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 that might be illegal.

That's a bit of an oversimplification,

but let's talk about it.

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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 these big companies, all these very public,

multi-billion dollar companies, they always have two reasons

for any public-facing statement that they make.

There's the reason for the public,

and then there's the real reason.

So there's just some news this past week

of the US Department of Justice suing Apple saying

that they are an illegal monopoly in the United States,

the iPhone specifically.

Now, whenever there's legal proceedings,

obviously things get very complicated,

and I won't even pretend

to be diving into this at a super deep level.

But this is also interesting to me

because of all the stuff with the things

that we talk about every day

which is just smartphones and gadgets.

And of course this is a pretty US specific thing,

like obviously they're 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 we should keep in mind.

In the US the iPhone is at like 60% market share,

and it's even way higher up near 90% with young people,

like it is ridiculously dominant.

But worldwide, the iPhone is at about a 25% market share.

So the iPhone is specifically trending towards a monopoly

in the United States.

(upbeat music)

So here's where it gets really interesting.

I would like to live in this analogy for this video,

which is, you've heard about people describing

Apple's ecosystem as a walled garden before,

this could not be more true, right?

There's this really, really nice, beautiful luscious garden

and in the middle of that garden is the iPhone

and it has these really tall,

thick walls all the way around it.

So in an ideal world, right, you are just picking

between different options

for a product based on its merits, based on its features.

So you just look at the whole lineup and you go,

yeah, I like this one the best.

And that's how you make your choice, right?

Sick.

But with this one, the claim is

Apple is making it really, really difficult,

once you've chosen theirs

to ever switch to anything else.

So with this analogy, again, it's really the walls

of the garden that we have the issue with.

So I'll give you, I'll do two examples.

So take the Apple Watch, right?

This is one of the examples

in the Department of Justice's 88 page PDF

that they've submitted.

The iPhone and the Apple Watch work perfectly well together

and only together.

It's a feature, it's by design.

That's how they are.

So two parts of that are sketchy.

One is the Apple Watch works really well with the iPhone

in a way that no other smartwatch can.

And two, the Apple Watch does not work

with any other smartphone.

So 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 see and dismiss your notifications,

you can reply to messages, track your fitness.

You can even use it as a shutter for your iPhone's camera.

All these features that they just plug

right into the iPhone, they work great.

And I think that's even what Apple would tell people.

They would agree like, this is how we made it

so that they work amazingly well together.

This is vertical integration.

It's awesome.

But there's also the real reason.

Because the truth is now if you try

to use any other smartwatch with the iPhone,

you just don't get nearly as many of those useful features

from being super well integrated.

If you try to use like a Garmin smartwatch for example,

you don't get the viewfinder for the camera,

you don't get the fitness tracking through Apple Fitness,

you don't get quick replies,

you don't get even image previews for your text messages.

You don't even get to choose

which apps show you notifications.

It's just all or nothing.

So if you choose an iPhone, then next, when you're looking

for a smartwatch to buy, there's kind

of only really one good full fledged option,

which is the Apple Watch.

This is also true, by the way, to various degrees

with AirPods and AirTags

and various other things in Apple's ecosystem

because they all are great when you have an iPhone

and work super well with it, but work horribly

or not at all when you don't.

So that is part of the,

that's the walls around the ecosystem

that make it really hard to leave.

Because if you now wanna switch from the iPhone

to the Android phone, you're not just switching phones,

You have to now get a new phone and a new watch

and new headphones and a new tracker and all this stuff

because they all worked so well with the iPhone

and so horribly with anything else.

So that is a real barrier

to people leaving this ecosystem once they get into it.

So another example is the whole blue bubbles

and green bubbles thing that they do.

I've already made an entire video about this dynamic.

If you haven't already seen it,

I'll leave a link with a like button below

if you wanna watch it.

But basically today, when iPhones message other iPhones,

they have tons of features and typing indicators

and high res media, and those are blue bubbles.

And when they message Android phones, it falls back to SMS,

which is slow, low res, unencrypted trash

that is green bubbles.

And Apple just refuses to make iMessage work on Android.

The Department of Justice actually literally references

a video of Tim Cook on stage at a conference

where he says this.

- it's tough 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 leave-

- Buy your mom an iPhone.

(everyone laughing)

- All right.

- And this is so poetic just because, you know,

obviously he's got this smile of like,

you guys all know it's true,

but also it goes back to what I said at the beginning,

which is with any of these public-facing decisions,

there's the answer that they give the public.

And then there's the real reason.

You know, originally iMessage was built back in the days

where text messages were basically paid per text.

Like every SMS cost money, hence the green.

So iMessage would work over the internet and be unlimited

and it would offer way more features

and they'd build onto it over time.

Adding encryption and reactions

and typing indicators, all this stuff.

And Apple people and Apple themselves

would probably all agree like this is,

it's just a thing that Apple built

that's way better than SMS.

Like it's not their fault, SMS sucks,

they just made a better thing.

So yeah, of course, yeah,

they're gonna build their own version of a thing

and it's not illegal to not also develop it for Android.

They just made their own thing for the iPhone.

But also Tim Cook's quote,

"just buy your mom an iPhone"

is the other equally valid point.

It's the real reason.

There are plenty of internal emails

that have surfaced over time

with Apple executives openly talking about

how giving 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 it's probably one of the biggest thickest walls.

Like 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.

So is this stuff that they're doing illegal,

I guess is the question,

or maybe even another way to phrase it is,

is Apple making other products worse

or are they making their own products really good

and then not letting other things

outside the ecosystem have access to those things?

It's kind of both, honestly.

But the thing is,

they're not the only ones doing a lot of this stuff.

They are just the ones that happen to be

in this pseudo-monopoly position right now.

Like the Pixel Watch for example

does not work at all with the iPhone.

It just works perfectly with Android phones.

But is anybody that mad about that?

You know, RCS is announced to be coming

to the iPhone at some point in 2024,

but I can almost guarantee

it'll probably still be green bubbles.

It will probably be the absolute bare minimum

of supporting RCS

and they will probably still be delineating very clearly

between iPhone to iPhone, iMessage

and iPhone to Android something else.

And there's even more to this lawsuit,

like Apple Pay is another one.

How no other services can use the NFC chip on the iPhone.

Super apps is another one.

Like if you wanna look at all this stuff,

I will link the best stuff I can find down below.

So my take is Apple is technically yet guilty

of all these things.

They're doing all stuff,

but in the walled garden analogy,

it's like they have built up a really, really nice garden.

And Apple would say like, look, our garden, it's so green

and luscious and beautiful.

They've built the most beautiful garden

with the most people in it,

but they've also built up the biggest walls

around that garden.

And so Apple would love to say, look,

everyone's chosen our garden

and they're all staying in our garden.

That's how great it is.

But even if you saw another greener,

softer, better garden somewhere else, the walls to escaping

to getting to that are just way too high.

So it's less that each individual thing that they're doing

with the products working well together is illegal.

And it's more that they feel like they have to do something

about this one company having so much power and control

in smartphones, which is here,

it's essentially a commodity.

It's just like a thing that everybody has.

So I wanna leave you with this.

You remember at the beginning

when I talked about how Apple's ridiculously dominant

in the US and these crazy numbers, like 90% of young people.

The crazy thing is they're super, super popular here,

but as I mentioned, they are not a monopoly anywhere else.

And why?

Why is that true?

How are they so popular here

and they're doing all the same stuff in other places,

but they're not a monopoly in other places?

And so I think of China for example.

China is another huge smartphone market

where WeChat is kind of like this super app.

It's a huge thing.

Like it's messaging, it's payments,

it's also calling a taxi and also paying your bills

and ordering food, groceries, like WeChat is everything.

So just as long as your phone has WeChat,

then the rest is kind of doesn't really matter,

it's up to you.

And so in China there's this incredibly vibrant,

innovative landscape of all these smartphone manufacturers

competing like crazy, like Huawei, Xiaomi, Oppo

and iPhone is in there too.

But they're all just competing ruthlessly

with hardware features

and with other stuff to try to get your attention

to maybe pick their phone

'cause it's just what you're into.

They all have WeChat.

So in a market like that,

people will buy your phone based on

if it's actually better or not.

Meaning there's lots of gardens

and very few walls around those gardens.

That's what a good competitive landscape looks like.

Now, what would be maybe illegal

or a wrong thing to do is if WeChat or the makers of WeChat,

if Tencent made a phone

and then they gave their phone special access

to certain parts of WeChat

that suddenly no other phone could get, then monopoly.

So this lawsuit and all this legal versus illegal stuff,

it's mainly just a way to try to poke some holes

and get closer to that level of lower walls

and more competition that makes everybody better.

Then we're actually competing on innovation again.

But it's something that will be evolving

for a long time over time.

So it'll be interesting to keep an eye on.

And speaking of things that might be illegal,

shout out to Dbrand for sponsoring this video.

So you might have heard about,

unless you've been living under a rock,

you've heard about their grip case by now.

So I've got their latest Hydrodip cases here

and I gotta say the name matches it perfectly.

You know, these days a lot of phone cases

are just kind of boring plastic shells,

but with Dbrand they're kind of playing with some stuff

and these are some crazy colorways

and these trippy hydrodipped patterns.

Plus with the Gold Rush one,

if you catch it under the right light,

you'll notice a little low key metallic effect

under this matte finish, which is sick.

Now in addition to the impact protection

that you expect from premium case, perfect.

Grip cases also have

what I would consider attention to detail.

So that's two things.

First of all, these buttons, they're just really cliquey,

they're nice, they're probably better

than the actual phones buttons.

But also, in general,

like we've all eventually dropped a phone,

whether it's like out of a car

or on your face while watching a YouTube video.

It happens.

Ideally, this case prevents it

'cause it's in the name, it's the Grip Case.

This texture is pretty nice at that.

So it's hopefully gonna prevent that sort of drop stuff.

But in the case you do drop it then, yeah, should be fine.

It's good.

So yeah, if you wanna,

if you're a case person,

I would say at least get yourself a nice Grip Case.

I'll leave a link below.

But that's it.

Thanks for watching this video

and lemme know what you think about these features

and the iPhone and everything going on with it.

And I'll catch you guys in the next video.

Peace.

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