App store antics: Legal screws tighten for Google, Apple

PARIS - David Barnard owes his entire livelihood to Apple.

In 2008, he sold his car to start a company building apps for the fledgling iPhone. He's since found success making what he self-deprecatingly calls "boring" apps, including ones that check the weather or help drivers monitor their gas use.

But his conflicting feelings sum up a growing debate -- playing out in courts and parliaments around the world -- over whether both Apple and Google are abusing their monopoly over the app market. 

In a world first, South Korean MPs passed a law Tuesday banning the two tech giants from forcing app developers to use their payment systems.

Until now, those restrictions have allowed Apple to take a cut of up to 30 percent from payments made inside apps downloaded via the App Store, and Google to do the same through its Play Store. 

The tech giants, whose operating systems run on 99 percent of the world's smartphones, have argued this is fair recompense for providing the platforms that allow apps to be downloaded in the first place.

And to some extent, Barnard agrees. "Apple enabled me to build a business, which I'm incredibly grateful for," he said from his home in Texas. "But it comes with some pretty big trade-offs."

Barnard said he had witnessed frustrating cases of companies building clever apps, only for Apple to release similar features that work better with the phone's technology "in ways that developers can't compete with".

And with tens of billions of dollars floating through Apple and Google's payment systems as apps become increasingly integrated into people's shopping and entertainment habits, the commission charges have come in for particularly fierce opposition.

EPIC LEGAL BATTLES 

The fees are at the heart of a bitter lawsuit between Apple and Epic Games, maker of the phenomenally successful video game Fortnite.

The game lets players spend real money on digital items like clothing and weapons. It sounds frivolous, but the trial revealed that this translated to at least $100 million collected by Apple. 

Furious over these lost profits, Epic is also suing both Apple and Google in Australia and has filed complaints with EU and UK competition authorities, in what competition lawyer Pierre Zelenko described as a "worldwide battle" against the tech giants.

"They're piling on the pressure on multiple fronts to have more chances of a recognized authority coming out in their favor," the Linklaters lawyer said. 

Epic are not the only challengers taking on the app market overlords.

In July, 37 US states banded together to sue Google, alleging that the Play Store represents an illegal monopoly.

They claim Google used various strategies to prevent viable competitors to the Play Store emerging, including offering to pay Samsung to make its Galaxy Store less appealing. 

Consumers are meanwhile waging class actions against both companies in the US and UK, while France's competition authority has joined forces with an alliance of start-ups to take Apple to court.

'TOXIC MESS'

Analysts say the new South Korean law could set a precedent as US and European lawmakers debate similar proposals to ban tech giants from forcing customers to use their app stores and payment systems. 

Both Apple and Google have sought to fend of criticism that its hefty fees strangle smaller businesses, by taking a reduced 15 percent from companies earning less than $1 million a year from app sales.

Last week, Apple also proposed a settlement to a class action that would see it pay $100 million to smaller developers like Barnard. 

The offer "clarified" the company's policies to state that developers can use information collected inside apps -- like customers' email addresses -- to tell them about payment efforts that don't involve handing money to Apple.

But developers have complained that the changes are much less radical than Apple claims.

"I've finally come to the conclusion that it's going to take regulation to get Apple to do right by developers and ultimately customers," Barnard said. 

Both tech giants have argued that their stores help consumers by vetting apps, offering better security and privacy. 

Without the App Store, Apple chief Tim Cook told the Epic trial, the app marketplace would be "a toxic kind of mess". 

Barnard broadly agrees that Apple's system makes life easier for consumers, and that it's entitled to reward itself for that.

But he also thinks the vast amounts the company is paying itself are untenable.

"It's time for Apple to rethink how much they charge," he said.

Agence France-Presse

Bitcoin's promise: A financial revolution the web's been waiting for

Bitcoin may not be the messiah of a new currency its hardcore fans yearn for, but it may herald the deeper financial revolution the internet has been waiting for.

While computers and smartphones have brought the web to more than a third of the world's population, online commerce still largely depends on a banking system that has changed little over recent decades, some of it relying on computer code written before the web was born.

The growing interest in bitcoin, a digital currency that requires no centralized body to handle transactions, is beginning to change all that.

"The rise of bitcoin has changed everyone's idea of what a good payment system should be," says Manu Sporny, CEO of web payments company Digital Bazaar, who is spearheading an effort to get the industry together to agree on standards for handling online transactions. "Bitcoin raised the bar, so everyone's got to come in and match that in some way."

A key moment, Sporny and others say, will be a meeting in Paris next week hosted by the World Wide Web Consortium, or W3C, one of the key bodies for setting internet standards.

Gathering for the first time to discuss web payment standards will be telecom operators such as Deutsche Telekom , Telefonica and AT&T, payment companies including SWIFT, PayPal and Gemalto, as well as the U.S. Federal Reserve.

Bitcoin can claim some credit for this buzz of activity.

Much of the focus on bitcoin has been on its meteoric rise in value - soaring from $30 a year ago to above $1,000 late in the year - which has been only slightly dented by the collapse last month of Mt. Gox, a leading bitcoin exchange, with half a billion dollars' worth of bitcoins missing.

But bitcoin as a currency might be a distraction.

Underpinning the digital currency is a combination of key computing principles - decentralized timestamping, public key cryptography and a proof of work system - that promise to revolutionise transactions.

Says Peter Vessenes, CEO of bitcoin start-up CoinLab and chairman of the Bitcoin Foundation, an advocacy group promoting its adoption: "Those three could be turned into money, but they could also do a lot of other things."

CHEAPER DEALS

What interests some, and worries others, among those due to attend the Paris meeting is the promise bitcoin offers in cutting the cost of moving money around.

"If they can have it cheaper, they will make it cheaper," said Marcus Swanepoel of Switchless, a Singapore-based company offering to integrate bitcoin processes into traditional banks and telecom companies.

Bitcoin poses a challenge for those used to handling consumer transactions: PricewaterhouseCoopers estimates that credit card companies charge around 3 percent in transaction fees. PayPal's cut can go as high as 4 percent. Those same transactions via bitcoin firms such as Coinbase and BitPay, which bypass central financial institutions, are as likely to be free.

However, Visa Inc's head of innovation Jim McCarthy told an investors' conference this month that while there were things to be learned about bitcoin, "I don't see those as the things that are going to tip the apple cart anytime soon."

MasterCard and Visa will not be at the Paris meeting, noted Sporny.

"GETTING WHACKED"

Indeed, there's plenty of skepticism that bitcoin will amount to anything, with critics pointing to recent setbacks such as Mt. Gox and the libertarian bent of some of its supporters, as indicators it's little more than a Ponzi scheme.

Some of bitcoin's doubters come from within. Mike Hearn, a key contributor to the code underpinning bitcoin, dismisses talk of Ponzi schemes, but worries about complacency. "A lot of people seem to believe it's a done deal, a dead cert. And I don't see it that way at all."

Hearn says that if bitcoin is going to challenge or win over the banking mainstream it needs to adopt better security while making it easier to use. And then, it needs to reach out to overcome the banking world's anxiety about regulators and its perceived links to crime.

"The banking blockage, where all banks are afraid of touching bitcoin because they're afraid of getting whacked by governments, is still the biggest challenge that bitcoin faces," he said.

COOPERATION

Switchless' Swanepoel believes this fear is already dissipating. Standard Bank of South Africa, for example, recently ran a pilot using Switchless technology to integrate bitcoin trading into the bank's own currency systems.

He sees similar interest among telephone operators and post offices looking for a cheap way to build a system to handle monetary transactions. But if bitcoin does make it into these behemoths, it's likely to accompany existing technologies. "You don't see bitcoin as something that would eliminate how things are done at the moment," Swanepoel said in a phone interview. "They're more likely to sit side by side."

Start-up Ripple, for example, offers a way for users to buy and sell currencies using some bitcoin technologies but not its computer-hogging method of confirmation, called mining. End users needn't know or care that they're using a system with bitcoin roots.

"Then people won't even know they're using it, they'll be using brands that they trust that will be using these protocols. All they'll know is that they suddenly get to send money to India for free, instantly," said Ripple CEO Chris Larsen.

MOBILE WALLET

Bitcoin's biggest potential market may be among the millions of people with limited access to proper banking services.

Bitcoin naturally lends itself to the idea of a mobile wallet, and of small payments that have so far been too expensive for mass adoption. Users of dogecoin, a variant of bitcoin, for example, raised funds for the Jamaican bobsled team and three Indian athletes to go to last month's Winter Olympics, and this week raised more than $30,000 to build wells in Kenya.

Bitcoin and its offshoots also offer a way round government currency controls - either by converting fiat currency to a virtual currency that can be sent overseas, or by bypassing the local currency entirely.

Next week, an Icelander who calls himself Baldur Friggjar Óinsson will start releasing a new crypto-currency he has created himself, Auroracoin, to all Icelanders who want some. The idea, he said in an email interview, "is to free the Icelandic people from fiat currency and currency controls" by giving them access to a currency that can be traded online or, in theory, used to pay for goods and services.

Icelanders have been restricted from converting their cash into foreign currency since the 2008 financial crisis. Each Icelander can download their allocation of Auroracoins, worth about $500 at current prices, from a website.

"Hopefully this is the beginning of a lasting revolution, where the power over money is removed from the elite and placed in the hands of the people," Baldur said.

BEYOND MONEY

Revolutionary talk aside, the legacy of bitcoin could be in the way it can decentralise any kind of transaction. The record of all transactions using the bitcoin protocol are stored in something called a blockchain - a log of where all bitcoins have changed hands.

Forget bitcoin as merely a currency, said the foundation's Vessenes, and think of it as a decentralised way to confer and agree ownership.

The smallest unit of bitcoin, the satoshi, could be a token that represents ownership of a share - with details of who should be paid a dividend, or who can vote at shareholder meetings - all built directly into the token. Ownership of a car could be managed the same way, so it only responds to someone who can prove possession and ownership of that token.

"Money, or what one perceives as money, is just a form of disintermediated trust," says Pindar Wong, a Hong Kong-based consultant who has been working on internet-based payment technologies. "There's a whole scope of innovation here and we're just touching the tip of a very big iceberg."

source: www.abs-cbnnews.com

What is bitcoin and how does it work?

SAN FRANCISCO - Mt. Gox, once the world's biggest bitcoin exchange, abruptly stopped trading on Tuesday, shaking investor confidence in the digital currency that is struggling for legitimacy.

WHAT IS BITCOIN?

A form of electronic money independent of traditional banking, bitcoins started circulating in 2009 and have become the most prominent of several fledgling digital currencies.

The virtual currency relies on a network of computers that solve complex mathematical problems as part of a process that verifies and permanently records the details of every bitcoin transaction that is made.

Unlike traditional currencies, where a central bank decides how much money to print based on goals like controlling inflation, no central authority governs the supply of bitcoins. Like other commodities and currencies, its value depends on people's confidence in it.

HOW VOLATILE IS IT?

The dollar price of bitcoins quoted on online exchange Bitstamp spiked from around $30 a year ago to more than $1,100 in December as more people became aware of the currency and speculators jumped into the highly volatile market. But growing attention from regulators and concerns that bitcoins could be more susceptible to fraud than previously thought have sparked a steady decline in prices, to around $530 on Tuesday.

Compounding the issue, its price can vary greatly depending on the exchange.

WHERE CAN I USE MY BITCOINS?

Proponents say bitcoins could one day become widely used by consumers for online shopping and other electronic transactions. Certain online retailers such as Overstock.com and physical stores, mostly smaller operations, already accept the digital currency, but its adoption is not widespread.

Critics say bitcoin is too volatile to be widely adopted and warn of its lack of regulation and its use to pay for illegal drugs and other nefarious transactions.

HOW DO YOU STORE, TRADE AND SPEND BITCOINS?

Bitcoins are held in virtual wallets with unique keys. Transactions are made by sending bitcoins from one wallet to a unique key associated with another wallet in a cryptographic process that is verified by computers across the bitcoin network.

Bitcoin wallets can be stored offline or online at exchanges like Bitstamp and BTC-E.

HOW ARE BITCOINS CREATED?
The system was designed to reward computers that do the crucial work of verifying transactions with the occasional payoff of new bitcoins in a process known as bitcoin mining.

The growth in the virtual currency's value has created a market for souped-up computers and chips especially designed for the cryptographic calculations used in bitcoin.

About 12.4 million bitcoins, worth $6.2 billion at recent prices, have been minted since the currency began circulating, according to Blockchain.info.

WHAT HAPPENED TO MT. GOX?

The Tokyo-based bourse halted withdrawals earlier this month after detecting "unusual activity", and on Tuesday it abruptly stopped trading. An unverified document circulating on the Internet purporting to be a crisis plan for Mt. Gox said more than 744,000 bitcoins were "missing due to malleability-related theft."

Mt. Gox began as a website for exchanging trading cards before turning to bitcoin.

WHAT'S THE FUTURE OF BITCOIN?

Bitcoin critics say Mt. Gox's apparent failure proves the unregulated currency is far from ready for widespread use. They also point to hacking attacks at other exchanges.

But proponents say it's early days for virtual currencies and note that newer bitcoin exchanges and other startups aiming to make bitcoin mainstream are supervised by seasoned venture capitalists and financial experts.

Many bitcoin advocates still hold out the hope of creating a digital currency system free of government intervention or control.

source: www.abs-cbnnews.com

7 tips to protect your BItcoins

MANILA -- A security software firm is urging Filipinos to learn the benefits and risks of Bitcoin before using the increasingly popular online currency.

In a statement, Kaspersky Lab noted how Bitcoin transactions are fast, taking around only 10 minutes to verify a transaction. It added that it is cheap and convenient, removing the need to maintain or pay for processing fees for a credit card company.

And similar to other money transfer services, it can be transferred from another person from halfway around the world in minutes and can be converted to traditional currencies.

Here in the Philippines, there is a growing community of Bitcoin enthusiasts called Bitcoin PH. An online exchange platform called BuyBitcoin.ph lets Filipinos have easier access to the online currency.

Kaspersky Lab, however, also mentioned some risks associated with the use of Bitcoin.

Since there is no central authority controlling it, there are no rules as fare as currency regulation goes, making Bitcoin highly volatile, it said, adding that central banks from different countries have issued public warnings about risks such as money laundering.

The Bangko Sentral ng Pilipinas has also yet to create regulations and measures to protect Bitcoin users.

On top of this, Kaspersky Lab said that Bitcoin transactions are irreversible, which means users must be more careful when using such currency. This, it said, may nurture fraudulent transactions, noting that there have been more than 30 instances of stolen or illegal transfers involving Bitcoin.

"While BItcoin can be a change-maker in money remittance and trading in the Asia Pacific region, people should be more wary about the risks associated with it. There are still countries in this region where no regulations exist to bind its users, and the fact that reversals cannot be done for Bitcoin transactions must make people more concerned about using the crypto-currency," said Bryan Sat, Kaspersky Lab's business development manager for the Philippines.

"Threats are not going away, it continuously evolves and hackers embrace every opportunity there is. With Bitcoin, hackers may find it easier to get into any user's online wallet and take their Bitcoin investments rather quickly," Sat added.

Having said these, Kaspersky Lab gave the following tips on how to keep your Bitcoins safe:

1. Don't keep them all in online banks or stock exchange services. There are newer institutions run by anonymous entities, so you have no guarantee that your money will be securely held or if you can have your money back if they are robbed.

2. Even if you consider a place that has a supposedly sterling reputation, again, there are more ways to breach a digital bank than a physical bank vault. Storing small amounts for current operations is okay, though.

3. Keep this offline wallet in a separate hard drive or a computer that is not connected to the Internet, only transferring Bitcoins to your Internet-connected device when you need to complete an online transaction.

4. Bitcoin users can certainly keep their money offline using free and widely available tools like Electrum or Armory that let you store your Bitcoins in heavily encrypted cases on your own hard drive.

5. Use a strong password with these or an open-sourced password-generating software.

6. Remember to back up your wallet so you don't end up throwing out all your life savings to the nearest landfill site.

7. Know where you keep them. James Howells, an IT worker from South Wales, once discarded an old hard drive containing his wallet which had around 7,500 Bitcoins inside or the equivalent of today's $6,235,000 (over P287 million).

source: www.abs-cbnnews.com