- 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.
(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 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.
(upbeat music)