We’re doing something a little different on today’s episode of Decoder. I asked my friend John Gruber, of the website Daring Fireball, to come on the show and talk about the future of Apple — and, importantly, the App Store.

Gruber and I have been friends for over a decade now. Daring Fireball was one of the first and most influential Apple blogs around, and he has more insight into Apple, its culture, and how it does things than anyone else. Everyone at Apple and in the Apple developer community reads Daring Fireball religiously.

In 2010, Steve Jobs himself emailed Gruber’s analysis of an early App Store rule change to an unhappy developer and called it “very insightful.” Personally, I will always remember a moment early in my career when a very excited Apple PR staffer pointed Gruber out to me at an event like a celebrity sighting, which was funny and also deeply humbling.

I wanted to have him on the show to talk about the most recent ruling in the Epic v. Apple legal saga. This is the lawsuit about Fortnite on the iPhone and whether developers like Epic can circumvent the App Store’s payment system to avoid paying those 30 percent fees on in-app purchases.

Well, late last month, Judge Yvonne Gonzalez Rogers, who has presided over that case for the past five years, effectively banned Apple from collecting fees on web transactions. She also harshly accused of the company of purposefully disobeying her original 2021 ruling by creating a series of restrictions and hoops to jump through that would basically make it impossible for developers to send people to the web to buy things. The judge’s extreme frustration with Apple is obvious in almost every line of her ruling; she even referred an Apple executive for criminal proceedings, saying this executive had lied under oath on the stand.

There’s a lot of tactical stuff you might talk about in the aftermath of this ruling — about what Apple might do next, how it might impact revenue, and how developers might respond. But I really wanted Gruber to talk about Apple’s big picture and how a company that so often prides itself on doing the right thing ended up so fully on the wrong side of the courts.

One theme you’ll hear throughout this conversation is that Apple often presents itself as small, but the company is actually huge in every way — Apple now sells nearly as many phones in a single quarter as it did in the entire first three years of the iPhone’s existence combined. It now operates in a geopolitical context that binds the United States, China, and Taiwan in ways you would have never imagined 15 years ago. And perhaps most importantly, Apple has control over applications on the iPhone, which means it has control over what kinds of businesses can and cannot exist on its mobile phones.

That’s the context for the other major theme here that you’ll pick up on in this conversation: Apple’s major shift toward digital services and whether that’s fundamentally changed the company’s culture. You see, as Apple kept selling newer and better iPhones, it simply ran out of people to sell them to. So, in order to keep growing revenue and keep Wall Street happy, it started squeezing more money from its existing customer base, including the very developers that put apps on the App Store.

That made some of the most important developers, the companies that make mobile games and stream media, very upset. But they had no other choice so they kept their apps in the App Store and continued to pay the fees — except for some major exceptions like Amazon and Spotify, which simply refused to sell you ebooks or music subscriptions on iOS at all. (After this most recent ruling, Amazon updated its Kindle app to sell ebooks via the web, while Spotify is working to update its iOS app to do the same for its subscriptions.)

All of that combined with Apple’s scale created a kind of hubris and, as you’ll hear Gruber say, a major blind spot for Apple that has pushed it toward these high-profile and public legal defeats that could reshape its business. If all of that weren’t enough to put the heat on Apple, there’s also Trump’s tariffs to deal with and a Google antitrust trial that could see Google barred from striking an exclusivity deal for its search engine that currently pays Apple north of $20 billion a year.

Apple also has to compete in AI with Apple Intelligence and Siri, products that are currently a total mess. Gruber and I got into all that at the end here, and I wanted to know if there was a connection between the corporate culture that produced the App Store debacle and the recent news of Siri delays and dysfunction around AI inside Apple.

There’s a whole lot going on in this conversation, and there’s really nobody better to talk about all of this than Gruber. I hope you like this one; as you’ll soon hear, Gruber and I really enjoy talking to each other.

Okay, John Gruber of Daring Fireball on the future of Apple and the App Store. Here we go.

This interview has been edited for length and clarity.

John Gruber, the proprietor of Daring Fireball, the industry’s leading Apple analysis source. How are you doing?

Busy. How are you?

I’m good. There’s been a lot of Apple news recently. I feel like we’re in this state where two years from now, or maybe three years from now, none of the big tech companies that we are familiar with look the same, or are the same. Google might get broken up, Meta is in the middle of an antitrust trial, Apple’s facing one, but then they’d already faced one. There was a big ruling in that case. I want to talk about that Epic case, and the Google money might go away from Apple, too.

I wanted to talk to you, because you and I were texting briefly and I just thought I should just have John on the show and we should talk about what Apple is right now, what it has become, and what might be changing. Because you’ve been following the company closer than anybody for 20-odd years. It feels like the question of “what is Apple right now” is more up for grabs than it has been in a long time.

Two things I keep coming back to, and it was such an off-the-cuff, “Yeah, sure. Why don’t I spend an hour?” For me, it turned into three hours, but why don’t I spend an afternoon on this seemingly goofy blog post of, “Hey, how many iPhones can you fit on an airplane?” When there was a report, when these tariffs came out, of, “Hey, Apple’s going to ship six full airplanes of iPhones from India ahead of the tariffs.” It is a fun little question. My friend Ryan Jones, the guy behind Flighty, had the idea of, “Hey, you could just look at the weight of a Boeing 747 freight airplane and figure out how much does a packaged iPhone weigh and multiply it, and there’s your answer.”

Maybe it’s slightly off because maybe the volume doesn’t quite fit, maybe, but as a baseline, the weight works, and it’s like a lot of iPhones in a certain sense. If me and you had to spend the afternoon doing the manual labor of loading pallets of that many iPhones onto a Boeing 747, we would agree that’s a lot of iPhones. But then you look at how many iPhones Apple sells in the United States in a typical April, and it was like 12 days [inaudible 00:06:40]. It gave me this palpable sense of just how big a business the iPhone is.

I don’t see how any company could not become distorted by that level of success. These are $1,000 bricks. A brand-new iPhone comes in a little brick of a package, and they’re $750, $800, $900, $1,000, $1,200, whatever, depending which one you get. They just send all of them, all the time nonstop out of China and India for $1,000 each with famously 35 percent, 40 percent margins. It is hard to fathom, and I feel like we’re hitting the point where we’re seeing the ramifications of the unfathomability of the iPhone’s success.

I needed an excuse to buy a new Mac Studio when they got announced, the M4s, and the tariffs were a good excuse. I think a lot of people just took the excuse, “I might as well buy one.” I did a little custom configuring, made sure it had the right amount of storage and RAM, and all this stuff. Then I watched it get manufactured to my specifications in China, go through customs in China, get on DHL, come across the ocean on a plane presumably, and then get to my house in a matter of days. We don’t think about that very often, but that is Apple’s success, that that whole system exists. One thing I’ve been saying a lot recently is Tim Cook probably has more responsibility for world peace over the past several decades than anyone wants to give him.

Because it’s his company that binds the United States and China, and to a large extent, Taiwan together now from the chips, from the manufacturing to the global trade to the fact that the platform, unlike most other tech companies, operates in both countries and is a huge success in both countries and consumers want the products in both countries. He has had to play statesman with Donald Trump, with Xi Jinping, with Joe Biden to whatever extent this whole time. It feels like Apple is more of that company than the big swing product company lately.

Well, and the other thing that came out of my thinking about the scale of the iPhone success, and this being Tim Cook’s company, is just how unlikely it was. I truly do believe there was only one path for the iPhone to meet demand at the prices they’ve been selling iPhones for the last 15, 18 years, however long it’s been. But when the iPhone became this sensation, right, and famously, it’s such an interesting way to think of it, but they sold more... The second gen was the 3G. They sold more than the original, and then the 3GS sold more than the 3G and the original combined. Then the iPhone 4 sold more in one year than the 3GS, 3G, and original combined.

That kept going for a couple of years, where each new model not only outsold the previous model, it outsold all the previous models combined. Now obviously, that had to end eventually, and it ended, I don’t know, 2013, 2014. Because the planet ran out of people.

The mechanism of that, just to be very clear for the audience, is every year Apple would add new countries and new carriers. You would have all the people on AT&T in the United States, and then you would add Verizon, and then you would triple the market.

But if you really think about it at an operational level, the only way that they could make that many iPhones and that many more new ones each year was through China. There was no other mechanism, no other way, no other country had anything vaguely like the capability to expand a supply chain that quickly to these incredibly tight, high-precision specifications than China. That’s the only way. In some ways, if you just go back a little bit, even like a decade before the iPhone, just go back to the ‘90s, it seems very iffy for China to be the path for an American company to be able to build this business from, the most profitable business in the history of capitalism.

Steve Jobs famously wanted to build his own automated factories in California, and he did for some of the Macs. Then he hires Tim Cook, and Cook is the one who moves all the manufacturing to third-party contractors like Foxconn, moves it all to China, and begins to scale.

Even going back to NeXT... I mean, again, NeXT for the decade or so that they were an independent company, they were only selling hardware for about the first half of it. But at that point, they had a Steve Jobs–driven dream, not just to make the computers in America, but to have computers build the computers. So there’s a lot of people out there, I think casual people who don’t need to know this, who probably think like, “Oh, an iPhone. That’s probably mostly made by robots.” It’s not. The factory line, it really is human beings screwing tiny screws into phones, putting tiny... Just keep putting this one component into a phone, here comes another phone, put that tiny component in perfectly. It is very labor-intensive.

The next dream was to build a factory in California where it really was just like something from the Jetsons where it’s all robots and robotic arms, and a human being just delivers the box to you. But it obviously didn’t work out.

I’m going to come to the manufacturing part of it. I do feel like our own Commerce Secretary Howard Lutnick is very confused about what it takes to build an iPhone, but we’ll come back to that. I just want to stay focused on this big Tim Cook change for one second. Tim Cook helps Apple expand, right? Without a doubt, something like the iPhone cannot scale to the volumes of production at Apple’s quality level in particular, without Tim Cook, master of the supply chain. That’s the role he plays for Steve Jobs. Steve Jobs has these very big ideas. He is incredibly tasteful, incredibly exacting in his demands.

Tim Cook is the person who says, “Okay, I can build you the machine that will make hundreds of millions of these products a year to your specifications.” Tim Cook becomes CEO, and you see, over time, the company gets even bigger, right? It’s much bigger now than it ever was as a company owner Steve Jobs, the scale of that operation has increased, but I also think the Cook era will be remembered for this as much as the scale. They ran out of people, as you said.

They moved the iPhone’s revenue from selling more iPhones every quarter to extracting more money from the people using their iPhones, in particular, in services, right? That’s the line they call it in their quarterly earning services. Services, it has a lot of celebrities as the face. It has Severance, it has Silo, it has all these other shows, Ted Lasso, famously.

All of music, really.

All of music. But what it really is, and this comes to the big court decision, what it really is is in-app purchases. Particularly, in-app purchases in games. Apple services revenue is people buying stuff on their iPhone, and Apple takes whatever percentage between 15 percent and 30 percent, depending on the style of app and the subscription or not. That’s the thing that’s under threat now, right?

Well, but I know you know this. The other thing, and it is a lot of money, and it all goes into services, is the traffic acquisition costs from Google search with the deal with Safari, which is, probably, we keep talking about $20 billion a year, but I’ll bet it’s closer to $25 billion a year right now.

Apple has a deal where Google pays to be the default search provider in Safari. Google lost that trial. We’re in the remedies phase. Google does not want to give up the ability to make these exclusive deals. It feels like that’s going to be the first thing to go, no matter what the judge decides. That’s $20 billion, $25 billion off from Apple. Then there’s this ruling in Epic versus Apple where the judge is furious with Apple for ignoring her earlier instructions, for lying on the stand. She says, one of the executives lies on the stand, and she says, in a variety of ways that I want you to explain, “Now you have to go compete with purchases on the web. We’re done. We’re done playing games.”

That feels like, “Oh, the services’ revenue is going to drop.” No matter what happens now, the amount of money you’re going to take from in-app purchases and games and other apps is going to go down. Because Amazon is just going to kick people to the web. It’s already happening. Spotify is going to kick people to the web, it’s already happening.

They’re not losing money from Amazon or Spotify though because they weren’t making money from Amazon. It’s the games. Where the games are really going to do it is by prompting the whales to, “Hey, you, a guy or a woman who spends $500 a month on tokens or chips or coins or whatever you call it for this game, we will give you a 40 percent discount if you just tap this button and preload your account from the web.” If you’re spending $200, $300, $400 a month on a game, which 1 percent of players do for some of these games. This is where an enormous amount of the money for the most profitable games comes from. It’s exactly like a casino. It really is.

But I want to be clear that the services’ revenue line for Apple, the face of it is Severance. The face of it is Jennifer Aniston in The Morning Show. The reality of it is Candy Crush whales. That has been true for a long time. You’re just looking at a company where its manufacturing excellence is under threat with tariffs and trade wars, for all of Cook’s efforts to hold it together.

Now, the revenue pressure on what the iPhone has become in services is extremely real from regulators not in Europe, which are also mad at Apple, but from the courts in the United States, which are saying, “Well, maybe we’re going to take the Google deal off the table, and maybe we’re going to take all this Candy Crush money off the table.” Is Apple ready for all of that?

There’s a part of me that, for years now, has been looking at some of these things, and I’ve been thinking, I don’t know, maybe they know something I don’t know. Because they don’t seem panicked. I would say with their compliance with Gonzalez Rogers’ original injunction with the Epic case in 2021, which was a case... I think you’ll agree with me. The Epic versus Apple case, Apple almost entirely won. Epic lost, Apple won.

But on what I would call a side note, she issued this injunction coming out of it that, “Oh, you win almost all these points, Epic, you lose almost all these points.” But this whole nonsense about the anti-steering provisions and apps being forbidden from even telling people famously, most famously, like with Netflix. If you’re a new Netflix user on iOS, you get the app, there’s no way to sign up. It said something like, “We know this isn’t convenient. We’re sorry about that.”

I did a story years ago where they have a number you can call. You can actually call a phone number and make a real phone call and talk to a human being at Netflix, and I pretended I didn’t know how to sign up. They’re like, “Oh, you have to go to our website, go to a computer, and go to netflix.com, and then you’ll sign up there, and enter your credit card information there, and you can’t do it in the app.” They’re allowed to put a phone number that you can call where a human will tell you that, but they can’t just tell you that on the screen.

I mean, imagine how much money they’re just wasting by having people answer the phone to do that. At this point, I doubt there are that many people calling every day, but somebody is, and it costs real money, and they could just put it on a screen. It’s just information: “You can’t do that anymore.” And they just kept doing it and instituted this “compliance” with it that was almost... And I’m very resistant to the whole malicious compliance argument, especially with their EU stuff. I think that term gets overused. But in the case of this injunction, it was almost... And the way that her new injunction or new decision that came out a week or two ago is just dripping with anger because it was so clear. But for the last four years I’ve been thinking, “Does Apple know something about her opinion on this that I don’t know?” And you’re the lawyer, you tell me.

But my understanding, and you know I’m married to a lawyer and my wife has said to me, “No, if it’s not in the injunction, it’s not there. There are no backroom deals and handshakes between lawyers and judges. The decision comes out and it’s in writing, and you can just read it and it’s there.” And there was nothing in that injunction that made it seem like Apple’s goofy 27 percent commissions and, “You have to open up your books and let us audit all of your transactions and track people for seven days and everything they buy. After leaving your apps for seven days, you owe us 27 percent for it.” There was nothing that made it seem like that complied with the injunction, it was very strange. I don’t see how they thought it was compliant or how they thought it would fly.

I’ve been thinking a lot broadly about the image the big companies want you to have of them and then what they have to be in order to be as big as they are and [as] successful as they are. Google, I think, still wants you to think of them as beanies and slides in the office. They’re a ruthless advertising company. We have all these emails from all of these trials. You can see the internal deliberations of these companies. I think Apple, to its credit, still wants you to believe that it is the company that puts the customer first and user experience first and design first, and then you see from the emails in this case that they had no reason for 27 percent except they knew that no one would use it.

And there’s this gap, and I think a lot of the danger for these companies is that these regulatory efforts expose that gap. And I think there’s reasons for the gap. To be a company of this scale moving this much money around, you got to have some sharks, that’s just the way it goes. You just don’t want the sharks to be exposed to the public in this way. If you go too far, the judge is like, “You know what? I’m going to have a second hearing because I think you’ve been lying to me. You’re going to produce all of the evidence so I can see your decision-making and here are the sharks.” And there’s just something about that with Apple in particular that I think is just fundamentally surprising to people and damaging to its brand in a way that I think if I said to you, “Amazon is full of sharks,” or, “Meta is full of sharks,” you’d be like, “Yep.”

Yeah, and there’s something in there with the Upton Sinclair line. It’s slightly not quite applicable, but it’s the same sentiment that it’s very difficult to make a man understand something that his job depends upon him not understanding it, right?

And there is something to that with Apple on this front where everybody I know and have any relationship with at Apple, but especially higher up, the sort of people that we get press briefings with, people with big titles, not necessarily the very highest, but people who get featured in keynotes, people who are on the videos, they really do believe, they really do. They’re not feigning it. They really do believe that Apple is a good company and that they do the right thing and that they really do put the user first, and that they are a fundamentally honest company.

And because they believe that, I feel like their actions on this particular issue with the app store, they can’t see it. It really is a blind spot where they just cannot believe that they keep losing these cases, they really can’t. That’s what I think. But all the rest of us, everybody else, whether you are a zealot like a Tim Sweeney guy who actually instigated the case, or just a developer or somebody who really believes in open source and that all of these closed platforms are fundamentally wrong and, “Here, see, this is why.”

Or if you’re just trying to observe it neutrally, everybody’s looking at them and they’re like, “How do you not see how this is not going to fly?” And it makes you look terrible. It looks bad legally, it looks bad regulation-wise in places like the EU, and it absolutely looks terrible to whether you’re a developer who’s actually writing the code or you’re just a businessperson from a company who wants to have an app in the store and you’re looking at these terms. It looks terrible. Nobody wants to build on a platform where the starting point is a 70/30 split in 2025.

Yeah. And you see all of the biggest new apps in the world debut as web apps on desktop, right? ChatGPT most often expressed to people is a web app on the desktop. And there’s something about that, that you would not have predicted at the dawn of the mobile age. In 2007 when the iPhone came out, in 2008 when the App Store released in particular, you would not say, “Okay, run it forward 15, 20 years. All the hottest new apps are going to come out as web apps on desktop computers.”

You would not predict that but for Apple’s app store policies, which have prevented big sustainable businesses from being built in the app store. You know a lot of developers, a lot of developers read Daring Fireball. How would you characterize the reaction from developers after this ruling? Actually, what would you say was the general sentiment towards Apple leading up to this ruling? Because it has really changed a lot over the years, right?

I think the reaction now is sort of, “Finally.” And I think there were a lot of people who read Yvonne Gonzalez Rogers’ decision, which I think also, I think you’re going to agree, she wrote.

Yeah, she wrote the hell out of that thing, she wanted it to be read. But you get the feeling a lot of judges are issuing decisions right now they want to have read by regular people, and this is a highlight of that class.

And there’s a very slight, it’s just a bit of lingo, it’s just, it’s a little formal. But when a ruling says, “The court,” and the court is uppercase, that means the judge. And every time you see her write, “The court,” you could just see, yeah, she’s like, “Fuck you for thinking you could do this in my court. Who do you think you are?” And I think a lot of developers read that, and they were like, “Finally, a court is just calling this out for what it is,” which is just sort of preposterous. And it’s been a long time and it has been a sort of, how long can the frog boil in the pot before it’s dead? It has been a very long time, but it really did shift from a scenario when the app store came out in 2008 and everybody who was around at the time, me and you writing about this stuff at the time, we remember the first year of the iPhone when there were no third-party apps.

And for a couple of months, Steve Jobs was saying, “We don’t want third-party apps,” and they had their first WWDC when the iPhone came out, I guess right before it came out. And they were like, “We’ve got a sweet solution, it’s called web apps.” Which would’ve been, it wasn’t a way to make the apps that Apple itself was making for that first iPhone. So at an artistic level, developers weren’t happy about it because they’re like, “No, no, no, we want to use these Coco-like APIs. We want to use Objective-C and we want,” because those 2007 phones were relatively slow and memory was so concerned, “We want to do what you guys are doing and pack as much into as little code as possible to make it efficient and make something as beautiful and cool and smooth as what you’re making.” But what they were saying, if you just put aside the technical nature of it, was, “Hey, you could just build free apps and ship them however you want on the web the way you want.”

Which again, here we are in 2025, and that is how developers are mostly choosing to launch new apps to consumers.

Very much so. But now the technical differences are very different. It’s sort of switched around, but it’s really about the business differences. But when the actual app store opened the next year and the pitch was... And again, it’s all very simplistic compared to now, subscriptions weren’t a thing. It was really just paid apps where the app costs $5 or it was a free app, and if it was a free app, you didn’t have to pay anything other than your $100 a year developer account fee and Apple would take care of distributing the app. And if it was a paid app for $5, the split was 70/30, and that came from the music store, which was the deal over there. And compared to every other mobile platform of the time, a 70/30 split where the developer got the 70 was amazing.

Compared to the carrier stores and all the other locked distribution methods.

Right. So if you were writing on one of those Java platforms from 2006 on the then smartphones, 70/30 might be what you’re getting, but the carrier was taking 70 and you were getting 30 maybe. So 70/30 was a great deal. It was like, “Holy crap, we can write software for phones and people can use them wherever they are, they’re in their pocket. This is a great deal.” And the idea that here we are 18 years later and that’s still the deal, and I know there’s the small business platform, and if you have a subscription, it drops from 30 to 15 after a year and there’ve been some slight loosening of those terms, but for the most part it’s a 70/30 split.

Eighteen years later with all of the two decades practically of innovation in online payments, Stripe wasn’t a company in 2007, this isn’t the world. And I know you’ve mocked this in your writing, I think they’ve sort of dropped this angle. Who knows, maybe their retort to YGR’s decision is going to go back to it. But just a couple years ago, they’d still come out with the whole buying software in boxes in retail stores and talking about the margins that developers got when people would go in a store and pick up a box and come home and put a disk in a computer to install software. And it’s like, I remember that, you remember that. A lot of people listening to this show remember that, but that was a long time ago.

It’s interesting. I feel like that was a happier time for software development. It was over, there was no subscription fee. You had the product, you could use it however you want. If you wanted a new one, you could go buy it, and now everything is this relentless series of subscriptions and upsells. And I do feel like that is also Apple saying, “What we want you to do is turn your apps into subscription services so we can collect the revenue every quarter, so we can continue growing the services business where we’re doing very little.”

I don’t think at this point, maybe in 2008, 2009, you could make a big argument that Apple was earning its 30 percent. They had the credit cards on file. They were doing the distribution, they had massive app store marketing campaigns. Every new iPhone owner was a potential new customer, and in a way that market is totally saturated now. I think it’s basically impossible to make the argument they’re earning their 30 percent now.

Right. Yeah, I agree.

But they are demanding the business models of the apps provide them with that 30 percent.

And there’s no one point between 2008 and today where you could say, “Here’s the point, this decision in 2012 or in 2014 or whatever, that’s where it happened.” No, there’s no one point, but the fact is they never budged, right? And there is, at one point, it was in the Epic trial, but there was some old email from Phil Schiller circa 2010, where he ran up the flagpole internally, the idea that, “Hey, once our run rate, Apple’s cut of the app store reaches $1 billion a year, how about at that point we’ll just keep lowering the commission to keep it at... We’ll make $1 billion a year from the app store and go from 70/30 to 75/25 then to 80/20, and if it keeps growing and we keep making $1 billion, we’ll go to 80, just keep lowering it.” And it didn’t seem like anybody, there was evidence in there of anybody writing back, “Nah,” but it sure seems like the answer was, “Nah.”

Well, here’s my question. And actually, it’s about Phil Schiller, who is as a character in Epic versus Apple in this case, talking about the services line, talking about these commissions for rates, keeps showing up as the one person who is saying what you are saying everyone else can see that Apple can’t see. “Hey, this is bad. Hey, we shouldn’t charge this commission. Hey, we shouldn’t play these games.” In these compliance meetings that Apple is having, which by the way, they started calling them Project Wisconsin, and I’m from Wisconsin, personally insulting to me.

But that Project Wisconsin was, “How do we comply with the judge’s ruling?” And they landed on this back, literally reverse engineered 27 percent where they decided it was 27 percent. They went and hired a consulting firm to come up with some reasons and the judge sees right through it and says, “This is garbage, you just came up with this number.” In that process, Phil Schiller is saying we should just not charge a commission on the web. Why do you think he’s the character inside of Apple who had that realization, who could see the problem so clearly?

By the way, just to put the stakes on for the audience, I should say there’s a meeting in which Apple’s CFO is arguing for commissions and Phil Schiller is arguing against them, and Tim Cook is the tiebreaker and picks commissions, he picks wrong. Literally, the ruling says, “Cook chose poorly.”

Yeah, that is a direct quote, “Cook chose poorly.” It’s exactly like the line from Indiana Jones and the Last Crusade, where the guy drinks out of the wrong chalice. Although Tim Cook didn’t age 50 years and five seconds afterwards.

Well, the second Trump got elected, I think he did. But anyway, go ahead. Why do you think Schiller is the character here who sees it?

I think that it’s a couple of reasons, but I think that because Schiller was there for so long, he’s the only executive who was there when Steve Jobs and the next reunification, he was already there when they came back and obviously thrived. It was like, oh, he got along with Steve. But therefore remembers vividly what it was like when Apple was an underdog. And so many other people, Greg “Joz” Joswiak has been there for just as long. I think Joz has been there for 35, 40 years. So it’s like Joz remembers it, but Joz doesn’t seem to be a character in this story, right? Jaws is whatever, he’s a senior vice president of product marketing. He’s obviously very influential at Apple, but it doesn’t seem like he’s got anything to do with this app store stuff. There are a lot of people who were there then, but when the people remember being an underdog, I think they just have a different mindset of, “The only way we’re going to win is by making great stuff that people want to buy and that developers want to use.”

And I think that two decades of this iPhone success has filled Apple’s ranks at a certain level with people who really just feel, “We can do this because what are they going to do, not make an iPhone app? We don’t have to compete.” And I’m sure they don’t say it that way. I’m sure they don’t say, “We don’t have to compete,” but they can say, “Why should we lower the rate? They have to come to us.” And I think Schiller remembers what that’s like. And Schiller, in between stints at Apple, he’d been at Macromedia and a couple of other companies. He knows what it was like to be an outside developer building for Windows and Mac.

And I think he gets at a fundamental level, the sort of virtuous circle, the flywheel of, if you make a great platform that users and businesses want to pay for and that developers want to build for because they see the appeal of it and they see those users who are buying the product, and that developers are happy and keep making great stuff, and if you can get them to make stuff, if you can keep the platform going forward in an innovative way and Apple can invent things and do things and have features that other phones and other ecosystems don’t have, things like AirDrop, the continuity features between devices, these things are coming up in the EU as controversial.

But if you can do these things and they’re exclusive to the platform and you can get developers to build on them, then the users see, “Oh, I’m going to keep buying this platform because I don’t want to lose these features that I can’t get anywhere else. And then you make new ones and then developers support those and users are like, “Oh, I’m going to keep buying this.” And it just keeps going for years and you’re making money and it just keeps working. And when you inject something in this that creates resentment, has entire fields of developers thinking, “How do we get out of this? How do we not pay Apple this exorbitant 30 percent cut? And how do we scheme?

Maybe what we do is, instead of building native Mac apps for the desktop, we’re just going to go all in on the web and have people go through a browser,” and now they’re not building anything that is exclusive to your platform. And you could use any computer with a version of Chrome or Firefox or any leading browser and get the same experience for it. And if your top three or four apps that you use all work exactly the same, no matter which brand of computer you’re using, that whole flywheel is broken. And I think Schiller sees that, that you don’t have to squeeze every penny out of it.

This is what’s so crazy about this, that the people who are really the angriest at Tim Cook over all of this think that because he comes from operations and has his mind on the finance and he’s not a product person. To his credit, has never pretended to be a product person, that he’s a penny-pincher. Now, Luca Maestri, the ex-CFO, he might be a penny pincher by all accounts, but Tim Cook isn’t, right? And Apple doesn’t pinch pennies in so many other ways. You can tell that they’ll go through dozens and dozens of hardware revisions to get the corner radius on the phone just right. They have metal engineers to create new custom versions of titanium to make the sides of the iPhone look the way they want using titanium to do this.

They have great customer service still in the retail stores. They do all these things that other companies don’t do that clearly cost money, and do it because of the idea that, “Well, if we keep doing things as well as we can to make people happy, this will all work out in the end, and it seems like we’re making enough money,” but here on this Apple Store thing, they just want all the money and there’s no other way to look at it.

Our friend Jason Snell has been sounding the alarm on services and Apple Store revenue for a long time. He’s written about it a lot at Six Colors, his site. I know you’ve talked about it with him, but I just have a quote from 2024 that I found. Here’s Jason. He says, “Services can never, ever take precedence over Apple’s hardware. If Apple ever begins to see its hardware as merely a vessel for selling more subscription services, the game will be over.” I look at this and I say, “Apple put up an executive to perjure himself in front of a judge about where the fake 27 percent came from and got caught.”

That person has now been referred to the DOJ for criminal prosecution. Apple invented this 27 percent rationale, this fake compliance, maybe not malicious compliance, but certainly fake compliance. Apple looked at a court order that said, “You will not restrict buttons and links,” and came up with the most restrictive policy over what those buttons and links could look like, such that no one could ever possibly comply with them in a way that was good.

There was a report that there were only 37 developers... I don’t know if this is true or not, but there’s a report the other day... I think MacRumors had it. Somebody’s filed a lawsuit that only 34 developers actually use those links.

Out of hundreds of thousands of developers. I’ve never encountered one in the wild, have you? I use a lot of apps. The nature of my gig is, I try new apps. I have never seen an app in the United States that uses one of these link-out things…

Right. Because you would take the discount from 30 to 27 and then you would immediately pay Stripe or whoever more.

And sign up to have Apple auditing your books and all this stuff.

So I’m just saying, you... I look at this line from Jason who’s been sounding this alarm for years, “Your dependency on a services line of business makes you a toll collector.” You’re the tax man now, and maybe the phones are great, but your priority is collecting the tax. And then you look at this court case and I can’t help but say, “Oh, they became the tax collector.” If they lose this, then maybe the whole game is up and they can’t keep funding the great customer service in the retail stores.

By the way, I think some people might disagree with you, my wife would disagree with you, but whatever. They can’t keep funding their huge retail presence in all of their real estate investments. They can’t keep funding larks like the Vision Pro. The game is in this tax, this is the money because the iPhone isn’t growing and there might never be another product that scales like the iPhone.

And my big point earlier was about the scale of the iPhone success and how distorting that unfathomable success must be, even to a company that I think was naturally resistant to the perverse effects of that sort of profitability, that they really were fundamentally driven by just making the coolest things, not by making the most money, but when you do make the most money, it just shifts your priorities. But the other factor was that point about 10 years ago where... I think it was around 2013 famously where Samsung was having a couple of good years. Steve Jobs had died two years prior and people were starting to call out, “See? They can’t do it without Steve Jobs.”

And yeah, look, it’s going to happen. Same thing happened to the Mac versus the PC is happening with the iPhone. I think it was the same year where the Mac Pro came out and Phil Schiller said on stage, “Can’t innovate anymore, my ass.” Which is... That they were irritated by what people were saying about them. And that’s when Tim Cook started promoting this idea that we’re going to grow a very serious services business to... And it was a message not to consumers, right? Customers don’t care. They’re not telling customers, “Come into Apple and we’re going to charge you for…”

Every time you look at your iPhone, that’ll be 30 percent. [Laughs]

We’re going to get you to give us money every month. But he was telling Wall Street, “We’re going to build this business.” And there were a lot of people... And I had an open mind about it, but there were a lot of people who were extremely skeptical about the idea that Apple could do services, that they had any proficiency to build any kind of service, whether it was media services like selling Apple TV, which wasn’t a thing yet, or the music or whatever, or charging people for iCloud and email and stuff like that.

But lo and behold, over the last 10-plus years they have built… And Snell’s been documenting it every single quarter. And that is a graph that does not fluctuate. It doesn’t go up and down. Sales go up and down based on things like when covid happened and there were supply-chain shortages. Over the years sales of iPhones and other hardware products sometimes fluctuate in places like China, which is the second-biggest market for Apple. But that services number is just like 5 percent up, 5 percent, up 5 percent up, 5 percent up. And now it’s this big thing.

You don’t have to be a Wall Street expert to know that investors in general don’t really care about the fundamental nature of the business. A lot of people buy a little bit of Apple because they’re like, “I believe in the company. I think this is a company that I want to support. I think they have a good future. I understand that they make what they’re doing and I believe in the mission and think it has a bright future for a decade or two decades to come at least, I’m going to invest in them.” A lot of other people though just want to invest in companies that they think are growing. That’s it.

And again, at a superficial level, you could say, “Well, they can make iPhones that start falling apart quicker,” but that doesn’t... Nobody at Apple thinks that way because they know that if you get irritated like, “Hey, I used to own my iPhones for four or five years and they were still great, just a little slow. And then I’d get a new one and it’s like, ‘Wow, the camera’s better. It’s a lot faster.’ And now I bought this phone two years ago and it’s falling apart.” That makes people think, “Maybe I should try a different brand.” Apple knows that, so they’re not going to do that. But with these long-lasting iPhones and with diminishing returns on chip performance at this point... And we see it with Apple Silicon in particular, the whole M1 series of Macs that started coming out at the end of 2020, they’re still great computers.

Yeah, I have an M1 MacBook Pro, and I have no idea when I will ever have to replace it.

Yeah, same here. And that is a real feather in the company’s cap that these devices last long and the performance is great like that, but how do you keep making the overall number keep going up? And the answer has been services, and that has twisted the company’s priorities. Clearly... They won’t admit it. I think you could hook Tim Cook up to a lie detector and he could pass it as saying, “No, our number one priority is not making services go up,” but look at their actions and I think it is.

I want to draw a line from that attitude to your criticisms of how Apple launched Apple Intelligence and the big Siri demo, which was totally a concept video, and then recently they had to walk that back. I think you actually broke that story that Apple was going to walk that back, not launch those features this year. I don’t expect to see any new Siri features at WWDC. I think it’s beyond even that, right? That’s coming up in the next month or so, but I don’t think we’re going to hear a lot about it, right?

No, I don’t think so either.

The agentic Siri that they promised is really far in the future, and the reason I want to make this connection is, one, just hubris... Is this all just hubris? But secondly, to make that Siri work, they need a lot of goodwill from app developers because what they’re promising essentially is you will talk to your phone and then Siri will go use a bunch of your apps for you. And I cannot, for the life of me, figure out why developers who are this frustrated with Apple will let that happen. But beyond the technical difficulty of this, there’s just a, “Hey, DoorDash, will you let Siri just order a sandwich on your platform without anyone ever opening your app?” And I don’t... There’s not enough goodwill to broker that negotiation. And so it just seems to me like, “Yeah, there’s hubris. This is a company that thinks people have no choice,” as you’ve been saying. And then there’s, “Well, is anyone going to let this happen?”

And it comes back to some of those things that I think Phil Schiller is keenly aware of, of getting developer buy-in for things that are specific to your platform. And these app-intense APIs are very specific to Apple’s platforms. I was going to say iOS, but they’re probably on the same APIs on macOS, too. But let’s just say for the Apple platforms that these app-intense APIs... And it doesn’t mean that if your company, Uber Eats or whoever or DoorDash, buys into it and supports these APIs, all of them as best they can and puts all of the stuff that they could do through app intents and supports them, it doesn’t mean that their Android app or their web version loses anything.

But it is a resource allocation of engineering to, “Well, these features though are only for the people who are using our apps on Apple platforms. How much time do we want to spend on this?” versus, “Engineering effort that when we spend this effort on our own APIs on the web, they apply to everybody everywhere. We could do it once and it applies on the web and Android and iOS. How much effort do we want to put into something that is only for Apple’s efforts?” So in terms of the size of the audience, that’s still there, right? There still are a billion very desirable or over a billion very desirable iOS users out there. But then... And I think this is what you were hinting at, there’s the trust issue of, “Hey, they seem pretty greedy.” How much information that we consider competitive. And I don’t think they’re lying about the private nature of this, of app intents and that Apple would be seeing and hoovering up the collective data so that Apple can analyze it.

But in the aggregate, it doesn’t really matter. If Apple can see that this is popular, they don’t need to take the private information from people’s DoorDash orders and analyze it. But they could see that maybe Apple should get into the food delivery business and it should be Apple Food, like Apple Pay. You laugh, but I mean, who would’ve thought 15 years ago that they would have a credit card? It’s not that crazy to think that there could be an Apple Food. Do you want to support a thing where they might become your rival? And I guess that’s really it. That’s where that... I think that’s what Schiller sees is that for almost all of these companies... Spotify’s an obvious counterexample because they’re up directly against Apple Music, but almost every other developer on the platform, the zillions of apps in the App Store, should not in theory see Apple as their competitor. They should see Apple as their partner and they should be like, “Yeah, this is a partner we really like working with.”

They should be saying, I’m not saying they are, “But they have great software development tools. We really like their APIs. Our engineers who work on these platforms are really happy to be doing it. It’s really hard to hire engineers for this because it’s so competitive and that the talented engineers for the platform can go work anywhere they want. Users really value the native apps for this platform. We’re really happy to be here and we feel like we’re getting a great deal from them.” That’s the part that’s just missing now. What company thinks they’re getting a great financial deal from Apple right now with the App Store as it stands? I don’t know of anybody. Maybe some games, because games... The game industry is sort of 70/30 everywhere. Maybe.

Well, I think games because again, like you said, it’s just gambling. They’re just happy the buttons are there, right? And you can get a lot of distribution. I mean, you look at the game economy, the games companies are hiring celebrities to make TikTok ads for free-to-play tower defense games. That’s a whole other episode of this show.

The money there is a little out of control, and it is the thing that powers all of this. It’s not big business. I think Adobe and Microsoft were the big examples on the Mac, right? Microsoft, famously the first developer for the Mac, the first version of Microsoft Word comes out for the Mac.

Excel was invented on the Mac.

Excel was invented on the Mac. You just see these big classes of applications on desktop computers with the operating system as a very responsible layer that creates capabilities. But if you will recall, when Microsoft went to cross-platform interface elements in the early days of Word, the Mac community rebelled and said, “No, we want a bespoke version of Microsoft Word for the Mac.”

It was Word 6.0.

Yeah, it was Word 6.0. And it took them years to recover from this self-imposed stain of ugly interface elements. All of that’s gone. The culture around Mac development and Apple development used to be, “This is the best. We’re going to make something at Apple’s level of quality.” And what you’re pointing out is it shifted really far. There isn’t. I mean, there is a small community of Apple indie developers, which are amazing, but it’s still shifted really far. Do you think that’s recoverable?

I do think it’s recoverable, but I think it should have become a red flag issue at least five-plus years ago within Apple, like, “We need to turn this around and make it more of a thing.” And you can kind of see it on iOS, where... And this would be my existence proof that it’s recoverable, and it’s... Say what you want about the aesthetics of the iOS 7 flattened redesign from now, I guess, what, about 10 years ago, 11 years ago. But part of that wasn’t just Jony Ive wanting to get rid of those ‘skeuomorphic’ leather and texture and brushed metal and 3D buttons and stuff. But part of it was a concerted effort to get developers to stop making apps that the entire brand of the app looked like the brand of the company and kind of get apps that all look, “Oh yeah, that’s an iOS app.”

You still see some apps that don’t look iOSey at all. But for the most part, most apps on iOS are very consistent with the platform. It’s the Mac that’s lost that to a large degree. There are a lot of native third-party apps, but it isn’t a growing market. And Apple should see that as a five-alarm fire, in my opinion. Not because the Mac is that particularly big compared to iOS, but because it is the platform that makes the platforms, it’s... All iOS apps are made on a Mac and it doesn’t seem to be of concern to Apple. And to me, it is unusual. It’s why I love ChatGPT because the ChatGPT Mac app is actually a really good and clever Mac app that does really interesting Mac things, like it knows about BBEdit. And so if you’re using BBEdit while you use ChatGPT, they’re like, “Hey, do you want me to hook up to this script that you’re writing in that front BBEdit window, yes or no?” And if you do, then it’s like, oh, and now you can just type commands, like how do I make this script do X? And ChatGPT can do that. You can’t do that through the web connected to a native Mac app. And it knows about all the other popular text editors on the Mac too.

What’s interesting is Open AI does a lot of work with Jony Ive and Jony Ive’s new design firm. And you can just see, some of this DNA is coming through. When I say it’s recoverable, there’s the, is it recoverable, can you make an interesting platform? Can you attract the trust of developers? Then there’s the, can you deliver on what you say you’re going to deliver? And to me, that comes back to hubris, right? That’s the concept video at WWDC sewing off a Siri that I think even the Siri team had not known was going to be, to show it off.

Yeah, so we’ve learned since.

What do you think that says about Apple right now? I mean, you’ve written about this at length that heads should have rolled for this.

Well, and I think they kind of are, but in a very Tim Cook quiet-ish way that he does not like, I don’t think, external drama. I don’t think Steve Jobs did either, but I don’t think Steve Jobs cared, and I think when he got emotional, he just got emotional. I still don’t know. And there’s been so much reporting that’s come out in the last, I guess it’s about two months now, but Wayne Ma at The Information had a bunch of good stuff. Mark Gurman always has lots of little nuggets here and there in his reporting at Bloomberg. I still don’t know what they were thinking in June when they announced it. In the back of my head, I kind of feel like it’s another case where, and again, I’m not saying that the guy should be fired for it, Tim Cook, but I kind of feel like the buck stops there. And obviously, some number of people at Apple are like, yes, we can build this, these Siri features and ship them by next year. Right? It would be insane.

And some of the pushback I got to my piece, “Something Is Rotten in the State of Cupertino,” was on the grounds of insinuating that they were dishonest about it, that this was fraudulent. And I didn’t mean to imply that, and I don’t quite see, I guess, I didn’t explicitly state that they weren’t lying about thinking they could ship it because it seemed so obvious to me that of course they weren’t lying. Of course some number of people there thought they were going to ship that within the next eight months because it would look terrible if they didn’t and then they didn’t and it looks terrible. So, of course they didn’t. And famously, Apple’s leadership is extremely stable. Everybody there has been there for a long time. It’s not like it’s a fly-by-night job where there were people pushing for, “Yeah, let’s lie and say Siri will do X, Y, and Z by next year because I won’t even be here by next year. I’ll cash out in April and go work at Meta or Google or whatever.” No, they’re all still there.

So of course some number of people believed it was going to ship, but there also had to be other voices in the company saying, “I don’t know if we’re going to be able to ship this in the next year,” or, “I don’t think we’re going to be able to ship this in the next year.” And at the very least, “I don’t think we should tell people in June of 2024 that we are going to ship it in the next year. Let’s get closer to shipping it before we announce it. We don’t have to wait until it’s ready, but we should be a lot closer to ready before we tell people this.” I don’t know. I think that maybe, I know it’s an overused phrase, but that they’re sort of high on their own supply, where for so many years they’ve said and when they’ve gotten a little bit out over their skis of, this isn’t quite ready, but I think there were people inside the company who were effectively willing to bet their careers, but we can make this work.

So with these advanced Siri features, why in the world in June last year when they clearly at this point we now know they weren’t even within a year of being able to ship. So I don’t know what their most optimistic scenario was then, but why wasn’t the internal discussion, “Well, let’s table this for now and maybe if over the summer we get closer, maybe we can announce this at the iPhone event in September,” which I don’t know if you know, a lot of people pay attention to.

I will point out that a lot of people have announced Agentic AI systems, they can click around on websites and do it for you. None of them work to any great effect. Amazon announced Alexa+, approximately zero people have it. They launched it, they said it was out from what we can tell, 100,000 no ones have it. There’s some number of people who have it, but it’s no one that anyone knows.

Yeah, I don’t know.

So, it does seem much harder than it looks. But what I would connect this to, and I think we should end here. This is like, where does Apple go? Right? Here’s all of this pressure on manufacturing, on supply chains, on revenue. Right? The only growing line of revenue, like you said, it’s just a linear lineup. 20 billion, 25 billion is going away. Maybe we prompt the whales to come to the private rooms and take a little bit of that money away too. That’s a lot of pressure, but it seems like where Apple has been good for years, decades now, is relentless linear improvement.

You once wrote a very famous post called “This is How Apple Rolls,” right?

Yeah.

And they just, relentless improvement. Every year it’s a little bit better. And if you can start somewhere and you can get to the finish line, Apple’s going to get to that finish line. And it seems like what they’ve missed is any disruptive change. Right? And I think to whatever extent AI is a disruptive change, it’s a disruptive change to the interface of computers. You can just talk to the computer and then the computer will tell you to leave your wife, and that is going to change how we think about computers. I don’t know if they’re alive or conscious or whether they’re going to AGI, but the idea that we can just have a conversation with a computer or maybe it’s going to do some stuff, that’s the change.

And here Apple, instead of understanding the technology, announced what it might do, instead of saying, “Okay, here’s how we can get from A to B and from B to C.” I think you can see it with the Vision Pro too, right? They wanted to build true AR glasses and they couldn’t. They didn’t have the capability or this technology in there so they built this big VR headset and it hasn’t taken off because you can’t see how that thing improves in a relentless linear way to the actual goal. And I’m just wondering if you think the Tim Cook Apple, all this relentless optimization, all this relentless increase of revenue, whether you think culturally it can make a big disruptive change like that.

I think they can. I think though that it’s very odd to me that they seemed... And I am sure every single person involved, if they jumped into this podcast with us, would say, “We didn’t panic at all. We weren’t panicked.” But it looks to me like last year’s WWDC was a panicked announcement of, we keep hearing AI, AI, AI. We’re going to announce that we can do all these amazing things that nobody else can. And it turns out, nobody can do them, including Apple. Right? So, why announce them?

And I feel like it’s so early days for AI. I know that it’s so exciting and these models keep improving and there’s so much going on. But I think when you zoom out and look at, how is it really, what are the products that are driven by this? We don’t see it yet. It may just be a handful of years, but the product is not going to be the ChatGPT app. ChatGPT app isn’t going anywhere, that’s like the terminal. So running programs in a terminal app is still a thing today, even exactly... Would be very similar to somebody from 1973 at Xerox PARC. They could sit down in front of the terminal app and be like, “Oh yeah, it’s still got VI and lots of stuff is similar.” It’s like, oh wow, look how much faster this is. ChatGPT is like that. It’s not going anywhere. We’ll have it forever for doing the things where you actually chat to somebody.

Chat turns out to be a great interface. Right? This is how me and you, 98 percent of the year, two days a year, we see each other and we pal around and we have lunch and we’re in meetings together or a podcast together, and then the other 97 percent of the days, me and you are friends by text, right? It’s a great interface. It is, but it’s limiting. There are going to be interfaces that are to chat to interface with AI, what graphical user interface apps are to command line apps. I don’t know what they are yet. Nobody does. I don’t think we’ve seen them.

I think the one that’s obvious, people talk about it, I don’t know why people laugh. It is obviously going to happen. We want robots. We want C-3PO and R2-D2 style robots in our life who can walk around our house and go get us drinks from the refrigerator and go answer the doorbell because I’m expecting a FedEx package and the robot will go down there and answer. We want these things and what’s the... We’re going to talk to them. Apple can make physical devices better than anybody. Right? That’s part of the play, right? So to me, the thing that I don’t see why Apple’s panicked is that the real play is going to come when AI informs the fundamental physical nature of certain devices. Right? It’s not going to be these slabs of glass, the phones and the tablets, it’s not going to be laptops. We have the interfaces for them and now they’re all decades old. There will be new physical devices that you buy that are AI first, and again, they’re not going to be pins that you wear [inaudible 01:07:07].

But that’s where that entire class of devices came from. Right?

Right, right.

People thought, okay, voice is the dominant interface. If I redesign the phone to be voice first, maybe I’m going to throw the screen away and pin it to your chest.

Right. Get on that.

But the AI wasn’t ready, those products just didn’t work.

That’s where Apple should just have the quiet confidence and to start noodling on those ideas of, what can we build? Can we build a robot that can go up and down stairs? What else can we do? Can we do something? There’s so many different ideas that are possible and I think we’ll start seeing them soon, but Apple should be thinking that. What are the physical devices that are informed by this and how can we build them as quickly as possible? I mean, that’s probably why they had that experiment with the car. The car was, and by all descriptions of Apple’s car project was sort of... Some people within Apple apparently only wanted to do it if it could be entirely self-driving, right? That it was an AI product in a certain sense. And I don’t even know that it was wasted money.

I think you have to, if you don’t have failures, you’re not trying hard enough. If every single thing you try to do you succeed at, then you’re not trying hard enough. You need, I don’t know what the right batting average is, but you have a couple of, to be pushing so close to the edge of what’s possible that sometimes it’s not going to pan out, and Apple should get back to that. But promising things that aren’t within months of shipping shouldn’t ever be part of the recipe. And I don’t think, it’s going to be a long time before they recover from that.

And then the other thing they should be thinking about recovering is getting developers outside Apple to want to make software for Apple devices. To be dying, to be begging their boss like, “Let us make a native app for this whatever.” Whether it’s the iPhone, the Mac, or a new device or something, and having the boss say, “Well, what’s in it for the company?” And say, “Oh, it’s a great deal,” and to have it actually seem like a great deal. You know?

Yeah, or it’s something we can go tell our customers about that we can only do on the Mac or only do on the iPhone, which at this point is pretty limited.

But John, we got to wrap this up. First of all, I just want to say one thing. Every time I think about the Apple car, I think about the fact that the most popular cars in America are midsize crossovers, and imagining Jony Ive trying to design a midsize crossover is just the funniest.

Nope.

No wonder that project failed. What, Jony Ive’s going to compete with the Mazda CX-5? Get out of here, it’s just not happening. But that piece about developers is really important. And I’m just curious, I mean we’re coming up in WWDC, do you think they’re going to acknowledge these missteps and apologize and try to reset those relationships?

Well, maybe on the developer terms, and I don’t have any insider information about it, and if it is going to happen, I’ll bet you could fit them in a midsize crossover SUV. The number of actual people involved who know what Apple’s going to announce would fit in a Mazda CR whatever.

Yeah, not even the three-row one, the two-row one.

But I think that they could, and it’s a very Apple way. Steve Jobs was the master of this, of saying, they’d say, “Hey, do you think anybody ever wants to watch video on an iPod?” And he’d say, “No, that’s the stupidest idea I’ve ever heard in my life.” And then the next year, the video, the iPod plays video. And come out and say, “Hey, we had this great idea. How about we cut the rate of the app store to 85–15 from... It just popped into our head and we thought, and some kind of Apple explanation for why now’s the time to do it, without acknowledging that they lost a court case, without acknowledging any regulatory pressure from other countries around the world. Just act like it popped into their head and it’ll make a certain segment of the internet’s heads explode because they’re pretending that they just came up with this original, amazing idea of only taking 10 percent of digital transactions or whatever the number would be, and acting like they invented it. But that’s Apple. They could do it. There’s nothing that’s stopping them from doing it.

And I do think, just one quick point. I’m sure you remember this guy, Arthur Laffer, he’s still around, but he’s the guy from the Laffer curve that fueled the whole supply-side economics idea. And the idea is that if the government charged lower tax rates, they’d make more money because the economy would grow. At a certain level, and Republicans sort of took it to an absurd degree, but at a certain level it is true. It has to be true, because if the government taxed your income 100 percent, well, nobody would work. Why would you work if they’re taking 100 percent of your money? And if the government taxed you at 0 percent, the government would make no money. So there has to be a magic number in between zero and 100 that is about the optimal amount of money that people are inspired to work the most, and then the government makes the most money because the economy is growing.

The number for Apple has to be different from 70–30, but they’ve somehow started thinking, “Why would we lower it at all? We’ll lose money.” But they’re clearly, they’ve lost so much money because people aren’t building for the platform and they don’t see it. It’s bananas.

I would tell you, having talked to a number of antitrust regulators in the show, the idea that we would take tax policy and apply it to a company is the problem that they see. Right? They’re like, “Apple’s a state. Apple has government problems. Apple has tax policy problems.” The market should be setting the rate. Right? Apple should say, “Our developers are leaving and going to develop for Microsoft or Google or whoever, and that is bringing the rate down, not us, the regulator.”

And this is, now we’ve just entered into pure Decoder land, but what is the optimal tax rate for a platform is, in the Laffer curve is deep. We’re going to have to come back after WWDC and talk about it because I’m very curious what they do here especially, and we don’t know yet if more developers take advantage of this moment when the judge has said, “You’re not doing this anymore.” And they’re adding the buttons, right? They’re adding the buttons to take people to the web, but Apple’s appealed that ruling. There’s this weird A–B test that is about to happen.

The most innovative thing to happen so far in May 2025 is that the Kindle app now has a get book button in.

You see what I’m saying?

Innovation, Nilay, innovation.

Do you see what I’m saying? This is what they would say the problem with the monopolies are. But John, you’re going to have to come back. I’m dying to see what happens to developers. I’m dying to see what happens with WWDC. It seems like, like I said at the top, whatever we think of these big companies right now, the status quo is not holding, right?

No.

Things are changing. And I think in particular for Apple, the soul of the company is either going to persist and win or something else is going to happen.

So from our perspective in the media, they have done their job of making this year’s WWDC something that seems like it’s going to be dramatic.

I hope so. We’ll see. All right, John, thank you so much for being on Decoder, we’ll have to have you back soon.

All right.

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