¶ Greetings from Kalamazoo
So greetings from Kalamazoo, Michigan. You've moved. I've moved again. I actually don't. When I was moving to Baltimore, we talked about it quite a bit in the lead up. But I don't think I've mentioned it at all on the show just because it's happened pretty fast. But yes, we have moved from Baltimore to Kalamazoo, Michigan for Emily's work yet again. We're hoping that this is like the last move, the final spot, assuming she likes her job at Western Michigan.
The interesting thing that I keep getting asked by people, though, now that I'm talking about the move and people are curious, is whether we hated Baltimore. And that is absolutely not the case. I feel obliged to say that we... Loved Baltimore because Baltimore gets such a bad rep among a lot of people. Oh really? But we absolutely loved Baltimore and if the opportunity ever presents itself to where we could go back.
We would jump on that in a heartbeat. I would be in the car the same day to get back to Baltimore. But this is where we are. I mean, this is my uncultured UK brain, but... Kalamazoo sounds like a made-up place in like a TV show or something. You were not the first person to say that. I was talking to Federico Vatici and John Voorhees at WWDC because I know John lived in Chicago for a while, which is like...
two hours from here, two and a half hours from here. So yeah, we're moving to Kalamazoo next month. And Federico, the Italian that he is, was like, that's not a real place. There's no way that there's a place named Kalamazoo, Michigan. I was like, yeah, there is. John backed me up. So it is a real place, I promise. But one of the more interesting things about the move this week was I was on the road driving from Baltimore to here.
at like a rest stop thing in ohio charging the car and i was just sitting inside scrolling on tiktok or whatever like i do and somebody came up to me and he goes are you chance and i was like yes and he goes chance miller from nine to five mac I was like, yes. And he was like, oh, I listen to the shows each week and I love them. And it's so great to meet you in person. And that interaction, his name was Dustin, was so pleasant and so cool.
Just to like meet a listener in real life. It was just such a, it made my day. I told him it made my day. Not anything like app related, right? Just a complete random. Literally like an interstate rest stop somewhere. I couldn't even tell you what city we were in. Somewhere in Ohio. And have somebody walk up and say they listen to the shows. It was quite pleasant. Someone in Ohio came over and said oh hi.
Oh, hi. Yes. And now he's going to stop listening because of that joke. That is really cool. So thank you, Dustin, for saying hi. That was really fun. Because I've been recognized a few times at like Apple stores. And of course, when I go to Apple Park. But I think this was the first time like in the real world, just like doing normal mundane day-to-day things that somebody has came up. So yeah, very cool. And thank you, Dustin. Thank you for listening and thank you for saying hi.
¶ Cheaper MacBook with A18 Pro
Ming-Chi Kuo reports that Apple is planning to debut a new MacBook powered by the A18 Pro chip. So this would be the first time Apple has released a Mac not powered by an M series chip in the Apple Silicon era. And I think the thinking here, at least part of Quo's speculation, is that this would lead to a cheaper MacBook. So you have the MacBook Air with the M4 that starts at $999. And then somewhere below that, you would have...
the quote-unquote MacBook with an A18 Pro chip starting at $699? I don't know. We can split more prices. No, that's too cheap. That's too cheap, you think? Yeah. I think like $799, $899 probably is... where they would line with this because the right so an a18 pro chip right could power mac os without problem right it the single core performance is
you know 50 better than the m1 chip that obviously apple silicon started with back in 2020 a lot of people still use m1 chip machines and they feel pretty fluid and pretty responsive you just need ram and multi-core obviously doesn't hold up to modern m4 max but it's roughly equivalent to the m1 um and most things that you're doing for casual use on macbook air and lower laptops are very single core bound right multi-core tasks
aren't you know browsing the web they're not doing email and stuff like that like uh it just generally single core is going to be your primary performance metric and the performance of an 18 pro chip in a phone or is already pretty solid and you give it a bit more thermal headroom in a laptop and it can be you know on single core roughly in the same equivalent as an m4
MacBook Air because they all run the same cores right that's how it that's how it works these days the same core design of CPU is the same in Mac and iPhone and iPad it just depends how many of them there are and what
you know clock speeds that are allowed to run out because of the thermal headroom so on single performance it's basically equivalent to the modern max it's just on what we call where it'd be lacking but then you do have the other stuff that the 18 pro chip doesn't have that m chips do Namely, you know, all the I.O. stuff like Thunderbolt controllers and things. Which the A18 Pro has none of because the...
the highest end iPhones run on USB-C, right? And they do USB 3, but they're not Thunderbolt. So there's immediate questions about, like, display outputs and things like that, of that nature, because... it's not clear to me that you'd even be able to drive like a 4k display at 60 off an a18 pro chip that's in the phone um you can do 4k output from a phone right now but it'll do like you know it's meant for like movie output right you can't really do a 60 hertz
um full desktop however it might not be this this laptop for one thing might not be literally just an a18 pro chip slapped inside a laptop body right they could be adjustments and they could maybe extend the a18 pro chip it might be a variant of it so it's not quite as powerful as the m chips but maybe they could put in one display controller right so you could do one display out or something or even if it isn't is it really that big in a deal that like
Like the base level MacBook has these downsides and the downsides are then justified by the price difference, right? Compared to the 99 machine. I have to assume that Apple has seen the popularity of like the... the laptops that apple don't sell directly i.e like the m1 air that you know was what 650 at walmart and stuff like those kind of things seem to be relatively popular and people seem to
quite like them and they're not as cutting edge as the m4 line or the m3 line before but like the m1 is still a pretty capable laptop and people feel like it's pretty performant so why not sell something that's cheaper and you're already making a18 chips for the iphone um so you bring that down the line i do have a one like burgeoning question which is is it that much cheaper for apple to like use a18 pro versus just like the m3 or the m2
if you see what i mean like is there i don't that i'm not sure about like i'm not sure how much cheaper it is for apple to manufacture a18s versus just keeping the m2 production line going because they obviously got rid of the m2 air when they did the m4 right um
But if you wanted to have a price gap, then the only difference is going to be what processor it uses. I'm not really sure there's that much... Like, the build of materials between a... couple generation old m series chip and the current generation a series chip although i guess it would be last you know one year old by the time it actually came out it wouldn't be that it can't be that far apart so that's a curiosity to me maybe there's just
economies of scale when they're having to continue to make all the iPhone chips because they'll obviously still sell some variants of iPhone 16 next year. They're not going to replace them all when they do the iPhone 17. Could it be that using the A18 Pro instead of an M-series chip allows them to...
skimp on other components as well and that's what ultimately drives the cost down using the a18 pro chip maybe they can use lower power ram that they can't pair with the m4 chip or something like that or lower lower power storage or something like that to drive the overall cost down even if the difference between the a18 pro and the m4 m3 or m2 is not as drastic by itself yeah that's fair i mean the storage is like separate anyway so
They can just kind of attach. I'm pretty sure they can just attach different storage. It's not like the storage is on the same die. And the RAM is on the package, but it's also still kind of separated out. I mean, it is a bit different because on like the... The iPhone is directly on package, whereas on laptops they have like dedicated RAM chips, right? Like you can actually see them on the board. And so maybe by having the integrated RAM on the iPhone, that's also a bit...
worse than what the ram you get in laptops that's also a bit of a cost saving so maybe it does add up there but i don't think it's going to be miles apart than if they carried on doing an m2 um a couple year old m series chip and just have like the leftover stock but that's where it comes to the price gap right
And right now, Apple sells a pretty compelling, good value for money MacBook Air for $999, which is the M4. If the rest of the machine is spec for spec and it's only like the core chip plus the... you know, things that plug into the core chip. I can't see them getting much more of a price advantage out of that. It can't be $300 cheaper, right? Assuming they're going to use the same quality screens and stuff. It'll be like, maybe they can skip $100 out of it and it'll be like $100 cheaper.
I don't think it's going to be $400 cheaper or $300 cheaper. The best comparison you've got is the difference between the iPad Air and the base iPad, which is what, like $600 versus $350 kind of dealio. I don't think it's going to be that dramatic where it's like half the price. But you can skimp another 10%, 15% off and attract a base of customers that probably wouldn't even notice that the chip that it runs on is different. So I think it's a pretty compelling idea.
The other thing that contributes to the price, though, other than the specs, is the design. Remember there was that rumor from Digitimes that Apple was working on a plastic MacBook of some sort? I think that was last year. So if you put an A18 Pro chip... lower bill of materials that way, and then a cheaper design, then you can really start getting closer to that $700 price point, I think. Because Walmart still sells the M1 MacBook Air today for $649.
So there's space. There's clearly space somewhere in the lineup for something in that $700 to $850 price range, I think. And Apple should do whatever it takes to get down to that price point if they want to go all in on. at a lower price point than they do with the $1,000 MacBook Air. Yeah, and if they can get to $799, that's pretty compelling. That's a big deal from the higher-end model and would attract people that just...
They want a Mac, but they don't quite have the funds to get a $1,000 computer, but an $800 computer, which is then maybe discounted a bit more at third-party retailers, is then attractive. And it does sound like they're going pretty aggressive because Quo says Apple's targeting...
production targets of five to seven million in 2026 which would be a pretty big portion of the overall macbook sales um if that is if that is accurate so you have to imagine the price gap is going to be you know it's not going to be I don't think if you make one $100 cheaper, it gives you 7 million units. So it probably has to be more in the $200 price difference range. And with the people buying that machine at that point...
care or even realise that the IO is worse and the display outputs are worse. I'd love to know how many people buy MacBook Airs and never plug them into anything, you know? Yeah. I mean, Apple tried it before with the 12-inch MacBook, right? When it had one port and basically...
They kind of just want you to use that for power and nothing else. And that was a great computer. And I could easily see this machine have one port again if that was a way to make it... you know if that was the if that was the compromise to get the price down that you don't have enough io to do two ports at once i would totally see them do that the problem with the 12 inch is that it was also more expensive right so they were going for like a premium product and it had
poor performance so it was like the worst of all worlds right it was expensive it had to run on a really low power intel chip and it only had one port so for the price you could almost get like the competitive map of pros at that level and the You know, the appeal was the thinness and the lightness, but a lot of customers just don't care about that premium nature and therefore it was always a niche product.
If you just take a MacBook Air and you make it slightly worse, but it's $200 cheaper, I think that's way more compelling than whatever the 12-inch MacBook was for its entire lifespan. And they could call it MacBook Air E or something, or they could give it a different name.
I don't think that matters too much. I mean, Quo even suggests that they would do some pretty colours for it, like silver, pink and yellow. That's always Apple's play when they have a lower end machine. You know, they're like, let's make different colour options for it because it'll make it stand out more.
So that's kind of where I think they're going for it. He says it will go into production in late 25, early 26. So probably coming out like the springtime of next year. It's hard to, if they want to attract a lower end of the market.
This feels like a good way to do it, you know? It's a good example, too, of being able to play with form factors and specs more in the Apple Silicon era than you could in the Intel era. Because like you said, the 12-inch MacBook was hampered mainly... by its processor and mainly by having to use chips from intel and apple couldn't strike the balance of performance versus battery life versus form factor that they wanted to do but now that they control the whole widget
They have more room to play and they have more room to experiment. The other inside baseball thing I was thinking about when I saw this rumor, how do you think Kuo is differentiating? an A18 Pro chip in his supply chain reporting that he sees versus, like, how is he differentiating this A18 Pro chip reportedly destined for a MacBook compared to the millions of A18 Pro chips Apple makes for?
the iPhone. It's a good question, right? Yeah. I don't know how you draw that line. It either implies that there is some big enough difference between the versions of the chips that he's able to correlate one to the other. Or perhaps it's an example of Apple's planning to just use the A18 Pro and more iPhones next year, and he's just misinterpreting it. It's weird. I would imagine it's a hard thing to discern from a supply chain perspective, which is where he gets.
The vast majority of his information. You have to assume that he must have visibility into the actual production process of the MacBook to be able to make this claim. convincing and confident fashion right because if you just have the the numbers on the iphone 18 pro chips alone you can't work out that's going to a laptop and i don't
You know, Quo has not been as good as he historically has been if you go back 10 years, but he's still pretty good. And you don't feel like he kind of just makes things up on the fly. It must be based on something. And the idea that...
there's a MacBook running on a low-power iPhone processor is kind of a big reach to just come up with off the cuff. So I feel like he must have some information that correlates this. And I hope he's right. I think it would be a... good move by apple to hit those lower price points and i do hope i do hope that they do something fun or different with the design like they don't just take the m1 macbook air design put an a18 pro chip to slightly modernize it
And then just keep selling it forever. Because that M1 MacBook Air design, as good as it was at the time, it's showing its age now. With the bezels, with the wedge form factor. if they can put an a18 pro chip in something give it a fun design give it fun colors make it plastic for all i care just make it fun and different and put it at i really think they should try to hit 700 which is probably wishful thinking but yeah i think that's too far but
Somewhere in that range, I think this thing would sell 5 to 7 million units like Quo, says Apple's targeting. If you have Apple listed at $799, you can then get it on Amazon for $700, I think is kind of where they'll probably end up. And in terms of the industrial design... The current MacBook Air industrial design chassis screen, that started with the M2, right? Yes. So 2022, is that?
Yes. Into MacBook Air release date. I think, yeah, July 2022. So we're coming up on three years. Three years old. Yeah. So I reckon they could probably put the M2 industrial design in it.
I don't think they have to go back. Because I would agree, if you do the M1 design, it stands out a lot more. It looks old. And people don't buy things that look old. The bezels look old. It just looks not super modern. And then you can kind of feel... the price compromise you know if whereas if you just had the if you had a MacBook Air that looked identical to the one you can buy right now but the chip was slower you'd I think you could easily find
millions of people in the world that wouldn't even be able to tell the difference you know um so i think it's pretty i think it would be popular if they can do a design that looks like the current design even if it has less ports maybe the battery life isn't as good maybe the screen's slightly lower quality but it's still like the same kind of look to it you know with the bezels and the notch cut out whatever and it runs an a18 pro chip
I hope they could do one display out at 4K60, you know? I can't imagine where they would. Not sure they could completely get away with having no display output, but I don't feel like the...
I don't feel like it's such a fundamental part of the architecture where the display controllers define the generation. So if they wanted to, they could probably do like a... except a display controller on the board of the laptop right it doesn't have to be dead center on the middle of the chip they just have the yeah they can sit they can it wouldn't be identical to the a18 pro that's in the phone they would like modify it um and you can get one display controller to have proper output then
That will suffice. You don't need any of the rest of the Thunderbolt stuff. It will do USB-C at 10 gig. I don't think you have to worry about doing the 40 gig Thunderbolt speeds. But just make sure it can do one proper display out. And then you'd basically be where you were with the MacBook Air until, what, last year? Because it could only do one display out until very recently. So I think this is interesting.
And we did see, I remember they put the M3 Ultra in the Mac Studio, but they also like slightly revised the chip to add Thunderbolt 5 connectivity. So there is a precedent for them using an older chip design. And there was that one... thing with the iPad where it had the, it was the A16 iPad mini, but it had like double the bandwidth for USB-C port versus what the phone had. So there's clearly flexibility when it comes to the IO.
And maybe that's how Quo is realizing that it's for a Mac and not an iPhone, like we said earlier. Maybe there is a display controller change or something in the chip that he's seeing. Yeah, I don't think it will be the A18 Pro with modifications. It's going to be identical.
I still don't fully know why you would do that versus using just like the M2 line of chips. I don't... I guess you'd have to look at Apple's... profit and loss sheet for their fabrications and see like what the costs are but i know the m the m chips are a lot more expensive than the a series chips but
I think that price differential has to fall away over a couple of years worth. And like the M2 would be three years old by the time this came out and the A2 would be one year old. So like even if the chip was like half the price when it's brand new, give it a few years of depreciation and it feels like it'd be along the same kind of lines. But maybe there's economies of scale that we don't really get visibility into. Happy Hour This Week is sponsored by Square.
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¶ Navigating EU App Store Changes
I don't even know how to describe it. Incomprehensible. Incomprehensible, confusing, a complete and utter mess, but we are going to try. So last Thursday, Apple announced several major changes to the App Store guidelines in the European Union as part of its ongoing efforts to comply with the Digital Markets Act. So what's easy to understand about these changes is the policy changes.
Previously, Apple allowed developers under the EU terms to add a single static URL in their apps with restrictions on things like tracking parameters, redirects, and intermediate links. So this was a way, theoretically, to let developers link out to alternative payment methods, but with all those restrictions in place.
With these changes, Apple is loosening that grip so developers can promote offers across all channels and external websites and other apps and alternative app marketplaces. They can include any link that they want. They can include parameters, redirects. And they can freely design their own custom interfaces. They don't have to use Apple's proposed design standards for that. And the so-called scare sheet that users see when they tap on external links.
They're still there, but there's a new option to opt out of seeing that disclosure sheet for future interactions in the same app, so not as aggressive as it was before where you saw it every single time. All of those changes, I think, make sense. Right, Mayo? yeah and they kind of that's kind of what they're forced to do in the US at the moment because the epic lawsuit right like yep
You have free access and you can do as many links you want with whatever format. You can't do in-app purchase inside the app. You have to go to a website. But I think in the US, there's no intermediary scare sheet, right? Because the judge... didn't allow that but it's interesting in the EU Apple is still being able to retain that part of it but
It was always the case that they were always like... The fact that you could do one static link without parameters was always stupid because it meant if you were logged into your account inside the application, the static URL wouldn't be able to pass along logging credentials. So it was just...
oppressive and for no reason is is like well obviously the reason was to make it as hard and annoying as possible so that people it was to disintensivize people doing it right and obviously these regulations are trying to find the middle ground where apple doesn't get everything it wants here One difference between the U.S. and the EU, I think, is that in the U.S. under the current guidelines, those links can't open in an in-app web view. You get kicked out to Safari.
But in the EU, they can open in the in-app web view. Okay. Small difference there. But you get the sketch eight. Yes. Now, the business terms. And this is where things get messy and confusing with a whole lot of different numbers.
So do you want to remind what it was before? Can you remember what it was before? It was 27%. It was 27% flat across the board for... any sort of payments outside of apple's system right so that was yeah including if you installed the app and didn't buy anything by clicking on a link in the app but then you bought something on the app developer's website a week later
Apple wanted a 27% cut of that because they said that you were basically being onboarded. You were doing customer acquisition through them even though you hadn't actually clicked on a link or done anything to actively buy something. Well, this time there's I guess something targeting directly that situation for the initial acquisition fee.
So this is 2% on the sale of digital goods and services made by new users, and it applies for the first six months after a user first downloads the app from the App Store. That 2% fee is waived for developers in Apple's small business program.
And it's waived for any existing users that a developer previously acquired. So that makes sense. That's pretty straightforward, I think. And again, it's targeted directly at the situation that you just mentioned. But it's only based on stuff actively done through the app, right?
So the whole thing where Apple can audit you for operations of your whole business doesn't exist anymore, which seems pretty sensible. Then there's the store services fee. So Apple is splitting the store services fee into two tiers. Tier 1 is a 5% fee, and developers who opt into Tier 1 only get access to a limited set of what Apple calls mandatory App Store services. That's things like app distribution and delivery, the trust and safety features, and app management via App Store Connect.
But tier one doesn't include things like automatic app updates and automatic downloads across devices. So the app distribution includes installing but not updating. Not updating, yeah. Then it doesn't include app store promotions, search suggestions.
or even rating and reviews on product listings, and your app won't get included in any sort of personalized recommendations for users, and you don't get access to any sort of developer marketing tools. So basically just 5% to... be able to exist in the app store and everything else is up to you or even if you're on a third-party app marketplace right yes because of course
Things that are distributed through third-party marketplaces are still hosted in some way by Apple, right? They have to do the approval, they have to do the neuralisation. So Apple set it up so that they are involved. A third-party marketplace or web distribution still involves Apple infrastructure. So the tier one 5% fee is requirement. You can't avoid it. Then tier two is 13% or reduced to 10% for small business program members and for.
10-year subscription, so after the first year of a subscription. And that gets you all of the services provided by the App Store today. So all of the things that you expect being a developer in the App Store or on Apple's platforms. Most significantly. automatic updates i would say like ratings and reviews you know people care but who really like it's spotify
I was just thinking of Spotify in this case because they're by far the biggest proponent of the opposition. They don't care if they've got App Store reviews or not. They're the brand, right? They just need a way to get their app when you go to Spotify.com and pay Apple as little as possible. That's what they're doing. trying for and so they don't need you know app store reviews or marketing or personalized recommendation inclusion or any of that stuff but
App updates are kind of essential. I don't think you could really meaningfully have customer acquisition on an ongoing basis where your app doesn't automatically update and you'd have to like... tell them to go to the app store every single time to update the app like that is the one feature that separates tier one and tier two that kind of makes tier two a requirement i would say so then we get to what apple is calling
The Core Technology Commission. So that name sounds familiar. It's because we also have the Core Technology Fee, which is the 50 euro cents per install for each first annual install after 1 million. The new Core Technology Commission applies to developers on Apple's standard business terms in the European Union, and instead of the per-install fee...
They'll pay a 5% commission on sales made through in-app promotion of alternative payments. So you add them up. So you do 13 plus 5 gets you 18. And then you do plus 2 for the first six months as well. So 20%.
cross the board, give or take 5% if you're in the small business program, right? Yeah, and the 2% goes away after six months. Yes. So I would say if you want to do a rough summary, You've gone from 27%, which also included stuff bought outside the app, not even linked through the app, right, to 18%.
Or 20% if you want to include the 2% fee. But it doesn't include stuff that you just happen to find through the Spotify website after you've installed the Spotify application. So do you think these terms are more compelling than the initial attempt at... complying with the dma i'd say so i think we're on the right track i mean the number's lower right like the number is lower that is true and and you don't have to pay like the core technology fee was you know
Your app could make no money, but you still pay 50 cents, right? Right, yeah. Now you don't pay unless you're making the money as well because it's all commission-based. And Apple said that in 2026, they're going to move all apps in the EU to a new model.
that will be based around including the Core Technology Commission on everything. The details of that haven't been disclosed in full. But basically the Core Technology fee is being phased out. So nobody will be paying that next year. They're all going to move to this 5% base commission plus whatever else.
so yeah it is more generous because the number's lower right it's gone from 27 to 18 in the best you know in the average case for the big companies and you can link however you want and you don't
You don't have to include purchases of other digital goods that aren't directly linked to an action from starting inside your own application. However, it's still 18%, right? Right. Does it make any of the big companies... satisfied well of course not like they're like great we've gone down nine percent right now we've got to go for the next 18 so i don't know when this ends like some interpretations of the dma
suggest that Apple needs to offer all of this for free of charge, right? And there should be a way for you to install an app from the web without having to pay the gatekeeper or anything. And until there's like a firm legal conclusion on the wording... You know epic Spotify and everything else you can think of they're just gonna keep fighting it
And Apple's appealing this, right? Oh, yeah, of course. Yeah. So they don't want to be delivering you 18. They want to be making you pay 30% like what they do, you know, in other parts of the world. So...
Does this really change anything in the long calculus? I don't think so. It's just like another intermediary measure that is more favorable to... developers because i guess the eu forced them to do it by a certain deadline although we're gonna get fined some more money so apple's not saying yeah this is our new plan or our new business structure for everybody they're just like this is what we kind of had to agree to
make the eu not finest for the next little while but the appeal is going on and i don't think anyone in their right mind would say that the other companies aren't going to appeal it the other direction because they want even more better deal so does it really change anything in the long term
No, because the original terms were outrageous. They were going to get appealed and here they are. And they were going to carry on getting appealed and appealed and appealed forever. These terms are slightly less outrageous, but it doesn't, they're still going to get appealed on. Like what you need is you need like a government.
the controlling government to be like, Apple is allowed to charge X percent for its services in providing apps on the platform. And until we get a definitive number on what percentage is allowable, all the big companies are just going to say, well...
We don't want to pay 18%. We want to pay zero. They're just going to carry on fighting in the exact same manner. I don't see this announcement. Nowhere does the EU say, this is what Apple is allowed to pay. This is fair and reasonable. It doesn't say that anywhere. The EU could come back in August and be like...
18% is too much. You can only charge 2%. Like there's no finality to any of this. So yeah, the new intermediary terms that Apple's obviously announced avoid the short-term fines, but I don't think anywhere it's clear that it actually...
puts a line under the sand and says this is it nowhere does it say that and you said that the eu could come back next month or whatever and say no you can only charge two percent but part of the problem with this whole dma process in addition to apple's attempts to be obstinate in every possible turn, every possible corner, is that the E won't come back and say, no, you can only charge 2%. They'll come back and say, nope, we don't like that. Yes. Try again. Then Apple says, okay, how about...
13%. How about 12%? This is not going to end. That's what I mean. You need the government agency to be like, gatekeepers can charge this amount of money for services. Yep. Full stop. And there's two different... sides to this. There's the side of what makes Spotify and Epic happy and what actually complies with the DMA. And I don't think those are the same thing. Sure. Spotify and Epic want to pay 0%. I don't think the EU has straight come out and said...
Or even suggested or hinted that Apple can't charge anything like we had in the United States with the Epic Games case. They haven't said... that for sure in either direction do you know what i mean like if you read the word the dma is so vague it literally says in many places you have to offer free of charge access to these platforms so
The purest definition of free of charge is 0% commission, right? But you can't get the head of the EU enforcement agency to be like, this is what it means. They're just kind of... always hedge their bets and just hope that at some point the businesses will come to some sort of arrangement but there is no end to this until the number is zero
What stops Spotify from fighting and talking to the EU and saying this doesn't agree with the DMA and we'll go back to the drawing board? Nothing. And so that's what's happening. And for that entire duration, you also have Apple appealing saying...
We should be allowed to do this, this X, Y, and Z, and it stops competition, it hurts security, and everyone's profiting of us for free. I don't see these rules as... making any progress towards the underlying problem of what do we actually allow to charge compared to the last set of rules they're both just things that they've kind of thrown out there it's like well i guess this is what's happening at the moment but i don't see this as a as a full stopping point
Any more than the previous set of rules were. And I've been looking around and trying to follow developer reactions to this news because I think... At least me, I'm not a developer, so it's hard for me to gauge what exactly this means for different developers' business and different size developer businesses. And Steve Charlton-Smith on Mastodon, I'll just quote what he said.
He said, will Apple's new EU fee structure pass this time? It all boils down to can an app try to compete with an Apple app offering the same level of pricing that Apple has? And the answer is still no. Apple still maintains the unfair advantage in both discoverability and in pricing, so by definition their proposal does not satisfy the DMA. It might reduce their rate from 30% to 12% if you eschew App Store discoverability.
but that's still 12% more than any Apple app has to pay or needs to charge. Steve Charlton-Smith clearly thinks that until Apple and Spotify pay the same terms or pay the same commission, that doesn't qualify the DMA. So he means zero. Zero, right. And I don't think that that's fair. But at the same time, I think you can look at the retirement of the core technology fee in favor of the core technology commission as a good thing.
And that, to me, stands out as the biggest change Apple has announced and the biggest thing that I do think has the ability to pass muster with the European Commission. These terms are certainly better than the previous terms. I don't think anyone would disagree with that. But whether they're the fair and reasonable equilibrium, no one can tell you. Right? Apple will say...
No, the fair equilibrium was back at 30%. Spotover say the fair equilibrium's at 0%. Some other companies are going to say zero because if you're negotiating, why would you say any number higher than zero? And the EU just kind of sits in the middle going, well...
the DMA says this and the DMA says that and this doesn't seem very fair so I guess we'll go back and have backroom discussions again with everybody and come back in another six months with new rules like it's just a kind of joke at the moment of no one I don't think anybody believes that this
The rules as written here will be the same in two years' time. They're going to have to change from one direction or the other. Either Apple will win its appeal and the numbers will go back up again, or the EU will come back and say, we've listened to Spotify, Match, all these other companies, and they don't think it...
complies with the DMA because it's not free and equal access to the platform. So you ought to go lower. It's like a game higher or lower that just seems to be going in one direction until we get to zero. So I don't know what the stopping force is there. And I think that's part of Apple's appeal, right? It's like Apple says... What is there here that allows us to charge any amount of money that isn't zero? Yeah. It's just kind of up in the air. And it's also confusing. I mean, I don't...
I don't necessarily know if Apple is making this confusing by design, but it's really starting to seem like they are. They're trying to make it so confusing that people can't parse what the guidelines mean, what terms you should opt into, what... strategy, what approach you should take to distributing your apps in the European Union. These terms are more confusing than what we had before, even though...
based on everybody's interpretation, and we could all be interpreting it wrong, honestly, but based on everybody's current interpretation of the rules, yes, they're better, but they're still so confusing. It's not in Apple's interest to make interest to make finalized streamline rules when they're trying to negotiate for as high a percentage possible the dma the eu won't tell them one way or the other what they're allowed to charge so they just keep finding ways that
I guess, have different compliances with different interpretations of the words that are in the DMA, right? And they're like, well, it's free and open access because you can use an app for free as long as you don't charge anything for it. But if you charge anything for it, you can do commissioning. It's all just legal meandering.
And at some point, someone's got to like actually say for sure, definitively, this is what you're allowed to do and what you're not allowed to do. Because otherwise you just end up with different versions of this that go on and on and on forever. There's no end point at the moment. This doesn't...
this doesn't get you any closer to a resolution. It doesn't make anybody happy. So, you know, Apple's not happy with it. Spotify's not happy with it. And when I say Spotify, I mean Spotify and all the other companies of that scale, right? Yeah. You know. No one's happy with it, really. So this isn't a final end point. This is just another little stepping stone in the long legal nonsense. And I say legal nonsense because the EU won't...
Write down what you're allowed to do and what you're not allowed to do. So both companies, both sides of the fence, just move as little as possible in either direction each time we come round to the table. And where does it end? I have no idea. There's no obvious end point because no one will definitively say what they're allowed to do and what they're not allowed to do. And say what you will about the Epic Games case in the United States and Apple is...
Not a fan of the ruling that came out of that in the latest injunction, but Judge Yovan Gonzalez Rogers clearly laid out what she thinks that Apple needs to do to comply with her order. There is no room for interpretation or no room for... confusion in what she said apple had to do yeah there's no loopholes other than you're allowed to appeal it to a higher court and then we might come back in a while but in the meantime it's you can it's open season you know
And the other final thing I'll say on this is that Apple is fighting the DMA in the European Union, but it knows that what it's doing in the European Union is being closely watched by regulators in other countries who are trying to and planning to, in some cases, already.
taking similar action against the App Store. So they're watching how Apple complies. And Apple knows that if they give up too much in the European Union, regulators in another country are going to say, OK, you did that in the European Union. We checked your numbers and you're not out of business yet. So why can't you just do the same thing here? Apple's playing the game in the EU, but it's also being watched by the rest of the world. And that's a key reason for some of Apple's behavior.
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¶ Apple Music Celebrates 10 Years
Apple Music is celebrating a birthday, 10 years of Apple Music, which is wild, crazy to think about. And it was 10 years ago since, who was it, Drake took the stage with Eddie Q to announce Apple Music. Drake's had an interesting 10 years since then as well. But Apple is celebrating the 10th anniversary of Apple Music with a new Apple Music Replay all-time playlist. So this is in addition to your normal.
yearly replay playlist. It shows your most streamed songs in the entire time you've been using Apple Music. So if you're like me and you've been using it since day one, your most streamed songs in the past 10 years, which is pretty cool to have in. one central location. And then there's a handful of other things Apple's doing. They're opening a new office in Los Angeles, a 15,000 square foot hub.
with things like an advanced radio studio with immersive spatial audio playback, sound stages, dedicated spatial audio mixing rooms, social media labs, isolation booths, and... All kinds of different stuff that you'd expect from an Apple-designed music hub for Los Angeles. Oh, and they have a replay, but for the entire of the service, right? Oh, yes.
They've got like the top 500 songs of the streamed of the last decade, essentially. And they're doing like 100 songs a day. So you can subscribe to a place to see the most popular songs of all time, essentially on the service. And I think it's just a good time to... Take a step back and see where Apple Music is today compared to where it launches. I think right now, Apple Music is pulling ahead of the competition at a pretty brisk rate.
I mean, you look at the experience that Apple Music offers in terms of things like app design, the new auto mix feature in iOS 26, the playlist curation, the year round availability of Apple Music Replay. Apple Music Replay is now native as well. Yes. I think the gap between Spotify and Apple Music right now is bigger than it's ever been. And it's bigger in Apple's favor, which you couldn't necessarily say was the case five years ago, maybe.
They've really done a good job of investing in Apple Music and pulling ahead. You mean in terms of experience, right? Because obviously in terms of scale, they're the second player. Yes, in terms of experience for users. Yeah. The one thing Spotify still probably does better is like the social features, right? And some of the discovery stuff. But I think you can see that Apple Music has come on leaps and bounds. And it has real inertia.
which you couldn't say for all of Apple's services, right? But ever since Oliver Schuster took over in around 2018, and I feel like one of the first things he did is he upgraded all the playlist artwork to have that distinct, like he commissioned all the artwork to be made for all the, you know, the playlists that they run. And he just made the...
service feel a lot more vibrant and alive and ever since then they've just been on absolute roll they have feature after feature multiple times a year something new all the time whether it's just you know new radio stations they had those new like
you know mood mix things they rolled out last year they have different kind of made for you playlists and like you know you go back a few years you didn't have the heavy rotation mix you didn't have the get out mix or the chill mix like they just keep pushing and pushing and pushing
I think the app design is great. It looks really nice on iOS 26 as well. They have pioneered the Lyric stuff. Spotify users are still waiting for some ability to even listen to like... higher resolution music if you want to whether that's the spatial stuff or the loss of stuff you know lossless is a bit of a yeah like it's a some people care about it but it really doesn't make a difference in practice but
on a spec sheet i think it looks quite interesting that like here you can get apple music and for free you can get losses tier streaming On the Spotify side of the camp, they're still waiting for it, despite being promised it for years and years and years. And when it eventually comes out, it seems like it's going to be an additional add-on purchase, right? So that's annoyed people, I know. And there's definitely people that have switched over.
just because they want the highest quality music possible, even if it doesn't make an actual difference when you listen to it. But even the bass... music quality of apple music i think is slightly higher resolution slightly less compressed than what spotify streams at so people appreciate that the spatial audio stuff does make a difference especially if you're using airpods to listen to because it's well optimized for that and guess what
AirPods are very popular. So, you know, there's plenty of users out there who were on Spotify, they play the music, then they did like a trial of music and their same song sounded a bit better. And they're like, wow, maybe I should switch just for that alone.
I think the best commendation about that is that everything that isn't the music listening experience has got a lot better on Apple Music so that it doesn't feel like you have to stay for that reason anymore. Do you know what I mean? So like...
just by having a better music listening experience, all of the social, playlist, discovery stuff has got, I don't know if it's necessarily as good, but it's got close enough that I feel like people can kind of turn a blind eye to any of the smaller differences now and just switch over. And I think it's...
coming along pretty well i don't know if it's translating into massive user growth it's who knows right no one of these you know spotify announced how many subscribers they've got and it keeps going up and up and up apple hasn't disclosed subscriber numbers for music for five years and They don't disclose numbers for any of their services anymore. But in terms of the actual app and the day-to-day experience of using it, I think they're doing really, really well.
And I think there's a marked difference between the first five years of Apple Music and the second five years of Apple Music. And the second five years of Apple Music, Schuster was leading the thing. And I feel like him and his team underneath him have really pushed it into a very positive direction.
One of the things that I think is a reason Apple Music has pulled ahead is Apple Music focuses on music. We've seen Spotify's focus kind of drift in recent years to where they're focusing on podcasts. They're focusing on audiobooks. And that's fine to a degree. I get the value of getting a certain number of free audiobook hours or quote-unquote free included in your Spotify subscription. You don't get that with Apple Music. But at the same time...
I fall into this crowd, and I think a lot of other people do, where I open Apple Music and I know that all I'm going to see is my music. I'm going to see my music. I'm going to see editorial playlists. I'm going to see interviews about music. It's all music. Music is in the DNA of the Apple Music app, whereas Spotify, it's more of a hodgepodge mixed experience. Podcasts, audiobooks, music, and I think people appreciate the central focus of Apple Music. Yeah, and to be fair to Spotify...
Apple does do all those disciplines. They just do them in different applications, right? So they have the podcast app. They have the books app, which the books app is... one of those example services that is very abandoned and left behind, right? And doesn't feel like it's got any inertia at all. And I wish they would put audiobook hours into Apple One, for instance, you know? Because I think the free audiobook hours is a big draw. And it's like, if you're on Spotify right now...
Why would you switch waves? You can also listen to a book of free a month, you know, a free book a month kind of dealio. So that is something where I do feel like Apple is kind of slacking. But I do prefer one app, complete focus on music, than another app, complete focus on podcasts. Some other users out there might like it all in one thing. And I'm pretty sure the adoption rate and usage stats on podcasts in Spotify is pretty high. So it's not like everyone's revolted. But...
I do like the individual apps because it just feels like a bit more tailored experience where instead of giving like a drunk jaw of everything kind of shoved in the same place. I completely understand why Spotify has to, you know, grow its own business and they make more money the more...
of if their users listen to podcasts or other music because they don't have to pay the licensing fees for the podcasts they listen to so I completely get why they've done it and I'm sure it's helping their bottom line and helping all their metrics in the right way too but For me, I like that Apple Music is just music and I use podcast for just podcasts. Then finally this week, some Apple intelligence updates, courtesy of Mark Gurman at Bloomberg.
¶ Siri Might Use Third-Party AI
So the headlining big story here is that Apple is in talks with Anthropic and OpenAI to power a revamped version of Siri, a move that would potentially sideline Apple's own in-house AI models. in favor of those third-party options. Gurman says that Apple's investigation into third-party models is at an early stage and the company hasn't made a final decision on using them, but according to the report, the...
Apple is basically asking, right now the focus seems to be on Anthropic, but asking Anthropic to train customized versions of their large language models that could run on Apple's private cloud compute infrastructure. This would be a... big shift in Apple strategy, but I think it aligns perfectly with something we heard when the Apple intelligence leadership kind of shifted to Mike Rockwell and Craig Federighi, which was, we don't have to do everything in-house, we can lean on our partners.
While continuing to work on our own in-house stuff, but lean on our partners to give customers the best experience possible. Or to give customers any experience possible. Yeah. Honestly, that is the number one driver here. I think they've delayed the Siri stuff once. They want to do a competitive, not just the features that they delayed and publicly announced, but they want to become like...
relevant in the sense that they want to offer the same kind of voice mode stuff that ChatGPT and Amazon Alexa Plus do now. And they want to deliver that to customers as fast as they can while still upkeeping their privacy requirements and stuff and integrating with all their...
you know device experiences but i think right now they see a much faster path to market using third-party models that are already trained rather than having to like bring their own up to speed and i think this is perfectly compatible with You know, you can keep working on your own models. You might have employee retention issues because obviously then...
If you're using other models in the meantime, the people might be less motivated to also work on your own models that aren't currently being used in customer-facing experiences. But that's kind of a separate problem. The consumer problem is right now, Siri is lackluster compared to... the voice mode competition, you know, seen through the ChatGPT app, which is really impressive. And if it had device access, it could do even more, right? Meanwhile, Apple is...
Got their own models that can't quite get up to speed even before this latest debacle. They weren't even focusing on world knowledge at all, right? I think one of the most powerful things about the voice mode stuff at ChatGPT is you can ask it really specific questions about your exact problem, and then you can also feed in world knowledge about...
you know, asking anything in the world and it can actually give you an answer. And what do you see in Siri today? They do exactly the same thing, right? Like, they have the Apple model, but they pass you off to ChatGPT. Is it really that much more of a leap to just run the whole thing on a...
third-party train model? Like, is it that much of a difference in... It's even a better user experience because you wouldn't have to do the handoff thing. Like, the model would be running Apple servers so you wouldn't need the... please can we send this request to chat GPT, yes or no? You wouldn't need that, right? It would all be run in Apple servers. Does the end user care or does it affect their experience at all, negatively or positively, that the model is coming...
from a third party and it hasn't been trained from inside the walls of Cupertino? No. So for the short-term problem of we need to make Serie A more competitive...
And LLMs seem to be the way to do that, but our LLM delivering capability isn't quite up to speed yet. Use a third party, get a good deal on the numbers and ship it. I don't think it matters whether it's anthropic or... open ai like any model would be good enough to deliver you a much better siri experience tomorrow if they can run it on their own servers even better and we've talked before about
The countless example of just how Siri and Apple can't even handle when to do that transition from its Siri experience to handing it off to ChatGPT. You say, close my garage door, and Siri will come back and say, Do you mind if I pass this off to ChatGPT? It's like, that's very clearly a HomeKit command, but yet Apple can't parse whether it should do it or pass it off to ChatGPT.
I almost think you need the opposite where like they send the command off to the remote model first and if it could be handed on device, they send it back. You know what I mean? Like in terms of the reasoning of how that works. Because right now it does just seem not good enough for whatever reason. And you don't...
get rid of all problems by partnering with a third party because you're still going to need some coordination of like, well, this can be handled solely on device. So how do we work that out? But it's probably an easier challenge for your in-house team to work, to make that better. And then...
defer to a third party for all the world knowledge and everything else versus trying to do all of it yourself from the ground up when you're clearly still in catch-up mode. Do I think long-term this is a good strategy? No. I think... AI models and AI in general is a core function of future hardware and software. And you can't rely on third parties forever.
But for a short-term fix, it's a good short-term fix. The longer-term issue is a problem and hopefully they're investing more in that and getting good people up and making it work and having a future roadmap there. But for the short-term, it doesn't matter. Right now, what you deliver in terms of the iPhone and the iPad and all your devices, if you have third-party models, you don't need to come from in-house to have a better experience. The third-party models more than suffice.
in the in the five to ten year future maybe there's new form factors new experiences that you really really need to have your own models that you can tune directly to your own liking to really take advantage of it because what you're worried about is They're like, for instance, the collaboration between Johnny Ive and OpenAI.
they're going to train their own models in-house using all of their capabilities and maybe they can come out with some accessory that can do things that your phone cannot do at all because it only has access to third-party models right and if you could build it in-house you could make it a lot a lot better and native and integrated and continuous
That's all future stuff. Near term, I don't see anything in terms of the Siri capabilities of the stuff you want Siri to do. That can all be achieved by doing a partnership. So why not just do a partnership? The financial terms, though, here are going to be fascinating to watch play out, because if you remember right now, for the basic chat GPT integration we have today, there's no money changing hands between...
Apple and OpenAI. Apple's not paying OpenAI. OpenAI is not paying Apple. Apple says you're getting the exposure for the ChatGPT brand. But that agreement, that... It's not going to hold up when you're asking Anthropic or OpenAI to train custom models and let Apple run them directly on their servers. And the Bloomberg report even says that Apple and Anthropic have disagreed over their preliminary financial terms.
where Anthropic is seeking a multi-billion dollar annual fee that increases sharply each year. Maybe OpenAI would be more amenable to a less lucrative financial deal. OpenAI is... burning money at just about as fast a pace as any company in history has ever burned money, and they aren't worried about that right now. But I have a hard time believing that Apple is going to be willing to...
pony up billions and billions of dollars on an annual basis to do this. Combined with the fact that I don't think, I think deep down while Craig Federighi says, yeah, we'll work with other companies to improve the AI experience on our platforms.
they're doing it begrudgingly still right they don't want to do it i don't think it's sustainable long term it's like if you if you believe ai is going to be useful for a long while and so far all the indicators for me point to yes you know if you're making your own cpus with apple silicon that doesn't really jive with but we're also dependent on a third party all the time and you know we have these cool ideas but we can't make them happen because the third party
isn't doing them or the third party wants to charge us exorbitant amount of money that we can't afford to pay for it like that would be a huge risk right if you if you partner up with open ai which they already have done in a big way but if you even commit even more and then open ai comes out comes out with a competitive
phone for instance and then they charge you 10 billion dollars a year instead of 1 billion dollars a year to use their services like they've got you by the ankles right like that's a huge strategic issue despite all the other stuff about actually making features that are unique to your own devices and not just like lowest common denominator stuff. But you've probably got leeway in five, ten years before that's really a problem. The short-term problem is...
People are using Samsung phones that basically white label Google's Gemini AI for all their AI services. And then they pick up the iPhone in the shop and they're like, why can't I do this on that? And no one cares that... galaxy ai isn't really made by samsung right right now the lowest common denominator features it doesn't matter where they come from you just need to offer them
It would be funny to see Apple in a position where they're on the other side of some sort of anti-competitive issue, like the shoes on the other foot, where they're relying on a company for their platforms that's also simultaneously competing with them. similar to what so many other companies experience today. That would be a funny version of Apple to watch. And if that happens, it means Apple's less relevant. Yeah. So that's why they don't want to let it happen. Yep.
But I think short term, it's a matter of practicality. Can we make our own models good enough, quick enough? Unclear. I mean, the German article doesn't say that they're definitely going to use a third party. They're just kind of exploring options, right? And I guess if it's really multi-billion dollar a year cost, then the options will no longer be explored. But...
If they can find a decent financial arrangement, they should do this as quickly as possible because it would let them ship everything they promised for spring 2026 and more, right? That's the thing. The features that were delayed from last year's WWC in terms of Siri...
are interesting and cool but there's also a lot of other stuff you want Siri to be able to do that isn't involved in those three features like if you only ship those three features next spring I think most average customers will still use like
the chat gpt voice mode because it's just more capable and can answer more types of questions and knows what you're on about right and you can just see how if you could plug that into the iphone you could like it would never misunderstand you when you wanted to make a home kit request
Right? Whereas right now it misunderstands you quite often if you don't say the exact right words in the exact right order. So this is clearly something they have to fix. The personal context stuff is almost just like a... flowery bonus on top of it the core of siri is not as good as what you can get through apps that you download from the app store and siri is like a system feature that needs to be pretty good it even takes up a button on the phone right like
You know, it's a core feature of the phone with a button that's dedicated to it. And it's essential on the Vision Pro, you know, voice interaction. It's essential on the Apple Watch. It's essential on AirPods. Every product they go into these days, voice input and voice, you know, a voice assistant is so critical. And right now their own system is not in a good enough place to be able to deliver the features they need.
So you have to, I think if you can't fix it yourself, a partnership is entirely practical. And I think Rockwell and Federici have come in. They've got rid of the stigma of, you know, not invented here syndrome. And they've been like, look. We need to deliver this stuff on a timely manner. What is our options? Keep working on our models. We really need our models for the long term, right? That's our future. But for the short-term present...
Image playgrounds kind of sucks. Okay, let's add chat GPT styles. You know, like it's just that, but for Siri. Or Swift Assist. We never shipped that, but let's ship it with OpenAI models and the ability for developers to plug in other models from any company. We've already seen the start of Apple being more willing to integrate competitor products. I mean, Siri right now palms it off the ChatGPT in quite many cases, right? Like...
But it just doesn't feel great because you have these kind of two silos of how the system works and doesn't really talk over the wall to each other. So you need one unified system. And right now it seems like the best way to get a unified system is to power it by someone else's model.
¶ Considering a Perplexity Acquisition
Then there's also the possibility of an acquisition to address some of these problems. And Mark also reported a couple weeks ago at this point that Apple is in early talks with perplexity about a potential acquisition. Perplexity is an interesting company because they largely just fork other open source models. They don't develop and train their own models. So to me, an acquisition of Perplexity is more about a product rather than any sort of actual...
industry-leading AI technology. I don't think it's going to get you the talent you need to make your own models better. It's more about a brand. It's more about a search product, which we've heard Eddie Hugh talk about the importance of AI and search going into the future.
So that's what this acquisition I think is targeting more than any sort of effort to boost Apple intelligence itself. If the search deal with Google gets ruled unlawful and they're not allowed to offer like Google search anymore or... or preference any other third-party search option because it's deemed you know anti-competitive the logical next step is for them to offer their own search product that they can then monetize themselves to make up the shortfall in the money right in that situation
Maybe an acquisition of perplexity makes sense because then you could just plug that in and use that as your ongoing search provider. That'd be the Apple search platform and they can put their ads on it and they can make close to the $20 billion that they currently get paid from Google for the same thing, right?
I think the more likely situation is that that won't happen and Apple will still be able to offer a choice of different search options in Safari and they'll be able to take roughly amount of the same much money from each of them. It just won't be all from one and it won't be the default thing anymore.
In that situation, I think there's less pressing need for Apple to offer its own search from a business perspective. And then I don't really understand the idea of perplexity acquisition. They don't make their own models. You can argue that Apple is making better models than perplexia because they actually do make their own models. It's not quite that simple, but you know what I mean.
However many billions it would cost to hyperplexity, it would probably be better spent on just hiring the best AI talent in the industry and getting them to work for you, right? I don't think you really need a company buyout because company buyouts come with culture clashes and Apple has never made...
Apple does not make a habit of doing big acquisitions because they're so worried about the culture problems. Their biggest acquisition ever is Beats Music, which was $3 billion. And even that had a... a plentiful of culture clash problems and they probably wouldn't have bought that if it wasn't for the 1 billion dollar a year revenue from the hardware business you know so like you really have they would really have to defy
everything, all of their principles to go out and buy something like Perplexity, which if you get super desperate, maybe you do. But I really don't think they're that close to desperation yet. Maybe you make a deal with Perplexity to offer search in your browser, for instance. But I don't really get what they would gain from buying them out, right? I mean, if you look at the Apple car stuff, right? They had plenty of multi-billion dollar options for advancing their autonomous car work.
There were loads, you know, so many autonomous car companies have come and gone. So many opportunities. If they wanted to get a leg up, they could have bought one of them out and moved on and they rejected or ignored all of them because that's just how they are.
They feel like they're a big enough company they can do it themselves in most cases. And in most cases, they have, right? Yeah, yep. Most cases, their strategy has worked. Right now, their strategy isn't working. But just because it isn't working right now doesn't mean you go out and... spend $13 billion on something on a whim. And I don't think you can understate just how key the culture thing is because perplexity is.
Their CEO has made some interesting comments over the years, including it was this year where he said the perplexity browser will track every single thing you do online. to sell what he said were hyper-personalized ads. If you look at that statement alone, I don't think you can imagine a worse cultural fit for Apple. As a company focused so heavily on privacy and so heavily on protecting user data, not tracking every single thing somebody does. I don't think the two companies would mesh.
in any way shape or form when you buy companies like this they they generally have like a three to five year window on the talent right at the top of the company so like you get your stock options if you stay for the you know the golden handcuffs you get your stock options you stay for three years or five years Look at all the companies Apple buys. So many of the founders that they've acquired the companies from, they just leave as soon as their golden handcuffs expire. Right?
Because why wouldn't you? You go off and do your own because the people you're buying are like entrepreneurs of their own right. They get their B exit. They come to Apple. They get all their money after three years. Then they want to go off and build their own thing on their own. They don't want to be part of a corporate giant.
And so I think it's really turned Apple off of doing these massive acquisitions because they never quite get what they want out of them in most cases. I mean, Siri is a perfect example. Siri was an acquisition, right?
what did what did the founders of siri do after they get bought by apple they stayed for their period then they left then they basically made a new version of siri but not called siri as an independent company and that got bought out by samsung right like this this happens over and over again
And now they do interviews talking about how bad Siri is and how bad Apple botched the acquisition. It's never worked out well. Yeah, because they don't have the drive to stay at the company and make it better, right? They're entrepreneurs that are looking for exits. Perfectly fine.
I wouldn't turn down millions of dollars either. But if you're the Apple executive team, I think you've been burned enough times to be like, spending billions and billions of dollars is not going to fix your problems. It doesn't fix the culture. It doesn't fix anything. It's a much more complicated situation, that. And if you are ample, let's say you turn down perplexity today, right? And it turns out to be a massive mistake.
in three years time you could then buy them out for 40 billion if you really had to right like you know they have to get really really big for apple not to be able to afford them so if they turn them down now they'll probably have to spend a bit more money in a couple years but they could still buy them out if they really had to
¶ Episode Wrap Up
All right, I think that does it for this week. You can find us on Apple Podcasts where you can leave a rating and a review. Find an ad-free version of the show with bonus content each and every week at 9to5mac.com slash join. for $5 a month or $50 a year. Send us feedback, happyhour at 9to5mac.com. I am on threads and elsewhere at Chance H. Miller. And Mayo, what about you? At BZM Mayo. All right. Thanks, Mau. Bye-bye.