Did Apple get too big for its own good?

26:12And it makes you look terrible. It looks bad legally. It looks bad regulation wise, you know, 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 business person 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. Right. ChatGPT most often expressed to people as a web app on the desktop.

26:53Right. And there's something about that that you would not have predicted at the dawn of a mobile age. Right. In 2007, when the iPhone comes out, and 2008, when the App Store comes out 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 on the App Store. You know a lot of developers. A lot of developers read during Fireball. How would you characterize the reaction from developers after this ruling?

27:24Actually, 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, right? 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. You get the feeling a lot of judges are issuing decisions right now. They want to have read by regular people. And this is like a highlight of that class. And there's like a very slight, it's just a bit of lingo.

27:56It's just, you know, 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. I'm 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, 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 very, you know, how long can the frog boil in the pot before it's dead, right? It has been a very long time, but it really did shift from a scenario when the app store came out in 2008.

28:49I mean, 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 have been, it wasn't a way to make the apps that Apple itself was making for that first iPhone, right? 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.

29:25We want to use Objective-C and we want, you know, 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.

30:00Very much so. But now it's not, you know, 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.

30:37And 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 an amazingly good deal. Compared to the carrier stores and all the other lock distribution. 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.

31:15This 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 have been some slight loosening of those terms. But for the most part, it's a 70-30 split. But 18 years later, with all of the, you know, two decades practically of innovation in online payments, right? I don't, Stripe wasn't a company in 2007. This isn't the world. And, you know, and I know you've mocked this in your writing. I don't think, I think they've sort of dropped this angle.

31:54Who knows? Maybe their retort to YGR's decision is going to go back to it. But, you know, just a couple of 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 the computer to install software. And it's like, I remember that. You remember that. A lot of people listening to the show remember that. But that was a long time ago. You know, what's interesting is I feel like that was a happier time for software development, right? Like it was over.

32:28There was no subscription fee. Right. You like had the product. You could use it however you want. If you wanted anyone, 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. Right. 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.

33:05I really do think so. They were doing the distribution. They had massive app store marketing campaigns. Every new iPhone owner was a potential new customer in a way that that is totally saturated now. I think it's basically impossible to make the argument that they're earning their 30 percent now. 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?

33:40And 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 a billion a year. how about at that point we'll just keep lowering the commission to keep it at you know we'll make a 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 a billion we'll go to 80 you know just keep lowering it and it i didn't seem like anybody there was evidence in there of anybody writing back nah but it sure seems like The answer was, nah.

34:29Well, so here's my question. Actually, it's about Phil Schiller, who is, as a character in Epic vs. Apple, in this case, talking about the services line, talking about these commissions, her 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 Project Wisconsin was how do we comply with the judge's ruling?

35:04And they landed on this 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? I think there's a couple of things. I mean – And 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.

35:44And Tim Cook is the tiebreaker and picks commissions. He picks wrong. Right. 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. 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.

36:33It was like, oh, he got along with Steve, but therefore remembers vividly what it was like when Apple was an underdog. And, you know, so many other people, Jaws has been there for just as long. I think Jaws has been there for like 35, 40 years. So it's like Jaws remembers it. But Jaws doesn't seem to be a character in this story, right? Jaws is whatever, you know, he's as 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.

37:20and 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 gonna do? Not make an iPhone app? You know, 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, you know and I think Shiller remembers what that's like And Schiller, you know, 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.

38:00And 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, right? The continuity features between devices.

38:48These 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?

39:28How do we not pay Apple this exorbitant 30 % cut? And how do we scheme? Maybe what we do is we'll build, 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 computer you're using, that whole flywheel is broken. And I think Shiller sees that, that you don't have to squeeze every penny out of it, right?

40:09And Apple, this is what's so crazy about this, that people who are really 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, has never, to his credit, has never pretended to be a product person, that he's a penny pincher, right? 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 know, you can tell that they'll go through dozens and dozens of hardware revisions to get the corner radius on the phone just right.

40:47They have metal engineers to create new custom versions of titanium to make the sides of the iPhone look the way they want using titanium and 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 cost money, 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 App 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 app store revenue for a long time.

41:36He'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. And that person is now going to refer to the DOJ for criminal prosecution. Apple invented this 27 percent rationale, this fake compliance, maybe not malicious compliance, but fake, certainly fake compliance.

42:20Apple 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 a report the other day, I think MacRumors had it. Somebody filed a lawsuit that only 34 developers actually used those links out of like 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.

42:52I 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. Right. So I'm just saying, I look at this line from Jason who's been signing this alarm for years, right? Your dependency on a services line of business makes you a toll collector, right? 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.

43:27If 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 and 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. Right. 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 that sort of the perverse effects of that sort of profitability.

44:12that 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, you know, I think it was around 2013 famously where Samsung was having a couple of good years. Steve jobs had died like two years prior and people were starting, you know, starting to call out the CEC, they can't do it without Steve Jobs. And, and yeah, look, it's going to happen to, you know, same thing happened to the Mac versus the PCs happening with the iPhone.

44:53I think it was the same year where the Mac Pro came out and Phil Schiller said on stage, you know, 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. Every time you look at your iPhone, that'll be 30%. Yeah. Yeah. We're going to, 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.

45:32And there were a lot of people, you know, 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, you know, when COVID happened and there were supply chain shortages, the, the, uh, over the years sales of iPhones and other hardware products sometimes fluctuate in places like China, which is a second biggest market for Apple, but the services number is just like 5 % up 5 % up 5 % up 5 % up.

46:30And now it's this big thing. you know you don't have to be a wall street expert to know that what investors in general that if they don't really care about the fundamental nature of the business like lots of people buy a little bit of apple because they're like i believe in the company i think this is a company you know that i want to support i think they have a good future i understand that they make you know 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.

47:06That's it. And again, at a superficial level, you could say, well, they can make iPhones that start falling apart quicker, right? 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 like four years and they worked great four or five years and they were still great, just a little slow. And then I'd get a new one. 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, right? Apple knows that, so they're not going to do that.

47:36But with these long-lasting iPhones and with diminishing returns on chip performance at this point, and we see it with Apple Silicon in particular, right? 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 Pro MacBook Pro, and I have no idea when I will ever have to replace it. Yeah, it is unclear. Right, 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.

48:14Clearly, 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.

48:31We need to take another quick break. We'll be right back.

48:45We're back with Daring Fireball's John Gruber. Before the break, we were discussing what John referred to as Apple's massive blind spot, its inability to see just how badly its response to Epic lawsuit was perceived, and how its insistence on taking so much money from developers year after year was warping its reputation from a legendary product company into one of a greedy toll collector. But as you'll hear John and I get into, this isn't an isolated incident for Apple. It might be evidence of a deeper problem at the heart of the company, and it's really starting to undermine its efforts to keep innovating in all sorts of other areas, most visibly in AI, with the announcement that the next generation of Siri will be delayed.

49:22I want to draw a line from that and 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 the next month or so. But I don't think we're going to hear a lot about it. No, I don't think so either. The big agentic Siri that they promised is really far in the future.

49:57And the reason I want to make this connection is, one, just hubris. Like, is this all just hubris? But secondly, to make that Siri work, they need a lot of goodwill from app developers. Right. 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. Like beyond the technical difficulty of this, there's just a, hey, DoorDash, will you let Siri just like order a sandwich on your platform without anyone ever opening your app?

50:36And 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? Right. 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-intents APIs are very specific to Apple's platforms. I was going to say iOS, they're probably on the same APIs on macOS too. But let's just say for the Apple platforms, these App Intents 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.

51:32It 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, right? 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? And so in terms of the size of the audience, that's still there, right?

52:14There 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, you know, and I don't think they're lying about the private nature of this, of AppIntense, 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.

52:59But 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 have 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. And do you want to support a thing where they might become your rival, right? And I guess that's really it. That's where the, and I think that's what Shiller sees, is that for almost all of these companies, like 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.

53:45They 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, you know, 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.

54:18That'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, right? Because games is, you know, the game industry is sort to 70, 30 everywhere. Maybe. Well, I think games, because again, like you said, it's just gambling. Like they're just happy the buttons are there, right? And like you can get big distribution. I mean, you look at the game economy. The games companies are hiring celebrities to make TikTok ads for like free to play tower defense games. Like that whole thing, like that's a whole other episode of this show.

54:49The money there is a little out of control and it is the thing that powers all of this. It's not big business. Like I think Adobe and Microsoft, the apps 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, Adobe and Photoshop. 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 like 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.

55:37Word 6. And that used to be... It was Word 6. Word 6, yep. And it took them years to recover from this self-imposed stain of ugly interface elements. All of that's gone, right? The culture around Mac development and Apple development used to be, this is the best. We're going to make something in Apple's level of quality. And what you're pointing out is it's shifted, really. far, right? There isn't. I mean, there is a small community of Apple indie developers, which are amazing, but it's still shifted really far. I 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.

56:18Like 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 Johnny Ive wanting to get rid of those, quote unquote, skeuomorphic leather and texture and brushed metal and 3D buttons and stuff. But part of it was a concerted effort to get apps 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.

57:07And you see that more now. I think there's a lot more, oh, this, you know, you still see some apps that don't look iOS-y 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. And you still, you know, 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, right? It's all iOS apps are made on a Mac. And it doesn't seem to be of concern to Apple, right?

57:53And 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.

58:33You know, it's interesting is OpenAI does a lot of work with Johnny Ives and Johnny Ives' new design firm. And you can just see how 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 off. Yeah, so we've learned since, right? What do you think that says about Apple right now?

59:09I 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. 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. You 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, you know, lots of little nuggets here and there in his reporting at Bloomberg.

59:48I 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 it, it, the buck stops there. And somebody, 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, some of the pushback I got to my piece, the something's rotten in the state of Cupertino was on the grounds of insinuating that they were dishonest about it, that this was fraudulent.

1:00:31And I didn't mean to imply that. And I don't quite see, like, 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 they, 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 save.

1:01:12Siri 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're going to ship it in the next year. Let's get closer to shipping it before we announce it.

1:01:50Like, we don't have to wait till it's ready, but we should be a lot closer to ready before we tell people this. I don't know. I think that they maybe, you know, 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, you know, 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 like 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.

1:02:32So 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 that can click around on websites and do it for you. None of them work to any great effect. Amazon announced Alexa Plus. Yeah. Approximately zero people have it. They launched it. They said it was out. From what we can tell, 100 ,000 no ones have it.

1:03:10There'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.

1:03:48You once read a very famous post called The Southerly Roll, right? 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 is 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 you think about computers. I don't know if they're alive or conscious or whether they're going to AGI, but the idea that you can just like have a conversation with a computer or maybe it's going to do some stuff, that's the change.

1:04:27And here, Apple, instead of understanding the technology, announced what it might do instead of saying, OK, 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 the 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.

1:05:08I think they can. I think, though, that it's very odd to me that they seemed, and I'm sure every single person involved, if they jumped into this podcast with us, would say, we didn't panic at all. You know, 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 that, 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.

1:05:50But 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 them yet. Like we're, it may just be a handful of years, but the product is not going to be the ChatGPT app. ChatGPT app isn't going where. That's like the terminal. Like, so running programs in a terminal app is still a thing today, even exactly, you know, would be very similar to somebody from 1973 at Xerox Park. You know, they could sit down in front of the terminal app and be like, oh, yeah, still got VI and, you know, lots of stuff is similar. It's like, oh, wow, look how much faster this is.

1:06:30Chat GPT 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 I'm, me and you, 98 % of the year, like two days a year, we see each other and we pal around and we have lunch and we're in meetings together and the other, you know, or a podcast together. And then the other 97 % of the days, me and you are friends by text, right? It's a great interface. It is. But it's, you know, 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.

1:07:14I 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. What's the interview? We're going to talk to them. Apple can make physical devices better than anybody, right? That's part of the play, right?

1:07:50So 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. 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 on your lapel. But that's where that entire class of devices came from, 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.

1:08:30Right. Get on that. But the AI wasn't ready for it. 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? You know, there's so many different ideas, you know, that are possible. And I think we'll start seeing them soon. But Apple should be thinking that, like, 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.

1:09:06The 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. 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. Yeah. 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 need to have a couple – you need to be pushing so close to the edge of what's possible that sometimes it's not going to pan out.

1:09:44And Apple should get back to that. But promising things that you don't – aren't within months of shipping shouldn't ever be part of the recipe. And it's – 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.

1:10:20Yeah. And have it be, 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. Right. Or only do on the iPhone, which at this point is pretty limited. But John, I'm going 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 Johnny Ive trying to design a midsize crossover is just the funniest. It's like no wonder that project failed. Johnny Ive is going to compete with the Mazda CX-5.

1:10:50Like, 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 on 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 inside information about it. And if it is going to happen, I'll bet that there are – I bet you could fit them in a midsize crossover SUV. The number of actual people involved who know what Apple is going to announce would fit in a Mazda CR whatever. Not even a three-row run, the two-row run.

1:11:27But I think that they could. I think – 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 of the video, you know, iPod plays video and, you know, 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, we just, it just popped into our head. And we thought, you know, 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.

1:12:07Just 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 % of digital transactions or whatever the number would be and acting like they invented it. But that's Apple. And that's the Apple. They could do it. there's nothing that's stopping them from doing it. And, and I do think just one quick point, there's, 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.

1:12:44And 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, 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 a hundred percent, well, nobody would work. Why would you work if they're taking a hundred percent of your money? And if the government taxed you at zero percent, the government would make no money. So there has to be a magic number in between zero and a hundred that is about the optimal amount of money that people are inspired to work the most.

1:13:18And then the government makes the most money because the economy is growing. The number for Apple has to be different than 70-30. But they've somehow gotten into it of 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 anti-trust regulators in the show, the idea that we would take tax policy and apply it to a company is the problem that they see. They're like, Apple's a state. Apple has government problems. Apple has tax policy problems.

1:13:55The 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 now we've just entered into like pure decoder land. What is the optimal tax rate for a platform is – in the Laffer curve is like 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 a judge has said, you're not doing this anymore. And they're adding the buttons, right?

1:14:33They're adding the buttons to take people to the web, but Apple's appealed that rule. 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. You see what I'm saying? 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 with developers. I'm dying to see what happens with the WWDC. And it seems like, like I said at the top, whatever we think of these big companies right now, the status quo is not holding.

1:15:07Things 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.

1:15:32I'd like to thank John Gruber for taking time to join me today. And thank you for listening. I hope you enjoyed it as much as we did. If you'd like to let us know what you thought about this episode or really anything else, drop us a line. You can email us at decoder at theverge.com. We really do read all the emails. or you can hit me up directly on Threads or Blue Sky. We also have a TikTok and an Instagram. They're both at DakotaPod. They're a lot of fun. If you like Dakota, please share it with your friends and subscribe wherever you get your podcasts. Dakota is production of The Verge, part of the Vox Media Podcast Network.

1:15:54Our producers are Kate Cox and Nick Statt. Our editor is Ursa Wright. The Dakota music is by Breakmaster Cylinder. We'll see you next time.