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SpaceX Chief Engineer Elon Musk takes part in a joint news conference with T-Mobile CEO Mike Sievert (not pictured) at the SpaceX Starbase, in Brownsville, Texas, U.S., August 25, 2022.

Adrees Latif | Reuters

Elon Musk has announced big, albeit confusing, plans for Twitter since he took over the social network last month.

Musk wants to vastly increase the revenue the company makes through subscriptions while opening up the site to more “free speech,” which in some cases seems to mean restoring previously banned accounts like the one owned by former president Donald Trump.

But Musk’s plans for Twitter could put it in conflict with two of the biggest tech companies: Apple and Google.

Tensions are brewing

One of the biggest risks to Musk’s vision for “Twitter 2.0” is the possibility that his changes violate Apple or Google’s app rules in a way that slows down the company or even gets its software booted from app stores.

Tensions are already brewing. Musk complained in a tweet just last week about app store fees that Google and Apple charge companies like Twitter.

“App store fees are obviously too high due to the iOS/Android duopoly,” Musk tweeted. “It is a hidden 30% tax on the Internet.” In a follow-up post, he tagged the Department of Justice’s antitrust division, which is reportedly investigating app store rules.

His complaint is over the 15% to 30% cut Apple and Google take from purchases made inside apps, which could eat into the desperately-needed revenue from Musk’s plans for $8 per month from Twitter Blue subscriptions.

Over the weekend, Phil Schiller, the former head Apple marketing executive who still oversees the App Store, apparently deleted his widely-followed Twitter account with hundreds of thousands of followers.

Phil Schiller, senior vice president of worldwide marketing at Apple Inc., speaks at an Apple event at the Steve Jobs Theater at Apple Park on September 12, 2018 in Cupertino, California.

Justin Sullivan | Getty Images

There are signs Twitter has already seen an increase in harmful content since Musk has taken over, putting the company’s apps at risk. In October, shortly after Musk became “chief Twit,” a wave of online trolls and bigots flooded the site with hate speech and racist epithets.

The trolls organized on 4chan, then barreled into Twitter with anti-Black and Jewish epithets. Twitter suspended many of the accounts, according to the nonprofit Network Contagion Research Institute.

Musk’s plan to offer paid blue verification badges have also led to chaos and accounts impersonating major corporations and figures, which have caused some advertisers to shy away from the social network, in particular, Eli Lilly after a fake verified tweet erroneously said insulin would be provided for free.

The app stores noticed.

“And as I departed the company, the calls from the app review teams had already begun,” former Twitter head of trust and safety Yoel Roth wrote this month in the New York Times.

Fees and subscription revenue

Twitter and Apple have been partners for years. In 2011, Apple deeply integrated tweets into its iOS operating system. Tweets that function as official company communications are regularly posted under Apple CEO Tim Cook’s account. Apple has advertised new iPhones and its big launch events on Twitter.

But the relationship appears poised to change as Musk moves to generate a larger bulk of income from subscriptions.

Twitter reported $5.08 billion in revenue in 2021. If half of that comes from subscriptions in the future, as Musk has said is the goal, hundreds of millions of dollars would end up going to Apple and Google — a small amount for them, but a potentially massive hit for Twitter.

One of Apple’s main rules is that digital content — game coins, or an avatar’s outfit, or a premium subscription— that’s purchased inside an iPhone app, has to use Apple’s in-app purchasing mechanism, in which Apple bills the user directly. Apple takes 30% of sales, decreasing to 15% after a year for subscriptions, and pays the remainder to the developer.

Companies such as Epic Games, Spotify, and Match Group lobby against Apple and Google’s rules as part of the Coalition for App Fairness. Microsoft and Meta have also filed briefs in court criticizing the system and made public remarks aimed at app stores.

One option for Musk is to take an approach similar to what Spotify has done: Offer a lower $9.99 price on the web, where it doesn’t pay Apple a cut, and then users simply log in to their existing account inside the app. Users subscribing to a Premium subscription inside the iPhone app pay $12.99, effectively covering Apple’s fees.

Or Twitter could go further, like Netflix, which stopped offering subscriptions through Apple entirely in 2018.

Musk could sell Twitter Blue on the company’s website at a cheaper price and tweet to his over 118 million followers that Blue is only available on Twitter.com. It might work and could help cut Apple out of any fees.

But that also means Twitter would have to remove many options for informing users about the subscription inside the app, where they’re most likely to make a purchasing decision. And Apple has detailed rules about what apps can link to when telling users about alternative ways to pay.

As Netflix’s app says: “You can’t sign up for Netflix in the app. We know it’s a hassle.”

A power struggle over content moderation

Tim Cook, chief executive officer of Apple Inc., speaks during the Apple Worldwide Developers Conference (WWDC) in San Jose, California, U.S., on Monday, June 4, 2018. 

David Paul Morris | Bloomberg | Getty Images

Musk faces the power of Apple and Google and their ability to decline to approve or even pull apps that violate their rules over content moderation and harmful content.

It’s happened before. Apple said in a letter to Congress last year that it had removed over 30,000 apps from its store over objectionable content in 2020.

If app store-related problems strike Twitter, it could be “catastrophic,” according to the former Twitter head of trust and safety Roth. Twitter lists app review as a risk factor in filings with the SEC, he noted.

Apple and Google can remove apps for various reasons, like issues with an app’s security and whether it complies with the platform billing rules. And app reviews can delay release schedules and cause havoc whenever Musk wants to launch new features.

In the past few years, the app stores have started more closely scrutinizing user-generated content that starts shading into violent speech or social networks that lack content moderation.

There’s precedent for a complete ban. Apple and Google banned Parler, a much smaller and conservative-leaning site, in 2020 after posts on the site promoted the U.S. Capitol riot on Jan. 6 and included calls for violence. In Apple’s case, the decision to ban high-profile apps is made by a group called the Executive Review Board, which is led by Schiller — the Apple executive who deleted his Twitter account over the weekend.

Although Apple approved Truth Social, Trump’s social networking app, in February, it took longer for Google Play to approve it. The company told CNBC in August that the social network lacked “effective systems for moderating user-generated content” and therefore violated Google’s Play Store terms of service. Google eventually approved the app in October, saying that apps need to “remove objectionable posts such as those that incite violence.”

Musk reportedly fired many of Twitter’s contact content moderators this month.

Apple and Google have been careful while banning apps like Parler, pointing to specific guideline violations like screenshots of the offending posts, instead of citing broad political reasons or pressure from lawmakers. On a social network as large as Twitter, it’s often possible to find content that hasn’t been flagged yet.

Still, Apple and Google are unlikely to want to wade into a difficult battle over what constitutes harmful information and what doesn’t. That could end up inviting public scrutiny and political debate. It’s possible that app stores simply delay approving new versions instead of threatening to remove apps entirely.

Future features could also irk Apple and Google and prompt a closer look at the platform’s current operations.

Musk has reportedly talked about allowing users to paywall user-generated videos — something that former employees think would lead to the feature being used for adult content, according to the Washington Post.

Apple’s App Store has never allowed pornography, a policy that dates back to the company’s founder, Steve Jobs, and Google also bans apps centered around sexual content.

Anything that isn’t safe for work needs to be hidden by default. Twitter currently allows adult content, which could put it even more directly into reviewer sights.

“Apps with user-generated content or services that end up being used primarily for pornographic content … do not belong on the App Store and may be removed without notice,” Apple’s guidelines say.

But Musk often runs towards battles, not away from them. Now he has to decide whether it’s worth taking on two of the most valuable and powerful companies in Silicon Valley over 30% fees and Twitter’s ability to host edgy tweets.

An Apple representative didn’t respond to a request for comment. A Google representative declined to comment. Twitter didn’t respond to an email and the company no longer has a communications department. Musk didn’t respond to a tweet.

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Microsoft, Amazon AI partnerships face scrutiny from British regulators

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Microsoft, Amazon AI partnerships face scrutiny from British regulators

A Microsoft logo seen displayed on a smartphone screen and Amazon logo in the background in Athens, Greece on October 5, 2023. 

Nurphoto | Nurphoto | Getty Images

British antitrust regulators are seeking views on partnerships between Microsoft and Amazon with smaller generative AI model makers.

The U.K.’s Competition and Markets Authority on Wednesday said that it was opening invitations to comment for interested third parties to give their views on major AI partnerships between Microsoft and French AI firm Mistral, and Amazon and U.S. startup Anthropic, as well as Microsoft’s hiring of former employees from Inflection AI.

The CMA, which is seeking views from interested parties by May 9, is attempting to investigate whether the arrangements between these companies qualify as mergers.

The invitation to comment is the first part of an information gathering process that comes ahead of the launch of a formal Phase 1 review by British regulators. An invitation to comment does not start the formal Phase 1 review, the CMA noted.

Microsoft disputed the notion that its deal with Mistral and its hirings from Inflection constituted mergers.

In a statement, a Microsoft spokesperson said: “We remain confident that common business practices such as the hiring of talent or making a fractional investment in an AI start-up promote competition and are not the same as a merger.”

“We will provide the UK Competition and Markets Authority with the information it needs to complete its inquiries expeditiously,” the spokesperson added.

An Amazon spokesperson said it was “unprecedented” for the CMA to review a collaboration of the kind that the company had agreed with Anthropic.

“Unlike partnerships between other AI startups and large technology companies, our collaboration with Anthropic includes a limited investment, doesn’t give Amazon a board director or observer role, and continues to have Anthropic running its models on multiple cloud providers,” Amazon’s spokesperson said.

“By investing in Anthropic, which has just released its industry-best, new Claude 3 models, we’re helping make the generative AI segment more competitive than it’s been the last couple years. And, customers are very excited about the opportunities this collaboration is providing them. We’re confident that the facts speak for themselves, and hope the CMA agrees to resolve this quickly.”

This breaking news story is being updated.

Correction: The article has been updated to reflect the CMA is seeking views on a partnership between Microsoft and Mistral, and a separate arrangement between Amazon and Anthropic.

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U.S. prosecutors seek 36-month sentence for ex-Binance CEO Changpeng Zhao

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U.S. prosecutors seek 36-month sentence for ex-Binance CEO Changpeng Zhao

Changpeng Zhao, founder and CEO of Binance, attends the Viva Technology conference dedicated to innovation and startups at Porte de Versailles exhibition center in Paris on June 16, 2022.

Benoit Tessier | Reuters

U.S. prosecutors are seeking an above-guidance sentence of 36 months for the former CEO of cryptocurrency exchange Binance on charges of enabling money laundering, according to a sentencing memorandum out late Tuesday.

The memorandum, which was filed with the court for the western district of Washington, states that Zhao should serve a higher sentence that suggested under advisory guidelines to “reflect the gravity of his crimes.”

Under advisory guidelines, Zhao’s sentencing would come in at a range of 12 to 18 months in prison.

“A custodial sentence of 36 months—twice the high end of the Guidelines range—would reflect the seriousness of the offense, promote respect for law, afford adequate deterrence, and be sufficient but not greater than necessary to achieve the goals of sentencing,” U.S. prosecutors said.

Zhao is accused of wilfully failing to implement an effective anti-money laundering program as required by the Bank Secrecy Act, and of effectively allowing Binance to process transactions involving proceeds of unlawful activity, including transactions between Americans and individuals in sanctions jurisdictions.

Binance has separately been sued by the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission over the alleged mishandling of customer assets and the operation of an illegal, unregistered exchange in the U.S.

This crypto cycle is different from past ones, Binance CEO says

The U.S., which separately accuses Binance and Zhao of violating the U.S. Bank Secrecy Act and sanctions on Iran, ordered Binance to pay $4.3 billion in fines and forfeiture. Zhao agreed to pay a $50 million fine.

Zhao stepped down as Binance’s CEO in November last year after reaching this plea and was replaced by the former Abu Dhabi markets regulator’s chief, Richard Teng.

Zhao was not immediately available for comment when contacted via social media platform X. Binance has yet to return a request for comment when contacted by CNBC.

‘Unprecedented scale’ of financial crime

Prosecutors say that Zhao violated U.S. law on an “unprecedented scale,” and that he had a “deliberate disregard” for Binance’s legal responsibilities.

In the memorandum of Tuesday, prosecutors said that, under Zhao’s control, Binance operated on a “Wild West” model.

“Zhao bet that he would not get caught, and that if he did, the consequences would not be as serious as the crime,” the memorandum stated.

“But Zhao was caught, and now the Court will decide what price Zhao should pay for his crimes.”

Zhao’s official sentencing is expected to take place on April 30.

New Binance CEO: Building a robust compliance program after an immature past

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Amazon is opening cloud regions in Southeast Asia to meet customer demand, CTO says

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Amazon is opening cloud regions in Southeast Asia to meet customer demand, CTO says

Generative AI has to incorporate cultural knowledge, Amazon CTO says

Amazon is opening cloud regions in Southeast Asia because customers want their data stored securely in their own countries, Amazon Chief Technology Officer Werner Vogels said in an exclusive interview.

“The reason for this is that many of our customers have been asking for that. They really wanted something local such that they can meet, for example, local data storage requirements, or protection of personal identifiable information,” Vogels told CNBC’s JP Ong.

Amazon’s cloud computing division, Amazon Web Services, was the world’s largest cloud service provider in the fourth quarter, accounting for 31% of total cloud spending, according to a Feb. 26 report from Canalys.

An AWS region is a physical location where data centers are clustered. Within each AWS region are a minimum of three separate availability zones. Each zone has its own power, cooling and physical security and is connected through redundant, ultra-low-latency networks.

“And it’s not just startups that are looking for that. Big enterprises and government agencies as well. You can imagine government agencies want to go through a digital transformation as well,” Vogels said.

“And for them, it’s important to have these kinds of technologies on the ground, in [the] country to make sure that they can serve their customers best or their citizens best,” said Vogels.

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Amazon in November said it is launching a new AWS Region in Malaysia this year. It previously committed a 25.5 billion Malaysian ringgit ($6 billion) investment by 2037 to support the government’s ambitions to transform Malaysia into a “high-income” digital economy by 2030.

“This new AWS Region will also enable customers with data residency preferences to store data securely in Malaysia, help customers to achieve even lower latency, and serve demand for cloud services across Southeast Asia,” the statement said.

This comes after AWS opened a cloud region in Indonesia in December 2021 and in Singapore in 2010. AWS is also planning to launch an infrastructure region in Thailand.

AWS already operates multiple regions across North America, South America, Europe, China, Asia Pacific, South Africa and the Middle East.

“And especially, of course, the security capabilities that AWS has, that allows us to protect these customers. Security, will be, and is forever, our number one priority. [It] is our number one investment area,” said Vogels.

“And to be able to keep customers safe in our compute regions, [it] is of great attraction to companies here in the region and also governments.”

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