This moment will be understood in retrospect as one in a series revealing that the U.S. big tech model of development is actually bad, and against the traditions of Silicon Valley as a place with lots of small and medium size nimble firms. Like Boeing, and auto giants before them, U.S. big tech monopolies are in the initial stages of their collapse, though they will still be immensely profitable for some time.
AI promised to shake up this dynamic, to give Apple back some spark. Last year, the phone giant introduced the brand Apple Intelligence. This would be a computing transition, perhaps as important as the shift from mainframes to personal computers, or desktops to mobile. You would no longer have to touch or type, you could just talk to your machine, and have it talk back or do what you want.
Apple’s marketing said it would release features allowing Siri to look across your personal information and apps and run your life somewhat seamlessly.
For example, a user can say, “Play that podcast that Jamie recommended,” and Siri will locate and play the episode, without the user having to remember whether it was mentioned in a text or an email. Or they could ask, “When is Mom’s flight landing?” and Siri will find the flight details and cross-reference them with real-time flight tracking to give an arrival time.As one would expect for a breakthrough of this magnitude, the company ran ads promising this new and improved Siri, and encouraged people to buy its new phone upgrades on the premise that Apple Intelligence would be coming out in a software update. And reviewers waited for the release. And waited. A few random AI-enabled features, like messaging summaries, came out, but nothing major. And then, Apple issued a statement on Friday saying that “it’s going to take us longer than we thought to deliver” on its product line. The new and improved Siri was just not ready.
This announcement embarrassed the people who had always vouched for Apple’s credibility and excellence. John Gruber, who is probably the single most influential pro-Apple voice, ran a post on his site Daring Fireball titled Something Is Rotten in the State of Cupertino.
Investors and Wall Street chatter have changed their tune on Apple as well. Warren Buffett had already been reducing Berkshire Hathaway’s large Apple stake, but others, such as Scott Galloway, a longtime Apple bull, said he would be selling all his stock.
The problem isn’t that Apple flubbed a product release, that’s happened many times. The issue is one of trust. “Apple,” Gruber said, “pitched a story that wasn’t true, one that some people within the company surely understood wasn’t true, and they set a course based on that.”
So why couldn’t Apple develop this product line? Nilay Patel and David Pierce at the Verge did a long podcast titled “The fake promise of better Siri” in which they describe two major obstacles.
The first is that large language models are an untested technology, and may never actually work the way the consumer tech sector hopes. LLMs hallucinate, they get things wrong, and that’s not fixable. Machine learning is great in a lot of business to business areas, but no one, said Pierce, has gotten the consumer gadget - except for OpenAI and its various clones - right.
The second problem is that Apple has burned its bridges with third party developers, and third party developers are key to making this new platform work. And that’s one place where we get to Apple’s monopoly problem. The company has a terrible reputation with developers at this point, using its chokehold over the app store to take 30% of everything it can. And I don’t mean 30% of the price for the app, but for everything. For instance, when you download the app for Patreon, which lets you donate to creators, Apple doesn’t charge 30% of the cost of the download. It sought to take 30% of every donation to every artist or creator.
Apple’s view is that they should get a cut of every transaction that happens on any app or adjacent to any app through the iPhone. And the company is insanely aggressive. Its legal budget was apparently $1 billion a year at its height, with CEO Tim Cook backing the lawyers “through thick and thin.” Right now, the company is openly flouting a judicial order to let developers link out from the Apple app store, enraging a moderate judge so much so that she told Apple’s litigation director that "Your client is not entitled to have you engage in unethical conduct." It is also engaged in fights globally, with the EU fining Apple for discriminating against Spotify. In other words, Apple is increasingly turning into a law firm and design shop that imports electronics from China. (...)
Antitrust Enforcers Were Right
Last March, Jonathan Kanter at the Antitrust Division filed an antitrust suit against Apple, alleging that it focuses more on monopoly maintenance than innovation. The complaint noted the company spends twice as much on stock buybacks than research. But more importantly, the suit showed Apple’s executives are explicit in demanding that the company not innovate too much for consumers. Here’s one part of the complaint.
The ride is over. When mediocrity, excuses, and bullshit take root, they take over. A culture of excellence, accountability, and integrity cannot abide the acceptance of any of those things, and will quickly collapse upon itself with the acceptance of all three.
I’m glad Wall Street and the tech press are catching up to the antitrust enforcement world, and finally noticing the internal crisis at Apple. Ultimately, if we don’t start breaking these companies up, tech innovation is just going to come from China. I don’t do investment analysis, and I have no idea if Apple’s stock will suffer. But really, who cares? Those are ultimately just numbers on a spreadsheet. True wealth are the products, engineering and production capacity, and knowledge of how to build. And we’re losing that, across the board.
Last March, Jonathan Kanter at the Antitrust Division filed an antitrust suit against Apple, alleging that it focuses more on monopoly maintenance than innovation. The complaint noted the company spends twice as much on stock buybacks than research. But more importantly, the suit showed Apple’s executives are explicit in demanding that the company not innovate too much for consumers. Here’s one part of the complaint.
For example, Apple’s vice president of iPhone marketing explained in February 2020: “In looking at it with hindsight, I think going forward we need to set a stake in the ground for what features we think are ‘good enough’ for the consumer. I would argue were [sic] already doing *more* than what would have been good enough.” After identifying old features that “would have been good enough today if we hadn’t introduced [updated features] already,” she explained, “anything new and especially expensive needs to be rigorously challenged before it’s allowed into the consumer phone.”It’s pretty clear that Tim Cook has positioned Apple to be focused on raw financial returns and efficiency, and not innovation. (...)
The ride is over. When mediocrity, excuses, and bullshit take root, they take over. A culture of excellence, accountability, and integrity cannot abide the acceptance of any of those things, and will quickly collapse upon itself with the acceptance of all three.
I’m glad Wall Street and the tech press are catching up to the antitrust enforcement world, and finally noticing the internal crisis at Apple. Ultimately, if we don’t start breaking these companies up, tech innovation is just going to come from China. I don’t do investment analysis, and I have no idea if Apple’s stock will suffer. But really, who cares? Those are ultimately just numbers on a spreadsheet. True wealth are the products, engineering and production capacity, and knowledge of how to build. And we’re losing that, across the board.
by Matt Stollar, BIG | Read more:
Image: Reuters via
