Microsoft’s Nadella says tech has entered a new era for productivity tools enhanced by AI.

Says we’ve been using AI on autopilot; now we’re making AI the co-pilot.

“We made a conscious design choice to put human agency both at a premium, and at the center of the product.” “We believe this next generation of AI will unlock a new wave of productivity growth with powerful co pilots designed to remove the drudgery, from our daily tasks and jobs, freeing us to rediscover the joy of creation.” - @satyanadella

*new story* @Apple has captured Gen Z in the US so thoroughly that American teens fear being electronically ostracized if they don't own an iPhone.

A thread, augmented by me having fun with @midjourney_ai the last week. (Pls note these images are not used in the story!) Gen Z now makes up 34% of iPhone owners in the US (vs. 10% at Samsung); 76% of iPhone owners are 18-34, per Attain.

Gen Z's preference for iPhone helps explain how Apple's share of the US market grew from 35% in 2019 to 50% in 2022 (as I wrote here: ft.com/content/75891d…)

New story *thread*: Apple is taking steps to “decouple” from Alphabet, setting iOS on a course that would cut its alliance with Google Search, Google Maps, and the broader digital advertising world that CEO Tim Cook has called a “data-industrial complex built on surveillance.” The iPhone maker has held an abiding grudge against the search giant ever since its Android operating system mimicked iOS in the late 2000s. Steve Jobs called Android “a stolen product,” declared “thermonuclear war,” and ousted Google’s then-CEO Eric Schmidt from the Apple board

Another thread on my @FT series covering Apple’s China problem.

Disruptions from Zero-Covid at “iPhone City” are temporary. Far more significant is how the protests reminded the world that Apple increasingly finds itself beholden to America’s biggest geopolitical rival.

1/6 When Tim Cook was doorstepped by a reporter asking questions about China, he kept silent and changed direction. “It was the worst 45 seconds of Cook’s career.”

Many observers think Cook’s silence reflects how Apple’s reliance on China is its its biggest vulnerability

2/6

Quick thread on my two-part @FT series covering Apple’s biggest conundrum: its China problem.

Apple manufacturers +95% of iPhones, AirPods, Macs and iPads in the country, which under Xi Jinping is increasingly authoritarian and estranged from the west.

1/6 Hardware-software integration has been critical to Apple since its founding, so when PC makers began outsourcing to Asia 40 years ago, Apple did not. But in the mid-90s Apple was nearing bankruptcy…

2/6

How’s this for a chart?

@Apple’s digital ads business is forecast to rise from ~$1bn in 2020 to ~$30bn by 2026. Via @EvercoreISI

From new scoop: Apple plans to double its digital advertising business workforce enterprise-sharing.ft.com/redeem/106d803…

*Thread here* Apple plans to ~double its “Ad Platforms” workforce 17 months after it introduced sweeping privacy changes that hobbled @Meta @Snapchat @Twitter

Ad team is ~250ppl, per @linkedin.
On Apple’s careers website, it’s looking to fill 216 such roles, 4X the number in late 2020

🚨Scoop in @FT 🚨

Millions of American and European smartphone users are unknowingly sending user, device and IP address information to servers in Russia.

From there, researchers worry it might be accessed by the Kremlin.

Wait whhaaaat???

*Tweet thread follows* Here's how this is happening: Yandex - aka Russia's Google - has embedded "free and unlimited" coding software into tens of thousands of apps, which collects user data and stores is in servers in Finland and Russia. Yandex confirms this, but says it's not used for surveillance.

*New*: @Apple’s privacy settings caused an estimated $9.85bn of revenues to evaporate in the second half of this year at @Snap, @Facebook, @Twitter and @YouTube, as their advertising businesses were shaken by the new rules

Average impact on revenue: -12%

*Thread* Lost revenues will extend into the next quarters as the advertising groups rebuild using a privacy-centric paradigm.

“New tools and frameworks need to be developed from scratch and tested extensively before being deployed to a high number of users,” says @eric_seufert

A bunch of stats on @Apple earnings:

Finance chief Luca Maestri tells the @FT that supply constraints cost the group $6bn last quarter.

"components shortage" and "manufacturing disruptions in Southeast Asia caused by Covid," he said.

*Thread* No guide for Q1 but Maestri says “demand is very, very strong”.

"We expect to set a December quarter record in spite of the fact that these supply constraints - the way we see them right now - **we believe they're going to be greater than the September quarter, the $6bn**.”

An *enormous thread* on alleged @Google @Facebook collusion based on the just-released *unredacted* complaint from the Texas AG. First filed December.

Anything PURPLE is newly unredacted.

Yellow/Orange is just normal highlights.

1/? Online advertising is enormous. Google's Exchange process processes 11bn online ad spaces / day.

Google says "more daily transactions are made on AdX than on the NYSE and NASDAQ combined."

First Snap question is about Apple.... Wants to know if it'll take a quarter, multiple quarters or years to set a new-normal:

"This has definitely been a frustrating setback for us," @evanspiegel says.

1/? "With these new Apple changes, those tools were essentially rendered blind," @evanspiegel says. "You can only really measure your advertising results using the success parameters that Apple's already defined. The reporting is delayed for a significant period of time ...

*Breaking* @Snap blames @Apple privacy changes for Q3 earnings miss and says Q4 revenues will come in between $1.16bn and $1.2bn, versus consensus estimate of $1.4bn.

*a Thread* Chief executive Evan Spiegel says: "the new Apple-provided measurement solution did not scale as we had expected, making it more difficult for our advertising partners to measure and manage their ad campaigns for iOS."

🚨 Breaking 🚨 Scoop - @Activision tells all employees it has fired 20 people, reprimanded 20 more and will triple investments into training resources as it tries to clean up culture following allegations of pervasive sexual misconduct, gender pay disparity and more.

*Thread* Frances Townsend, compliance chief, tells @FT:
“It doesn’t matter what your rank is, what your job is. If you’ve committed some sort of misconduct or you’re a leader who has tolerated a culture that is not consistent with our values, we’re going to take action."

Chart of the Day:

@Apple’s advertising business has more than tripled its market share in the six months after it introduced privacy changes to iPhones that obstructed rivals, including @Facebook and @Google, from targeting ads at consumers.

*A Thread* Search Ads now drives 58% of all iOS app installations that can be tied back to paid ads, according to @Branch, whose basket of data comprises 250 major apps including BuzzFeed, Instacart, Strava and Starbucks. That’s more than three times its 17% share a year ago

Start of *thread*

Will tweet some of the more glaring exhibits in the @Apple-@Epic trial -- moving too quickly to offer (much) commentary. @Apple @epic

Two mini-scoops in this Saturday @FT Big Read:

@Tencent has its own “an internal adaptation” to #CAID, the IDFA-workaround out of China, called QAID.

@glumobile got acquired b/c of IDFA/ATT implications.

A *thread* to expand on story here.

on.ft.com/3aQhpX8 Obtained documents from Tencent explaining how CAID and QAID work. The reason for its own IDFA solution, per someone familiar, is WeChat is big enough to do this on its own -- 1.2bn users. It doesn't need the China Ad Association.

*thread* begins:

Sen Klobuchar said @Apple and @Google “operate at gatekeepers, with the power to decide how or whether apps can reach iPhone and Android users.” “Just because a company creates a successful innovative business that consumers like doesn't give it a free pass to harm competition or ignore our antitrust laws.”

*Thread*
Overnight both @Apple and @EpicGames released hundreds of pages of new documents, containing lots of colour based on discovery and recent depositions. I stayed up reading so you don't have to. Here's what I learnt (couple *bombshells* in here) Epic argues that Apple’s App Store review process is “cursory” and that Apple doesn’t recruit reviewers with sophisticated tech backgrounds.

Apple-Epic hearing started a few minutes early. “We are going to be hear for hours, I suspect,” says Judge Gonzales, who threatens to mute people if they regurgitate arguments she’s already aware of.

Thread begins... Gonzales begins by grilling Katherine Forrest - Epic’s lawyer - and says it’s not acceptable Epic hasn’t produced documents for discovery.

“Well, Apple has already produced. So, I find it to be convenient for you, not convenient for anybody else.”

Last week I wrote about rampant app inflation in the @Apple App Store. Quick addendum, from the cutting room floor, via thread.

Apple: how app developers manipulate your mood to boost ranking via @FT
on.ft.com/2DVgtng Apple claims its store is curated and that they heavily invest to make sure apps work and that reviews are accurate. But it’s simple to find examples where 5-star reviews are bogus and the the star ratings are at best questionable and likely fraudulent.

Apple counter-sues Epic -- 1/many. *thread from doc* @Apple @EpicGames

"Although Epic portrays itself as a modern corporate Robin Hood, in reality it is a multi-billion dollar enterprise that simply wants to pay nothing for the tremendous value it derives from the App Store." Epic 'rakes in billions by taking commissions on game developers’ sales and charging consumers up to $99.99 for bundles of “V-Bucks.”'