Hello readers and welcome back!
Last week I wrote about the problems Axie Infinity is facing after a $625 million heist. This week I’m talking about Apple and crypto.
If you like my ramblings follow me on twitter and subscribe to my new crypto newsletter chain reaction
the big thing
This week my colleague Sarah wrote an interesting story about an “NFT” app on the App Store that Apple suddenly seemed to ban even though it had been publicly running for months. Apple had argued that the app was misleading consumers by selling “NFTs” that couldn’t be resold and weren’t even stored on a blockchain. The app seems a bit dodgy in my opinion, but that’s not necessarily the app developer’s fault; The app seems designed to live in the gray area of Apple’s nonexistent guide to NFTs. (It’s worth noting that Apple somewhat surprisingly reintroduced them to the App Store within an hour of our story going live.)
This whole little saga prompts a more interesting question: What exactly are Apple’s plans for NFTs?
On the one hand, I am sure that Apple would like nothing more than to explicitly ban NFTs in the App Store. Apple has argued that a key area of the App Store’s utility is to protect users from fraud – something that’s quite difficult in today’s NFT environment. Regulating the industry within the walled garden of its app store sounds like a nightmare, something that would essentially force Apple to build its own internal SEC.
But, and it’s important but, Apple also loves money; more specifically, service revenue from the App Store.
Gaming is the most popular industry on the App Store, bringing in tens of billions of dollars in annual revenue for Apple. The prospect of gaming companies using NFTs extensively over the next decade seems increasingly likely, and losing that revenue would destroy Apple’s grip on in-app payments for mobile gaming.
But how does Apple settle its IAP in-app payment system with NFTs and blockchain assets?
While individual apps might be able to justify Apple’s tax on the primary sale of NFTs, there’s no way the same fees could be charged on secondary peer-to-peer sales of NFTs already owned. NFT storefronts like OpenSea and Rarible have already published apps to the App Store, but these native apps only allow users to view NFTs — and not interact with their storefronts at all. Most legitimate NFT startups are considering how to operate on mobile, and Apple’s withholding of clear guidelines could encourage more developers to invest in web-based experiences that bypass App Store rules.
One thing that’s pretty clear is that if Apple creates a special exemption for NFTs in its own App Store rules, it will do so on its own terms. You could take different paths; I could imagine a world where Apple could only allow certain assets on certain blockchains or even build its own blockchain. But Apple’s path to user experience control will most likely depend on Apple being directly involved in creating their own smart contracts for NFTs, which developers may need to use to comply with App Store rules.
This could easily be justified as an effort to ensure consumers have a consistent experience and can trust NFT platforms on the App Store. These smart contracts could send Apple royalties automatically, leading to a new pipeline for in-app payment fees that could persist even across transactions that took place outside of the Apple ecosystem (!). More complex features could also be built in, allowing Apple to handle workflows like voiding transactions.
Needless to say, any of these moves would be highly controversial among existing developers. Apple would make regulations on how smart contracts are written and which ones can be used, which would mean a big change in the crypto world and cause too much turmoil in the developer ecosystem. But I think it’s clear that Apple will have a hard time ignoring this market for much longer.
Here are a few stories from this week that I think you should check out:
Axie Infinity Raises $150M in Funding After $625M Heist
A small addendum to my newsletter from last week… Large-scale hacked crypto game Axie Infinity announced this week that it has raised $150 million from Binance, which it will add to its own funds to use the stolen funds replace last week by a hacker.
Elon promises widespread adoption of fully self-driving software later this year
Promises from Tesla (Elon, to be precise) regarding the imminent release of fully self-driving software have been a constant source of controversy. Despite this, Musk reiterated at the company’s Cyber Rodeo event that the full release of the software is just around the corner.
Meta is dropping the F8 developer conference this year
Facebook’s long-running developer conference is being canceled or, in Meta’s words, “paused” this year. The F8 developer conference has typically been the premier venue for Facebook to showcase updates for the Facebook, Instagram, and WhatsApp platforms, but following the company’s Metaverse pivot, their flagship event will likely shift to the Connect event, the takes place in autumn.
Some of my favorite readings from our TechCrunch+ subscription service this week:
3 views on Elon’s Twitter investment
“…I’ve been munching on the question of big names taking their fans to new platforms since we’ve seen an exodus of certain right-wing figures to alternative Twitter services in recent years. Some went voluntarily, some with a tight boot up their ass. But what they all have in common is the fact that their new homes have generally failed to challenge Twitter’s hegemony…”
What the death of Fast teaches about the fragility of unicorns
“…It seems that many startups have been raising money beyond reasonable pricing over the past year, leaving them in a virtual zero-margin situation. Any startup that hit a double- or triple-digit revenue multiple in 2021 now faces an environment of declining values for tech companies and high-profile investor groups pulling back on deals. This could lead to rounds down (or worse)…”
What the rescue of Axie by Binance means for web3
“… The hack that took place on Axie’s Ethereum-based sidechain Ronin marks the largest known crypto heist to date. Things were looking bad not only for Sky Mavis, but also for investors like a16z, who had been hyping Axie as the future of crypto. It looks even worse when you look at the demographics of Axie players overall – over 25% do not have a bank accountthe company said, and many are low-income workers in developing countries who derive a significant portion of their income from Axie…”.