Is the iPhone "Illegal?"

- So if I build a new lens and my lens only works with my camera, then that's vertical integration. Or if I build new headphones and my headphones only work with my cable, that's vertical integration. Now if I build a new smartwatch and my smartwatch only works with my smartphone, be careful, it could be

illegal

. It's a bit of an oversimplification, but let's talk about it. (upbeat music) So this is a developing story and will continue to develop for years, but I feel like it all comes down to something that I've at least noticed in talking to all of these large companies, all of these public, multidisciplinary companies. billion-dollar companies, always have two reasons for any public statement they make.

There is the public's reason and then there is the real reason. So, last week there was news that the US Department of Justice sued Apple saying that it is an

illegal

monopoly in the United States, specifically the iPhone. Now, when there are legal proceedings, obviously things get very complicated, and I won't even pretend to dive into this at a super deep level. But this is also interesting to me because of all the things we talk about every day, which are just smartphones and devices. And of course, this is something quite specific to the US, obviously they are being sued by the US, but also their dominance, Apple, the iPhone is the most popular in the US.

So I think these are some numbers that we must take into account. In the US, the iPhone has about 60% market share, and it's even much higher, around 90% among young people, like it's ridiculously dominant. But worldwide, the iPhone has about a 25% market share. So the iPhone specifically tends to become a monopoly in the United States. (upbeat music) So this is where it gets really interesting. I'd like to live this analogy for this video, I mean, you've already heard of people describing the Apple ecosystem as a walled garden, this couldn't be more true, right? There is a really nice, beautiful and delicious garden and in the middle of that garden is the iPhone and it has very high and thick walls around it.

So in an ideal world, you're simply choosing between different options for a product based on its merits, based on its features. So you just look at the whole lineup and say, yeah, this is the one I like the most. And that's how you make your choice, right? Sick. But with this one, the claim is that Apple is making it really difficult, once you've chosen theirs, to switch to anything else. So with this analogy, again, it's really the garden walls that we have the problem with. So I'll give you two examples. So take the Apple Watch, right?

This is one of the examples in the 88-page DOJ PDF they presented. The iPhone and Apple Watch work perfectly together and only together. It's a feature, it's by design. That's how they are. So two parts of that are incomplete. One is that the Apple Watch works very well with the iPhone in a way that no other smartwatch can. And two, the Apple Watch does not work with any other smartphone. Look, I don't think it's a surprise that when Apple built a watch, they gave it all kinds of integrations with the iPhone. So you can see them working perfectly together.

You can view and dismiss your notifications, you can reply to messages, and track your fitness. You can even use it as a shutter for your iPhone camera. All of these features that just plug directly into the iPhone work great. And I think that's even what Apple would tell people. They would agree that this is how we get them to work incredibly well together. This is vertical integration. Is awesome. But there is also the real reason. Because the truth is, if you try to use any other smartwatch with the iPhone, you just won't get as many of those useful features as they are super well integrated.

If you try to use it as a Garmin smartwatch, for example, you don't get the camera viewfinder, you don't get fitness tracking through Apple Fitness, you don't get quick responses, you don't get a smooth image. previews of your text messages. You can't even choose which apps show you notifications. It's simply all or nothing. So if you choose an iPhone, then when you are looking for a smartwatch to buy, there is only one good all-around option, which is the Apple Watch. By the way, this is also true to varying degrees with AirPods and AirTags and various other things in the Apple ecosystem because they are all great when you have an iPhone and work great with it, but they work horribly or don't work at all when you don't. have. 't.

That is part of the walls that surround the ecosystem and that make it very difficult to leave. Because if you now want to switch from iPhone to Android phone, you are not just changing phones. Now you have to get a new phone, a new watch, a new headset, a new tracker and all that, because they all worked great. fine with the iPhone and just as horribly with anything else. So that's a real barrier to people leaving this ecosystem once they get into it. Another example is all that stuff with the blue and green bubbles they make.

I already made a complete video about this dynamic. If you haven't seen it yet, I'll leave a link with a like button below if you want to see it. But basically nowadays, when iPhones send messages to other iPhones, they have tons of features and writing indicators and high-resolution media, and those are blue bubbles. And when they send messages to Android phones, they resort to SMS, which is slow, low-resolution, unencrypted garbage that's green bubbles. And Apple simply refuses to let iMessage work on Android. In fact, the Department of Justice literally references a video of Tim Cook on stage at a conference where he says this. - It's hard not to make it personal, but I can't send my mom certain videos or she can't send me certain videos.

And so we go... - Buy your mom an iPhone. (everyone laughs) - Okay. - And this is so poetic just because, you know, he obviously has that smile of, you all know it's true, but it also goes back to what I said at the beginning, which is with any of these public decisions. , there is the answer they give to the public. And then there's the real reason. You know, originally iMessage was created back in the days when texting was basically paid per text message. Like all SMS costs money, hence the color green. So, iMessage would work over the Internet and would be unlimited and would offer many more features and would expand over time.

Add encryption, reactions and write flags, all that. And the people at Apple and Apple itself would probably agree that this is something Apple created and that it is much better than SMS. Like it's not their fault SMS sucks, they just made something better. So yes, of course, yes, they are going to create their own version of something and it is not illegal to not also develop it for Android. They just created something of their own for the iPhone. But also Tim Cook's quote, "buy your mom an iPhone" is the other equally valid point. It's the real reason.

There are many internal emails that have surfaced over time in which Apple executives talk openly about how moving iMessage to Android would make it easier for people to switch to Android from the iPhone. iMessage is clearly one of the walls of the ecosystem and is probably one of the biggest and thickest walls. Ask any young person in the US today why they use an iPhone. And I think a lot of them would probably tell you something to do with iMessage. I guess the question is, or maybe even another way of putting it, whether Apple is making other products worse or whether they are making their own really good products and then not letting other things go off the market.

Does the ecosystem have access to those things? Honestly, it's both. But the thing is, they're not the only ones doing a lot of these things. They are precisely the ones who find themselves in this pseudo-monopoly position right now. Like the Pixel Watch for example, it doesn't work with the iPhone at all. It just works perfectly with Android phones. But is anyone that angry about that? You know, RCS is announced to be coming to the iPhone sometime in 2024, but I can almost guarantee that they'll probably still be green bubbles. It will probably be the absolute minimum of RCS support and will probably continue to delineate very clearly between iPhone to iPhone, iMessage and iPhone to Android and something else.

And there is even more to this lawsuit, as if Apple Pay were another one. How no other service can use the NFC chip on the iPhone. Super apps are another. If you want to see all of this, I'll link the best stuff I can find below. So my opinion is that Apple is technically still guilty of all these things. They're doing everything, but in the walled garden analogy, it's like they've built a really nice garden. And Apple would say, "Look, our garden is so green and luscious and beautiful." They have built the most beautiful garden with the most people in it, but they have also built the biggest walls around that garden.

And that's why Apple would love to say, look, everyone has chosen our garden and everyone is staying in our garden. That's how cool it is. But even if you saw another greener, softer, better garden somewhere else, the walls to escape and reach it are too high. So it's not so much that every single thing they do with the products working well together is illegal. And it's more that they feel like they have to do something for this company to have so much power and control over smartphones, which are essentially a commodity here. It's like something everyone has.

So I want to leave you with this. You remember at the beginning when I talked about how Apple is ridiculously dominant in the US and these crazy numbers, like 90% of young people. The crazy thing is that they're super, super popular here, but like I mentioned, they're not a monopoly anywhere else. And because? Why is that true? How are they so popular here and do the same thing elsewhere, but aren't a monopoly elsewhere? And then I think of China, for example. China is another huge smartphone market where WeChat is like this super app. It's something huge. Like messages, payments, also calling a taxi and also paying your bills and ordering food, groceries, like WeChat is everything.

So as long as your phone has WeChat, the rest doesn't really matter, it's up to you. And so in China there is an incredibly vibrant and innovative landscape where all these smartphone manufacturers are competing like crazy, like Huawei, Xiaomi, Oppo and iPhone. But they all compete ruthlessly with hardware features and other things to try to get your attention and maybe choose their phone because it's just what you like. Everyone has WeChat. So in a market like that, people will buy your phone based on whether it really is better or not. Which means there are many gardens and very few walls around those gardens.

This is what a good competitive landscape looks like. Now, what would perhaps be illegal or wrong is that WeChat or the creators of WeChat, if Tencent made a phone and then gave your phone special access to certain parts of WeChat that suddenly no other phone could get, then there would be a monopoly. . So this lawsuit and this whole legal versus illegal thing is mostly a way of trying to poke some holes and get closer to that level of lower walls and more competition that makes everyone better. Then we will compete in innovation again. But it is something that will evolve for a long time.

So it will be interesting to keep an eye on it. And speaking of things that might be illegal, we thank Dbrand for sponsoring this video. You may have heard of, unless you've been living under a rock, you've already heard of their grip case. I have their latest Hydrodip cases here and I must say the name matches perfectly. You know, nowadays a lot of phone cases are just boring plastic shells, but with Dbrand they are playing with some things and these are some crazy color combinations and these cool hydro-dipped patterns. Also, with the Gold Rush, if you view it in the right light, you'll notice a small discreet metallic effect under this matte finish, which is sickening.

Now, plus the impact protection you expect from a premium case, perfect. The grip cases also have what I would consider attention to detail. So those are two things. First of all, these buttons are very cliché, they are nice, they are probably better than the actual buttons on phones. But also, in general, we have all dropped our phone, whether from a car or on our faces while watching a YouTube video. Happens. Ideally, this case should avoid that because it's in the name, it's Grip Case. This texture is quite nice at that. So hopefully it will prevent those types of falls.

But in case you drop it, yes, it should be fine. It's good. So yeah, if you want, if you're a case expert, I would say at leastget a good Grip Case. I'll leave a link below. But that's all. Thanks for watching this video and let me know what you think about these features and the iPhone and everything that happens with it. And I'll see you in the next video. Peace. (upbeat music)