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1. Walmart will integrate with Shopify, adding 1,200 Shopify merchants to its 3rd-party marketplace
  • This week Walmart announced it was partnering with ecommerce platform Shopify to add 1,200 Shopify merchants to Walmart’s invite-only, 3rd-party seller Marketplace this year. The program involves an integration that would allow Shopify sellers to add or change their products in Shopify, with updates immediately reflected on Walmart.com.
  • Shopify’s platform is used by 1M+ businesses across 175+ countries to operate and market their offerings online. While many of them are small to medium-sized businesses, Shopify’s platform also powers well-known larger brands such as Allbirds, PepsiCo and Staples. For the merchants approved for the program, the opportunity to tap Walmart Marketplace’s 120M monthly visitors could be very attractive.
  • Walmart’s Marketplace is central to its strategy to grow its assortment online and take on Amazon, which continues to lead in US ecommerce with 38% of the market. Of the 80M SKUs offered by Walmart online, the vast majority comes from its 35,000+ 3rd-party sellers. Walmart has been aggressively building out its ecommerce capabilities, recently launching Walmart Fulfillment Services to lure more merchants to its platform. The pricing of the program, which has no monthly membership fee, is set to be “one of the lowest-priced services on the market.” It will also offer sellers better visibility into inventory and more control over content on their Marketplace product pages. Walmart has been aggressive in subsidizing lower prices on items from select 3rd-party sellers through a “Competitive Price Adjustment” program designed to make it competitive with Amazon.
  • Related Briefs:
    • Mar 26 2020: Grocery delivery, ecommerce & the renewal of Walmart
    • Nov 11 2019: Why Amazon’s recent challenges are rooted in its business model
2. Apple gets antitrust heat for its App Store and Apple Pay practices
  • This week saw reports that the EU had launched two formal antitrust probes against Apple. The first focuses on Apple’s App Store, specifically Apple’s requiring mandatory use of its in-app purchase system and disallowing developers from informing customers of alternative cheaper payment options available outside of iOS apps. The second focuses on Apple Pay, targeting Apple’s conditions for integrating Apple Pay into apps and websites, the fact that “tap-and-go” using iPhones in stores is available only to Apple Pay, and alleged refusals to let rivals use Apple Pay.
  • Apple’s App Store practices have become a prominent point of contention for developers over the past couple years. The App Store takes a 30% commission on paid apps, in-app purchases, and the first year of subscription-based apps (after which Apple takes a 15% commission). Larger app developers with their own brands and audiences – such as Netflix, Spotify and Epic Games’ Fortnite – have been restive about Apple’s “tax,” especially with respect to subscriptions, and sought to move payments to their own websites.
  • In Mar 2019, Apple Music’s largest competitor Spotify wrote an open letter and filed a complaint with the European Commission claiming that Apple uses its App Store commissions and requirements to stifle competition. Rakuten-owned e-reader Kobo filed a similar complaint in Mar 2020 and Tinder parent Match Group has lately also been in touch with regulators. Microsoft has piled on as well, criticizing the high toll for accessing Apple’s platform.
  • Apple Pay, in turn, has been a particular sticking point in Europe, where open banking is directed by the compulsory revised Payment Services Directive (PSD2) that took effect in Jan 2018. Antitrust regulators in Europe have sought to encourage competition among financial services providers, with Germany enacting a law requiring “non-discriminatory access to the technical infrastructure.” Apple Pay, which facilitates payments on Apple devices, in physical stores and on 3rd-party merchant sites, has 441M+ users (Sep 2019) and accounts for 5% of all global card transitions (Feb 2020). The EU’s concern is that Apple is using its market power and control of the hardware and Apple Pay to disadvantage rivals, such as denying them access to the iPhone’s near-field communications (NFC) chip for “tap-and-go” transactions and putting restrictions around Apple Pay. On a related note, in May 2020, bluetooth tracker startup Tile complained to the EU that Apple was disadvantaging 3rd-party tracker apps by defaulting the “always allow” function to off and persistently warning users, in contrast to how Apple treats its own apps (e.g. Find My).
  • Antitrust focus on big tech continues to ramp up globally. Facebook’s proposed $400M acquisition of Giphy and $5.7B investment for 10% of Reliance Jio are being investigated in the UK and India, respectively. In the US and more recently the EU, Amazon is being investigated for allegedly using data from 3rd-party merchant transactions to launch competing products. The Justice Department and a group of state attorneys general are reportedly gearing up to file an antitrust suit this summer against Google focused on its advertising business. This week, the CEOs of all the big tech firms mentioned above were requested to testify to Congress on their practices, with the House indicating it would serve subpoenas if necessary.
  • Related Briefs:
    • Dec 13 2019: Tech players expand their ecosystems through payments & financial services
    • Nov 11 2019: Why Amazon’s recent challenges are rooted in its business model
3. OpenAI releases an enormous general-purpose language API for commercial use
  • Users can request access to try it on any English language task, including integrating it into products, developing a new application, or conducting research. Use cases for the API include: Semantic search (searching documents based on meaning rather than keywords), powering chatbots (e.g. for customer service), generating written work (e.g. for journalism), productivity tools (e.g. summarizing emails), language translation, and content comprehension and communication (e.g. simplifying language in documents).
  • As AI systems advance and become more responsible for concept and content generation, the extent to which its output can be protected as intellectual property will have vast implications. As of now, the United States Patent and Trademark Office (USPTO) has ruled that an AI system cannot be listed as an inventor in a patent application, and that inventorship is limited to “natural persons.” The European Patent Office (EPO) and other patent offices around the world hold similar stances.
  • Related Briefs:
    • Jun 3 2020: Can an AI be an inventor or author? The current state of IP protection
    • Oct 15 2019: The advance of deepfakes is spurring new countermeasures
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