Hello readers, and welcome back!
Last week, I wrote about the issues facing Axie Infinity in the wake of a $625 million heist. This week, I’m talking about Apple and crypto.
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the big thing
This week my colleague Sarah wrote an interesting story on an “NFT” app in the App Store that Apple seemed to suddenly ban despite the fact that it had already operated in plain sight for months. Apple had argued that the app was misleading consumers by selling “NFTs” that could not be resold and furthermore weren’t even stored on a blockchain. The app seems a little dodgy in my opinion, but that’s not particularly the fault of the app developer at hand; the app seems built 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 reinstated it in the App Store.)
This whole minor saga triggers a more interesting question: What exactly are Apple’s plans for NFTs?
On one hand, I’m sure Apple would like nothing more than to explicitly ban NFTs on the App Store. Apple has argued a key area of the App Store’s utility is in protecting users from scams — something that’s a pretty 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 build out its own internal SEC.
But, and it’s an important but, Apple also loves money; more specifically, services revenue from the App Store.
Gaming is the most popular vertical in the App Store, which brings Apple tens of billions in revenue annually. The prospect of gaming companies embracing NFTs in a major way over the next seems likely, and losing out on that revenue would be destructive to Apple’s hold on in-app payments in mobile gaming.
But how does Apple reckon its IAP in-app payments system with NFTs and blockchain assets?
While individual apps might be able to justify the Apple tax on primary sales of NFTs, there’s no way that those same fees will fly for secondary peer-to-peer sales of already-owned NFTs. NFT storefronts like OpenSea and Rarible have released apps on the App Store already, but these native apps only allow users to view NFTs — not engage with their storefronts at all. Most legit NFT startups are weighing how to proceed on mobile, and Apple holding off on clear guidelines could push more developers toward investing in web-based experiences, which bypass App Store rules.
One thing that is pretty clear is that if Apple creates a specific carve-out for NFTs in its own App Store rules, it’s going to be on its own terms. They could take a number of different paths; I could see a world where Apple could only allow certain assets on certain blockchains or even build out their own blockchain. But Apple’s path toward controlling the user experience will most likely rely on Apple taking a direct hand in crafting their own smart contracts for NFTs, which developers might be forced to use in order to stay compliant 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 send Apple royalties automatically and lead to a new in-app payment fee pipeline, one that could even persist in transactions that took place outside of the Apple ecosystem(!). More complex functionality could be baked in as well, allowing Apple to handle workflows like reversing transactions.
Needless to say, any of these moves would be highly controversial among existing developers. Apple making any 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 lead to plenty of turmoil in the developer ecosystem. But I do think it’s clear that Apple is going to have a tough time ignoring this market much longer.
Here are a few stories this week I think you should take a closer look at:
Axie Infinity scores $150M in funding following $625M heist
A little follow-up to my newsletter last week… crypto game Axie Infinity, which got hacked in a major way, announced this week that they had raised $150 million from Binance, which it will be adding to its own funds to replace the stolen money last week by a hacker.
Elon promises widespread rollout of full self-driving software this year
Tesla’s (more specifically Elon’s) promises surrounding the impending release of full self-driving software has been a constant source of controversy. While, at the company’s Cyber Rodeo event, Musk again reiterated that the software’s full release was right around the corner.
Meta is dumping the F8 developer conference this year
Facebook’s long-standing developer conference is getting canceled this year, or “paused” in Meta’s words. The F8 developer conference was typically the premier spot for Facebook to showcase updates to the Facebook, Instagram and WhatsApp platforms, but following the company’s metaverse pivot, it’s likely that their flagship event will shift to being 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 been chewing on the matter of major names taking their fans to new platforms since we saw an exodus of certain right-wing figures to alt-Twitter services in recent years. Some left voluntarily, some with a boot firm in their backside. But what they all share is the fact that their new homes have generally failed to challenge Twitter’s hegemony….”
What Fast’s demise teaches about the fragility of unicorns
“…It appears that many startups raised money last year beyond the limit of defensible pricing, leaving them in an effectively zero-margin situation. Any startup that raised at a two- or three-figure revenue multiple in 2021 now faces an environment of declining values for technology companies and high-profile investor groups retreating from deal-making. This could lead to down-rounds (or worse)…”
What Binance’s bailout of Axie 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 only for Sky Mavis, but also for investors like a16z that had Hyped Axie as the future of crypto. It begins to look even worse when you consider the demographics of Axie players overall — over 25% are unbankedthe company said, and many are low-income workers in developing countries who rely on Axie for a significant portion of their income….”