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Epic’s latest argument in its fight against Apple keeps antitrust issues front and center

Epic Games, the game engine developer and creator of the wildly popular Fortnite game, is keeping the focus squarely on antitrust issues in its lawsuit against Apple as pressures mount to rein in anti-competitive practices of the world’s largest tech companies.

Antitrust arguments are gaining ground on both sides of the political spectrum, which could present a more favorable environment for Epic to make its case.

Earlier this month the Trump Justice Department filed its antitrust case against Google even as Congress laid out its roadmap for how to limit the monopoly power of a quartet of trillion-dollar companies: Facebook, Amazon, Apple and Alphabet (the parent company behind Google).

Epic’s lawyers acknowledged in the filing that the company breached its contract with Apple, but said that it only took that step because Apple’s contract restrictions are illegal, according to the company.

“When Epic took steps to allow consumers on iOS devices to make those payments directly, it breached some of the contractual restrictions that Apple imposes on iOS developers,” the lawyers wrote. “Epic did so because those contractual restrictions are unlawful. Epic chose to take a stand against Apple’s monopoly to illustrate that competition could exist on iOS, and that consumers would welcome and benefit from it. Epic did so without advance notice to Apple because Apple would otherwise have used its monopoly control to prevent that competition from happening.”

Ultimately, the argument comes down to whether Apple can claim ownership of commerce occurring on the phones they make and through the marketplace that companies are forced to use to access the users of those phones.

“It’s a crazy, misguided view,” according to a tweet from Epic Games founder and chief executive, Tim Sweeney.

The argument that Epic is making to the court is that Apple’s contractual restrictions are anticompetitive and deny choice to developers and consumers.

From Epic’s perspective, it took the steps it did in creating an in-game marketplace that its players could access directly, to prove that the App Store is not a necessary part of the iOS ecosystem; “they are just the tools Apple uses to maintain its monopoly,” the company’s lawyers wrote.

“Apple has no right to the fruits of Epic’s labor, other than the rights arising under a contract. Consumers who choose to make in-app purchases in Fortnite pay for Epic’s creativity, innovation and effort—to enjoy an experience that Epic has designed,” the company claimed in its filing.

The legal confrontation between one of the world’s most valuable tech company and one of the tech industry’s rising (and incredibly popular) stars began in August when Epic Games introduced a new payment mechanism to its Fortnite app allowing gamers to purchase its in-game currency directly and bypass Apple’s in-app purchase framework.

The company pushed the same update to its Android game, as well. Both Apple and Alphabet responded by taking down the company’s Fortnite game from its app stores.

Earlier this month, Judge Yvonne Gonzales Rogers, kept a temporary restraining order issued in September in place which simultaneously protected Epic’s Unreal Engine from retaliation by Apple, while allowing Apple to keep Epic’s Fortnite game off of its App Store.

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Judge denies Epic’s request to force Apple to bring Fortnite back to App Store

The California judge in the legal skirmish between Epic Games and Apple has denied Epic’s request that Apple be forced to reinstate Fortnite in the App Store, but did affirm that Apple cannot take action against the Epic Games developer accounts used to bring Unreal Engine developers access to Apple devices.

The court’s decision re-affirmed its proclamation from late August in a court hearing where Epic Games’ lawyers sought to obtain a temporary restraining order after Apple informed the Fortnite developer that they would be kicking the company off the App Store and terminating all of their company accounts.

The judge noted that “[p]reliminary injunctive relief is an extraordinary measure rarely granted,” and detailed that they were granting in part and denying in part Epic’s request, noting that “Epic Games bears the burden in asking for such extraordinary relief.”

From the filing:

Epic Games has strong arguments regarding Apple’s exclusive distribution through the iOS App Store, and the in-app purchase (“IAP”) system through which Apple takes 30% of certain IAP payments. However, given the limited record, Epic Games has not sufficiently addressed Apple’s counter arguments. The equities, addressed in the temporary restraining order, remain the same.

This confirms that Fortnite will not return to the App Store before the trial begins; a court filing this week signaled that the two companies will go to trial on May 3, 2021.

Both sides aimed to take their win and ignore their loss in the mixed decision.

“Epic Games is grateful that Apple will continue to be barred from retaliating against Unreal Engine and our game development customers as the litigation continues. We will continue to develop for iOS and Mac under the court’s protection, and we will pursue all avenues to end Apple’s anti-competitive behavior,” an Epic Games spokesperson said in a statement.

“Our customers depend on the App Store being a safe and trusted place where all developers follow the same set of rules,” an Apple spokesperson told TechCrunch in an emailed statement. “We’re grateful the court recognized that Epic’s actions were not in the best interests of its own customers and that any problems they may have encountered were of their own making when they breached their agreement. For twelve years, the App Store has been an economic miracle, creating transformative business opportunities for developers large and small. We look forward to sharing this legacy of innovation and dynamism with the court next year.”

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Apple ordered to not block Epic Games’ Unreal Engine, but Fortnite to stay off App Store

A district court denied Epic Games’ motion to temporarily restore Fortnite game to the iOS App Store, but also ordered Apple to not block the gaming giant’s ability to provide and distribute Unreal Engine on the iPhone-maker’s ecosystem in a mixed-ruling delivered Monday evening.

U.S. District Court Judge Yvonne Gonzalez Rogers said Apple can’t retaliate against Epic Games by blocking the gaming firm’s developer accounts or restrict developers on Apple platforms from accessing Unreal Engine. 

“The record shows potential significant damage to both the Unreal Engine platform itself, and to the gaming industry generally, including on both third-party developers and gamers,” she said.

But the ruling was not a complete win for Epic Games, which had also requested the sleeper hit title Fortnite to be restored on the iOS App Store. Rogers said the game will remain off the App Store unless Epic Games attempted to bring it back in accordance with App Store guidelines. 

More to follow…

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Fortnite for Android just got axed from the Google Play Store too

After Epic Games picked a fight with Apple over the sizable chunk of fees the company takes on transactions in its mobile ecosystem, it looks like the Fortnite developer will be waging a war on two fronts.

Epic added a direct payment option to its mobile game early Thursday, prompting Apple to remove Fortnite from the App Store. Now, the Android version of Fortnite has gone missing from Google’s own app marketplace too.

In a statement, Google defended the decision to remove Fortnite for breaking its platform rules:

The open Android ecosystem lets developers distribute apps through multiple app stores. For game developers who choose to use the Play Store, we have consistent policies that are fair to developers and keep the store safe for users. While Fortnite remains available on Android, we can no longer make it available on Play because it violates our policies. However, we welcome the opportunity to continue our discussions with Epic and bring Fortnite back to Google Play.

While Epic’s legal filing and in-game spoof of Apple’s iconic 1984 commercial make for a flashy fight, it’s not Epic’s first tangle over the mobile version of Fortnite. The company actually decided to keep Fortnite out of the Google Play Store back in 2018 over complaints very similar to its current crusade against the 30% cut that Google and Apple take from sales in their app stores. Fortnite is free-to-play, but players buy seasonal passes that unlock its progression system as well an in-game cosmetic items like skins that make Epic a ton of money and don’t affect gameplay.

Update: Epic has apparently filed a parallel suit against Google, citing the company’s old “Don’t be evil” mantra and alleging that the company violated antitrust rules by “using its size to do evil upon competitors.”

When Epic gave in and brought Fortnite back to the Google Play Store this April, it did so with a statement condemning Google’s treatment of apps outside of its own app marketplace. While all apps in Apple’s iOS come from the App Store, Google actually does allow apps like Fortnite to be sideloaded outside of Google Play, but the experience is generally less smooth and accompanied with warnings about malware.

“Google puts software downloadable outside of Google Play at a disadvantage, through technical and business measures such as scary, repetitive security pop-ups for downloaded and updated software, restrictive manufacturer and carrier agreements and dealings… Because of this, we’ve launched Fortnite for Android on the Google Play Store,” an Epic Games spokesperson said in April.

Fortnite is still available on Android, just not through Google’s app store. On its website, Epic points players to a direct download via QR code and the game is also available through Samsung’s Galaxy Store on supported devices.

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Daily Crunch: Apple removes Fortnite from the App Store

Epic Games takes on Apple, Instagram fixes a security issue and Impossible Foods raises $200 million. This is your Daily Crunch for August 13, 2020.

The big story: Apple removes Fortnite from the App Store

The controversy over Apple’s App Store policies has expanded to include Epic Games and its hit title Fortnite. The company introduced a direct payment option for its in-game currency on mobile, leading Apple to remove the app for violating App Store rules.

“Epic enabled a feature in its app which was not reviewed or approved by Apple, and they did so with the express intent of violating the App Store guidelines regarding in-app payments that apply to every developer who sells digital goods or services,” Apple said.

Epic, meanwhile, said it’s taking legal action against Apple, and that the game’s removal is “yet another example of Apple flexing its enormous power in order to impose unreasonable restraints and unlawfully maintain its 100% monopoly over the iOS In-App Payment Processing Market.”

The tech giants

Bracing for election day, Facebook rolls out voting resources to US users — The hub will centralize election resources for U.S. users and ideally inoculate at least some of them against the platform’s ongoing misinformation epidemic.

Instagram wasn’t removing photos and direct messages from its servers — A security researcher was awarded a $6,000 bug bounty payout after he found Instagram retained photos and private direct messages on its servers long after he deleted them.

Slack and Atlassian strengthen their partnership with deeper integrations — At the core of these integrations is the ability to get rich unfurls of deep links to Atlassian products in Slack.

Startups, funding and venture capital

Impossible Foods gobbles up another $200 million — Since its launch the plant-based meat company has raised $1.5 billion from investors.

Omaze raises $30 million after expanding beyond celebrity campaigns — The Omaze model has shifted away from celebrity-centric campaigns to include fundraisers offering prizes like an Airstream Caravel or a trip to the Four Seasons resort in Bora Bora.

We’re exploring the future of SaaS at Disrupt this year — We’re bringing Canaan Partners’ Maha Ibrahim, Andreessen Horowitz’s David Ulevitch and Bessemer Venture Partners’ Mary D’Onofrio together to help explain how the landscape has changed.

Advice and analysis from Extra Crunch

How to get what you want in a term sheet — Lior Zorea discusses the reality of term sheets.

Five success factors for behavioral health startups — Courtney Chow and Justin Da Rosa of Battery Ventures argue that behavioral health is particularly suited to benefit from the digitization trends COVID-19 has accelerated.

Minted.com CEO Mariam Naficy shares ‘the biggest surprise about entrepreneurship’ — Naficy got into the weeds with us on topics that founders don’t often discuss.

Everything else

Digital imaging pioneer Russell Kirsch dies at 91 — It’s hard to overstate the impact of his work, which led to the first digitally scanned photo and the creation of what we now think of as pixels.

AMC will offer 15-cent tickets when it reopens 100+ US theaters on August 20 — The theater juggernaut announced plans to reopen more than 100 theaters in the U.S. on August 20.

The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 3pm Pacific, you can subscribe here.

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Epic Games launches a campaign (and lawsuit) against Apple

Epic Games is launching an all-out campaign against Apple and its App Store rules.

Thursday morning, Epic Games introduced a new payment mechanism through a server-side update that allowed gamers to purchase Fortnite’s in-game currency directly, allowing the app to bypass Apple’s in-app purchase framework and the substantial cut that Apple takes. Apple quickly acted in banning the app from the App Store.

Apple soon released a statement:

Epic enabled a feature in its app which was not reviewed or approved by Apple, and they did so with the express intent of violating the App Store guidelines regarding in-app payments that apply to every developer who sells digital goods or services.

The ban was an action Epic Games was ready for.

The company soon shared that they were taking legal action against Apple, alleging that they were abusing their market position, saying in part that “Apple’s removal of Fortnite is yet another example of Apple flexing its enormous power in order to impose unreasonable restraints and unlawfully maintain its 100% monopoly over the iOS In-App Payment Processing Market.”

Minutes later, Epic Games broadcast a short video inside Fortnite Party Royale, presenting a spin on Apple’s iconic “1984” commercial. On-screen text declared, “Epic Games has defied the App Store Monopoly. In retaliation, Apple is blocking Fortnite from a billion devices. Join the fight to stop 2020 from becoming ‘1984’. #FreeFortnite”

Any legal action against Apple on monopolistic grounds is going to be an uphill battle given the narrow (relatively speaking) focus of the suit, especially given the fact that Apple CEO Tim Cook has already spoken to congressional anti-trust officials who didn’t seem to deliver any knockouts at the recent Zoom hearings. While the legal efforts might be a challenge, Epic Games wields major influence over the 350 million users of Fortnite, and gamers have proven particularly apt at launching campaigns against companies and coming out on top.

This saga comes just days after Apple attracted criticism for denying Microsoft xCloud, a cloud game-streaming application, from the App Store.

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We need more video games that are social platforms first, games second

During these long, mundane physically-distant days, stretching on into an uncertain future like an ever-lengthening beigeish corridor, it’s impossible not to miss hanging out with friends. Especially the kind of hanging out where you’re not really doing anything in particular, not talking about any one thing—just kind of being.

As we continue to stay physically distant from one another, it can be hard to feel socially present with the tools we have. Even with Zoom and other more casual chat apps, video chat can feel sort of flat. (And for those of us lucky enough to be working from home, visiting friends after work with the same tools we use to do work stuff doesn’t always feel great.) More often than not, we sit, stationary at our designated video-chat-spot, trade reports from self-quarantine and maybe drag in a cat or a kid or two.

But even untethered from our desks with more playful video chat apps or innovations like Facebook’s Portal and its roving eye, there’s still something else that doesn’t get conveyed. With flat screens, we have little sense of our physical selves in relation to one another. Socializing spatially, as it turns out, is something we probably took for granted. But the gaming world has understood this for years.

Now more than ever, we need creative ways to feel present with other people. The whole crisis looks like a huge opportunity for the gaming industry, but also one for more transcendent digital social experiences that don’t just look like playing a few rounds of Call of Duty after work. Hopefully, these experiences could be so imaginative that we don’t even know what they could look like yet.

If VR had delivered on its early promise, we’d all probably be living in it right now. The idea of having some kind of shared virtual realm is still a potent one, but the additional hardware has proven too prohibitive to get the average person on board (for now, at least) and even the coolest VR experiences remain niche. Still, it’s clear that we want to come together, not just in Instagram DMs and email threads, but as avatars navigating shared spaces. Somehow.

Virtual worlds getting it right

If the mainstream crossover success of Animal Crossing is any indication, people have a huge appetite for virtual spaces right now. Even with Nintendo’s truly painful online multiplayer experience, there’s something fun and special about visiting a friend, bopping each other with nets and showing them your new digs.

In Animal Crossing, this is truly a more-than-the-sum-of-its-parts experience. The last time I genuinely laughed and could not stop was visiting my younger sister’s Animal Crossing island right after the game launched. In spite of the interface’s few emotes and harsh character limits, her weird sense of humor managed to bubble up through the game’s limitations. And those constraints made it more special, for some reason. When I left her island I felt a pang of sadness at leaving her funny little physical manifestation, running circles around my own. It felt different than signing out of a video chat or dropping out of a conversation via text.

These experiences are happening on an individual level, but also a collective one—and people are getting creative. One of the writers from Rogue One just made his own in-game Animal Crossing talkshow, complete with its own tiny guest couch and cityscape view.

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A developer in New York even launched a dev conference that took place entirely on an Animal Crossing island. Much like a normal conference, “Deserted Island DevOps” boasted speakers, moderators and even talks to be uploaded to YouTube after the fact.

Plenty of players are using Animal Crossing for more intimate get-togethers too, like celebrating Ramadan and Passover last month or just gathering far-flung friends or family together in one place.

The pandemic is showing us that the sweet spot of mainstream virtual presence might be something more than a Zoom-like video conference but less than a full-on virtual reality experience. Video games, or more specifically video games as platforms, seem to be resonating right now, even among the kinds of people who wouldn’t identify as gamers. That last bit is important.

This is something that Fortnite maker Epic Games has been doing right for a while now. There’s a reason that Fortnite, like Animal Crossing, brought non-gamers into the fold. Sure, Fortnite is fun and addictive, but lots of games are fun and addictive—and Fortnite is much harder than a lot of those games.

Epic’s real innovation is its buttery-smooth social layer that seamlessly connects players across platforms. If you can talk a friend into downloading an app, you’re in business. Of course, other games get this right too (Minecraft comes to mind, of course, and others) but timing is everything right now. And Fortnite’s team is cleverly iterating on its already-good ideas.

This week, Epic added a new deliberately chill game mode called Party Royale to Fortnite—a new island just for hanging out with friends. Littered with appropriately zany non-lethal weapons like throwable hamburgers and paintball guns, Party Royale is a designated space where you can take a group and chat while doing mindless yet amusing nonsense, like awkwardly kicking a soccer ball around (I did this with a total stranger for 20 minutes for some reason!) or driving virtual ATVs off virtual precipices.

And like much of Epic’s battle royale hit, the island itself is over-the-top weird, stocked with everything from a pirate ship to a music festival grounds awash in colorful lights, gigantic neon dancers and a very psychedelic vibe, molly not included. There’s even a drive-in movie screen, like another area of the main game, which could signal interesting things to come. If we’re lucky and Epic expands it out, Fortnite’s newest casual online virtual space could evolve into something pretty interesting.

Fortnite is a game ostensibly about killing people before they kill you, but it’s also a concert venue—and that hints at Epic’s deeper ideas about the game as a versatile social platform. The game held its latest big in-game show event last month, this time featuring a skyscraper-height Travis Scott who performed as he stormed around a bucolic-turned-kaleidoscopic version of the Fortnite map. 12 million people tuned in, besting the 10 million who played during the more modest Marshmello in-game EDM show a year prior. Whether you even listen to his music or not, the wildly visually imaginative event was, by all accounts, cool as hell.

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Video games should evolve to meet the moment

For anyone who’s spent any time in massively multiplayer online role-playing games (MMORPGs), this will all sound familiar. These games have long, vibrant history of drawing huge numbers of people together into persistent shared virtual spaces and letting them express themselves. Curating outfits, decorating spaces and even making choices around playstyle and faction affiliation are all ways to express aspects of who you are and what you’re about in a virtual world populated by other people doing the same. As someone who played World of Warcraft for years, this was the real appeal of the game for many of us. The game itself—quests, dungeons and the rest—was secondary.

During its peak ten years ago, World of Warcraft had as many active subscribers as players who tuned into the Travis Scott event—12 million. Since then, gaming exploded into the mainstream and by late 2018, Fortnite boasted almost 80 million active players. Online multiplayer itself bounded forward too, mostly through the success of blockbuster first-person shooters—usually grim, well-funded and vaguely or overtly militaristic games that routinely court one kind of gamer. Playful, candy-colored shooters like Fortnite, Splatoon and Overwatch emerged to extend a hand to casual players, even non-gamers, but there’s still plenty of room for online gaming to move beyond shooters.

The wild popularity of Minecraft carved out a path for cooperative gaming not just because building stuff is incredibly fun, though that’s true too, but because doing anything new with friends in a virtual space is really cool. Scrappier games like the incredible No Man’s Sky could do for exploration what Minecraft did for building, but with an indie developer’s budget, big ideas about multiplayer play can only get so far. Historically, the lion’s share of industry resources still get funneled toward reliably profitable military-style shooters. But with the world changing, trends could transform too. Just look at sales of Animal Crossing’s social feng shui sim dominating sales during the first months of the epidemic.

There’s a big opportunity right now for games offering a common social experience that’s magnetic enough to draw in the kind of people who don’t even play games. For those of us stuck at home, imaginative gaming worlds offer not just their usual escape from the moment’s stresses, but a way to share space when we can’t come together.

We just need more of them to visit.

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A multiverse, not the metaverse

Following web forums, web platforms and mobile apps, we are entering a new stage of social media — the multiverse era — where the virtual worlds of games expand to become mainstream hubs for social interaction and entertainment. In a seven-part Extra Crunch series, we will explore why that is the case and which challenges and opportunities are making it happen.

In 10 years, we will have undergone a paradigm shift in social media and human-computer interaction, moving away from 2D apps centered on posting content toward shared feeds and an era where mixed reality (viewed with lightweight headsets) mixes virtual and physical worlds. But we’re not technologically or culturally ready for that future yet. The “metaverse” of science fiction is not arriving imminently.

Instead, the virtual worlds of multiplayer games — still accessed from phones, tablets, PCs and consoles — are our stepping stones during this next phase.

Understanding this gradual transition helps us reconcile the futuristic visions of many in tech with the reality of how most humans will participate in virtual worlds and how social media impacts society. This transition centers on the merging of gaming and social media and leads to a new model of virtual worlds that are directly connected with our physical world, instead of isolated from it.

Multiverse virtual worlds will come to function almost like new countries in our society, countries that exist in cyberspace rather than physical locations but have complex economic and political systems that interact with the physical world.

Throughout these posts, I make a distinction between the “physical,” “virtual,” and “real” worlds. Our physical world defines tangible existence like in-person interactions and geographic location. The virtual world is that of digital technology and cyberspace: websites, social media, games. The real world is defined by the norms of what we accept as normal and meaningful in society. Laws and finance aren’t physical, but they are universally accepted as concrete aspects of life. I’ll argue here that social media apps are virtual worlds we have accepted as real — unified with normal life rather than separate from it — and that multiverse virtual worlds will make the same crossover.

In fact, because they incentivize small group interactions and accomplishment of collaborative tasks rather than promotion of viral posts, multiverse virtual worlds will bring a healthier era for social media’s societal impact.

The popularity of massive multiplayer online (MMO) gaming is exploding at the same time that the technology to access persistent virtual worlds with high-quality graphics from nearly any device is hitting the market. The rise of Epic Games’ Fortnite since 2017 accelerated interest in MMO games from both consumers who don’t consider themselves gamers and from journalists and investors who hadn’t paid much attention to gaming before.

In the decade ahead, people will come to socialize as much in virtual worlds that evolved from games as they will on platforms like Instagram, Twitter and TikTok. Building things with friends within virtual worlds will become common, and major events within the most popular virtual worlds will become pop culture news stories.

Right now, three-quarters of U.S.-based Facebook users interact with the site on a daily basis; Instagram (63%), Snapchat (61%), YouTube (51%) and Twitter (41%) have similarly penetrated the daily lives of Americans. By comparison, the percentage of people who play a game on any given day increased from just 8% in 2003 to 11% in 2016. Within the next few years, that number will multiply as the virtual worlds within games become more fulfilling social, entertainment and commercial platforms.

As I mentioned in my 2020 media predictions article, Facebook is readying itself for this future and VCs are funding numerous startups that are building toward it, like Klang Games, Darewise Entertainment and Singularity 6. Epic Games joins Roblox and Mojang (the company behind Minecraft) as among the best-positioned large gaming companies to seize this opportunity. Startups are already popping up to provide the middleware for virtual economies as they become larger and more complex, and a more intense wave of such startups will arrive over the next few years to provide that infrastructure as a service.

Over the next few years, there will be a trend: new open-world MMO games that emphasize social functionality that engages users, even if they don’t care much about the mission of the game itself. These new products will target casual gamers wanting to enter the world for merely a few minutes at a time since hardcore gamers are already well-served by game publishers.

Some of these more casual, socializing-oriented MMOs will gain widespread popularity, the economy within and around them will soar and the original gaming scenario that provided a focus on what to do will diminish as content created by users becomes the main attraction.

Let’s explore the forces that underpin this transition. Here are the seven articles in this series:

  1. Games already are social networks
  2. Social apps already are lightweight virtual worlds
  3. What virtual worlds in this transition era look like
  4. Why didn’t this already happen?
  5. How virtual worlds could save society
  6. The rise of virtual economies and their merging with our “real” economy
  7. Competitive landscape of the multiverse

Source: TechCrunch

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Where FaZe Clan sees the future of gaming and entertainment

Lee Trink has spent nearly his entire career in the entertainment business. The former president of Capitol Records is now the head of FaZe Clan, an esports juggernaut that is one of the most recognizable names in the wildly popular phenomenon of competitive gaming.

Trink sees FaZe Clan as the voice of a new generation of consumers who are finding their voice and their identity through gaming — and it’s a voice that’s increasingly speaking volumes in the entertainment industry through a clutch of competitive esports teams, a clothing and lifestyle brand and a network of creators who feed the appetites of millions of young gamers.

As the company struggles with a lawsuit brought by one of its most famous players, Trink is looking to the future — and setting his sights on new markets and new games as he consolidates FaZe Clan’s role as the voice of a new generation.

“The teams and social media output that we create is all marketing,” he says. “It’s not that we have an overall marketing strategy that we then populate with all of these opportunities. We’re not maximizing all of our brands.”

Source: TechCrunch