Amex Wins, Amazon Loses And iPhone Scales Back

The New Year is here — and we have high hopes that 2017 will keep us even more glued to the edges of our collective seats than 2016 did.

Admittedly it will be a pretty high bar to clear — 2016 was pretty crazy.

But there are some pretty eye-catching augers that 2017 will compete favorably — Amazon took over the Consumer Electronics Show (CES) to announce it’s integrated Alexa into pretty much everything, everything is going virtual reality (VR), and bitcoin bubbled and popped all within the space of 48 hours. And we’re only a week in.

So what to watch next?

Is The Amex Antitrust Drama Over For Real?

Score one for American Express — and a big swing and miss for the U.S. Justice Department (DoJ).

A federal appeals court has officially hammered another nail into the coffin of the U.S. government’s antitrust case against Amex. DoJ representatives asked the court to reconsider its decision to allow Amex to stop merchants from encouraging customers to use non-Amex-branded cards that carry lower fees. At issue were the more than $50 billion of fees that merchants pay annually to process transactions and that they claim can be passed along to customers through higher prices.

The case originated with a lawsuit filed by the DoJ against Amex, Mastercard and Visa. Mastercard and Visa settled with the DoJ and agreed to stop the anti-steering practices. Amex decided to fight. A lower court found with the DoJ — however, that decision was reversed by the Second U.S. Circuit Court of Appeals, hence the DoJ’s request for reconsideration.

Specifically, the DoJ noted the appeals court wrongly focused on how the company’s policy affected customers and merchants, rather than merchants alone. It also said it should have been Amex’s burden to show that its policy promoted competition, not the government’s burden to show otherwise.

This week, the Second U.S. Circuit Court of Appeals let stand its Sept. 26 reversal of a lower court ruling that had struck down Amex’s anti-steering rules, giving its opinion without comment.

That reversal allowed New York–based Amex to block merchants that accept its cards from steering customers to rivals Visa and Mastercard, even if the move saved them money.

The DoJ may ask the Supreme Court to consider their appeal. Stay tuned.

The iPhone 7 Ramps Down

Despite some very high hopes — and perhaps a bit of a boost from Samsung’s pre-holiday woes — it looks like the iPhone 7 is not quite living up to the hope and the hype.

At least, that is the scoop out of Nikkei Asian Review, which reported that Apple is gearing up to cut production of its iPhone by roughly 10 percent in the new year.

The production cut will apparently come in early Q1, which is a somewhat expected event (Apple made similar cuts to 6s production last year) — but the consensus is emerging that sales aren’t doing as well as expected and are thus pushing further production cuts.

The report noted the production cuts are for both the iPhone 7 and the iPhone 7 Plus. The popularity issue seems to be hitting the 7 Plus harder — iPhone 7 Plus is still popular, but a shortage of sensors for its camera has prompted Apple to scale back because it can’t meet demand.

There were some bright spots in this report for Apple. Demand for the new phone in Japan remains strong, largely driven by the phone’s ability to accept and make contactless payments at merchant point of sale. But Japan accounts only for 10 percent of all of Apple’s global sales and isn’t going to be enough to make up for sluggish demand elsewhere.

And Apple’s pain is pain down the chain. Component makers will also feel some pinch, though that may be evened out some by Chinese smartphone markers and demand for in-car technology.

A source told Nikkei Asian Review the production cuts are “within expectations.”

Despite the cuts — and the debate about what they mean — Credit Suisse remains bullish about the eventual launch of the iPhone 8. In a recent research report, analyst Kulbinder Garcha said he is “looking forward to the iPhone 8 super cycle,” as that phone debuts, ostensibly, next year.

Looks like all eyes will be peeled and all ears will be open when Apple gives the world a peak at the real-deal numbers when it reports earnings on Jan. 24.

Amazon Buy Button Patent Bye-Bye

It’s been a good run — but it seems Amazon’s ownership of the one-click buy-button may be coming to an end.

Amazon’s patent on its 1-Click payment system will expire this year, meaning online buyers could soon see many other online stores adopting similar methods throughout 2017.

The 1-Click is, of course, a signature service for Amazon — as any shopper is well aware. Rolled out a little over 20 years ago, it is both a distinguishing feature and a money maker for Amazon, since it is popular with some pretty big non-Amazon players. Apple, for example, reportedly pays Amazon an undisclosed sum to use its own version of the technology in its app store. While Amazon — being Amazon — hasn’t put any official numbers on it, some have suggested that 1-Click brings in a money measured in the billions of dollars.

So while the patent expiration could be a bit of a disappointment for the online retail behemoth, most everyone else who sells online can’t wait to get their hands on it.

And we shouldn’t feel too bad for Amazon. Sure, they’re losing the buy button — but given the flurry of announcements last week about holiday sales, fulfillment shipments and Alexa integrations (in washing machines, speakers, restaurants, lamps and a whole host of other places) — we feel that somehow, some way, they will find a way to soldier on.

Until next week …