This Week in Apps: TikTok Shops, Microsoft & Apple Updates

The Ever-Evolving World of Mobile Apps

Welcome back to This Week in Apps, the definitive TechCrunch series dedicated to recapping the latest developments in mobile operating systems, applications, and the broader app economy.

The app industry demonstrates continued expansion, achieving a record 218 billion downloads and $143 billion in global consumer expenditure in 2020. Android users alone spent an astounding 3.5 trillion minutes utilizing apps last year. Furthermore, app usage in the U.S. has surpassed the time dedicated to watching live television. Currently, the average American dedicates 3.7 hours daily to live TV, but now spends four hours per day on their mobile devices.

Apps are not merely a source of leisure – they represent a substantial business opportunity. Companies prioritizing mobile platforms held a combined valuation of $544 billion in 2019, a figure 6.5 times greater than those without a mobile focus. In 2020, investors channeled $73 billion in capital into mobile companies, marking a 27% year-over-year increase.

This Week in Apps provides a centralized resource for staying informed about this rapidly changing industry, offering the latest news, updates, startup funding announcements, mergers and acquisitions, and recommendations for new apps and games.

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Top Stories

TikTok Prepares for Advertisers and E-commerce Expansion

During its online event, TikTok World, the company unveiled a series of new initiatives, product enhancements, and advertising formats designed to attract more marketers to its platform. On the e-commerce front, TikTok broadened its selection of shopping partners beyond its initial pilot program with Shopify. Earlier this year, the video platform initiated TikTok Shopping in the U.S., U.K., and Canada, enabling Shopify merchants with a TikTok For Business account to add a Shopping tab to their profiles and synchronize their product catalogs with the app, creating mini-storefronts.

TikTok is now extending access to new brand partners for TikTok Shopping, including Square, Ecwid, and PrestaShop, with Wix, SHOPLINE, OpenCart, and BASE to follow shortly. It also introduced a more comprehensive suite of solutions for TikTok commerce, encompassing ad products and, later this year, a TikTok Shopping API. The app now features three in-feed ad products for online shopping: Collection Ads, featuring swipeable and tappable product cards; Dynamic Showcase Ads (DSAs), which are automatically generated; and Lead Generation ads.

The company also presented its strategy for boosting advertiser investment, emphasizing “brand safety” and launching several new, interactive ad formats. These range from clickable stickers to “Choose Your Own Adventure”-style ads, “super likes,” and more. The ads are intended to encourage TikTok users to interact with content through taps, swipes, and gestures. There’s even an ad format where users can direct the storytelling, and a dedicated page connecting users with brand messaging directly within the TikTok app.

To date, marketers haven’t allocated as much of their advertising budgets to TikTok compared to established platforms like Facebook and Instagram. However, TikTok’s parent company, ByteDance, has made significant gains in the global ad market, with annual revenue across its apps more than doubling in 2020 to reach $34.3 billion. In the U.S., TikTok was projected to generate $500 million in 2020, up from $200-$300 million the previous year, according to a report by The Information. (This figure includes in-app purchases.)

As TikTok expands its ad business, ad prices have steadily increased. Bloomberg reported this summer that home page takeover ads, its most valuable advertising space, were reaching over $2 million on peak days, such as holidays. Reuters also noted a 500% increase in the number of advertisers running campaigns in the U.S. from the beginning of 2020 to the end, although ad sales remained relatively small compared to larger platforms. This trend continues into 2021. In fact, TikTok wasn’t individually listed in eMarketer’s recent tabulation of U.S. ad revenues, instead being grouped into an “Other” category with smaller social networks (like Tumblr), which collectively are expected to reach $1.3 billion in 2021.

The company also announced this week a new milestone: 1 billion monthly active users worldwide.

Apple Now Allows User Reviews for Its Own Apps

Apple has leveled the playing field by enabling users to rate and review its first-party apps available for download in the App Store. This means users can now provide feedback on built-in apps like Mail, Music, News, Stocks, and Calculator, among others. User sentiment varies across apps. News currently holds a 2.5-star rating, with complaints about ads even in the paid version, personalization issues, and prompts to subscribe to Apple News+. Podcasts has a 2-star rating, while Apple Music has 3.5 stars. Fitness is performing well with 5 stars, and the Wallet app has a solid 4-star rating.

This change likely stems from increased regulatory scrutiny surrounding the App Store, which critics argue gives Apple an unfair advantage over competitors. This could have included the lack of public user feedback on Apple’s own applications.

Microsoft Opens Windows Store to Third-Party Storefronts

Last year, Apple argued its commission rate was justified because the broader market for apps and games had established a standard 70/30 split. At the time, it cited policies of other major app stores, including the Amazon Appstore, Galaxy Store, and Microsoft Store, as comparisons.

Apple might prefer that attention remain off those app stores now. Especially considering the updated policies of the Microsoft Store!

In June, Microsoft updated its revenue share terms and policies to offer more favorable conditions. App developers utilizing Microsoft’s payment platform will now receive an 85/15 revenue split, while game developers will see an 88/12 split starting August 1. More importantly, (non-game) app developers are permitted to use third-party payment processors within their apps and retain 100% of the revenue.

This week, the Microsoft Store announced it will allow third-party app store apps. The company plans to make these apps discoverable within the Microsoft Store on Windows, including Amazon and Epic Games, over the coming months. These stores are not required to list their apps and games within the Microsoft Store if they choose not to, and can utilize their own payment processors and retain the revenue.

While presented as a win for an open ecosystem, the impact on consumers is limited. Third-party apps and app stores, like the Epic Games Store, have always been downloadable on Windows devices.

However, in the current regulatory climate, this is a strategic move. It potentially reduces regulatory scrutiny that could have targeted Microsoft, as the company still benefits from revenue generated by hosted apps and games. Microsoft can now demonstrate that developers on its platform have choices – they can distribute apps with their own payment mechanisms and package games into storefronts to avoid commissions.

This shifts the focus back to Apple and Google as platforms perceived as slow to adapt to market trends. It could also shield Microsoft from future legal challenges or app store legislation. Furthermore, Microsoft’s expanded and redesigned store – which will include storefront apps, PWAs, and alternative browsers – has a greater chance of becoming a preferred destination for users.

The issue of third-party storefronts has been a central point of contention between Epic Games and Apple, with Epic seeking to offer its own distribution system within the App Store to reach iOS users and retain revenue. However, this issue predates the recent Epic-Apple dispute. Apple has historically banned third-party app store apps, citing concerns about artificially inflated app store rankings. Even the claim that these apps simply offered a new way to discover apps was seen as a threat to Apple’s control over discovery and associated advertising revenue.

While a PC platform like Windows is not directly comparable to a closed ecosystem like iOS and the App Store, Apple itself previously used Microsoft and others as points of comparison. Apple stated “everyone else was doing x,” and should do the same regarding commissions. Now, the company must hope regulators recognize the nuances between a Windows app store and its own.

Weekly News

Apple Updates

• Some users are reporting CarPlay issues with iOS 15 and iPhone 13, causing CarPlay to crash when playing music through Apple Music or third-party apps like Spotify.
• The latest iOS 15.1 beta fixes the “Unlock with Apple Watch” bug that prevented users from unlocking their iPhone 13 with their Apple Watch.
• Apple reminded developers to prepare for the iPad mini’s new display, advising them to utilize Auto Layout and size classes for optimal interface adaptation.

Android Updates

• Google announced the return of the #AndroidDevSummit, taking place October 27-28, offering developers the latest updates and networking opportunities.
• Google published a post addressing developers’ questions about the new Android Game Development Kit.

E-commerce & Food Delivery

• Deliveroo entered the grocery delivery market with Hop, a new service delivering fresh food and groceries in as little as 10 minutes, in partnership with Morrisons.

Augmented Reality

• Snap and WPP partnered on augmented reality with The AR Lab, aiming to help brands create immersive consumer experiences, including e-commerce solutions.

Fintech

• Robinhood partnered with Snap to bring its “Snacks” videos to Snapchat’s Discover section, offering easily digestible financial news and education.
• Google is abandoning its mobile banking service Plex, according to The WSJ.

Social

• Instagram paused plans for a version of its app aimed at children under 13, following critical reporting on the app’s potential negative impact on teen mental health.
• Facebook faced scrutiny in Congress over the impact of its apps on teen mental health, following the release of internal research revealing awareness of negative effects.

• TikTok settled a lawsuit with the original voice actress for its text-to-speech feature, after allegations of unauthorized use of her voice.
• TikTok announced its first NFT drop, featuring content from creators like Lil Nas X and Grimes.

Messaging

• Messenger rolled out cross-app group chats, allowing users on Facebook Messenger and Instagram to join the same conversations.
• Google’s Gboard is discontinuing its “Minis,” the selfie-based sticker feature.

Streaming & Entertainment

Clubhouse added clips, replays, improved search, and spatial audio for Android, enabling asynchronous listening and podcast-like functionality.

Spotify rolled out listener polls and Q&As to all creators through Anchor, allowing for interactive engagement within podcasts.

Spotify addressed a bug causing battery drain on iOS 15, suggesting users disable Background App Refresh as a temporary solution.

Disney+ surpassed $1.5 billion in worldwide consumer spending on its mobile app, according to Sensor Tower.

Gaming

Netflix acquired Night School Studio, the developer of Oxenfree, marking its first gaming studio acquisition.

BlueStacks launched BlueStack X, a cloud gaming service offering free streaming of Android mobile games across various platforms.

Epic Games made its parent verification system available for free, helping parents consent to their children’s gaming activities.

Tencent’s “Honor of Kings” exceeded $10 billion in player spending, setting a new record for mobile games.

Health & Fitness

• The vaccination app Portpass exposed personal information, including driver’s licenses, of hundreds of thousands of users.

Travel & Transportation

Uber, Booking.com, Google Maps, and Waze dominated summer travel app downloads, with Google Maps being the most downloaded.

Utilities

Apple Maps rolled out 3D maps to more cities, including London, LA, New York, and San Francisco.

Google Maps added a wildfire layer, displaying nearby fires on the map.

Productivity

Apple updated its iWork suite, adding live video functionality to Keynote and enhancements to Pages and Numbers.

Yahoo is developing a new calendar app called Day, created by the co-founder of Sunrise.

Government & Policy

• South Korea requested compliance plans from Apple and Google regarding its new app store law banning forced use of in-app payment systems.
• Google criticized EU antitrust regulators for overlooking Apple in a case related to Android’s anti-competitive practices.
• A new payments rule in India will impact tech companies, requiring additional approval for auto-renewable transactions.

Security & Privacy

• The Android malware GriftHorse infected over 10 million devices, subscribing users to premium SMS services.
• Mozilla previewed new Firefox on Android features to protect user passwords from breaches.

Funding and M&A

🤝 Netflix acquired Night School Studio, the independent game developer known for Oxenfree.

🤝 French mobile gaming company Voodoo acquired Beach Bum, a game studio specializing in tabletop and card games.

💰 PSPDFKIT raised €100 million ($116 million) to continue developing its document collaboration software.

💰 Stockholm-based insurance tech startup Hedvig raised $45 million in Series B funding.

💰 Fintech app Betterment raised an additional $160 million, including a $100 million credit facility and a $60 million Series F equity round.

Downloads

Pearl: Wellness Reminders

Pearl is a simple, yet effective app that transforms Apple’s push notification system into a source of motivation and positivity. Users can add images to motivational quotes or custom messages, receiving reminders throughout the day. Mac, iPhone, and iPad are supported. Free download with a $1.99 one-time in-app purchase for multiple notifications.

Quiver Quantitative

Quiver Quantitative provides access to alternative data, pulling information from public records and message boards. The app was recently updated with dashboards tracking stock trading by U.S. Representatives, off-exchange trading, and Reddit cryptocurrency discussions.