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Apple moves to open the App Store as strict EU laws approach

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Apple is laying the groundwork to comply with tough new EU rules that will allow iPhone users to choose apps from outside its App Store, as developers seek to avoid the up to 30 percent fee charged by the US tech giant.

This step comes in response to the decision of the European Union Digital Markets Lawwhich was passed into law last month and is part of the biggest overhaul of the laws that have governed the world’s largest tech companies in more than two decades.

The DMA, which will not be implemented until March 2024, represents the biggest threat to Apple’s control of the closed operating system in the past 15 years.

European Union officials believe an Apple will be disproportionately affected by the new rules. “They’re in a situation where it won’t be easy for them to escape,” said someone directly involved in drafting the rules, adding that it would likely result in billions of dollars in lost revenue each year.

Apple has been fighting to keep all app downloads and payments within the App Store for years, arguing that its “regulation” process was critical to user safety. I experienced Constant criticism and legal challenges from application developers, incl Fortnite Epic Games maker and Spotify music service.

The US tech giant has set up teams dedicated to complying with the new Brussels legislation, but is working out the details as it spells out what the sweeping laws entail, according to people familiar with the matter. The move was first reported by Bloomberg. Apple declined to comment.

“This is big and it’s very essential for innovation,” said Nicolas Reul, president of IAB Europe, an advertising association that believes Apple is abusing its power.

Europe, with 450 million smartphone users, is Apple’s second largest market after the Americas, with a value of $95 billion. The European Union has warned that “repeated breaches” of its DMA legislation could result in penalties of up to 20 percent of global revenue. In the case of Apple, that would be $80 billion.

CFRA Research’s Nicholas Rodelli said Apple’s global operating profit could see an “enormous” 15 percent hit if DMA becomes the de facto global standard, noting that the EU was serious about enforcing rules designed to generate more competition.

It is expected that Apple will look for ways in which it can restrict changes.

EU rules state that “gatekeepers” — large online platforms — “must allow and technically enable the installation and effective use of third-party software applications or software application stores.”

Or it could give Apple leeway to offer so-called sideloading — where users install software through a browser — but not competing app stores.

Another part of the DMA that would affect Apple’s business is the requirement that developers be allowed to install third-party payment systems, rather than being forced to use Apple’s systems.

One of the biggest questions is whether Apple will charge its usual 15 to 30 percent fee for apps installed outside the App Store.

Rodelli said Apple is likely to take a “simple approach,” sticking only where it needs to be, but using security holes to keep the iPhone as locked down as possible.

Apple has previously made it clear that it will fight for what it considers to be legitimate intellectual property payments.

Apple CEO Tim Cook said in his beta on Epic Games last year that the 15 to 30 percent “in-app purchase” (IAP) fee wasn’t just a payment processing fee, but a bigger commission for the tools it makes. Apple and customer service.

“If it weren’t for IAP, we would have to come up with another system for billing developers, which is . . . Cook said.

Apple’s foray with the Dutch Competition Authority over the past year provides insight into how the company’s regulatory playbook applies to DMA.

Last December, Dutch regulators told Apple that banning dating apps from using alternative payment systems was “unreasonable”. It gave the tech giant two months to allow consumers to pay outside of the App Store.

Apple complied after initially paying a €50 million fine for missing a deadline from the Dutch Consumer and Market Authority. However, it exchanged its 30 percent commission for a 27 percent fee, leaving only up to 3 percentage points of additional revenue for the developer, of which payment processing fees would also have to be paid.

Apple also required pop-up messages warning the user that they will “no longer do business with Apple”. Early drafts included a warning that “only App Store purchases are secured by Apple”, which critics saw as an attempt to discourage users from leaving Apple’s platform and was only changed after pressure from Dutch authorities.

Many in the industry expect Apple — which has a history of intense litigation — to try to challenge some aspects of DMA through the courts.

EU regulators point to it as the company with some of the most aggressive lawyers seeking to block or relax the rules. A senior EU official said this led to confrontations between the European Commission and Apple over how to implement the new rules.

“I expect litigation and disputes about implementation details. Apple may not challenge the legislation itself, but it can challenge, for example, what it means to have reasonable security measures,” Rodelli said.

Apple requires additional safeguards on the iPhone because a compromised device could grant access to a user’s location throughout the day as well as highly personal health or financial information.

Even if Apple allows third-party app stores, Eric Woodring, an analyst at Morgan Stanley, expects that no one will use them.

He called any potential fix “more bark than bite,” adding that Apple customers enjoy “the security, centralization, and convenience of the App Store” and value a worst-case scenario revenue of just 1 percent.

Another option could see Apple comply fully with Brussels rules but choose to charge for apps that don’t currently pay anything, such as banking apps or transportation services.

Others point out that Apple could choose to reduce all of its fees to 10 or 15 percent if the EU’s enforcement is too draconian.

Such a move could thwart any emerging competition from alternative app stores and even bring in new sources of revenue from the likes of Spotify and Netflix, big apps where consumers can subscribe and pay on the web.

Both streaming groups have ditched Apple’s in-app purchases because they consider the fee prohibitive, but Ben Bajarin at research group Creative Strategies said 10-15 percent could be more likely if it drives traffic.

“This is the money Apple never had,” Bajarin said. “You could say they could make more money than they get on those cuts.”

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We need to pay more attention to skewed economic signals

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The writer is chair of Queen’s College, Cambridge and advisor to Allianz and Gramercy

Inflation was the dominant economic and financial issue of 2022 for most countries around the world, especially for advanced economies that have a consequential impact on the global economy and markets.

The effects have been seen in declining living standards, increasing inequality, increasing borrowing costs, stock and bond market losses, and occasional financial mishaps (fortunately small and so far contained).

In this new year, recession, both actual and feared, has joined inflation in the driving seat of the global economy and is likely to replace it. It’s a development that makes the global economy and investment portfolios subject to a wide range of possible outcomes — something that a growing number of bond investors seem to be aware of more than their equity counterparts.

International Monetary Fund iYou will likely review soon Her economic growth forecasts again, predicting that “a third of the world will be hit by recession this year”. What is particularly notable to me about these worsening global prospects is not only that the world’s three major economic regions – China, the European Union and the United States – are slowing down together, but also that this is happening for different reasons.

In China, a chaotic exit from the wrong Covid-19 policy is undermining demand and causing more supply disruptions. Such headwinds to domestic and global economic well-being will continue as long as China fails to improve the coverage and effectiveness of its vaccination efforts. The strength and sustainability of the subsequent recovery will also require that the country more vigorously renew a growth model that can no longer rely on greater globalization.

The European Union continues to deal with energy supply disruptions as the Russian invasion of Ukraine continues. Strengthening inventory management and reorientation of energy supplies is well advanced in many countries. However, it is not yet sufficient to lift immediate constraints on growth, let alone resolve long-term structural headwinds.

The United States has the least problematic view. The headwinds to growth are due to the Fed’s struggle to contain inflation after mischaracterizing rate increases as fleeting and then initially being too timid to adjust monetary policy.

The Fed’s shift to an aggressive front-load of interest rate hikes came too late to prevent the spread of inflation in the services sector and wages. As such, inflation is likely to remain stubborn at around 4 percent, be less sensitive to interest rate policies and expose the economy to greater risk for accidents from additional policy errors that undermine growth.

The uncertainties facing each of these three economic areas suggest that analysts should be more careful in reassuring us that recessionary pressures will be “short and shallow”. They need to be open, if only to avoid repeating the mistake of prematurely dismissing inflation as transient.

This is especially important because these diverse drivers of recessionary risk make financial fragility more threatening and policy shifts more difficult, including potentially Japan. Get out of interest rate control Policy. The range of possible outcomes is extraordinarily large.

On the one hand, a better policy response, including improving the supply response and protecting the most vulnerable populations, can counteract the global economic slowdown and, in the case of the United States, avert a recession.

On the other hand, additional policy errors and market turmoil can lead to self-reinforcing vicious cycles with rising inflation and rising interest rates, weakening credit and compressed earnings, and stressing market performance.

Judging by market prices, more bond investors are better understanding this, including by refusing to follow the Fed’s interest rate guidance this year. Instead of a sustainable path to higher rates for 2023, they believe recessionary pressures will lead to cuts later this year. If true, government bonds would provide the yield and potential for badly missed portfolio risk mitigation in 2022.

However, parts of the stock market is still weakly bearish pricing. Reconciling these different scenarios is more important than investors. Without better alignment within markets and with policy signals, the positive economic and financial outcomes we all desire will be no less likely. They will also be challenged by the risk of more unpleasant outcomes at a time of less economic and human resilience.

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Macro hedge funds end 2022 higher, investors say, while many others take big losses By Reuters

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© Reuters. FILE PHOTO: Traders work on the trading floor of the New York Stock Exchange (NYSE) in New York City, US, January 5, 2023. REUTERS/Andrew Kelly

By Svea Herbst Baylis

NEW YORK (Reuters) – Some hedge funds betting on macroeconomic trends have boasted of double and even triple-digit gains for 2022, while other high-profile companies that have long been on technology stocks have suffered heavy losses in volatile markets, investors said.

Rokos Capital, run by Chris Rokos and one of a handful of so-called global macro companies, gained 51% last year. Fund investors this week, who asked not to be identified, said Brevan Howard Asset Management, the company where Rokos once worked, posted a gain of 20.14% and Caxton Associates returned 16.73%.

Haider Capital Management’s Haider Jupiter Fund rose 193%, an investor said.

Data from hedge fund research showed that many macro managers have avoided crumbling stock markets that have been rocked by rapid interest rate increases and geopolitical turmoil, including the war in Ukraine, to rank among the best performers in the hedge fund industry. The company’s macro index rose 14.2% while the general index of hedge funds fell 4.25%, its first loss since 2018.

Equity hedge funds, where the bulk of the industry’s roughly $3.7 trillion in assets are invested, fared worse with a loss of 10.4%, according to HFR data. And while that beat the broader stock market’s loss of 19.4%, some high-profile funds posted even bigger losses.

Tiger Global Management lost 56% while Whale Rock Capital Management ended the year with a 43% loss and Maverick Capital lost 23%. Coatue Management ended 2022 with a loss of 19%.

But not all companies that bet on technology stocks suffered. John Thaler JAT Capital finished the year with a 3.7% gain after fees after a 33% increase in 2021 and a 46% gain in 2020.

Sculptor Capital Management (NYSE::), where founder Dan Och is fighting the company’s current CEO in court over his salary increase, posted a 13% drop.

David Einhorn’s Greenlight Capital, which bet that Elon Musk would be forced to buy Twitter, ended the year up 37% while Rick Sandler’s Eminence Capital rose 7%.

A number of so-called multi-manager companies where teams of portfolio managers bet on a variety of sectors also boast positive returns and have been able to deliver on their promise that hedge funds can deliver better returns in distressed markets.

Balyasny’s Atlas Fund (NYSE: Enhanced) gained 9.7%, while Point72 Asset Management gained 10%. Millennium Management gained 12% while Carlson Capital ended the year with a 7% gain.

Representatives for the companies either did not respond to requests for comment or declined to comment.

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German automakers point to easing supply chain problems

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Sales at BMW and Mercedes-Benz jumped in the final months of 2022 as the German premium auto brands indicated supply chain problems plaguing the industry were abating.

Automakers around the world have experienced parts shortages since the pandemic, especially semiconductors, leaving many of them with large fleets of incomplete vehicles that can’t be delivered to customers.

BMW and Mercedes each said their full-year vehicle deliveries fell last year by 4.8 percent and 1 percent, respectively, due to Suppliers Bottlenecks as well as lockdowns in China and the war in Ukraine.

But supply pressures eased in the last quarter of the year, as BMW recorded a 10.6 percent jump in sales, with 651,798 vehicles delivered, and Mercedes fulfilling 540,800 orders, up 17 percent from the same period in 2022.

BMW He said the main effects of supply chain bottlenecks and continued lockdowns were felt in the first six months of the year, adding that “sales were steadily picking up in the second half.”

Mercedes boss Ula Kallenius told the Financial Times last week that the list of problems in the auto supply chain was declining, but added that long waits for cars would continue into 2023.

“One chip is enough to be vital [ . . .] Missing, and then you can’t finish the car, even if you have everything else.

Both brands recorded strong sales growth electric car. Mercedes, which last week announced a plan to build 10,000 charging docks, said EV shipments grew 124 percent to 117,800 last year compared with its predecessor.

Similarly, BMW reported strong growth in electric vehicle sales, with deliveries of fully electric vehicles doubling last year to 215,755.

Analysts at Bank of America said that sales of electric vehicles, including hybrid cars, reached a historic peak last November, with 1.1 million units sold. They attributed this largely to the upcoming phase-out of customer subsidies in Germany.

Participate in Mercedes BMW and BMW prices held steady Tuesday morning as investors priced in an image of an improving showing.

Rolls-Royce, a subsidiary of BMW, announced Monday that sales have hit a 119-year record, driven by strong demand in the United States, its largest market.

The luxury brand has been largely unaffected by the semiconductor pressure, mainly because it makes relatively few compounds and therefore needs fewer chips.

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