00:00:00 ◼ ► We were supposed to record yesterday. There was a reason why we didn't, that I'm not sure we want to share, but there was a reason why we didn't.
00:00:06 ◼ ► And then today, massive Apple news broke from this DOJ lawsuit. And so we look really prescient. We look like we had a really good inside line to say, "Wait, hold the show until tomorrow."
00:00:22 ◼ ► Well, we did kind of know. I mean, everybody knew. The rumors that the DOJ was going to announce were known before we began recording.
00:00:29 ◼ ► Yeah, but I think they were like a little bit still squishy. Like, it might happen, it's rumored to happen, maybe.
00:00:35 ◼ ► To be clear, we wouldn't have, we would have just recorded as usual. Because, here's the thing, you have to record sometime. There's always going to be more news that comes after the show.
00:00:42 ◼ ► And, you know, there was no way I would have said, "Oh, well, because the DOJ thing is supposed to come out tomorrow, we should delay." No, I would have said, "No, record and we'll talk about it next week." But as it turns out...
00:00:52 ◼ ► No, no, no, no, no, no. This is the advantage of us accidentally bumping a day is we can claim, like Marco's trying to do until you've ruined it, we can claim that this is all just, that's how good we are. Your hosts are that dedicated.
00:01:06 ◼ ► That's not being good. That's being, I don't want to have the reputation that we would delay the show because of news because everyone's going to be like, "Oh, you should delay the show. There's news."
00:01:13 ◼ ► And no, look, the show has to come when the show comes. It comes once a week and there's going to be news that happens before it and there's going to be news that happens after it. And guess what? All the news that happens after it is fair game for the next episode.
00:01:23 ◼ ► You just have to pick one day during the week and that's going to be the day. So, we occasionally shift things around, but for the most part, I really just want to say we're very regimented. Wednesday, if possible.
00:01:43 ◼ ► It was very much my problem. There were some, let's just say, unexpected pyrotechnics and so I needed to delay a little while and...
00:02:03 ◼ ► I do love the idea, though, at some point we could get called in to a grand jury to testify how we possibly had inside information that leaked out of this lawsuit and we might have to actually put that on the record.
00:02:15 ◼ ► Well, this is why we really delayed the show. It was not inside information through some illegal leak.
00:02:31 ◼ ► Alright, so the M1 MacBook Air that was dead, we had a funeral, what, two weeks ago, a week ago, I don't even remember.
00:02:36 ◼ ► It was dead and now it has risen again like a phoenix from the ashes. It lives on at Walmart and Best Buy. What?
00:02:44 ◼ ► This is amazing. So, here's... So the news basically is Apple has directly stopped selling the MacBook M1... the M1 MacBook Air when they released the M3, what was it, two weeks ago, one week ago, whenever that was.
00:02:58 ◼ ► We all thought they've been making this for a long time, it's a great computer, but it's pretty old now and they have... they've gone two chip generations afterwards, it's time to discontinue it.
00:03:06 ◼ ► That made perfect sense to us. They've made some deal with Walmart where they are apparently going to still be making this for some interval into the future.
00:03:16 ◼ ► We don't know how long, but I would assume at least a year or two. It's available, I think, seemingly exclusively at Walmart in the US for only $700.
00:03:29 ◼ ► Well, so Best Buy has it on sale for $649, but I... as far as I know, the Walmart ones are not like they're just clearing their inventory or their refurbished models or whatever, but they are brand new in the box M1 MacBook Airs.
00:03:50 ◼ ► Whenever Apple wants to clear out excess inventory of something without doing their own official sale or price cut, it's almost always discounted at Best Buy.
00:03:59 ◼ ► Best Buy is... at least... I don't know what to do around the rest of the world, but in North America, Best Buy is, first of all, a huge retailer.
00:04:09 ◼ ► And so you can always kind of tell like whatever Apple products either they have too many of because they're about to replace them or they just did replace them or like in the case of the HomePod, they just... they are not selling the way Apple wants... needs them to sell or wants them to sell or they made too many.
00:04:22 ◼ ► And so that's kind of where they dump inventory without officially saying from Apple's side, "We're going to cut the price."
00:04:29 ◼ ► So my guess is the Best Buy thing is temporary for like for what was officially old stock, maybe Best Buy's own old stock, but the Walmart thing seems to be like Apple...
00:04:40 ◼ ► And what's interesting is this is, I believe, the first time Walmart's selling a Mac, right?
00:04:47 ◼ ► Yeah, so like again, for people not in the US, you might not realize how big of a deal this is.
00:04:51 ◼ ► Walmart is massive and I'm sure... I know you've heard of it probably if you listen to American media at all.
00:04:57 ◼ ► But there are so many American consumers for whom Walmart is the closest and unfortunately oftentimes the only retailer that is within a reasonable driving distance from their house.
00:05:11 ◼ ► So... because tons of rural America, there's just no big box stores, no Apple stores, nothing except Walmart's.
00:05:19 ◼ ► There's a huge amount of the US buying public that basically only shops at Walmart for most things.
00:05:26 ◼ ► So to have not been to Walmart all this time is a pretty big deal. To be there now is now also consequently a very big deal.
00:05:35 ◼ ► And what's interesting about Walmart too is that partly by just demographics of where they are and partly because of their own brand, Walmart sells things cheaply.
00:05:44 ◼ ► That is kind of what they are known for. Oftentimes they sell crappy things in order to hit those prices.
00:05:49 ◼ ► But when you go to Walmart, you know what you're getting. You're not going there to get the best of the best.
00:06:04 ◼ ► And to have it be an M1 MacBook Air at a price that Apple has never sold official new computers at.
00:06:18 ◼ ► Yeah, a complete computer let's say. So to sell that at $700 for what is actually a pretty great computer still, like yes it's old, but the M1 MacBook Air, let's not forget.
00:06:29 ◼ ► We were just saying this when the M3 came out. We were just saying how amazing this computer is.
00:06:34 ◼ ► So to have this as what seems like a long term inventory item that a retailer as big as Walmart means Apple is still making them.
00:06:43 ◼ ► And that they presumably don't want to sell it on their own site to kind of encourage people who go directly to Apple to get the higher priced, newer offerings.
00:06:51 ◼ ► It's an interesting form of market segmentation that I don't think they've really done to the public.
00:06:56 ◼ ► They've had education only items before, like less expensive iMacs, the eMac and stuff like that.
00:07:03 ◼ ► They've done that. But to do this, this is pretty new. And I think this makes a lot of sense.
00:07:10 ◼ ► Now that we have, you know, the Apple Silicon era jumped so far ahead, even this, what is it, almost four year old computer.
00:07:22 ◼ ► So this is a great computer people can now get for $700 from Apple. Well, an Apple computer they can get from Walmart.
00:07:33 ◼ ► And what's also interesting is, you know, we heard those rumors about six months ago that Apple was preparing a new low cost MacBook.
00:07:42 ◼ ► Do you think this was it? Like, do you think, you know, something got confused in the rumor chain and it was just a rumor about this?
00:07:49 ◼ ► I don't think the sourcing like this is the type of thing that would be easy to keep a secret probably because it's just two private or not two companies talking to each other.
00:07:57 ◼ ► There's not like a supply chain or manufacturing or whatever. Not to say that other rumor is ever going to turn out to be true, but I don't think this would have led to that rumor.
00:08:05 ◼ ► I don't know because this probably would have caused a little bit of supply chain rumbling in the sense that they are going to have to manufacture this particular laptop for...
00:08:14 ◼ ► But the supply chain would know that they're still making, that they're making more of the same computer. The supply chain wouldn't be confused to think that it was a new computer.
00:08:21 ◼ ► No, no, no. But I think it is suspicious, you know, if you only have a little bit of information from the supply chain, it is kind of suspicious to see that, hey, they're producing inexpensive laptop parts for way longer than one model would normally be produced.
00:08:40 ◼ ► Speaking of the cost of this one, the one thing against this is if you're going to keep selling in the Tim Cook way, keep selling your old models for just way longer than anyone ever thought you would keep selling your old models, in this case it's fine because as you pointed out, the M1 is still great or whatever.
00:08:52 ◼ ► But if you are going to do that, it's going to really, really highlight the worst thing about your products with your Apple, which is that you are so stingy with the SSD space.
00:09:02 ◼ ► Not even the RAM, because whatever, it's a $700 computer, 8 gigs, but the SSD space. The thing about the RAM is, okay, so it's got a small amount of RAM, but it's incredibly inexpensive and you can get by with it.
00:09:14 ◼ ► It will use swap, right? But when you run out of SSD space, there's no more swap for that. There's not a second SSD that you can swap.
00:09:22 ◼ ► It's a hard limit, and by the way, going to swap because you have 8 gigs of RAM is just going to abuse that tiny thing even more.
00:09:29 ◼ ► This is not the fault of that computer, but it's the fault of Apple for just being so stingy and holding the line on the 256 base model because I believe that Walmart will only sell the base model.
00:09:40 ◼ ► There is no BTO option. I don't think they have any other options for the sizing of it.
00:09:49 ◼ ► And if they follow Apple's typical pricing, as soon as you put a more reasonable size SSD in there, the price would go up tremendously.
00:09:57 ◼ ► So I think it's just the base model. Those decisions are bad at the time, but they get so much worse when the machine is two or three generations old and you're continuing to sell it as new, not even refurb.
00:10:08 ◼ ► That's a sin of Apple's past. That's, again, not the fault of this machine, but it makes me wish that, for example, the M3 MacBook Air should no longer come with 256 SSD.
00:10:18 ◼ ► It shouldn't be an option at all. It's just Apple being incredibly stingy and, again, putting all their margins into storage and RAM, which is painful for all of us.
00:10:30 ◼ ► Please consider becoming an ATP member today. Membership is the best way to support the show, and you get some pretty cool perks, too.
00:10:38 ◼ ► So we just launched this new feature called ATP Overtime. This is, effectively, a bonus topic every week.
00:10:45 ◼ ► So we record the regular show, and we record our regular after show, and then after we go off the air, we record one more topic.
00:10:52 ◼ ► Usually, we're aiming for 15 to 45 minutes of bonus content after each show, and it's a tech topic. It's an ATP topic.
00:11:00 ◼ ► So last week's episode, our bonus topic in ATP Overtime was we talked about the Rabbit R1, that cool little Playdate-looking thing that's the little AI gadget.
00:11:10 ◼ ► We've been wanting to talk about it for a long time. We never had time. We never got to it in the show notes.
00:11:25 ◼ ► So we're still trying it out, still brand new, but ATP Overtime, bonus content for members on every single episode.
00:11:33 ◼ ► Somewhere on the order of 15 to 45 minutes extra, and a tech topic. So that's one of the benefits you get.
00:11:38 ◼ ► You also get an ad-free version of the show, of course, with ATP Overtime now included in it.
00:11:43 ◼ ► And you get the bootleg recording feed if you want to listen to our raw live broadcast. That's in there too.
00:11:56 ◼ ► We have a couple of different currency options as well if you're outside of the US and it's easier for you that way.
00:12:00 ◼ ► Check it out once again. ATP.fm/join. It's the best way to support the show. We really appreciate it. Thank you so much.
00:12:16 ◼ ► "Early on in the car project, a very large rack of server gear was loaded into the back of SUVs for development and testing.
00:12:23 ◼ ► When the Apple Silicon team was asked to help, it was years before Apple Silicon shipped in Macs.
00:12:41 ◼ ► When connected, this Mac studio-sized box outperformed the rack of server GPU gear by an order of magnitude while consuming a fraction of the power.
00:12:53 ◼ ► One of the interesting notes on Project Titan is there was a huge effort to develop custom sensors, LIDAR, vision, etc.
00:12:58 ◼ ► that would also outperform industry standard equipment in both performance and accuracy."
00:13:02 ◼ ► What was in the box? Who knows? I mean, I guess it could have just been an M1 Ultra at that point back then,
00:13:12 ◼ ► But yeah, Apple Silicon participating in this process and the idea that they're making their own LIDAR sensors,
00:13:17 ◼ ► as with everything involved with Project Titan, it seemed like when you start a new project, the possibility space is big.
00:13:25 ◼ ► Look at all the things that we could do because we do have a lot of money and there are lots of possibilities.
00:13:33 ◼ ► But unfortunately for Project Titan, they never really seemed to narrow that to something that they wanted to do,
00:13:38 ◼ ► and so the project was canned. But it doesn't surprise me that, especially in the early days,
00:13:43 ◼ ► they were like, "And we can make our own LIDAR sensors and they'll be better than everybody's,
00:13:49 ◼ ► And they just really didn't know what they were doing in the end. But that is interesting.
00:13:52 ◼ ► Again, rumors of Apple Silicon for the car project rumored to be as powerful as, what was it, what did they say,
00:14:02 ◼ ► I don't know what stage those designs get, but if they have anything that's in a box the size of a Mac Studio,
00:14:07 ◼ ► it must have gotten far enough along that it was fabbed on a reasonable process that it could be cooled in,
00:14:14 ◼ ► I don't know, I don't know. I would love to hear more about this, but we have to wait for all these people to get old and retire.
00:14:36 ◼ ► If you kill that, for example in Activity Monitor or with Kill All, it relaunches automatically and the problem is temporarily fixed.
00:14:42 ◼ ► Note that killing Safari networking can sometimes cause open tabs to essentially crash, requiring a full reload.
00:14:46 ◼ ► It's funny you bring this up, was this from the most recent member special, is that right?
00:14:50 ◼ ► Yeah, that's what I was talking about, why I use Safari in Chrome and Safari still sometimes starts refusing to load web pages for me.
00:14:57 ◼ ► So this happens to me, I don't think I said anything during the show because you were vibing in a great way,
00:15:02 ◼ ► I didn't want to ruin your whole flow there, but this happens to me not often, but often enough that it's annoying.
00:15:08 ◼ ► And coincidentally, it happened earlier today and I tried to do exactly this and it didn't make a darn bit of difference.
00:15:14 ◼ ► Now it very well could be user error, maybe I screwed something up, maybe I didn't quit the right thing or kill it in the right way,
00:15:19 ◼ ► but it didn't do anything for me. Now have you tried this, John? Has this worked for you?
00:15:27 ◼ ► This probably worked for Wade, maybe that's what the problem was there, although I would say to the people who were writing the Safari networking subsystem,
00:15:45 ◼ ► Yeah, I don't know, I was just saying, deadlock, hmm, yeah, it's a problem, concurrent programming is hard.
00:15:52 ◼ ► Next time it happens to me, I will try it and I hope it does work, but I'm not particularly optimistic.
00:15:56 ◼ ► Yeah, I mean, I'm going to try it again, because like I said, maybe I was holding it wrong.
00:16:03 ◼ ► Or for me sometimes, if I close enough Safari windows, it starts working, which is very suspect.
00:16:07 ◼ ► Or wait a really, really long time, perhaps long enough for some watchdog to trip and then it maybe does all this resetting itself.
00:16:15 ◼ ► I've never had waiting work for me. I mean, maybe I haven't waited 24 hours or something, but I've waited.
00:16:21 ◼ ► Yeah, because I would walk away from the computer, like, oh, this is annoying me, I leave, and then I come back later in the day and I remember, oh yeah, Safari's still misbehaving. So waiting has not worked for me.
00:16:29 ◼ ► Cool. All right, so we have a lot of legal news, and part of it is with regard to Apple doing a nine-hour workshop feedback session thing.
00:16:42 ◼ ► It wasn't Apple, it was, this was a nine-hour feedback session about Apple run by the EU.
00:16:48 ◼ ► Oh, okay, thank you. So this happened somewhere overseas, I'm not even entirely sure where it happened geographically, but it was somewhere in Europe.
00:16:59 ◼ ► It seems like it went, it went, I don't even know if I would say it went well or went poorly, but it went. It was a thing.
00:17:07 ◼ ► And I don't think anyone left exceedingly happy, although I'm not sure anyone left angry.
00:17:12 ◼ ► Well, it's just a feedback session. This is Gruber's summary of it from his post about it. He says, "This was an opportunity for critics of Apple's DMA compliance plans to address questions to representatives from Apple."
00:17:23 ◼ ► And there is a video apparently, but it's behind a password, which Gruber gave him some stick about for not being transparent.
00:17:30 ◼ ► And he says, "I can't imagine sitting through that even at 2x speed, but lucky for us, Cage Belly followed along and took copious notes in a thread on Twitter."
00:17:37 ◼ ► So we'll link to the Twitter thread of someone who was watching the video and writing the interesting things in tweet-sized bits.
00:17:44 ◼ ► Steve Trout and Smith also used the Whisper transcript generator thing to get text out of it.
00:17:51 ◼ ► Obviously, Whisper is going to be a little bit confused by technical jargon and stuff, but we'll put a link to that in the show notes as well. He's got it up on GitHub.
00:17:57 ◼ ► And then there is one video clip of Riley Testud's question, the alt store guy. He was using an example from his life.
00:18:09 ◼ ► I think he had a viral hit application that was a free download on the iOS app store when he was younger, like college or high school.
00:18:17 ◼ ► He was like, "If that happened to me today, and I'm just a student and I make a free app, you know, no in-app purchase, I think it's just 100% free,
00:18:25 ◼ ► and I put it up on one of these alternative stores and it becomes like a viral sensation overnight and everyone's downloading it because someone talked about it on TikTok or something,
00:18:35 ◼ ► And so his question to the Apple representative, who was like a Kyle and dear VP of Apple Legal, saying, "What would happen?
00:18:42 ◼ ► Would you try to extract 5 million euros from this student who had a viral hit application?"
00:18:47 ◼ ► And the response was, a bit of the end of the response from the Apple representative was, "This is something we need to figure out.
00:18:58 ◼ ► Which is not much of an answer of just saying, "Yeah, that does sound bad. We'll figure something out."
00:19:03 ◼ ► But I think, like, feedback sessions like this, I mean, I feel like what Apple should have said is, "Well, if you don't want that to happen, stay in the app store.
00:19:13 ◼ ► And then, you know, the EU would have said, "Yeah, but the whole idea is we want the alternative app stores to be an actual alternative, not something that's always bad."
00:19:19 ◼ ► And that was kind of what I imagine all nine hours of this was. If you look at the Twitter thread, there's a lot of statements by representatives of the EU saying things like,
00:19:33 ◼ ► Like, just as an aside, I forget if Core Technology was one of them, but a whole bunch of, like, large components of Apple's compliance, they would just offhandedly say, "Yeah, that's not there. I don't think they can do that."
00:19:46 ◼ ► So this was just a feedback session, and I don't think it's worth dwelling on the minutia of it, because I think what will happen is, guess what? More changes.
00:19:54 ◼ ► Last time, like, yes, they had nine hours of feedback, and surely, in response to those nine hours of feedback and back and forth, Apple's going to have to change more stuff.
00:20:03 ◼ ► Because there were big parts of their compliance that the EU representatives were like, "Mm-mm, nope, yeah, that's not it."
00:20:15 ◼ ► Harvey Simon writes—this was weeks ago, and it keeps getting pushed down in the show notes—but Harvey Simon writes, with regard to magnets and Apple Watch bands,
00:20:22 ◼ ► regarding its own Apple Watch band with a magnetic closure, Apple says, "Band contains magnets and may cause interference with compass on Apple Watch."
00:20:34 ◼ ► And so Harvey asks, "If magnets don't interfere with the compass, why does Apple say they may?"
00:20:39 ◼ ► And I presume the answer for that is, you know, in part, liability, in part, just general cover your butt.
00:20:44 ◼ ► But one way or another, there is at least the possibility that there's some interference.
00:20:48 ◼ ► I mean, yeah, they say they may. I don't know. I think it's a butt-covering as well, considering they sold that strap for a while,
00:20:55 ◼ ► and you didn't hear wide-story reports of saying, "My compass doesn't work on my Apple Watch, and I found that it's because of this magnetic latch."
00:21:08 ◼ ► However, there are lots of other Apple Watch bands that have magnets in them, like, for instance, the Leather Link, or now the Fine-Woven Link, full of magnets.
00:21:23 ◼ ► It turns out probably a third of the bands have either one or many magnets in them, so I don't think this is a big deal.
00:21:31 ◼ ► I think it's kind of interesting that they even say that it may interfere, because, especially on the modern buckle,
00:21:35 ◼ ► the magnet is on the opposite side of your fleshy wrist from the watch. It's pretty big distance, and, you know, so I don't know.
00:21:41 ◼ ► All right, so I don't remember how you stumbled onto this, Jon, but you have a very curious obsession with the widths of the streets in front of people's houses.
00:21:55 ◼ ► I wasn't—didn't we talk about this in, like, in the member special or something? I don't remember how it came up. It was recent, though.
00:22:06 ◼ ► The main issue is I'm basically complaining about how difficult it is to navigate my streets, and then, of course, Marco chimes in and says, "We don't even have streets! We just have sidewalks! The cars go on!"
00:22:15 ◼ ► And then you take for granted your ridiculously wide streets, and I think you said, "Mine aren't that wide! They're not that much bigger than yours!"
00:22:28 ◼ ► We did. So we have some street widths. Marco is the winner at the beach with the tiniest streets, and having been there, I can attest to this.
00:22:50 ◼ ► Underscore chimed in from the UK saying his are nearly 20 feet wide. John, you measured yours, and you got to about 23 and a half feet.
00:23:02 ◼ ► And I'm sorry if you live anywhere with sensible units. We're not gonna convert it. Just look it up.
00:23:13 ◼ ► Well, the winner in the sense that you live somewhere where there's so much empty space that they're able to make the streets a third wider than most places.
00:23:21 ◼ ► I think it's basically like new—obviously, so, you're a special case, Marco, because you're not in like a normal street area or whatever.
00:23:28 ◼ ► And so there's very limited space there, and you got your little things, and they don't expect there to be two-way traffic on any of these roads, right?
00:23:34 ◼ ► Underscore is obviously in the UK, which has notoriously narrow lanes, as they call them.
00:23:39 ◼ ► And then Casey, I think the reason his are so wide is because he's probably in the newest development.
00:23:46 ◼ ► Like, all the houses around him were constructed, like, you know, they're certainly constructed after mine and probably after Underscore's.
00:23:54 ◼ ► And that's what I think determines it, because the land that I'm living on was probably settled a long time ago, and these streets and roads existed and were made back when maybe horse-drawn carriages were on them or much narrower cars.
00:24:08 ◼ ► And so they're sized incorrectly for modern vehicles. They're maybe sized incorrectly for automobiles entirely, even more so than a lot of the roads on Long Island that were made for maximum speed of 45 miles an hour and, like, you know, Model Ts or whatever going on.
00:24:25 ◼ ► But yeah, that's why the roads are wider. It's not that they have so much extra land, it's that land was not—there was no road there until some developer came and said, "We're going to build a bunch of houses here," and at the time they did that, they used essentially the best practice for road widths, which is way wider than it was in the 1900s, whenever the heck my road was made.
00:24:44 ◼ ► So yeah, I didn't do the math—I meant to, and I completely forgot—I didn't do the math of you had said to me—I don't remember if this was privately or during the show—but you had suspected that Aaron's truck, car, SUV, whatever you want to call it, SUV, I guess, could park perpendicularly across the road and have quite a bit more road left over.
00:25:04 ◼ ► Yeah, perpendicularly across the road, and then the space remaining after you parked sideways against the curb, like your rear bumper against the curb, the remaining space would be the width of my road.
00:25:20 ◼ ► Like, it is incorrect, but it—because I think her car is something like 15 feet, which would make it, like, three—your road is three feet longer than the remainder there.
00:25:34 ◼ ► Anyway, here's the point. If you look at the—we'll put a picture in the show notes, or maybe it'll be the chapter art.
00:25:40 ◼ ► When you look at my—obviously Marco's thing is not a real road, so disregard that. An underscore lives in Maryland, England, so whatever. Mine is not that much bigger than—
00:25:50 ◼ ► Yeah. Mine is not that much bigger than underscores. Keep this in mind when you look at this, right? So Marco's road is essentially the width of his car. The R1S is that wide, essentially.
00:26:10 ◼ ► I did look up the R1S width, and that's about it, right? So take that as being a car width, and take two—we're both looking at this picture here.
00:26:19 ◼ ► Marco's road is purple, and mine is green. Take two Marco with purple stripes, and try to arrange them on my green road so that two cars can pass each other going in opposite directions.
00:26:28 ◼ ► Because I swear to you, I live on a two-way street. It is not a one-way road. It is designed so that, in theory, two cars can pass each other. One going one direction, one going the other.
00:26:37 ◼ ► So give each car eight feet, just like Marco's thing here, and lay out those two purple things, and see how much room you have left, okay?
00:26:47 ◼ ► Do you see how this doesn't work in a functioning way, right? It's not even one side parking only. Even if it was one side parking only, I can tell you, when someone parks one of their gigantic SUVs on one side of my road, there's not enough room for two cars to safely pass in the space remaining.
00:27:03 ◼ ► Because especially if they don't literally have their rubber touching the granite curbs that are on my road, right? It is absolutely ridiculous. And so that's why I'm always complaining about it, because I'm constantly navigating these roads, or trying to get one of my teen children to navigate these roads without scraping my wheels against the curb, or killing us all. There we go.
00:27:23 ◼ ► We are brought to you this episode by Trade Coffee. Trade Coffee is here to help you make better coffee at home. Trade brings roasted to order coffee from over 55 of the nation's top roasters right to your doorstep.
00:27:37 ◼ ► And we have a new special offer for our listeners in just a moment. So, look, this is the time of year when you need some pick me ups. The weather's still really cold and bitter and windy and rainy.
00:27:47 ◼ ► Trade is always a bright spot in my morning. When you subscribe to Trade, you get new favorite coffees and you support small businesses across the country. And you can personalize everything about what you get.
00:27:59 ◼ ► They send coffee that's matched right to your taste preferences. You choose how often you need it, how much you want delivered, whether you need it ground or not or whatever else.
00:28:07 ◼ ► So it is a wonderful subscription service. And I personally have used Trade for a while now, I think a few years by this point. And it is great, the variety that I get.
00:28:17 ◼ ► That's one thing that I think Trade has above everyone else I've ever tried. They have amazing variety of coffees and roasters. I get stuff from roasters that I've heard of that I'm like, "Wow, they work with Trade. That's pretty cool."
00:28:28 ◼ ► And I also get more coffees from places all over the country that I never would have found on my own because I just don't live in those places or I'm not enough of a coffee nerd to know them.
00:28:37 ◼ ► And they've been so good. I told Trade what I liked like two years ago and I haven't had to update anything since. They just send me great coffee every week. It's amazing.
00:28:46 ◼ ► So, jumpstart your daily coffee routine by signing up for a Trade subscription. Right now, Trade's offering up to $15 off select plans and you get your first bag of coffee free.
00:28:57 ◼ ► Just visit www.drinktrade.com/atp. Once again, www.drinktrade.com/atp for a free bag and up to $15 off select subscription plans. www.drinktrade.com/atp.
00:29:29 ◼ ► Well, that's the right way to approach this. I mean, I think we can start going through little, I guess, snippets of what's in this lawsuit.
00:29:35 ◼ ► Do we want to do, Jon, an opening statement of any sort or do we want to try to establish the...
00:29:40 ◼ ► I think we can go through it in the order as here with breaks at various points to expound on things.
00:29:46 ◼ ► So, we'll start with the summary from The Verge. It says, "The U.S. Department of Justice at DOJ and 16 states and district attorney generals have accused Apple of operating an illegal monopoly in the smartphone market in a new antitrust lawsuit."
00:30:00 ◼ ► And I don't like the headline. I copied this headline from The Verge, "U.S. sues Apple for illegal monopoly over smartphones."
00:30:05 ◼ ► But that, we'll get to it in a little bit. I saw the headline and I'm like, "That could be better written because that's not quite it."
00:30:12 ◼ ► So anyway, we will link you to the Department of Justice press release, The Verge article, and we'll link you to the actual complaint, like the legal complaint or whatever in the lawsuit.
00:30:23 ◼ ► That is a PDF that you can read through at your leisure. I've read through the entire thing today. It's not that long today.
00:30:30 ◼ ► But there are various excerpts from it. This is, well, here's the framing I would give, okay?
00:30:38 ◼ ► I have lived through, we have all lived through one other very significant Department of Justice lawsuit in the tech sector, which was the Department of Justice lawsuit, antitrust lawsuit against Microsoft in the, what, 90s?
00:30:56 ◼ ► And a lot of our discussion of monopolies and antitrust laws in the U.S. stems from that case because it's so similar.
00:31:06 ◼ ► It's in recent memory, it's in the tech sector, it used the same U.S. law as the basis of the antitrust efforts, the same U.S. law that is very old and predated like computers and any of this stuff, right?
00:31:20 ◼ ► But I guess the best way to set this up is that unlike the EU DMA, you know, all stuff that we've been going through, this is something different. This is the government suing a private company saying you have violated some existing laws that are on the books.
00:31:37 ◼ ► Whereas the EU DMA thing is a governing body saying, here are some new laws you have to follow.
00:31:45 ◼ ► And that might seem like not a big deal, like what's the difference? It basically boils down to the same thing, telling Apple they can't do stuff or whatever.
00:31:51 ◼ ► But it's very different because in theory, in the EU thing, a bunch of people can get together and say, we think this is how it should be.
00:32:06 ◼ ► Because apparently it's a really hard thing to do while I really feel like I could have helped them a lot if they had consulted me, but they didn't.
00:32:12 ◼ ► But the DOJ thing or any other lawsuit, this is what happens. The government says, company, you broke a law and we're going to go to court and try to prove that you broke a law and win a verdict from, I don't know if it's going to be a judge or a jury trial, I don't know all the legal intricacies, but whatever.
00:32:28 ◼ ► Like, it's in a court of law and they have to prove Apple, you broke this law. It's an existing law and here's how you broke it and we're going to prove it.
00:32:36 ◼ ► And then if they're found guilty, they just appeal forever and blah, blah, blah, whatever. Look at the Microsoft thing. The Microsoft essentially lost, but then on appeal got parts of it reversed and then they came to a settlement and legal stuff is always not right.
00:32:47 ◼ ► But however the court case goes, first of all, there is a court case with all the US rules of evidence and all that crap or whatever.
00:32:53 ◼ ► And then after that, there's some kind of, well, assuming they even go to like a verdict and a remedy or a punishment or whatever, which is not necessarily the case they could end up settling because a lot of court cases end up with a settlement.
00:33:05 ◼ ► Nevermind the court case, the two parties have agreed to settle according to these terms. The government could do that as well.
00:33:10 ◼ ► But either way, there's either going to be a settlement or some kind of verdict and punishment or remedy or whatever.
00:33:17 ◼ ► And that is determined, like what Apple would have to do as kind of like you lost the case, therefore X is determined by the court case.
00:33:27 ◼ ► Again, I don't know how the details worked out as determined by the jury, the judge or whatever, but the whole point is it's not determined by lawmakers.
00:33:35 ◼ ► It's not determined by a bunch of people getting together and saying, here's what we think Apple should do.
00:33:40 ◼ ► Instead, they just say, you broke a law, here's the laws that you broke and here is the remedy for you breaking them.
00:33:52 ◼ ► Unless it's like a court case where it's like, I just want money from you because you did something bad and now you're going to be fined or something.
00:33:59 ◼ ► It's so much better if you have, again in theory, a bunch of people who get together and at their leisure come up with a new set of laws or regulations or whatever and say,
00:34:09 ◼ ► there's a problem, we're going to write a new set of regulations that will tell Apple or whatever, here's how it should be.
00:34:17 ◼ ► We can consult people, we can talk to experts, we can talk to all the other companies in the sector, we can talk to Apple.
00:34:23 ◼ ► In theory, what the EU did with the DMA, only the US version of it, is make new regulations, make new laws, say what you actually want, use your words.
00:34:32 ◼ ► Instead of saying, hey, a law from 100 years ago, you actually broke that and we're going to prove it and then we're going to punish you somehow.
00:34:40 ◼ ► And there are remedies listed in this thing, but I have to say, starting from zero, if you're wondering how this is different from the EU thing,
00:34:51 ◼ ► And the EU thing is not going well, to be clear, but this is like, it's not the way to get the change you want to see in the world,
00:34:59 ◼ ► is suing somebody and having the punishment from this suit that you think you're going to win change their behavior.
00:35:08 ◼ ► There are other reasons, which we'll get to as we start going through, that I'm pessimistic about it, but setting aside the actual complaint,
00:35:13 ◼ ► even if the complaint had been written beautifully and perfectly and was everything I dreamed it could be,
00:35:18 ◼ ► in the end, if Apple loses this case, determining what they have to do as the fix for them breaking this law is so much worse than actually deriding a new regulation
00:35:29 ◼ ► where you can just say exactly what you want. And that has really got me not feeling great about this whole exercise.
00:35:36 ◼ ► Yeah, having read this, I went through the whole thing and I was using my iPad and highlighting in green when I was like, "Yeah!"
00:35:44 ◼ ► In red when I was like, "Oh, gosh." And I got to tell you, a lot more red than there is green.
00:35:50 ◼ ► Even when you were going to the "yeah" parts, like, when I was looking through the parts, and we'll get to them, the parts where you think,
00:35:55 ◼ ► "Oh, they've actually realized something reasonable here." My question was always like, "Okay, so say you're right about that,
00:36:03 ◼ ► and say you prove it in court, and say Apple loses. Then what? Then what is the hard part?"
00:36:08 ◼ ► It's not like you can slap them on the wrist and say, "Apple, you were naughty. Give me $10. Okay, go on your way."
00:36:13 ◼ ► They're going to ask for changes in behavior. And again, there is a remedy section in this document, but I looked at it and said,
00:36:19 ◼ ► "This? This is like, yeah, Apple should probably do this, that, and the other thing, and maybe some other stuff we haven't listed here. Anyway, you'll figure it out, court."
00:36:26 ◼ ► I was like, "No, that's the hard part." This whole thing is like, "The government's going to prove that Apple was bad, and if they win, yay, we all celebrate."
00:36:35 ◼ ► "No, we don't celebrate." "What? So you proved they did something bad. What is the fix? How do you make it better?"
00:36:41 ◼ ► That's the hard part. Just ask the EU. It's apparently really hard, even when you have the force of law with you, and you can tell,
00:36:48 ◼ ► "Apple, you have to do X, Y, and Z." Apparently, even that is next to impossible to do with any competence.
00:36:53 ◼ ► And here, I look at this document and I'm like, "Let's just assume that you're brilliant, and everything you say here is right, and you win this case, and it's a slam-dunk, and they appeal, and you win on all the appeals. Then what?"
00:37:04 ◼ ► The "then what" is just like, "Ugh, then it's just probably going to either not do anything or make things worse." It's just making me feel sad.
00:37:12 ◼ ► Yeah, and I think, to finish my opening statement here, I think the thing that's troublesome is that I don't think it's unreasonable for Apple to be regulated, or be asked to change, or forced to change, or have something like what the EU is attempting, and now what the United States is attempting.
00:37:32 ◼ ► But I don't feel like either organization is doing a particularly good job of it, and that's frustrating. And the Americans, at least, having read the overwhelming majority of this document, it is clear that this is a bunch of people who don't really understand what they're talking about, shaking their fist at the air and going, "But that just doesn't seem right."
00:37:55 ◼ ► And there's very little justification, there's very little corroboration, and there's very little understanding of what's at play here. So I guess with that in mind, let's start peeling it apart.
00:38:07 ◼ ► So, from the PDF, from the actual lawsuit, "This case is about freeing smartphone markets from Apple's anti-competitive and exclusionary conduct, and restoring competition to lower smartphone prices for consumers, reducing fees for developers, and preserving innovation for the future."
00:38:24 ◼ ► So it's like here, okay, I don't know that Apple has a monopoly on smartphones, but okay, sure.
00:38:33 ◼ ► Yeah, presumably. But in principle, you know, "anti-competitive and exclusionary conduct," yep, okay. "Restoring competition to lower smartphone prices for consumers," like, I don't see that happening, but okay, sure? I mean, I guess that sounds good.
00:38:47 ◼ ► "Reducing fees for developers," okay, yeah, you've got my attention now. "And preserving innovation for the future," I'm not sure that this is the right vehicle for that, but okay, sure.
00:38:56 ◼ ► But it's a vague enough goal you can say, "Okay, so again, tell me how this lawsuit is going to do that." Like, what's wrong?
00:39:05 ◼ ► And speaking of the stuff that's in the document, part of what I was thinking, again, not being a lawyer, is like, they have to show that Apple violated some existing law, and so I have to think that the things that they picked, and we'll get to the items that they picked to sort of highlight as examples, are focused on the things they think are violations of some existing law, and are not actually kind of like the EU would focus on, what are the things that are the most unjust or the most anti-competitive.
00:39:34 ◼ ► But it doesn't really matter what is unjust or what is anti-competitive or what just feels wrong. It only matters what you can prove is a violation of an existing law.
00:39:42 ◼ ► Again, that's the big difference between this and the EU thing. They're not making up new rules. They're saying, "We have existing laws, and we have to prove Apple violated one of our existing laws, and there's ample case precedent about what constitutes a violation of the law and what doesn't."
00:39:58 ◼ ► So they have to pick things, presumably as lawyers, if you want to run the case, and you say they broke this law, this section of this law, you better have things that are going to show that they broke that, and those may be dumb things.
00:40:10 ◼ ► Because again, the law is not tailored to deal with the smartphone market. It was for Standard Oil, right? It's not... I actually looked up the Sherman Antitrust Act and looked at Section 2 that they say they violated, and it was not eliminating.
00:40:22 ◼ ► As you would imagine, there wasn't a lot of text, and there wasn't a lot... I'm like, "This is it? This is Section 2 of the Sherman Antitrust Act?" And I'm like, "Well, you know..."
00:40:31 ◼ ► Anyway, obviously, just because that is the words in the law, there have been so many cases that have been based on that law that there is precedent, and it's complicated, right?
00:40:39 ◼ ► So I trust lawyers to do that, but being hemmed in by having to show that they violated this specific existing law because it's the only one that's even remotely applicable makes this whole thing just so much more stupid, frankly.
00:40:54 ◼ ► We are brought to you this episode by Squarespace, the all-in-one website platform for entrepreneurs to stand out and succeed online.
00:41:01 ◼ ► Whether you're just starting out or managing a growing brand, Squarespace makes it easy to create a beautiful website, engage with your audience, and sell anything from products to content to time, all in one place and all on your terms.
00:41:13 ◼ ► Squarespace makes it super easy to make websites, whether it's something like a portfolio or a simple info site, all the way up to a full-blown storefront. They make it easy.
00:41:23 ◼ ► I've seen it myself. I've used Squarespace myself. I've recommended Squarespace myself to many of the people in my life, and almost everyone else I've recommended it to is non-technical.
00:41:33 ◼ ► So I've been able to tell people, "Hey, go here. Build your site here." People who are not programmers, who are not even nerds, who are not even really technology power users, but they're able to go there because it's so easy.
00:41:44 ◼ ► There's no coding. Everything is visual. Everything is self-serve so that you, the nerd in people's lives, if they ask you where to make a website or how to help them make a website, you can just send them to Squarespace and they can do it themselves without relying on you to do things for them, which works out better for everyone.
00:42:02 ◼ ► You and them. So check it out today, squarespace.com/atp. They can go there, or you can. Either one. Go there and start a free trial.
00:42:13 ◼ ► And you can see exactly how Squarespace works for you. All the features you might want, whether it's a business site or a personal site or anything in between, they have them and it's so easy.
00:42:23 ◼ ► And then the site that you get is beautiful and professional looking. You can customize it with all the stuff you want. Your own brand, your own logo. It doesn't look like it looks like a cookie cutter or anything like that. It's great.
00:42:33 ◼ ► Check it out today, squarespace.com/atp to start that trial. When they're ready to purchase, go to squarespace.com/atp again and use code ATP for 10% off your first purchase of a website or domain.
00:42:44 ◼ ► So squarespace.com/atp. Once again, start the free trial and then at purchase get 10% off. Thank you so much to Squarespace for sponsoring our show.
00:42:57 ◼ ► So it continues not directly. This is later on in the document. The iPod experience gave Apple a recipe for the future. A high-end device, a large number of platform participants, i.e. music labels and consumers, and a digital storefront. More importantly, it gave Apple a playbook. Drive as many consumers and third-party participants to the platform as possible and offer a wide selection of content, products, and services created by those third-party to consumers.
00:43:20 ◼ ► This structure put Apple in the driver's seat to generate substantial revenues through device sales in the first instance and subsequently the ancillary fees that it derives from sitting between customers on the one hand and the products and services they love on the other.
00:43:37 ◼ ► Yeah, we'll get to that in a little bit. There's a lot of sections of this complaint that read like a book report about the tech industry and it should get like a C-. Because it's not well researched and is wrong about the facts in several cases and draws completely ridiculous conclusions that are not supported by any of the evidence.
00:43:59 ◼ ► And again, I don't know how legal complaints are written. Maybe that's just a thing you do as background context or whatever. The complaint is not the court case. They'll go to court, lawyers will argue things, that'll happen.
00:44:09 ◼ ► So I don't understand what you're supposed to put in the complaint, but there's a lot of book report style, like table setting and background stuff and just lots of the stuff in there.
00:44:19 ◼ ► If I was Apple's lawyers and I saw this, again, maybe they don't have to address this in the court cases. I don't know how things work. Just as a person who knows the tech industry, I'm like, nope, that's not a thing. We'll get to them. We should keep going.
00:44:32 ◼ ► So today only Apple and Google remain as meaningful competitors in the US performance smartphone market. We'll get to that in a second. Barriers are so high that Google is a distant third to Apple and Samsung, despite the fact that Google controls the development of the Android operating system.
00:44:47 ◼ ► I pulled this bit out because it is an example of a very confused understanding of the smartphone market in the United States. Only Samsung and Google remain as meaningful competitors.
00:44:58 ◼ ► What we all know on this podcast and anyone in the tech world is who controls the smartphone world? The answer is Apple and Google. The only two platforms that matter in the smartphone world.
00:45:11 ◼ ► Android, which is controlled by Google, and iOS, which is controlled by Apple. And maybe regulators are confused, like, but wait a second, Google's is open source and lots of people use it and Google doesn't control them and blah, blah, blah.
00:45:23 ◼ ► Well, there's a whole other court cases about how Google actually does manage to control the people who use Android, despite the fact that it's open source and through the Google Play Store and blah, blah, blah.
00:45:31 ◼ ► To a first approximation, smartphone, Apple and Google, right? But this thing is like, you know, Google is a distant third to Samsung.
00:45:41 ◼ ► Samsung? Like I know that like they're saying, they're just saying in terms of how many phones do you sell? Google doesn't sell a lot of phones, despite the fact that pixels are good. Like they don't sell a lot of them.
00:45:49 ◼ ► I understand how they came to this, but in an antitrust suit, I think one of the main things that they never touch again, maybe for legal reasons, because it doesn't help their case or whatever, is that Google is the other big company in the smartphone world.
00:46:05 ◼ ► There are two big smartphone platforms, Apple's and Google's and Samsung sells a lot of phones based on Google's. Like I understand that technical nuance there, but like I read this paragraph, I'm like, I would say for a little Timmy, like you turn this book report.
00:46:20 ◼ ► It's like you're right about the number of phones sold and the company that makes those phones, but you're not seeing the forest for the trees here.
00:46:27 ◼ ► And again, maybe Google is irrelevant to the suit because this is not a suit against Google. It's just against Apple, but they do all this sort of background information.
00:46:39 ◼ ► Well, I think I kind of know the answer to that too, which we'll get to in a second. But that was just one excerpt. I have so many excerpts that I pulled. I can't do them all, but we'll get to them eventually.
00:46:47 ◼ ► So the DOJ had a press conference about this where people got up in a podium and talked about things. And there is a transcript of, I believe, just the prepared remarks of the press conference. We'll put a link to it in the show notes.
00:47:00 ◼ ► A few things that were in the press conference, which at that point I hadn't read the entire complaint yet. So I was going by what they said.
00:47:09 ◼ ► I was like, "Why are they suing Apple? What is this under?" And the person at the podium, I believe it was the Attorney General, Merrick Garland, said it's for violating Section 2 of the Sherman Antitrust Act.
00:47:22 ◼ ► So it's clear that's what this is about. It's antitrust. It's Section 2. You can look it up.
00:47:33 ◼ ► And I was like, "Okay, but surely..." Again, the last time we had a big DOJ antitrust thing against Microsoft, it wasn't because Microsoft had 65% of the PC market.
00:47:46 ◼ ► That number seems low. But I'm sure they'll support it in the document. But anyway, Merrick Garland is up there. Here are some more things that he said.
00:47:52 ◼ ► Again, US Attorney General said, "The Supreme Court defines monopoly power as 'the power to control prices or exclude competition.' As set out in our complaint, Apple has that power in the smartphone market."
00:48:05 ◼ ► Okay, I mean, I'm not a lawyer, so maybe that is the standard in the US, is just the power to control prices or exclude competition. I guess they'll talk about that in the document.
00:48:16 ◼ ► Now, this is the key part we were getting from before. This is Merrick Garland continuing, "Having monopoly power does not itself violate the antitrust laws.
00:48:26 ◼ ► But it does when a firm acquires or maintains monopoly power, not because it has a superior product or superior business acumen, but by engaging in exclusionary conduct.
00:48:35 ◼ ► As set out in our complaint, Apple has maintained its power not because of its superiority but because of its unlawful exclusionary behavior."
00:48:41 ◼ ► This is the key. That's why I think the headline is crappy. US sues Apple for illegal monopoly? Monopolies are not illegal in the US. You can have a monopoly. It's fine. There's no such thing as an illegal monopoly.
00:48:51 ◼ ► There is a such thing as using your monopoly to illegally stop people from competing with you, and that's what this is about.
00:48:58 ◼ ► And there are two parts of that. One, you have a monopoly, and presumably the US has to show that's the case. And that's where they're going, "Oh, how do we define monopoly? It's because X, Y, and Z."
00:49:08 ◼ ► And you have to say, "Okay, you've got that monopoly, which is fine. Did you use that monopoly to exclude competition in ways that are against the law according to all of our legal precedents?"
00:49:18 ◼ ► And that's what the DOJ case against Microsoft was about, and that's what this is about. It's not about it's illegal to have a monopoly. You've got a monopoly, and you used it in a way that you're not allowed to.
00:49:28 ◼ ► Because basically what it comes down to is if you have a monopoly, different rules apply to you. And that's why in a lot of these cases, especially people in the US, will get indignant.
00:49:38 ◼ ► They'll say, and Cut a Marker was getting at it before, "Aren't you just complaining that Apple is too good at their job? They're too good at business?"
00:49:46 ◼ ► They're doing all these things, and you may not like it, but that's business. They're competing. This is what got them to where they are. Now you're saying they can't do it, and the answer according to US law is, "Yeah."
00:49:58 ◼ ► If you gain monopoly power, you have a different set of rules that apply to you. Things that were fine for you to do when you were a little company, when you were a monopoly, those exact same things become illegal when you are a monopoly.
00:50:11 ◼ ► So showing that Apple is a monopoly is a really important part of this case, because if Apple was a tiny little company and not the biggest company in the US, every single thing we talk about and the things we complain about on this show, and things we've always complained about on this show, is like,
00:50:27 ◼ ► "Well, we don't like it, but it's not like it's illegal or anything. They're just kind of being jerks, or they're doing things that are not in their interest, or they're annoying us as developers or whatever."
00:50:33 ◼ ► But this antitrust law says when you are a monopoly, there are a bunch of things you can't do, and that is the US-centric context of this entire thing.
00:50:42 ◼ ► One more bit. This is not from the Merrick Garland, but this is from the complaint itself.
00:50:47 ◼ ► It says, "Plaintiffs bring this lawsuit under Section 2 of the German Interest Act to challenge Apple's maintenance of its monopoly over smartphone markets, which affect hundreds of millions of Americans every day."
00:50:57 ◼ ► This is as close as I could find in the complaint to the government acknowledging a fact that I think is important, maybe not to this case, but is important to this situation.
00:51:10 ◼ ► Because again, what's important to this case is just based on the law, and a lot of our laws are dumb or not applicable or never envisioned the situation they're being applied to, right?
00:51:19 ◼ ► But the bigger picture, as I've said many times, is I think, setting aside US laws, that one of the reasons why a different set of rules should apply to Apple and Google is because, as the states, hundreds of millions of Americans have smartphones.
00:51:35 ◼ ► It is not like an optional thing or a frivolous thing like a game console or whatever. You can get by as an adult in America without a game console.
00:51:46 ◼ ► But it is very difficult to get by these days as an adult in America without a smartphone, because so many parts of business and job and everything assume you have one, and if you don't, it is a hindrance.
00:51:58 ◼ ► It's kind of like the telephone, right? There's no law that says you have to have a telephone back before cell phones, like a landline telephone.
00:52:05 ◼ ► But at a certain point, if you didn't have a telephone, it would really impair your ability to participate in society and be a functioning person. It's like the bar for what you need to have in society gets raised.
00:52:16 ◼ ► And it's not illegal not to have a phone, it's not illegal not to have a landline phone, you know, it's not illegal not to have all sorts of things, but so many people have them that the phone, I think, should be treated differently than a game console or something like that, right?
00:52:32 ◼ ► That's not part of this lawsuit, there's no part of the Sherman Antitrust Act that says, "Oh, if you sell something that everybody needs, it's different," right?
00:52:38 ◼ ► But I think it should be different, and this is one little bit of the lawsuit that leans in that direction, but unfortunately that's irrelevant because it's not like, we don't have any laws in the US that say if you sell something that's super important that everyone kind of needs, a different set of rules apply to you.
00:52:55 ◼ ► The EU is essentially saying that, by saying we regulate all sorts of things, but we find it particularly important or interesting to regulate the smartphone market because smartphones are so important to our modern lives, that's why we in the EU are deciding that we should turn our attention to that, and not turn our attention to, you know, something that is not as significant to daily life or whatever.
00:53:20 ◼ ► And so that's why I pulled that little thing out of there. And speaking of the Microsoft DOJ trial, at one point, back to the people standing up at podiums, I think this was Jonathan Cantor, who I think is like the head of antitrust division of the DOJ or whatever, said this at the podium.
00:53:36 ◼ ► He said, I'd wager that everyone in this room has a smartphone. And that reminded me a lot of during the Microsoft antitrust trial, at one point, I think this was literally during the trial, like the prosecutor said, everyone in this room who has a Windows PC raise your hand.
00:53:54 ◼ ► And it's a giant audience of people, reporters, the audience, people, government people, everybody raised their hand. This is the 90s, okay, who has a Windows PC in a giant courtroom during the... everybody has a Windows PC. Of course, everyone has a Windows PC. They had like 90 something percent market share.
00:54:09 ◼ ► I would not be surprised if there was like one Mac user in that room of like 300 people, right? Right. And it's not again, it's a court case, you can showboat or whatever, but raise your hand if you have a Windows PC, all the hands go up. Like, yes, as part of the MS DOJ trial, the government had to prove that Microsoft was in a monopoly.
00:54:28 ◼ ► But let me tell you, it's pretty easy to do. In the 90s, people who weren't alive then or weren't involved in the tech sector do not realize how dominant Windows was at that point. Windows was everywhere. Everyone had a Windows computer, right?
00:54:44 ◼ ► This is not saying raise your hand if you have an iPhone. This was who here has a smartphone, which is getting to my earlier point, which is like, look, we all, everyone has a smartphone. He didn't ask them to raise their hand. He just said, I assume everyone's room has a smartphone. I agree. I think everyone in the room did have a smartphone because it's just something that everyone has to have.
00:55:01 ◼ ► And another point from the podium, he said, roughly seven out of 10 smartphones are iPhones. So they went from 65% of US market share to the seven out of 10 number, which is what they were saying, well, in the performance smartphone market share or whatever, Apple has even more, right?
00:55:17 ◼ ► Still kind of fuzzy thinking from my point of view. It's like, okay, well, is there some percentage of market share you need or is it not about market share? Is it about how much money goes through the thing or is it just about the ability to exclude competition and control prices? This will all be hashed out in the court case.
00:55:32 ◼ ► But I feel like just from the day of dropping this complaint, it's not clear to me that the government has a bumper sticker they can put on that says, here's why Apple's a monopoly. Other than like everyone has a smartphone, Apple makes a smartphone, something, something Samsung, Google, monopoly.
00:55:52 ◼ ► Yeah, I don't, it's hard for me to not get distracted when I read this complaint or the various coverage of it by little details of like, wait, that doesn't sound right or wait, that shouldn't be illegal or that's common sense that how every, you know, well designed or well thought out product should be or that thing that they're saying Apple's doing.
00:56:14 ◼ ► Yeah, of course they're doing that. That's what makes it good or that's what, that's their prerogative to do or things like that. But I'm trying to take a broader, higher level view of this. You know, first of all, I am not a lawyer. I don't study the law. I barely even had time to read this because I also happen to be moving today.
00:56:30 ◼ ► So it's been a bit of a busy day, so I apologize. But it's important for me to keep reminding myself what they've laid out here is not a complete version of what they have. It's not a complete story that's meant for necessarily people like us.
00:56:48 ◼ ► What they've laid out here is a strategy. This like, they've said everything they've said, they've used the words they've used, they've chosen very carefully as a legal strategy. What they're trying to do is achieve a certain set of goals and they're trying to fit, you know, the law, the precedent and everything into supporting their goals.
00:57:08 ◼ ► And so all the arguments they're making, all the choices of how they've chosen to phrase things, what evidence or, you know, quote evidence they've chosen to cite, all of that is legal strategy to achieve the actual goals.
00:57:27 ◼ ► Well, the goal is simple. The goal is to win the case. And that's part of the problem. The Department of Justice, their goal is to win their court cases. That's their job, their literal job.
00:57:39 ◼ ► And you say, well, okay, but the court cases are in service of a larger goal, right? Like, they bring this, why do they bring this suit? Because they must have some larger goal in mind.
00:57:47 ◼ ► And in the end, the larger goal doesn't really matter because it's not like by winning the suit, they get to dictate exactly what Apple has to do. They can suggest remedies, but what's actually going to happen, especially if they like settle or whatever, it's just, it's the wrong way to go about bringing about change.
00:58:03 ◼ ► If the government has ideas about how this situation could be improved, they can pass new laws. They can pass new, it happens all the time. Hey, companies should not be dumping toxic waste into the river. What can we do about that? Can we sue them for violating some existing law that we think they vaguely might be violating?
00:58:20 ◼ ► No, pass a new law that says you can't dump toxic waste into the river. That's the solution. The solution is not to say, well, technically they're violating this law of like, they're in violation of the Constitution because they're stopping people from their pursuit of happiness.
00:58:34 ◼ ► But no, just pass a law that says you can't dump toxic waste into the river. That's the solution. But we're so bad at passing laws, and apparently so is the EU, that that is not what we're doing.
00:58:42 ◼ ► Instead, we're going to sue them under the Sherman Antitrust Act because if you squint, it's like they're buying up the entire supply chain so that no one can compete with them except for Google who has more market share, but I don't know.
00:58:56 ◼ ► Well, the thing is, and I think, obviously, the Sherman Antitrust Act is the tool we have in the US to deal with monopoly behavior. And so, again, I'm sure there's a lot of legal strategic reasons for this, but what I've heard a lot of other people report on, who know more about this, is that obviously a lot of the success or failure of antitrust cases in the US relies on the market definition.
00:59:30 ◼ ► That's right, performance smartphone market as a separate market from all smartphones. I actually like a lot of their arguments in it that said basically it's a little bit different from other market definitions in the sense that when people buy the phone, they're buying it for reasons like the camera, the specs, the phone.
00:59:51 ◼ ► They're buying it for reasons other than the parts where they're being accused of being anti-competitive like App Store, private APIs, stuff like that. So I kind of get that argument. It's not a terrible argument.
01:00:07 ◼ ► What I hope to see here, I don't know their chances of winning this case. I don't know the law enough and the tricks and the details enough to be able to make any kind of call on how good their chances are. They're very smart people. They probably think they have a pretty good chance, otherwise they wouldn't have brought it.
01:00:28 ◼ ► They said on the podium essentially that the DOJ wins most of the cases it brings because it doesn't bring cases unless it's pretty sure it can win them. So I would trust them on that. If you're going to place betting odds, will the verdict come in favor of the DOJ, especially on the initial one before appeal? Their odds seem reasonable based on historical precedent.
01:00:48 ◼ ► I don't know how much of it is also like, maybe they'll just win part of it and win some claims or some remedies. I'm sure this is going to be hashed out over a while. However they have chosen to wedge their arguments into the existing legal frameworks that they have to use,
01:01:07 ◼ ► I do agree that Apple does engage in a lot of anti-competitive behavior and that Apple has a scale and an importance in the market and to so much of commerce and so much of modern life as you were saying earlier John with everybody having a smartphone.
01:01:24 ◼ ► Over the years I've said many times, I do think this is very different from a game console just because of how much of modern life and commerce runs through this gatekeeper.
01:01:38 ◼ ► And that's why I don't object at all to the EU DMA focusing on this idea of a gatekeeper and basically making a law that's targeted at only a very small number of companies because it does control and restrict so much of modern life.
01:01:54 ◼ ► That is exactly the sort of thing that regulation is made for. Regulation is ostensibly to protect consumers or markets or the environment or something else from what capitalism would normally do naturally.
01:02:11 ◼ ► What would be in the self-interest of the company if their goal was to just make more money? It's way cheaper just to dump your toxic waste into the river than to have to pay lots of money for someone to ship it away and safely dispose of it.
01:02:25 ◼ ► And so without that regulation a company with a soulless evil company that just wants to make money is going to say yeah just dump it in the river. Why would we do anything different?
01:02:30 ◼ ► That's what you bring the regulation and it says they're just being a smart company. They're saving money. They're increasing profitability by not paying those expensive fees to dispose of toxic waste. That's what regulation is for.
01:02:41 ◼ ► And so yeah that would be a much better tool to do this and it's what the EU is trying to do but in the US that's not how we've chosen to do it for the second time.
01:02:49 ◼ ► And also you can look again at things like the phone networks. The original, the landline phone networks and how government regulation was required there to ensure good competition and use of those lines because the phone networks while they were built by private companies became so important to modern life and to everything in modern life that it was in the best interest of everybody, like the whole society to have some basic regulations on how to do it.
01:03:18 ◼ ► So it did so that the very small number of companies that built them couldn't dictate modern life. Look also at the railroads. Similar problems and this is why these mechanics exist.
01:03:31 ◼ ► And if you look at Apple, their size today, they are so big, they are so important to so much of the world and so much of commerce and so much of society, they do need to have governments looking at them for regulation because of Apple's size and influence over so much.
01:03:52 ◼ ► Governments should be holding Apple responsible for making sure they use their power in a way that's not going to really damage commerce, the economy, companies, etc.
01:04:03 ◼ ► A lot of this complaint I think reads very poorly to those of us watching it because we look at it and say things like I was saying earlier, this thing that they're being accused of, that's just making a good product, why should that be illegal?
01:04:16 ◼ ► And to a lot of extent I believe that, but you can also look at a lot of Apple's behavior over the last decade and you can see a lot of anti-competitive and also I would say needlessly anti-competitive behavior that really just comes down to greed or just extracting whatever they can.
01:04:39 ◼ ► Which itself is not necessarily inherently illegal, but again once you reach a certain scale, tighter standards have to be applied to you for the good of the entire economy.
01:04:51 ◼ ► So I do believe Apple has reached that scale and that they still are doing certain anti-competitive behaviors that warrant government intervention.
01:05:01 ◼ ► So even though I disagree with a lot of the specifics and the examples they cite, I think that what the DOJ is getting at has a decent amount of merit and maybe the reason their arguments seem a little bit absurd at times is because they're trying to wedge the current situation into these very old laws that have a hard time directly applying.
01:05:24 ◼ ► Yeah, that's because everything you just mentioned is not in the Sherman Anti-Trust Act. There's nothing in the Sherman Anti-Trust Act that says if the thing you supply is used by most of the population and is required to be a part of daily life, that's not in the Sherman.
01:05:35 ◼ ► The Sherman Anti-Trust Act is very succinct and to the point and does not make any distinction between like well, what if you make a game console, how important is your product to society, how big are you as a company in terms of like, it's not about that.
01:05:49 ◼ ► It's much simpler and everything, all those nuances that are about that have been established by case law and the case law leading up to this, including very recently with Microsoft, has not really made that distinction that we're making here.
01:06:00 ◼ ► That it's like it really does make a difference whether you make a smartphone or a blender.
01:06:08 ◼ ► Every adult in America doesn't need to have a blender to be able to function well in society, but a smartphone is like a landline phone used to be. It's so necessary that we feel here on the outside of the legal system, it makes sense to give that more scrutiny.
01:06:24 ◼ ► It makes sense to apply different rules to that. But to win the legal case, if that's not in the law, there's no point in bringing any of that up in the court case.
01:06:34 ◼ ► They could have brought it up in this document because lots of random crap is brought up in this document. So I'm kind of disappointed not to see it here.
01:06:39 ◼ ► But when it comes to proving they violated the law, I'm not sure. I mean, they can make that case. They can say, well, Judge, that's how precedent gets set.
01:06:46 ◼ ► Well, Judge, even though Apple has a 64% market share, it's so important to have a smartphone. And they do make the point in the document that it sounds silly to us to get on the tech world, but they make up this term for it everywhere.
01:06:56 ◼ ► They call it multi-homing or something. People don't use more than one smartphone. They either have an Android phone or an Apple phone, but they tend not to have both of them.
01:07:05 ◼ ► So basically, they're basically saying if you make an app and you want to address the entire addressable market for smartphone users, like if you're a DoorDash or Uber or something, you have to be on Apple's platform.
01:07:16 ◼ ► Even though Apple only has 65% market share, because people don't own two phones, you can't expect if I just make it for Android, everyone will be able to use Uber.
01:07:26 ◼ ► You have to make it for both platforms. There's a weird way of getting at the point of saying there's essentially a duopoly, but we don't really have any laws about duopolies.
01:07:34 ◼ ► And a duopoly and something as important as a smartphone is arguably worse than having a monopoly because they can both point to each other and say, see, there's competition, which they absolutely will do in the court case, I'm sure.
01:07:44 ◼ ► Our laws are insufficient to capture the moment, but DOJ is going with the laws they have and I guess trying to win based on those things.
01:07:55 ◼ ► And that's why a lot of this does not ring true to us. So I agree with Mark. I feel that something needs to be done.
01:08:02 ◼ ► But I look at this complaint and I'm like, yeah, this is not it. This is not what needs to be done because it necessarily can't get at the heart of the problem.
01:08:11 ◼ ► It has to instead prove that Apple violated this law. And that's, you know, so here they gave five examples and they were clear in the complaint. They said, this is not exhaustive.
01:08:21 ◼ ► These are not the only things that we're saying Apple did that's bad. I'm sure the court case will, the government will roll out many, many things that I think Apple did that was bad. Right.
01:08:34 ◼ ► So here we go. Here we go. Disrupting quote unquote super apps that encompass many different programs and could degrade iOS stickiness and make it easier for iPhone users to switch to competing devices.
01:08:45 ◼ ► Wait, what is this? I love. All right. So maybe this is a term of art that I don't know. So bad on me for not being familiar with the term of art about super apps.
01:08:52 ◼ ► But I didn't know this either. If you're, if you're listening to this and you think I've never heard of a super app, once we start naming examples, you're going to be like, oh, I know what that is. I just never heard it referred to as a super app.
01:09:01 ◼ ► Yeah. So what they define a super app is a super app is an app that can serve as a platform for smaller mini programs developed using programming languages such as HTML five and JavaScript super apps can provide significant benefits to users.
01:09:13 ◼ ► For example, a super app that incorporates a multitude of many programs might allow users to easily discover and access a wide variety of content services without setting up and logging into multiple apps.
01:09:21 ◼ ► Not unlike how Netflix and Hulu allow users to find and watch thousands of movies and television shows in a single app. So I think what they're actually referring to though is WhatsApp, isn't it?
01:09:33 ◼ ► Basically, here's what they're talking about. Anytime we've ever talked about like app store rejection and stuff like that, where some person wanted to make an app and then inside the app, there was like a little miniature store where you could buy a bunch of individual like sub games like Roblox, but those aren't games. Those are experiences. It's fine.
01:09:52 ◼ ► Yeah, I think it will. I'm pretty sure it'll be brought up right. But anyway, Roblox is allowed. But like things like WeChat, WeChat, my understanding is in China, you get WeChat and you can do so much stuff from that.
01:10:03 ◼ ► You can get a taxi, you can pay for your meal, you can pay your electric bill. Like it's all inside one super app right now.
01:10:10 ◼ ► This is weird in some ways because, well, so it's weird because things like Roblox exist and sort of are violations I like. And the examples, they have Netflix and Hulu. You log into your Netflix thing and there's a whole bunch of things you can watch there within a single app.
01:10:24 ◼ ► Netflix doesn't have to put out a separate app for each individual show, which sounds dumb to you. But that's what Apple was making people do for things like, we'll talk about cloud streaming services, but I think that could also kind of be under super apps.
01:10:34 ◼ ► So like if you're inside an app and there's like a sub store, if it's like another level of abstraction, there's other things you can do in there. Apple tends to not allow those unless it feels like it.
01:10:43 ◼ ► But this is one of the things I cite is here's what Apple does and it's anti-competitive because things like WeChat essentially can't exist in the US.
01:10:51 ◼ ► I would say, you know, again, as a consumer looking at this in the big picture, I think super apps like WeChat are not what I want. I would much rather have Android and iOS with individual apps for all of those things competing in sort of a more fair open playing field.
01:11:11 ◼ ► I do not want one super app where my phone is just a WeChat device and WeChat owns every aspect of my life because that's just another, all you're doing is shifting the antitrust problem to a different place.
01:11:23 ◼ ► That is not what I think. That is not an example of competition. But in the GDS complaint, they're like, look, Apple doesn't allow these things to exist elsewhere in the world. They do exist.
01:11:32 ◼ ► And even in the US, there are companies that want to do this and Apple says no. And we think that's stifling innovation. And I think, DOJ, pick a different example because all you're doing is setting up your 2038 lawsuit against the dominant super app in the US.
01:11:46 ◼ ► Yeah, this is one area where I think this, and this is going to be a common theme to a lot of Apple fans' responses to these complaints, is like, we actually want it this way. I think we're actually better off to not have these big super apps because all that does is just create other monopolies that just sit above the smartphone and then can even be stronger monopolies because they can make that same super app for iOS and Android.
01:12:15 ◼ ► Yeah. Alright, so the next one is related to that. Blocking cloud streaming apps for things like video games that will lower the need for superior hardware. This is basically saying the cloud gaming services where there's like a streaming game service like Microsoft's Xbox thing where the games run in a data center on big gaming PCs and you stream the input and output to your phone, right?
01:12:32 ◼ ► And Apple for a long time has rejected those. And I think this is one of their starter cases, like, look, why are you rejecting this? Is there a safety concern? Is there a security concern? Is it confusing to customers? Are they going to be exploited?
01:12:46 ◼ ► It's like, no, no, no, no. Apple doesn't want this just simply because first, it makes a little mini store where you can go in and buy individual games, which I think is fine with the concept of gaming. Apparently, robots can do it, but those are experiences, not games. And second, like, who cares? The only reason Apple doesn't want this is because they make so much money with individual native games.
01:13:05 ◼ ► And they're like, well, if we did this and we let them in, then all gaming on the phone... First of all, I think this is wrongheaded because I don't think streaming gaming would actually dominate. I think Apple... This is another one of those cases where I think Apple, if you actually competed and allowed this, you'd be fine. But whatever, they're scared to find out, right?
01:13:20 ◼ ► So they just said no to this. And I think this is actually a good example of anti-competitive behavior because they're going to be able to say, Apple, remind me again why people aren't allowed to do this? Like, even if they were willing to pay you the 30% and do whatever, it's like, no, we just don't allow things like that in the store. Well, why not?
01:13:34 ◼ ► And the answer effectively is because we make more money from the other things. It's not... There's no privacy angle. There's no security angle. There's no, like, there's no anything. It's just they were disallowing us. And of course, they changed this rule very recently to say, okay, Microsoft, you can't... Remember that thing we told you you couldn't do for years? You're allowed to do it now. And I think the reason they changed it is because of, you know, all of the pressure that they knew was going to arrive or was arriving from the EU or was coming from the US or whatever. Like, they didn't change it out of the goodness of their hearts, right?
01:14:03 ◼ ► So this is, I think, a reasonable point, although maybe it's undercut by the fact that Apple already allowed this. But it's an historical sample. Here's the thing that they were doing to stifle competition.
01:14:12 ◼ ► The next one, I think this is going to be tough for the government for a variety of reasons. Suppressing the quality of messaging between the iPhone platform and competing mobile platforms like Android. Here's what they mean in the complaint.
01:14:26 ◼ ► Because only messages on the phone can do SMS, that makes it difficult to use any other third party messaging platform as sort of your, like, you can do everything.
01:14:38 ◼ ► Because the point of the thing is, like, if you have to message someone, you can just go to messages, you type in their phone number and you send the message and one of two things can happen.
01:14:45 ◼ ► Either it's going to send through SMS because that's all they have and it's the common denominator or it will send through iMessage because they have an iPhone.
01:14:52 ◼ ► And their argument is, they have a whole bunch of bogus arguments with the beeper thing that we've talked about in the past episodes, right?
01:14:59 ◼ ► But their argument is, like, no other third party messaging app can do that because Apple doesn't allow third party apps to use the API for sending SMS messages.
01:15:13 ◼ ► This whole section drove me nuts because what they're saying, depending on how you interpret it, is either just straight up wrong or just a poor way of describing it.
01:15:23 ◼ ► Because the whole point of FastText, may it rest in peace, was to send text messages and there is an API to do that.
01:15:30 ◼ ► Now, I think what they're saying is there's no mechanism to go in and have a replacement for the messages app. There's no mechanism for my app to become the system SMS app.
01:15:43 ◼ ► Not even that. I think they're saying you couldn't make a client app. Like a full, I guess you can send messages, but you can't basically be a client app that's sitting there running in the background waiting for someone to send you a message and like, you know, and just being an interactive client.
01:15:54 ◼ ► Like, that's basically, I feel like what they're saying is that, yeah, there may be an API to send a message, but there's not enough APIs for you to write, essentially write your own version of messages.
01:16:06 ◼ ► Forget about it for replacing it as a system default. I think that's what they're saying. I think that's true, right?
01:16:11 ◼ ► That you couldn't write messages yourself, make your own set of servers, make your own everything, make your own, like, it's all your own infrastructure, but just write an app that looks and feels just like messages.
01:16:20 ◼ ► It's not the default app on the phone, but it does the same stuff. I don't think that's currently possible.
01:16:25 ◼ ► No, you're right. And the other thing that drove me nuts about this section is that they were complaining and moaning incessantly about how, oh, you can't run anything in the background, so you wouldn't receive your messages in a timely fashion or whatever.
01:16:41 ◼ ► Yeah, I think I pulled a quote out about that, which is, I was like, I really want to see them, I mean, this is not maybe what they're going to say in court, but I really want to see them try to support this statement. Let me see if I can find it.
01:16:51 ◼ ► All right, here, this is directly from the complaint. For example, third-party messaging apps cannot continue operating in the background when the app is closed, which impairs functionality like message delivery confirmation.
01:17:04 ◼ ► Cannot continue operating in the background when the app is closed? I don't think there's any way you can interpret that sentence for it to be technically valid in iOS today.
01:17:12 ◼ ► And then the second part is, which impairs functionality like message delivery confirmation? Push notifications exist and can be used by third-party apps. I swear they can.
01:17:22 ◼ ► Like, you can get a push notification, or like, none of this is true. I don't think any of this is true. And it is such a weird thing to be harping on. Like, third-party messaging apps can't continue operating in the background?
01:17:35 ◼ ► This is news to every third-party messaging app that does exactly that and notifies you when people send you a message. Like, I don't, I'm just flabbergasted that this is in here. It makes no sense.
01:17:44 ◼ ► Like, the one point they have is, hey, they're private APIs, and I've been at this point several times, they're private APIs that Apple keeps to themselves, and those APIs would be useful to third parties if Apple let them use them, but they don't.
01:17:55 ◼ ► And it gives Apple a competitive advantage, because only Apple can make the app that does its own proprietary messaging plus SMS.
01:18:02 ◼ ► And this is a weird thing to bring up as well in their five examples, because it's not like there's a lack of competition in messaging apps on iOS. There's a lot of them.
01:18:12 ◼ ► And they're popular. Like, the one strike they have against them is, oh, I guess they can't do SMS. And I guess there is a point to be made there. I think they will successfully make that point in the court case, but it's not one of their stronger points.
01:18:26 ◼ ► So, so far we've got Super Apps, which I think is wrongheaded and bad. Cloud Streaming, which is pretty good, but Apple's already reversed that.
01:18:33 ◼ ► No SMS use of API, which I think is just one case of them keeping APIs to themselves. Maybe they can bring that in that direction.
01:18:43 ◼ ► The next one is, I think it gets worse again. Limiting the functionality of third-party smart watches with its iPhones, making it harder for Apple Watch users to switch from iPhone due to compatibility issues.
01:18:54 ◼ ► These are summaries, essentially. They're basically saying Apple Watch can only be used with iPhones, and it's hard for third parties to make smart watches that can integrate with the iPhone the way the Apple Watch does.
01:19:06 ◼ ► That's all true. And to Marco's earlier point, we look at that and say, yeah, because they're Apple and it's their watch, and it's going to be tightly integrated with their operating system because they make all of it. What's wrong with that?
01:19:19 ◼ ► And the government's going to say, well, when you're a monopoly, the rules change for you. And what would previously have been a smart business move now becomes illegal because you're not letting other people compete.
01:19:28 ◼ ► But the example they're going to use is there were smart watch APIs before the Apple Watch came out, and Apple essentially just didn't ever improve or expand them, and Apple Watch got to use its own fancy APIs.
01:19:40 ◼ ► We look at this as Apple fans and be like, yeah, that's how Apple works. That's how the tech sector works. They made those APIs for the Pebble smart watch or whatever because Apple didn't have its own watch.
01:19:51 ◼ ► And then when it made its own watch, of course you don't get to use those APIs. Only Apple does, and those APIs are better. And tough luck because Apple's going to Apple.
01:20:05 ◼ ► Yeah, this is a weak one. This is why, again, you can look at Apple and you can find instances of anti-competitive behavior, I think, fairly easily, but I think the examples they have chosen to highlight are not great examples.
01:20:20 ◼ ► They seem to be trying to frame the case against Apple as Apple makes it too hard for consumers to switch to Android.
01:20:29 ◼ ► And I don't think that's that strong of an argument. You can make lots of other arguments about Apple's anti-competitive behavior. I don't think that is a good way to go.
01:20:40 ◼ ► But what I can't tell is, like, do they also, would they agree with that, and this is just how they're going to give it the best chance of winning within the legal framework that we have? Or is this actually what they're trying to argue?
01:20:51 ◼ ► They do a different angle on it. They're not actually saying Apple makes it too hard to switch to Android. What they're essentially saying in several parts of the document is they say, this change that Apple made was not made to make their products better.
01:21:06 ◼ ► It was instead made to demotivate people from switching. That's subtly different than saying Apple is stopping you from switching.
01:21:13 ◼ ► It's basically saying, oh, Apple, here's some internal email that says the reason you did this is because you were afraid if you did this, there would be less reason for people to stay on your phone.
01:21:22 ◼ ► Which again, you would look at that and say, isn't that Apple's job to make their phone the most attractive platform so people want to stay on it?
01:21:28 ◼ ► And you're saying because they did that, it shows, well, you only made this change because then people would like the iPhone better.
01:21:34 ◼ ► And if they left it, they would miss it because things are only on the iPhone. And you're like, yeah, that's just business. Isn't that great?
01:21:40 ◼ ► And again, it's saying, yeah, that's great right up until you're a monopoly. And so if you're a monopoly, you're not allowed to do those things.
01:21:46 ◼ ► But they use that angle constantly by quoting from emails in the discovery like the Epicase or whatever is saying, here you are, Apple, saying you're not going to do this thing that we, the DOJ, thinks would benefit consumers.
01:21:58 ◼ ► And the reason you say you're doing it is because you're one of your executives who says, we did this. People would have less motivation to stay on iPhone.
01:22:05 ◼ ► It would be easier for them to get their kids Android phones. Right. And that does not look nefarious when I read it because, you know, I understand Apple and how things work.
01:22:13 ◼ ► And a lot of times I agree that they shouldn't do that because it would make the iPhone worse. But the DOJ comes out and flatly states in this complaint, this would have been better for consumers.
01:22:22 ◼ ► I'm like, already I disagree with you, DOJ. But anyway, then they go on and say, and the reason you did it was to make it harder, not to make it harder, to make it so people don't want to switch because they switch. They'll be leaving behind this good thing here.
01:22:36 ◼ ► Right. Is there something only on the iPhone? Oh, well, they even say about the services. So like all these services you have, it makes it so that if people leave, they're sad because they're like, oh, but all my things that I see on this service, I wouldn't have them anymore if I want an Android because it's not available there.
01:22:51 ◼ ► It's so confused when I look at that and I say Sherman Antitrust Act and third party watches can't integrate with the iPhone. Like I'm trying to connect those dots real hard. It's just not it's not working for me.
01:23:08 ◼ ► The final one they had here, which I think maybe is one of their strongest ones, but it's so dead simple. And of course, the EU beat them to it, as with all these things. Blocking third party developers from creating competing digital wallets with tap to pay functionality. Remember the whole hubbub I guess years ago was like, hey, there's going to be NFC and Apple phones. But oh, only Apple can use it for these certain purposes.
01:23:28 ◼ ► The EU, I think, already made Apple not do that anymore and say, hey, it's part of the DMA, I think. Hey, Apple, you have to let third party apps have access to the NFC thingy so that other companies can have an app on your phone so that when you smash your phone against the thing, you can pay with them.
01:23:44 ◼ ► But in the US, I believe it is still the case that only Apple can access that through their whatever APIs they're protecting. That is kind of like a level playing field within the iOS market type of argument of saying there are features, there are hardware features of the phone that you don't let other people use.
01:24:01 ◼ ► And why is it because it's better for consumers? Apple will surely argue that having only a single wallet app is better for consumers because it's simplifying yada yada yada. But the DOJ is going to argue that it's better if Apple really is doing it to basically make sure that all commerce on the phone goes through them and they get a cut of it and has nothing to do with simplifying things for their customers.
01:24:21 ◼ ► I suspect a lot of the DOJ case will be exactly that and not just this point in all of them. The DOJ saying you're doing this, Apple, because it gives you a cut of all transactions and Apple saying, no, we're doing it because having a single wallet is better for consumers because it's simpler and it's better for security and yada yada yada.
01:24:37 ◼ ► And I think both of those things are true. It is simpler and easier for consumers to understand. And also Apple is also doing it so they can get a cut of all those transactions. Like they're literally both true. It's not like they're not in opposition to each other at all. Those are two reasons that Apple does it in probably equal measure.
01:24:56 ◼ ► And neither one of those reasons is wrong. But the DOJ has to, I guess, prove that the money reason is more important than the being nicer for consumers reason and repeat that for all these points.
01:25:09 ◼ ► And it seems so weird to me that the DOJ really has a burr up its ass about the fact that people want to use alternatives to Apple Wallet. And who? Why? Like, I don't really get that. And in fact, I would argue that compelling all of these different apps and Ticketmaster and everyone else, if Apple is even compelling them to add things into Apple Wallet, which I don't know that they are, but I would expect that they are.
01:25:39 ◼ ► So I see the DOJ case on this and I think they have a strong case in terms of the law. It's going to make sense to people who aren't Apple nerds. Here's the deal. Like, from our perspective, we're like, this is a simplification. And because we trust Apple, we prefer this scenario. But from a strictly business scenario, it's basically Apple saying, no commerce can happen unless we mediate it.
01:25:59 ◼ ► So you're a bank and our phones have NFC and you would love it if you could boop and do your bank stuff, but we're saying actually, you've got to go through us. I know you're already a bank, but it's got to go through us because we need to get our cut.
01:26:13 ◼ ► Right? And because we need to have control. And Apple would say, and it's not because we need to cut, it's not because we need control. We do it for security reasons. That's why Apple pays better. We have these temporary credit card numbers. You were just going to send the same number constantly back and forth. It was totally insecure. I was just better, blah, blah, blah.
01:26:27 ◼ ► But from a strictly business perspective, it's like, they're basically saying, hey, you want to, you bank can't have an app that uses our phone to pay for things. You can do it on Android phones. It works fine. But here we're saying, no, everything has to go through us. And for the DOJ's case, and I think they're going to be able to make this pretty strongly to a non tech savvy audience is like, why does Apple get to insert itself there? And I think Apple's obvious claim that this is a simplification, it's better for security is better for privacy may fall on deaf ears because they're going to say like, yeah, that's exactly what you would say if you wanted to get yourself between them.
01:26:56 ◼ ► yourself between every single transaction. And again, I think both are true. I think it is more secure. And I do trust Apple more than a lot of these banks. And it is better for consumers. But also Apple does want to cut right. Both things are true. And I don't quite see how this is going to how anything useful is going to come out of this because, you know, if you have it, if that's if the government makes this case, and the things they're saying are true, and Apple goes on the stand and things they're saying are also true, it basically comes down to the
01:27:25 ◼ ► judge and or jury, however, this trial is going to go, deciding which one of those two completely true things is dominates the other. And it really just depends on are you looking at Apple as a big evil cooperation? Are you looking at the government as incompetent and tech ignorant? What if it's both and pork in a low
01:27:43 ◼ ► status? Yeah, it's that's, that's a difficult thing. And that's why you never want to leave this up to a frickin legal case. Just tell again, use your words, government, right regulation that tells Apple what you want it to do differently and Google for that matter, because they're kind of important in this scenario. So but anyway, this is some one. I don't want to pull this one out. Let's go let's go to Apple's response, because I have a bunch of other excerpts that I want to just do a quick hits on. But here's Apple's
01:28:10 ◼ ► terse response, obviously, the day of this thing coming out. You want to read this Casey?
01:28:14 ◼ ► Sure. At Apple, we innovate every day to make technology people love designing products that work seamlessly together, protect people's privacy and security, and create a magical experience for our users. This lawsuit threatens who we are in the principles that set Apple products apart in fiercely competitive markets. I like that they throw in the first part. If successful, it would hinder our ability to create the kind of technology people expect from Apple where hardware, software and services intersect.
01:28:40 ◼ ► It would also set a dangerous precedent who empowering government to take a heavy hand in designing people's technology. We believe this lawsuit is wrong on the facts and the law, and we will vigorously defend against it.
01:29:01 ◼ ► I feel like this is a canned thing that they have ready to go. Probably had ready to go for ages, kind of like when you're pre-write obituaries. But this is a tangent, but it's my favorite thing about this.
01:29:10 ◼ ► We've talked many times on the show about how Apple's style guide wants you to say like Apple Vision Pro and not the Apple Vision Pro, and they want you to say iPhone, not the iPhone.
01:29:21 ◼ ► We don't want you to say we believe the iPhone, right? That's in all their style guides. It's the way they do PR or whatever.
01:29:26 ◼ ► So in this statement, they say, "It would also send a dangerous precedent, empowering government to take a heavy hand." And when I originally read that, I'm like, did I miss copy and paste this?
01:29:34 ◼ ► Shouldn't it say empowering the government to take a heavy hand? But no, the government gets the iPhone treatment.
01:29:49 ◼ ► I understand Apple's attitude here because, look, Apple does not like being told by external forces how to design their products.
01:30:02 ◼ ► But the reality is, again, they do actually anti-competitive behavior all the time and have for a while that I think is easily avoided.
01:30:17 ◼ ► They have been so brazen and so comprehensive with their anti-competitive behavior over the years that they have invited governments to, they have actually, you know, they've effectively forced governments to try to regulate them by behaviors that are not core to their products.
01:30:35 ◼ ► By, you know, behaviors like various anti-competitive app store policies and third party service policies.
01:30:42 ◼ ► And they have, if you look at all that whole area of their behavior, that has invited most of this regulation and most of these lawsuits.
01:30:51 ◼ ► And that has nothing to do with their products being good and well integrated with each other and secure and private.
01:31:08 ◼ ► And a lot of times it's warranted because Apple products really are pretty secure and pretty private compared to everything else in the industry.
01:31:15 ◼ ► But they also use that same cover on behavior that is not great and where those are not the reasons for that behavior.
01:31:39 ◼ ► We like a lot of these moves because we trust Apple more than we trust some stupid bank, for example.
01:31:51 ◼ ► So if you say it's legal for Apple to insert itself between every transaction, we think that's great because I'd rather have Apple in there because we trust Apple more.
01:31:58 ◼ ► But if you just remove the names and just say anonymous company A, B and C, do you want that to stand?
01:32:04 ◼ ► Because what if the company that's doing this in the middle was, for example, Microsoft or whatever company you have less nice feelings about than Apple?
01:32:21 ◼ ► And so while we may actually prefer Apple to insert itself because we trust Apple more because of their proven track record and also because of how Apple makes money is not the same way that Facebook makes money.
01:32:33 ◼ ► They have a strong legal case to say it's all well and good because you like this benevolent dictator, but it should be illegal for anyone to do that, even though Apple's being nice about it.
01:32:49 ◼ ► So, uh, I think Joe Rosenstiel retweeted or retweeted, uh, an account glyph, which I'd not been familiar with, but I think this is a perfect distillation of kind of how I feel about it.
01:33:01 ◼ ► Even if you're an Apple Stan and think the company really has no motivation, but a sincere desire to protect users and government regulators are bad product designers, and this will make things worse.
01:33:16 ◼ ► They should have figured out a way to self regulate by now, but because the appearance of impropriety clearly exists and has now been called out on multiple continents, this is not one regulator with a bias.
01:33:31 ◼ ► We said that we said this was going to happen and lo and behold, it has, and I still, part of when we had these discussions years ago, what I always said is that Apple's calculation is not that they're going to avoid regulation, but that they're going to survive it.
01:33:42 ◼ ► And it is better to essentially force it to happen and then like settle or like the essentially the making the calculation that, yeah, we know we're bringing on the bad thing.
01:33:52 ◼ ► We're doing it to ourselves, but we think in the end, because we're Apple and we're so huge that we will still come out in a more powerful position than if we were to give concessions manually.
01:34:02 ◼ ► I think the reputational damage is what they aren't weren't taking into account, but that has always been like a plausible reason that not that Apple's just dumb and didn't do.
01:34:18 ◼ ► I think we can come out ahead if we just hold firm, bring on the lawsuits, fight it in every continent, like just because that's effectively that's what they're doing and no one's forcing them to do it.
01:34:29 ◼ ► So their calculation much be, this is actually the better way to go, even though there's going to be short term pain and we're going to look bad in the end, we'll come out ahead.
01:34:48 ◼ ► But there's some, some choice snippets that I pulled out of the complaint that I thought were interesting.
01:34:58 ◼ ► You can go look through old episodes when we talked about the Bieber thing, but this paragraph is essentially about beeper.
01:35:04 ◼ ► This is the DOJ saying recently Apple blocked a third party developer from fixing the broken cross-platform messaging experience and Apple messages and providing end to end encryption for messages between Apple messages and Android users by rejecting solutions that would allow for cross platform encryption.
01:35:19 ◼ ► Otherwise, this is entirely beepers framing what was going on, but it was ridiculous when beeper said it as ridiculous.
01:35:25 ◼ ► People was trying to use Apple servers in an authorized manner to run a messaging service where it didn't have to run the servers.
01:35:40 ◼ ► I think they will not do well at that point in court because it is ridiculous, but it's funny that they shoved it in there.
01:35:50 ◼ ► Uh, Apple acknowledges that it's technically feasible to enable an iPhone user to set another app, for example, a bank's app as the default payment app and Apple intends to allow this functionality in Europe.
01:36:11 ◼ ► Maybe some other way to change Apple's behavior other than suing them based on ancient antitrust law.
01:36:25 ◼ ► Although, I mean, keep in mind, like it does kind of work in the sense that like, you know, remember when Apple announced they were switching to our, they were going to add our app.
01:36:34 ◼ ► Um, and remember how they announced when they were doing, when the DMA plan came out, they announced also, Oh, by the way, the game streaming apps thing, that's okay everywhere now.
01:36:43 ◼ ► I mean, we thought at the time, I mean, maybe it was China, maybe, you know, and maybe that might be true, but there is now it's very clear, like Apple did both of those things strategically to, to kind of get ahead of this.
01:37:04 ◼ ► But the whole point is that Apple is citing something that, that, that they are, Apple is intending to allow in Europe.
01:37:10 ◼ ► They're intending to allow it in Europe because Europe actually passed regulations that forced them to.
01:37:19 ◼ ► Europe did the thing where you have regulations and you say, Apple, you must allow banks to use the, so if, if the U S government want that to happen, there's a way that the government can make that happen besides suing them and hoping somewhere in the remedy.
01:37:41 ◼ ► This is so targeted and so specific that I believe even our lawmakers could pass a targeted law or regulation saying that Apple has to allow access to it.
01:37:51 ◼ ► Like it's absurd to even think that that would go through because it's just so many things are aligned against it.
01:37:57 ◼ ► So they have a bunch of stuff, anti-steering stuff in there, which I don't, I mean, it's anti-competitive behavior and presumably it would be a legal maintenance of a monopoly.
01:38:07 ◼ ► If you can prove they have a monopoly, which is its own challenge, but this is very Apple even prohibits developers on its app store from notifying users in a developer's app that cheaper prices for services are available using alternative digital wallets or direct payments.
01:38:20 ◼ ► They mentioned that, that there had been court cases that in the U S that have said Apple, you can't do this anti-steering thing.
01:38:28 ◼ ► They told Apple they can't do it, but still people are complaining that even though they lost that case and the court said that Apple had to do a thing, the thing that they did is not satisfactory.
01:38:42 ◼ ► Already Epic is like, you know, continuing that in the legal system saying, Hey, Apple lost the case and they did a thing.
01:38:53 ◼ ► This is all like in their own complaint is evidence that the thing they're trying to do does not work well to get the end they want.
01:39:07 ◼ ► Again, I don't know how this works legally speaking and who decides what they have to do.
01:39:11 ◼ ► And all this is a moot point if they settle out of court with the government, in which case there will actually be a negotiation back and forth about what Apple is supposed to agree to do or whatever.
01:39:19 ◼ ► But near the end of the document, it instructs that what they want is the DOD wants us to enter relief as needed to cure any anti-competitive harm, including but not limited to preventing Apple from using its control of app distribution to undermine cross platform technologies such as super apps and cloud streaming apps, among others, prevent Apple from using private API's to undermine cross platform technologies like messaging smartwatches and digital wallets, among others, and prevent Apple from using the terms and conditions in its contract with developers,
01:39:49 ◼ ► accessory makers, consumers, or others to obtain, maintain, extend, or entrench a monopoly.
01:39:56 ◼ ► Like if they follow the letter of that, super apps are allowed, you can do cloud streaming, which they already allow.
01:40:08 ◼ ► But they can't use them to undermine cross platform technologies like messages, smartwatches, and digital wallets.
01:40:12 ◼ ► What does that even mean? Do they have to open up all their Apple watch API's to somebody else?
01:40:18 ◼ ► They have to allow messaging apps to use SMS and then don't have terms and conditions in your contract with developers that are anti-competitive.
01:40:28 ◼ ► That's the extent of the section where, I don't know if it's the job of this document to suggest what should change,
01:40:40 ◼ ► Because if they had that, they could have just written a law and there's a different branch of government that does that.
01:40:46 ◼ ► After all this, and this is going to go on for years, and it's just going to be a disaster, and it's going to cloud everything that Apple is trying to do with its company.
01:40:55 ◼ ► Just ask Microsoft how much the DOJ draw was a distraction and did reputational harm that took them years to recover from.
01:41:02 ◼ ► Oh, one other thing. I guess this is the final. I don't know where I have this in the excerpts or whatever.
01:41:07 ◼ ► There's this whole section of the document where the DOJ tries to do a victory lap for its Microsoft case,
01:41:13 ◼ ► saying, "You know that Microsoft case that we won?" Even though it was partially overturned on appeal.
01:41:17 ◼ ► Anyway, "You know that Microsoft case that we won?" That basically let Apple become the company it is today, because we did that thing.
01:41:25 ◼ ► If you know anything about the tech industry, you just have to look at the document and look at the absurd conclusions they're drawing.
01:41:37 ◼ ► But here's the thing about the DOJ MS trial. If any of these people had any clue about anything having to do with the tech sector, here's how that shook out.
01:42:04 ◼ ► You know what changed? The PC market became less relevant, because the mobile market was where the new show was.
01:42:10 ◼ ► But what happened in the PC market? Did Windows disappear? Did Linux on the desktop become common?
01:42:31 ◼ ► It fundamentally didn't change. It was Microsoft dominating Apple with a tiny market share, and now Apple's market share is like ten times what it was then, but still small.
01:42:41 ◼ ► And that took decades, right? The DOJ trial, if it was supposed to fix the PC market, it didn't.
01:42:48 ◼ ► The PC market, it was like, Microsoft dominated, and there's literally nothing this court case can do to fix it.
01:42:54 ◼ ► Even if Microsoft loses, they have this settlement, blah, blah, blah. It did not change the PC market.
01:42:59 ◼ ► What happened was, new market, the mobile market, and that is what this whole case is about.
01:43:04 ◼ ► And so if they think that somehow, by massively winning this thing, they're going to quote-unquote "fix the phone market,"
01:43:11 ◼ ► if they're using the Microsoft DOJ trial as their precedent, the best case scenario is that phones are replaced by digital holographic rings or some crap.
01:43:21 ◼ ► And then even though the phone market never got any better, and it stayed Microsoft and Android, and it stayed the way it always is,
01:43:48 ◼ ► You did not fix anything. That's the part that makes me give them a C- on this paper, because they do not understand.
01:43:58 ◼ ► Obviously, those people all retired. But they do not understand history and what the MS DOJ case meant.
01:44:38 ◼ ► There were some AI stuff, AI updates from Apple this past week, so we're going to be talking about that in ATP Overtime.