๐Ÿ—ž30% Apple Tax, Yes Or No?

Antitrust might work?

Good morning. A fun fact to start your day: the first oranges weren’t orange, and they are green! ๐Ÿ˜ฏ In fact, the original oranges from Southeast Asia were a tangerine-pomelo hybrid. In warmer regions like Vietnam and Thailand, oranges are still green through maturity. 

Top stories of the day:

  1. 30% Apple tax, yes or no? Fortnite’s developer Epic Games said no - it sued Apple and filed an antitrust complaint to the European Commission.
  2. British inflation edged up to a 3-month high, extending the rise from a 4-year low; A more competitive London as a financial hub?
  3. Fashion brand performance: Gucci and its owner Kering v.s. Louis Vuitton and Dior (LVMH)


30% Apple Tax, Yes Or No?

Source: Twitter

Fortnite’s developer Epic Games said no. So it was taken down by Apple from the App Store last summer (till now). In return, Epic sued Apple.

What’s an “Apple Tax”? On Apple devices, app developers can only charge their users via the App Store payment system. Apple takes 30% of that revenue for using their platform. It does not allow you to build your own in-app payment system and circumvent the “tax”.

Epic: That’s too much

Epic thinks 30% is too much. In 2020, it declared war by launching its in-app payment system enabling gamers to buy points directly in the mobile game without using App Store.

  • It’s a huge number: Since 2012, Epic Games generated USD 1.2 bln from Apple’s App Store. Apple took USD 360 mln (for doing nothing๐Ÿ™ƒ).

Apple was not happy. So it removed the game Fortnite from the App Store and threatened to shut down Epic’s developer account for breaching the terms. Once the developer account is over, Epic would not be able to provide any services on Apple devices.

Epic responded with a lawsuit. The court ruled that Apple has the right to remove Fortnite for violating the Developers’ Agreement. Yet the case has not been concluded... little hope for Epic.

An antitrust complaint may work?

Yesterday, Epic changed its tactic by filing an antitrust complaint to the European Commission. Epic accused Apple of eliminating competition and giving its own platform preferential treatment.

  • Epic thinks Apple can charge as much as they wish under the current rule, from 30%, 50% to even 100%!

Looking ahead… Epic is not the first one to complain about the “Apple Tax”. Under the global antitrust trend, will it succeed?


Wall Street closed mixed. US recorded strong retail sales, and the Fed signals that it will maintain an accommodative stance and continue to push for stimulus. However, technology stocks faced inflation concerns, and the rapid spread of new variants also tempered enthusiasm.

European shares pulled back from near one-year highs on Wednesday over concerns of a possible rise in inflation. Kering slipped after sales at its Gucci brand fell more than expected. (Details in stories)

Hong Kong edged higher before mainland China’s reopening on Feb.18, with tech stocks leading the gains. China
 markets open today after the Chinese New Year holiday.


Which One Is (Perhaps) The Worst-Performing Luxury Brand In 2020?

Source: Town & Country Magazine, MEME, Morning Wrap

No matter talking about the share price, revenue growth, or earnings…. Gucci is the one (unfortunately ๐Ÿคฅ). 

Both Gucci and its owner Kering reported weaker-than-expected earnings yesterday. During the 4Q, Gucci sales dropped 10.3%, far below Wall Street’s 4% expectation.

  • Gucci, as a single brand, accounts for 60% of revenue and 80% of the profit of its owner Kering. So Kering also underperformed.
  • But other brands under Kering, including Bottega Veneta and Saint Laurent, recorded better growth.

Why? While losing international consumption, renewed lockdown across Europe even made local sales impossible. Its strategy change on cutting wholesale reliance also hurts but may finally benefit it in the long-term.

  • Yet investors are still concerned about the brand equity of Gucci as all other brands recorded stronger growth under the same market condition. Gucci is no longer attractive? ๐Ÿ˜ข

Looking ahead… Kering hopes to revive the brand and get back to high growth by holding more fashion events. Under that strategy, Gucci already had a “very, very encouraging” start in 2021, according to Kering.

Dior is more resilient

By contrast, Louis Vuitton and Dior added buoyancy to their owner LVMH, bringing 18% growth in LVMH’s fashion sales.

  • China is the biggest driver of that growth. Bain & Co. estimates China’s luxury spending expanded 48% in 2020, being the only region with positive growth while the world ex-China contracted by 28%.

What’s exciting: LVMH secured the USD 15.8 bln acquisition of the American jeweller Tiffany. So more to expect.

Wrap up: Since the beginning of 2020, the share price of Kering dropped 10%...while LVMH and Hermes jumped 29% and 32% respectively.


Climb Off Its Lows

Source: The Guardian

During the lockdown, you may spend 100% of your day at home, which makes a cozy home far more important than ever before. ๐Ÿ˜Œ How does this relate to the nation’s inflation, and even monetary policy?

British inflation edged up to a 3-month high of 0.7% in January, extending the rise from a 4-year low. 

What pushed up the inflation?

Despite January’s lockdown, prices rose in almost all categories as many businesses held back large discounts. 

  • Food and furniture are major contributors. Food retailers and household goods stores also gave out less discounts.
  • Demand side: consumers also spend more on new sofas, duvets, food, video games, and home entertainment during the third national lockdown. (You got the 1st answer).

Looking ahead: though the current inflation is still below the Bank of England’s 2% target, analysts said that the inflation rate was likely to rise in the coming months. The rise in Jan is the first step toward an above-target inflation rate by fall, and it could reach 2.5% by the end of this year.

Implication to BoE: The pick up in inflation in the UK would decrease the hopes of more stimulus from BoE, yet it doesn’t indicate tighter monetary policy. 

A more competitive London?

We know that London is facing increasing competition after Brexit as a financial hub. However, Brexit can be a “remarkable opportunity” to keep London more competitive by making more appealing financial rules, according to a cross-party parliamentary report on Wednesday. 

  • Ring the alarm bell: the shift in euro shares and swaps trading from London to Amsterdam and NY at the start of the year. 
  • But opportunities ahead? UK can draft its own financial rules nationally after leaving the bloc. UK regulators can embed more competitiveness into its law, though it also requires tighter oversight.


Wrapping Up Other Important News for You


  • Former US President Trump’s attack on Senate leader McConnell further divided the Republican party. 
  • US SEC sued Morningstar for making undisclosed rating adjustments to 30 commercial mortgage-backed securities.


  • Saudi Arabia is planning to increase oil production, reversing the recent output cut as the price recovered.
  • US retail sales recorded a 5.3% increase after 3 consecutive months of decline, buoyed by the recent stimulus payments.


  • Shopify beat forecasts on revenues, helped by soaring demand during the pandemic.
  • Ford is planning to invest USD 1 bln in a German electric vehicle plant, and plans all cars sold in Europe to be electric by 2030.
  • Amazon was accused by New York’s Attorney of failing to protect its workers during the pandemic.
  • Nestle is planning to sell its North American bottled-water brands for USD 4.3 bln, aiming to focus more on trendy brands.


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