Hello readers and welcome back!
Last week, I wrote about the problems Axie Infinity faced following a $625 million heist. This week, I’m talking to you about Apple and crypto.
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the big thing
This week, my colleague Sarah wrote an interesting story about an “NFT” app in the App Store that Apple suddenly seemed to ban despite having already been running in plain sight for months. Apple had argued that the app deceived consumers by selling “NFTs” that could not be resold and which, moreover, were not even stored on a blockchain. The app looks a little dodgy in my opinion, but that’s not particularly the app developer’s fault; the app seems designed to live in the gray area of Apple’s non-existent guidance for NFTs. (It’s worth noting that within an hour of our story going live, Apple had somewhat surprisingly reintegrated it into the App Store.)
This whole minor saga triggers a more interesting question: What exactly are Apple’s plans for NFTs?
On the one hand, I’m sure Apple would want nothing more than to explicitly ban NFTs on the App Store. Apple has argued that a key area of the App Store’s usefulness is protecting users from scams, which is quite a difficult thing to do in today’s NFT environment. Regulating the industry inside the walled garden of its App Store sounds like a nightmare, something that would require Apple to essentially develop its own internal SEC.
But, and this is important but, Apple also loves money; more specifically, revenue from App Store services.
Gaming is the most popular vertical in the App Store, earning Apple tens of billions in revenue annually. The prospect of game companies adopting NFTs in a major way over the next decade looks increasingly likely, and losing that revenue would be destructive to Apple’s hold on in-app payments in mobile games.
But how does Apple rate its IAP integrated payment system with NFTs and blockchain assets?
While individual apps may justify Apple’s tax on primary sales of NFTs, there’s no way that those same fees will skyrocket for peer-to-peer secondary sales of NFTs already owned. NFT storefronts like OpenSea and Rarible have previously released apps on the App Store, but these native apps only allow users to view NFTs – not to engage with their storefronts at all. Most legitimate NFT startups are thinking about how to do this on mobile, and Apple’s failure to follow clear guidelines could push more developers to invest in web experiences, which circumvent App Store rules.
One thing that’s pretty clear is that if Apple creates a specific exclusion for NFTs in its own App Store rules, it will be on its own terms. They could take a number of different paths; I could see a world where Apple could only authorize certain assets on certain blockchains or even create its own blockchain. But Apple’s path to user experience control will most likely rely on Apple directly participating in crafting its own smart contracts for NFTs, which developers may be forced to use in order to stay in accordance with App Store rules.
This could easily be justified as an effort to ensure that consumers have a consistent experience and can trust NFT platforms on the App Store. These smart contracts could automatically send Apple royalties and lead to a new pipeline of in-app payment fees, which could even persist in transactions that took place outside of the Apple ecosystem (!). More complex functionality could also be integrated, allowing Apple to manage workflows such as the cancellation of transactions.
Needless to say, each of these moves would be highly controversial among existing developers. Apple issuing mandates on how smart contracts are written and which ones are allowed to be used would mark a major shift in the crypto world and cause much turmoil in the developer ecosystem. But I think it’s clear that Apple is going to have a hard time ignoring this market for much longer.
Here are a few stories this week that I think you should take a closer look at:
Axie Infinity Secures $150M in Funding After $625M Heist
A quick follow-up to my newsletter from last week… majorly hacked crypto game Axie Infinity announced this week that it has raised $150 million from Binance, which it will add to its own funds for replace the money stolen last week by a hacker.
Elon promises widespread rollout of comprehensive self-driving software this year
Tesla’s (specifically Elon’s) promises of the imminent release of fully autonomous driving software have been a constant source of controversy. Nonetheless, at the company’s Cyber Rodeo event, Musk again reiterated that the full software release was imminent.
Meta is dropping out of the F8 Developer Conference this year
Facebook’s longtime Developer Conference is canceled this year, or “suspended” in Meta’s words. The F8 Developer Conference was usually the first place Facebook showcased updates to the Facebook, Instagram, and WhatsApp platforms, but following the company’s metaverse pivot, it’s likely their flagship event will become its Connect event, which takes place in the fall. .
Some of my favorite reads from our TechCrunch+ subscription service this week:
3 views on Elon’s Twitter investment
“…I’ve mulled over the issue of big names taking their fans to new platforms since we’ve seen an exodus of some right-wing figures to alt-Twitter services in recent years. Some left voluntarily, others with a firm boot on their back. But what they all share is the fact that their new homes have generally failed to challenge Twitter’s hegemony….
What Fast’s Disappearance Teaches About the Fragility of Unicorns
“…It seems that many startups raised funds last year beyond the defensible price limit, leaving them in a zero-margin situation. Any startup that reached a revenue multiple of two or three figures in 2021 is now facing a declining value environment for tech companies and leading investor groups pulling out of deals, which could lead to down-rounds (or worse)…”
What Binance’s Axie bailout means for web3
“…The hack, which took place on Axie’s Ethereum-based sidechain Ronin, marks the largest known crypto heist to date. It was a bad look not just for Sky Mavis , but also for investors like a16z who had touted Axie as the future of crypto.It starts to look even worse when you consider the demographics of Axie gamers as a whole – more than 25% are unbankedthe company said, and many are low-income workers in developing countries who depend on Axie for a significant portion of their income…”.