Apple revoking Facebook’s certificate was a strategic err which may come back to haunt the tech industry

image credit: Peter Sellers in Dr. Strangelove, Or: How I Learned To Stop Worrying And Love The Bomb

Let me explain why I think Apple’s decision to revoke Facebook’s developer certificate was a strategic err. Not just for Apple, but for tech in general.

First the background. For an app to run on an iPhone, it has to be signed by an Apple certificate. Apple provides app developers with both an enterprise certificate, with extra privileges for internal iOS app development, and a general certificate, for the app store. Facebook broke Apple’s rule in using the enterprise certificate to sign a Facebook VPN app (giving it more privileges) for an app going to the App Store for regular customers. This app could then collect information on which other apps were installed on user’s phones, and what data traffic was sent. This was a violation of the rules, a privacy breach, and was done knowingly. Make no mistake. Facebook was bad bad bad.

In response Apple revoked Facebook’s enterprise certificate, which in turn shut down all iOS development and testing inside Facebook. It’s the nuclear option. Then it turned out Google had done something not quite as bad but similar, so (to be fair), Apple shut down Google as well. And now it turns out there are other companies which violated the terms too. After a few days, Apple re-instated the certs for everyone, so now things are getting back to normal.

Here’s my point. As Ben Thompson noted: “I wouldn’t be surprised if, in the long run, the company comes to regret this move.” This is exactly correct. I believe Apple made a strategic err they will regret. Even though it’s popular right now. For example John Gruber “Give me a break. Everybody knows that Apple’s enterprise certificate program does not in any way permit distribution of this kind of software, which wouldn’t be allowed in the App Store. But that’s exactly how Facebook was using it. There are pros and cons to Apple’s iron-clad control over native apps on iOS. This incident with Facebook is one of the pros.”

Both can be true: 1) Facebook gets away with too much and absolutely deserves severe punishment, and 2) Apple going nuclear was a mistake. No matter how deliciously satisfying. No matter if the rules said they could revoke Facebook’s certificate. Rules should be enforced with an eye toward precedent, with an assumption bad actors will eventually latch on to those same precedents.

Here’s an analogy. Suppose back in the day when Netscape had just invented the web browser and was riding high, and Microsoft was the evil empire (think circa 1997), Microsoft shut down all Netscape windows development for a rules violation. It’s similar to what Apple (good company) did to punish Facebook (bad company). But in this hypothetical the villains are swapped. It’s Microsoft (bad company) punishing Netscape (good company). While this couldn’t happen back then, with cloud centralization it can now. As Apple just demonstrated.

The cold war between the Soviet Union and the US was very fraught, but the one thing both sides got right was showing restraint with nuclear weapons, either directly or in proxy wars. The cold war bomb threat was invoked all the time. Fine. But leaders showed restraint. Knowing if one side (the good side) used them, even if justified, then the other side (the bad side) would run with that precedent and also use them. Apple could have played the brinkmanship game, publicly threatening to revoke the cert in a Bay of Pigs style confrontation with Facebook, and gotten much the same result, but without actually firing nukes.

It’s unclear exactly how and when this may come back to bite. But as a hypothetical imagine a startup using modern centralized platforms such as Amazon AWS, Microsoft github, Google maps, etc etc. And Amazon, Microsoft, Google put in place complex developer rules on what’s not allowed. So it’s hard to comply. Then if that startup later competes against one of those companies, the platform owner has the temptation to stop that company dead by disallowing development on their platform on the pretext of a rules violation. Threatening may be enough. And I’m not saying Amazon, Microsoft or Google in particular will do this. Rather that in the cloud era all centralized cloud platforms face this temptation.

Apple set a precedent. Nukes are now allowed. Even if the letter of the law says you can do it, restraint is often a wiser choice. There will be increased temptation to create platform rules which are easy to violate. Laying a trap. Just in case. Then, if the mood strikes, bombs away.

image credit: Major Kong (Slim Pickens) riding a nuke in Dr. Strangelove

Apple’s new services strategy. Apple is commoditizing (some) of its complements: music, movies, TV.

Apple announced their music and movie services will be available on non-Apple hardware. Whoa! This is huge. Ben Thompson correctly highlighted the importance, saying this shift in strategy (link $) “is not just fascinating, it’s frankly a bit stunning.” And “I think these announcements are a much bigger deal than people realize: Apple is absolutely sacrificing its traditional hardware business model, at least when it comes to TV black boxes and smart speakers, in favor of a content-centric services strategy.”

Why such a big deal? Apple’s incredible success was built on a consistent model: use proprietary software and services to make money selling hardware. That was true for the Apple II, Mac, iPod, iPhone, iPad, Watch. Despite near bankruptcy in 1997, the Apple business model remained sacrosanct. Side note: I’d argue iTunes for Windows with iPod was an exception that proved the rule.

Apple’s vertically integrated software/hardware stack allowed them to create premium experience. And premium profits. But also meant Apple services were hindered strategically. A strategy tax if you will. Because the optimal services strategy (think Google) is horizontal, putting your services on all platforms and devices. The marginal cost of extending an existing service to another platform is low, so in some sense services “want” to be everywhere. More users -> more data -> better services.

Suddenly Apple is putting Apple music on Amazon Alexa speakers. Apple movie and TV shows on Samsung, LG, Vizio and Sony TVs. And allowing AirPlay to those TVs, the ability to send content from your phone to your TV. Apple is destroying the proprietary value of their hardware. Most significantly Apple TV and HomePod, but also to a lessor extent the iPhone itself. What gives?

What’s happening now in 2019 is something I wrote about in 2013, in a post which I think holds up well.

But longer term, say 5, 10 or even 15 years, the Apple services strategy tax creates a third possible Apple bear story. Phones are becoming more and more about services. Let’s say the phone-services split was 90-10 for the first iPhone. It was primarily about what you held in your hand, not what’s in the cloud. Let’s say it’s now at 50-50. You can see where this is going. It’s possible that in a world where the phone-services split is 10-90 the other way, a company which focuses exclusively on services could wind up with a better overall premium phone experience than a company which focuses on complete systems. The strategy tax could actually dislodge Apple from the premium end of the market. Clearly this is a long term speculative scenario, but it’s a plausible future. Especially if you segment the market, where segments focused more on services will reach their tipping point earlier.

Apple makes money selling premium hardware, but what the people are paying for is premium experience. That’s the job to be done. And right now Google maps, Google email, Google voice assistant, etc are all better than Apple. Nonetheless, since I wrote that post in 2013, Apple has continued making enough moderate (if lagging) progress on its services, plus has innovated on its hardware (Face ID, camera, displays, integration of Mac and iPhone, custom ARM processors, integration of Apple Watch and Airpods) to keep their overall experience better. But this approach is showing cracks. Hence the new services strategy.

My guess is Apple’s new services strategy is, in select areas, to commoditize the complements. From Joel Spolsky’s classic post:

A complement is a product that you usually buy together with another product. Gas and cars are complements. Computer hardware is a classic complement of computer operating systems. And babysitters are a complement of dinner at fine restaurants. In a small town, when the local five star restaurant has a two-for-one Valentine’s day special, the local babysitters double their rates. (Actually, the nine-year-olds get roped into early service.) All else being equal, demand for a product increases when the prices of its complements decrease. Let me repeat that because you might have dozed off, and it’s important. Demand for a product increases when the prices of its complements decrease. 

By putting music, movies, TV on all platforms, Apple has decided to stop making those services a premium differentiator for their hardware. They are commodities. Anyone can get them. Even customers who never buy Apple hardware. Hmmm….. what about the $3 billion Apple spent buying Beats in 2014? I’d say flushed down the toilet.

To be fair, there’s another possibility. Apple may be attempting to simultaneously create premium horizontal services with music/movies/TV, and retain their traditional premium vertical stack hardware business. Ben Thompson suggests this possibility when he says “In short, it seems that Apple can have its (services) cake and eat it too: offer exclusive content across all platforms, while preserving its integrated experience (and iMessage) for its moneymakers.”

Perhaps. But the strategy conflict remains. Making a cross platform service means avoiding proprietary customization. Exactly what made those services work better on Apple hardware. That said, I know enough about huge corporations to know how this will play inside Apple. The people in the music/movie/TV services group want it to be best in market. And that’s fine. Good for them! Perhaps they’ll succeed. But even if they become the best, they won’t differentiate Apple hardware. To the hardware teams at Apple, those services are now pure commodities, and the cheaper those commodities become, the more valuable their hardware complement.

The big open question here is which other services at Apple are candidates to go horizontal. If my commoditize the complement theory is correct, it should be all services which don’t move the bar on selling Apple hardware. Let’s try three buckets:

  1. Cross platform now: music, TV, movies, itunes
  2. Cross platform likely: books, all media content, parts of iCloud
  3. Cross platform unlikely: Siri, iMessage, maps, App store, Apple pay

At first I wanted to put Siri into bucket #2. The strategy trade off is acute for voice interface. Google and Amazon can partner with everyone, getting more users and data, making their voice interfaces better and better. Apple lags. But on the other hand, Apple is famously future product oriented. And I started thinking about which future product might benefit most from tight hardware/software integration. The (or at least one) answer is augmented reality (AR) glasses. So even though the pressure for Siri to go horizontal right now is large, I suspect it’ll remain proprietary. I moved Apply pay into bucket #3 for the same reason. Whenever Apple AR glasses arrive, buying stuff with Siri voice and Apple pay will be frictionless. And in tech, frictionless is money. Pure money.

Update January 15 (two days after original post): Apple just announced they are partnering with search provider DuckDuckGo on Apple maps. Maps is a critical strategic capability, so perhaps my guess on Apple’s new services strategy was wrong. That said, I stand by my fundamental point that to the extent a service is available everywhere, it becomes a complement to selling hardware, creating an economic incentive to keep the margin on those widely available services low. And to be clear, partnering with a particular search provider is very different from putting Apple maps on Android. Which remains extremely unlikely. In any case, a lot happening right now with Apple services strategically. Something to keep a close eye on for 2019.


My Soylent review: decent with a very annoying packaging flaw. Plus disruption frameworks.


Soylent started in 2013 as a Rob Rhinehart crowdfunded experiment in food replacement. The name and food replacement angle attracted lots of enthusiasm, for example see what happened when I ate only Soylent for 30 days. Answer: farts. Evil ones. With the 2.0 version coming out in Sep 2015 as a prepackaged drink, I bought some to try it out. On my Friday commute I often listen to Ben Thompson and James Allworth’s Exponent podcast, and their latest episode covered disruption in the internet age. Drinking Soylent while listening, the two seemed (somewhat) related. Let me explain, finishing with my Soylent review.


Praxtime 2015 year end review. My favorites in science, tech, econ, pop culture. Grading and making predictions.

image credit

I’ve always been a fan of year-in-review lists. So here are some of my favorites from this year. Then at bottom I grade my tech predictions for 2015, and provide new ones for 2016.

My most viewed blog posts this year:

  1. Understanding AI risk. How Star Trek got talking computers right in 1966, while Her got it wrong in 2013.
  2. 2015 is a transition year to the (somewhat creepy) machine learning era. Apple, Google, privacy and ads.
  3. The algorithmic hand is replacing the invisible hand. But Hayek still applies.
  4. Homo naledi and the braided stream of humanity. It’s miscegenation all the way down.

An iPad with a keyboard is not a PC! Technology transitions and PCs in the Clipper ship era.

image source
image source

In September Apple announced the iPad Pro, which supports a keyboard cover and stylus. Then in October Microsoft announced their latest Surface Pro 4 and new Surface Book. Inevitably they were compared, with many claiming Apple copied Microsoft. Business Insider “Apple just admitted Microsoft is right”. And the Verge “Everyone is copying Microsoft’s Surface“. From that piece: “Apple missed that consumers were attaching keyboards to its iPad tablet, but Microsoft took advantage and saw an opportunity.  Now everyone else is following in its footsteps, but Microsoft is already way ahead.”


Why I’m excited about the new Apple TV for gaming, movies, TV, apps, Siri

image source

Tomorrow is September 9, Apple’s fall event where they’ll announce their new iPhones and Apple TV. The new Apple TV is expected to be a large break from earlier versions, supporting an app store and providing better gaming capability. It’s been widely anticipated for years. In fact most of my posts about Apple TV date from 2013 and 2014. So while my timing was off by a few years (Apple Watch may have had something to do with this), I think those Apple TV posts hold up well enough they’re worth revisiting. So let me quote from them below, and then add a few updated thoughts at the end.


Twitter’s Temptation: The False Allure of Anonymous Users.

twitter anonymous
image source, image source

Like many who spend a lot of time reading on the internet, I love twitter. It’s an invaluable source of information. One especially prized by journalists and infovores. But the product has stagnated. In particular casual users have struggled with it. One billion people have tried it (!) but only about a quarter of those stayed with the product. So it was no surprise when twitter announced in early June current CEO Dick Costolo would step down.


Blazing a path on machine learning and privacy, Google risks becoming “Uber for lawsuits”

image source

When taxi-like service Uber (order a car instantly from your smartphone) first became successful, it created a trend for copy cats. These companies were marketed and mocked as “Uber for X“, e.g., Uber for flowers, Uber for shopping, Uber for laundry, Uber for pizza. You get the idea. But Uber’s explosive growth had another side. The company fought tooth and nail, lawsuit by lawsuit, against entrenched taxi interests to expand. And as Google unleashes the full potential of machine learning (especially talking computers), it risks a similar battle on privacy, becoming an “Uber for lawsuits.” I’ve mentioned this in previous posts, but as an aside. It’s worth exploring in more depth.


2015 is a transition year to the (somewhat creepy) machine learning era. Apple, Google, privacy and ads.

image source

With Apple’s announcements at WWDC and Google’s announcements at Google I/O, there’s a reasonable case to be made that 2015 will be looked back on as the year we transitioned from the mobile tech era into the machine learning era. To be clear, that’s a huge oversimplification. Smartphone mobile tech is still changing rapidly (watch versus phone) and machine learning is itself tightly coupled to mobile’s rise. And there’s plenty of other technology vying for a similar claim: solar, genomics (CRISPR), Internet of Things, Bitcoin, 3D printing, other big data and cloud, etc. And yet. The world is so complex. Honing in on a single simplifying theme can provide insight. So let’s run with this one to see where it leads.


Talking computers pose a threat to current Apple versus Google market segmentation. Beyond Peak Google.

image source, image source, image source

Ben Thompson starts off his Peak Google post saying “Despite the hype about disruption, the truth is most tech giants, particularly platform providers, are not so much displaced as they are eclipsed.” By this he means old platforms and companies don’t fail or go away. They continue to dominate their old platforms. It’s just that new companies create new platforms that are so much bigger they eclipse the old ones. His examples are IBM mainframes being eclipsed by PCs, and PCs being eclipsed by smartphones. I want to pause here to note that both of his eclipse examples are driven by the invention of new and more personal input methods. Yes, it’s true PCs continued using command line input at first. But once PCs shifted to mouse/keyboard and graphical interfaces, IBM dropped out and PC use exploded. We entered the Microsoft era. For smartphones of course the input shift was moving to touchscreen interfaces, where Apple iOS and Google Android now dominate. History seems to show that computer platforms have such strong lock-in the original owners never lose control. Instead what happens is new entrants have a window of opportunity to eclipse old platform owners when new and more personal input methods become technically feasible.