What ads to expect, what’s at stake

Apple will hold its first product launch event of the year on Tuesday.

On the cover: The new iPads Pro is expected to be the main new hardware products that Apple introduces. Although Apple’s iPad business showed sluggish growth in the mid-2010s, it has experienced a boom over the past year as consumers turned to tablets while working and playing from home during the pandemic.

But beyond the new artifacts, Apple faces a decade of competition and battles in the courtroom on numerous fronts, including Facebook, Epic Games, Spotify and legislators and regulators around the world. It may seem like another event for the iPad, but there’s a lot of tension bubbling beneath the surface, much of which could threaten Apple’s next wave of growth as it expands to more digital services and new forms of computer technology.

Here’s a quick rundown of what situations are ahead of the Apple event on Tuesday:

Facebook has been waging a full-blown public relations war against Apple for an imminent change to iPhone software that will give users the option to block apps to track specific ads. Facebook has said the measure will hurt small businesses that rely on advertising to provide free digital services and programs. Apple has said the change will give iPhone owners a better understanding of how apps track them and give customers the option to block that tracking.

But the bitterness between the two companies is much deeper than that.

Both companies are working on technology that they believe will launch the next wave of computing after the smartphone, thanks to computerized glasses that use augmented reality. Facebook is expected to launch its first pair of AR glasses as soon as this year. Apple could launch its first headphones in 2022. If the platform takes off, you’ll have both Facebook and Apple dominating it for AR, just as Apple fought Microsoft in the era of PCs and Google and Samsung ( Android) on the current smartphone. era.

This struggle is far from over. In fact, it is just beginning.

On May 3, Apple and Epic Games, creator of the popular game Fortnite, will go to trial in their dispute over how Apple manages payments from iOS apps. Last fall, Epic Games intentionally changed the iOS version of Fortnite to allow users to pay for Epic directly, circumventing Apple’s App Store rules. Apple finally removed Fortnite from the App Store and Epic had a lawsuit ready.

Epic’s complaint against Apple echoes what we’ve heard from several iOS app makers over the past decade: Apple typically reduces digital in-app transactions and sales of paid apps by 30%. The developers of the Epic field claim that the so-called “Apple tax” gives Apple too much influence, as it only allows users to download software from their own store. Apple does not allow alternative app stores like Google does on Android.

Major app makers like Spotify and dating company Match Group support Epic’s demand. Many of these developers also formed a group called the Coalition for App Fairness, which has recently pushed state legislatures in Arizona and North Dakota to pass laws governing Apple’s App Store. If Apple loses the legal battle or is forced to make concessions to Epic and other app developers, it could slow the growth of Apple’s App Store revenue. (The App Store generated gross sales of about $ 64 billion in 2020, compared to $ 50 billion in 2019).

Apple has said it collects fees in part to keep the App Store safe so its customers can trust the software they download. The company has recently changed its fee structure so that it will only reduce 15% of applications that generate less than $ 1 million a year.

Apple’s control over the App Store was also the key focus of an antitrust report from last year’s Congress that found that Apple uses its control “to create and enforce barriers to competition and discriminate and exclude rivals while preferring their own offers “. Apple denied the report’s findings and said its fees match other digital software stores.

In addition to legislation in Arizona and North Dakota, U.S. regulators have reportedly investigated Apple over a formal antitrust complaint.

Apple’s dependence on China is a vulnerability that could be exploited by rivals. Most of Apple’s products, including the iPhone, are assembled in China before being shipped to customers around the world.

Although Apple has a small manufacturing presence in the US, most go to China. Apple’s reliance on supply chains and assembly in the country is something rivals can point to amid growing geopolitical tensions between the U.S. and China.

And it’s already happening.

Earlier this month, Peter Thiel, a billionaire tech investor and Facebook board member, said Apple is less likely to face China because of its deep ties to the country. (He also had similar criticisms of Google’s efforts in China.)

“Apple is probably what structurally is a real problem, because the entire iPhone supply chain is made in China,” Thiel said. “Apple is the one that has real synergies with China.”