- 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)
