The Vergecast - Apple goes to war with Facebook and Google

Episode Date: February 1, 2019

Apple has disabled Facebook and Google’s internal applications after privacy violations were revealed, leaving Google and Facebook employees at a standstill for key operations. Meanwhile, in other Apple news, the tech giant’s revenue declined over the holiday quarter and is reportedly testing new iPhones with three rear cameras and a USB-C port. Learn more about your ad choices. Visit podcastchoices.com/adchoices

Hey, everybody, it's the United from the Vergecast. Huge news this week. Apple has revoked Facebook and Google's enterprise certificates after both companies were revealed to be installing market research apps or a little sketchy on the privacy front. We talk all about that with Casey Newton. We talk about the rumors of USBC iPhone, which is very exciting. We talk about Apple's big FaceTime bug.

We've got to talk Apple earnings. And then we wrap it up with Paul Segment, which we do every week. You all know what it's called. We'll be back right after this. Support for the show comes from Retool. Too many companies run critical operations on duct-taped spreadsheets, Slack workflows, and whatever else they could cobble together.

Not because they want to, but because building internal tools means weeks of waiting on someone else's backlog. That's where Retool comes in. Build custom internal tools just by describing what you need. Prompt something like, Build me a revenue dashboard on our Salesforce data. And Retool actually builds it on your company's data in your cloud with enterprise security built in.

Go to retool.com slash Verchcast. We all need to retool how we build software. What's up, y'all. I'm Skylar Diggins, seven-time WMBA All-Star, Olympic gold medalist, and mom. And I'm Cassidy Hubbard, host and reporter for nearly 20 years covering the biggest names and stories in sports and mom. And this is Am Mom, a community for athletes, game changers, and moms of all kinds. Dropping May 14th. Tap in with us. Hello.

and welcome to the Vergecast, the flagship podcast of theverge.com, a show that still has its enterprise certificate. That's the news. We've got to get started. First, I want to tell you, Dieter is out this week. He might leave us a voicemail later. He called me earlier and just started ranting, so I might just make him do that. He's had a lot of thoughts. So he's out on a reporting trip. You'll see that product of that later. So to replace him, I had to bring in two people. Hi. Hymgartenberg is here. Hello. Casey Newton. It's calling in. What's up? From the road.

AirPods in looking like a pro traveler. And Paul's here. Hey, buddy. Hello. All right, let's just start. World War 3.4. World War 4.0 has begun. Minutes before we started taping, Apple, which is an important company that makes phones and laptops. And software.

And software. Yanked. Google's Enterprise Software Certificate for iOS, which is the software certificate that lets Google deploy its own internal apps without going through the App Store, thus shutting down all of its betas of Gmail, YouTube, Maps on iOS, and their own internal apps, like the one that opens, that shows them the menus in the cafe.

This literally just happened. It happened minutes before we started taping. This follows the fact that Apple did this to Facebook yesterday, situation, yanked the enterprise certificate. Facebook people can no longer look at their bus schedule or test up builds of Instagram. This is all in response to both Facebook and Google running. Casey, how would you describe them? Research apps, user research apps?

Market research apps. So there are plenty of these kinds of programs that all kind of. of companies, right? Like, there are a lot of companies that'll pay you 20 or 50 bucks, give you a gift card in exchange for some amount of your time. And typically, you'll just sort of answer a bunch of questions about the product and the competition. What made this really different was that they were using a program designed to let companies test apps internally in order to do market research with their customers. And after Apple became aware of it, they pulled the plug and said, nah-uh. So Facebook very famously,

owned a VPN called ONAvo, which is a bad name. But they owned a VPN called ONAVo. And so famously, Facebook bought this VPN company. They let people install ONAVo Protect, which is the app, route all the traffic through this VPN to say you were more secure. But really what Facebook was doing was monitoring this traffic to see which apps were taking off, which features you were using. So this is how they discover that WhatsApp was taking off, I believe.

before they acquired WhatsApp. It's how they discovered that Instagram stories was taking off. I'm sorry, Snapchat stories were taking off, and they cloned it in Instagram stories. So Facebook is like monitoring user behavior on the iPhone through this Anavo Protect app. At one point, I believe they even had a tab in the Facebook, the big blue app that said, protect,

to try to get you to install Anavo Protect, which is insane. This all came out. Apple said, wait, wait, wait, this is not cool. do not want anyone, we saw Facebook, monitoring user data this way. They banned an AvoProtect. But it turns out the same code, and the headers of the research app, was being used for this Facebook research. By the way, you have to give a shout-out to TechCrunch and Josh Constine that broke this story. So Facebook is running a research program where everyone is focused on teens.

But I think it was more than teens, right, Casey? Yeah, they were targeting people ages 13 to 35. So a broad definition of teen. But teens in the mix where you would get like a $20 gift card if you sign up for this program through one of their vendors. They would send you the certificate that lets you side load apps onto an iPhone, right? Famously you cannot side load apps onto an iPhone. You have to go through the app store. But if you have an enterprise certificate, you can deploy apps without the app store.

So Facebook would send you their enterprise certificate. You would sideload this app that had a ton of Anavo code in it, and it would monitor everything that was happening on your phone. In some cases, it appears even encrypted chats. Like they were able to bypass that layer too. This is a point that I've had a hard time figuring out the exact details of. Obviously, a VPN app like the ANAVA app, could track a lot of what you do based on your internet traffic.

A side-loaded app theoretically has a lot more privileges than just a regular VPN app that got through the app store. Yep. Was this app doing a lot more than a VPN, or was the primary data collection just the VPN stuff? Or do we know? From the TechCrunch article, it appears it was doing much more. And they had some security researchers looking to it. Casey? Yeah.

And, you know, Ben Thompson wrote about it today and described it as kind of like what in other terms would have been a classic man in middle attack where they were able to intercept basically anything. The original TechCrunch article says that tech messages and email of content would have been accessible to the person. So based on the reporting we've read, it seems like this was like a near, near total access to all of the most sensitive data on your phone, which again, we should say people volunteer to submit, assuming they actually read the terms of service. For $20.

$20. Would you give Facebook root access to your phone for $20? Is really the... I think that I should acknowledge that $20 is a meaningful amount of money to a lot of people, especially people who, let's say, are 13 years old. And, you know, interestingly, Slate posted an article today in which it interviewed some of the people who were apparently participating in this program. And some of them, in this way that kind of depressed me, said, you know,

We thought that this data was being sent to, you know, random companies anyway. So, you know, to us, it was just free money. That's kind of good. Anyway, so it comes out, TechCrunch breaks the story. Facebook is doing this. They're installing this side-loaded app on iOS through this research program. They're using their enterprise certificate to get on the phone. That's really the heart of the thing, right?

The actual sort of Facebook is once again doing something shady with user. data, right? Their excuse is, and I think Cheryl Sandberg even just said this to CNBC was, well, they signed up. They signed up. They wanted this to happen. They got paid. Like, this was the deal. Their parents should, like, so there's like a whole conversation about this app and whether it should work. But then there's the issue of the enterprise certificate, right? There's side-loading apps in iOS. So Apple responds, and we broke this story. We gave credit to TechCrunch. I want to give credit to our team. We broke the story yesterday. They yank Facebook's enterprise certificate.

They just disable it, which causes this chain reaction. Every other side-loaded Facebook app that uses a certificate just stops working. You click on it doesn't even open. And the primary understanding is that the terms of use for having this enterprise certificate is that you do not use it to distribute apps to consumers. Yes. Is that correct? It sounds very much like everyone does it anyway.

which is a thing. But you think about it, think about it, Fortnite. Right. Epic distributes Fortnite as a side-loaded enterprise certificate. Yeah, it could give people $23 worth of Fortnite skins,

were they to side-load Fortnite with their enterprise certificate? Well, look, I don't know anything about what they've considered internally, but I will tell you that I tweeted, this is pretty disturbing, that Apple can just disable these certificates. And all of Facebook's internal apps stop working.

It's basically like a vacation day at Facebook from what I can surmise. Casey's nodding his head. Did you hear that too? Yes. I mean, just imagine, you know, your entire workflow is dependent on you having access to the iOS app that you're working on. And there is literally no way for you to get it to launch anymore. Yeah. So you don't need, I just want to be really clear about this.

Many, many, many people have tweeted many, many things at me. But you don't need an enterprise certificate to be an iOS app developer. You can just plug your phone into X code. You can do a thing. You can use test flight if you have a small enough user base. But if you're Facebook and you're operating at this massive scale, you need this thing to work. You can't deploy to 15,000 devices with the standard $100 a year Apple developer account. So there's an element where Facebook needs us to work,

and Apple said you broke our deal. You did this thing we don't like. It's bad. We're pulling it, and Facebook grinds to a halt. Casey, you wrote about this in your newsletter yesterday. I had a glimmer of a thought, which is it is pretty remarkable that Apple has this power. And I think everybody thinks it's a good thing.

Like Facebook finally got punished. I mean, punched him in the mouth. But I think you share my sort of hazy discomfort. Yeah. And, you know, I tried to say, two things about this yesterday and then have been, you know, getting flamed all day for, for the second thing that I said. The first thing I said was this was bad on Facebook's part. Facebook acted really recklessly and Apple acted appropriately in rescinding this access.

Okay. The second thing I said was, wow, it's really crazy that a single company unilaterally sets the terms of this enormous part of the economy and even the most powerful companies in the world have no recourse or no system of justice with which to dispute their decisions. And, um, you know, for this, I've, uh, I've been honored on Daring Fireball, uh, with the dumbest take of the day award. Wow. Congratulations, Casey. Uh, thank you.

I like John. Yeah. We're, you know, he's been on our show. We've been on his show. But, you know, his job is to be Apple PR. So that's fun. Um, uh, this, this is, this is a fundamental. thing. This is a fundamental tension in my life. I always enjoyed using iOS. I tend to like Apple products. I decided that I didn't like that Apple had the fundamental say of what I could put on my phone. So I went over to a platform that is way more known for spying on me on Android. But I also have FDroid on there and I can put random apps on there. And Google can't tell me no. Tim Cook can't say no.

Tim Cook is jamming on this button saying. This is like, this is when Dieter called me earlier in ranting and raving. This is what he was, he was sad about missing that conversation because it's a big, deep, important conversation. But let's just finish the chronology. So that was yesterday.

At the tail end of yesterday. I got so excited. Right? It's there. That conversation is, that's the Verge cast conversation. But that's yesterday. At the tail end of yesterday, a bunch of people noticed,

Hey, you know, Google has one of these, too. It's called ScreenWise. And they're doing the same exact thing with these enterprise certificates. And so Google reacts. They issue an apology. Like, whoops, didn't mean to do that. We're so sorry. We pulled the app.

Everything's cool. You know, they, like, sent some pizzas to Cooper Tino. Like, it appeared that they just, like, yanked it. And they were fine. Right? And to Casey's point, literally, literally this morning when Dieter and I were talking on it, we're like, it is remarkable that Facebook did this thing, and Apple's system of justice kicked into punish Facebook, and Google

got away with it. And so then later today, and I think that, I saw that just bubbling up on Twitter all day today, and it appeared everything was fine. And then we definitely got a tip. There's another story our team broke. Tom Warren broke it. Hey, Google's app stopped working too. Well, there you go. Like, they, Apple made this decision. And I think the remarkable thing is, and this is Paul, where you're going, is, so now Google has ground to a halt, right? The people who work on the YouTube app can't work on it. You can't go to the Google cafeteria or whatever and, like, pay with your app.

So they've ground two massive companies to a halt. but one was like a split second decision. Like TechCrunch posted Facebook certificate revoked. Google does the same thing. They issue this apology. A day later, Apple makes the same decision. And it's like completely unclear how they're communicating. It's completely unclear who is making this decision.

It's completely there. I think, I'm kind. We've heard about this. Lots of companies deploy apps to customers using these certificates. because it's a way to deploy its scale without going into the app store. It is unclear if Apple is going to review every one of those and revoke all those certificates. It's unclear if you're doing this right now, if you just say that you are and apologize, you might just reveal yourself and be disabled.

Right? So, like, it's great that John Gruber, you know, its entire business is organizing Apple's actions into a coherent narrative. and that's useful and he's very smart. But to not reckon with the power that Apple has over this massive platform, while at the same time being like, do you know when you reckon with power is when people do the worst thing?

Exactly. There's not a... Apple doesn't just yank Instagram out of the app store because Tim Cook was angry. You know, like, they had to do something and then we have to have this power be exercised. And I think, Paul, this is where I want to get in that kind of conversation, this has been the trade-off of all of software. We're going to seed central control

of the apps on our phones, of the code on our computers to some other authority, and they can literally change the bits if they want. They can push updates. They can push security fixes. They can stop malware from running in your phone. And that security benefit is good. And that comes with an enormous amount of power. But the other trade-off that everyone, people have been talking about for a long time is you're letting another company control your phone. And you're not, that's not an ongoing negotiation that you're in.

It's literally, Apple can just do this whenever it wants. And there's no process that they have to follow. And I think that's just, we're at that moment where we're all kind of considering it. So Paul, what were you just saying? I mean, that's the tension.

I try to view these things of like, what choices can I make to change this? And so one of the choices I've made is using Android. But it is this, it's this scenario. I mean, I wrote a piece about this a while back about edge computing, because that's the goal for most of these companies, is they do not want to be providers of cool utilities

that you buy on a CD-ROM at Best Buy, and then you install on your computer. And then they don't really want you to own the software or the hardware. They want to really control it. end to end. And when I say they, I guess I mean Apple. Well, look, no, Microsoft sells Windows 10S, right? Which is the same idea.

Office is a subscription now. You can buy Surface laptops on a monthly installment plan where you're basically renting it for Microsoft. Like, they're getting there. There's an aspect of Photoshop. And my dad runs a graphic design studio. He hates the way Adobe licenses its graphic design, software now that you don't really own it.

There is an aspect. Like, just think, go through all the tools that you use and how many of them does Tim Cook or another tech CEO have a button where he could decide that you can't use that software or hardware anymore? I would say it's pretty, pretty large, pretty large. I mean, somebody of Google could decide that you can't use Google Docs anymore. Yeah. I mean, literally Jeff Bezos could be like, you know what?

let's break the internet and turn off AWS for five seconds, right? Cashmer Hill O'Gizmodo is actually doing a great series right now. It's like, I tried to live a life without X tech giant. And it turns out that you cannot do that, like, basically. Right. And that gets it at what's changed, right? Because when Apple opened the app store, no one would have had any angst over whether they would eliminate a fart app, right? It was like, look, you know, there's got a bunch of apps and, you know, they're going to make some money, you know, but like we're not ever going to be in a position where we can hold the tech economy hostage. And because we have no meaningful antitrust regulation in this country, we now have four, five, or six, depending on how you count them, enormous monopolistic tech platforms.

And they are, like, their futures are like weirdly at the discretion of the single company. So, you know, there's been a change there. And look, I think it's fine to say, you know, what Apple was in the right here. And because they acted in a way that I support here, I will just sort of trust them forever to always make the right decision. And, you know, I just think we journalists are not as trusting by our nature. Like, it's our job to be skeptical of power,

which is why I'm, like, happy to receive, you know, all of the criticism I have today. So, Casey, you described this in your take, which was very smart, I will say, not only because it quoted me, but very smart for other reasons. But Casey, you described this as the beginning of, quote, a shooting war, right?

We've had this sort of like cold war stalemate between Apple, Google, Facebook. Tim Cook says snippy things. Mark Zuckerberg says, I hate it when Tim Cook says snippy things about me. Right? And Mark Zuckerberg is writing op-eds for the journal being like, I need to do ad tracking because otherwise Facebook wouldn't be free.

Right. That's it. That's the end of my argument. But you say this is, you think this is beginning of a shooting war. What do you mean there? Well, up until now, it's only been about optics, right? It's been about Tim Cook's scoring points because he can and because he wants to convince you that Apple devices are worth $1,000 because they protect your privacy.

And it's helpful to him to have a boogeyman and Apple and Facebook where they're advertising based business models have been an effective bogeyman. And as his rhetoric has escalated, you know, Google and Facebook have had very little to say because he is holding them hostage, right? He holds the keys to the switch that that destroys them, at least in the iOS market, right? But then what happens today? Well, there are actual consequences for employees of Google and Facebook beyond, oh, Tim Cook made fun of me in a speech when he was receiving a humanitarian award, right? It's like literally we can't do our jobs today because, you know, Apple is cracking down. And again, I just want to reiterate, I think Apple acted appropriately and in the interest

of its consumers today. And I think that that is a good thing. But if you're working at Google and Facebook on, you know, one of their many apps that were not doing anything against Apple's policies and you can't do your job anymore, all of a sudden it's a real consequence. So it is a shooting war. And I do think it's sort of worth asking how we're not. will Facebook and Google, if not retaliate, then at least start building backup plans for the next time something like this happens. So strategically, like tactically,

as I agree with you, like, at the big level, the strategic level, like, this is bad. We shouldn't let Facebook have teens get 20 bucks to like screen scrape their phones or whatever this app was doing. It's probably bad. Like, if you're going to have this power, this is probably the appropriate use of the power. I think at any point when you give a huge actor

that doesn't really have a check on its power, the ability to do something, to your point, Casey, it is very fair to say, well, what if Tim Cook just decides that Netflix shouldn't work tomorrow, right? Like, what if, you know, they want to get Netflix in the TV app and Eddie Q says, you know,

we've noticed you've been distributing this enterprise certificate to some people who are just Netflix contractors, not employees. So, you know, like pay us the money or like you're done. Like, that is the power that they have. You might believe in your heart that Apple and its leadership

would never do that. But, you know, people get new jobs, people retire. Like, you can't guarantee that a company will act the same way forever. Literally in their earnings reports, they're like, past performance is not indicative of future results.

Like, this is a thing companies say out loud all the time. But then there's also the question of, like, tactically, Apple yank this thing from Facebook, which immediately is going to require a meeting between Tim Cook and Mark Zuckerberg, right? Like, this doesn't happen at, like, the lawyer level. This doesn't get, like, they shut down Facebook's iOS department today. People can't get on the shuttle bus.

Like, you have to think it's Mark Zuckerberg who has to make that phone call. You're like, hey, can you turn our company back on? Right? It's not, you know, the third junior VP of procurement who's like, hey, what's the, what the fuck shouldn't you just wait to see how that conversation goes before you form Facebook and Google into an alliance against you

like there's just a tactical mistake here that I don't understand like now Sundar Pichai and Larry Page and Mark Zuckerberg are in the escalade on the way to Cupertino to be like what the fuck turn our companies back on or hey

you know this is great when we go to our antitrust hearings we now have this ammunition to say, hey, the platform vendor has the ability to shut our companies down. There's meaningful competition in this market. We don't need any more antitrust enforcement. Like, there's just a... This is, what Deere said to me earlier

was this is Keystone Cops. They're acting impulsively, and I don't even think they're going to get to the outcome they want because now they've formed an alliance. And, like, I don't think Sundar Pichai wants to be thought of in the same breath as Mark Zuckerberg. But this is a pretty good time for that to happen. I mean, the question is also, how much of this is from Apple's motivation is what Google and Facebook did and how much of it is how they did it?

Like, would Apple's response be the same if Google was not, and Google and Facebook were not distributing apps that, you know, monitored traffic of teenagers, which looks optically very bad? Like, if this was a flashlight app that they just distributed to people for, you know, no good reason. Like, how much, how much of this is motivated from what it was? and how much was how it was. And only Apple could really answer that. But like, is Apple just, you know, slamming down the bandhammer because Facebook very publicly

in a, you know, bad way, flaunted the rules that it wrote? Or is this more like... Oh, I have an answer to that. Which is that all of Tim Cook's speeches about privacy painted them into this corner, right? When you go around the world, presenting yourself as the standard bearer for privacy,

among tech companies, and you find out that Facebook has circumvented your rules in order to collect the most intimate forms of data about your customers, right? Even if it was with their consent, then I think you are compelled to act because had Apple not active in this case, then we would be saying, wow, it sure is the odd that Apple keeps giving all these speeches about privacy, but when their most important partners screw up, all they get is a slap on the wrist. right so i really think that they felt compelled to act there there's an aspect of there's like a viralness to the there's a security hole in what google and facebook were doing or i i don't to be honest i don't know a lot about what google was doing for instance was google giving teens 20

gift cards i think so yeah i think google was also giving giving so apparently this is like a common thing like nielsen has an app that measures internet use of in this, like, there's quite a few of these market research apps in the world where they literally, like, the instructions are literally leave this app running in the background at all times and we'll sort of like pay you money over time. Right. And there's an aspect that I as a user can say, hey, go at it. I'm an open book.

You can look at all of my data. But what am I doing on the phone? I'm not just, I don't have just my data on my phone. I have emails that I talk to other people. I have text messages. I talk to other people. I have video calls that I do with other people. And so there's an aspect where an app like this is spying.

Yeah, it's spying on me, but it's also, in a sense, wiretapping all of my conversations. Yeah. And then learning that you use Snapchat stories so that Instagram can build stories. Right. And it makes the platform less secure in a broad sense, not just for this individual person. it kind of increases Apple's liability because their goal is to keep their platform secure. And that's how they're, to Casey's point,

that is how they're marketing the platform. And I don't think there's anybody who looks at this whole thing and says, well, yeah, if Apple can shut that down, they probably should, right? It's just the tool they have to do it is like a pretty blunt instrument. And a great illustration of how much power they have. Here's what I want to happen in the best case, cyberpunk scenario.

Yeah. Is that Google buys a GeoHot self-driving car company ostensibly to work on Waymo. But in fact, they create a skunk works division to try to jailbreak the iPhone so that the next time they get shut down, they leak a jail break and all their employees jailbreak their iPhones so that they can keep running on science. I like this idea a lot. Do you remember the, what was it called the iPhone Hack Squad? What was the name of the main jailbreak group for a while? There was muscle nerd.

Anyway, I was. Red snow was at one point. I was, I was routinely told during those years that many of the best iOS jailbreak developers were actually Apple employees. Yes. Which always, it's always made me somewhat happy. No, but Paul, you're right. We should just have, you know, look, if we're not going to have an effective government,

We might as well just have massive corporate, like warfare at that level. So Casey, what do you think? Have you read Snow Crash? Right. So here's an idea. So, you know, something I've been writing about with Facebook recently has been this oversight board that they want to set up. And the idea is when you run a platform big enough, you can't rely on your own employees to police everything that happens on the platform.

Some people are going to want to appeal. and they should probably appeal to someone independent of Facebook. And so Facebook is thinking through that and they're going to put something together over the next year or so. I wonder if Apple's platform doesn't deserve an oversight board, right, where a developer who feels like they have been unfairly penalized and booted off the platform can appeal to some sort of body that then has to hear their case publicly and then publish a decision about it and develop a. some kind of, you know, equivalent to case law, right? I'm sure this suggestion is making many people

laugh very hard, right, as if Apple would ever even consider this. But I think the thought experiment is good, because if you had that system, you would have something resembling a system of justice in which we sort of understood the terms of power and what avenues we had for the redress of our concerns. And if that kind of system existed, you know, I would be a lot less worried about Apple deciding today to, you know, rip away Google search. I think this idea is so good that I said it, I think, in 2009 on the NGadgett podcast. And Paul and Josh laughed at me because I sounded like a huge nerd. App court.

I'm sure YouTube creator, AppCort. I'm sure YouTube creators would love this. And as much as I was hating on case law and what's a call when you. It's called when you have something that a judge says one time? Wait, when a judge says what? It's like, you, president. Yes, Paul. I was making foot of president last week.

But anyway. You know, as one does on this tech news podcast. But to Casey's point, a sort of some sort of formal arbitration that had that, because typically arbitration doesn't have precedent involved. than this. I learned this from somebody on YouTube talking about law the other day. Oh my God, Paul. Just call me, dude. It's an all-y-study of Philadelphia episode. Oh, my God, Paul.

So arbitration typically doesn't have precedent, but if you had arbitration plus precedent, I think people would be really into that. But then you just have, then you just have a legal system. So the- Well, you want arbitration

and precedent, but you don't want the government. Yeah. You kind of do. for like a variety of reasons, including one is like if things go sideways, you can vote the bastards out, right? But let's just set that entire freshman year bong-based conversation aside. This is like the problem, right? Casey said earlier the sort of lack of antitrust enforcement has created this moment when these tech giants are in control of a lot of things. yesterday I interviewed Lena Kahn, who is a very smart antitrust lawyer.

You'll hear that interview on Tuesday during the interview episode. But she's like, we need to like do more to regulate these companies. So like Amazon is the merchant platform. They can see what sells well and they can make their own product and like burn merchants out of the store. We just wrote that huge feature about the Amazon marketplace economy, which sounds like the Wild West. And there's no there's no arbitration. in there, right? You can just write Jeff Bezos a letter and hopefully he helps you. App developers on the iOS App Store for years have run into weird, arbitrary app store enforcement

guidelines. You know what you do then? You write Phil Schiller an email and hopefully he solves it for you, even though there is this very secretive app review like system that is populated by thousands of people reviewing apps every day. Things get through. And if you're like a political cartoonist, you make a political cartoon app, Phil Schiller might be like, nope, that's against our rules. Right? That's like a big thing. That's part of the economy. Apple's out there being like, yeah, we don't make the iPhone in America,

but the app economy is strong, and they tightly regulate that economy. Google runs YouTube. They're on Google search. They're in front of Congress. Congress is like, how do you distribute what goes on Google search? YouTubers, like, how do you choose who gets demonetized or not? And there's no review of those things. Facebook is a Facebook scandal after like you're right like they like Mark Zuckerberg at least is like Facebook Supreme Court here's some ideas it sounds insane he's thinking about it Twitter is just like a burning car headed towards the ocean but like the same questions around

Twitter constantly appear Jack how do you do this jack screws it up all the time by making it sound like he's in charge of it when as Casey reports every day every week there's actually thousands of Twitter employees desperately trying to figure out a system to make this work. This is a problem. It's like a constant problem. They have this power. They use the power. It is unclear.

It is not transparent how that power is wielded, how those decisions are made, whether those decisions will be consistent. Even when they do put forth iOS App Store guidelines, it is inconsistent enforcement with no precedent. And then our government does not have any oversight over that either. does not say, hey, actually, we think there are some, there are some principles that should guide every platform, right? Let's call them laws. How do you, how do you, because we're all, I think, pointing in a similar direction right now, which is crazy.

But how do you make this weird court-like thing not be only accessible to, like, Facebook? can go to this court and afford the lawyers to go to this court and spend three years fighting Apple in this court, you know? How can this actually be more democratizing? That is one of the hardest questions. I talked to a very smart economist in Helsinger. A while ago, we've interviewed him. We've talked to him a lot, basically. And his model is like, look, we've built this at the FCC for cable systems. Right. So if you are, his first, famous example is like the tennis channel.

Comcast owns a bunch of cable systems. They bought a competitor to like the tennis channel. The tenant, they downranked them in the channel guide. It's like your placement in a channel list and a cable box grid guide is like a life in death situation, right? You rather be channel five than channel 5,000. So they bought some competitor to a tennis channel, downranked the tennis channel.

How does the tennis channel get relief? And so the FCC has a whole mechanism. of arbitration in like an administrative court where the cable channels can go and like argue about where they belong in the cable company grid guide that they're being discriminated against. And that sounds insane, right? And the reason that mechanism exists is because the players, the actors in that system are all big companies with lots of lawyers. They can tie up the judicial system. They can lobby Congress. They can do all the stuff. And so we built a system to deal with them. Like lawyers,

go over here. Like Comcast lobbyists, we are tired of hearing about you. There's a basement conference room at the FCC. Just go in there, figure it the fuck out. We don't want to hear from you anymore. Regular people don't have that ability at all, right? And in this case, Facebook and Google don't have that ability at all. Apple did some shit to them. We all sort of court of public opinion are saying, that's probably the right thing to do. But there's no, there's no place for them to go mediate that to talk about it. And you know what else happens, Nilai, like in this system is that instead of having a system that we can trust to try to adjudicate these things fairly, we just fall back on, well, which brand do I trust the most? Right? And for a lot of people, it is Apple. They think, well, you know, yeah, that seems like it has a lot of power. But, you know, I like by and large, this company seems like they have my back. So I'm going to stick with them.

but and that like maybe that sounds okay but in a world where there's only two smartphone operating systems that seems like a pretty shitty deal to me yeah i mean what if honestly what if um disclosure comcast owns a chunk of ox media which owns the verge um what if comcast just decided that it didn't want you to see youtube anymore right they could just do that and you would not as a user really have any market recourse and like we talk about all the time that's net neutrality that's the thing we talk about all the time. They can charge you more for those bits. There's a lot of, Paul and I have probably argued about that 9,000 times. In our rundown, we are supposed to talk about the fact that net neutrality is going to court tomorrow,

but we're 45 minutes into one story, and so we're probably going to miss that one. But, like, we've been having this conversation about who gets to decide what you see at every layer of the network stack. And I think now it's just hit the platform level because Apple pulled the plug on the, on these certificates. And it's, you're, most people are probably like, yep, they should have done that. I'm kind of like, yep, they should have done that. But it's this exercise of power that everyone should take one step back and be like, how does this power get exercised?

What is the check on that power inside of the system where it doesn't appear that the government is actually a meaningful actor, which would normally be the check on that kind of power? And it's unclear. The answer is clearly Bitcoin. I knew that was coming. All right. We're going to take a break. I think Dieter's going to, we're going to play this voicemail from Deeter that I haven't heard yet.

Let him yell for two more minutes about this. And we're going to come back. Hi, we're going to talk about this USBC iPhone. I'm ready to talk to this USBC iPhone. All right. Let's let Deeter have it for two minutes. Hey, everybody. This is Deeter.

I'm sorry that I missed the Verge cast. I have been out reporting a thing that you'll see later. Anyway, I couldn't help but notice in the news that your phone, well, not your phone, the phones, the phones of the Google employees and the Apple employees, they got turned off. They had all their apps turned off because Apple yanked their root certificate because those companies were doing honestly skeezy things. They were, you know, spying, not really spying market research, but with way too many permissions. But the real problem was that they broke Apple's policy. And you know what? Fair. If there's ever a time for Apple to flex its muscle and slap the wrist of its major global competitors, it's when they're doing skeezy stuff. And so it feels really good to watch Apple slap the wrist of people who are doing skeezy stuff. But I don't know. I'm sure that Neely is going to talk about this. Isn't it weird that Apple can just turn off stuff on somebody else's phone? That's like weird, right? Does Apple really want to be the judge and jury for the

the entire phone ecosystem. I mean, yes, they do. That's how they set up iOS. But also, that's rough. Like, it's kind of rough. Support for this show comes from Shopify. Starting something new isn't just hard. It can be really scary, too.

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Terms and conditions apply. Okay, we're back. more Apple though more Apple so much Apple how is it that Apple had a bug in FaceTime that let you listen in on calls and it's like the 45th most important story

of the week Apple posted its earnings like they're not selling iPhones in China 45th most important story the week but let's start with some good news let's like bring it back USBC iPhone walk me through at home

okay so we're in the early phases this is like far from confirmed, but Mark German posted his scoop on the first batch of rumors for the 2019 iPhones, and there's a whole bunch of stuff. There's a dark mode for iOS 13. There's three cameras. There's like 3D camera scanning. But Apple is testing some versions with USBC ports on the phone.

So I want to just walk everyone through the emotional roller coaster that Hymn and I both went on yesterday, which is we see that. The headline goes out. We're like, yes! And then we're like, they're going to do something. Something's going to happen. Like,

they're either not going to go through with it. Someone's going to go at the last minute. No, let's stick with lightning. They're going to get up on stage. You know, Johnny Ives going to go. And this year we've added USBC to the cable in the box with the lightning port on it.

It's going to be something like that. Like, I'm going to be halfway through a tweet in like September and just have my hopes crushed. And now instead of the USBA to, and USBC to lightning by default. Or it's going to be like an MFI USBC variant where you can still only use cables that are approved by Apple. I mean, that's been the problem all this time is that the lightning port is just too essential to Apple and the control it gives Apple has been too important for Apple to give up up until now. And they put it on everything else.

Like at a certain point, the reason is, is like they don't want people plugging stuff into the iPhone because the iPhone makes them all their. money and like that's the earning story is sort of like this is like the sacred thing that must be protected and when it fails Apple has to release a letter saying that we're missing earnings by nine billion dollars okay but let me let me put a positive spin that apple's money was the iPhone and the iPhone ecosystem for so long and they have to you know they know they're going to sell millions of iPhones and they just chunk off a percentage of those sales and convert them into MFA made for iPhone accessories then they make a lot of money. Mm-hmm.

I have on sales are flat to down, that business, that percentage necessarily down. Yeah. Who cares? We're a services business now. Really what we want you to do is sign up for this mysterious TV service. Screw it. Let them charge with USBC. Yeah, I don't think MFI has really ever been about the money for Apple.

Like, they're making sense on iPhone chargers. But they, it's a billion iPhone. It's money, but like I think it's always more been about the control of you can only plug this thing into an iPhone if we let you. Like, you still can't plug a camera into an iPhone. You can't plug an SD card into an iPhone unless you, you know, buy the weird thing and chain together dongles together. Like, Apple wants control over that entry.

There's a lightning to SD adapter I own it. Yeah. It's, I don't use it very often. I think it's more of a control thing for them. And the switch to USBC would mean giving up that control. But I think that control, my point is I think that control, is less and it's important. Yeah.

So it's funny as Apple makes its transition and we should talk about their earnings, but they're obviously making this transition into being a more holistic company where they, yes, they sell lots of iPhones, but their money is not in iPhone sales. It's in this long relationship of providing you services while you have the iPhone.

Yeah, and I think that makes sense for like Apple. I mean, I also think that they blew the ship on this and should have done this like three years ago with the iPhone 7 when they killed the headphone jack. You could have done everything in one fell swoop, because this fall I'm going to get like, someone's going to buy a new iPhone, and it's going to be, you know, the same complaints when they switch from 30 pin, if they do it, which I'm still refusing to get hopes up for. Like, we have to use adapters, we have to buy new cables. You could have done it all at once.

I think the idea that you now charge your Mac and your iPad Pro with one cable and your iPhone with another, that has to... That has to end. It has to end. It's had to end since Apple started selling laptops that only... have USBC ports. Like at a certain point, Apple needs to commit to the decisions that it's made on its own hardware, and it hasn't. Yeah.

I refuse to get my hopes up. So the other argument, just to go through it, is they'll never go to USBC because they're just going to go to a fully portless phone, which I have never believed because I sit in bed every night with my phone plugged into the wall using my phone with battery dead. Yep. And I just have to imagine Apple executives have had similar experiences in their lives. And fully wireless charging means you can't use your phone when the battery is dying. Yeah.

Sure and imagine all sorts of things. Rainbows. It's just like. Leprechaun. The idea that like they're like that, you know, they famously have like the six hour management meetings every week. And someone's like, we're taking all the ports off. And Tim Cook's like, wait, how do I use my phone on the battery? dying. They're like, put it on this pad and just lean over it.

That can't have been the answer. How do I listen to my music? I have five words for you. Day iPhone and night iPhone. Yeah, that's probably right. Just use your watch. Just poke at that for a while. Okay, so it's good news.

There's a good news. There's hope. There's this glimmer of hope. And then there's also a rumor that the new iPad might have lightning. Yeah. But the baby, the little iPad, the cheap one. Which is bad.

Like, it's bad for Apple to keep doing that. Well, you segment it out. You got to rip the band-a-band-in. The real iPad Pro is the computer, and it gets the USBC port. That's why, like, I was upset when they announced an iPhone with Lightning, and then four weeks later announced the USBC iPad. Like, it felt like someone was, like, taunting me. But I can imagine the twisted rationalization you need to make that work,

which is this is a computer, this gets USBC, this is mobile, and it gets lightning. And like AirPods charged with lightning and there's a beat speaker that charges with lightning. Here's my frustration. You know, we're now this many years into the lightning era about to transition fully to the USBC era. And every hotel in America is still in the 30-pin dock connector era. Yeah. I think I have seen one hotel with a lightning connector. like ever in my entire

like hotels are not going to have these USB C connectors until like the 2030s. Yeah, but all hotels now have like USB USB ports. Yeah. Power plugs by the bed. I think they're like you're going to bring your own charger. Hotels are skipping right to Alexa.

Like the idea that you're going to plug this into an alarm clock that we've provided it's like I think they know like if you're I don't know Bob Marriott or whoever runs Marriott. Yeah, that's Bob Marriott. Yeah. And Angelina Marriott, you're not like, you know what, we should spend millions of dollars

on new alarm clocks. You're like, can we just put the plug outlets by the beds, the new hotels? Are there, is there a single USBC, is there an I-home with a USBC port on it? Does that exist even? It has to be. I feel like we've moved to like Bluetooth at like a certain point. One of the unique joys of my particular role is I get to come on this podcast and say things like, I want to install plug outlets in my house with USBC connectors.

and I don't have any, and then, like, I get 500 PR pitches for plug outlets with USBC ports. So it's all coming. Okay, that's the good news. Let's talk about the, the, let's go bad to medium. Right? Does that seem right? Yeah. Let's start with that bad.

So, again, it is remarkable that this is, like, the 45th biggest story of the week after everything that's happened. But for a minute, it was the story of the week. There's only one story, and it's there was a huge, huge bug in FaceTime that we, I think we all tested, everyone just tried it out, where if you made a FaceTime call, you needed two phones that supported Group FaceTime. But you made a FaceTime call, and then you added yourself to it. The other phone would just pick up and start sending audio. And if they tried to hang up, it would start sending video, which seems like the worst part of the bug is that if you tried to hang up this call that you were getting, video would also be sent.

I tried it at work. Dieter tried it. I believe you tried it. Apple, so here's the scandal. Paul, I'm curious for your thoughts on the bug bounty part of this. Apple knew about it for some time. There was like a teenager in Arizona. Playing Fortnite.

Of course. Actually. The cause of insolution to all problems. There's a teenager playing Fortnite. He discovered with his friends. He told his mom, his mom's a lawyer. Mom was tweeting about it. like screenshots of Facebook Messenger, like threads.

She was sending to Fox News. She faxed Apple. She faxed Apple a very formal letter. No one got back to her. And then it was, you know, discovered by somebody else. I think 9 to 5 Mac had it. And then Apple shut down group T-Fa-Time at the server level and put out a statement being like, we'll fix it later this week.

Yep. Still doesn't work. So the show's coming out on Friday. It might work by Friday. Who knows? But it's Thursday night and they haven't fixed it. How does Apple miss a bug like this, Paul? Is it just the systems are not in place to catch it?

I mean, Ashley wrote a long piece for us basically. And like the systems in place are for professional security researchers. But this thing percolated for a while. I have no idea how this wasn't caught instantly the moment somebody mentioned it. Because it's so easy. I mean, a lot of times bugs can languish because they're hard to reproduce. And a non-security researcher reporting a bug. might not explain how to reproduce the bug very well,

and therefore they have a hard time reproducing it. But this is apparently very easy to reproduce. I have no idea how this languish. And I also wanted to say, I know this doesn't need to be said, but I feel like there's a fundamental contract that we all have had as people since the telephone was invented, where if I don't pick up the telephone, it can't hear me.

They broke like the first rule of telephemy. phones. Yeah. You know, I mean, Amazon has broken that rule with drop-in. I think that's why everyone finds drop-in to be so very creepy. Although if you use it in our comments less so. Anyway, so Apple puts- This goes to the need for formal verification of software and how we really haven't

figured out the mathematical underpinnings of modeling the possible states that our software can be in, and we need to do a better job at that. Wait, explain. For the safety of Fortnite teens. Explain what you mean. Well, like, there's multiple states. There's listening, yes or no. And then there's, have I picked up the call?

Yes or no? And there are ways of modeling your software if it's very simple so that you can formally verify that you can't listen if you haven't picked up, right? But as software gets bigger and larger, it's much harder. There's a combinatorial explosion of possible states your software can be in. That's why turning it on and off, it fixes so many problems because you get back to a good initial state and then you go on a happy path from there. But if you get into this weird state, and so anyways, I'm just saying that it's something that math people, like true computer science PhD types think a lot about how we can formally verify our software that it works, how we say it should. The way that I've implemented this is that I've installed iHom smart plugs at all my parents' cable boxes.

And when their U-Verse goes out, I just restart them from my phone. I've done it twice. It's worked both times. That's super interesting. This one to me, it doesn't... I think they just thought that no one would add themselves to group FaceTime and never tested it. Yeah, this is such like a weird thing to have even tried? I mean, it's not like you've done some weird permissions thing where, you know, you rebooted the phone at the right time and it kicked it into like a dev mode that allowed you to have like unauthorized permission.

This is literally like no one would ever be this weird to try and add themselves to a group call that they're already on. Well, maybe you have like two to, I don't know. So all of it, by the way, this is true. All of the recommendations are like, you got to turn FaceTime. Yeah, we wrote a piece. Here's how to turn FaceTime off. The New York Times is tweeting, major bug, you got to turn FaceTime off. And I go home and my mom text me, can I FaceTime the baby?

And I was like, well, I guess I'm just leaving this security whole of it. I don't have a choice. But they turned it off at the server level. Hopefully they'll put out a fix next week. It is remarkable that we just talked about a massive bug in FaceTime. I mean, Apple was like about to hit like a privacy reckoning. Like you felt it growing. and then this stuff happened and it's just disappeared, which is remarkable.

It's weird that Apple was privacy angel and privacy devil in the same 24-hour news cycle. I wouldn't call them devil. It's just a mistake, right? Yeah. That's exactly it. Well, that's exactly it. It's like, you know, bugs happen. And I think we just have to accept that as people who use software.

We're never going to be able to fix all the bugs. And when a bug gets found, I think that we should sell them. that it was found instead of just existing on the dark net so that it can be sold for you know two million dollars or whatever um so like you know i mean there there might be some questions about why did it take apple this long and those are appropriate questions to be asked but the fact that bug existed like you know there are a lot of bugs out there look i'm going to find another one that lets me spy and casey tonight i'm just going to do weird face time stuff so i'm listening to how bad would it have to be for tim cook to revoke apples

Send cook just sends an email It's like snow day Polar vortex everybody take the day off All right We got to talk about earnings This is the other huge Apple story of the week Um earnings

Out their earnings They put out the earnings They put out revised guidance I said we're not going to sell as many phones we thought Um There's lots of numbers We can run through numbers But here's two things that jumped out of me

from both the earnings release and the call One Apple last quarter said, we're not going to do unit sales anymore. This quarter, they actually started releasing other kinds of information, which are interesting. So they're very into installed base of the iPhone, iPad, the Mac, the watch, and the Apple TV, which are their operating systems. And they said we have 1.4 billion devices running on the Apple platform.

That number is what you convert into services customers. So they have to, I think they're going to disclose that number quite often. Yeah. Second, so that's like really interesting. So they went from here's how many units we sold this quarter to here's how many active devices that we can address with Apple services. Hopefully make some money. Second, like Tim Cook just said iPhone upgrade like 500 times on this call. Like that is the story of the iPhone now is how often will people upgrade?

And it is remarkable. His answer is basically like, look, the phone carriers aren't doing subsidies anymore. It's like pretty hard to upgrade your phone, even though it's not. I don't know why he keeps saying it. He's like, it's pretty like, we got to make it easier for people to upgrade. So we're going to start doing like trade-ins. We're going to make it easier to move your data right away. You know, and then it starts to, he said this, and it starts to look like a subsidy.

Like you give us your old phone and the new phone's cheaper. It looks like a subsidy. And I just don't think that's how normal humans perceive that. No. Right? Like, you're giving them your phone that you bought and buying a new one. Yeah. I mean, the value proposition there is, I guess, like, selling phones on, like, the gray market sucks for the average consumer.

And no one wants to be, like, going into a bank lobby to sell it to some guy on Craigslist. So Apple is, like, will be that guy. And you can do it in an Apple store without, you know. Yeah, I just, I don't know, like, Casey, you have a car. I have a car. I never think to myself, I'm going to subsidize my new car by selling my old one to the deal. Like, that's just like, it's not how your brain works. But they're very focused on how do we make upgrades easier.

They talked about it a lot. And then they're obviously very, very focused on China, where their sales fell the most. And then they gave some hints about their TV stuff. So do you want to kind of just time walk us through where you think that the China problems are? Because I know you were covering earnings yesterday. Yeah. So it's kind of like a twofold thing. Part of it does seem to be that there is like a broader economic context,

which I am not qualified to speak on because I am very much non-economist. But Apple's not the only company that has reported, you know, economic downfall due to China. There's like political stuff. There's economic stuff, which probably has. has something to do with it. But also, it is just like a very different phone market out there. And Apple has to deal with a lot of competition in China that it doesn't have. You have Xiaomi, you have Huawei, you have these big established players that can't really play in the U.S. But are these massive, massive brands that have phones that are just as powerful, like same

premium level features that cost a fraction of what Apple sells for. And I think part of it is just this is one of the largest customer base in the world, and Apple has to actually compete on price and feature in a way that it doesn't have to do in any other market or to an extent that it doesn't have to do in any of the market. Yeah, and I think Ben Thompson has a great chart that's like, in China, iPhone sales are directly related to new form factors. Yeah. Like, they put out a new form factor in sales spike. They do the S cycle, sales go down. You know, how much this upgrade anxiety relates to the fact that the 10, S and 10R just aren't very compelling phones to people who have bought a phone within the past

couple of years? Like, is it possible that they'll come out with a really slamming phone this year? Sales will go up and they'll kind of be able to shrug off some of this anxiety? Maybe. You know, they were very clear that the 10R is their best selling phone. It should be. And it's a great phone. And I think everyone sort of thought it was the iPhone 5C comparison. Like the 10R isn't selling in China. They had to revise their earnings. you know, there's like the wave of tweets about, well, I didn't upgrade my phone, and then it turns out, well, actually in America,

their sales are slightly up. Yeah. Right? And their best-selling phone is the 10R. So, like, they're doing all right here, I think, on that upgrade curve. The second best-selling phone that they had was the 10-S max,

and then the 10-S, which I think cuts against this notion that everybody wants a small phone, even though, you know, the iPhone SCE like goes on sale, it sells out in, like, 10 minutes. I don't take, I have to take the, is proof positive. They're two biggest screens

of their best selling phones. I mean, the smallest screen is their second most expensive phone. Like, I can't take that as evidence that people don't want small phones because people also don't want expensive phones. I don't think people are saying that everybody wants small phones.

I think what people like me are saying is that some people really want a small phone. Yeah, no, I think that's true. And like I said, the iPhone SE goes on the clearance sale and it sells out. And 10 seconds. Some people really want a USBC iPhone. Anyway, Casey, my answer to you our question is, at least in America, in the United States, they're doing fine, right?

And in Europe, they're doing fine. In China, they're doing badly because the phones look the same. And I don't think the 10R is compelling as a cheaper phone against the Zalmi phones. You know, like, those are terrific phones for the same price as the 10R. and like why wouldn't you want more features for the same money when you're just running WeChat anyway, right? Which is kind of the big comparison. So it's like iPhone, just to say the numbers,

their iPhone sales revenue fell 15% from last year. Like I said, they were basically flat in sales in America in terms of revenue. They were flat-ish in Europe and they're down in China and that pulled the whole number down. The other thing is the services, narrative, which I like to put in quotes, because Apple is very much saying that it is not a services company. They're very proud that Apple Music has 56 million subscribers. They're very proud,

you know, Tim Cook was like, I'm not going to say much about our TV plans, but he's time to deal with Oprah. And then he, what do he say? He's like, we hired some great people and I have super confidence in them, which prompted me to walk around the verge office and tell everyone I had super confidence in them. But they won't reveal what that plan is. And I, again, I just come back to the idea that Apple Music is a success because Apple made a bunch of deals with carriers, right? Like Verizon gives you Apple Music. Apple preloads it around the world. Spotify has similar deals, but like Apple Music's it's preloaded and you get it for free with your carrier.

That goes a long way towards boosting your thing. Apple Maps is not competitive with Google Maps. ICloud as a paid storage service is not quite as useful as the other paid storage services. they're going to put out this TV service and it's it sounds like what they're going to do is like make some free content with Oprah or make some content with Oprah

and then sell you some channel subscriptions to like Hulu and HBO and down the line and like aggregate that together like the problem with Apple's services narrative is that their services aren't competitive with their competitors and they're late to market on some of them

the only one that is far in a way like the most, the best service in the market is iMessage, which is locked to the iPhone. So, and I stand by that, by the way. I think I message is absolutely terrific.

It's, I know I'm locked in. I'm like safely in sconce this wall garden, but that shit works really well. Like, like really well, and I know it's private

and they don't have any interest in like putting a chatbot into it and making me turn off the encryption. Like, it works. So there's just like, one of the things that Apple's,

yesterday was our revenue in China was down because the Chinese government stopped approving games in the app store. And it's like that had a material impact on their revenue because most of the services money that they make is like candy crush gems and like in at purchases and games. I didn't know app like app store revenue was that significant of a share of Apple's revenue. It's a huge, I think underreported share of Apple's services revenue. So, you know, they say what the services are and one of them is App Store. And so, yes, there's like the subscriptions that you buy. There's the actual apps that you buy.

But the big driver of it is in-app purchases and games. And so, like, that's a weird, that's a weird thing to say we have a services business around and kind of like allied that like fundamentally, like people are just buying more moves in like two dots or whatever. This is a, this is kind of an interesting. So I remember like the most. Remember when that, I think it was GTA4 came out and it was like, it was like one of the biggest media releases ever. And then the headlines kind of started coming out.

The video game industry is bigger than the movie industry, at least in like box office numbers comparatively. And now there's this huge kind of kerfuffle in the games industry of like the core gamers who want games for PCs or at least consoles. And the fact that all the big game companies have realized, that the revenue of mobile games has eclipsed all the other video games revenue yeah yeah um and so it's there's kind of there's a lot of tension there's a kind of a war between like fans of blizzard games and blizzard people because blizzard had the temerity of announcing a mobile diablo uh and bethazda is doing a mobile at elder scroll so these are like the the old school classic companies that have been loved for decades

that are kind of risking a backlash just because there's so much money in mobile gaming. I don't know. It's just interesting how huge of a market that is. Yeah. And I think Apple hates the fact that free to play games are the most common experience people have with their app platform, right? Like it's not great to just like hit the wall and be like,

I guess I'm going to look at this bad ad. or pay you four bucks. You know, like, I don't, that's not like, I don't think Apple, Apple never gets on stage in a keynote and is like, we're so proud of this app. Let's go ahead and bring the candy crush people on the state, you know, like, they're just like, yeah, just that's, that's the money factory in the basement.

We don't talk about it. Services, though, that's great. It was always the unintended consequence of, like, in-app purchases. Like, when they first announced it, like, most of the keynote was showing off, like, you download the game for free, and then you can buy the rest of the levels.

Like the Super Mario Run model, which didn't really work, was kind of what Apple always envisioned this as. And then there was, like, one thing at the end where they showed, like, a multiplayer game and a guy bought, like, a rocket launcher in the middle, and then he suddenly started winning. And that was the one that stuck. But that wasn't what, like, the focus was on

when they announced this feature. It was supposed to kill, like, Because in like the old Wild West Days of the App Store, every game had like, you know, game free, game light, and then game full. And Apple's like, what if we just had game? And then you could buy the rest of it. Yeah. And that didn't happen. It didn't happen at all.

All right. I hate about Apple services. Yeah. 16 by default, right? Like, because they're so large, because they have so much power, they're able to do things like Apple music, which, you know, is fine in a lot of ways. It's not as good as Spotify. but its growth, which again is by default because it's just so much easier than, you know, downloading Spotify comes at Spotify's expense.

So my fear is that over the long term, you wind up with fewer interesting consumer apps, like, you know, supporting an external ecosystem and more just kind of like a good enough Apple BS. It similarly drives me crazy. So they finally got me to pay them a dollar a month just so that I can see the one shared photo stream that has every photo of my nephews in it. And that's, and by the way, that is in spite of the fact that I manually installed Google photos on the phone of every single member of my family, right? But I still have to pay Apple a dollar. So I see the new pictures of my nephews. So it's like, yeah, like every time I read about the Apple services narrative, I'm always like, oh, like the bullshit that means that I give Apple $12 a year that

they don't need. These guys who have $245 billion in cash, it, you know, melts me for another 12. Like, Congratulations on your damn service narrative. I mean, 1.4 billion Apple devices paying $12 a year is another $17 billion almost. So that's how they get you. So I just want to do with it. Yeah. It's like, let's try building a car. They're buying a TV show from Oprah.

Oprah's not cheap. That's true. She's not. They've spent a billion dollars on these TV shows. And a planet of the apps is any indication. We're all in for a wild ride. Anyway, the way you can sum all this up is, It is somewhat uncomfortable when someone with massive distribution power exercises that in a monopolistic way.

And I encourage you to tune into the Vodcast on Tuesday when I talk to antitrust expert and scholar Lena Kahn, who literally pulled this apart from me for 45 minutes. All right. You just pick these interview things to troll me. I'm convinced. I'm being personally attacked. I'm going to try to find somebody in America who thinks that we should live under the thrall of four giant. corporations and I'll bring them on the verge cast. But I have as yet

been unsuccessful in locating my person. That's not the point. You're deliberately misrepresenting my points. All right, we're going to take one more break. Hold on one second and we'll be back. Support for this show comes from What Not. Whether you're selling online or out of a storefront, you already know the challenge.

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All right. Speaking of which, Paul, there's another point you make every week on the show. It's always the same point. Always the same name. I never forget it. It's called. It's called nightlight. Highlights.

Sleep tight. Is that supposed to be asleep now? Yeah, you are asleep. This is a dream. Casper is getting into the gadget biz with a nightlight called glow. And I didn't think this would be interesting at all, but I really like it. So it's a little light that sits next to your bed and it sits on a wireless charging stand. And then when you have to go the bathroom, you like pick it up and it's battery powered.

And so you can light your way through your house and then you bring it back. And it has all these like interesting gestures. Like you twist it to set like a 45 minute timer and it will slowly like dim until you fall asleep. You can set it as an alarm so they'll wake you up by getting like lighter. I don't know. I just I like this. I mean, it does have an app like any internet of things device. So you do control it.

You kind of configure it from the app. But it seems like it's designed with these kind of really interesting gestures that sound relatively intuitive. And it kind of sounds like a future I would accept in my life. Do you have to have a Casper mattress to use it? Is there a lock-in component? I don't see how, but I hope so. Casey's making his squinting at Casper face. Go ahead, Casey.

I like to mention whenever Casper comes up, which is that it literally went out and bought up every mattress review website on the internet to prevent anyone from saying an honest about Casper. So I don't know how that makes about their work, but I got to be honest. Yes, there's a great fast company article that's like diving into like the deep crazy SEO games of the mattress review wars that Casper played. But I love a night. I have a soft spot for Casper because they are like one quarter of the funding of like the podcast revolution. Yeah. Like I feel like podcasts would not be nearly as big of it.

They'd be like 25% less of a big deal if it weren't for Casper. And I want to recommend everybody to listen to them, my brother, my brother and me guided sleep experience for spiritual harmony, which is a whole episode of SpawnCon sponsored by Casper. Yeah. Look. I just let Casey make that point, because it is true that there's also the, like, they're Casper. They go to their thing and like take an app. Like, that's a real thing you can do in New York at the Casper store.

You can buy a sleeplight. But then at the same time, if you own a mattress review website, they will ruthlessly crush you. Well, only if you don't say good things about Casper. That's true. All right. We're way over time. I just want to mention, these are all very, very. very nerdy things.

But let's just wrap them up. Haim, Intel, after seven months, hired a CEO. It's the guy who's their CEO. Yeah, I wish him luck. Tell me who is it? So this is Bob Swan, who is Intel's interim CEO. He is now their permanent CEO. He had told people in June that he wasn't interested in the full-time job and now has the

full-time job. I don't know if they couldn't find anyone else. Intel has like a tough road ahead of them. So Moore's Law is like running into a wall a little bit. They still have been shipped. Their actual next-gen 10-nometer process chips, like it has been slowing down PC growth. It has been slowing down PC development. We saw some of that at CES this year.

We're like a lot of the updates were very iterative because they don't have new chips to put in. And Intel's updated chips were like gigabit Wi-Fi. It does the same thing. So he's got a job. And also, he's currently the CEO. Intel. He was their CFO before. He was their CFO. Interim CEO, and now he's... Intel also, in addition to not

updating the chips, is not able to make enough chips of its unupdated chips. So much so that Microsoft's earnings were depressed by the lack of chips. They're like, we would have sold more Windows licenses and PCs. There just aren't

enough chips in the world. So there's like two problems, like make enough of the old ones. They're getting squeezed at both ends. And then invent some new ones. There was a rumor that they were going to hire Apple's chip guy, Johnny Sruji. And you have to imagine he was like, thanks, but no, thanks. Anyway, so Intel has a new CEO.

Hopefully that means to new things. This one, I think, obviously, is near and dear to my heart, which is that Foxconn sort of announced but didn't announce and then walked back. We actually have a, Josh Judge, should have a story today about it. It is unclear what Foxcon is up to, but their spokesperson for the plan. plant in Wisconsin said, we are not building a factory. You cannot measure our success in terms of a factory in Wisconsin. You might remember that Foxcon announced that they were building a factory with the Walker

administration and the state of Wisconsin gave them $4.1 billion in tax credits to build a factory. It also declared the land that people lived on blighted so that it could buy the land at reduced prices and give it to Foxcon for a factory. but now there may not be a factory. When I read this, Neely, and please enlighten me, I read it as, in Wisconsin, we're not building a factory, you know, like dot, dot, dot, we're building a dream. It's more than a factory.

That is very much, I think, how Foxconn wants to play it. So here is just the math at the core. And now all the, you know, the Republicans, and Democrats in Wisconsin are all yelling each other because, you know, Walker got voted out. The new guy, Evers is in. He's a Democrats. The Republicans are all like, Foxcon is scared of Tony Evers. He ants, he's anti-job.

Of course, they're pulling out of this deal. The Democrats are like, it was always a bad deal, and that is going to happen. But here's like the, just the math underneath it. They promised the state of Wisconsin 13, 13,000 jobs. We're going to build 75-inch sharp TVs, 13,000 jobs. Everyone's like, yep. They're like, the biggest factory in the world. Like, this is like a whole thing.

Now it's not a factory. they're still saying 13,000 jobs, but they're going to do it in, and we got the statement from Foxxon today, in R&D for our AIK Plus 5G ecosystem. So we're still right there with that. The problem is 13,000 R&D jobs is the size of Stanford University.

It's the size of like the University of Wisconsin's research division, right? Like that is a large research university's worth of jobs. And so where are they going to find those people? Like, why are they going to all want? Like, there's a polar vortex in Wisconsin. Maybe they'll have to move with like, like, I'm from Racine. I'm just saying, I don't think you can lure a lot of people to Racine's beautiful amenities. Right.

How about Foxconn HQ2? Yeah. Coming to New York. Anyway, so it's a thing that's happening. The story's on the site. Josh is working on a follow-up. we're obviously pushing Foxcon on it. But things are changing.

That's a thing I want to keep everybody updated on. And I'm very proud of, like, The Verge, because I think the verge and reply all elevated the sort of changing Foxcon plans to be the big story. And I'm eager to keep pushing them on him because literally it's my hometown. I tweeted this. I don't know if I really saw that, like, one of the houses we owned when I was growing up, it was like sat on a large plot of land.

A developer bought more land around that house. and now it's on sale to be turning to strip malls for like $3 million. And my mom is so mad at my dad for selling that house. But now that happened because they're not building a factory,

they're building a dream. Okay. Last one, I mentioned, I meant there's net neutrality hearing tomorrow with Mozilla suing the FCC. We're going to live tweet that. Hopefully you get this podcast the morning, Colin and Addie and McKenna

are going to be live on live on video that from the verge account, I'll have a report on that. That's a big case. Net neutrality might come back if Mozilla wins. It's kind of amazing that it's Mozilla up against it. There's obviously a lot of action there. So pay attention to that.

And then this one, I think, is super interesting. There's a company in New York. They found an exception to the copyright law. It's like it's written in the law where nonprofits are allowed to rebroadcast TV over the internet. It's called Lowcast. Ed Lee, who's a great reporter at the New York Times, wrote a piece about it today. we followed up, we investigated this loophole that they found.

It's not a loophole. It's actually in the law. It says nonprofits are allowed to do this. But go to L-O-C-A-S-T. It literally looks like a non-profits website. But the point of this entire effort is, hey, TV is broadcast for free over the air that we, like the airwaves, the spectrum that we grant to TV providers,

consumers should be able to get that for free. So they've started, it's literally a nonprofit company. You can just like donate them $5 if you want. but the big TV providers don't want to sue them because they think that they might not win and they don't want to draw attention to it. So it's just one of those very perfect verge edge case companies where it's like you can't poke at it too much because you might lose really bad, but the companies hate it. Well, just real quick, if you'll let me know what you're watching on lowcast.com, I will give you a $20 gift

That's all I want to use. Paul, what were you saying? I would say, is this lobbying by form of starting a nonprofit company? Or is this someone who's like, I think this nonprofit can really have legs. And I want to run locust.org for perpetuity because people need access to local channels. So in the Times article, it laid out some of the math of the business. And he's like, yeah, I've raised $10,000 in donations. But I took out a $700,000.

from the bank, it's 15%. So I think if you're like NBC, you're like, that'll just solve itself. It sounds like it's going to solve it. That'll probably just solve itself over time. But it's super interesting because the cord cutters that we hear from are always putting up antennas. Tivo, like, makes a cord cutting box with an

antenna port because broadcast TV is just like available to you in the air. And there was a big company called Aereo. I went there, I held their antenna. They were unable to be a company because you're not allowed to re-broadcast without paying fees. But there's a very specific part of the law that says a nonprofit can do it. So this guy started a nonprofit just to be like, come at me. That just warms my heart. I wanted to end on the good news that even in this age of corporate control,

there's still a guy being like, what if I lose a shitload of money just to be like, you can't get me? So hope is alive, Paul I mean, it's the government The shutdown area No, they got sued Rose, there was illegal That was cable companies

You're not, you're just an anarchist I just want you to know this You have become like fully an anarchist I'm an anarchist All right, well I'm going to send you this X-Pistol CD And it's going to be great I have to send you physical media Because the government could shut down

Your streaming subscription I'm going to send you some like magnetic tape in the mail That's the Verge cast. It was crazy. Highs, lows. Casey was here. Thank you, Hym.

Paul is ever. One of us is going to start a corporation that destroys the other one, I'm sure. I wish Deeter was here. Not-profit. Tweeted Deeter, so you missed him. That's it. You can follow the Verge on Twitter, on Instagram, or at Verge. You can listen to all of why you push that button, season three on Apple Podcasts.

You can listen to Pivot with Kara Swisher and Scott Galloway. You can listen to Function with a Neil Dash, all part of the Vox Media Podcast Network, of which we are the flagship. And you can tweet at us, I'm at Reckless Heim. At C. Gartenberg? Casey. He said I'm Casey Newton, but his AirPods did again.

And Paul, is that future Paul? That's it. Rock and roll. Paul. I'm a cook.