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562: Let's Break the Law

 

00:00:00   from relay this is upgrade episode 562 for may 5th 2025 today's show is brought to you by oracle

00:00:17   squarespace and delete me my name is mike hurley i'm joined by jason snow hi jason hi mike it's good

00:00:25   to be back good to be back with you and uh happy happy may oh thank you it's gonna be may i'm very

00:00:32   excited for today's episode i've been looking forward to it uh for reasons that i assume most

00:00:37   listeners will understand and we'll get to it a little later on in the show but we don't have

00:00:40   time for that right now because we have a snell talk question comes in from adam who has to say

00:00:46   jason as an e-ink connoisseur would you ever consider an e-ink monitor and i have a link here

00:00:52   jason to the books your friends over at books the books books yeah mirror pro color e-ink

00:01:01   desktop monitor yeah what do you think of this or do what do you think of the idea of

00:01:09   an e-ink monitor in general okay so let's back up sorry to adam but i'm not an e-ink connoisseur

00:01:20   i'm just not you are i'm not this is how the world labels you sometimes when the connoisseurship is

00:01:26   hoisted upon you you must take it i'm not i just want to be clear i just like to read books and e-readers

00:01:31   i have i have people people all the time send me notes saying hey jason i know you review e-readers

00:01:37   what are you going to read review this giant thing that you use a pen to take notes with and it's like

00:01:42   i don't care i i when i get a an e-reader that has a pen option i don't get it when i get sent a review

00:01:49   unit that includes the pen i don't use the pen i'm not interested i'm not i'm only interested in

00:01:54   basically reading books on e-ink uh readers that's it that's where it goes jason with great love of e-readers

00:02:02   comes great responsibility to listen to people talk about e-ink everything that's i think that's what's

00:02:08   going on yep not interested not interested so would i consider an e-ink monitor no um uh no not only are

00:02:16   they expensive and are their frame rates not great and not only are their color reproductions not great

00:02:21   and their contrast not great but uh this this very credulous overly credulous uh verge article that you

00:02:28   put in our show notes that says oh it's got lighting like on a on a kindle so it'll be fine it's like

00:02:33   you know okay they don't have backlight so what lighting is going on here across 25 inches can

00:02:40   that even reach that's that's a very bright front light i don't really want to have to sit in a room

00:02:47   where the where i'm brightly lit from behind in a way that allows me to see my screen because it's

00:02:54   a reflective screen i don't really know what this is for right like i don't know i'll tell you what

00:03:01   it's for i'll tell you what it's for e-ink made a a panel this big and it's that it's that typical

00:03:07   thing i've seen it my entire career which is some manufacturer makes a thing and then there are

00:03:12   companies who will step up and just put it in a product right and nobody asked the question why

00:03:16   the only reason is because we made it so now we'll see if anyone wants to buy it maybe in the long run

00:03:22   this technology could be used in certain products right the idea that you could have a smartphone that

00:03:27   that was as good as today's smartphones in terms of refresh rate and things and resolution and things

00:03:33   like that but it used much less power and it it didn't have reflection issues because it was actually

00:03:39   most of the time being lit by the lighting around you instead of needing a backlight like okay well and

00:03:45   also like this panel could be used in a bunch of places but i don't know if it's a consumer product

00:03:49   like you could write for signage like in in london now all of the bus stops uh a lot of the bus stops

00:03:56   that i've seen recently the newer ones they have an e-ink display showing you the bus times it's like

00:04:02   that's perfect right great that says let's do it and also you can tap through like i have like physical

00:04:08   buttons that you can tap through to see the schedules it's like that is a perfect use of an e-ink display

00:04:13   it's just sitting there it's not drawing any power until somebody needs it i have i have that terminal

00:04:19   that's on my you know on my microwave right now and then before that i had the other e-ink kind of

00:04:24   experiment but again the point there was more it's an ambient device that has that is an interesting

00:04:29   application yeah um and that's a personal not commercial and it's a hobbyist kind of thing but

00:04:34   like in the end it's not about the the screen it's a thing that's enabled by the screen this just seems

00:04:39   like nonsense to me but um you know i'm i'm sure there are i'm sure there are very specific niches

00:04:46   probably not personal as you said it's probably more commercial where these could be used you know

00:04:51   people always talk about like signs in supermarkets and stuff like that there are lots of uses for this

00:04:55   kind of technology that make it interesting but i just don't i just don't see it i i just i mentioned

00:05:00   i need to mention again the um the overly credulous verge story just because the other part of it that

00:05:06   made me chuckle is the conclusion which is i feel like it's okay i'm not trying to be mean here but

00:05:13   this it's so cliched it's like if you're a gamer photo or video editor or someone uses their desktop

00:05:17   monitor for watching tv and movies the mirror pro color isn't for you well that's true that is

00:05:23   objectively true but if you spend your days editing text writing or crunching numbers and spreadsheets

00:05:27   in a space with plenty of light wow okay an ink monitor might be worth considering particularly

00:05:33   if you find yourself frequently dealing with eye strain this is this is too much it's like this is

00:05:38   this is not the kind of product that is for everybody except this little narrow area for whom it is

00:05:44   inappropriate it really is inappropriate for almost everybody unless you have a very specific need

00:05:50   and the in a space with plenty of light and dealing with eye strain and like yeah yeah i'm sure that

00:05:57   the you know 400 people who actually want this product will find it but i also want to read a quote from

00:06:04   this now um this is just i just find this funny the statistics and then the price so the mirror pro

00:06:10   color uses a 3200 by 1800 e-ink kaleido 3 panel that can only display a limited palette of 4096 colors

00:06:19   its refresh capabilities can't match the best lcd or oled screens but books offers four customizable

00:06:25   display modes balancing image quality and performance is fast enough to watch videos

00:06:30   uh this monitor is 25 inches and it costs 1100 dollars so you know

00:06:38   follow your bliss yeah you know yeah anyway adam sorry we've we've beaten your question to death but

00:06:48   this is good because what adam has provided us and the upgradians with today is the knowledge that jason

00:06:53   likes e-readers he does not like e-ink that is important that is important yeah it's true i like i

00:07:00   like and i like ambient displays which is why i've got like the metric time which is not not an e-ink display

00:07:06   it's like i don't even know what it is it's little teeny tiny leds i think in a yeah in a matrix but

00:07:11   like yeah it it um i'm more into kind of e-readers and ambient uh information than i am like e-ink is a

00:07:19   tech it's an interesting technology but like no i i've never dreamed of having an e-ink monitor and i

00:07:26   don't think anybody should should yeah no don't if you would like to send in a question for us to

00:07:31   answer on a future episode of the show please go to upgradefeedback.com and you can send in your

00:07:37   snow talk question jason it's also where lots of people lots of people

00:07:41   sent in their recommendations for me for a thermostat um to replace my nest i was very

00:07:48   happy i got lots of great advice it seemed pretty split uh between the two companies that i was

00:07:53   expecting hive and tado uh tado edged ahead um so that is the product that i will be upgrading to but

00:08:01   what i did come to realize in doing a little bit more research is i have a third gen nest thermostat which

00:08:08   is not one of the ones that is being kind of like shut off by the app so we have a little bit more

00:08:15   time to make this decision so we'll still be able to use our nest um as we were but this is again the

00:08:22   point kind of still stands to me that we do need to upgrade because google is it there is only a set

00:08:29   amount of time and google's going to kill off our nest too because they have no desire to support products

00:08:34   in europe and a bunch of upgradians wrote him uh saying that like what's good about tado is they

00:08:40   actually have like a whole system and so they also make smart uh radiator valves like i have here at the

00:08:47   studio and so what i will do so our we have downstairs we actually have underfloor heating and then

00:08:54   upstairs it's all controlled by the boiler so we have radiators so the downstairs heating that's on its own

00:09:00   system it's not going to be connected to this at all um because unfortunately the system that we have

00:09:06   this is all installed by the previous owners um they went with a system that doesn't really tie into

00:09:12   any smart home stuff so it's like whatever it's fine it has an app though and so like we can program it

00:09:17   and whatever yeah i mean my my system i can't i can't replace it comes with its own controller and it's

00:09:23   it's very barely smart and i'm using home bridge to connect it and yeah but the upstairs you know

00:09:28   it's like it's two bedrooms an office and a bathroom and we now have very different temperature needs for

00:09:37   those rooms from now going into the future the nursery would need to be warmer than our bedroom for

00:09:42   example um and they also make these uh the radiator valves and it ties into the whole system together i

00:09:49   thought ah okay that's actually something i can do to make things better because at the moment

00:09:52   when we have to turn the heating on to heat up one room we heat up all the rooms which is like not ideal

00:09:59   um and so we'd be able to kind of balance them out a little bit across each other and do what we

00:10:03   need so that this that's what i'm going to do at some point and uh tato they're a german company and

00:10:09   this is what they do so this was actually as well the the um i found out in europe people that have a

00:10:16   first and second gen nest uh google worked to tato to give them 50 off one of the systems to to replace

00:10:22   that was who they they did that's nice thing with so you get a european option i think if you're using

00:10:27   european heating yes absolutely lesson absolutely because google can't be bothered anymore nope they

00:10:34   don't have enough money they're not big enough they're just not powerful or big enough it is sad

00:10:38   really i feel bad stuff hard times hard times over there so obviously we have a huge lawyer up segment

00:10:43   to do later on today as which means you don't really have enough time for a forward roundup but i wanted

00:10:48   to mention one story which is also kind of like yeah just half just a year uh there's no huh uh i

00:10:55   wanted to bring up the fact that the information is reporting that apple is considering splitting their

00:10:59   iphone lineup into two separate releases one in the fall one in the spring mike i i literally texted

00:11:06   you immediately when i saw this story and i was like mike it's coming true your prediction your your

00:11:11   your prediction is finally coming true two separate rollouts this was a prediction that i made in the

00:11:19   draft of the ages in episode 300 for episode 400 so it was i was very ahead of my time on this one

00:11:28   ahead of your time uh but they're considering this for 2026 if they do this they would do fall 26 and

00:11:34   spring 27 and then fall 2026 you would get the iphone would it be 19 pro yeah pro night night right

00:11:44   what are we on now 16 so be 18 18 18 so you'd get the 18 pro the 18 pro max the 18 air and let's say

00:11:53   the 18 fold right whatever they would call that in fall of 2026 if that's what they have and then

00:12:00   the iphone 18 and the iphone let's just call it the 18e would be in spring of 2027 right apple want to do

00:12:08   this for the obvious reason of the logistical work becomes much easier uh if you're not releasing six

00:12:15   phones at once like six distinct phone models at once um but i've i think they should do this for the

00:12:22   reason i've been saying this you do it for a long time uh i think you get it's it's cleaner to spread

00:12:27   it out you get two distinct kind of like uh marketing beats at different points of the year

00:12:33   why have one iphone event when you could have two exactly exactly i mean you know apple over the years

00:12:40   has done stuff like they might release an se or they might release a color of an iphone but no let's

00:12:46   just actually make it that there will be one in say march and there will be one in september and you

00:12:52   just rely on that samsung has done this for ages ages right like for ages this is when i when i when

00:12:59   i saw samsung were doing this over time is what made me think about it it's like they they release

00:13:04   their like expensive big phones and their foldable phones at one point and then they're like flagship

00:13:09   kind of this is the fun that everybody buys at another time like a different time of the year

00:13:15   they actually do the i think they do the more expensive ones at the beginning and then the kind

00:13:20   of more mainstream ones towards the end of the year but like whatever it doesn't matter um and when i was

00:13:25   thinking about this today about like you know should they do this now would it make sense to i kind

00:13:31   of realized they do not do this to any other product line they don't release like all of the max

00:13:36   at once they spread it out a bit because yeah it makes sense to do that because just logistically

00:13:42   marketing wise product development wise there is a sense to kind of stretching this out a little bit

00:13:48   where you can so i think this makes a lot of sense to do especially if there are six devices they won't

00:13:55   be able to talk about them all in one event anymore like i can't and really give them a fair shake

00:14:02   imagine how much easier it is to make iphones if you have separate production ramps so we just saw this

00:14:12   with the 16e but going even further separate production ramp up required separate finalization

00:14:19   all the steps are off a little bit you're using a lot of the same base technology but you don't have

00:14:25   to ship them all at once it is like you said it is like not shipping every m4 mac on day one

00:14:30   because that would be really really hard for lots of reasons for engineering reasons for marketing

00:14:36   reasons for for factory reasons for part reasons there's so many reasons it would be hard so you

00:14:42   spread it out into two you're giving yourself breathing room as a every aspect of your company

00:14:48   you're getting breathing room and like i said i don't think it makes the iphone message weaker in

00:14:51   fact i think it makes it stronger because you get two punches at an iphone event and the iphone event

00:14:56   is by far the most uh watched apple event so if they do two iphone events i think that benefits

00:15:03   them i think if there's a net benefit there uh on marketing plus literally everything else yep

00:15:09   all right let's take our first break now and then we'll get into this this big chunky segment

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00:16:26   this show and all of relay it's time to lawyer up clunk clunk clunk indeed all right so

00:16:35   uh there's some context around this one we're going to get into it and we're going to talk about all of

00:16:41   this stuff but i think that there are some some table there's table setting to be done so last

00:16:46   wednesday uh in the kind of next event in apple's epic five-year legal dispute apple and epic epic five-year

00:16:54   legal dispute uh judge yvonne gizales rogers made a huge ruling over apple's ability to collect purchases

00:17:02   made outside of applications that are on the app store so in 2021 the judge gave an injunction ordered

00:17:10   an injunction that resulted in apple creating the ability for developers to have one text link to an

00:17:16   external page for purchases that contained no tracking information would display the scare screen

00:17:23   to them what did you call those screens so like this app may kill you this app may kill you this app will

00:17:28   kill you right like danger this app could kill you uh that was a long time ago but scare screens is so

00:17:34   perfect it's just perfect after all of that they would still demand 20 of any subsequent purchases

00:17:39   and you as the developer had to do all of the accounting to work that out for a i think it's

00:17:44   a seven-day period of any purchase that could occur even though you couldn't have any tracking on them

00:17:48   epic went back to the judge and argued that this does not meet with what the judge ordered and

00:17:54   effectively results in no change for apple which we all knew was the case the judge subsequently ordered

00:18:00   further hearings these went incredibly poorly for apple and has resulted in a fiery 80 page opinion

00:18:07   that rules that apple can no longer impose any commission or any fee on purchases that consumers

00:18:14   make outside of an app they cannot place any restrictions on how a link or a button looks to

00:18:20   start a purchase via the web from inside an app and they cannot present any screens or dialogues to

00:18:26   users to discourage and leaving out leaving outside of something that says a user is going to a third

00:18:32   party website essentially the result of this injunction is that now from now from last week but it's

00:18:39   happening now a developer can choose to forego apple's in-app purchase system and the 30 fee

00:18:47   completely all they have to do and i say all but all they have to do is the work to enable a web-based

00:18:53   purchasing system which frankly most large companies have anyway because they don't exist in just one

00:18:59   place but you could be any developer and have this set up with accounts and such and are happy with their

00:19:05   customer leaving app to complete it so me and jason make an app uh we want to charge say like so we

00:19:11   made an app for upgrade plus and we want to charge for it in the previous system even if we collected

00:19:17   payments outside on our own it was fine if we had an ios app we would have to do this via in-app purchase

00:19:23   to be on the app store that no longer needs to be there um and you can't do the purchase inside of the app

00:19:30   but you can have a button that just takes you to a website and you complete the purchase and you're

00:19:36   all done yeah and those urls can't the you you didn't mention it in your bulleted list but the urls

00:19:42   that apple said okay we're gonna we'll let you do it you can link to one url and it has to be static

00:19:48   which is the worst right because what you want to do as a developer is link to the particular

00:19:53   membership plan that they're on or the particular item that they want to purchase or whatever

00:19:59   and none of that was allowed before and in this ruling the judge said you know you can let them

00:20:05   link to whatever they want yep this is pretty huge this is yeah this is pretty huge and just to be clear

00:20:13   um the judge the judge's take here is i gave you apple the opportunity to implement

00:20:23   my ruling in order to be non you know not be anti-competitive anymore that was her ruling was

00:20:32   yeah was and so and so i don't want to hear it i this is an important point i don't want to hear it

00:20:39   from the people who say oh it's so outrageous judges and regulators and the legal system are all making

00:20:46   free enterprise follow their rules and build products that that that you know that they should

00:20:53   be building and the others they should the judges shouldn't be building it that's outrageous the judge

00:20:59   here let apple implement something that was in line with the with the rules she said this is anti-competitive

00:21:08   here are the reasons why you need to make it competitive she didn't say let me design a system

00:21:14   for you this was three years ago and then it went through the the the court of appeals the circuit court

00:21:21   uh and then it went up to the supreme court and then and and in neither case did those courts say

00:21:28   apple is right about this so they they i mean there were like little details that she gets to into the

00:21:33   ruling but basically all the way through the supreme court they said yep and the day after the supreme

00:21:40   court denied cert which is basically said we're not gonna even take this case right like no it's fine

00:21:45   this is the ruling is fine uh apple had to implement this thing and this is the important point which is

00:21:54   she gave apple the ball and all she said was you design your own system here is what i'm looking for

00:22:01   in terms of being uh not being anti-competitive and and what we know because she details it because there

00:22:08   was more discovery of memos at apple is apple was well aware of what was being asked of them

00:22:15   apple had internal debates about what they wanted to do to implement her ruling

00:22:23   many senior apple executives said this means we need to do things like allow people to link out and you

00:22:34   know and not have an enormous commission and all of these things and phil schiller in particular and

00:22:40   we'll probably get to that and and they were overruled by other executives inside apple who said no what we

00:22:47   need to do is maximize our revenue in a way and our anti-competitive behavior in a way that has a fig leaf

00:22:56   it looks like it would be competitive but all of the details will be poisoned they decided to go that path

00:23:02   now the way the legal system works is it has come back to the judge in the case because epica said

00:23:09   they're not doing it it's still anti-competitive they the thing that they built 27 of credit card

00:23:17   purchases and a seven seven day tax on any further transactions in the store from somebody coming from

00:23:25   the app this is not what you asked them to do and the judge said it's absolutely not what i asked them

00:23:33   to do and the deal is i gave you a chance to build what i wanted you refuse to build it yep so now you don't

00:23:42   get to build anything and this is this she says this is not a negotiation this is not a second try i gave you

00:23:50   your try you chose to refuse to honor what i ordered you to do so now you don't get to build anything you

00:23:59   just have to turn it all off and that is what we've we've been talking about for a while now that is the

00:24:05   consequence of this incrementalism this malicious compliance is in this case the judge can say i you

00:24:15   only get one swing at it you squandered that swing at it by trying by conspiring to and cooking up fake

00:24:24   reasons and she's got the the the details in order to in order to maintain your your anti-competitive

00:24:31   behavior and so i'm just blasting all your rules away and so as of the next day all of those rules didn't go

00:24:38   to well what about 10 or what about 15 no it's zero and what about the urls no you just can and what

00:24:45   about the scare sheet no it's gone it's not like it's gone beyond a small thing because the i mean this

00:24:53   is the truth she gave apple a chance to comply and actually behave in a in a way of apple's choosing that

00:25:01   fulfilled her desire and apple refused and so they are now reaping what they sow or sowing what they

00:25:09   reap i don't know both there's a lot of reaping and a lot of so going on this and i think as well i think

00:25:14   what's important to note that i mean i don't know exactly i don't know exactly how these things go um but

00:25:21   there is a scenario where you know they did it they did it in a way that the judge wasn't happy and we kind

00:25:29   of go back around again but the difference here is she found the evidence of them trying to get around

00:25:35   it like that's that's the problem here it's not that like you know apple took this and they misunderstood

00:25:40   it and they acted in good faith and and this is what they implemented no like i'll give a quote from the

00:25:47   from the uh the opinion apple despite knowing its obligations there under thwarted the injunction's

00:25:52   goals and continued its anti-competitive conduct solely to maintain its revenue stream remarkably apple

00:25:58   believed that this court would not see through its obvious cover-up so for example the 27 yeah

00:26:04   it is exactly what we thought it was which is a bunch of apple executives said well

00:26:09   it's a little like arrested development like what what could a banana cost michael a hundred dollars

00:26:14   um it's like well what is credit card transaction three percent okay we'll just make a 27 instead of 30

00:26:23   and they knew what they were doing they knew that what they were doing was poisoning the entire concept

00:26:28   because because it was not going to save anybody any money to compete with apple's purchases and

00:26:34   therefore you should just stay with apple and then what happens is an app developer came to them and said

00:26:41   i think it was a dating app and said it's it's like it's not even three percent it's like more than four

00:26:48   percent so we're going to lose money if we go outside the store and apple's internal reaction

00:26:53   was good good it's even it's working even better than we thought but what they said to the judge was

00:27:00   oh no 27 is totally a scientific number that we arrived at by scientific means it just we calculate

00:27:07   up all our expenses and the cost of our apis and like 27 is what we have to we just have to charge that

00:27:14   but she's got their receipts it it that's not what it is it's they're doing i mean mike i don't know if

00:27:20   it struck you but as i read the entire judgment which i did i just kept shaking my head and thinking

00:27:27   it's exactly what we thought it was yeah exactly we knew all of this but but it's worse to see it in

00:27:34   black and white like it's worse that way it it is and if you're a judge you know we we can look back

00:27:40   with our you know with our popcorn and be like oh i knew it i knew those guys just made up that number

00:27:46   but if you're the judge and you're saying you need to do this thing and they're like no we don't want

00:27:52   to we're gonna make we're gonna i mean this is why uh she forwarded apple and one of their executives

00:27:58   for criminal contempt yes like it's hard not to say that apple is absolutely in contempt of this court

00:28:04   acting in contempt of court because they literally made a mockery of her instructions which were to

00:28:11   eliminate anti-competitive behavior by creating a new anti-competitive system and so is it any wonder

00:28:18   that at the end of the day the judge said forget about it it was it was more anti-competitive because

00:28:24   like in a scenario based on the fact that somebody would have to then incur all the additional costs of

00:28:29   the accounting like if i as a customer went to this link right and like signed up for an account but

00:28:36   didn't pay if i then went back on the web within three days apple wants that money then that's not how

00:28:42   it works in the app store like if i go to you know look at netflix and i'm like no i don't worry

00:28:49   about it and then three days later go you know what i do want it and go to the web browser and sign up

00:28:54   netflix don't have to give apple any money right and just to be clear because i'm seeing some

00:28:58   comments about um well apple got three years where they got to rake in more money and that's like ha

00:29:03   ha look what they did okay but here's the thing apple was given an opportunity to build a reasonable

00:29:11   proposal yes that would include more language that would scare you that would include them taking a

00:29:19   percentage of uh transactions outside their store maybe not the seven day auditing whatever but maybe

00:29:27   ten percent or something and by foregoing that they got there two or three years in the sun or whatever

00:29:34   but the judge now is saying you can take nothing yeah ever there was there was so was that a good move

00:29:39   in which you could have ten percent five percent three percent i mean this probably wouldn't work but

00:29:45   a world where you could be like it has to be apple pay right so you still get a little bit or like

00:29:49   whatever that wouldn't you know you get my point there are like lots of different things you could

00:29:52   have tried but now you have zero percent of nothing so you've got right all all you had to do was build

00:29:59   a system that was arguably competitive right so if if apple said and and it's not like i know people

00:30:06   have said oh well what if they did you know five percent they would feel pressure to compete it's like

00:30:10   yeah but they got the home field advantage they've got it's so easy you've already got your credit card at

00:30:14   apple all of that they could even make make it clear in their rules that the the outside link and

00:30:21   the in-app purchase link had to be on the same screen right they could they could make a bunch of rules

00:30:26   like that and then they could say you know we're gonna take ten percent or whatever and then and then

00:30:34   epic might complain and other companies might complain but what apple would i think apple would have

00:30:39   a strong argument to say look our system is really easy it's already there it's convenient it's it's

00:30:43   secure people trust apple for that you pay ten percent but if you don't you you're you're doing

00:30:49   what again we've we just heard you're you're doing what four percent five percent so and we're giving

00:30:54   the customer the choice right they said we're giving customers the choice and you can choose yeah

00:30:58   they could do 10 they could do 15 they could do 20 i mean you got to see what the judge might say

00:31:03   about that but like all you want to do is create an area where there's a competitive opportunity

00:31:09   to not use what apple forces you and see if that competitive system is more of a benefit and then

00:31:16   because what judge uh what the judge in this case judge rogers or guns gonzalez rogers said is

00:31:23   competitive make it competitive she did not say apple can't compete she said make it competitive but

00:31:32   apple didn't choose to build a competitive framework they chose a non-competitive framework and again

00:31:38   if i were her i would be furious and she's furious and i and we're not lawyers i know that ben thompson

00:31:46   pointed out that there's there's some you know questions about like is this takings and all of that

00:31:50   although i feel like apple stands apple standing is greatly decreased because they are acting in

00:31:57   contempt right like they got their shot at it um so it strikes me that this is going to be a rough one

00:32:03   for them it's not impossible they said they're going to appeal but you know even tim cook the appeal was

00:32:08   filed this morning yeah and and tim cook you know basically said but you never know what might happen

00:32:14   and and it's in effect now that's the other thing is that this first round happened with appeals but i

00:32:19   believe this is all just in effect they had to do it the next day because we're at the end of that

00:32:24   process now i mean i i would be really surprised if their appeal worked like they might be able to gain

00:32:32   some ground back i don't know but there is also this thing that like i mean even as i'm saying it i'm

00:32:39   like no but like it does it feel like the genie's out of the bottle on this one but no apple doesn't care

00:32:43   they would just go back we know this like we can see this here's what i'll say just a quick aside

00:32:49   actually about saying about seeing this i can't believe that all of this information was just written

00:32:53   down it is kind of amazing right haven't these executives learned by now but here's the thing i

00:32:58   don't know it may be that they were ordered to keep notes of the meetings involving compliance with

00:33:03   the orders right yeah yes i mean it's it's super damning and and you're in a you're you're literally in

00:33:11   meetings where you're saying how do we scheme to get around the judge and people and and people are

00:33:16   taking notes like what are you what are you doing yeah i just feel like at this point it it surprises

00:33:24   me i mean maybe they decided this was the route they wanted to go down because you know google lost its

00:33:29   case like lost its case and continues to lose lots of its cases because they they kind of instituted

00:33:36   this system of like let's not write this down and that actually came back to bite them big time so maybe

00:33:41   is the right call to you know actually the right call is just not to it's just don't do anything

00:33:48   anti-competitive like maybe that's just the right call just be competitive so speaking of that

00:33:56   let's talk about phil shiller yeah because phil shiller comes off pretty well in this document

00:34:01   not like a hundred percent like but but here's the point phil shiller first off did the work and

00:34:09   there's there's a very strong indication from the judge that she is not impressed by other apple

00:34:14   executives who have lots of opinions about her ruling but aren't but did not read it and we're not at the

00:34:20   trial yeah uh whereas phil shiller was at the trial and clearly she says read every word of the judgment

00:34:28   and and expresses awareness of what is being asked and so when all of these these jokers are saying oh

00:34:37   well let's just do 27 and let's avoid this and let's avoid that phil shiller rolls in and and and phil

00:34:43   shiller he's a true believer he's a lifer he is not some malcontent uh revolutionary inside apple he

00:34:52   is a made man at apple and he says this outside commission thing we can't do it we can't do it

00:35:00   it's it's a bad idea the judge is is clear about what she wants here we can't do it and luca maestri and

00:35:09   the finance team basically says to tim cook don't listen to phil just do this thing and then tim

00:35:17   cook says i'm going with what luca says and not the guy who was our guy at the trial who knows every

00:35:23   detail of it who is phil shiller apple fellow and very senior person at apple still phil shiller i'm

00:35:29   going to go with the money man and as the judge wrote cook chose poorly so i was reading as a john

00:35:39   voye's at max story used to be a lawyer right and so like you know he wrote a good piece about this

00:35:44   they also spoke about on app stories i really enjoyed it and something i didn't understand that john

00:35:49   explained is like typically a company a large company they will appoint an executive specifically to go and

00:35:57   listen like yes that's the point you're going and you're listening that person was phil shiller so

00:36:03   he was appointed as the person to go listen and then they didn't listen to him so why why why even

00:36:10   have him like how much money did did that cost to send phil and like you know in his time like time for

00:36:17   money for his time right which must be very expensive to have him go and sit in that courtroom and listen

00:36:23   yeah for hours and hours and hours and hours right and then he was in this situation he's like we

00:36:28   shouldn't do this again like someone who has effectively before now ran the app store for a decade who has

00:36:37   sat there and not wanted to change these fees right and has done everything possible over this last 10

00:36:44   years or however long to hold on to that 30 percent he is the person in theory would least be likely to

00:36:53   say let's get rid of this because he could have gotten rid of it at any point before now and he's like we

00:36:58   shouldn't do this because he knows it's now a question of following a judge's orders it's the law yes we are

00:37:08   saying and and i mean i'm gonna boil it down there's a meeting where the guy who went to the trial says

00:37:14   the law says we have to do x and then off in the corner the money men say oh let's not do x let's

00:37:23   let's concoct a scheme to avoid x let's break the law yes and and phil schiller says whoa whoa whoa whoa

00:37:33   i'm as true a believer as anyone i want us to get our money i believed in the 30 percent i i believe

00:37:39   it's still the 15 for the small developers we did that but the 30 it's our bread and butter we have all

00:37:45   this but we can't break the law this is the law so we need to find the right approach that benefits us

00:37:53   the most that follows the law and the money men are like i think we should break the law i think we should

00:37:59   concoct a scheme to break the law instead and tim cook said let's do that let's break the law

00:38:05   let's ignore the judge's wish let's ignore the guy we sent our expert phil who's been around longer

00:38:11   than anybody at this point in the senior ranks let's ignore him who's saying you need to follow the law

00:38:17   and let's break the law and that and that's why the judge says that was a bad decision by tim cook that

00:38:23   that was a that was a a bad decision you are defying a judge because and i think this is the way we have

00:38:30   to say this apple executives at least some of them not phil schiller apple executives think they're above

00:38:38   the law that's it that's the answer they think they're above the law and here's the thing that kills me

00:38:48   it's everything we thought they thought yeah they've behaved in the last five or ten years

00:38:53   like they're above the law that they have contempt for everyone including judges including regulators

00:39:01   and including their own third-party developers and this ruling just says yep that they are who you thought

00:39:09   they were and like saying about breaking the law it is now being considered that one of those people

00:39:15   actually also lied in court right like that they lied in court and it was a simple i mean it's very

00:39:22   simple like the lie was you know they the judge that's how they get you yeah asked him like you know

00:39:27   did you have any idea about the about the you know when did you come up with this idea of 27 and they

00:39:33   set a date or whatever it's like you didn't have it before then it's like nope this is the first time

00:39:37   time we ever spoken about it but this meeting that jason's talking about happened months before

00:39:41   long chain of events involving them concocting the scheme and then reverse engineering in a way you

00:39:47   just couldn't couldn't get that wrong like you just because you would also in theory be prepared right

00:39:53   like you would also have your meeting notes and and so this is why this i think the whole thing and

00:39:59   especially this is now being kicked up to the district attorney for north car at north north north

00:40:04   northern california the u.s attorney for because for criminal oh yeah yeah so it's the it's the u.s

00:40:09   attorney in san francisco it got kicked there to for for criminal contempt which is they'll the that

00:40:15   attorney will decide if they want to pursue that or not and given the current uh state of the justice

00:40:20   department and the trump administration and all that who knows whether they they want to uh you know

00:40:24   any corporate crime is worth prosecuting to them or not i don't know i'm sure that donald trump

00:40:30   would get a call from tim cook if they tried to prosecute one of their guys but um but still i

00:40:36   mean the point is made that they've been referred to the u.s attorney because the judge feels that

00:40:42   they've committed criminal contempt in a in a case that's not great that's not great i should also say

00:40:47   because i saw there was a particularly uh disturbing piece last week on a kind of a penny ante apple website

00:40:54   that is embarrassing and is even more embarrassing now and i'm not going to even mention it where they

00:41:00   said something derogatory about the judge in this case they have also in the past said that about the

00:41:06   regulator in the eu it's uh it's sexist but i just want to point out how do you get that job

00:41:14   you got to get nominated by the president of the united states and confirmed by the senate

00:41:19   and this judge was concerned confirmed by the senate like like 80 to 15 or something like this is not a

00:41:29   rando judge that rolled in off the street this is a a federal district court judge doing all of this

00:41:40   so i i i think it shows you what dire straits were in that a bunch of people who are who are

00:41:46   reflexive apple boosters and propagandists have to resort to insulting a distinguished judge because

00:41:56   they got nothing left they got nothing left i don't understand like obviously i love apple products and i

00:42:04   love in like the idea of the company and have done for 20 years or whatever um but most of all like i

00:42:12   care about the products but like i just i don't understand how at this point you feel the need to defend them

00:42:18   in this like why do you anyone why would anyone feel the need to defend apple in this scenario

00:42:26   beggars belief to me anytime anybody wants to come to me and say oh you shouldn't say those things

00:42:32   about apple they're really just making a good decision because of this and that i'm just going

00:42:36   to point to phil shiller do you think phil shiller is against apple phil shiller is i'm going to say it

00:42:42   again a true believer and a lifer an apple lifer and a true believer there is nobody more in tune with

00:42:51   apple and also with steve jobs and what he believed about apple than phil shiller number one guy and he's

00:42:58   waving his hands saying no no no no no no no don't do this and they did it anyway so like i don't want

00:43:05   to hear about it phil shiller was right don't break don't do crimes okay it's not hard it's not hard

00:43:13   and they went the other way let's talk about the developer response um as i expected this is a big

00:43:21   topic so do developer response and then then we'll get into what i'm labeling as the further ramifications

00:43:27   the aftermath for the aftermath of this uh i want to read a little bit from underscore david smith who

00:43:34   posted on uh mastodon about this and i think the underscore is so perfect because like in even like

00:43:40   even in private conversations underscore says to me the same stuff that he says here which is like

00:43:47   i am very happy to and have been very happy to give apple the you know to be in the apple ecosystem

00:43:55   to play by the rules like it doesn't bother him right but i want to read this thing from him on mastodon

00:44:01   here saying that reading this it is clear that the highest levels we are viewed developers we are viewed

00:44:07   as a resource to be extracted from not a customer to be served it feels like apple got turned around here

00:44:13   and stopped trying to grow satisfaction with developers because you know he's saying that

00:44:19   like and i'll read a little bit more to kind of put a bit more context his words over the last 17 years

00:44:24   i paid apple an eye-watering large sum of money for the services they provide me and i don't begrudge

00:44:28   them at all like because someone like underscore the life that he has is based upon the fact that apple gave

00:44:35   the tools that they gave right but i think that there has been um a hopeful what it was originally

00:44:44   an implicit understanding and a hopeful understanding as time has gone on that no matter what apple do

00:44:50   at their core they do still value the developer but it feels like at this point they have gotten

00:44:58   far enough away from that that it doesn't feel it doesn't feel like that anymore as he says they got

00:45:05   turned around and stopped trying to grow satisfaction with developers yeah it is um i think the i think

00:45:14   it's broader than developers too because there's a tendency for people to sort of say well boohoo developers

00:45:18   right like you chose this path and whatever and i think that's wrong but i will also say

00:45:23   hurts consumers yes fundamentally it's a consumer harm because we're not saying we're really not saying you

00:45:32   know what we need is apple to take the 30 away so that uh they can come in with alternate payments at four

00:45:40   or five percent six percent whatever their processing fees are and then the developers just take all the money

00:45:46   away that could happen but the other argument is that it makes more price competition because

00:45:54   you've eliminated an enormous amount of overhead and that you will now have price competition

00:46:00   where they could charge less maybe not all that less and they are more productive you could also say that

00:46:07   it makes it easier for developers to be successful at the app store but i i do think that there is a

00:46:14   fundamental kind of i keep using this word contempt that that parts of apple feel and i also want to

00:46:20   be clear i know people in the developer relations group they really there are parts of apple that

00:46:25   really do love and care about developers and want to do right by developers and i'm going to return now

00:46:31   to that image of phil schiller in a meeting saying we need to follow the law and i'm going to continue to

00:46:36   to call them the money men in the corner lucca maestri and his cadre of financial uh group

00:46:44   people who said no and why did they do that because the organization chose

00:46:58   money over everything else and we can talk about this more in the aftermath but like

00:47:03   it's not just about the money it's not and and an effective ceo needs to balance

00:47:09   a lot of different aspects including the money but not limited to the money and this is a case where

00:47:15   you know there's a shiny object out there shiny gold

00:47:22   and the judge says don't take that you're like well what if i do a look over there and i take it

00:47:28   like you just can't it's it's it's the marshmallow experiment on a except for cfos

00:47:34   don't take this marshmallow like nope they they took the marshmallow expensive marshmallow

00:47:40   so very the it's already started right so the the rules had to be changed immediately and they were

00:47:49   basically as immediately as they could be changed and you're already seeing a couple of key players

00:47:55   maybe the most aggrieved ready to go so patreon right out of the gate so this will allow again if

00:48:04   you're a caution mind back a few months uh apple put its uh uh thumb on patreon and insisted that patreon

00:48:13   take a give apple 30 of any subscription that was signed up for in the app and also demanded that

00:48:21   everybody had to have the ability to sign up in the app right so it wasn't even like a an individual

00:48:26   creator could choose whether or not someone could sign up in the patreon app it was like that one-two

00:48:30   punch well they're now not going to do this again so they've gone back on it again which is great

00:48:35   so creators will now be able to be in the patreon app and accept payments from the ios app by going

00:48:41   outside right so that's how it's working so it's the same for everything you select subscribe in the

00:48:46   app you'll tap it you'll go out to a website something i don't know but i think i know the

00:48:50   answer to is it doesn't you can't do this in safari view controller but it just it opens a website i

00:48:56   i don't know the answer to that question um i would like to well i would i would love it if

00:49:01   it could just open a safari view controller window right within the apps you know actually even being

00:49:06   kicked out to another app but ultimately i don't really think it matters i don't think customers will

00:49:10   care um so this will this now means that apple will no longer be forcing themselves into the

00:49:18   process and taking money from creators which i think is fantastic i'm so happy about this

00:49:24   um spotify they were they've been ready to go for like four years

00:49:29   and it's now shipping so this one's in the store like federico had some screenshots like you do it

00:49:36   right you press a button it's like an actual button unbelievably and it takes you out to it opens safari

00:49:43   so i think that might be the route it has to do because i'm sure spotify yes push any line they

00:49:48   could push yeah no you have to go out to safari right um although just come on but anyway

00:49:54   um i'll take what i can get at this point or by the way not me i won't take anything because

00:49:59   this is just in the us which i'll just quick diversion come on apple like i mean i know you

00:50:06   won't but just like give it up just give it up like you've just i won't step into the ramifications

00:50:13   point yeah we'll get there in a minute uh stripe has already published a huge set of documentation to

00:50:18   help developers implement payment processing of their own and epic epic have said that they want

00:50:24   to bring fortnite back there's been a lot of question about if they can can or cannot do that

00:50:31   i don't think that epic would say that unless they actually had a developer account like epic have

00:50:37   developer accounts outside of america um because otherwise they couldn't publish the epic game store in

00:50:45   europe yeah but that's because they were they were apple was forced to allow that and i don't see any sign

00:50:51   that that the judge in this case has forced apple to allow epic to right come back to the store in the

00:50:57   u.s after violating the epic says a lot of things wait but we also don't know that apple haven't said

00:51:03   yes you can have your account back like we don't know the answer to that like we'll have to wait and

00:51:07   see you know like no one's saying anything other than epic is saying we're coming back apple hasn't

00:51:13   said epic's not coming back so well there's some bad there's some bad story news stories that got

00:51:17   published that said fortnite's coming back to the app store and it's like no epic said fortnite's

00:51:21   coming back to the app store in the u.s we'll see but they haven't made some other stuff so they have

00:51:27   announced that the epic game store will come again they're making lots of announcements all we can say

00:51:32   is epic have said that the epic game store will be available and it will offer game developers payment

00:51:38   processing at no cost for the first one million dollars of revenue then it is their usual 88 to

00:51:45   12 percent split for being on their store and using their infrastructure and they're also working on

00:51:51   something they're calling web shops for developers of non-games that will be hosted by the epic game

00:51:56   store so if you wanted to sell digital content or something you could epic will give you the tools to

00:52:03   set up a store that you know you you have all the links and your customer customer will click

00:52:07   it it will take them to the to the site that you know take them to the web they'll have your epic

00:52:11   store there they have said they haven't published it but be better rates than apple they will handle

00:52:16   the infrastructure and customers get kind of credit that they can then use in the epic game store for

00:52:22   any purchase that they make on an epic web shop so my point is this is a few of the many things that's

00:52:29   going to happen you know revenue cat i don't know if they're doing anything yet but you know they're going

00:52:33   to have stuff like every and there will also be whole new companies that are created sure to facilitate

00:52:40   this stuff but you're going to see i think a lot of a lot of success from stripe and and a lot of these

00:52:45   developers are also already using payment processing for things that happen outside so to build in a new

00:52:51   flow that just takes people from the app to their existing outside payment processing same makes sense

00:52:56   makes sense all of this though it's messy and ugly for customers so like all major companies now are

00:53:04   going to implement their own systems and they're going to be forcing you out to pay because you'd be

00:53:07   bananas not to if you're disney if you're netflix if you're amazon anyone everyone why would you give

00:53:15   apple 30 why would you do that if you don't have to 30 is a lot of money even the 15 that some

00:53:22   developers get under certain circumstances is a lot of money right that you're not going to make your

00:53:28   service cheaper but then you get 15 more of it like why would you not do that and the problem is now

00:53:34   customers are going to be thrown left and right to be signing up for accounts all over the place

00:53:39   this is the exact thing that apple was saying that they were trying to avoid right like they're talking

00:53:44   about consumer privacy and stuff which uh judge gonzalez rogers said was a lie

00:53:50   like right there's something along those lines of like you just you you hide behind this which again

00:53:54   is a thing that we've all felt i think gonzalez rogers might be an upgrade listener if you're out there

00:53:59   judge we appreciate you but like if apple chose to be a partner to either the developers or the legal

00:54:09   system not a gatekeeper they could have kept the experience at least for their customers being good because of

00:54:18   the experience is going to be worse now than it was before because as a customer your experience

00:54:25   of signing up for stuff in the apple ecosystem having all your subscriptions available in the app store

00:54:32   one click cancellation all of this stuff share purchase sharing all of these incredible benefits that you get

00:54:38   as a customer amazing but they're going to be gone now you're not going to have these because no one's going to

00:54:44   use this anymore even fewer people than before so if they would have actually just prioritized the customer experience

00:54:51   the experience of their development partners everyone could have been better off cut all customers could have been better off

00:54:57   apple could have been better off because they could have gotten something out of this

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00:56:57   so

00:57:00   i was saying you know i'm i'm frustrated this is us only honestly because i think

00:57:08   it'd be great if everybody didn't have to keep

00:57:11   paying this developers customers because you know i know that there are things that i pay more money for

00:57:16   because i choose to do them in the apple ecosystem than if i would have just got signed up

00:57:20   on the developers website

00:57:21   so i wonder

00:57:24   look at europe

00:57:26   and the dma

00:57:27   like are they just going to look at this and be like oh you know what actually that's

00:57:30   that's what we wanted

00:57:32   like what we wanted

00:57:33   was more competition

00:57:35   what we wanted

00:57:36   was

00:57:37   our developers to make more money

00:57:39   we don't

00:57:41   really care about these other app stores anymore

00:57:43   the cut is the biggest problem

00:57:45   it's always been the biggest problem

00:57:46   we'll take that

00:57:47   similarly like other antitrust lawsuits

00:57:50   right

00:57:51   if you kind of tie these things together

00:57:53   like i mean

00:57:54   apple still got that outstanding case of the department of justice

00:57:57   we now know

00:57:59   if you look hard enough

00:58:00   there's a ton of stuff available in discovery

00:58:02   there was so much damning evidence

00:58:04   that seemed somewhat readily available to judge yvonne gonzalez

00:58:08   rogers

00:58:09   and so

00:58:09   is there more of that sitting in there

00:58:12   i've got to assume

00:58:13   yeah

00:58:14   like especially in the slack

00:58:16   which

00:58:16   i think

00:58:18   we'll get to some of this again in a minute

00:58:19   but like a lot of the slack messages

00:58:21   is by designers

00:58:23   and

00:58:23   engineers

00:58:24   people who don't

00:58:26   care

00:58:27   at the same level

00:58:28   that the

00:58:29   the c-suite would

00:58:30   about being

00:58:30   about being careful

00:58:32   about what they're saying

00:58:33   you know

00:58:34   so like they're just

00:58:34   doing what they've been told to do

00:58:36   or doing what has been

00:58:37   loosely instructed to them

00:58:39   and they're just talking about it

00:58:40   but all of that stuff is available

00:58:41   under subpoena

00:58:43   so like

00:58:45   is this

00:58:46   if you're

00:58:46   you know

00:58:46   if you're a

00:58:47   if you're a lawmaker

00:58:49   you're now being like

00:58:50   great

00:58:51   it's in there

00:58:52   we know we can get it

00:58:53   i don't know

00:58:54   i don't know

00:58:55   and then you think about

00:58:57   games

00:58:59   right

00:58:59   i mean

00:59:00   games is kind of the big

00:59:01   thing here

00:59:03   this is what makes up

00:59:04   the majority of that

00:59:05   services revenue

00:59:07   right

00:59:07   is the

00:59:07   is the assumption

00:59:08   it's

00:59:09   it's

00:59:10   coins

00:59:11   and gems

00:59:12   in games

00:59:13   no game

00:59:14   is going to give apple

00:59:15   the 30 percent

00:59:16   right

00:59:17   none

00:59:18   and

00:59:19   well again

00:59:20   it depends on

00:59:21   the implementation

00:59:21   because

00:59:22   i think you're right

00:59:25   that they're going to be

00:59:26   extremely motivated

00:59:27   and probably

00:59:28   they'll just

00:59:29   there'll be a price disparity

00:59:30   between them

00:59:31   but i think

00:59:32   you still have to

00:59:33   offer

00:59:34   in-app purchase

00:59:35   as an option

00:59:36   maybe hidden away

00:59:38   but i think

00:59:38   that rule

00:59:39   is still

00:59:39   in effect

00:59:40   that apple

00:59:40   also needs

00:59:41   to be there

00:59:42   really

00:59:43   i think so

00:59:45   but um

00:59:46   it doesn't have to be

00:59:48   visible

00:59:49   right

00:59:50   or in your face

00:59:51   but what about for the things

00:59:52   that you

00:59:52   that you couldn't

00:59:54   because there's now stuff

00:59:55   that like you couldn't do

00:59:56   with in-app purchase

00:59:57   but the rules have been changed

00:59:58   and you can do

00:59:59   i don't know

01:00:00   i don't know

01:00:01   but uh

01:00:02   what i'm

01:00:02   what i'm saying here is

01:00:03   i think there's some

01:00:05   especially since that's

01:00:06   100 percent profit

01:00:07   right i think

01:00:08   there's some

01:00:09   benefit

01:00:10   to giving apple's

01:00:13   apple its cut

01:00:14   and having it be

01:00:15   super easy

01:00:15   and i'm sure

01:00:17   these developers

01:00:18   will learn

01:00:18   if they don't know

01:00:19   already

01:00:19   the dynamics of

01:00:20   parental controls

01:00:22   and asking for approval

01:00:23   from parents

01:00:24   and

01:00:25   is

01:00:26   how much

01:00:27   does opening

01:00:28   safari

01:00:29   to a web page

01:00:30   where a kid

01:00:31   has to go and

01:00:32   tell their parents

01:00:33   to log in

01:00:34   or put in

01:00:34   their credit card

01:00:35   in order to

01:00:36   get

01:00:37   buy those gems

01:00:39   or even just

01:00:40   you as the consumer

01:00:41   like giving you

01:00:42   that second thought

01:00:43   before you press

01:00:43   buy

01:00:44   like there is

01:00:44   there are

01:00:45   there are

01:00:45   economic practices

01:00:47   there

01:00:47   that's the home

01:00:48   field advantage

01:00:50   you know

01:00:51   again

01:00:51   but that would be

01:00:52   you know

01:00:53   that would be

01:00:53   apple competing

01:00:54   so we'll see

01:00:55   but these things

01:00:57   right

01:00:57   the way that this

01:00:59   could touch

01:00:59   the money

01:01:00   in quite

01:01:00   significant ways

01:01:01   the way that

01:01:03   this could play

01:01:04   into

01:01:04   more

01:01:05   kind of

01:01:06   legal challenges

01:01:08   this decision

01:01:12   to me

01:01:13   feels pretty

01:01:14   existential

01:01:15   to apple's

01:01:17   business

01:01:17   now

01:01:19   because it's

01:01:20   services

01:01:21   right

01:01:21   so services

01:01:22   is the growth area

01:01:23   we're going to talk

01:01:23   about earnings

01:01:24   in a bit

01:01:24   but services

01:01:25   is the growth area

01:01:26   it has been

01:01:27   for years

01:01:28   it's what

01:01:28   they have

01:01:28   always pointed

01:01:30   to

01:01:31   for wall street

01:01:32   to be like

01:01:32   hey

01:01:33   look

01:01:34   we're still

01:01:36   able to do

01:01:37   stuff

01:01:37   you know

01:01:38   our products

01:01:39   might be flat

01:01:40   but look at

01:01:40   this growth

01:01:41   it just goes

01:01:41   up and up

01:01:42   and up

01:01:42   and up

01:01:42   forever

01:01:43   you couple

01:01:44   this decision

01:01:45   with the fact

01:01:46   that it's

01:01:46   looking more

01:01:47   and more

01:01:47   likely

01:01:48   like the

01:01:48   google search

01:01:49   deal money

01:01:49   is going

01:01:50   to be

01:01:50   going away

01:01:51   and

01:01:52   in a

01:01:53   few quarters

01:01:54   from now

01:01:55   that services

01:01:57   revenue

01:01:57   could take

01:01:58   a

01:01:59   pretty

01:02:00   big

01:02:00   decline

01:02:01   that

01:02:02   would

01:02:03   feel

01:02:04   at least

01:02:04   unlikely

01:02:05   that they

01:02:06   would be

01:02:06   able to

01:02:07   build up

01:02:08   with any

01:02:08   kind of

01:02:08   speed

01:02:09   so

01:02:11   I don't know

01:02:12   you take away

01:02:12   the services

01:02:13   revenue

01:02:13   obviously

01:02:14   Apple as a

01:02:15   company

01:02:15   is doing

01:02:16   fine

01:02:17   financially

01:02:17   it would

01:02:17   be a big

01:02:18   chunk

01:02:18   but not

01:02:19   you know

01:02:19   they're going

01:02:20   to carry

01:02:20   on

01:02:20   but the

01:02:21   stock market

01:02:22   is not

01:02:22   going to be

01:02:22   happy

01:02:22   right

01:02:23   and how

01:02:23   much

01:02:23   do they

01:02:24   care

01:02:24   I don't

01:02:24   know

01:02:24   I think

01:02:25   this is a

01:02:26   an important

01:02:26   point but I

01:02:27   also think

01:02:27   that it can

01:02:28   be over

01:02:28   emphasized

01:02:29   yes

01:02:30   I am

01:02:31   much more

01:02:33   skeptical it

01:02:34   sounds like

01:02:34   than you

01:02:35   are

01:02:35   of the

01:02:37   google search

01:02:38   money going

01:02:39   away

01:02:39   in part

01:02:41   because I

01:02:42   have a

01:02:42   hard time

01:02:43   imagining a

01:02:44   remedy

01:02:44   that is

01:02:46   in a case

01:02:46   against google

01:02:47   that allows

01:02:48   google to

01:02:48   keep money

01:02:49   and harms

01:02:51   other

01:02:52   people

01:02:53   who lose

01:02:54   money

01:02:54   seems like

01:02:55   a very

01:02:55   weird

01:02:56   remedy

01:02:56   against google

01:02:57   to say

01:02:57   google

01:02:57   keep your

01:02:58   whatever

01:02:59   they're spending

01:02:59   in total

01:03:00   30 billion

01:03:00   dollars

01:03:00   just keep

01:03:01   that

01:03:01   and everybody's

01:03:03   going to

01:03:03   choose you

01:03:03   anyway

01:03:04   and now

01:03:04   you're not

01:03:04   also I

01:03:05   don't think

01:03:06   it actually

01:03:06   fits very

01:03:07   well because

01:03:07   it's

01:03:07   it's

01:03:08   it's

01:03:08   it's

01:03:09   referral

01:03:09   money

01:03:10   it's

01:03:10   affiliate

01:03:10   money

01:03:11   and I

01:03:12   think the

01:03:12   most that

01:03:13   will happen

01:03:13   is that

01:03:13   they won't

01:03:14   be allowed

01:03:14   to be

01:03:15   the default

01:03:16   but everybody's

01:03:17   going to

01:03:17   choose them

01:03:17   anyway

01:03:17   I think

01:03:18   Apple's

01:03:18   and by

01:03:19   the way

01:03:19   Safari

01:03:20   default Safari

01:03:22   search

01:03:22   is so

01:03:24   valuable

01:03:25   that

01:03:26   if

01:03:27   Apple

01:03:28   is not

01:03:29   allowed

01:03:29   to make

01:03:30   a deal

01:03:30   with Google

01:03:30   for it

01:03:31   Apple will

01:03:32   find another

01:03:33   way to make

01:03:33   money on it

01:03:34   they will

01:03:34   set up

01:03:35   their own

01:03:35   search engine

01:03:35   with their

01:03:36   own ads

01:03:36   they will

01:03:37   find a

01:03:37   partner

01:03:38   there will

01:03:39   be somebody

01:03:39   who will

01:03:40   pay for

01:03:40   Safari

01:03:41   it might

01:03:41   not be

01:03:41   as much

01:03:42   and this

01:03:42   is what

01:03:42   my point

01:03:43   is

01:03:43   I don't

01:03:44   think

01:03:44   you're

01:03:44   going to

01:03:44   talk about

01:03:45   20 billion

01:03:45   going to

01:03:45   zero

01:03:46   but it

01:03:47   could take

01:03:47   a hit

01:03:47   and I

01:03:48   don't

01:03:48   think

01:03:48   in-app

01:03:49   purchase

01:03:50   and

01:03:50   app store

01:03:51   revenue

01:03:52   is going to

01:03:52   go from

01:03:53   all to

01:03:54   nothing

01:03:54   I think

01:03:55   it's going

01:03:55   to take

01:03:55   a hit

01:03:56   and that

01:03:56   means yes

01:03:57   the services

01:03:57   line

01:03:58   were probably

01:03:59   headed for a

01:04:00   moment where the

01:04:01   always goes up

01:04:02   service line

01:04:03   is going to have

01:04:03   a correction

01:04:04   but I will

01:04:06   also say

01:04:06   because we're

01:04:07   going to talk

01:04:07   about Apple's

01:04:08   results in a

01:04:09   little bit

01:04:09   that

01:04:10   if Wall Street

01:04:12   understands it

01:04:13   and they understand

01:04:14   the ramifications

01:04:14   and after

01:04:16   that is

01:04:16   done

01:04:17   it continues

01:04:18   to go up

01:04:19   from the

01:04:20   new lower

01:04:20   level

01:04:21   they'll probably

01:04:23   get over it

01:04:24   right

01:04:24   they'll get

01:04:25   over it

01:04:25   it's not

01:04:25   it's not

01:04:26   existential

01:04:27   because Apple's

01:04:28   doing fine

01:04:29   it really is

01:04:29   just

01:04:30   it's an area

01:04:31   that they've

01:04:31   really built

01:04:32   up that

01:04:32   they're going

01:04:33   to get

01:04:33   a black

01:04:33   eye in

01:04:34   but if

01:04:35   it's about

01:04:35   court cases

01:04:36   and you know

01:04:37   things like

01:04:37   that that are

01:04:38   that are

01:04:39   out there

01:04:39   that are

01:04:40   just part

01:04:40   of doing

01:04:40   business

01:04:41   I don't

01:04:42   know

01:04:42   whether

01:04:42   Wall Street

01:04:43   will be

01:04:43   too upset

01:04:44   about it

01:04:44   in the

01:04:45   long run

01:04:45   even though

01:04:46   it's going

01:04:46   to be a

01:04:47   hit to

01:04:47   them

01:04:47   yeah

01:04:48   that's

01:04:48   fair

01:04:48   so

01:04:51   I wanted

01:04:52   to talk

01:04:53   about Luca

01:04:53   Maestri for a second

01:04:54   okay

01:04:54   great

01:04:55   because he left

01:04:57   he's not the CFO

01:04:58   anymore

01:04:58   no

01:04:59   and one of the

01:05:00   stories here

01:05:00   is that

01:05:00   Luca

01:05:01   is prominently

01:05:03   named as one

01:05:03   of the people

01:05:04   and one of his

01:05:04   lieutenants

01:05:05   was personally

01:05:06   referred to

01:05:06   for criminal

01:05:07   contempt

01:05:07   he's referred

01:05:08   to in that

01:05:09   story

01:05:09   as Phil

01:05:10   Schiller

01:05:10   who's

01:05:11   paid

01:05:11   attention

01:05:11   to the

01:05:12   whole

01:05:12   trial

01:05:12   saying

01:05:12   we can't

01:05:12   do

01:05:12   this

01:05:13   and Luca

01:05:13   Maestri

01:05:14   says

01:05:14   no

01:05:14   let's

01:05:14   do

01:05:15   let's

01:05:15   concoct

01:05:15   a thing

01:05:16   and Tim

01:05:16   chose

01:05:16   poorly

01:05:17   and chose

01:05:17   to go

01:05:18   with Luca

01:05:18   I'll also

01:05:19   throw in

01:05:20   that report

01:05:20   from a couple

01:05:20   of weeks

01:05:21   ago

01:05:21   about how

01:05:22   Apple's

01:05:23   AI team

01:05:23   wanted to

01:05:23   buy

01:05:24   an enormous

01:05:25   amount

01:05:26   of GPUs

01:05:27   for AI

01:05:28   training

01:05:29   a key

01:05:29   area where

01:05:30   Apple is

01:05:30   behind

01:05:31   and the

01:05:32   report

01:05:32   was

01:05:32   that

01:05:33   Luca

01:05:33   said

01:05:34   no

01:05:34   and

01:05:36   Apple

01:05:37   actually

01:05:38   responded

01:05:38   to that

01:05:39   report

01:05:39   and their

01:05:40   response

01:05:41   was

01:05:41   weak

01:05:41   sauce

01:05:42   because

01:05:42   their

01:05:42   response

01:05:42   was

01:05:43   no

01:05:43   no

01:05:43   no

01:05:43   no

01:05:43   no

01:05:43   all

01:05:45   we

01:05:45   did

01:05:45   was

01:05:45   slow

01:05:46   down

01:05:46   the

01:05:46   amount

01:05:47   but they

01:05:47   did get

01:05:47   it

01:05:48   eventually

01:05:48   which to

01:05:49   me

01:05:50   I read

01:05:51   as being

01:05:51   that's

01:05:52   not

01:05:52   great

01:05:52   Apple's

01:05:54   got

01:05:54   its

01:05:54   hair

01:05:54   on

01:05:54   fire

01:05:55   about

01:05:55   AI

01:05:55   training

01:05:55   and AI

01:05:56   models

01:05:56   and all

01:05:57   of that

01:05:57   and you

01:05:58   go

01:05:58   and your

01:05:59   boss

01:06:00   the head

01:06:01   of AI

01:06:01   says we're

01:06:01   going to buy

01:06:02   this stuff

01:06:02   and then the

01:06:03   CFO rolls

01:06:04   in and says

01:06:04   well let's

01:06:05   not buy it

01:06:05   all at once

01:06:06   it's like

01:06:07   your parent

01:06:07   coming in

01:06:08   and saying

01:06:08   well I know

01:06:09   you want

01:06:11   this thing

01:06:11   but why don't

01:06:12   we get you

01:06:12   this lesser

01:06:13   thing

01:06:13   or why don't

01:06:14   we just do

01:06:14   a little

01:06:14   like why

01:06:15   don't

01:06:16   why don't

01:06:17   we rent

01:06:17   a surfboard

01:06:19   instead of

01:06:19   buying a

01:06:20   surfboard

01:06:21   for you

01:06:21   which is

01:06:21   great if

01:06:22   you're

01:06:22   going to

01:06:22   go on

01:06:23   to the

01:06:23   next

01:06:23   thing

01:06:23   but it

01:06:24   turns out

01:06:24   AI

01:06:24   not the

01:06:25   next

01:06:25   thing

01:06:25   and

01:06:26   I

01:06:27   got really

01:06:28   bad

01:06:29   scary

01:06:29   vibes

01:06:30   from the

01:06:30   idea

01:06:31   that the

01:06:32   CFO

01:06:32   was telling

01:06:33   the head

01:06:34   of machine

01:06:34   learning

01:06:35   how many

01:06:36   GPUs

01:06:36   he could

01:06:37   buy

01:06:37   and slow

01:06:39   played

01:06:39   Apple's

01:06:39   argument

01:06:40   is

01:06:40   essentially

01:06:40   well we

01:06:41   just slow

01:06:42   played

01:06:42   him

01:06:42   which is

01:06:44   not

01:06:44   I mean

01:06:44   that doesn't

01:06:45   really help

01:06:46   so I

01:06:47   have to

01:06:47   say

01:06:48   knowing

01:06:49   what we

01:06:49   know

01:06:49   now

01:06:50   one

01:06:52   I wonder

01:06:53   if this

01:06:54   is why

01:06:54   Luke is

01:06:54   not the

01:06:54   CFO

01:06:55   anymore

01:06:55   that

01:06:57   people

01:06:57   within

01:06:58   Apple

01:06:58   were

01:06:58   very

01:06:59   unhappy

01:06:59   with this

01:06:59   kind of

01:07:00   behavior

01:07:00   and they

01:07:01   knew

01:07:01   that there

01:07:01   were going

01:07:02   to be

01:07:02   ramifications

01:07:02   of it

01:07:03   maybe

01:07:03   maybe not

01:07:04   we'll

01:07:04   see

01:07:04   and two

01:07:06   I want

01:07:07   to point

01:07:07   out that

01:07:07   we can't

01:07:09   make

01:07:09   Luca

01:07:09   Maestri

01:07:09   the

01:07:10   boogeyman

01:07:10   because

01:07:11   as I

01:07:12   mentioned

01:07:12   earlier

01:07:13   and as I

01:07:14   know

01:07:14   from

01:07:14   all

01:07:15   through

01:07:15   my

01:07:16   career

01:07:16   the job

01:07:18   of the

01:07:18   CEO

01:07:18   the job

01:07:19   of the

01:07:19   person

01:07:20   at the

01:07:20   top

01:07:20   is to

01:07:21   balance

01:07:22   all the

01:07:22   needs

01:07:23   of the

01:07:23   organization

01:07:23   and have

01:07:24   a vision

01:07:24   for what

01:07:25   that organization

01:07:25   needs to

01:07:26   do

01:07:26   and their

01:07:27   job is not

01:07:27   and I hear

01:07:28   this a lot

01:07:28   in some

01:07:29   bad

01:07:29   analysis

01:07:30   I hear

01:07:32   people say

01:07:32   the job

01:07:33   of the

01:07:33   CEO

01:07:33   is to

01:07:34   make the

01:07:34   shareholders

01:07:34   happy

01:07:35   or to

01:07:36   maximize

01:07:36   revenue

01:07:37   or to

01:07:38   maximize

01:07:38   profit

01:07:39   and what

01:07:40   I would

01:07:40   say is

01:07:40   I

01:07:41   think

01:07:41   the

01:07:41   job

01:07:42   of the

01:07:42   CEO

01:07:43   is

01:07:43   of a

01:07:43   public

01:07:44   company

01:07:44   to

01:07:44   make

01:07:44   the

01:07:45   shareholders

01:07:45   happy

01:07:46   in the

01:07:46   long

01:07:47   run

01:07:48   in terms

01:07:49   of the

01:07:49   corporation's

01:07:50   value

01:07:51   the danger

01:07:52   is you

01:07:52   get these

01:07:53   short-sighted

01:07:54   CEOs

01:07:54   whose job

01:07:55   is to

01:07:55   make the

01:07:56   number

01:07:56   this quarter

01:07:56   and not

01:07:57   worry

01:07:57   about next

01:07:58   quarter

01:07:58   and try

01:07:58   to make

01:07:59   that

01:07:59   quarterly

01:07:59   number

01:07:59   as long

01:08:00   as they

01:08:00   can

01:08:00   and once

01:08:01   they

01:08:01   finally

01:08:01   don't

01:08:01   make

01:08:02   it

01:08:02   they

01:08:02   get

01:08:02   a

01:08:02   golden

01:08:03   parachute

01:08:03   and they're

01:08:03   gone

01:08:04   and they

01:08:04   replace it

01:08:04   with another

01:08:05   guy who

01:08:05   goes through

01:08:05   the

01:08:05   same

01:08:05   process

01:08:06   and

01:08:06   that's

01:08:06   how you

01:08:07   hollow

01:08:07   out

01:08:07   successful

01:08:08   businesses

01:08:08   and destroy

01:08:09   them

01:08:09   the job

01:08:10   of Tim

01:08:10   Cook

01:08:11   is not

01:08:12   to be

01:08:13   penny wise

01:08:14   and pound

01:08:15   foolish

01:08:15   the job

01:08:16   of Tim

01:08:16   Cook

01:08:16   is to

01:08:16   listen

01:08:17   to his

01:08:17   CFO

01:08:17   yes

01:08:18   it is

01:08:19   but also

01:08:20   to consider

01:08:21   the value

01:08:22   of the

01:08:22   brand

01:08:23   and the

01:08:23   long-term

01:08:24   relationship

01:08:24   with

01:08:24   developers

01:08:25   and the

01:08:26   possibility

01:08:27   that if

01:08:27   they lose

01:08:28   this

01:08:28   if they

01:08:29   displease

01:08:29   the judge

01:08:30   they're not

01:08:31   going to

01:08:31   just lose

01:08:31   some money

01:08:32   they're going

01:08:33   to lose

01:08:33   all this

01:08:34   money

01:08:34   because they're

01:08:35   going to

01:08:35   be

01:08:35   zeroed

01:08:36   out

01:08:36   by an

01:08:37   angry

01:08:37   judge

01:08:38   the job

01:08:39   of the

01:08:39   CEO

01:08:40   is to

01:08:40   consider

01:08:40   all of

01:08:41   that

01:08:41   and that's

01:08:43   the part

01:08:43   that troubles

01:08:43   me the

01:08:44   most about

01:08:44   this

01:08:45   is not

01:08:46   because I'm

01:08:47   not saying

01:08:47   don't listen

01:08:48   to the

01:08:48   money men

01:08:48   I'm saying

01:08:49   CEO's job

01:08:50   is to

01:08:51   not just

01:08:52   listen to

01:08:53   the money

01:08:53   men

01:08:54   but consider

01:08:54   the big

01:08:55   picture

01:08:55   the money

01:08:56   men have

01:08:56   a very

01:08:56   loud

01:08:57   voice

01:08:57   a good

01:08:58   CEO

01:08:58   knows

01:08:58   that you

01:08:59   can't

01:08:59   just

01:09:00   listen

01:09:00   to that

01:09:01   noise

01:09:01   because there

01:09:02   are bigger

01:09:02   picture

01:09:03   issues

01:09:04   and I

01:09:04   gotta say

01:09:05   this is

01:09:06   the most

01:09:06   disappointed

01:09:07   and I

01:09:08   know that

01:09:08   other thing

01:09:09   this is the

01:09:10   most disappointed

01:09:10   I've been in

01:09:12   Tim Cook

01:09:12   because this

01:09:14   suggests to me

01:09:15   something that I

01:09:16   didn't really

01:09:16   think was true

01:09:17   of Tim Cook

01:09:18   which is that

01:09:19   at the end

01:09:20   of the day

01:09:20   if there's an

01:09:22   argument between

01:09:22   doing a

01:09:24   good thing

01:09:25   that takes a

01:09:26   hit in the

01:09:27   short term

01:09:27   but is probably

01:09:28   better for

01:09:28   Apple in the

01:09:29   long term

01:09:30   and also

01:09:30   complies

01:09:31   with the

01:09:32   law

01:09:32   or just

01:09:33   spiting

01:09:34   a judge's

01:09:35   order

01:09:35   because you

01:09:36   want to

01:09:36   maximize

01:09:36   revenue

01:09:37   that he

01:09:38   chose

01:09:39   that one

01:09:40   that's very

01:09:41   disappointing

01:09:41   because that

01:09:42   is not

01:09:42   thinking big

01:09:43   picture

01:09:43   of a guy

01:09:44   who I

01:09:45   think

01:09:45   has shown

01:09:47   that he's

01:09:47   pretty good

01:09:48   at thinking

01:09:48   about the

01:09:49   big picture

01:09:49   but I

01:09:50   think he

01:09:50   got overwhelmed

01:09:51   by whatever

01:09:52   it is

01:09:52   that Apple

01:09:53   thinks it's

01:09:53   really entitled

01:09:54   to not

01:09:55   compete

01:09:55   and to

01:09:56   take

01:09:56   as much

01:09:57   money

01:09:57   as it

01:09:57   can

01:09:57   out of

01:09:58   the

01:09:58   market

01:09:58   I'm going

01:09:59   to go

01:10:00   one step

01:10:00   further than

01:10:01   in you

01:10:01   because I

01:10:02   agree with

01:10:02   you completely

01:10:03   so I

01:10:04   I find in

01:10:06   general it

01:10:07   to be

01:10:08   quite tiring

01:10:09   to hear people

01:10:10   try to fire

01:10:11   this person

01:10:11   fire this

01:10:12   person

01:10:12   that kind

01:10:13   of

01:10:13   where every

01:10:15   time you're

01:10:15   unhappy about

01:10:16   something that

01:10:16   Tim Cook

01:10:17   does

01:10:17   we have

01:10:18   friends that

01:10:19   have wanted

01:10:19   to fire

01:10:20   Tim Cook

01:10:20   for a long

01:10:20   time

01:10:21   and talk

01:10:21   about it

01:10:22   often

01:10:22   this is

01:10:24   the first

01:10:25   time

01:10:25   that I

01:10:27   really think

01:10:28   that it

01:10:29   could be

01:10:30   time to

01:10:30   consider a

01:10:31   new CEO

01:10:31   and the

01:10:33   reason for

01:10:34   me is

01:10:34   not

01:10:35   it's not

01:10:37   the Luca

01:10:38   thing

01:10:38   right

01:10:39   like it's

01:10:41   for me

01:10:41   it was

01:10:43   the fact

01:10:44   that there

01:10:44   are designers

01:10:45   who

01:10:47   were egging

01:10:49   each other

01:10:49   on to

01:10:51   make the

01:10:52   scare screens

01:10:53   look scarier

01:10:54   because it

01:10:55   would appease

01:10:56   executives

01:10:57   like there's

01:10:58   transcripts of

01:11:00   this from

01:11:00   Slack

01:11:01   that it

01:11:01   would make

01:11:02   the bosses

01:11:02   happy

01:11:03   if they

01:11:04   made it

01:11:04   worse

01:11:04   and similarly

01:11:05   the people

01:11:06   inside of

01:11:07   teams who

01:11:08   were celebrating

01:11:09   the fact

01:11:09   that this

01:11:11   would be

01:11:11   more expensive

01:11:12   it seems

01:11:14   clear to me

01:11:14   from seeing

01:11:15   this slice

01:11:16   of communication

01:11:18   that Apple's

01:11:20   corporate

01:11:20   culture

01:11:21   has changed

01:11:23   to a

01:11:26   degree

01:11:26   which I'm

01:11:28   unhappy

01:11:28   with

01:11:28   it's all

01:11:30   I've always

01:11:31   felt that

01:11:31   and the

01:11:32   reason that I

01:11:32   love Apple

01:11:33   products and

01:11:33   why I

01:11:34   respect the

01:11:35   company is it

01:11:36   feels like their

01:11:37   corporate culture

01:11:37   was about

01:11:38   producing the

01:11:38   best possible

01:11:39   work and

01:11:41   I know that

01:11:41   that is the

01:11:42   thing that

01:11:43   encourages people

01:11:44   to go work

01:11:45   there but

01:11:46   it seems

01:11:46   like there

01:11:47   is a level

01:11:48   of the

01:11:48   company now

01:11:49   a level

01:11:49   of the

01:11:49   company which

01:11:50   is being

01:11:50   listened to

01:11:51   by the

01:11:51   CEO maybe

01:11:52   more than

01:11:52   any other

01:11:53   level where

01:11:54   their most

01:11:56   important thing

01:11:57   is to

01:12:00   make money

01:12:01   at all

01:12:02   costs which

01:12:03   is what most

01:12:04   businesses do

01:12:05   but then you

01:12:07   lose the

01:12:08   customer experience

01:12:09   which is

01:12:10   Apple's whole

01:12:11   friggin thing

01:12:12   and it should

01:12:13   have remained

01:12:14   the whole thing

01:12:15   and I just

01:12:16   feel like if

01:12:16   you've gotten

01:12:17   if you are at

01:12:19   the point where

01:12:20   you've taken

01:12:22   Apple and

01:12:23   turned it into

01:12:24   something where

01:12:25   there are

01:12:25   designers that

01:12:27   are trying to

01:12:28   make text

01:12:29   read scarier

01:12:30   to customers

01:12:31   so they are

01:12:33   less likely to

01:12:34   click a button

01:12:35   that would save

01:12:36   their money

01:12:37   you've gone too

01:12:39   far it's gone

01:12:40   too far and I

01:12:42   don't know how

01:12:43   you untangle

01:12:45   that and I

01:12:46   don't think

01:12:47   this is it

01:12:48   because I know

01:12:49   those same

01:12:49   people and

01:12:50   now like that

01:12:52   dang judge

01:12:53   she doesn't

01:12:54   understand us

01:12:55   how dare she

01:12:56   that's our

01:12:56   money how

01:12:58   could she

01:12:58   and the

01:12:59   reason and

01:13:00   like that and

01:13:01   I am I'm very

01:13:02   confident that that

01:13:03   thinking is

01:13:04   encouraged which

01:13:06   would suggest to

01:13:07   me and I feel

01:13:08   confident in that

01:13:09   just from reading

01:13:09   what I have read

01:13:10   in the last few

01:13:11   days and so I

01:13:13   feel like at this

01:13:14   point there needs

01:13:16   to be some

01:13:17   change I don't

01:13:20   know if it's

01:13:20   Tim Cook I

01:13:21   don't know right

01:13:22   maybe it was

01:13:22   Luca I don't

01:13:23   know but they've

01:13:25   jumped the

01:13:25   shark at this

01:13:27   point I think

01:13:28   so yes I mean the

01:13:30   argument is that

01:13:31   Apple's whole

01:13:31   business model is

01:13:32   they use advanced

01:13:33   technology and their

01:13:34   own innovation to

01:13:35   create products that

01:13:36   delight customers and

01:13:37   the money follows and

01:13:39   what this is is this

01:13:40   is a little thing

01:13:40   where they got a

01:13:41   they got an

01:13:41   enormous injection

01:13:42   of revenue that

01:13:43   they didn't really

01:13:44   I think expect

01:13:46   which is app store

01:13:47   revenue like when

01:13:48   it happened and

01:13:50   they've become not

01:13:52   only have they

01:13:52   become kind of

01:13:54   reliant on it which

01:13:55   I don't think is

01:13:55   actually true but it

01:13:56   is a source of

01:13:57   growth for them

01:13:57   Wall Street loves

01:13:59   it but they become

01:14:01   addicted to it and

01:14:02   they feel they

01:14:02   deserve it and that

01:14:03   they feel that it

01:14:04   belongs to them and

01:14:06   it has it has I

01:14:09   don't know whatever

01:14:10   metaphor you want

01:14:11   here I mean it's

01:14:11   hollowed them out

01:14:12   it's poisoned them

01:14:14   it's addicted them

01:14:15   to something they

01:14:17   they feel entitled

01:14:18   to it and that's

01:14:20   what you're saying

01:14:20   about the culture

01:14:21   being broken the

01:14:22   priorities being

01:14:23   misaligned and

01:14:24   and you know you

01:14:25   can I mentioned

01:14:26   Luca Maestri I

01:14:27   don't know that's

01:14:28   just a weird

01:14:29   coincidence that these

01:14:29   two things happen

01:14:30   but I will say it

01:14:31   goes to in the end

01:14:32   to the CEO it goes

01:14:33   to Tim Cook Tim

01:14:35   Cook talks a good

01:14:35   game about what

01:14:36   Apple stands for

01:14:37   but when you

01:14:38   look at this you

01:14:38   see that part of

01:14:39   what Apple stands

01:14:40   for is compromising

01:14:41   their values in

01:14:42   order to prevent

01:14:44   competition and

01:14:45   maximize revenue and

01:14:46   again I'll make the

01:14:47   point the CEO's got

01:14:50   to think of the

01:14:50   bigger picture because

01:14:51   this is a real if

01:14:52   this stands this is

01:14:54   this is a completely

01:14:55   avoidable misstep that

01:14:57   will dramatically harm

01:14:58   their revenue and

01:14:59   dramatically harms

01:15:00   their image and

01:15:02   they've got a house

01:15:03   on fire when it

01:15:04   comes to how

01:15:04   developers feel about

01:15:05   them anyway and

01:15:07   so the problem

01:15:09   Mike is this is

01:15:11   happening simultaneously

01:15:12   with us being in

01:15:15   an era where Tim

01:15:17   Cook has culture

01:15:18   cultivated amazing

01:15:19   relationships with

01:15:20   key global players

01:15:22   politically and is

01:15:25   the master of supply

01:15:28   chain in general

01:15:29   Apple supply chain in

01:15:30   particular at a moment

01:15:31   where the supply chain

01:15:32   has to be reconfigured

01:15:34   rapidly based on

01:15:36   global events so

01:15:39   the problem if I'm

01:15:40   on the board is I

01:15:43   don't like what this

01:15:44   says about Tim Cook's

01:15:46   approach to these

01:15:47   areas but these

01:15:50   other areas is what

01:15:52   Tim Cook is great

01:15:54   at and that Apple

01:15:56   would be in a much

01:15:56   worse place if he

01:15:59   wasn't able to do

01:16:00   his magic there

01:16:01   yeah and so I

01:16:03   would be torn as a

01:16:04   board member about

01:16:05   that but I will say

01:16:06   this I'm not going to

01:16:08   go so far as to say

01:16:09   it's time to consider

01:16:10   a new CEO if I were

01:16:11   on the board what I

01:16:13   would say is I'm

01:16:15   troubled by this

01:16:16   report and the

01:16:17   suggestion that Apple

01:16:17   has lost its way

01:16:18   culturally and that

01:16:20   given that Tim is

01:16:22   not going to be

01:16:22   staying as the CEO

01:16:23   for 10 years or

01:16:25   whatever that I want

01:16:26   to accelerate a

01:16:28   clear succession

01:16:29   plan and say if

01:16:31   you've got a

01:16:32   favorite let's let's

01:16:33   name our favorite

01:16:33   who's going to take

01:16:34   over in three to five

01:16:35   years and let's get

01:16:37   that person up to

01:16:38   speed and let's make

01:16:39   that person more

01:16:40   visible and let's

01:16:41   explain to that

01:16:42   person as a board

01:16:43   what we think of as

01:16:45   the strengths and

01:16:46   weaknesses of this

01:16:47   along with the CEO

01:16:48   I would make my

01:16:49   displeasure known to

01:16:50   Tim but what I would

01:16:51   say is not you're

01:16:52   fired I would say

01:16:53   you need to you need

01:16:55   to also start

01:16:56   planning your and

01:16:57   maybe this has

01:16:58   already happened but

01:16:58   like you need to you

01:17:01   need to know when

01:17:02   you're going and it

01:17:03   needs to be in the

01:17:03   next three to five

01:17:04   years and we're not

01:17:06   gonna we don't want

01:17:07   you to stay beyond

01:17:07   that you need to step

01:17:09   off and and the new

01:17:11   person coming in needs

01:17:12   to know what we want

01:17:13   from you because this

01:17:14   is I think a you know

01:17:17   they shot themselves in

01:17:18   the foot here this is

01:17:19   this is unnecessary and

01:17:21   they they are going to

01:17:22   pay for it but I

01:17:24   don't think I could

01:17:25   say you got to go to

01:17:27   the guy who's kind of

01:17:28   holding it together

01:17:28   given everything else

01:17:30   if this was a calm

01:17:32   seas kind of moment

01:17:33   yeah I would say

01:17:34   maybe you've stayed

01:17:36   too long but it's

01:17:39   not a calm seas

01:17:39   moment this is why

01:17:40   I'm like I struggle

01:17:41   to be like I'm not

01:17:42   saying fire Tim

01:17:43   cook but I'm saying

01:17:44   something needs to

01:17:45   change because it

01:17:47   seems to me that the

01:17:49   culture is broken and

01:17:51   like what does that

01:17:51   need to be is it he

01:17:54   steps aside is it

01:17:55   they as you say like

01:17:56   they accelerate the

01:17:57   new CEO and like now

01:17:59   internally in the

01:18:00   company everybody sees

01:18:01   this person is like the

01:18:02   new light you know like

01:18:04   in the and we you know

01:18:04   we look towards them

01:18:05   and I will say as

01:18:06   well you know you're

01:18:07   saying about all Tim

01:18:08   cooks you know it

01:18:09   would be concerning

01:18:10   like he's built all

01:18:11   these relationships

01:18:12   Apple has the model

01:18:13   Tim Cook becomes

01:18:15   executive chairman or

01:18:16   chairman of the board

01:18:17   like Steve Jobs did

01:18:18   and then the new CEO

01:18:20   comes in like sure

01:18:21   that I think would be

01:18:23   the way they should do

01:18:24   this right to have

01:18:26   that like that

01:18:29   whenever Tim Cook does

01:18:30   retire I think that

01:18:31   that should be part of

01:18:32   the plan of like he's

01:18:33   still there he's still

01:18:35   visible he's still

01:18:36   someone that can be

01:18:37   called upon and then

01:18:39   they transition out that

01:18:40   way

01:18:40   but I agree with you in

01:18:43   the broader sense which

01:18:44   is this is the least

01:18:46   confident I've been in

01:18:47   Tim Cook seeing what's

01:18:48   in that document yes

01:18:49   makes me much less

01:18:50   confident in Tim Cook

01:18:52   as a CEO because he

01:18:54   he took bad advice for

01:18:57   the wrong reasons yeah

01:18:58   and applauded bad

01:19:00   decisions like the like

01:19:02   making the scare sheet

01:19:03   almost satirically

01:19:05   ludicrously scarier yeah

01:19:08   it and he specifically

01:19:10   applauded that as Phil

01:19:11   Schiller saying it's not

01:19:12   really allowed that's not

01:19:13   really the spirit didn't

01:19:14   matter he went all the

01:19:15   way in which suggests a

01:19:17   level of and this is the

01:19:18   thing that comes of course

01:19:19   they're going to appeal

01:19:19   because of course they're

01:19:20   going to appeal it's a

01:19:21   it's a judgment against

01:19:23   you you appeal it great

01:19:24   but like I do think that

01:19:26   that says something which

01:19:27   is that they just don't

01:19:30   believe that they're in

01:19:31   the wrong no and and

01:19:33   that's the problem is it's

01:19:36   very hard not to look at

01:19:38   that 70 page thing and say

01:19:40   you're in the wrong here and

01:19:43   maybe privately they're

01:19:44   saying we should have

01:19:45   listened to Phil I hope

01:19:47   that's what they're saying

01:19:48   they're definitely saying

01:19:49   that now like they are

01:19:50   saying that now I mean

01:19:51   maybe maybe I hope so I

01:19:54   hope so because that's the

01:19:55   only way you learn is to

01:19:56   be is to be in this case

01:19:57   brought low and told you

01:19:59   have to break all of these

01:20:01   rules that you set are just

01:20:02   gone because you screwed

01:20:04   this up like that's what you

01:20:06   need to hear and then

01:20:09   somebody needs to actually

01:20:10   believe it and try to

01:20:11   institute change and I'm

01:20:13   not convinced that Apple

01:20:14   is capable of that but

01:20:15   we'll see it's like I

01:20:17   don't I don't like

01:20:19   particularly begrudge

01:20:20   them for getting to the

01:20:21   point that they got to

01:20:23   with the but that led up

01:20:25   to everything before this

01:20:27   court case right where

01:20:29   like and I wouldn't have

01:20:30   said you should fire Tim

01:20:32   Cook because they wouldn't

01:20:33   get rid of 30 percent like

01:20:34   that just wasn't my feeling

01:20:35   the thing that that why I

01:20:38   feel like it should be

01:20:39   considered now that just

01:20:41   change should happen like

01:20:42   even if it's Tim needs to

01:20:44   change which I also would

01:20:45   like to see like he's you

01:20:46   know re kind of think about

01:20:48   how he's considering this is

01:20:49   that when forced to rethink

01:20:52   it from a legal perspective

01:20:54   they were like yeah but what

01:20:55   if we didn't though like that

01:20:57   was the the the prevailing

01:21:00   sentiment is yeah but what if

01:21:01   we didn't like what if we

01:21:02   didn't and we did everything

01:21:04   possible including either

01:21:08   asking to or encouraging

01:21:09   someone to lie on their

01:21:11   oath right like I don't

01:21:12   know why that happened but

01:21:13   there are two reasons why

01:21:14   that happened I don't know

01:21:15   which one of them it is that

01:21:17   this guy wanted to lie to

01:21:20   keep his money or it was

01:21:21   suggested who knows right

01:21:23   like I'm not going to say

01:21:24   either way but there's only

01:21:24   two ways that that kind of

01:21:25   thing happens or there's a

01:21:27   third one is like that they

01:21:28   really just don't remember

01:21:29   but I don't know about that

01:21:30   I do want to just before

01:21:33   we wrap up on this Jason

01:21:34   I do just want to read

01:21:35   because I've mentioned this

01:21:36   thing about the designers

01:21:38   right and like the

01:21:39   copywriting about the

01:21:40   scare screens I want to

01:21:41   read this passage from the

01:21:42   verge because I think it

01:21:43   is it shows what I'm

01:21:45   talking about and there's

01:21:46   also one paragraph at the

01:21:47   end which I think is just

01:21:48   just objectively hilarious

01:21:50   so a user experience

01:21:52   writing manager at Apple

01:21:53   instructed an employee to

01:21:55   add the phrase external

01:21:56   website to the screen

01:21:58   because it sounds quote

01:21:59   sounds scary so execs

01:22:01   will love it another

01:22:02   employee gave a suggestion

01:22:04   on how to make the

01:22:05   screen quote even worse

01:22:07   by using the developers

01:22:08   name rather than the app

01:22:09   name quote ooh keep

01:22:11   going another Apple

01:22:13   employee responded in

01:22:14   Slack so that is the

01:22:16   that's that just doesn't

01:22:17   I just don't like any of

01:22:18   that like it it's like

01:22:21   it's it's become fun to

01:22:22   make developers seem

01:22:24   untrustworthy right and

01:22:27   then carry on even cook

01:22:28   got in on the action when

01:22:29   he finally saw the screen

01:22:31   for approval he asked

01:22:32   that another warning be

01:22:33   added to state that

01:22:35   Apple's privacy and

01:22:36   security promises would

01:22:37   no longer apply on the

01:22:38   web and then this is the

01:22:40   part that I think is

01:22:40   hilarious in court Apple

01:22:41   tried to argue that the

01:22:42   term scary didn't

01:22:44   actually mean it wanted

01:22:45   the screen to scare

01:22:46   people scary it claimed

01:22:48   was quote a term of art

01:22:50   an industry term with

01:22:51   specialized meaning in

01:22:53   fact the company claimed

01:22:54   scary meant raising

01:22:55   awareness and caution the

01:22:57   court did not buy it

01:22:58   saying the argument

01:22:59   strained common sense

01:23:00   yeah we're all talking

01:23:01   about that like scary

01:23:02   design you know it's a

01:23:03   new responsive design

01:23:04   scary design and it just

01:23:06   means consumer privacy

01:23:07   scary design yeah it

01:23:09   started with the spice

01:23:10   girls and it's just gone

01:23:11   on from there consumer

01:23:12   consumer spice oh boy

01:23:15   well yeah here we are

01:23:18   yeah they also they also

01:23:19   say things are sporty

01:23:20   yeah or ginger I mean it's

01:23:23   just a thing that happens

01:23:24   tech I'm surprised people

01:23:25   more people don't know

01:23:26   this that most things

01:23:28   in tech are described by

01:23:29   spice girls sporty

01:23:30   design yeah yeah well I'm

01:23:33   looking forward to the to

01:23:35   the posh redesign and in

01:23:38   June yeah let's do it

01:23:39   this episode is brought to

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01:23:51   vulnerable sadly it's

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01:24:12   happy customer they gave

01:24:14   me a subscription but I

01:24:15   continue to use it because

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01:24:29   public person who likes

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01:24:35   if I wasn't this is

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01:24:40   spam it can be used to

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01:24:44   can be out there that

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01:24:51   with if they want to try

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01:25:15   I'm going to read that

01:25:16   again because I'm not

01:25:16   sure I spoke it correctly

01:25:17   j o i n d e l e t e m e

01:25:20   dot com slash upgrade 20

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01:25:31   are thanks to delete me

01:25:32   for their support of this

01:25:33   show and relay

01:25:35   Jason hit me with the

01:25:36   jingle

01:25:45   money money money money

01:25:47   money money who has all

01:25:49   the money it's apple for

01:25:54   now all right so it's

01:25:56   apple earning it's apple

01:26:00   earnings time awkward it

01:26:02   was the next day pretty

01:26:03   awkward all right let me

01:26:07   run through the top line

01:26:08   revenue 95.4 billion dollars

01:26:11   up 5% year over year this is

01:26:14   overall revenue mac was at

01:26:16   7.9 billion up 7% ipad was

01:26:20   6.4 billion up 15% the

01:26:22   iphone was 46.8 billion up

01:26:26   2% services up 12% at 26.6

01:26:30   billion and wearables home

01:26:32   accessories it's the ugly

01:26:34   stepchild 7.5 billion dollars

01:26:36   down 5% you did a really good

01:26:41   article on six colors that I

01:26:43   enjoyed where you were like

01:26:45   all right thank you let's

01:26:47   actually look at the the

01:26:49   headlines here and what is

01:26:50   really going on I know you

01:26:52   sometimes on this piece on

01:26:53   mac world but yeah they don't

01:26:55   want it anymore so I write it

01:26:56   here now and I really liked

01:26:58   it I thought it I thought it

01:26:59   had a different kind of vibe

01:27:01   than the one that you

01:27:01   usually do and I found it

01:27:04   really useful I put more

01:27:05   jokes in it Mike I put you

01:27:06   know what it's probably why I

01:27:08   liked it it's just written more

01:27:09   like you right it's because

01:27:11   what the six colors voice is

01:27:12   different to the mac cord voice

01:27:13   as it should be because it's

01:27:16   not your publication right you

01:27:17   kind of they have a style that

01:27:19   you fit within when you're there

01:27:20   but I'm gonna there's a bunch of

01:27:24   things that you pointed out in

01:27:25   here but like essentially the

01:27:27   things that I found interesting

01:27:28   thing is that iPhone revenue has

01:27:29   been flat for the last three

01:27:31   years an iPad is up 15% and

01:27:35   it's four straight quarters of

01:27:37   growth after being down for nine

01:27:39   out of ten previous quarters and I

01:27:42   for the iPad specifically I don't

01:27:45   feel like I can really put my

01:27:46   finger on why it's so successful

01:27:49   right now I mean they're ship I

01:27:51   can they're shipping new iPads but

01:27:53   they've always ship new iPads no

01:27:56   but there was a year where they

01:27:57   didn't but that's that's that's

01:27:58   more than nine out of ten

01:27:59   quarters though right that's what

01:28:01   I mean it's like I know there

01:28:02   was a year where they didn't but

01:28:03   like I don't know it's hard it's

01:28:05   hard to I think my argument is

01:28:08   there was a pandemic high where

01:28:10   they sold a lot then there was a

01:28:11   drop-off after that because they

01:28:12   had they had sold a lot to the

01:28:14   people who were going to

01:28:15   probably buy one in the next

01:28:16   year then they didn't release an

01:28:18   iPad for a whole year and now

01:28:20   that bar is low enough that by

01:28:22   releasing iPads in a regular

01:28:23   schedule they can be higher sales

01:28:26   numbers than the year where they

01:28:28   didn't release any iPads so I

01:28:30   think that's actually what's going

01:28:31   on here but yeah the net result is

01:28:32   they had a really huge spike with

01:28:34   COVID and then they kind of like

01:28:36   fell off for the following couple

01:28:39   of years and now they have a

01:28:40   little bit of a resurgence which I

01:28:42   do think that those are the two

01:28:43   things going in there is there they

01:28:45   they had their year of no iPads and

01:28:47   they had the year where they were

01:28:48   coming off the high of of COVID and

01:28:51   that that's why okay that's fair

01:28:54   I think wearables 5% drop year over

01:28:59   year in line with the last seven

01:29:02   quarters which showed revenue drops

01:29:04   yeah what's and it's and it's

01:29:08   actually 10 of the last 12 quarters

01:29:11   have been down what's going on here

01:29:15   well I laughed out loud when Apple

01:29:20   said that it was a difficult compare

01:29:21   with last year because last year

01:29:25   they introduced the Vision Pro

01:29:26   although I have to say if you do the

01:29:31   math and multiply a hundred thousand

01:29:35   or whatever it was two hundred thousand

01:29:37   by thirty five hundred you can you can

01:29:41   get that nine hundred or four hundred

01:29:44   thousand four hundred million drop off

01:29:46   you can get it if Apple sold one hundred

01:29:47   and fifteen thousand more Vision Pros

01:29:50   last Q2 than this Q2 that would

01:29:53   actually account for it I'm sure it's

01:29:55   not all Vision Pro but like it doesn't

01:29:58   take that much to to account for that

01:30:00   drop in revenue and then the other

01:30:02   thing that they also I lifted my

01:30:04   eyebrow at was they mentioned the Ultra

01:30:06   2 Apple Watch that's like okay the Ultra

01:30:09   2 Apple Watch was for sale in Q2 last

01:30:12   year but it had been for sale for four

01:30:17   months prior to that and so but I

01:30:23   actually I actually don't doubt though

01:30:25   I honestly I don't doubt the fact that

01:30:27   there is a an aging curve of any Apple

01:30:29   product and that when you're in month

01:30:31   four versus when you're in month 16 that

01:30:35   month four sells more than month 16 I I

01:30:38   don't doubt that they sold more more

01:30:40   Ultra 2s last year than they would this

01:30:43   year when it's an old product and

01:30:46   there's probably an Ultra 3 coming in the

01:30:47   fall I don't doubt it I just find it

01:30:49   very funny that their difficult compare

01:30:51   is a four-month-old watch and the Vision

01:30:54   Pro but that's where wearables home and

01:30:57   accessories is right now which is why I

01:30:59   referred to it as the ugly dog in these

01:31:02   results it's like oh I mean I love you

01:31:05   but oh you don't look that great that

01:31:08   that's what's going on here you seem

01:31:09   very nice but but also you know you

01:31:11   wouldn't win a contest or anything right

01:31:14   now that's where wearables is I think

01:31:16   personally my theory is this category is

01:31:19   driven almost entirely by the iPod or by

01:31:22   AirPods Pro yeah and they have and they

01:31:24   haven't been around and they haven't been

01:31:26   updated in ages and that when they do a

01:31:29   new AirPods Pro that they'll get a big

01:31:31   boost in this category but also that it's

01:31:33   just kind of flat to down and that's

01:31:34   just where they are right now I can't

01:31:36   I can't get I cannot get my head around

01:31:38   the Apple Watch Ultra 2 being brought up

01:31:40   I thought right how much of a Mike how

01:31:43   much though like what you're saying

01:31:46   people don't like the black one is that

01:31:48   what you're saying because there's a new

01:31:49   black one I think they looked at the

01:31:53   four hundred thousand dollar or sorry

01:31:57   four hundred million dollar difference

01:31:58   between Q2 last time it was seven point

01:32:01   nine billion out of seven point five

01:32:03   billion so four hundred million dollars

01:32:05   and they looked at well why is that why

01:32:08   we need an excuse and they looked and

01:32:11   they said well actually if you add Vision

01:32:12   Pro and Ultra 2 you got all of it and

01:32:17   somebody with like a green eye shade in a

01:32:19   back room somewhere back behind where

01:32:20   Luca and his senior executives were all

01:32:23   conspiring is it green because of money

01:32:27   is that why he's just got like a little

01:32:29   adding machine and a green eye shade and

01:32:31   he's doing long division and all that

01:32:32   somebody in the back room when you said

01:32:34   I think you meant makeup no no no not

01:32:38   eyeshadow when I say you got to have the

01:32:40   green eye shade because it makes

01:32:41   everything look like money it tints

01:32:43   everything green like money get it I get

01:32:45   it and he's back there counting pennies

01:32:47   and doing whatever click click click on

01:32:50   the adding machine and all that and goes

01:32:51   ah I got it if you add these two things

01:32:53   together it makes it a difficult compare

01:32:55   and and the Kevin Parick the new CFO is

01:32:59   like great that's what I'll say and so

01:33:00   that's what they said is well boy it was

01:33:04   tough this year no vision no new Vision

01:33:06   Pro no new Apple Watch Ultra really

01:33:09   saddled that category down I'm like okay

01:33:11   I mean I think it's technically true but

01:33:13   what a weird case to make but it just

01:33:15   it's weird weird I mean I just just say

01:33:19   vision pro I know but they had to throw

01:33:22   an ultra 2 as well just say vision pro

01:33:26   like are they are they mad because there

01:33:28   was some executive was like let's not do

01:33:29   an ultra 3 this year and they're like oh

01:33:31   how dare you I'm gonna show you like I

01:33:34   just feel like they obviously do not need

01:33:37   to they don't need to Apple's kind of

01:33:41   constructed their earnings call in such a

01:33:42   way that they don't need to tell you

01:33:43   anything they don't want to tell you

01:33:45   right and so like I just don't know

01:33:46   why I mean it helps us save face a

01:33:49   little bit if they're like oh yeah man

01:33:51   vision pro made us so much money now we

01:33:53   don't have the new like it's a I just I

01:33:55   just find ultra 2 being brought up there

01:33:58   to be very curious yeah right I mean

01:34:01   because it wasn't this is the thing

01:34:02   tough a tough compare a difficult compare

01:34:05   that they talk about all the time usually

01:34:08   it's about a product that launched but

01:34:11   they bring up the ultra 2 and it's like

01:34:12   really the ultra 2 didn't do as well

01:34:15   this year as it did last spring after

01:34:18   it already had been out since September

01:34:20   what and also like the ultra 2 I don't

01:34:25   know I can't get this out of my head now

01:34:27   the ultra 2 was like not even really a

01:34:30   good upgrade from the oh no like I bought

01:34:32   it because I've been waiting but like it

01:34:34   added like one sensor it wasn't even a

01:34:37   helpful sensor if I remember I can't even

01:34:40   remember what it was now but it's like

01:34:41   it was it's just like such a peculiar

01:34:43   product to bring up like why not bring up

01:34:47   the fact that you have not updated

01:34:49   AirPods Pro which is obviously all this

01:34:51   is weird I don't know very weird just

01:34:55   weird just weird look look there's very

01:34:58   little when they do these things you got

01:35:01   to glean what you can because there's so

01:35:02   much of it that is is just sort of

01:35:05   boilerplate and almost marketing but that

01:35:07   one yeah that one step just I was struck

01:35:10   by that just vision it's a tough compare

01:35:12   because a vision pro and Apple watch

01:35:13   ultra 2 okay I guess strange there were

01:35:20   they didn't if they didn't really talk

01:35:22   about the the the legal stuff right on the

01:35:28   earnings that not very much no this is the

01:35:31   line that I thought I mean so Tim Cook

01:35:33   said we strongly disagree with it we've

01:35:35   complied with the court's order and we're

01:35:36   gonna appeal which is of course he says

01:35:39   that but I thought it was you know it's I

01:35:41   think it's BS but that's what he has to

01:35:42   say fine but what he didn't do is say it's

01:35:47   not gonna matter don't worry about it

01:35:48   instead he said we are monitoring these

01:35:50   closely but as you point out there's risk

01:35:52   associated with them the Google case as

01:35:54   well as the epic case and the outcome is

01:35:56   unclear which I would say it is so at

01:35:59   least he had that in there that this is

01:36:01   not they're not they're not take they're

01:36:04   not taking it lightly nor should they I

01:36:06   feel like it would have been made more of

01:36:08   a thing if tariffs weren't also in

01:36:10   conversation so I've got a good quote

01:36:12   here and some information so Tim Cook

01:36:14   said that for the June quarter we expect

01:36:17   the majority of iPhones sold in the US will

01:36:20   have India as their country of origin and

01:36:22   Vietnam to be the country of origin for

01:36:24   almost all iPad Mac Apple watch and

01:36:27   Airpods products also sold in the US

01:36:29   Chinese made products would be sold

01:36:31   everywhere else and Apple said that they

01:36:33   expect to lose around 900 million dollars

01:36:36   in the next quarter due to tariff

01:36:38   implications which that number is large

01:36:42   but as you very astutely pointed out the

01:36:45   this quarter was 85.8 billion that they're

01:36:49   good that sorry the the quarter that

01:36:51   they're going to be comparing against was

01:36:53   an 85.8 billion quarter that they say

01:36:55   they're gonna they're expecting to beat so

01:36:57   yeah so it's it's a yeah 900 million

01:37:00   seems large until you realize it's going

01:37:02   to be a beat on 86 billion and they're

01:37:05   going to just take you know 0.9 back from

01:37:09   that it's not massive they could do that I

01:37:13   think the challenge is what happens after

01:37:15   that and the thing is Wall Street wants

01:37:19   certainty right that's what they like they

01:37:20   don't like to be surprised they want

01:37:21   certainty and the problem with all of

01:37:24   this is as Tim Cook says nobody knows

01:37:27   right like nobody knows he says we'll be

01:37:29   thoughtful we'll manage the company we'll

01:37:31   focus on the long term dedicated to

01:37:33   innovation right all those things is like

01:37:35   great but like that's all he can say is

01:37:37   like look we'll we'll try our best to

01:37:39   weather this but he can't say it's not

01:37:41   going to be a problem because nobody

01:37:43   knows it is a problem it's just how it is

01:37:46   a problem right yeah data that's 900

01:37:49   million dollars they weren't expecting to

01:37:51   not have right that's again it's like even

01:37:54   to a company that makes the money that

01:37:56   they make I'm sure that they could use a

01:38:00   billion dollars right that they would use

01:38:02   it on something I don't know what it would

01:38:04   be but they would use it on something and

01:38:07   who knows what the potential knock-on

01:38:10   effects of doing what they have to do is we

01:38:13   don't know like there could be knock-on

01:38:15   effects that they can't even perceive of

01:38:16   yet like we were just talking about it

01:38:18   last time right of like how how ready are

01:38:23   these manufacturing pipelines for what is

01:38:26   now being thrown at them were they that

01:38:29   ready like are they going to be ready like

01:38:31   what is the is there going to be you know

01:38:33   like for the iPhone this year will America

01:38:37   have less units available for launch day

01:38:42   than they would have right we don't we

01:38:45   don't I'm not saying this will be the

01:38:47   case but there are knock-on effects they

01:38:49   also kind of wouldn't it were asked right

01:38:51   if they remember right they were asked

01:38:53   and didn't really say much about if

01:38:55   prices were going to change it's kind of

01:38:57   just like hey who knows man have to wait

01:38:59   and see like for customers no there's

01:39:01   nothing about it because I don't think

01:39:02   they know yet right like nobody knows

01:39:05   right it's like even I'm sure they've got

01:39:07   lots of contingency plans but you can't

01:39:09   say here are various contingency plans

01:39:11   you basically say we don't know we'll

01:39:12   see we're gonna like what Tim Cook said

01:39:14   which is like we're gonna keep doing our

01:39:17   thing and monitor everything closely but

01:39:19   that is not like that is and the analyst

01:39:21   did say like you have any color on like

01:39:24   the rest of the year and and they're like

01:39:26   we told you about the next three months

01:39:28   that's it that's all we're willing to do

01:39:30   and even there they're like by the way

01:39:32   this is an assumption that nothing

01:39:33   changes over the next the rest of the

01:39:35   next two months I guess left in this

01:39:37   quarter if something changes it'll be

01:39:39   different like the nine the 900 million

01:39:41   is only if things stay the way they

01:39:43   are today or last week and like when has

01:39:47   anything in the last five months stayed

01:39:49   the way it is today like it just doesn't

01:39:52   happen so we'll see yep yeah it was an

01:39:55   interesting it was interesting earnings

01:39:57   also on Apple intelligence Tim Cook said

01:39:59   we need more time to complete our work on

01:40:01   these features so they meet our high

01:40:03   quality bar we are making progress and

01:40:06   we look forward to getting these

01:40:07   features into customers hands not much of

01:40:09   a statement but no he did say they're

01:40:12   still working on those features yeah and

01:40:15   and again clearly it's like they weren't

01:40:17   good enough high quality meet our high

01:40:20   quality bar is a very weird like that's

01:40:22   you don't meet the bar you clear the bar I

01:40:24   don't raise the bar but you don't meet

01:40:25   the bar whatever but it's okay like also I

01:40:30   I wanted to shout out one of the analysts

01:40:34   on this call so there's a bunch of

01:40:36   analysts there they're like characters in

01:40:37   a weird sitcom that only airs every three

01:40:39   months one of them is a guy named Richard

01:40:42   Kramer at a REIT research and he had the

01:40:47   line of the whole thing which is when

01:40:49   they because they say okay we'll take our

01:40:51   next question please and then the operator

01:40:53   comes on to the next question is from

01:40:55   Richard Kramer from a REIT research and

01:40:57   then there's the like clicks and pops

01:40:59   and then and then you hear the voice of

01:41:00   somebody else on the call and they say

01:41:02   oh Tim Kevin thanks for taking my call

01:41:05   and he says I'm not gonna ask about

01:41:08   tariffs because literally every question

01:41:11   up to that point had been about tariffs

01:41:12   and Kramer's like I'm not gonna ask

01:41:14   about tariffs and you know what I feel

01:41:16   like in that moment the Apple people were

01:41:18   probably like oh thank God we don't want

01:41:19   to hear about tariffs anymore and then he

01:41:21   asked two questions his two questions

01:41:23   were so you failed to ship that Apple

01:41:26   intelligence feature set that you were

01:41:28   talking about what's up with that and they

01:41:31   said well it didn't meet the high quality

01:41:32   bar but we are making progress and we're

01:41:33   gonna get those into customers hands and

01:41:35   then his follow-up question was so all

01:41:38   these court rulings against you the one

01:41:40   yesterday the Google thing where you've

01:41:42   got all that money in search referrals

01:41:43   what's up with that and they're like uh

01:41:45   this thing and I just like I don't know

01:41:48   if he's gonna get invited back uh he I gave

01:41:52   him a gold star basically in my column I

01:41:54   actually got an email from Richard Kramer

01:41:56   who was like thanks

01:41:56   I've just googled Richard Kramer and then

01:42:01   because I just like I like you like what

01:42:04   are you all about you know I got I mean I

01:42:05   don't want to reveal too much but I will

01:42:07   say I got a LinkedIn message from

01:42:08   Richard Kramer which is the most analyst

01:42:11   thing possible but like at least he asked

01:42:14   these quite like imagine going through this

01:42:16   whole phone call without without giving it

01:42:18   away was which Richard Kramer happy to be

01:42:21   mentioned in the article yes oh yeah no he

01:42:23   was very appreciative of I love that oh my

01:42:25   god that's so funny but but like can you

01:42:29   imagine going through this whole thing

01:42:30   without anybody asking about them failing

01:42:32   with Apple intelligence stuff and being in

01:42:34   all this peril in courts like somebody needs

01:42:37   to ask that question so they did let Richard

01:42:40   Kramer ask those questions and they had

01:42:43   their little statements about it but I'm

01:42:45   glad somebody did because every I mean

01:42:47   tariffs is big and people need to ask

01:42:48   about tariffs but I just laughed out loud

01:42:50   when he said I'm not going to ask about

01:42:52   tariffs I'm like oh man here we go

01:42:53   something that is not another question

01:42:56   trying to get them to say anything

01:42:58   resembling anything about tariffs which you

01:43:01   know they don't want to do so thumbs up

01:43:04   to Richard Kramer good job and then the

01:43:07   only other detail which probably was known

01:43:09   but I they kept talking about oh you know

01:43:11   we love the US it's one of those right

01:43:13   like we love the US Tim Cook twice listed

01:43:15   listed off all of the states that are in

01:43:17   that February press release about their

01:43:19   US investment of five hundred billion

01:43:21   dollars they'd list all those states got

01:43:23   listed multiple times there's a list Tim

01:43:25   Cook's got it right in front of him taped

01:43:27   down that says Michigan Texas California

01:43:29   Arizona Nevada Iowa Oregon North Carolina

01:43:31   and Washington there it is sounds like

01:43:33   one of those songs that you learn in

01:43:35   school mm-hmm that's right and the part

01:43:39   that I thought was an interesting detail

01:43:41   probably already known but I thought it

01:43:42   was very specific which is the TSMC project

01:43:45   in Arizona he said we're going to get tens

01:43:48   of millions of advanced chips from that and

01:43:50   they are going to be systems on a chip

01:43:52   they're SOCs and he said we are the

01:43:54   largest and first company getting product

01:43:55   out of that now they're not cutting edge

01:43:57   their legacy notes but it is there's going

01:44:01   to be stuff in I don't know the next Apple

01:44:02   TV that little that home thing some other

01:44:05   low-end Apple products that are not using

01:44:07   the latest and greatest hottest TSMC

01:44:09   processes will be processed will be powered

01:44:13   by chips fabbed in Arizona by TSMC so you

01:44:19   know I don't know there was what a week

01:44:21   Mike and what a whiplash from the judges

01:44:23   report the day before to then that that I

01:44:26   was wondering if they were would say would

01:44:28   have like a comment on it and instead it

01:44:30   was sort of just this mild answer to a

01:44:32   Richard Kramer question at the end so yeah

01:44:34   yeah they were just hoping like oh no one's

01:44:36   gonna bring this up everyone's gonna be too

01:44:38   focused on tariffs but we can always rely on

01:44:41   Richard Kramer I assume those analysts

01:44:44   have their questions like vetted beforehand

01:44:47   by Apple and like but I don't know I don't

01:44:51   know I didn't ask Richard Kramer that but

01:44:53   I'm glad they invited him because somebody

01:44:55   had to ask those questions big episode I

01:44:59   think we'll we'll come back to ask upgrade

01:45:01   next week because we've we've run very long

01:45:03   give the lasers the week off that's fine yeah so

01:45:06   you can send us your questions by going to

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01:45:35   listening we'll be back next time until then

01:45:38   say goodbye Justin Snell goodbye Mike Hurley

01:45:41   you