Apple sued by app developers, Unilever controversially reports higher profits, the battle for Twitter-esque text-based social media heats up

Good morning.

Here are the top 5 stories for British business leaders today:

1) UK app developers are suing Apple for extortionate App Store fees

• What happened: Apple are being suit by 1,500 app developers in the United Kingdom for £785 million in a class action over its App Store fees. Apple charges apps between 15% to 30% for in-app payments. This fee affects only 16% of apps (as other don’t require in-app payments). (Read more)

• Why it matters: Clearly, if the developers were successful in the law suit, this would be a huge payout for them, with some potentially raking in millions. Let’s take a look at the arguments likely to be presented by each side:

  • Apple: Will claim the fees it charges enable it to provide iOS users with a premium experience, such as reviewing apps for security and privacy concerns.

  • Developers: Will claim that Apple’s fee is unfair in the non-uniform way it’s applied which results in apps like games, news and streaming services paying, whilst others don’t. Developers also pay other fees such as an annual $99 fee to have their app in the App store. And they often pay Apple to buy search ads to appear in App store searches to be discovered by potential users.

2) Spotify is increasing its prices for the first time since 2011

• What happened: The individual plan Spotify account will increase by £1 a month to £10.99. Duo plans and family plans will also increase whilst student plans remain the same and Spotify continues to offer a free plan with ads. (Read more)

• Why it matters: Spotify continues to be a loss making company. In the latest financial results, losses (£207.3m) were 3 times the amount in the previous year. And this price hike follows the axing of 6% of staff in January. The price hike, along with other structuring changes, indicate that Spotify is shifting its focus from growth to profitability (although they did add 36 million monthly active users between April and June, so they are continuing to grow as well).

3) The battle for text-based social media (i.e. Twitter killers) - with Tiktok entering the battle ground

• What happened: Following the record-breaking Threads app by Instagram parent Meta, we are now seeing another heavy-weight (Tiktok) enter the battleground for text-based social media. Tiktok has added a feature that allows users to post with either video, photo or just text. (Read more)

• Why it matters: It is no more coincidence that Tiktok has launched a text-based feature just weeks after Threads became the fastest app in history to hit 100 million downloads. These social media giants sense an opportunity to capitalise on what Twitter (or more accurately, X) has demonstrated to be a popular medium of competition. And in doing so, to steal market share from Twitter .

4) Consumer goods giant Unilever has (somewhat controversially) seen its profit soar over the past 6 months after it increased prices

• What happened: Unilever, the conglomerate that owns Ben & Jerry’s, Magnum, Dove and other huge brands, had 21% higher profits. This is despite a fall in the number of products sold. Which means that the profit increase is entirely based on charging higher prices. (Read more)

• Why it matters: At a time where high-inflation has led to a cost of living crisis, it may seem a little disingenuous for a large corporation to be increasing prices. These higher prices are somewhat driven by higher costs for Unilever, but increasing profitability indicates they are benefiting themselves from charging more. Competition authorities have already investigated supermarkets to understand whether they are benefiting from inflation hikes - it remains to be seen whether they choose to investigate manufacturers as well.

5) Virgin Media 02 are cutting 2,000 jobs (which is 10% of its workforce)

• What happened: Virgin Media and 02 merged in 2021. These job cuts are a result of this integration, which allows them to operate more efficiently as on. (Read more)

• Why it matters: However, the job cuts are also reflective of a tough market for broadband and mobile operators. An industry expert explained … "revenues aren't really growing, but costs certainly are... because they're having to upgrade to 5G and to fibre and all of that requires investment.” BT has said it will axe up to 55,000 jobs by the end of the decade, mostly in the UK, with up to a fifth of those jobs replaced by technologies such as artificial intelligence. Vodafone has also said it would axe a tenth of its staff over the next three years, equating to 11,000 jobs. The telecoms market seems to be a tough one at the moment.