Apple unloads a charm offensive to beat back proposed E.U. tech regulation

After the world’s strongest data privacy law—the European Union’s General Data Protection Regulation, or GDPR—went into effect in 2018, others followed suit. A month later, California signed its own version, the Consumer Right to Privacy Act, into law. The Virginia Consumer Data Protection Act was inked this May. Many more states are now hashing through a patchwork of similar proposals (which a federal bill may one day supersede).

This tendency for E.U. rulemaking to blaze a trail globally helps explain why Apple trotted out a senior executive at the Web Summit tech conference in Lisbon today. Craig Federighi, Apple’s senior vice president of software engineering, gave a keynote address ostensibly about privacy and security, but really to criticize a draft piece of European tech regulation called the Digital Markets Act, or DMA, with which the company vehemently disagrees.

Unlike GDPR—which squeezed data-hungry tech giants, like Facebook and Google—DMA poses a threat principally to Apple. The proposal, in its current form, would force companies like Apple to allow “sideloading.” This seemingly innocuous-sounding function would mean that people could download apps onto their phones from the open Internet or other app stores, bypassing Apple’s own App Store. That’s an unpopular proposition at Apple’s Cupertino, Calif. headquarters.

Sideloading represents an existential issue for the world’s second-most valuable company. The feature could shake loose the tight grip Apple keeps on its iPhones, the same grip that enables it to charge app developers steep fees and seek rents on in-app payments. 

Some regulators want to make sideloading mandatory because it would foster more marketplace competition (good). Apple argues, on the other hand, that this would be a security disaster, opening its customers to attack and fraud (bad). An Apple entourage stressed this point to me in a closed-door meeting earlier in the day.

On stage, Federighi emphasized the same point. “Sideloading is that unlocked side door and it would give cybercriminals an easy point of entry on your device,” he said, calling this aspect of the DMA proposal “a step backward.” He said the requirement would open “a Pandora’s box of unreviewed, malware-ridden software” and thrust its customers “into a landscape of professional con artists constantly trying to fool them.”

Apple has a point—the company often earns kudos for offering superior security. But the argument disguises Apple’s own blatant self-interest in maintaining absolute control over people’s interactions with apps. It’s no coincidence that this is also the central point of contention in Apple’s ongoing battle with video game maker Epic, which ultimately wants to offer people its own, alternative app store on Apple devices.

When the E.U. hashed out GDPR, it had an easier time rallying behind the prospect of improved privacy. Now as it seeks to crack down on anticompetitive practices by Big Tech with DMA, the E.U.’s running into the trickier proposition of potentially undermining security. 

Robert Hackett
@rhhackett
robert.hackett@fortune.com

NEWSWORTHY

Ruh roh, Roku. Shares of streaming company Roku dropped in after-hours trading Wednesday following the release of its latest quarterly results, which included revenues of $680 million that may have been up year over year but still missed analyst expectations. The stock was down after the market's close by 8.5%, as of 5:27 p.m. ET. CFO Steve Louden attributed the fall-off in an interview with CNBC to the global supply chain issues, which have led to "elevated component pricing, inventory availability issues, and supply chain logistics delays" in the TV industry.

Google just can't quit the military. The search and ad giant that is Alphabet's Google is back to pushing for a major military contract called the Joint Warfighting Cloud Capability, even as its past attempt to work with the Pentagon was met with employee backlash, The New York Times reports. The contract's size is unknown, but, unlike its predecessor JEDI (the Joint Enterprise Defense Infrastructure contract), it will go to several companies, according to the report. And yet, it also has the potential to conflict with Google's artificial intelligence principles, which were created soon after its workers demanded that the company withdraw from the Pentagon's Project Maven.  

The original memes want back in. Months after the first wave of meme stocks that included GameStop, AMC Entertainment, and Bed Bath & Beyond took off, investors are seemingly piling back into those stocks. On Wednesday, shares in GameStop rose 5.5%, AMC was up 5.2%, and Bed Bath & Beyond posted yet another double-digit day with shares rising 15.2%.

We're all friends, right? In a rare collaboration, Twitter and Meta's Instagram are working to make posts from the picture-sharing app more easily decipherable in tweets, according to The Verge. So, starting Wednesday, a user tweeting an Instagram photo will see a preview of the link that includes the image rather than just the URL text. The move comes almost a decade after Instagram made the controversial decision to get rid of such a feature, which the company justified at the time as a way of getting users to see Instagram content on Instagram, TechCrunch reported.

FOOD FOR THOUGHT

What is the future of the metaverse? Is it going to be the fun, super-casual hang out destination for Gen Z? A tool that wants to be consumer facing but is better for big business? Can you build it sustainably? Quartz’s Scott Nover recently spoke with early virtual reality adopter Jeremy Bailenson, who cofounded an enterprise VR company Strivr and is now a professor at Stanford University, about where the latest push to create the metaverse goes from here. And in the near term, employee training is bound to be the main entry point into virtual reality, Bailenson says. 

From the article:

You think work and enterprise are going to be huge parts of the metaverse. Why are they the main use cases?

When you go through the history of VR, it’s all about training, starting with the Flight Simulator in 1929. It has been a killer app of VR since there’s been VR and that remains the case today. Video games are doing okay. And you’re getting thousands of people per day going to places like AltspaceVR or VRChat, but not hundreds of thousands.

Ultimately, what’s going to drive VR is that it’s really good for training. What Strivr does is we put you in this incredibly immersive scene. We began as a football training, training quarterbacks and other players, and then we went to other sports—US Olympic skiing, NBA free-throw shooting. In 2016, we pivoted to enterprise, and so the largest client remains Walmart. Currently, we do lots of things where there are other people around, but those people are either controlled by A.I. or they’re recorded people that we’re beaming in via video capture. What the metaverse is going to do is that, with all the Strivr training scenarios, we’re now going to be able to do it in teams.

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BEFORE YOU GO

Celebrities are back to backing SPACs. Months after the SPAC boom fizzled out, thanks to a mix of regulatory concerns and big investors paring back their blank-check bets, the market is showing signs of life again. Digital World Acquisition, the SPAC that is planning to merge with former President Donald Trump’s new tech and media company, has come far down from its highest levels, but remains trading north of $60, as of Wednesday. And in one of the highest profile celebrities to back a SPAC in a while, NBA star Kevin Durant is looking to raise $200 million in an IPO for Infinite Acquisition Corp., which is looking for a deal in the sports, health, sustainable food, or crypto sectors.