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Apple Gives Up Some Control Over the App Store
Apple Makes Exceptions for Subscription Services
Apple (AAPL) is relinquishing some of its control over the apps in the App Store, announcing that the likes of Spotify (SPOT), Netflix (NFLX), and other media apps can create in-app links for customers to sign up for their services on their own websites. This will enable the apps to bypass giving Apple a cut of subscription fees. For years, app developers have decried Apple’s rule which prevented apps from directing users outside of the App Store to sign up.
The changes, which Apple said will go into effect in 2022, were part of an arrangement with the Japan Fair Trade Commission, which has been investigating Apple’s app business practices. The change will apply globally.
Apple Faces Regulatory Pushback
Apple’s decision comes as regulators across the globe are looking at the control the tech giant wields over the apps in the App Store. In the US, a judge is presiding over an antitrust case against Apple brought by Epic Games, the maker of Fortnite. Epic Games contends that Apple limits distribution of apps through the App Store and requires payments to be made only on Apple’s in-app payment system. Apple gets a 30% cut of that revenue. The changes coming in the new year do not apply to Epic Games.
Meanwhile, South Korea passed a new law earlier this week which requires Apple and Google (GOOGL) to allow alternative payment methods in its app stores.
Apple Still Gets a Cut
Apple was willing to let digital magazines, books, music, video, and newspaper apps share a link to their websites because they do not sell in-app goods and services that Apple would lose a cut of. The iPhone maker also said it would work with developers of these content apps to ensure users are protected when they click on an external link. It is worth noting that if the app developers sell a subscription through their app, Apple still gets a cut.
Apple has been feeling the heat as regulators around the world try to blunt some of its dominance in the app marketplace. While allowing content apps to share a single link is a step forward for Apple, it may not be enough to soothe regulators.
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Lithium Miners Ride EV Demand
Prices for Lithium Carbonate Surge
Albemarle (ALB) and Livent (LTHM) are two lithium miners sporting lofty valuations. Demand for lithium-based chemicals used in rechargeable batteries is soaring, sending prices surging. Lithium carbonate, one of the compounds needed to make batteries for electric vehicles, cost $14,386 per metric ton in August. In December it was $6,124 per metric ton. Meanwhile, forecasts call for the market to more than double in size from 2021 through 2025.
That was not always the case for the lithium miners. Back in 2018, prices for carbonate reached a high of $17,000 per metric ton only to fall in a boom-and-bust cycle. This time the EV market is red-hot with most vehicle markers churning out electric vehicles.
Miners Pour Money Into the Market
While history has a tendency to repeat itself, miners are pouring billions of dollars into the market. Albemarle recently raised $1.5 billion to bankroll expansion, while Rio Tinto (RTNTF), the diversified mining company, is spending $2.4 billion on a Serbia lithium project. Investors do not appear to be too concerned about a boom-bust cycle either. Albermarle is trading at 51 times earnings while Livent is at 89 times earnings.
While lithium itself is not in a shortage, low cost supplies of it are. As it stands, lithium is mainly mined in Australia or in the Andes and requires a conversion process to produce the chemical compounds that can slow down production. Because lithium plants take two years to mature, prices are likely to remain high and supply will stay tight for some time.
Competition Causes Challenges
A challenge facing lithium miners is the industry’s reliance on China, which controls the processing aspect of production. That requires companies like Albemarle to continue to invest in conversion facilities in China. It is why the valuations of Ganfeng Lithium (GNENF) and Tianqi Lithium , the Chinese producers, have surpassed Albemarle in stock market value.
Albemarle and Livent also face the prospect of more competition in the US. With semiconductor shortages causing massive delays in the supply chain, vehicle manufacturers are looking for several sources for key components. That could prompt partnerships with local miners. Tesla (TSLA) already inked a deal with Piedmont Lithium (PLL) and General Motors (GM) is investing in a lithium project in California. The lithium miners are no strangers to boom-and-bust cycles, but this time may be different given strong demand for EVs.
Friday Fundings: Checkr, VanMoof, and Quip
Human Resources Startup Now Sports a $4.6 Billion Valuation
Checkr, a human resources tech startup which counts Netflix (NFLX), Lyft (LYFT), and Coinbase (COIN) as customers, raised $250 million in venture funding. The Series E round was led by Durable Capital and included new investors Fidelity Management & Research as well as Franklin Templeton. Checkr now has a valuation of $4.6 billion.
Checkr, which launched in 2014 and has raised $550 million to date, handles background checks for its corporate customers, processing more than 30 million background checks per year. It relies on artificial intelligence to automate the process. The startup plans to use the money to expand the products it offers and make acquisitions, and it is eyeing an initial public offering as its next step.
E-Bike Startup Raises $128 Million in New Funding
VanMoof, an Amsterdam e-bike startup, raised $128 million in funding, increasing its total fundraising to $182 million in the past 24 months. The Series C round was led by Hillhouse Investment and included participation from existing investors Norwest Venture Partners, Felix Capital, Balderton Capital, and TriplePoint Capital.
The startup, which now claims to be the most funded e-bike company in the industry, has nearly 200,000 e-bikes on the road. It aims to get 10 million people on its e-bikes during the next five years, and hence the need to raise capital. VanMoof plans to use proceeds to reinvent how e-bike hardware and software is made. The goal is to improve the quality and reliability of its e-bikes.
Electric Toothbrush Maker Raises $100 Million
Quip, an oral healthcare startup which boasts more than 7.5 million users, raised $100 million in venture funding. The growth funding was led by Cowen Sustainable Investments, which focuses on sustainable companies. Quip is trying to disrupt the global oral healthcare market which is $450 billion in size by making electric toothbrushes and operating a digital platform.
Proceeds from the fundraising round are earmarked to grow its subscriber base, grow its companion app, and expand its product offerings, which currently includes refillable floss picks, mouthwash, gum, and electric toothbrushes. Quip also plans to use some of the money to branch further into offering virtual services, to expand globally, and to hire more employees.
Not-So-Breaking News
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General Motors (GM) is slashing production at its plants in North America because of chip shortages. It is the second time in recent weeks the car marker was forced to reduce production because of the supply-chain issues.
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Facebook’s (FB) WhatsApp was fined $267 million by Ireland for breaking European Union data privacy rules. The Data Protection Commission in Ireland said WhatApp did not tell customers what it is doing with the data it collects.
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Virgin Galactic (SPCE) is teaming up with the Italian Air Force to launch its first commercial space mission. The space company will take three crew members to the edge of space. The crew, which is paying for the trip, will study how the body reacts when moving from gravity to low-gravity.
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BMW (BMWG) is aiming to reduce its carbon emissions by 40% or more from 2019 levels by 2030. The vehicle maker plans to increase the amount of recycled and reusable materials it uses to 50% from 30%.
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American Eagle’s (AEO) second-quarter revenue missed Wall Street’s forecasts, which sent shares lower. The retailer said it saw a slowdown in online sales compared to a year ago and that back-to-school shopping happened later than in normal years.
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Financial Planner Tip of the Day
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