Tech Brew Ride Home - Mon. 02/06 – iPhone Ultra?

Episode Date: February 6, 2023

Is Apple considering launching an “Ultra” version of the iPhone as soon as this year? Have the good Twitter bots gotten a reprieve from Elon Musk? Is the Microsoft/Activision merger toast because global regulators are coordinating? And might regulators look askance at all these generative AI investments from the big cloud computing platforms? Sponsors: ZocDoc.com/techmeme Bombas.com/techmeme Links: Apple Talks Up High-End iPhones in Sign Ultra Model May Be Coming (Bloomberg) Elon Musk says Twitter will provide a free write-only API to bots providing ‘good’ content (TechCrunch) Microsoft’s Activision Deal Tests a New Global Alignment on Antitrust (NYTimes) Big Tech companies use cloud computing arms to pursue alliances with AI groups (FT) A16z votes against proposal to deploy latest Uniswap iteration on BNB Chain (The Block) Pre-order Brady Dale's SBF Book! Learn more about your ad choices. Visit megaphone.fm/adchoices

On April 4th, 2023, around 2 in the morning, a man was found stabbed multiple times on a sidewalk in downtown San Francisco. Hey, who did this to you? What happened next turned the story into a political firestorm. Reports have identified the victim as Bob Lee, the founder of Cash App. From Bloomberg Podcasts, this is Foundering, the Killing of Bob Lee, beginning April 16. Welcome to the tech meme right home from Monday, February 6th, 2023. I'm Brian McCullough. Today is Apple considering launching an ultra version of the iPhone as soon as this year? Have the good Twitter bots gotten a reprieve from Elon Musk? Is the Microsoft Activision merger toast because global regulators are coordinating and might regulators look askance at all these generative AI investments from the big cloud computing platforms? Here's what you miss today in the world of tech. Mark Gurman Apple Scoop Monday. Mark's sources are telling him that Apple has discussed taking a page out of Samsung's book by adding a higher-end iPhone Ultra Model as soon as this year. Such a model would probably offer camera improvements, a faster chip and an even larger display, quoting Bloomberg. Apple chief executive officer Tim Cook, speaking on an earnings call that was mostly focused on holiday results, made an off-the-cover mark that could be quite telling about the company's future.

Hook was fielding a question about whether the iPhone's rising average sales price was sustainable. After all, a top-of-the-line model that cost $1,150 in 2017, the iPhone 10 with 256 gigabytes of storage, now fetches $1,600, the iPhone 14 Pro Max, with one terabyte. His response, the price increases no problem. In fact, consumers could probably be persuaded to spend more. I think people are willing to really stretch to get the best they can, can afford in that category. Cook said on the call, noting that the iPhone has become integral to people's lives. While Cook wouldn't say if he anticipates further price increases, he made a good argument for why even more upscale iPhones could make sense, especially if they deliver new

features. Apple has internally discussed adding a higher-end iPhone to the top of its smartphone lineup, and it's already been doing more to distinguish its pro models from standard iPhones, giving consumers a reason to pay up. When the iPhone 15 arrives later this year, Apple will further differentiate the product's tiers with a range of materials, processors, and cameras. That includes giving the Pro Max model a periscope lens, which will offer improved optical zoom. Apple's plan to draw a greater distinction between the Pro and Pro Max has spurred speculation that the company will opt for a new top-end brand, the Ultra. Apple has already used that name for its sporty high-end smartwatch and the top version of the M1 processor. But instead of renaming the Pro Max, the Ultra, Apple could add an even higher-end.

iPhone above both pro models. Internally, the company has discussed doing just that, potentially in time for the 2024 iPhone release. That could certainly drive up prices, but consumers would need a reason to upgrade. At this point, it's unclear how that top-of-the-line model would be different, but it will probably offer further camera improvements, a faster chip, and perhaps an even larger display. There also may be more future forward features, such as finally dropping the charging port. Samsung has already embraced this approach with its own ultra phone, a model that offers more cameras,

a bigger battery, a larger screen, stylus support, additional memory, and a different design. Moreover, Samsung offers two types of foldable phones, which have increasingly become the focal point of its smartphone strategy. Apple has explored a foldable iPhone in the past, but I wouldn't anticipate when launching in the near future. For now, the company is focused on larger foldable devices, something the size of a laptop. If Apple were to sell a foldable iPhone, the price would clearly be higher than that of its current models. Such a device would require far more advanced technology for batteries, displays, and chips. Samsung's priceiest foldable, the Z-Fold 4 costs as much as $2,160 bucks. It may be quite a while before Apple customers have a chance to actually purchase an

iPhone fold, but if Cook's comments are any indication, many will happily spend the money, end quote. When Twitter announced the end of free API access last week, the thing that a lot of us feared would happen would be the end of our favorite bots. And by that, I mean, the actually useful bots, not the bad bots, things like that bot that tells you when people in big tech follow other people in big tech or the bots that post random lines from the book Moby Dick, for example, or random seconds from Star Wars movies or pictures of possums every hour. You know the ones I mean. Well, maybe a reprieve, quoting TechCrunch. Last week, Twitter said it is shutting down free access to its APIs starting February 9th. Now, days before the deadline, Elon Musk said that, after getting

feedback from developers, Twitter will provide a right-only API for, quote, bots providing good content that is free, end quote. This decision is as opaque as some of the other policy decisions under Musk's management. There is no information on what constitutes good content and who will decide that. However, if Twitter ends up implementing this rule, some bots will get a new lifeline on the social network. At the moment, it's not clear if accounts like at Big Tech Alert, which tweets about big tech execs and organizations following and unfollowing each other, will be eligible for this free tier as they might need to scan account information. Darius Kazemi, a developer who has made over 80 bots and even organized a bot devs summit in 2016, told TechCrunch over a call that these

automated accounts have been an integral part of Twitter for years. He said that some of these bots with thousands of followers bring joy to many people daily. He mentioned that it would be costly to maintain these bots who are providing free content to the platform. I have more than 80 bots on Twitter, so it would take me several thousand dollars to keep them up every year, and I can't afford that kind of money, he said, end quote. There have been several stories of late that suggest, as I've suggested before, that the Microsoft Activision deal might be in serious trouble. sources are telling the New York Times that Microsoft's legal team actually expects the UK's CMA to oppose the Activision acquisition, which would obviously be a problem, but which also

might show a new antitrust enforcement alignment across the U.S., the UK, and the EU. This is from the New York Times' deal book. When Microsoft announced its $70 billion acquisition of the video game maker Activision Blizzard last year, almost everyone involved expected antitrust inquiry. from officials in the European Union and Britain, and many thought regulators there would try to block the deal. What U.S. enforcers would do, however, was less clear. But by December, it had become apparent that all three regulators would scrutinize the deal and that they were playing off one another's plans. The tell? The Federal Trade Commission chose to sue Microsoft in its

own administrative court rather than first moving to block the deal in a federal court. Typically, the agency would seek a temporary injunction from a federal judge to stop a transaction from going through before trial. In this case, the European Union's antitrust authority had already announced it was reviewing the deal, and the FTC knew Europe's inquiry meant the deal was at least many months away from closing, so it went straight to its own more favorable court. Welcome to the modern era of global antitrust enforcement, an elaborate labyrinth of regulatory bodies working together. Cooperation among antitrust regulators isn't new, and U.S. regulators have long discussed timing on cases, arguments, objections and potential remedies with their foreign counterparts. The shift now is that what are perhaps

the three most important regulators worldwide, the FTC, the European Commission, and Britain's competition and markets authority are roughly on the same page. All of them want to be seen as tough on deals. Until recently, the European Commission was often seen as the toughest antitrust regulator, taking a more expansive view of what could harm competition. On the other end of the spectrum was the United States, where decades of precedent leaned toward a more limited view of the kinds of deals that should be blocked. And so dealmakers believe that if they could appease the European Union with a behavioral remedy, their transaction was likely to survive global scrutiny. That has changed. Britain's Competition and Markets Authority, which was established in 2014, has positioned

itself as pushing for tougher powers after Brexit, presenting itself as a check on big tech and other corporate giants. In the United States, President Biden has appointed antitrust officials, Lena Kahn of the FTC and Jonathan Cantor of the Justice Department's Antitrust Division, who have expansive takes on regulating competition. Khan in particular has championed cracking down on mergers and big tech, and she has said she is willing to take on tough-to-win cases to help stretch the boundaries of antitrust law. The FTC opposed Microsoft's bid to acquire Activision and a lawsuit filed in December. Microsoft's legal team also expects the antitrust authority in Britain to oppose the transaction,

while it believes the European Commission is open to potential remedies, according to four people briefed on the matter who were not authorized to speak publicly. Some of these people said that Microsoft was hoping to convince both Britain and the European Union to accept its concessions and approve the deal, which could make it easier for the company to reach an agreement with the FTC before the scheduled administrative trial starts in the summer. If all of the agencies accept the compromise, the perhaps wishful thinking goes, none of them will look weak on big tech. That logic also, works in reverse, however. Any of the three agencies could instead put pressure on the others to oppose the acquisition, end quote. This is related and very interesting. What have we been talking

about lately? AI stuff, of course, but also the investments made in AI by the likes of Google, Microsoft, and Amazon, all pursuing investments and deals with these generative AI startups, often explicitly incentivizing those companies to use their respective cloud services as part of those investments. Remember, the need for vast compute power is a huge hurdle for these new services to work. So essentially, golden handcuffing these new disruptors to the existing cloud computing incumbents, might that raise regulatory concerns? Quoting the Financial Times. This is exactly the type of scenario that the Federal Trade Commission has said they're going to focus on, said William Kovach, a former Republican chair of the U.S. antitrust agency and a professor

of antitrust law at George Washington University. There is a heightened concern about how the large information service firms are limiting opportunities for new generations of competitors to come forward, he said, adding that they would probably be paying a great deal of attention to these deals. The FTC declined to comment. These partnerships give the owners of the cloud insight into the talent and technology inside startups while allowing the smaller companies to sidestep the vast capital investments that would otherwise be necessary to build their own data infrastructure. AI startups that need to train models have little choice but to rush into the arms of large companies offering essential cloud computing at discounted rates and access to the large

amounts of capital they need. Clouds love lock-in. They force people into massive multi-year commitments, said Jonathan Frankel, co-founder of Mosaic ML, an AI company that is trying to commoditize the cloud for its corporate clients that need AI models. Historically, this type of dependency has attracted the attention of antitrust regulators in other areas, including telecommunications, according to Kovac. The fact that your supplier of a key service is also your competitor is an inherently awkward and tension-filled relationship, end quote. The fundamental need for a reliable cloud provider that can supply computing infrastructure at the volume and frequency that a generative AI startup needs means companies are quickly forced into big tech cloud partnerships. Cloud management company Yellow Dog,

which helps customers switch between cloud services, says it knows of several alliances between nascent AI companies that have yet to launch products and cloud providers made at a stage when they are willing to tie themselves to a supplier and give up equity. Some academics that want to move into their own startup, their first conversation, is with cloud providers before they even recruit developers because they know it's impossibly expensive. It's key, said Tom B.C., chief executive of Yellow Dog. He declined to name any of the companies involved because of non-disclosure, signed with big tech cloud providers. Such deals could quickly gather regulatory scrutiny. Legislation aimed at so-called self-preferential behavior of tech giants was advanced in the

U.S. Congress last year to prevent large online platforms from using their influence in one field to boost their other products, end quote. Finally today, back to Web3 for an interesting case study in how Web3 supposedly wanted governance of startups to function going forward. Remember that whole idea of voting with your tokens. The whole tokenization of startups was designed to sort of democratize control of how projects move forward. Well, news all over crypto Twitter this morning was that Andreessen Horowitz has used all 15 million of its uni tokens to vote against a proposal to deploy Uniswap version 3 on the BNB chain using the wormhole bridge. Voting concludes on February 10th. And a lot of people are up and

arms about this because they're claiming that this isn't very democratic, quoting the block to explain why this is interesting. OX plasma labs put forward the proposal to deploy uniswap version three on B&B chain using the wormhole bridge for the deployment. A16Z put its considerable uny holdings to use by voting against it. The VC firm has significant skin in the game, as does jump crypto, pitting two of the spaces most active VCs against each other. Voting will conclude February 10th and Jump Crypto has not voted for or against this proposal. Andresen Horowitz's crypto arm A16Z backs layer zero as a bridge, while Jump is investing in Wormhole.

A16Z could not vote in last week's temperature check, but partners noted their intention to back layer zero. Quote, to be totally unambiguous, we at A16Z would have voted 15 million tokens toward layer zero if we were technically able to, and we will be able in the future snapshot votes. Eddie Lazarin, partner at A16Z wrote in a forum post, the fund could not participate in the temperature check due to the custodial setup of its tokens, a source with knowledge of the process told the block. While the debate about these bridges is partly about security, cross-chain bridges have been the target of numerous attacks, including last year's $325 million attack on wormhole, the fact that two massive VC firms own portfolio companies that are involved in this vote also played a significant role.

Wormhole proponents were hoping to avoid this scenario with one person close to the project telling the block, quote, if A16Z goes against community vote and tries to tank it, I'd be shocked. That would be truly abhorrent, and I don't think they would go that far, end quote. So maybe this isn't really a newfangled controversy after all. Maybe this is just the old story of different VC investors having different portfolios and thus different aims. But, you know, on the blockchain, this sort of thing can play out in public. So you have one VC firm voting to move a project in a certain way that might benefit one of its other portfolio companies and another VC firm with a lot of votes on the chain also wanting to maybe go in the other direction. A lot of Web3 native tweets that I've been seeing this morning seem to be appalled that A16Z is exercising essentially veto power over a direction a project takes. The term being bandied about is an anti-competition cartel. And yet, isn't that exactly how this was always supposed to work. Quoting Mike Duda's on Twitter, this seems like a completely rational and

justified action speaking generally. They own the governance tokens, this is their preference, and they use the tokens for the intended purpose to vote their preference. Is there a major caveat I'm missing, end quote? And quoting Dr. Nick A on Twitter. So at A16Z are trying to push the univote towards an advantage to one of their portfolio companies. This isn't an anti-competition cartel, this is precisely the exact point of governance tokens, end quote. What if this is the rhetoric and decentralized culture of Web3? Remember communities and users having a say, bumping up against the reality of that practice in practice?

I don't have an opinion on this either way. It's just fascinating to watch it play out in real time. Quick fun story for you. Do a search on Amazon for a book called SBF, how the FTX bankruptcy unwound crypto's very bad good guy by Brady Dale. I'll try to remember to put a link in the show notes or, you know, just search for Brady Dale on Amazon. You'll see a pre-order page for a book by friend of the show Brady Dale, which, first of all, congrats to him for writing and selling his first book. But for our purposes, the fun of the story comes from this. Remember when the

whole FDX Sam Bankman-Fried story was blowing up and I reached out to Brady and was like, can you summarize what you think went on here? I'm not deep enough. in the space to really understand all this. Brady DM'd me like a three-sentence summary of what he thought had gone down, and I read it on the show that day. Well, it turns out an editor at Wiley was listening to the show that day as well, heard me read the summary, and reached out to Brady right away and was like, how quickly can you expand that summary to book length? Brady agreed, worked on writing the book in what I assume was a mad, crazy crash project over the holidays, and the result is, hopefully, the first book to hit the stands in a matter of months.

about this whole saga. I think it's scheduled to come out in May. So how cool is that? I always say the audience for this podcast might not be huge, not, you know, Joe Rogan huge, but it's a super connected audience. You never know who's listening. Talk to you tomorrow.