2025-04-25 17:49:31
Clear as Mud
Link to: https://ec.europa.eu/commission/presscorner/detail/en/ip_25_1086
After John Gruber linked to this press release from the EC the other day, it took me a bit of time to figure out that this is actually completely unrelated to the fine they levied on Apple for a DMA breach. To be clear – and yet no less confusing! – the above is about other DMA breaches.
Specifically, Apple's fine was for:
Under the DMA, app developers distributing their apps via Apple's App Store should be able to inform customers, free of charge, of alternative offers outside the App Store, steer them to those offers and allow them to make purchases.
The Commission found that Apple fails to comply with this obligation. Due to a number of restrictions imposed by Apple, app developers cannot fully benefit from the advantages of alternative distribution channels outside the App Store. Similarly, consumers cannot fully benefit from alternative and cheaper offers as Apple prevents app developers from directly informing consumers of such offers. The company has failed to demonstrate that these restrictions are objectively necessary and proportionate.
But the link up top is to another press release, issued on the same day, about two other DMA matters. The first, was good news for Apple, the second, less good, but just "preliminary":
Following a constructive dialogue with Apple, the Commission has decided to close its investigation into Apple's user choice obligations under the Digital Markets Act (DMA). The Commission has also informed Apple of its preliminary view that Apple's contract terms concerning alternative app distribution breach the DMA.
Why the EC couldn't bundle all of these complaints together, I don't know. But why restrict your ability to fine to one all-encompassing violation when you can fine for a hundred different once, no matter how arbitrary, I suppose.
In other words, while the $570M fine is tiny relative to what it could be (and relatively small for Apple overall), the EC could be in the process of fining Apple $500M+ a number of times for different violations. And unless they comply within the (comical) 60 day window, they might be doing so in perpetuity – with escalating fines. This compounding would constitute an actual pounding to Apple's bottom line. And why they need the Trump administration to step in.
Which they clearly will be doing.
One has to wonder if Apple doesn't now regret complying with any of the EC's initial requests here. They gave the mouse the proverbial cookie with the app defaults and browser choice screens. Now they want the glass of milk. Specifically:
Under the DMA, Apple is required to allow for the distribution of apps on its iOS operating system by means other than through the Apple App Store. In practical terms, this means that Apple should allow third party app stores on iOS and apps to be downloaded to the iPhone directly from the web.
Apple, of course, did make some tweaks to technically satisfy both demands. But the EC believes Apple also put in place blockades to make it decidedly unattractive (or impossible) to use such features, in the form of both the Core Technology Fee, but also the rules around who can utilize web distribution (which seemingly locks out 99% of developers from being able to utilize it). I don't think the EC is wrong here to highlight both issues, but they also don't give much of anything in terms of guidance for what Apple should or should not be allowed to do to comply.
Back to Gruber:
So is the entire idea of the Core Technology Fee disallowed? Or is the fee too high? Does Apple need to just make app distribution free and unfettered, no fees, no restrictions?
And with regard to web distribution, is Apple allowed to restrict it in ways which they'll argue is in the name of security? Even if it's only what they do in terms of signing developers on macOS? I'm sort of holding out hope that one of the reasons why Apple made this so comically restrictive to start is that they're working on a better solution – perhaps to be unveiled at WWDC. I mean, I'm not holding my breath there, obviously. But beyond the EC, it sure feels like there's a dam about to burst with regard to developers and Apple...
M.G. Siegler
M.G. Siegler
M.G. Siegler
2025-04-25 04:15:00
A couple strategies have been in the news the past few weeks thanks to the ongoing Big Tech™ antitrust trials. “Buy or bury” and “build versus buy”. They sound similar, but they’re obviously quite different. And it feels like we’re going to hear a lot more about both in the age of AI...
2025-04-24 18:44:19
There was a time when HBO was the most admired and coveted brand in television. Yes, it was the era before streaming, but it wasn't all that long ago. And then in walked AT&T with every bad idea in the book. So bad that they quickly offloaded the entire Warner Bros parent entity to David Zaslav to merge with his Discovery network. Cut to last year:
A group of Warner Bros. Discovery executives gathered in a conference room at the Beverly Hills Hotel last spring to discuss a hard truth: Their Max streaming service was kind of a letdown.
It wasn’t considered a must-have or utility service, like Netflix and Amazon Prime, but more of an add-on item, a strategy officer told the team, including Chief Executive David Zaslav and Casey Bloys, who runs content for HBO and Max.
Over snacks, coffee and Diet Cokes, they plotted Max’s revival.
“We said, ‘OK, we’ve got to sort of refocus our bull’s-eye,’” said JB Perrette, CEO and president of global streaming.
This piece does read a bit puffy – thank god we got the "snacks" and "Diet Cokes" detail in there – but it still directionally points to the problem WBD recognized and aimed to fix with Max. A problem of their own making:
When Zaslav unveiled plans for the Max streaming service two years ago, he declared, “this is our rendezvous with destiny.”
That destiny, as he laid it out at the time, was to be “the place every member of the household can go to.” It offered critically acclaimed fare from HBO, popular reality shows from Discovery’s cable networks and lots of children’s programming.
But most consumers already had a streaming service for every member of the household. It was called Netflix.
At the time, Max's approach seemed fairly reasonable – in particular with all of the Discovery comfort content that no one else had. The problem, as it turns out, is that such content doesn't seem to drive subscribers. It may be good as filler content to keep them around, but Max wasn't growing as WBD would have liked. And part of that was perhaps that content, which just completely muddled the message of what Max was supposed to be. Again, they thought they could be the sort of "everything" streamer. But yes, Netflix already staked that claim. And WBD was never going to be able to out-Netflix, Netflix.
So they pivoted, as least from a content-focus perspective:
Max’s second life is more streamlined, with adult-oriented content like “The Pitt” and “Hacks,” and true-crime offerings such as the documentary “Quiet on Set: The Dark Side of Kids TV.” And HBO’s highly anticipated “Harry Potter” series is scheduled to debut in 2026.
“We’re not fighting for the more-is-better game,” Perrette said. “We’ll let others deal with the volume.”
Well, they were fighting that game – as was everyone in those earlier days of streaming. But again, no one could beat Netflix there. It was stupid, not to mention insanely expensive, to try. In hindsight (though not hindsight for all of us), only Sony made the right decision in continuing to partner with Netflix rather than build yet another streaming service and burning billions of dollars in the process.
But everyone has now pulled back on that spend and volume – including, in ways, Netflix itself. Wall Street basically dictated that everyone else change their strategy, and Netflix, having won the arms race, could afford, quite literally, to pull back a bit as well.
Everyone knows the old famous quote from Ted Sarandos "The goal is to become HBO faster than HBO can become us" – one which he now says he regrets, because it was too shortsighted. Netflix is now far larger than HBO ever was. Not to mention more powerful – a $400B company perhaps on their way to $1T. But what's really wild about the quote, which he said in 2012, just as they were embarking on their original content efforts, is that it failed on both sides! While Netflix failed to become HBO in a good way, HBO failed to become Netflix in a bad way.
And so now, in a way, the goal is for HBO to become HBO again faster than anyone else can become HBO. Technically, for Max to become HBO, I suppose. (Yes, my headline quip was better: "So what you’re saying is: HBO became HBO before HBO could become Netflix.") And it seems to be working,1 with the end of Game of Thrones transferred over to House of the Dragon (though there are some of the same worrying issues already cropping up there...) and the end of Succession transferring over to The White Lotus (and perhaps Industry). And yes, The Last of Us, the current zeitgeist-y show thanks to a certain element this past week which I won't spoil but I'm still recovering from.2
I long ago predicted that I thought Apple TV+ would actually become the new HBO. And I think it has in many ways, partially thanks to Apple's relatively meager content output, which has ended up being a strength in terms of quality (aside from their movies, which is another matter) but a weakness when it comes to growth (and churn prevention) for the actual streaming service.
Speaking of, WBD has also re-learned another important lesson: the power of bundling:
One key part of Max’s makeover was a bundling partnership it launched with Disney last summer in which subscribers can purchase Max, Disney+ and Hulu at a significant discount to their respective stand-alone prices.
It has been a major subscriber driver, with high retention rates, and Warner executives have said they are eager to extend the partnership overseas.
With more of a focus on quality over quantity, these bundles make even more sense. It will let both Max and Apple TV+ try to be HBO, perhaps they should bundle. Perhaps Apple should bundle them. Perhaps that's still in the cards...3
M.G. Siegler
M.G. Siegler
M.G. Siegler
1 Though the pull-back on children's content is disappointing -- in particular Semsame Street, which is leaving them in a tough spot, it seems.
2 Something not shocking to those familiar with the game, of course. But the timing still was likely a surprise to everyone.
3 Speaking of timing, this story is also interesting given the fact that WBD just had two hits back-to-back at the box office in the forms of The Minecraft Movie and now Sinners, after quite a few flops, to the point where studio chiefs Pamela Abdy and Michael De Luca were widely reported to be in trouble. Just a few weeks later, and they seem safe. And WBD is doing this victory lap, of sorts. Perhaps to drum up some M&A interest?...
2025-04-24 04:10:21
Microsoft, Google, and Amazon all have a fairly straightforward pitch for their CapEx spend: AI will increase the top-line sales of the company and eventually the bottom-line profit. But with the other big captain of AI CapEx, Meta, the math has always been decidedly more murky. That's because they neither sell their AI models nor sell cloud services that would directly take advantage of said models.
But Meta is always quick to note how the open-sourcing of Llama will have "halo" benefits for the company, just as they've seen with open sourcing their data center projects and things such as PyTorch. And, sure. Undoubtedly, such a move should help to drive down costs while at the same time, helping Meta competitively if Llama gains widespread adoption by others. And there's a bonus side effect that it would hurt their competitors offerings by creating a massive amount of pricing pressure, as long as Meta's models are on par with their rivals (and they're close, if not quite there, despite Mark Zuckerberg's assurances).
On paper, that all makes sense. Again, especially because Meta has run this same general playbook before. But there's also a big difference on that piece of paper...
2025-04-24 00:32:26
Here's perhaps the least shocking news to come out of Google's antitrust remedy trial, but still makes for a good headline: 'OpenAI Would Buy Google’s Chrome Browser, ChatGPT Chief Says'. As Leah Nylen, Shirin Ghaffary, and Davey Alba relay today:
OpenAI would be interested in buying Google’s Chrome browser if a federal court orders it to be spun off, the head of ChatGPT said in a court hearing Tuesday.
“Yes, we would, as would many other parties,” Nick Turley, OpenAI’s ChatGPT chief said in response to a question about whether the company would seek to buy Google’s browser.
Yes, that's right, OpenAI would be open to buying a product with a few billion active users. And probably the iPhone business from Apple too. Google Search perhaps? Why not! Very magnanimous of them.
Of course, none of these businesses are for sale. Though the Justice Department would sure like Chrome to be, which is exactly why they summoned Turley to the stand. And Turley said exactly what they were hoping he would say. Because there seems to be confusion right now as to whether or not Google selling off Chrome would make any sense as a remedy here – including, notably, from the judge in this case, Amit Mehta.
Make no mistake, per Turley's point, a lot of entities would buy Chrome. That's not the question. The question is whether or not it would actual solve for what the law is trying to solve for here: the Google Search monopoly. As I wrote back in November when this notion was first put out there as a potential remedy:1
The government would argue that consumers will benefit as they'll no longer be as locked into Google Search – especially if this is coupled with an order to end any default search agreements with other browser makers. But unless those other browser makers choose another search engine as the default, it feels like Google Search will not be impacted very much. It is interesting to think if that would impact the uptake and growth of Gemini and a few other Google products, such as their payment services, but that's not what is on trial here.
It's not clear who could pay what for Chrome. Bloomberg throws out the notion of OpenAI being one potential home, but would the government really want that? That would risk anointing – well, really entrenching – a king in a new field. OpenAI's main benefactor, Microsoft could acquire it, especially now that their own Edge browser is all-in on Chromium. But they would probably just use it to bolster not just Bing but also their own AI products and services. And that would be extremely awkward for the government as well.
So yes, OpenAI is one idea that could potentially put a dent into Google Search. Because it's already naturally happening even without ChatGPT being a default in Chrome. And this would hand the service roughly 3.5 billion users overnight.2 That's not going to happen.3 Beyond the fears of the law playing kingmaker, there's the pesky problem of a price. How much is Chrome worth? Google would probably argue for something in the range of hundreds of billions of dollars given all of those active users. OpenAI would have to raise another round.
Back to Nylen, Ghaffary, and Alba:
Currently, OpenAI’s chatbot, ChatGPT, has an extension in Google’s Chrome browser available for users to download. But having Chrome be more deeply integrated into OpenAI would allow for a better product, Turley said.
“You could offer a really incredible experience” if ChatGPT was integrated into Chrome, he said. We would “have the ability to introduce users into what an AI first experience looks like.”
Could you really though? I mean, sure, it would be better than what you could do with an extension, but you'd also have all the legacy cruft that Chrome has built up over the years. A lot of technology mainly in there to help Google do Google things, not to help do OpenAI do OpenAI things. It would be better to build a browser from the ground up for ChatGPT.
As I wrote a few days after the post above, in a post entitled, Forget the Fate of Chrome, Focus on the Fate of the Browser:
And with that in mind, I do think it makes sense for OpenAI to have a browser. They shouldn't buy Chrome, nor should they be allowed to for all the reasons discussed. But they should do what Google did back in the day and build it from the ground up to tailor it for their own vision of the future of the internet – complete with a new "Omnibox" that is truly "omni". And so the reports (and hires) suggesting that they're working on such a browser makes sense, of course.
Now, you might argue that their resources are better spent working on what's next after a web browser. And yes, they should be doing that too – and seemingly are. But an OpenAI web browser product right now reminds me not of Chrome, but of Google's old toolbar for Internet Explorer back in the day. One of the early projects which, much like Chrome itself, was led by none other than... current Google CEO Sundar Pichai. This was their way to get a toehold in the market at the time. And it worked.
You might say that the ChatGPT Chrome extension – pretty aggressively installed and implemented alongside the new Search product – is OpenAI's version of this. And it may be. But I think a re-imagined browser tailored around ChatGPT would be better placed to gain a toehold within our current tech environment. Until we get to the AI wearable product or whatever is actually next.
Buying Chrome wouldn't be about this. It would be about distribution, pure and simple. And that's exactly what Turley testified was one of OpenAI's biggest challenges right now. So yes, they'd happily buy Chrome! Because they're beholden to the phone and PC makers for that distribution until they can invent that next magical device. Which again, is why they should build a browser. A case I made yet again in January after trying out OpenAI's 'Operator' agent:4
Imagine a new web browser where interaction with various AI agents is the primary input – including ones for browsing the web, of course. It still has a lot of the stuff you know and need, but adds other elements specific to AI, and removes a lot of cruft that is no longer needed. It's a browser you can use, but it's built just as much with your 'Operator' in mind. And it doesn't even necessarily need a screen to operate. That's how you break Chrome's dominance. And perhaps Google's.
We've been hearing the 'build vs. buy' debate a lot the past few weeks in the context of these antitrust trials. Not just with Google, but with Meta too. They opted to buy Instagram and WhatsApp, but couldn't buy Snap, so they effectively built Instagram into their own version of it. With OpenAI here, as much as the government would like us to believe they could buy Chrome, it's just not happening. Nor should it. Instead, OpenAI should build their own version.5
Back to my conclusion in November:
Go back to that first point: a web browser remains the most-used and thus, most important piece of software for nearly everyone on the planet.
One more thing: Speaking of distribution, OpenAI obviously has their deal in place with Apple – which Apple should probably be pushing a lot harder. But perhaps one reason why they're not right now, despite their own internal AI fiasco, is because there may actually be a financial arrangement in place after all. As Erin Woo relayed from the Turley comments at the trial today for The Information:
On the witness stand on Tuesday, Turley said OpenAI made its technology available to Apple to “power iOS features.” The integration operates “as an overflow,” Turley said: if the iPhone’s Siri assistant can’t answer a question someone asks by itself, it refers the question to ChatGPT.
Asked by the judge overseeing the case, Amit Mehta, how the integration worked financially, Turley said “at a high level, we offer a share of our revenue.”
OpenAI had expected the integration would give ChatGPT increased exposure to consumers, helping it sell more paid subscriptions to its ChatGPT.
That reads like perhaps OpenAI is sharing a cut of the revenue they earn when people upgrade to ChatGPT Pro accounts, rather than just from standard usage. Still, if Apple really did go all-in with ChatGPT, you'd imagine there would have to be some sort of new, massive deal.
M.G. Siegler
M.G. Siegler
M.G. Siegler
1 Which I had guessed would be coming as a potential option back in October.
2 Assuming OpenAI was allowed to make ChatGPT the default in their newly-owned browser!
3 And if this were proposed to Google, one also imagines their response would be something like, "literally anyone but them."
4 A product which, incidentally, runs on a custom version of what else, Chrome!
5 They could even use Chromium! Well, provided the government didn't force Google to sell Chrome and thus putting that project in peril too.
2025-04-23 19:18:04
With Team Trump now back at home after a quick trip to Europe to discuss trade deals,1 the EC has come back out of hiding:
The European Union fined Apple and Meta Platforms hundreds of millions of dollars and ordered the companies to comply with the bloc’s tech rules, a move that risks ratcheting up tensions with the Trump administration as EU officials pursue trade talks.
The European Commission, the EU’s executive body, on Wednesday slapped Apple with a fine of 500 million euros, equivalent to about $570 million. It fined Meta €200 million.
Oddly, the WSJ didn't want to do the Meta math for you – this is breaking news – so I will: €200 million is about $230M. And that's notable because of what it's not. Specifically, $230M is not $16.45B. And $570M is not $39.1B. Those latter numbers would have been 10% of Meta's and Apple's annual worldwide revenue, respectively. And that's the amount the EC says that it could have charged these companies for failing to comply with the DMA.
In other words, the EC came out swinging with kid gloves.
This is hardly surprising. With the turnover in leadership amongst the EC late last year, it seemed like the group may start to take a different approach to regulating Big Tech. While they still clearly aimed to follow the mandate to go after Apple, Meta, and the like, they also seemed to be taking into account the damning report from Mario Draghi, the former president of the European Central Bank (and former Prime Minister of Italy), which took the EU to task over their approach to competition. They were finally starting to read the room, meaning, the world.
And then Donald Trump was elected. Again. And with that came the promise that if anyone was going to regulate Big Tech, it would be America, and not our neighbors to the east. And then came the tariffs. And so again, when Trump was in town last week, reports stated that the EU decided to delay announcing the fine on Apple and Meta – presumably (and not coincidentally) until he was gone again and couldn't confront them in person about it. And here we are.
But again, this is kids glove stuff. Both Meta and Apple are saying they'll appeal, because of course they will since the fine was not $0 and because the President now seemingly has their backs. The President will want them to appeal. But this is essentially pocket change for both companies.
Of course, the fines can keep coming. And both have a mere 60 days to get into compliance with the rules which range from vague (with Apple) to borderline insulting (with Meta):
The commission also issued cease-and-desist orders against both companies, which target business practices that are an important part of their revenue streams, and could have a bigger impact than the fines.
It ordered Apple to remove what it said were technical and commercial restrictions on app developers’ ability to inform users about cheaper and alternative ways to buy digital products outside the company’s App Store.
The commission also said it is still evaluating whether an option Meta has for several months given European users to see “less-personalized ads” on Instagram and Facebook without paying a subscription fee complies with the cease-and-desist order—raising the specter of further changes. The EU fine covers a period last year when Meta required European users to agree to seeing personalized ads on those apps, or pay for an ad-free subscription.
Fines aside, this will be the real stand-off. Are Apple and Meta going to tweak their services in the next couple of months or risk another fine? Does the EC dare fine again or even escalate those fines to be more meaningful? Does Trump combat this move with new tariffs on the EU? The EC may have just brought those kid gloves into the ring with a sleuth of grizzly bears.2
Update April 24, 2025: As you might expect, the US government has already weighed in on the topic. "'This novel form of economic extortion will not be tolerated by the United States,' a White House spokesperson said."
M.G. Siegler
M.G. Siegler
M.G. Siegler
1 And yes, per the internet memes this week, to meet with the Pope in what was sadly his last official visit.
2 Yes, that's the right word, look it up!
