Amazon Outage Knocks Out the Internet & The iPhone 17 is Saving Apple

0:03When did making plans get this complicated? It's time to streamline with WhatsApp, the secure messaging app that brings the whole group together. Use polls to settle dinner plans. Send event invites and pin messages so no one forgets mom's 60th. And never miss a meme or milestone. All protected with end-to-end encryption. It's time for WhatsApp. Message privately with everyone. Learn more at whatsapp.com. Good morning for Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, how a small error by Amazon broke the entire internet. Then, in the midst of Apple's It's So Over, the iPhone maker found within it an invincible.

0:44We're so back. It's Tuesday, October 21st. Let's ride.

0:52Good morning. The World Series matchup is set, and it happens to be a very appropriate name this year because a team from Canada is playing in a dramatic Game 7 last night. the Toronto Blue Jays defeated the Seattle Mariners in the ALCS to book their ticket to the World Series, where the juggernaut Los Angeles Dodgers and their$350 million payroll are waiting. With all of Canada rallying behind their team and baseball fans in Japan, tuning in to support the Dodgers superstar Shohei Otani. It's going to be a truly World Series this year. What other storylines should we know about, Toby? Well, L.A., Canada, a lot of people are calling this the Kendrick Drake World Series, with Kendrick hailing from LA and Drake being, of course, from Toronto.

1:35Sure enough, the MLBX account posted a video of Drake going wild when they won last night just to rub salt in the wound. Something tells me that Drake may try and rekindle things with Kendrick, but Kendrick's sort of above it all these days. If I was a Blue Jays fan, though, I would be more concerned about the good old-fashioned Drake curse because the rapper has an undeniable knack for jinxing any teams he root for. He and I actually share that in common, RIP, to the Mariners. So I won't go through every team that he's cursed, but I encourage you to look up the Drake curse and good luck, Toronto, because you're up against the eight ball.

2:31Speed up your hiring with a$75 sponsored job credit at Indeed.com slash podcast. Terms and conditions apply. Said to our first story, millions of Americans picked up a physical book for the first time in years yesterday after an Amazon Web Services outage knocked out more than 1 ,000 websites people use for work and for fun. Wanted to trade stocks and crypto? No dice. Robinhood, Fidelity, and Coinbase were down. Needed to check in for your flight? United and Delta were on the struggle bus. Wish you could cheat on your homework. AI chatbots like Perplexity were also caught in the crossfire. Craving your wordle fix, New York Times games was broken.

3:09Plus, Amazon's own services like its e-commerce marketplace and ring doorbells were disrupted, along with social media sites Facebook and Snapchat and gaming sites Fortnite and Roblox. It's a stark reminder that the internet and global economy are being held up Atlas style by just a handful of cloud providers, Amazon web services being the biggest among them. In fact, it's the largest cloud provider in the world, underpinning one third of the entire web. Trouble started a few hours before we taped yesterday's podcast around 3 a.m. Eastern time when a domain name service error took the database in Amazon's key Northern Virginia data centers offline, which impacted services on the East Coast and beyond.

3:49By the morning rush, a number of sites were coming back online, but the recovery hit a snag later in the day when some U.S. users reported fresh issues with accessing certain apps. Toby, this doesn't seem as damaging as the CrowdStrike outage last year that caused global mayhem. Remember that. But it does raise questions about the Internet's reliance on a few server warehouses in Fairfax County, Virginia. Yeah, it is U.S. East 1. That is a name that you should know if you are someone who is affected by this outage. What happened here? So a simple update was shipped to this domain name system, DNS.

4:23A lot of people describe a DNS system as the Internet's phone book. It connects human-friendly domain names, so think something like google.com, to numeric IP addresses that computers use to identify each other on a network. So when something in that process breaks, essentially any computer trying to access another computer are getting the equivalent of a wrong number. They're unable to find the right destinations, which is why you saw all these data requests bouncing and all these sites go down. It actually started affecting Amazon's internal logistics system and then quickly rippled out from there.

4:57And what it did, too, is put a lot of companies that are so-called in decentralized industries right in the spotlight. The one that comes to mind initially is Coinbase. Coinbase, you know, is a crypto exchange. Crypto's entire value prop is the fact that it's a decentralized organism. And yet here is one of the biggest exchanges in the world going down because of a very centralized entity in AWS. Let's just look at the scope of the damage. I mean, yes, it did start on Amazon's internal services, but spread far and wide. People couldn't charge their electric vehicles Monday morning because the charging network uses AWS.

5:31More than 4 ,000 flights were delayed. A bunch of news websites as we were trying to do research for this specific story were knocked out, especially the Wall Street Journal. Alexa devices could not hear. A lot of people couldn't post on Slack. Students couldn't turn in assignments or materials from their courses. And then a number of British government websites were also down. So it extended beyond the Atlantic. And again, a lot of people were reflecting on the fact that, yes, Coinbase is a decentralized service. And all these other companies, you know, were relying specifically on Amazon Web Services to keep them afloat.

6:04And here we are with this maybe single point of failure. You heard that phrase a lot, single point of failure for the entire Internet is being propped up by just honestly Google, Microsoft and Amazon Web Services with their cloud providers. I do think one of the funniest jokes being made was the fact that Venmo was down. And so you made it yesterday on the show that, hey, I'm going to be a little late in the payments because, you know, hey, what can I do? It's down right now. But the other segment of the world that melted down, which is a little bit funny, was Wordle because New York Times website went down for a little bit as well.

6:35And so a lot of people's Wordle streaks disappeared. And so people are looking at it like one person that Business Insider talked to had a 292-day streak snap that was actually in Manchester over across the pond. And they're like, what am I going to do? They legitimately reported all-out body chills. Obviously not the most important part of the entire internet, but it was funny how certain pockets of the web were totally melting down over this big old outage. Yeah, so this has happened before for Amazon. happened once in 2023, once in 2021, and once in 2017. But if you look at the numbers, you're starting to see how much Amazon Web Service has grown to be a key player in holding up the Internet.

7:19So Amazon Web Services had a brief stumble back in 2017. Well, back then, it was a business that was doing just$20 billion in annual revenue. That's pretty big. But today, Amazon Web Services accounts for about$130 billion in revenue. It accounts for nearly 20 % of Amazon's entire revenue, and it really is its profit center with 60 % of its operating profit coming from this very high margin cloud business. I think you're going to start hearing the term multi-cloud, multi-cloud resilience going forward because all of these businesses are looking at this saying, we're going to need to diversify where our data is living because if it all comes down to AWS, even though it has been a reliable service up until this point, it's just cloud centralization causes more and more risks.

8:04So I did look, though, Amazon stock is up in the early trading right now. So maybe it just shows how important it is to so many businesses. But maybe you'll start to hear some inklings about people trying to diversify their suppliers to the cloud because you don't necessarily want to have just all the strain on one specific point of failure that can get wiped out in just one early morning outage. Moving on, after a couple of down years, it looks like the emperor has its new groove back. Apple, for a long time, has been the laggard of the Magnificent Seven, falling as much as 31 % by April of this year as investors fretted over tariffs and its lack of AI progress.

8:41But yesterday, its stock set a new all-time high on the back of old faithful, the iPhone. After two years of declining or flat iPhone sales, the iPhone 17 is suddenly hot again. According to CounterPoint Research, the latest iPhone outsold its predecessor by 14 % in its first 10 days across the U.S. and China. Shipping times are also 13 % longer than last year, which is a proxy for strong demand. For as much as people like to poke fun at the lack of a major hardware change, the iPhone 17's meaningful increase in battery life, camera upgrades, and a fresh orange paint job were enough to convince plenty to upgrade.

9:19An analyst from Loop Capital, which aggressively upgraded their long-term price target on Apple yesterday, said part of the reason for the upgrade is that we're at the front end of Apple's long-anticipated adoption cycle, meaning a lot of people sitting on pandemic-era phones are finally in the market for a new one. Neil, all of a sudden, Apple has gone from worst to first among its peers, trading at 32 times forward earnings, the most expensive member of the Magnificent Seven after Tesla. Who needs AI when you have an iPhone? The question analysts are trying to parse now is whether this is an iPhone 17-specific story or this is just part of a broader cycle of people upgrading their iPhones.

9:58315 million iPhone users out of 1.5 billion users worldwide have not upgraded their phones in over four years. That's according to Wedbush's Dan Ives. A lot of people got their previous iPhones back in the pandemic when all we were doing was scrolling on our phones. And we looked at it and we're like, we should probably get a new phone. So a lot of people have not had a new phone in four years. So they were due for an upgrade. But it does look like Apple did make meaningful changes to the iPhone 17 specifically. that makes it a very compelling proposition compared to at least the iPhone 16, which it's absolutely lapping in sales in both US and China, which are its two biggest markets.

10:36Perhaps to further the bold case here is that if this iPhone upgrade cycle is in the midst of happening, but Apple intelligence hasn't even hit its stride yet, then it could have this almost second wave of growth because Apple intelligence hasn't even rolled out in China, one of the most important markets for the iPhone. So if you have people upgrading to this new phone and then you can roll out an AI system, that's a big if, obviously, because so far Apple has shown absolutely no ability to capture anyone's intention with their AI efforts. But if you do that and people just have these new phones and maybe you could see how the ball can start rolling again for Apple, which, I mean, we go back to the beginning of the year.

11:14Things were looking very dire for Apple because, you know, iPhone sales were not looking good. They were flat or falling. Its AI efforts stunk. And also, you know, tariffs hit it and we thought it was going to be very much affected by that. It's made a massive comeback since then is now doing just fine amidst its magnificent seven pier. So quite a turnaround story for a company that was very beleaguered at the start of the year. Yesterday, the head of NASA told Elon Musk something he's heard a few times before. You're missing deadlines, pal. Sean Duffy, the NASA administrator, said that he was going to reopen a contract for a lunar lander previously awarded to SpaceX because SpaceX was taking too long getting its Starship ready for a moon mission in the next couple of years.

11:58And now is not the time to dilly-dally because the U.S. is scrambling to send humans back to the moon before China does to secure the best lunar real estate. In a Fox News interview, Duffy said, We're going to have a space race in regard to American companies competing to see who can actually get us back to the moon first. I love SpaceX. It's an amazing company, he told CNBC. The problem is they're behind. They push their timelines out, and we're in a race against China. Back in 2021, SpaceX was awarded contracts worth$4 billion to use its mega Starship rocket to ferry American astronauts to the lunar surface for the first time since the 70s, beating out other companies like Bezos' Blue Origin.

12:37To accomplish this, it would need to pull off a series of unprecedented engineering feats like refueling Starship multiple times while in space. But so far, through 11 test launches, Starship has exploded more often than not, leading Duffy to solicit bids from rival rocket companies. Toby, Elon Musk isn't exactly known for his two minute drill. And now the space race has a quarterback controversy on its hands. It does because yes, obviously the rockets keep blowing up, but that is not even the hardest logistical challenge they're trying to pull off. It is this, you know, mid orbit refueling that has a lot of people scratching their heads because you'd like to see them a little bit further along in the process by now, if you are going to pull this off, because that engineering feat is something that hasn't been done before.

13:20They are literally trying to invent the technology to do this on the fly. And so you see a lot of NASA administrators saying, why did we even go down this path to begin with? Jim Burdenstein, a NASA administrator during Trump's term, it said in a Senate hearing that it's an architecture that no NASA administrator I'm aware of would have selected. So just the premise of the launch in general is something that has a lot of people scratching their heads and being a little bit nervous. Obviously, it's Elon. He tends to pull things off that you don't think are possible. But right now, it is not looking super good if we want to get to the moon on the timeline that we're expecting.

13:55Who are the alternatives, though? There's not that many because while they did give a contract to Blue Origin, Jeff Bezos' company, for a lunar lander, Blue Origin is also utilizing a similar process for getting these people to the moon, which is doing rocket refueling in the middle of space, which is very experimental and it has not been done before. And the timeline is encroaching. So China is planning to go to the moon by 2030. And you have to assume they're going to be on the moon in 2030. Here's the timeline for NASA. There's three Artemis missions. Artemis 2 is supposed to happen in April 2026.

14:31They're going to send astronauts around the moon. It's kind of like a scoping mission to see what's going on up there at the moon. So they're going to do a 10-day trip around the moon in April 2026. And then by 2027, that's the goal, is they're going to land maybe two astronauts in the south polar region of the moon in 2027. So that's three years ahead of China. So they do have a bit of wiggle room here. But SpaceX seems to be dragging its feet a little bit or not getting Starship in the fitness that it needs to be where they're confident in. We saw a little bit of an anti-SpaceX trade popping off yesterday, too.

15:07When this news came out, you saw shares of smaller space company names like Rocket Lab, AST, Planet Labs look a little bit more attractive to investors because maybe there's just a hint that one of them could land some of this contract if things are up for negotiation once again. So maybe the space trade is back on after a couple of years of not that much excitement around this space. Eh, pun intended. All right, we're going to take a quick break and come back with Toby's Trends. To all the financial advisors listening, let's talk bonds for a minute. Capturing value in fixed income is not easy.

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16:18All investing is subject to risk. Vanguard Marketing Corporation Distributor. Neil, would you rather have surgery performed by a junior resident or a department head? Is that even a question? Give me the doctor with the most practiced hands, please. Customers of Quest software have the same outlook. Quest has been a global leader in data management, cybersecurity, and platform modernization for decades. So now that the AI transformation is here, companies are turning to their established expertise for support. Quest's approach to AI success is based on three priorities, trusted AI-ready data, secure identities, and platform modernization that scales with AI demand.

16:56And they have thousands of customers around the world, including more than 90 % of the Fortune 500. So on top of Quest's expansive product suite, they use insights from those relationships to inform how companies build AI readiness and success. With something as complex and significant as AI, you're probably going to want to have a seasoned pro in the room with you. Head to quest.com slash brew to get started. That's quest.com slash brew. Welcome to Toby's Trends, the segment where I take a deep dive into the internet to emerge with a trend you can impress your group chat with. And today's trend, I would argue, is the most important one I've done yet, if you have a child in middle school right now.

17:35Because today I am daring to explain the 6-7 trend that has swept classrooms around the country. What is 6-7? If you ask your kids, they will likely tell you it means nothing, which is actually pretty spot on. The phrase is sort of an in-joke among the youth whose power lies almost entirely in confusing adults. You can trace its origins back to a viral song from the rapper Skrilla. The song Do Doot has a lyric that reads, 6-7, I just bipped right on the highway, probably in reference to 67th Street in Philly or the police code 1067 used to report a death. From there, it made its way to the sports world with edits featuring Hornets point guard Lamella Ball, who, you guessed it, stands 6 foot 7 inches tall.

18:16The meme's human embodiment came in March of this year when a hyperactive suburban middle schooler was caught on camera shouting 6-7 at a basketball game, attaching a sort of ironic, overzealous middle school energy to the joke. From there, any mention of 6 or 7 in succession, either on the calendar or in problem sets in school, sends a certain gen alpha demographic absolutely buck wild. Teachers everywhere have no doubt been greeted with a chorus of 6-7 when going about their everyday duties. Neil, this trend is of the skippity toilet in Ohio variety, a meaningless phrase whose purpose is to divide the insiders from the outsiders.

18:55But on a scale of 1 to 10 right now, how confused are you? About a 6 or a 7. You did a good job explaining it, Toby. This seems to be the trend of all trends this year, and it has remarkable longevity. It's amazing what's going on in classrooms, especially math classrooms, because teachers and adults are realizing how much you actually use the words six and seven in your daily life for especially teaching math. And whenever they say either one of those words, especially in succession, there is a chorus of kids who are saying six, seven, disrupting the entire classroom experience. So these teachers are taking interesting tacks to figure this out.

19:32Some are avoiding breaking kids up into groups of six or seven. They'll never ask them to turn to page 67 in a textbook, and they'll never say you can take six or seven minutes on a particular task. That's one way they're doing. They're trying to avoid this. But on the other hand, they're also embracing it by perhaps saying, oh, if I do it, it makes it cringe. And then you guys will stop doing it. We can actually learn something here. I think we are actually helping teachers out right now by talking about it. Admittedly, pretty late to the trend. I mean, this thing probably pinked a few months ago, but at a certain point, the news outlets finally started to get to it.

20:07We're like, all right, I guess we'll talk about it. We are also inherently making it uncool right now. So, teachers, you are welcome. But it did penetrate pop culture for sure. I mean, South Park had a whole episode about it where there was a cult of 6 '7 at the middle school. And then, obviously, you've seen it in the sports world a lot, too. I mean, even last night, Amon Ross St. Brown, a receiver for the Lions, celebrated. There's a hand movement that goes along with it as well. People just celebrate with it now. It has penetrated the sports world. Paige Beckers dropped six, seven in a press conference.

20:38She was kind of giggling while all the reporters had no idea what was going on. That's kind of just an encapsulation of the trend is one group of people, usually kids, giggling, while another group of people have no idea what's going on. So in that sense, it's a tale as old a time. Kids have always created just dumb words that mean nothing in order to signify that, hey, I'm a kid. I'm cool. You're an adult. You're not cool. So this is not a new thing by any stretch, even though it probably is the most absurd one to date. One thing I thought was really funny is a bunch of kids went to an in and out and they just waited until the order 67 was called.

21:10And then they celebrated. And that was a particular video that I saw that went viral on social media. Toby, thank you for trying to explain six, seven. I know that's one that's been percolating around. We're like, are we going to do it for Toby's trends like for a couple of months now? And I think it did a great job. OK, let's sprint to the finish with some final headlines. History was made in Japan this morning, where Sanei Takaichi was elected by lawmakers to become the first woman prime minister in the country ever. She's also the first Japanese prime minister to have been a drummer in a heavy metal band and ride motorcycles, probably.

21:40Takaichi, a conservative whose hero is Britain's Margaret Thatcher, has advocated for more government spending to rejuvenate Japan's military and industries. But she must also deal with a rising cost of living that has angered the public in the world's fourth largest economy. Her rise to prime minister is a milestone in Japan in particular, a patriarchal country where men dominate the ranks of business leaders and politicians. Japan ranked 118th out of 148 countries in the World Economic Forum's most recent global gender gap report. Yeah, let's just dive into her policies a little bit as well.

22:13She is expected to push Japan further to the right. She's pretty hawkish on China, but she also wants to reduce her reliance on the U.S. military. She wants to tighten immigration and tourism rules and has a little bit of a nationalist messaging as well. But at the same time, she is, you know, the first woman to ever become prime minister in a very patriarchal country. Her husband actually took her last name, which is not something you see in this culture. So a bit of a contrast between her actual policies and her rise through the ranks as a female lawmaker in a country that, you know, doesn't necessarily make it easy for someone like her to rise to the top.

22:49And I think a lot of people will zero in on the fact that she was a drummer in a heavy metal band. Her favorite bands are Iron Maiden and Deep Purple. And also she loves riding motorcycles in her youth. So those are sort of the counterculture aspects of Takeuchi that people are going to focus on. Moving on, Disney is still picking up the pieces after temporarily pulling Jimmy Kimmel off air last month. According to independent data release, the decision triggered a wave of cancellations across Disney Plus and Hulu. About 3 million Americans pulled the plug on their Disney Plus subscriptions in September, more than double its usual churn, while Hulu saw over 4 million cancellations.

23:28Churn, the dreaded industry churn for the percentage of people who nix their subscriptions every month, jumped to 8 % for Disney Plus and 10 % for Hulu. For context, Netflix has been rooted at 2 % churn for the last 13 months. But the report from the data provider antenna was not totally negative. There was also a healthy amount of new subscriptions totaling 4.3 million across both platforms. Regardless, Neil, here we are weeks later still talking about that faithful choice to ditch Kimmel after his comments on Charlie Kirk's murder. Yeah, what surprised a lot of people during that time was that Disney announced that it was raising prices on Disney +, Hulu, and across its bundles.

24:09So that actually is going to effect today. So you might see your Disney Plus or Hulu bill go up. The ad-supported Disney Plus plan is going up$2 from$9.99 to$11.99. The ad-free premium version is going$3 from$15.99 to$18.99 per month. And so are those bundles with Disney Plus, Hulu, and ESPN, which is their new streaming service they just released. and maybe some of the increase in subscriptions that you were talking about is related to that new ESPN subscription service that was, you know, that is broadcasting NFL. And obviously the NFL came back in September. But another instance of a social media boycott that made its way to the real world like Bud Light and Target.