This Week in Apps: Apple, Twitter, and Parler News

Greetings and welcome to This Week in Apps, the TechCrunch feature dedicated to summarizing the newest developments in operating systems, the applications compatible with them, and the financial activity surrounding them.

The mobile application market continues to thrive, achieving an unprecedented 204 billion downloads and $120 billion in direct consumer expenditure during 2019. Individuals are currently dedicating three hours and forty minutes daily to app usage, a figure comparable to time spent watching television. Applications represent more than just a means of entertainment – they constitute a significant commercial sector. In 2019, businesses prioritizing a mobile-first approach demonstrated a collective valuation of $544 billion, which is 6.5 times greater than companies lacking such a focus.

Top Stories

Apple Lowers App Store Commission to 15% for the Majority of Developers

These modifications are applicable to developers earning under $1 million in revenue.

Apple revealed a significant alteration to its App Store commission structure this week. Effective January 1, 2021, the company will implement a 15% commission rate on paid applications and in-app purchases for developers whose total revenue across all apps does not surpass $1 million during the 2020 calendar year. Eligibility for the new App Store Small Business Program will be evaluated annually based on subsequent revenue performance.

This adjustment occurs amidst heightened regulatory examination of Apple’s App Store practices, including ongoing antitrust investigations in both the United States and the European Union. Throughout the year, Apple has also engaged in disputes with developers regarding in-app purchases, prompting revisions to its existing regulations and clarification of its “Apple tax” policies. Simultaneously, the company is involved in a legal dispute with Epic Games, the creator of Fortnite, which seeks to avoid utilizing Apple’s payment systems or the App Store itself.

These commission adjustments could potentially alleviate concerns voiced by members of the app development community and provide Apple with a means to demonstrate its commitment to fostering fair competition to regulatory bodies.

However, some of Apple’s most vocal critics responded unfavorably to the announcement.

The Coalition for App Fairness, a group encompassing Epic, Basecamp, Deezer, Match Group, Spotify, and others, stated: “developers are seeking a fair and equitable environment from Apple, not merely a symbolic action.” They contended that Apple retains control over the customer relationship, the $1 million threshold is arbitrary, and that the majority of developers who “earn a sustainable income” will not experience benefits from the change.

Match, Spotify, and Epic individually expressed similar viewpoints in their own statements.

Apple, however, asserted that the change would positively impact the “vast majority” of the App Store developer community. Currently, the App Store hosts 1.8 million applications accessible on over 1.5 billion Apple devices.

Developers with whom we spoke, including those who would qualify for the program, did not express complaints. Many were genuinely surprised by Apple’s decision.

“It’s reasonable to suggest that this change was influenced by either the impending antitrust investigations or the Epic lawsuit. Nevertheless, an action can simultaneously be a strategic political maneuver and still be genuinely beneficial to the majority of developers,” commented James Thomson, an independent developer responsible for the PCalc app and others.

“We are well below the million-dollar threshold, so we anticipate approximately a 20% increase in our earnings under the new system. We are in a comparatively fortunate position, as our sales are entirely digital and there is a consistent demand for calculators (or dice). However, we have observed a decline in sales over the past eight months. The additional revenue is therefore welcome,” he added. “These changes will be particularly advantageous for small developers who have historically formed the core of the developer community, and I am as pleased by this as I am surprised,” Thomson stated.

Other developers also conveyed general satisfaction with the changes, though some raised concerns regarding the specifics of the program’s implementation.

“Overall, I am very pleased with this new program,” said David Smith, the developer behind Widgetsmith, Watchsmith, Sleep++, and a variety of other iOS applications. “It will assist countless small developers who could significantly benefit from that additional profit margin. I am excited for all the independent developers who will now be able to dedicate themselves to their applications full-time a little sooner.”

Smith pointed out that it was unusual that the program was not structured similarly to a graduated tax rate, where, as he explained, “your first $1 million is taxed at 15% and the remainder at the higher rate.”

“The current system creates an uneven playing field among developers, and one aspect I have always valued about the App Store is its consistent treatment of all developers,” Smith continued. “It also introduces a peculiar disincentive for growth for mid-sized businesses approaching the threshold.”

We consulted with third-party analytics companies to gain a more comprehensive understanding of the market.

According to data from App Annie, approximately 98% of all iOS developers in 2019 (defined as unique publisher accounts) generated less than $1 million in annual consumer spending. This supports Apple’s claim that the “vast majority” of developers would benefit. This group of developers accounts for 567,000 unique apps, representing 93% of all apps generating revenue through in-app purchases.

Collectively, their revenues accounted for just under 8% of the total App Store revenue share—representing funds Apple could potentially forgo.

App Annie also determined that the number of mid-range developers “approaching” the $1 million threshold is relatively small. The data indicates that roughly 0.5% of developers earn between $800,000 and $1 million, while just over 1% fall within the $500,000-$800,000 range.

The majority of developers generate significantly lower revenue, with 87.7% earning less than $100,000 in 2019.

Some expressed concern that Apple’s system would unfairly penalize developers who exceeded the $1 million threshold by a small margin, effectively locking them into the higher rate (30%).

However, others speculated that the proportion of developers experiencing gradual growth beyond $800,000 in ARR was actually quite limited.

https://twitter.com/panzer/status/1329104295552114689?s=20

Based on the data we have gathered, subscription-based applications tend to experience accelerated growth once they surpass the $1 million threshold. According to data from subscription platform RevenueCat, applications on its platform grow, on average, at a rate of 1.5x year-over-year. Consequently, once an application exceeds the $1 million threshold, it is likely to generate $1.5 million in the following year. Furthermore, applications “nearing” the threshold tend to grow at an even faster rate, we understand, and rarely experience a decline.

“Apple has implemented numerous changes to the App Store over the years, and this is one of the first that I have observed with little to criticize,” stated Jacob Eiting, CEO of RevenueCat. “It has a broad impact on the App Store economy and is meaningful to individual independent developers. While it may have been motivated by public relations considerations and Apple may not face significant drawbacks, it is genuinely a positive development for many developers,” he said.

Further data on this topic will be available in the coming weeks. 

Funding Sources for Parler Identified as the Mercers; Parental Advisory Issued for the Application

As the “free speech” application Parler gains popularity following increased fact-checking efforts by Facebook and Twitter, reports from The WSJ indicate that its funding originates with well-known conservative contributor and supporter of Donald Trump, Rebekah Mercer.

Rebekah is the daughter of Robert Mercer, a hedge fund manager and key investor in Cambridge Analytica—the data analytics company at the center of a significant data breach involving Facebook, impacting 87 million users whose information was utilized for political advertising purposes. The Mercer family has also provided financial support to Breitbart News, the Heritage Foundation, the Federalist Society, a super PAC that initially supported Ted Cruz’s campaign for the Republican presidential nomination (later shifting allegiance to Trump), and Citizens United (responsible for distributing a 2007 film critical of Clinton and achieving a Supreme Court decision that altered campaign finance regulations), among other entities.

This week, the advocacy group ParentsTogether released an alert to parents regarding Parler, asserting that the application’s limited content moderation and presence of extremist users expose children to potential exploitation, mistreatment, and the possibility of being drawn into racist ideologies. The organization characterized Parler as a platform containing harmful material, including hateful rhetoric, encouragement of violence, and the broad dissemination of false information.

Furthermore, the group expressed concern that while Apple’s App Store assigns a maturity rating of 17+ to the app, Google Play lists it as appropriate for individuals aged 13 and older.

“We urge all parents of children under the age of 18 to promptly examine their children’s mobile devices and tablets to verify whether Parler has been installed,” the group stated. “Should your child have Parler installed, we highly recommend removing the application and deleting their account.”

Twitter launches Fleets

This week, Twitter made Fleets – its take on the popular Stories format – available to all of its users worldwide. This feature enables individuals to share content designed to vanish after 24 hours. Prior to this global release, Fleets had been introduced in several countries, including Brazil, India, Italy, South Korea, and Japan. The initial launch experienced some technical difficulties, leading to performance and stability concerns. Twitter temporarily paused the rollout to address these issues before announcing full global accessibility on Thursday.

User responses to Fleets have been varied. A segment of the user base has expressed disapproval of the feature, which aims to motivate greater participation on the platform, particularly from those hesitant to post due to Twitter’s reputation for strong reactions to content. Concerns exist regarding how a Stories-like feature can mitigate this environment, as Fleets are still visible within Twitter’s public network.

In addition, Twitter announced plans to begin testing a new feature that directly competes with Clubhouse, involving users participating in live audio conversations within dedicated chat rooms.

These developments occur following investment activity from Elliott Management Group and Silver Lake, who acquired a significant stake in Twitter earlier in the year. Their investment was accompanied by a desire to encourage further innovation and changes in the company’s leadership. An agreement was subsequently reached to avoid the removal of Twitter CEO Jack Dorsey, secure positions on the board of directors, and appoint a board member with specialized knowledge in technology and artificial intelligence. Dorsey, however, refuted the suggestion that their involvement influenced the direction of product development.

Weekly News

Platforms

• EU privacy concerns focus on Apple’s Identifier for Advertisers (IDFA). While Apple previously informed advertisers about an upcoming feature enabling users to decline ad tracking, these recent complaints center on the initial creation and storage of IDFA itself. Furthermore, critics argue that Apple’s proposed modifications are insufficient, as they limit IDFA’s application for external parties but not for Apple’s own purposes.
• Apple’s Developer Transition Kits (DTKs) have limitations regarding app installation. These kits are designed to assist developers in preparing their applications for Apple’s silicon. However, developers will find they cannot install iOS or iPadOS applications on these kits in the same way as with M1 Macs.
• Android developers face a deadline for background location data approval. Google has notified Android developers that they must obtain approval by January 18, 2021, to maintain the ability to utilize background location data and remain available on Google Play.
• A new iOS 14.2 update is available for iPhone 12 users. Apple has released an updated version of iOS 14.2 specifically for the iPhone 12, addressing an issue where the lock screen on some devices became unresponsive to touch. This update also resolves problems related to MMS messaging and Made for iPhone hearing aids, among other improvements.
• Google Play will mandate the Android App Bundle format starting in August 2021. Google has reminded Android developers that, beginning in August 2021, all applications submitted to Google Play will be required to utilize the Android App Bundle publishing format, alongside other forthcoming changes.
• Developers can now leverage offer codes for app subscriptions. Apple is now providing developers with the ability to promote and distribute their subscriptions through the use of offer codes. These unique, alphanumeric codes can be applied either directly on the App Store or within the application itself, enabling developers to attract new customers, retain existing ones, and re-engage previous subscribers with exclusive offers. Additional guidance on implementing these codes is available.
• iOS 14.3 beta 2 suggests streamlined app shortcut launching. The second beta version of Apple’s iOS 14.3 indicates that the company intends to eliminate the need to first open the Shortcuts app when launching application shortcuts. This change addresses a common frustration experienced by users who customized their iOS 14 home screens with custom icons and widgets.

Services

• As a result of guidelines established by Apple’s App Store, both Google Stadia and Nvidia’s GeForce Now – prominent cloud gaming platforms – will be accessible on iOS devices through web applications.

Security & Privacy

• Security weaknesses within the Bumble dating application potentially exposed the Facebook preferences, geographic locations, and profile images of 95 million individuals using the platform for online dating. Bumble addressed these issues over a period of six months and asserts that no user information was actually accessed by unauthorized parties.
• TikTok is enhancing its parental control features to encompass search functionality, comment sections, and account privacy settings. The initial Family Pairing feature, released in April, enabled parents to connect their accounts with their children’s to oversee screen time, direct message activity, and the application of “Restricted” mode—a setting that curates a more carefully monitored content stream. This week’s update further empowers parents to manage the visibility of their teen’s saved videos, regulate commenting permissions on their videos, and determine whether their teen can utilize TikTok’s search capabilities.
• A significant data exposure occurred within the Go SMS Pro messaging application, potentially compromising the private photos and files of a large number of its users. The Android-based app did not respond to reports from security researchers detailing the vulnerability, a practice that typically allows companies a 90-day window to resolve issues before public disclosure.

Apps in the News

• Epic Games integrated video chat into Fortnite through a partnership with Houseparty. The company completed the acquisition of the video chat application last year. Gamers can utilize their smartphone or tablet as a webcam while playing on PC, PlayStation 4, or PlayStation 5.
• Epic Games is also pursuing legal action against Apple in Australia. This follows an ongoing legal dispute in the U.S. concerning Apple’s mandate for using Apple Pay and the associated commission fees on in-app purchases. Epic Games founder Tim Sweeney recently compared this legal battle to a struggle for civil rights in an interview this week. (Some consider this assessment to be an exaggeration.)
• Snap has acquired Voisey, a U.K.-based application that enables users to produce music tracks and videos by adding their own vocal performances. The app had previously secured $1.88 million in funding, though the specifics of the acquisition deal have not been publicly disclosed.

• Google Maps has been updated with expanded COVID-19 information and the addition of its Assistant driving mode. The COVID layer within Google Maps, available on both Android and iOS, now displays the total number of confirmed cases in a given area, provides links to local government COVID-19 resources, and indicates the occupancy levels of public transportation. The driving mode allows users to have text messages read aloud and control their music directly from within Maps.
• Facebook’s Messenger Kids has been redesigned to resemble the standard Messenger application. The updated version features a more conventional vertical chat list, including previews of messages and media, along with bold text and blue indicators for unread messages. A new tabbed navigation system has also been implemented to clearly differentiate between apps and games.
• YouTube has introduced 15-second audio advertisements targeted at users who are listening to music or podcasts while the app runs in the background.
• Apple’s Shazam has surpassed 200 million monthly active users.
• Instagram is expanding its Guides functionality and enhancing its Search capabilities. Guides now empower creators to share advice, resources, and other in-depth content within a dedicated tab on their profiles. All users can now create Guides for Products, Places, and Posts. Furthermore, users can now search using keywords, rather than being limited to names, usernames, hashtags, and locations.
• Instagram has also updated its Threads messaging application. The app now includes a dedicated tab for simplified navigation between Stories and Status updates. All users now have access to a tabbed inbox, allowing them to view Stories from all contacts, not just close friends, and the option to share content to Stories beyond their close friends list.
• Facebook has filed a lawsuit against an operator of websites that mimic Instagram. The operator reportedly scraped data from approximately 100,000 Instagram accounts using 30,000 automated accounts designed to appear as genuine users to evade detection.

• SoundCloud is introducing profile verification with the implementation of official blue checkmarks.
• The App Growth Awards have announced their list of finalists.
• Google has released iOS 14 widgets for Gmail, Drive, and Fit. The company states that Calendar and Chrome widgets will be available shortly.
• State and federal investigators are preparing to file antitrust charges against Facebook regarding its acquisitions of Instagram and WhatsApp, according to a report by The Washington Post.
• Twitter and Facebook executives participated in another congressional hearing focused on technology. The hearing largely provided lawmakers with an opportunity to discuss a wide range of topics, rather than focusing specifically on social media’s role during the election. The CEOs were questioned about the addictive nature of their apps, their algorithms, their handling of misinformation, and other related issues.

Deadpool

• Google is discontinuing its Expeditions VR app and integrating the VR tours into its Arts & Culture application. *Checks watch*… is the VR future here yet?

Trends

• Spending on U.S. mobile strategy games increased by 22% to $2.8 billion during the first ten months of 2020, as reported by Sensor Tower. Clash of Clans was the top-performing game in terms of player spending, generating nearly $262 million in the U.S. during this period.
• The most popular home screen widget applications have been installed on one in seven U.S. iPhones, according to another report from Sensor Tower. The five leading apps — Widgetsmith, Color Widgets, Photo Widget: Simple, WidgetBox, and Photo Widget — have collectively amassed 13 million iPhone installs since the launch of iOS 14. Globally, they have reached a total of 45 million installs to date.

 

Funding and M&A (and IPOs)

Language learning application Duolingo has confirmed a funding round of $35 million, resulting in a company valuation of $2.4 billion. This news was previously reported last week, but the financial details are now official. The app was previously valued at $1.65 billion earlier in the year.

Baidu is set to acquire Joyy’s Chinese live-streaming service YY for $3.6 billion. The search engine company is working to compete with emerging rivals, such as ByteDance, and video platform Kuaishou. Last year, Joyy’s YY secured a $1.45 billion majority stake in Bigo, the operator of streaming apps Bigo Live and TikTok competitor Likee.

OpenPhone has raised $14 million to develop an application that will replace traditional corporate phone systems. The funding round was led by David Sacks, founder of Yammer, through his venture capital firm Craft Ventures.

Flipkart has acquired AR startup Scapic to create a more immersive shopping experience. The terms of the deal were not disclosed.

Athlete social platform Strava has secured $110 million in Series F financing from TCV and Sequoia Capital, with participation from Dragoneer Investment Group and existing investors including Madrone Capital Partners, Jackson Square Ventures, and Go4it Capital.

Yubo has raised $47.5 million to support its social application, which features live-streaming rooms and currently has 40 million users. Existing investors Idinvest Partners, Iris Capital, Alven, and Sweet Capital participated in the round, and Gaia Capital Partners joined as a new investor.

English learning app AllRight has raised $5 million from Genesis Investments. The Ukraine-based startup combines instruction from qualified teachers with AI-powered tutoring.

ContextLogic, the company behind the mobile e-commerce app Wish, has filed for an initial public offering (IPO). Wish experienced a slowdown in revenue growth in 2019, but has seen increased growth in 2020. Revenue for the first nine months of 2019 totaled $1.33 billion, compared to $1.75 billion during the same period in 2020, representing a 32% increase.

Roblox has filed for its IPO, reporting a loss of $206 million on revenue of $589 million. The platform has 31.1 million daily active users who now spend up to 22.2 billion hours in app, a 122% increase year-over-year.

Downloads

Amazon’s GameOn

Amazon recently introduced GameOn for Android, a mobile application enabling players to capture gameplay moments in videos ranging from thirty seconds to five minutes in length. A unique “Recall” function allows for saving clips even after the gameplay has concluded. These recorded segments can then be distributed via the GameOn platform itself, or shared on other social media networks. The application is compatible with over 1,000 different games upon its initial release, featuring popular titles such as PUBG Mobile, Crossy Road, Final Fantasy Brave Exvius, and Angry Birds 2. Gamers can also utilize a built-in selfie camera to provide personal reactions and commentary to their videos. Participants who succeed in weekly contests will be awarded exclusive badges for their profiles. This release comes after Amazon made its Luna cloud gaming service available.

Google Pay

This week saw a significant overhaul of the Google Pay application for both Android and iOS platforms, accompanied by the introduction of numerous new capabilities, notably a fully functional mobile bank account. Google has collaborated with eleven financial institutions, such as Citi and Stanford Federal Credit Union, to introduce Plex, a mobile banking solution. Plex functions with accounts hosted by these partner banks, while Google Pay serves as the user interface. Plex account holders will benefit from no monthly service fees, avoidance of overdraft penalties, and no required minimum balance amounts. Users are able to make payments to both merchants and individuals directly from their account.

Furthermore, the service provides opportunities to discover discounts and earn rewards during purchases, alongside detailed spending analysis, even incorporating data from bank accounts linked outside of the application. An additional enhancement simplifies the process of dividing expenses with contacts, covering scenarios like shared dining bills, rental costs, or utility payments.

Moment’s RTRO app

Released earlier in the year, RTRO provides a platform for capturing and distributing photos and videos with a classic aesthetic. A recent update introduced “Instant Film,” a feature that allows users to recreate the look of instant photographs utilizing the application’s “analog effects engine.” The images produced through this function will replicate the distinctive quality of a photograph taken with an instant camera.