrency had a promising future but it could not be at great cost to the environment.

The energy used to produce bitcoin alone is equivalent to the annual carbon footprint of Argentina, according to the Cambridge Bitcoin Electricity Consumption Index, a tool from researchers at Cambridge University that measures the currency’s energy use.

Bitcoin mining – the process in which a bitcoin is awarded to a computer that solves a complex series of algorithms – is deeply energy-intensive. Because there is a finite number of bitcoins that can be mined – 21m – computers have to solve harder and harder algorithms in order to get bitcoin. The special equipment and intense processing power use a lot of electricity – as much as some entire countries.

The concerns over energy use aside, cryptocurrencies have split opinion among investors and financial regulators for other reasons, including the rollercoaster ride sparked by their frequent swings in price.

Despite bitcoin’s recent rise, it is still trading about a third lower than the record high of $63,000, which it reached in April. A year ago, bitcoin’s value was under $9,500.

Earlier in June, the Central American country of El Salvador became the first in the world to adopt bitcoin as legal tender, as part of its technology-loving president’s proposals to use the cryptocurrency to promote “financial inclusion”, investment and economic development.

However, others remain unconvinced, and cryptocurrencies remain controversial. Global regulators are sceptical, on account of their volatility and vulnerability to theft or hacking.

The Bank of England has previously warned that the rise of digital currencies could set off a flood of withdrawals from high-street banks, risking financial stability and the wider economy, and cautioned that investors risk losing their money.

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According to various measures, bitcoin is undervalued at current prices, said Alexandra Clark, a sales trader at the digital asset broker GlobalBlock, although she added: “Many analysts are still on the fence when it comes to determining whether the digital asset is ready to continue its uptrend.”

Tesla’s decision to sell 10% of its bitcoin holding “has brought about fresh accusations of pumping and dumping by Musk and reiterated the need for an investigation by the SEC [US Securities and Exchange Commission],” Clark said.

The US securities watchdog warned Tesla last year that Musk had twice violated a settlement requiring his tweets and material public communications to be preapproved by company lawyers, the Wall Street Journal reported at the start of June.

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Price-capped broadband on hold for New York State after judge rules telcos would ‘suffer unrecoverable losses’ • The Register

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A new law due to come into force tomorrow that would force broadband providers in New York State to provide net access to low-income households for $15 a month has been put on hold.

A preliminary injunction [PDF] was granted by United States District Judge Denis R Hurley on Friday after a string of trade bodies – including the New York State Telecommunications Association and The Broadband Association – launched the action on behalf of their members.

The ruling notes that telcos and ISPs forced to impose the price caps would “suffer unrecoverable losses increasing with time” and that the “bulk of these losses will stem from lost income.”

“While a telecommunications giant like Verizon may be able to absorb such a loss, others may not: the Champlain Telephone Company, for example, estimates that nearly half [approximately 48 per cent] of [its] existing broadband customers will qualify for discounted rates,’ with each such customer ‘caus[ing] a monetary loss’,” it states.

The legal action also highlighted that not only would telcos lose revenue by offering cut-price access, they would also incur additional costs associated with increased spending on advertising.

In April, New York Governor Andrew Cuomo put his name to legislation that would force operators in the state to offer $15 a month high-speed internet to low-income families across the state.

The legislation also made it a legal requirement for operators to inform the authorities about their broadband products and prices, and how many had taken up the offers.

In all, it was estimated this change would impact seven million New Yorkers and some 2.7 million households.

At the time, Governor Cuomo said the need for remote access to work, education, and healthcare – which had been brought into sharp focus by the pandemic – had underlined the “need to make sure every household has access to affordable internet.”

“This program – the first of its kind in the nation – will ensure that no New Yorker will have to forego having reliable home internet service and no child’s education will have to suffer due to their economic situation,” he said.

US telcos in the crosshairs of the enforced price cap were quick to challenge the legislation, pointing out, among other things, a temporary $50-a-month discount being offered to households as part of a federal benefit.

In a 19-page lawsuit filed on 30 April, the industry lined up to say that they’re already doing their bit to help close the digital divide including offering cut-price tariffs to people on low incomes.

They also claim that New York is acting beyond its jurisdiction.

“In short, New York has overstepped its regulatory authority,” lawyers acting on behalf of the telcos said in their lawsuit.

Governor Cuomo hit back almost immediately and in a statement on the same day as the 30 April lawsuit said: “I knew giant telecom companies would be upset by our efforts to level the playing field, and right on cue, they’re pushing back. This is nothing more than a transparent attempt by billion-dollar corporations putting profit ahead of creating a more fair and just society.”

Fast-forward to this week and the decision to grant a temporary injunction halting the introduction of the $15-a-month broadband cap has left many wondering what happens next.

In a statement, US Telecom said: “The broadband industry is committed to working with state and federal policymakers on sustainable solutions that will serve the needs of all low-income Americans. While well-intended, the state’s law ignored the $50 monthly broadband discount Congress enacted, as well as the many commitments, programs and offerings that broadband providers have made for low-income consumers.” ®

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