What announcements to expect, what are the challenges

Apple will host its first product launch event of the year on Tuesday.

On the bridge: The new iPad Pros are expected to be the main new hardware products that Apple is unveiling. While Apple’s iPad business saw lackluster growth in the mid-2010s, it boomed over the past year, with consumers turning to tablets as they worked and played from home for. the pandemic.

But beyond new gadgets, Apple faces a decade of increased competition and court battles on many fronts from Facebook, Epic Games, Spotify, and lawmakers and regulators around the world. It may look like another iPad event. But there’s a lot of tension bubbling beneath the surface at Apple. And much of it could threaten Apple’s next wave of growth as it expands into more digital services and new forms of computer technology.

Here’s a quick rundown of the conflicts that are coming up as we head into Tuesday’s Apple event:

Facebook is waging an all-out PR war against Apple over an impending change in iPhone software that will give users the ability to block apps from tracking them for targeted ads. Facebook said the move would hurt small businesses that depend on advertising to deliver free digital software and services. Apple said the change would give iPhone owners a better understanding of how apps track them and give customers the ability to block that tracking.

But the bitterness between the two companies goes much further than that.

The two companies are working on technology they say will pave the way for the next wave of computing after smartphones, thanks to computerized glasses that use augmented reality. Facebook is expected to release its first pair of AR glasses this year. Apple could launch its first headset in 2022. If the platform takes off, Facebook and Apple will try to dominate AR, just as Apple fought Microsoft in the PC age and Google and Samsung (Android) in the current smartphone. time.

This fight is far from over. In fact, it has only just begun.

On May 3, Apple and Epic Games, the creators of the popular game Fortnite, are heading to their lawsuit in their dispute over how Apple handles payments from iOS apps. Last fall, Epic Games deliberately changed the iOS version of Fortnite to allow users to pay Epic directly, bypassing Apple’s App Store rules. Apple eventually pulled Fortnite from the App Store and Epic had a lawsuit ready to go.

Epic’s complaint against Apple echoes what we’ve heard from several iOS app makers over the past decade: Apple typically takes a 30% cut in digital in-app transactions and paid app sales. themselves. Developers at Epic’s camp say the so-called “Apple tax” gives Apple too much leverage since it only allows users to download software from its own store. Apple doesn’t allow alternative app stores like Google does on Android.

Big app makers like Spotify and dating company Match Group are backing Epic’s lawsuit. Many of these developers have also formed a group called the Coalition for App Fairness, which recently pushed the Arizona and North Dakota state legislatures to pass laws limiting Apple’s control over the App Store. If Apple loses the legal battle or is forced to make concessions to Epic and other app developers, it could slow Apple’s App Store revenue growth. (The App Store generated around $ 64 billion in gross sales in 2020, up from around $ 50 billion in 2019.)

Apple said it collects the fees in part to keep the App Store safe and secure so customers can feel confident in the software they download. The company recently changed its fee structure to only take a 15% reduction in apps that generate less than $ 1 million per year.

Apple’s control over the App Store was also at the center of a Congressional antitrust report last year which found that Apple is using its control “to create and enforce barriers to competition and to discriminate and exclude. rivals while preferring its own offerings. Apple denied the report’s findings and said its fees were in line with those of other digital software stores.

In addition to the Arizona and North Dakota laws, US regulators are reportedly questioning Apple over a formal antitrust complaint.

Apple’s dependence on China is a vulnerability rivals could exploit. Most Apple products, including the iPhone, are assembled in China before being shipped to customers around the world.

Although Apple has a small manufacturing presence in the United States, most of it occurs in China. Apple’s reliance on supply chains and assembly in the country is something its rivals might point out amid growing geopolitical tensions between the United States and China.

And it’s already happening.

Earlier this month, Peter Thiel, billionaire tech investor and Facebook board member, said Apple was less likely to face China because of its close ties to the country. (He also had similar criticisms of Google’s efforts in China.)

“Apple is probably the one that’s structurally a real problem, because the entire iPhone supply chain is made from China,” Thiel said. “Apple is the one that has real synergies with China.”