News You Can Use: Apple’s FacePalm, India e-commerce battle, Brexit looms

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We’re back for another 2019 tech news roundup, and it seems like we’ve returned not a moment too soon, with current events coming at us fast and furious over the past few weeks. In this recurring series, we review the latest headlines in marketing and technology, and explore what these developments might mean for your business.

Because, as we’re so fond of saying around here, staying on top of the news doesn’t just make you an informed citizen: It’s also great for business.

1) Apple hit with lawsuit as concern grows over FaceTime privacy bug (CNBC)

Fallout is continuing to mount over a recently discovered bug in Apple’s FaceTime app, dubbed ‘FacePalm,’ which allowed users to eavesdrop on calls. Apple is now facing a lawsuit from a Houston lawyer who claims that the bug allowed an outside party to listen in on his private deposition with a client and record sworn testimony.

The lawsuit claims the company “failed to exercise reasonable care,” and that Apple “knew, or should have known, that its Product would cause unsolicited privacy breaches and eavesdropping.” The suit further alleges that Apple did not adequately test its software and was “aware there was a high probability at least some consumers would suffer harm.”

The bug — and Apple’s slow response to patching it — have prompted renewed debate about the company’s much-touted commitment to data security and user privacy. The egregious nature of this latest case has led some analysts to question whether Apple is forgoing needed QA in order to get its products to market as quickly as possible.

Indeed, executives at Apple must be weighing every trick in the book in order to claw back the 12 percent decline in stock value the company suffered in December. But it remains to be seen whether this FaceTime bug is a bump in the road to recovery, or indicative of a more serious underlying problem with the company’s health.

2) Amazon and Walmart hit hard by new India e-commerce laws (CNN)

The top US e-commerce firms have invested billions of dollars in India, which boasts the world’s third-biggest economy and is one of the fastest-growing digital markets. But India has recently put in place regulations that have seriously cut into the profit margins of the biggest e-commerce firms, prompting tension between these companies and the Indian government.

The new rules stipulate that foreign online retailers can no longer strike deals with Indian companies in order to offer exclusive products or services that cannot be bought elsewhere. The rules also prevent these platforms from selling products distributed by companies they have invested in — in other words, Amazon cannot sell Whole Foods produce, and Walmart cannot sell Flipkart groceries.

These laws were drafted with the aim of preventing global retailers, like Walmart and Amazon, from using their size and wealth to artificially suppress prices and crowd out the competition. Tensions have arisen due to the uncomfortable fact that this is the precise business model both companies have used to dominate markets in the US, where anti-monopoly laws are much less strict.

The move follows an extensive campaign by India’s small business lobby against the outsized influence of Amazon and Walmart — the two companies account for more than 70 percent of all Indian e-commerce purchases.

As is so often the case, bad news for tech giants like Amazon and Walmart is great news for smaller businesses and marketers. India’s new laws will force bigger companies to compete on a level playing field, leaving far more space for smaller players to carve out their own corner of the market.

3) Investors brace for downturn in China’s tech sector (Reuters)

Investors are readying for a period of slower growth in China’s much-hyped tech sector, which in previous years has been a reliable driver of stock value. Weaker stock markets worldwide and an economic slowdown at home have stalled growth in China, which is now seeing tech valuations down 20 to 40 percent from previous highs a few months ago.

For much of the 2010s, tech investment in China enjoyed sky-high valuations and a rapid pace of IPO growth compared to other markets, including the United States. But beginning early last year, shortfalls among major electronics manufacturers and a general cooling of markets in both Beijing and Hong Kong have significantly cut into growth projections.

That said, investors are still generally optimistic about growth in China over the next few years — even these lower-than-expected IPO figures are still turning a handsome profit, after all.

4) Apple hits back at Facebook with ban on data-mining app (TechCrunch)

In a recent investigation, TechCrunch revealed that Facebook has been paying users to install the Research VPN app on their iPhones as part of ‘Project Atlas,’ providing Facebook with a trove of user data from a black-box ecosystem that is usually shut tight. Apple has struck back at Facebook by blocking the app from its devices before it could be officially shut down.

The ban came because Facebook allegedly violated Apple policy: Research VPN was built with device permissions that were only intended for internal corporate apps for Facebook employees, not for external testers or users. As part of Project Atlas, Facebook distributed the Research VPN app to 13 to 35-year-old participants, who were each paid $20 a month. The app let the company monitor every single bit and byte of data on the user’s phone which, in turn, allowed Facebook to decrypt and analyze a major competitor’s flagship technology.

As part of Apple’s pushback, the company revoked certification not only for the Research VPN app, but for all of Facebook’s internal-use employee apps, effectively breaking everything from the company chat system to their lunch menu.

The Apple-Facebook relationship has grown increasingly strained over the past few years, and these developments will only make things that much more tense. With Facebook facing a growing chorus of critics calling for more regulation, oversight, and accountability, it seems as though it’s only a matter of time before we have a massive public reckoning about Facebook’s business model.

5) ‘No deal’ Brexit now the likeliest outcome for UK’s divorce from EU (Bloomberg)

The UK has spent a grueling 2.5 years negotiating the terms of its exit from the European Union, and the withdrawal process is set to formally begin on March 29th. But the British government is still wracked by debate over what ‘Brexit’ should actually entail, and has not passed the critical legislation required to continue trade and diplomacy with the EU post-divorce. Leaders of the EU are warning that they are now expecting a disorderly, ‘no deal’ exit as the likeliest outcome.

The international business community is sounding the alarm over the potential damage a no-deal Brexit could inflict on the global economy. One in three firms that operate in the UK are considering relocating out of the country, and most economists predict that the British economy would suffer a severe and prolonged recession, one that would likely spread beyond the UK’s borders.

Investors and marketers whose work involves the UK will need to keep a close eye on the news for the next few weeks. If the UK does indeed crash out of the EU without a deal and trigger a recession, businesses will need to ask themselves a difficult question: Is the ever-reliable UK no longer a safe haven for stable investment?

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