Exploring biased AI and Apple Card

New 16-inch MacBook Pro arrives

“People think it's this veneer -- that the designers are handed this box and told, ‘Make it look good!’ That's not what we think design is. It's not just what it looks like and feels like. Design is how it works.” — Steve Jobs speaking about the iPod in this 2003 article in The New York Times Magazine

Discrimination, programming AI, and Apple Card

Another week, another crisis with Apple at the centre. It’s almost as if it is part of the communications messaging grid these days. It all started with this lengthy Twitter thread from David Heinemeier Hansson, mostly channelling his wife Jamie Heinemeier Hansson. The tweet thread is worth a read, but in a snapshot, Jamie has a higher credit score than David, and a decent income to boot, but was granted a credit limit 1/20th of her husbands on the Apple Card. The initial, and likely conclusion is that Goldman Sachs (provider of Apple Card) has an algorithm that is biased, and despite claiming in a tweet of all the places that it does not discriminate and does not factor in gender into the decision making; but it’s ok because “your concerns are important to us”.

You might think I’ve jumped to a conclusion. This was not a one-off example though, not even close. Soon after David and Jamie went public, up popped none other than Apple co-founder Steve Wozniak, a megamillionaire and technophile to say that his wife got offered a credit limit 1/10th the size of his. He explained to David on Twitter that him and his wife “have no separate bank or credit card accounts or any separate assets”. But I thought the algorithm didn’t take into account gender?

Wait, there’s more… After this started getting noticed, the experiments began. Twelve people purportedly signed up via their iPhone (six men, and six women), whilst no specific numbers were revealed the results apparently showed that the men, even with bad credit scores, got higher limits and better terms than the women. But repeat after me: the algorithm doesn’t take into account gender.

At this stage I suspect none of us are particularly surprised by this outcome; sexism is everywhere in our lives and entrenched in big tech through the errors of white men. For those with close to boiling blood right now, the errors are not necessarily intentional programming errors but the fact that so many white men refuse to let their teams and companies be truly diverse—or to accept that the training data supplied to AI models contains bias from the outset.

I’m willing to suspect at this point that the Goldman Sachs’ Apple Card algorithm also cares about the colour of your skin, the university you went to, your sexual orientation and many other factors it will discriminate you for.

Am I writing this to try and change the world of black box tech algorithms and the world of AI? Not really, although people should check themselves, interrogate their beliefs, and strive for truly diverse working environments.

Goldman Sachs is not alone here. For example, there was the time that Amazon tried to build an AI powered human resources system to help sift through CVs and cover letters to find the perfect candidate for jobs. After feeding the system lots and lots of examples (the kind that had been sorted by humans), the system soon taught itself that men were better candidates. Downgrading candidates that included “women’s,” as in “women’s chess club captain” or graduates or attendees of girls schools/universities. The project was soon disbanded.

And can we talk about biased AI without mentioning the dream Microsoft had to create a chatty online bot? Well to create a chatty bot you have to feed it lots of reference data; after 16 hours of Tay being live it turned out to be a “racist asshole”. Surprise, surprise.

These opaque choices about credit limits, rates, and who gets in a scheme and who doesn’t isn’t a new headache to the old school banks. They are trash. It begs the question, why did Apple partner with Goldman Sachs? Or even a step back from that, why did Apple want to release a credit card and open itself up to this kind of trashy behaviour?

Sadly, Apple thought it could do things different. Unsurprisingly, it was wrong; but still to this day you can visit Apple’s Card website and see the phrase: “a new kind of credit card created by Apple. And built on the principles of simplicity, transparency, and privacy.” Laughable.

As of writing, three days into this latest crisis. No comment from Apple.

Just last week I spent 1,500 words explaining the reason why Apple does things. As part of that argument, I explored Apple’s reason for wading into many different industries at different points in its history. One of the key threads to that argument was Apple’s desire to bring a good customer experience to an area with bad customer experience—no better place than banking. And Apple Card’s mission to simplify cashback, make managing spending easier, and easy payment of due balances is a success story to Apple’s mission; it is sadly undone with opaque and discriminatory decision making.

A McKinsey report into the growing use of artificial intelligence in hiring, healthcare, credit decision making, etc explores how AI can help reduce bias, but that it can also “bake in and scale bias”. With Goldman Sachs’ credit card algorithm it appears that the evidence to hand points towards this. So, on the one hand “AI can reduce humans’ subjective interpretation of data, because machine learning algorithms learn to consider only the variables that improve their predictive accuracy, based on the training data used”. But on the other hand, “extensive evidence suggests that AI models can embed human and societal biases and deploy them at scale. Julia Angwin and others at ProPublica have shown how COMPAS, used to predict recidivism in Broward County, Florida, incorrectly labeled African-American defendants as “high-risk” at nearly twice the rate it mislabeled white defendants”.

The report goes on to explain that the underlying data are often, but not always, the source of bias. But in this instance, the Goldman Sachs/Apple Card algorithm, the evidence we have shows some form of bias. But biased against what? There needs to be a scale of fairness to understand the bias. There are many approaches to introducing fairness balances into AI, including pre-processing to maintain as much accuracy as possible while reducing any relationship between outcomes and protected characteristics. And post-processing techniques that adjust the model’s predictions after it has made them, using human intervention to satisfy a fairness constraint.

Apple can fix this, big tech can fix this, the world can fix this. Consider the above discussed methods of developing AI within an environment which can help correct for bias; as well as awareness of when there is a high risk that AI could exacerbate bias. It’s also important to establish processes and practices for testing, and engage humans in decision making.

But also, start by building truly diverse teams, and truly diverse businesses. I’m not a chief diversity and inclusion officer, but I know that a team works better, thinks smarter, and makes less of these mistakes when it is naturally diverse.

16-inch MacBook Pro’s Pleasing Arrival

Surprise! Well, not really. The 16-inch MacBook Pro might have been the most accurately rumoured Mac to be released in recent years. And reading the first impressions and judging by the positive reception, Apple has done good by the pros.

As Quinn Nelson (aka SnazzyQ) said on Twitter: “I’m proud of Apple in 2019. They’ve fixed laptop thermal throttling, they’ve made their phones and laptops thicker and heavier for the sake of improved battery, they’ve given us a laptop keyboard that doesn’t suck, etc. They’ve listened. For the first time in a longgg time.”

It is crazy that in 2019 one of the shining examples of improvement coming out of Apple is the keyboard of a Mac. After thirty years of great keyboards, Apple delivered a bad, broken, and unnecessary upgrade to the 2016 MacBook Pros And there is a lot of blame out there as to whose precise fault this may be. Currently in the lead for having his head on the block is Jony Ive, who may be responsible as the person at the end of the line for design during this period of time. But if you ask me, this was an engineering decision, not a design one. And you’ve got no way of proving that, and neither do I. (Let’s not forget, despite all the talk about the “de-Jony-Ive-ification” of Apple, his head is still on the executive page and he’s still the Chief Design Officer.)

Enough of my judgement, how did it do in first impressions.

Mr “de-Jony-Ive-ification”, ask John Gruber of Daring Fireball notes:

We shouldn’t be celebrating the return of longstanding features we never should have lost in the first place. But Apple’s willingness to revisit these decisions — their explicit acknowledgment that, yes, keyboards are meant to by typed upon, not gazed upon — is, if not cause for a party, at the very least cause for a jubilant toast.

Marco Arment of ATP fame:

The new MacBook Pro has no massive asterisks or qualifications. It’s a great computer, period, and it feels so good to be able to say that again. (Emphasis his)

Matthew Panzarino over at TechCrunch:

“In my brief and admittedly limited testing so far, the 16” MacBook Pro ends up looking like it really delivers on the Pro premise of this kind of machine in ways that have been lacking for a while in Apple’s laptop lineup.”

iFixit’s teardown of the product revealed that the new keyboard is basically just the old keyboard. So that settles that.

Your long butterfly keyboard nightmare is over. The new Magic Keyboard in the 16-inch MacBook Pro uses switches that look and feel almost identical to much older Apple devices—so close, in fact, that you can stick desktop Magic Keyboard keycaps onto these switches.

Apple also allowed a number of senior executives to do a round of interviews with some publications.

Jason Snell and Myke Hurley of Upgrade podcast interviewed Apple’s MacBook Pro product manager, Shruti Haldea.

CNet had an interview with Apple’s marketing chief, Phil Schiller. In which a few details are revealed about Apple’s process by the new and old keyboard designs:

“As we started to investigate specifically what pro users most wanted, a lot of times they would say, “I want something like this Magic Keyboard, I love that keyboard.””

The interview also touched on the education market, oddly considering the MacBook Pros unlikely place in the education setting. In which they appear to have paraphrased this line from Schiller:

“Yet Chromebooks don't do that [achieve best results]. Chromebooks have gotten to the classroom because, frankly, they're cheap testing tools for required testing. If all you want to do is test kids, well, maybe a cheap notebook will do that. But they're not going to succeed.”

It was a paraphrasing enough to cause Schiller (ie. his PR team) to issue a sort of correction via Twitter:

What I’ve been reading...

Apple marches confidently into original content

Apple’s newest limb of the business / AirPods Pro launch

“We concluded a groundbreaking fiscal 2019 with our highest Q4 revenue ever, fueled by accelerating growth from Services, Wearables and iPad,” - Tim Cook during Apple’s Q4 fiscal results call with investors

Share World of Apple - Delivered

Apple TV+ goes live worldwide

On November 1st Apple began a new chapter, arguably new book, in its more than 40 year history. It begins with the words “An Apple Original”, they are the words that will be analogous with this era as the mouse is to the first two decades of Apple Computer, the click-wheel is to the mid-2000s, and the multi-touch display has been since 2007.

But this presents issues for the traditional tech media and Apple watchers, and maybe it creates an issue for Apple too. You see, Apple is an embodiment of a culture and at the heart of that culture is creating incredible customer experiences. Think about it this way, Apple was not the first company in the world to release an MP3 player, but it invented the click-wheel and commandeered tiny 1.8-inch hard drives to build a better MP3 player. Apple was not the first company to release a smartphone, but with the multi-touch display and slick interface Apple was able to step into and upend another industry—whilst delighting its customers.

The thread that ties all of Apple’s successes together through its history is this consideration of incredible customer experiences, we see it through the lens of great industrial design, we interact with beautiful and thoughtful interfaces, and we make use of services that just work. With Apple’s latest move, creating and pumping original content into our TVs and cinema screens it’s hard to connect the dots. That’s why I am thinking of this latest move, more than any other, as a new limb rather than a simple extension or layer of the existing business.

With that premise in mind, there are two questions to ask ourselves. First, can Apple bring its signature touch to this new world it is in? And second, why has Apple chosen to take this route?

Many people, myself included, have an unconscious (or not so unconscious in some cases) bias when it comes to judging Apple products. We hold them to a higher standard, we expect their software and hardware and cloud services to interact with ease. Steve Jobs himself coined the phrase “it just works”. Now, no company is perfect because perfect does not exist, and when a company is more than 100 thousand employees, producing more than 100 million hardware devices every three months, operating in every country in the world, and serving more than 1 billion customers, it is not at all even remotely possible to get close to perfect. Yet, here we are, expecting Apple to outperform the pack.

The same might be true for Apple’s original content, when the Rotten Tomatoes scores flowed in for the Apple TV+ hero shows, they did not meet that outperform mentality. Were those reviewers holding Apple to some unknown higher standard? In reality, despite some initial reports that executives were dictating what content could and couldn’t be included in TV shows, Apple is giving its producers creative license and that is the right thing to do. These shows are no different in quality or output than the shows being produced by other studios. The Apple twist on all of this, is its ability to bring in top-end talent on day 1, and put brand, platform, and marketing clout behind acquiring an audience.

So yes, Apple is bringing its signature touch to the world of original TV and movie content in the same way it has to many other industries. But not by issuing dictats to those producing the shows, but instead enabling their talent, securing the stars, and putting their work on the best platform with the biggest audience it can generate.

The next question, in the spirit of any human under the age of four: why? If we go back to my preamble and consider Apple’s epochs, we see that beyond a primitive desire to create products that customers will enjoy and thereby disrupt industries, Apple also builds layers on top of its key products. The iPod kicked off a generation of digital music, and the iTunes Music Store was born in 2003. The iPhone, whilst not originally launching with an App Store, started a revolution—notably beginning during the Apple marketing campaign “There’s an app for that”. The App Store is no longer just a store, but an economy, supported by newcomers like Apple Arcade, as consumers get pushed towards subscription models.

Both the above examples serve similar purposes. A music store that makes it easy to purchase music and get it onto the iPod serves to make using the product easier, as well as simultaneously locking the consumer into using devices that work with iTunes in the future. The App Store also locked people into the iOS platform, but having quality apps that can be downloaded in a safe environment serves to reassure customers who are afraid of their devices being infected with viruses and malware.

Using this equation of added value, customer lock-in, and enhanced experience as a basis for why Apple expands beyond the core products, can we fit Apple TV+ into this? In short, not really. In fact, Apple’s behaviour suggests that TV+ is the product and has done lots of work to build around that as the core—great examples of this include creating apps for third party devices like Samsung TVs and the Amazon Fire stick so as many people as possible can access the content.

This is not a play from Apple to sell more Apple TV boxes, more iPhones, or to furnish its brand. The cynics amongst you are proverbially screaming at the author right now asking why I’m missing the most obvious play of all… Money. Well yes, can a company that is mostly beholden to paying its employees and keeping its shareholders happy not make moves that have the end goal of adding to the bottom line?

The revenue angle has two aspects to consider. The first is that if Apple wanted to fill the revenue gap being created by slowing growth in iPhone sales then it would have built a streaming service that competed head-to-head with Netflix, Amazon Prime, Hotstar, Jio, and all the others. But TV+ only has original content, and does not have the draw of every episode of Friends, South Park, or an entire back catalog of Disney movies to bring a constant stream of people to its platform. Apple has relationships with movie and TV studios as one of the largest distributers of rent-to-view movies and digital download TV, it did not use these relationships to fill TV+ to the brim, instead it is embarking on a very long journey to score customers and keep them through original content—not an inexpensive process in itself.

Another aspect of thinking about revenue is the long term angle. Apple is presumably betting that peak iPhone is mostly behind us, the upgrade cycles are lengthening and the market crowding. There will likely be record revenue quarters in Apple’s future, driven by the iPhone. But in five years time this is unlikely to be the case so thinking long-term about revenue growth is the sensible play. Nobody thinks that Apple is not constantly strategising 5-10 years in advance, it’s just sensible business. But the difference between designing and building hardware and software to release in the future, is that you can mostly do it in secret—and when it arrives, you can sell it for hundreds if not thousands of dollars per item. Consumable services offer a different take on revenue, they allow for long-term prediction of trends. But you cannot keep them secret. Apple had to get TV+ into our hands as soon as possible to begin building a customer base, to begin building a reputation so that in five years time it has a stable, predictable, and resilient revenue stream; as it does from Apple Music and iCloud now and Apple News+, Arcade, and TV+ in the future.

The two questions we started with originally don’t have simple answers but they can be answered with succinct arguments. Apple is bringing its famous touch to the world of original content and streaming through talent acquisition, curation of content, and a base of platforms to allow the artists to have their work seen by the widest audience possible. And it is doing it to future proof one of many revenue streams that it requires in the next decade, and the best kind of revenue stream is one that is reliable, predictable, and resilient.

AirPods Pro reviews

Apple’s latest addition to the AirPods lineup came right at the tail end of the company’s normal release window for new products, landing just in time for the black Friday sales build up and ahead of the prized Christmas shopping period. And judging by shipping times, store stock, and the number of AirPods Pro popping up in London already; these are going to be a popular stocking filler.

Apple’s original AirPods got showtime at the September event in 2016 alongside the iPhone 7 and the Apple Watch Series 2, although they did not hit the shop shelves until December and were extremely stock constrained through to summer 2017. This year Apple clearly decided, for whatever reason not to show the AirPods Pro at their September event, and instead went the route of a press release and a fairly extensive marketing and public relations push. My favourite part of the launch was the huge decals of dancing people (reminiscent of those iPod adverts) that Apple put on the outside of its flagship retail stores, only to update them after the product launch with AirPods in their ears (see below).

Apple also followed a well beaten path and had YouTubers, bloggers, and the major tech sites release unboxings and reviews. Here are some highlights, in case you missed it at the time.

MKBHD on Youtube - Imperfectly perfect

RTINGS.com gave the AirPods Pro a proper workout, they particularly liked the active noise cancellation:

Their active noise cancelling works very well, and is among the best that we've tested on in-ear headphones, making them a good option to use while commuting or at work. While they're smaller than the previous models thanks to their shorter stems, they offer longer battery life and have an easier-to-use touch control scheme. 

The Verge:

The AirPods Pro do come close to perfecting the original AirPods concept, though: the in-ear design will fit more ears, the noise cancellation outperforms what you’d expect from tiny earbuds, and they sound better than ever

SoundGuys:

Not only will they sound significantly better than the original ones, but they offer more in the way of features too. Sure, they’re $50 more than the latest AirPods with wireless charging, but you get a lot for that extra cash.

SnazzyLabs on YouTube - Do AirPods Pro Suck? An audiophiles perspective

What to catch up on...

Apple closes out a rocky fiscal 2019

What to look for in Apple's financials this week / Apple TV+ launch looms as marketing ramps up

“My message to them is that it doesn’t have to be like that. It starts with them because if they treat their child with respect and dignity, just like we treat each other, then that child can do anything they want, including [being] the CEO of Apple, or to be the president or whatever they want. Being gay is not a limitation. It’s a feature.”Tim Cook on being gay ahead of recieving the Champion Award in Los Angeles from GLSEN, who champion LGBTQ rights for those under 18 in the US.

A look at the Apple TV+ launch marketing drive

This week that we lost any last hope of another Apple event before the end of the year. It’s possible that Apple could sneak some products out via press release, remember the pre-WWDC blitz of announcements in the spring?

One excellent reason for Apple choosing not to host another event is the impending launch of Apple TV+ on November 1. Apple has been on its most extensive marketing and PR drive in recent memory, in a hope it’ll make a splash this week and most importantly people subscribe and stay subscribed.

Here in London and the United Kingdom, Apple has been pushing the hero shows of Apple TV+ across all channels, owned and paid—notably Disney+ will not be coming to the UK at launch and there is no launch date known, but Netflix and Prime are well entrenched in the market.

More subtly than the London underground takeovers and the Hollywood launch events, Apple has been working the public status of its stars. Did anyone say Jennifer Aniston starting an Instagram account and breaking records for the number of followers gained in 30 minutes? Or did you see Dickinson star Hailee Steinfeld doing the rounds on British TV last week and US morning shows the week before?

Does having Reese Witherspoon, Jennier Aniston, Oprah, Hailee Steinfeld, Steve Carell, Aaron Paul, and Snoopy as your ambassadors have the same impact as having well known and established shows like Friends and House of Cards on your platform? Only time will tell.

Apple TV+ will launch this coming week in more than 100 countries, including most of Apple’s major markets (US, Canada, UK, India, Australia) at aggressive and localised pricing, with millions of users who have just snapped up new iPhones able to experience it free for a year. By my count Apple will launch with eight titles and one movie, with two series and two movies following in November/December and a further 32 without any firm dates.

Have you seen unique Apple TV+ marketing efforts? Reply to this email or comment on the post to let me know.

Apple closes out fiscal 2019 - What to watch for

On Wednesday, not Tuesday, Apple will announce their fourth fiscal quarter results and the final tally for the 2019 fiscal year. It’s been a long year for Apple, in January Apple had to push out a special announcement saying it would reveal results for the first quarter that would be below expectation, the first time it has issued such a warning since 2002. This announcement alone wiped $55bn off Apple’s market cap and set the scene for a potentially rocky 2019.

Since then, Apple has had a pretty solid year financially. As of writing, Apple is back as the largest publicly trading company with a market cap of $1.10 trillion, and the stock price is at an all-time record high, notably up 54% across calendar 2019.

As Apple closed the fiscal year, there are three things to watch for on Wednesday: performance in the Greater China region, iPhone forecasts for the coming quarter, and keeping an eye on that ever growing services sector.

Let’s take them in order. I detailed Apple’s China problem in the last edition of this newsletter (Apple kowtows to a tyrant), one area I only lightly touched on was Apple’s financial reliance on revenue from the region, making up $52bn of Apple’s revenue in fiscal 2018 (20%), up from $2.8bn in 2010 (4%). This week, UBS analyst Timothy Arcuri raised his stock price target ahead of Apple’s results suggesting that Apple’s fairing in the region would be strong. “More importantly, there has been growth in two of the last three months following declines for two and a half years,” he wrote.

Depending on how you look at things, this is both good and bad. Bad in that Apple’s growing reliance on revenue from the region makes its daily decisions around the government’s tyranny over its people and its interaction with the Chinese government an ongoing and growing problem.

On the flip side, Apple had been struggling in recent years to penetrate the market in a big way. It was fending off sizeable rivalries in the smartphone market against region grown Samsung and homegrown Huawei to name just a couple, and the countries reliance on WeChat as a method of paying for everything meant that there was no penalty in switching from iOS to Android. Since this struggle, Apple has moved aggressively with the iPhone, bringing key features including those almost edge to edge displays, new colours, dual physical SIM cards, and so on. Wednesday’s announcement will give us a sense of Apple’s growth in the region, but we’ll have to wait another three months to assess the impact of the iPhone 11 launch.

That leads me on nicely to the iPhone. Apple’s Q4 ended on the 28th September, so will contain only one week of on-shelf iPhone sales, and one week of pre-orders. As this is the case most years, it’s possible to make an assessment on the launch trajectory. But the real number to watch is Apple’s forecast for Q1 2020, with a bad year of iPhone sales behind them, we could see Apple enter 2020 with a bullish view of the future. Might the iPhone 11 cycle match that of the iPhone 7 cycle? Entering with low expectations, and exiting with better performance than expected.

Back in September after Apple’s iPhone event I published “By Innovation Only?”, a wide ranging piece on Apple’s positioning of the new iPhones. In particular, I focused in on three aspects of Apple’s iPhone pricing: perception, pricing in key markets, and value. On Wednesday we’ll get a glimpse of this impact, look out for the strength of the forecast and whether there are any mentions of gross margins adjustments going forward.

And finally, Apple will no doubt announce another storming quarter for its services business. Currently that’s made up of App Stores, AppleCare, Apple Pay, iCloud and Apple Music, and last quarter made up 21% of Apple’s total revenue. As we move into fiscal 2020, Apple TV+ will become a feature of this services category, and as we exited the last fiscal, Apple News+ and Apple Arcade will have contributed to the number.

To attempt to understand the context of this segment of Apple’s business and where it could go, let’s revisit the same maths from my early October newsletter where I discussed the Apple TV+ launch potential. In this, I use the workings of analyst Neil Cybart, who forecasts that by the end of FY2020 Apple’s content platforms (Music, TV+, News+, Arcade) will deliver more than $30bn in revenue alone. This may seem modest, but it’s worth noting that this forecast is only three fiscal years away. And to put into perspective how expensive content is, and how long it takes to build the business; in fiscal 2018 Netflix reported revenues of $15.79bn, but only a net profit of $1.21bn (and even that represented 116% growth), for a business that has been on our TVs since 2007.

It’s not likely that we’ll hear much from Apple on this subject this coming Wednesday, but going forward it’s possible that Apple unbundles the services category a little bit to help distinguish the success of the content arm vs the traditional consumer services, of which iCloud and AppleCare are very profitable.

Apple may also take Wednesday as an opportunity to disclose some numbers for Arcade or News+, but in recent years Apple has veered away from specific number releases, so I suspect we’ll be digging into those breakdowns to establish how much they’ve buoyed the services arm.

Considering all three of the items discussed above will make it possible to give an excellent assessment of how Apple is pitching itself as it goes forward. In terms of how it has done in FY2019, analyst estimates suggest Apple will report quarterly revenue in the region of $62.9bn ($2.83 earnings per share)—that’s flat year-over-year so the pressure will build if Apple hits this head on or misses.

More to catch up on…

Apple Kowtows to a Tyrant

Apple, politics, and China / macOS Catalina arrives

“Every once in a while I’ll go into one of their offices and say, ‘ah, what’s going on?’ And they’ll say, ‘OK OK OK, I didn’t know, I didn’t know’. It’s a big organisation, but we’re getting there.” - Lisa Jackson, Apple’s Vice President of environment, policy and social initiatives speaking to The Independent.

(Above: Apple CEO, Tim Cook attends The American Workforce Policy Advisory Board Meeting at The White House)

Apple in 2019 - A Political Pinball

Last week I promised a detailed look at Tim Cook the lobbyist. Since he officially took the helm as Apple CEO in 2011 the political, economic, and technology landscape has transformed in-front of our eyes. In part technology companies have accelerated a rise in mistrust in the media, the spread of disinformation, and created the foundations of a more chaotic and diverse political landscape.

In the week since I set out to detail Cook’s influence on the US administration and his navigation of serious geo-political issues, Apple hit its rockiest patch yet and as of writing it shows no sign of abating. Apple has never been the quickest to respond to the fall-out of major events impacting the company, but with Cook already issuing internal memos defending his position on Hong Kong and his decision-making—it raises the question, is Apple stuck?

You’d have to be living in a cave to have avoided this week’s fall out, but let’s take a moment to reverse course and explore recent events.

2016 marked one of Apple’s first major kowtowing to the People’s Republic of China, a region that as of today makes up $44bn of Apple’s total annual sales and manufacturers and assembles the vast majority of its products. In that year, Apple followed demands from officials to shut down its iBooks and iTunes Movie store—a form of censorship for the population of mainland China.

In 2017, Apple moved its iCloud data from one state-run provider to another. This in itself is not shocking news, even in democratic states laws generally insist that data of its citizens is stored within the region they live and that it is not transmitted over the internet to and from the United States where it could reasonably be spied on. Apple was largely criticised for the move, although rightly defended itself with explanations that most of the data is end-to-end encrypted (two keys required to open the door) but critics argued that with data wholly stored in China then requests for access no longer need to flow through US courts. In Apple’s defence, it details requests of access by governments, providing data in more than 96% of requests.

Later in 2017, Apple publicly complied with a request from China authorities to remove VPN apps from the App Store in the country. Many of these VPN apps provided a vital way of Chinese citizens to circumvent the “Great Firewall” and access the open internet. At the time a debate raged about what options Apple had.

The kind of person that likes to get your AirPods or iPad engraved with memorable dates or events? Well, think again in China, at some point in the last couple of years Apple blocked many phrases from being engraved onto Apple products, including but not limited to: June 4, Taiwan Independence and Falun Gong or words like “dictatorship” and “human rights”.

As 2019 swings round and Apple continues to kowtow in small but meaningful ways; with recent updates to iOS and macOS it is no longer possible to view or use the Taiwan flag emoji (🇹🇼) if you’re in Taiwan or mainland China, and some report that it is hidden in Hong Kong and Macau.

At the end of August, Apple was once again embroiled in a China related nightmare. Although the overall impact was ignored by the company and by the media at large.

Following extensive work, Google researchers uncovered that a recently patched exploit in iOS had allowed unfettered access to devices. In a statement at the time, Apple accused Google of creating a “false impression of ‘mass exploitation’”, the Apple media applauded with glee and accused Google of some marketing ploy. In that same statement, Apple admitted that “The attack affected fewer than a dozen websites that focus on content related to the Uighur community”—a community that is being oppressed and imprisoned by China, for being muslim.

Apple’s bullish statement was used primarily to attack the work of Google researchers, who in their extensive blog detailed the exploit and how it worked (although conspicuously missed out the China Uighur part). Apple despite quoting statements like “all evidence indicates that these website attacks were only operational for a brief period, roughly two months” provided zero evidence, and most embarrassing of all never criticised the Chinese government.

Then Apple’s September event swung round and everyone forgot about it. Apart from those in the Uighur community who cannot even take safe solace in the privacy of their Apple devices.

That brings us to the week just gone. We’re now more than five months into the civil unrest in Hong Kong. The citizens of Hong Kong fear that the government of the mainland is on a slow path to complete takeover of the former British island, and that a proposed law to allow extradition of Hong Kong residents to the mainland would be a serious step in the wrong direction. As part of the organised unrest, an app was created to help local residents, protestors, and tourists be more aware of what is happening on the island’s of Hong Kong. The app, and website, known as HKmap.live crowdsource the location of protests and police, warning of areas of tear gas use and potentially violent outbursts, or MTR closures.

Initially on September 21st, Apple rejected HKmap from the App Store for issues with payment options, a second submission was also rejected despite the issue being fixed, this time the rejection was because it "facilitates, enables, or encourages an activity that is not legal" and that it "allowed users to evade law enforcement". The internet erupted in outrage, but many argued that this was probably some kind of bureaucratic error rather than a top down decision. It would not be the first time an app has been rejected multiple times at the hands of a rank and file reviewer following a rulebook.

On October 4th, Apple reversed its decision and HKmap was once again available on the App Store in Hong Kong.

In the last week, the Chinese government mouthpiece The People's Daily published a commentary saying that the app "incites illegal behavior," accusing Apple of "damaging its reputation and hurting the feeling of consumers." On October 10, Apple did an about turn and removed the app saying in an official statement to the media, “We have learned that an app, HKmap.live, has been used in ways that endanger law enforcement and residents in Hong Kong,” and “This app violates our guidelines and local laws, and we have removed it from the App Store.”

Following Apple’s move, Google on Thursday removed from its own app store a mobile game called The Revolution of Our Times that let people play as a Hong Kong protester, saying it violated a policy against cashing in on conflicts.

In a company wide memo Apple’s CEO, Tim Cook wrote: “Over the past several days we received credible information, from the Hong Kong Cybersecurity and Technology Crime Bureau, as well as from users in Hong Kong, that the app was being used maliciously to target individual officers for violence and to victimize individuals and property where no police are present,” adding “National and international debates will outlive us all, and, while important, they do not govern the facts. In this case, we thoroughly reviewed them, and we believe this decision best protects our users.”

It’s not a disaster for Hong Kong residents and visitors that this app is no longer available, the website HKmap.live lives on and remains a useful tool for staying safe in the city.

In an open letter to Tim Cook via Twitter (a service not immune to its own controversies), Charles Mok a Hong Kong legislative councilor and tech entrepreneur argued that: “HKmap.live in fact helps citizens avoid areas where pedestrians not involved in any criminal activities might be subjected to police brutality which many human rights organizations such as Amnesty International have observed.”

The fact that Cook quoted intelligence from the official Hong Kong authorities undermines his argument at the outset, and shows a naivety that is not the norm for Cook. That said, HKmap.live app is merely a sideshow for Apple’s larger issues in the region, its inconsistent approach of not banning similar apps, or removing apps like Twitter or WhatsApp that allow for easy organisation of large protests could be seen as its best attempt at simultaneously towing the line of China’s wishes and what is right.

(As of writing another controversy is building up, with Apple being accused of encouraging Apple TV+ show producers to show China in a positive light. Not unusual for any studio to do, but Apple should probably cling to whatever moral high ground it has left.)

This line is muddied, of course, by the ongoing tech cold war between the US and Chinese administrations, with Apple stuck right in the middle.

Since Trump’s election in 2016, Cook has avoided criticism for being close to the administration. Cook has attended and continues to attend sessions held at The White House with Trump and appears to even visit Trump privately for lunch. This evidently to be working in Cook’s favour. With the ongoing trade war, Apple is especially exposed to tariffs on consumer goods.

With this threat building in August, a potential several billion dollar blow to Apple’s quarterly profits ahead of a new iPhone release, Tim Cook reached out to one of his most important contacts in D.C., Jared Kushner. In the call between Cook and Trump that followed, Cook explained that the forthcoming tariffs would impact prices of the iPhone and prevent Apple from competing so aggressively against Samsung.

In the days that followed the tariffs were eased, in response Apple issued a press release about job growth, saying that since 2011 it had quadrupled the number of jobs its business supports in the States. In fact, in the past few months Apple has issued no less than three press releases about job creation in the U.S., including a press release about the future Mac Pro being manufactured in Texas (there was no way this was not going to be the case anyway).

So at home, Apple and Cook are playing the administration at their own PR driven games and arguably winning. Even using the influence to criticise and pace the administration, most notably of which is fighting the Trump administration on their stance on the Deferred Action for Childhood Arrivals (DACA) immigration policy. They have so far avoided being dragged into the same kind of furore that has surrounded other senior executives that have dared to engage with the administration or be seen sat next to Trump.

In China however, Cook and Apple remain as cornered as ever by their reliance on the supply chain of parts and the mass of cheap labour to assemble hundreds of millions of iPhones a year, as they do on China’s growing wealth and the populations desire to own expensive products. It’s not known what failing to kowtow to the Chinese administration’s requests would mean, but it doesn’t look like a game of chicken Tim Cook is willing to enter publicly.

For the consumer, and the media, sharp criticism is fair and should continue and I imagine some will show their dissent with their wallets. And whilst I, and many others hold Apple to a higher standard, it’s hard to avoid any company that hasn’t turned a blind eye to China’s behaviour or indeed flattered the administration by following commands.

We can hope that Apple marches forward and reduces its exposure to China more rapidly that maybe it intended. But would shifting assembly and manufacturing to India and Brazil mean that we have the same kind of outrages in another decades time?

macOS 10.15 ‘Catalina’ lands to a chorus of disappointment and frustration

Continuing with Apple’s oddly timed software releases for 2019, the latest version of macOS landed on Monday this week. Catalina’s primary feature set includes: the removal of iTunes and replacement with a set of three apps focused on Music, TV, and podcasts; Sidecar, a feature to use the screen of an iPad as a second display; removal of compatibility for 32-bit apps; and the introduction of Catalyst that enables developers to easily bring iPad apps to the Mac.

Amongst these headline features, Catalina has arrived to a chorus of disappointment. Don’t take my word for it, here’s what the reviews said:

The Verge:

More than anything, the potential changes to the app model are the main reason I’m recommending that you hold off on updating for a little bit. Do some Googling on your most important apps, and make sure they’re updated to support Catalina before installing it. I suspect that, for the vast majority of people and the vast majority of apps, it will be a nonissue, but it doesn’t hurt to check.

MacStories:

There’s a place for the Mac in Apple’s lineup, but the platform needs to change with the times, and Catalina is the first step of bridging the gap to its future.

ArsTechnica:

Apple's operating system releases have all seemed a bit rushed this year—go ahead and give the company a couple of months to patch Catalina before you install it, if you can.

CNET:

Don't put this on the machine you use to make money yet, but you can certainly load it on a secondary machine or an older Mac that you still keep around -- so you can get a taste of the Mac's future

What to catch up on...

Next week...

It’s crunch week to find out if Apple will deliver one more product event before the end of the year, read my roundup of what could happen. And the big question, will Apple roll back on its China position or stay quiet?

Another Apple Event to come?

Looking ahead to a possible October event and what Apple TV+ will deliver on day one

“That Steve Jobs was a genius, a giant influence on multiple industries and billions of lives, has been written many times since he retired as Apple’s CEO in August. He was a historical figure on the scale of a Thomas Edison or a Henry Ford, and set the mold for many other corporate leaders in many other industries.” Former The Wall Street Journal journalist, Walt Mossberg, reflecting on Steve Jobs’ death eight years ago

(Above: Andreas Gurksy's portrait Jony Ive will go on display at the National Portrait Gallery in London)


A Possible October Event?

As of writing, there are 89 days to go until the end of 2019, 55 days until Thanksgiving and the official start of the Christmas shopping season. Why does this matter? Well, Apple’s product marketing team needs the best possible foundation to launch any products Apple has left in its pipeline for the remainder of the year.

Let’s start with a brief analysis of dates, and whether this may or may not happen. We’re already at least two weeks through October, with invites to events usually issued anywhere between 10 and 14 days before the event itself. Looking at the event dates from previous six years (30th, none, 27th, 16th, 22nd, 23rd) we can see that Apple may have another week or so before it reveals such an event date. Some may take solace in Apple’s announcement that its next fiscal results call will take place on Wednesday 30th October—so mark your diaries for a special event on Tuesday 29th.

And what to expect?

With Apple dedicating its September event to iPhones, iPads, and services we can expect a slightly different approach to an October event—in previous years there has been a strong Mac focus and rumours this year include the new 16-inch MacBook Pro. 

This new 16-inch model will feature a similar footprint to the current 15-inch model but with smaller bezels around the display, and a higher resolution display. Much detail beyond that is not known but some have suggested that Apple will drop its controversial butterfly switch keyboards, and instead return to the scissor-switch of the old style.

Sticking with the Mac theme, Apple have already announced and shown us the the new Mac Pro, a behemoth of a computer starting at $6,000, suitable for the top top-end of pro users. Apple expects to deliver the Mac Pro, made in the USA, during the “fall of 2019”. So no doubt we’ll hear more about that.

Apple could continue with the Mac refreshing, and roll out new updates to the existing mid-range MacBook Pro. The smaller cousin MacBook Air and 13-inch MacBook Pro were both recently updated so expect nothing in that area.

Also possible is the appearance of Apple’s new Tag product, I covered the potential of this product and the oddness around Apple’s lack of announcement in September. If it’s finally ready for show time, then an October event would be a natural landing spot.

However, new Macs and a Tag product announcement probably aren’t enough to summon the press and run an event. But throw in a possible iPad Pro minor update, and an excuse to show off Apple TV+ for one last time before launch and we might have the makings of an October special event.

(Last minute bonus: maybe some new AirPods too, featuring active noise-cancelling and in-ear plugs)

Apple TV+ Approaches - What to expect?

Apple TV+ will launch next month in more than 100 countries, including most of Apple’s major markets (US, Canada, UK, India, Australia) at aggressive and localised pricing, with millions of users who have just snapped up new iPhones able to experience it free for a year.

As November 1st approaches we’ve got a better sense of Apple’s strategy, certainly in the UK they’re blitzing cinema, traditional broadcast TV, YouTube pre-rolls, and social media with mini trailers showing the “hero” shows, ending with the message “Watch on the Apple TV app”. This week we also learnt that Apple will not launch on November 1st with a full line-up of shows, with the freshly announced Servant coming to the service at the end of the month.

By my count Apple will launch with eight titles and one movie, with two series and two movies following in November/December and a further 32 without any firm dates but have been rumoured by various leaky Hollywood sources to be in the works.

From this we can see that Apple is not taking this launch lightly, and on the basis that the company appears to not be pitching for any existing shows, and is instead riding the coattails of excellent talent and pitching to a base of hundreds of millions of platform users. It would suggest that Apple’s not competing with the likes of Netflix (draws you in with Friends and bombards you with originals) but instead closer to competing with the movie and TV studios themselves.

Another way of looking at it is via the economics, I doubt anyone working under Luca Maestri, Apple’s chief financial officer, is expecting Apple TV+ to exit the red for some years. But the benefit of a recurring revenue business is the incredible predictability of its future, assuming you understand your acquisition costs and your retention levels.

I’m not going to sit here and pretend to an expert of financial forecasting a product that hasn’t even been released, but Neil Cybart is, and has been doing some back of the envelope work. Cybart expects Apple to be pulling in $30 billion of revenue via all of its services by the end of FY22. To put that in context for those not 100% up to speed on Apple’s financials, revenue from “services” in FY18 topped $37bn, and growing at around 25% per year—but still only representing 13% of Apple’s total revenue for the year.

Going back to Neil’s work and looking just at Apple TV+, he expects that by the end of September 2022 Apple will have amassed 55m subscribers to the service, and that Apple has no revenue share agreements yet for its TV service, the revenue for FY22 will be $2.6bn. Compare that against stories that Apple has already spent in excess of $6bn and climbing on producing these shows, it could be some time before Apple enters positive territory.

What to catch up on...

Next week…

I’ll take a look at Tim Cook the lobbyist, from Apple’s flattery of the US administration to his direct criticism of how Dreamers are being treated, to the company’s failures in Hong Kong, Taiwan and China—Cook is arguably one of the most powerful CEOs and lobbyists in the world, and his influence is beginning to show.

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