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Apple’s wave of new products brings a special kind of baggage

·Technology Editor
·6 min read

Wednesday, April 28, 2021

This article was first featured in Yahoo Finance Tech, a weekly newsletter highlighting our original content on the industry. Get it sent directly to your inbox every Wednesday by 4 p.m. ET. Subscribe

Apple's latest products should be hits, but they come with risks for the company

Apple (AAPL) has begun launching a slew of game-changing products and features, like devices that track down your lost stuff and a new feature to protect your privacy online. But each one brings a special kind of baggage — namely, they come at a time when Apple faces attacks from rivals and antitrust scrutiny from regulators.

On Friday, Apple will roll out its AirTags devices, which help you find lost items and compete with Tile’s products. In May, it will release its Apple Podcast Subscriptions service just as Spotify (SPOT), which has filed antitrust complaints against Apple in the U.S. and European Union, is expanding its own podcast products.

Apple CEO Tim Cook welcomes customers to the company's new store, Apple Carnegie Library in Washington, Saturday, May 11, 2019. (AP Photo/Cliff Owen)
Apple CEO Tim Cook welcomes customers to the company's new store, Apple Carnegie Library in Washington, Saturday, May 11, 2019. (AP Photo/Cliff Owen)

And at this moment, its iOS 14.5 update is landing on millions of iPhones, complete with Apple’s new App Tracking Transparency, a feature that has drawn opposition from Facebook and could potentially hurt the social network’s bottom line.

As it launches these products, Apple faces a probe in the U.K. over its app store rules, and just last week, the Senate Judiciary Committee held a hearing scrutinizing Apple’s and Google’s (GOOG, GOOGL) app store policies. The tech giant has also been accused by House lawmakers of using the app store to punish its rivals.

So why would Apple further strain its relationships with competitors and risk greater antitrust scrutiny from the government? Because keeping you locked into its ecosystem of products is more than worth the trouble. Apple reported earnings on Wednesday, and revenue was up a whopping 54% year-over-year for the quarter on strong hardware sales.

“Vigorous competition is not illegal,” explained Penn State University law professor John Lopatka. “It will likely intensify antitrust scrutiny only marginally while potentially resulting in a handsome payoff."

Keeping you hooked

All roads run through Apple’s iPhone. In the company’s 2020 fiscal year alone, the iPhone generated roughly 50% of Apple’s $274 billion in total revenue. That’s why Apple wants you to keep upgrading to the latest model.

It’s also why Apple’s Mac line of laptops and desktops, iPads, Apple Watch, and AirPods all work best with the iPhone. And the company’s new AirTags fit the same profile. Available for $29, or $99 for a set of four, AirTags are attached to items like your keys or wallet. Misplace them, and AirTags guide you to their location via Apple’s Find My app.

Apple has revealed its new AirTags, a tracking product for your most lost items. (Image: Apple)
Apple has revealed its new AirTags, a tracking product for your most lost items. (Image: Apple)

But AirTags aren’t the first device of their kind. Tile has been offering trackers for years that connect to your iPhone. But changes Apple has made to iOS, Tile says, have made it more difficult for consumers to use its product. Last year, Tile sent a letter to the E.U.'s competition regulator claiming Apple makes setting up Tile on the iPhone more cumbersome than Apple’s own Find My app.

Apple’s Find My app comes preinstalled on all Apple devices, and locates lost Apple products. Recently, Apple opened up Find My to third-party products like Tile, but Tile’s general counsel, Kirsten Daru, says that using Find My hurts Apple competitors while benefiting the iPhone maker.

“The Find My Program holds critical location data hostage to coerce developers like Tile to abandon our apps and networks,” Daru said during last week’s Senate Judiciary Committee hearing. “It deprives customers of choice and breaks our interoperability with Android.”

Apple, meanwhile, says that it welcomes competition, as it helps spur innovation and provide customers with more choices.

The war over podcasts

Launching in May, Apple Podcast Subscriptions will let users subscribe to podcasts such as Tenderfoot TV, NPR, and the Athletic as well as access additional content and exclusive series.

Like AirTags, however, Apple Podcast Subscriptions will anger another tech company. And as with Tile, Apple’s biggest competitor for its new service is also one of the harshest critics of its App Store policy: Spotify.

Spotify complains that Apple forces it to use the tech giant’s in-app purchasing system, which gives Apple a 30% cut of Spotify subscriptions. That system, meanwhile, forbids Spotify from pointing customers to its own website to make subscription purchases.

So what has Apple Podcast Subscriptions got to do with that? Spotify has used podcasts to grow its subscriber base, snatching up exclusive rights to Joe Rogan’s podcast, as well as podcasting networks The Ringer and Gimlet. Apple is certain to receive more scrutiny for launching its new service, as Spotify’s own podcast ambitions take shape.

But for Apple, it’s worth the risk, because chances are, if you subscribe to its podcast service, you’re going to stick with Apple for the long term. And that means more hardware sales.

Apple’s privacy fight

Even Apple’s iOS 14.5, the latest version of the operating system that powers the iPhone, isn’t without controversy. The update, available for download now, brings a new feature called App Tracking Transparency that lets iPhone users choose whether the apps they download can track their activity across the web and other apps.

Apple's iOS 14.5 will include a new feature that allows you to stop apps from tracking you across apps and websites called App Tracking Transparency. (Image: Apple)
Apple's iOS 14.5 will include a new feature that allows you to stop apps from tracking you across apps and websites called App Tracking Transparency. (Image: Apple)

Privacy has become a product in and of itself for Apple, which uses its stance on ad tracking and its security features as major selling points. And if the iPhone is more secure than competing devices, why would you ever leave Apple’s ecosystem?

But App Tracking Transparency has become a flashpoint in Apple’s already rocky relationship with Facebook (FB). The social network claims the new feature will prevent advertisers from seeing how well their digital ads perform, ultimately hurting small businesses. Of course, it would also hurt Facebook, which makes the majority of its revenue by selling ads.

Apple is already facing potential backlash from the move as, according to The Wall Street Journal, its new policy could boost its own ad sales business. While Apple denies favoring its own products in the Journal report, that doesn’t mean it won’t raise eyebrows.

“These days, anytime a Big Tech platform expands into an adjacent market, it will face an antitrust challenge,” Lopatka said. “But antitrust law does not prohibit even dominant firms from competing in emerging markets. Expansion brightens the antitrust spotlight, but the light is already blinding.”

Apple is willing to withstand that spotlight from competitors and antitrust regulators — just as long as it can lock you into its vast ecosystem for life.

By Daniel Howley, tech editor. Follow him at @DanielHowley