Welcome back to This Week in Apps, the weekly TechCrunch series that recaps the latest in mobile OS news, mobile applications and the overall app economy.

The app industry continues to grow, with a record number of downloads and consumer spending across both the iOS and Google Play stores combined in 2021, according to the latest year-end reports. App Annie says global spending across iOS, Google Play and third-party Android app stores in China grew 19% in 2021 to reach $170 billion. Downloads of apps also grew by 5%, reaching 230 billion in 2021, and mobile ad spend grew 23% year-over-year to reach $295 billion.

In addition, consumers are spending more time in apps than ever before — even topping the time they spend watching TV, in some cases. The average American watches 3.1 hours of TV per day, for example, but in 2021, they spent 4.1 hours on their mobile device. And they’re not even the world’s heaviest mobile users. In markets like Brazil, Indonesia and South Korea, users surpassed five hours per day in mobile apps in 2021.

Apps aren’t just a way to pass idle hours, either. They can grow to become huge businesses. In 2021, 233 apps and games generated more than $100 million in consumer spend, and 13 topped $1 billion in revenue. This was up 20% from 2020 when 193 apps and games topped $100 million in annual consumer spend, and just eight apps topped $1 billion.

This Week in Apps offers a way to keep up with this fast-moving industry in one place with the latest from the world of apps, including news, updates, startup fundings, mergers and acquisitions, and suggestions about new apps and games to try, too.

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Top Stories

Apple’s iOS privacy changes & competition catch up with Facebook, err Meta

Image Credits: TechCrunch

While it may be a hair too soon to say it’s the beginning of the end of Facebook, the social giant now called Meta is finally starting to feel the combined impacts of a number of challenges hitting all at once. On top of the ongoing issues over content moderation and the general harms of social media — as the world was alerted to by whistleblower Frances Haugen — the company, at last, also has a formidable threat to its future in the form of TikTok. The short-form video app has managed to do the seemingly impossible: stop Facebook’s growth and cut into its ads business. In its Q4 2021 earnings, Facebook reported its first-ever loss in daily active users, from 1.93 billion in Q3 to 1.929 billion in Q4. Those are still mind-blowing user numbers to be sure, but it’s the first real hint as to how Facebook’s inability to reach the younger generation and competition from TikTok could be stalling its growth. In addition, Meta’s family of apps (FB, Instagram, Messenger and WhatsApp) reported slower growth than in past quarters, from 2.81 billion to 2.82 billion.

Meanwhile, Meta is attempting to navigate a future to some sort of immersive “metaverse” that won’t be realized for perhaps a decade, while also trying to fend off the TikTok threat. CEO Mark Zuckerberg told staff to focus on Reels and other video projects, even as the company is simultaneously building out features with the metaverse in mind — like cross-platform avatars. TikTok isn’t just taking away users, it’s eating into Meta’s revenue. The company reported $10.3 billion in profit in the quarter, and EPS of $3.67, falling short of Wall Street’s expectation of $3.84. And it reported Q1 revenue guidance of $27-29 billion, down from Q4’s $33.67 billion. That’s not all TikTok’s fault, of course, Meta plainly said that Apple’s privacy changes introduced last year already cost it $10 billion in lost sales during 2021.

But even Apple can’t be fully at fault here. Both Snap and Pinterest have more nimbly weathered the disruption caused by the iOS privacy changes, according to their own earnings and the accompanying stock recoveries. (Snap even turned its first net profit.)

What’s ultimately the issue is that Meta lacks diversified revenue streams — ads account for 98% of its revenue. For example, despite being a longtime home for creators, Meta is only now spinning up new efforts to cash in on those economies through things like tips and subscriptions. Instagram’s subscriptions are just entering tests. Meta also started to dabble in web3 and NFTs, but has little to nothing to show for those efforts. It even had to shut down its cryptocurrency project. Meanwhile, when Meta has expanded into new areas — like VR-based gaming or e-commerce — it has done so with an eye on how those are tied to social networking products, including key apps like Facebook and Instagram. So if Meta’s grip on social begins to trend downwards, it could impact the rest of its business in the process.

The Open App Markets Act moves forward

A bill that could force Apple and Google to allow third-party app stores, sideloading and alternative payments, aka the Open App Markets Act, won Senate Judiciary Committee approval this week after gathering bipartisan support. It’s also a great example as to why the tech giants should have never let things get to the point of needing regulators to step in to even the playing field, as the bill in its present form is not really a win for either consumers or smaller developers in its present form.

Apple has aggressively fought against this legislation, making valid points that opening up mobile devices to sideloading could increase the risk of “malware, scams, and data-exploitation,” or so the company argued in a letter sent to Senate Judiciary Chair Dick Durbin and ranking Republican Chuck Grassley. Plus, Apple pointed out how sideloading could help “big media platforms” avoid the consumer privacy protections it’s added to its platform.

Not all developers are on board with the bill. The Coalition for App Fairness — which counts Match, Epic Games and Spotify among its members — backs the legislation. But another trade group representing small companies in the app economy, The App Association, wrote a letter to Durbin and Grassley stating their opposition to the bill due to the security and privacy issues it could introduce, among other things.

But the bill won’t likely become law without a number of changes. In early debates, for example, some senators raised concerns over the privacy impacts and unintended consequences of allowing a path for apps promoting hate speech to find their way onto consumer devices. The bill has also already been amended to make it more clear what sort of security considerations the app stores can take without violating the law.

Weekly News

Apple

• The iOS 15.4 beta added support for web app push notifications as well as other hints about AR/VR features. The current speculation is that Apple is preparing to support its upcoming goggles or headsets, not necessarily third-party AR or VR devices already on the market.
• An app developer’s lawsuit over App Store rejections and scams is able to proceed, a judge ruled. Instead of trying to make antitrust claims, the developer, Kosta Eleftheriou, is focused on issues like lost revenue over the inconsistent App Store Review process and having to compete with scammers who use fake ratings to boost their competitive apps.

Platforms: Google

• During its Q4 2021 earnings, Google said its Pixel phones — the Pixel 6 and 6 Pro — just had their best sales quarter ever, noting the phones were popular with consumers and carriers alike. The company didn’t break out the actual sales numbers, however. They’re tracked in the company’s “Other” category, which covers all hardware and other things outside its core businesses. The category grew 22% year-over-year to reach $8.2 billion.

Augmented Reality

Image Credits: Pinterest

• Pinterest expanded its AR shopping feature to include furniture and home décor. The company is working with a select group of U.S. retailers, including Crate & Barrel, Walmart, West Elm and Wayfair, to allow online shoppers to virtually place items in their home using the Pinterest app’s “Lens camera.” If the user then likes what they see, they can proceed to purchase the item directly from the retailer.

E-commerce

• TikTok commerce is popping. The company released some crazy stats at its creator event this week, including one metric that claimed 48% of TikTok users immediately purchased a product they saw on the platform.