Read It And Eat 09/04

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Major Headlines

• The $6 Billion Eclipse

• The April 8th Eclipse was not only historical for the fact that for some it is a once-in-a-lifetime historical event, it also made economic history as an event that generated more revenue than any man-made event has to date. From Texas to Vermont, the eclipse could bring a financial boost of as much as $6 billion, thanks to increased spending on hotels, restaurants and travel, according to an estimate from the Perryman Group, an economic analysis firm. States and cities on the ‘Path of Totality, the areas whereby the moon completely covers the sun, have seen an economic spur as rooms, flights and Airbnbs have been booked out a year in advance. Texas was forecasted to enjoy the biggest economic gains at about $1.4 billion, according to Perryman's estimates. He said that's partly due to Texas' large population and to the number of big cities, like Austin and Dallas, that are in the path of the totality. Vermont, whose population of 650,000 makes it the second-smallest state in the nation, is expecting as many as 200,000 people to come to the state to witness the eclipse, CBS Boston reported. Its economic boost could reach $230 million, one of the smaller financial impacts for the states in the path of the eclipse, Perryman projected. Still, it's a significant bump for a state with annual GDP of about $43 billion. Businesses cashed in on the once-in-a-lifetime celestial event by offering fun eclipse-themed goodies or discounts. Some items came with free eclipse glasses. Product releases tied to the eclipse included a special Krispy Kreme eclipse doughnut, MoonPie Solar Eclipse Survival kits, Snapple's Elements Sun juice drink and Perfect Bar's new Chocolate Brownie flavour. Local coffee shops, bars, restaurants and breweries also had eclipse fever with a bounty of themed drinks and treats. Delta also had two flights that tracked the path of totality. The next eclipse is predicted to be in 2045. [CBS]

• Boeing gives the Out-going CEO a Golden Parachute while the Company Burns

• Although a golden parachute in business consists of substantial benefits given to top executives if the company is taken over by another firm, and the executives are terminated as a result of the merger or takeover, for the sake of the analogy and the fact that the image of David Calhoun jumping out of a burning Boeing plane with a parachute James Bond style, is stuck in my head, I will retain the title. Former Boeing CEO, who agreed to step down at the end of 2024 is not leaving empty-handed. Factually, he has steered the company right, coming on in 2020 when, due to the 737 Max airbrushes, all their planes were forcefully grounded by regulators and then also steered the company through the turbulent and unprecedented Covid-19 pandemic, bringing the company into profitability since then. Coupled with the fact that he has forgone the potential $2.8 million in bonus following the near-catastrophic Alaska Airlines incident in January. However, don’t feel too bad for him, he did get paid a whopping $33 million in 2023 and is to exit with a yearly base salary of $1.4 million and a further $30 million worth of Boeing stock at the end of the year, though the figure may change when the December comes round as those shares are now worth $17 million. [MSN]

• Serena Williams Just Doesn’t Miss

• It’s incredible to see that excellence isn’t just in one area but in whatever the person decides to put their mind to and excel in. After retiring from tennis as one of the greatest there has ever been, Serena Williams has focused her attention on Venture Capital Funding and once more proves that greatness isn’t what she does, it is who she is. With a decade of investment experience she, in 2014, established Serena Ventures a VC firm that is specifically for women and underrepresented founders. “I invest in a lot of companies, early companies, and I’ve always done this. I’ve actually been investing for over 14 years and just been an entrepreneur while I was playing tennis. It’s super important for me to make a plan B while I was doing my plan A,” Williams explained. As noted on its website, the company’s portfolio comprises 79% underrepresented founders, 54% women founders, 47% Black founders, and 11% Latino founders. Williams estimates that 14 of her portfolio companies have gone on to reach unicorn status. Detailed by Fortune, the term unicorn refers to a “privately held startup company with a valuation of $1 billion or more.” A few examples of companies in her portfolio include the ed-tech startup MasterClass, the plant-based meat substitute startup Impossible Foods, the subscription-based weight-loss app Noom and a startup that companies use to hire top engineering talent, Karat. [Yahoo Finance]

• AI Companies are Running out of Internet

• AI is running out of internet to consume. While you and I log onto this worldwide web of ours to enjoy (or, perhaps not), educate, and connect, companies use that data to train their large language models (LLMs) and grow their capabilities. It's how ChatGPT knows not only factual information but how to string together responses as well: Much of what it "knows" is based on an enormous database of internet content. But while many companies rely on the internet to train their LLMs, they're running into a problem: The internet is finite, and the companies developing AI want them to continue growing—rapidly. As the Wall Street Journal reports, companies like OpenAI and Google are facing this reality. Some industry estimates say they'll run out of internet to burn through in about two years, as both high-quality data becomes scarce, and as certain companies keep their data out of the hands of AI. Don't underestimate the amount of data these companies need, now and in the future. Epoch researcher Pablo Villalobos tells the Wall Street Journal that OpenAI trained GPT-4 on roughly 12 million tokens, which are words and portions of words broken down in ways the LLM can understand. (OpenAI says one token is about .75 words, so 12 million tokens is roughly nine million words.) Villalobos believes that GPT-5, OpenAI's next big model, would need 60 to 100 trillion tokens to keep up with the expected growth. That's 45 to 75 trillion words, per OpenAI's count. The kicker? Villalobos says after exhausting all the possible high-quality data available on the internet, you'd still need anywhere from 10 to 20 trillion tokens, or even more. some companies are considering is using synthetic data to train models. Synthetic data is simply information generated by an existing data set: The idea is to create a new data set that resembles the original, but is entirely new. In theory, it can be used to mask the contents of the original data set, while giving an LLM a similar set to train on. With limited human-created content left to scrape, some companies have reportedly begun developing “synthetic” information: Yes, that means using AI to create content that will be used to…train the same AI. [Wall Street Journal]

MINOR NEWS

• The first ever comic book appearance issue of Superman becomes the most valuable comic book, selling for $6 million. [NBC]

• Yet another Boeing plane with manufacturing issues. [Reuters]

• Powerball lottery player wins $1.3 Billion jackpot. Eighth largest jackpot in U.S. history. [AP News]

• Big Tech is unable to make massive cash acquisitions, without facing regulatory scrutiny. [Wall Street Journal]

• Jonathan Majors was sentenced to a 52-week mandatory in-person Domestic Violence Prevention Programme for the assault and harassment of his former girlfriend. [CNN]

• Blackstone’s $10 Billion bet on the property market. [Yahoo Finance]

• Spirit Airlines to defer Airbus payments and lay off 260 pilots to amplify liquidity. [CNBC]

• Elon Musk predicts AI will overtake human intelligence next year. [Financial Times]

NEWS OF THE DAY

The Department of Justice VS Apple And It’s Walled Garden

The United States Department of Justice has filed a case against Apple for violating antitrust laws. More specifically, the case revolves around the infamous Apple Walled Garden with the iPhone at the centre and how the company has used that to build a monopoly.

The phrase “walled garden” isn’t specific to Apple but in terms of Apple essentials means that the company tightly controls the software, hardware and services that are allowed to operate within its ecosystem or range of products and services that the company offers. To begin with, think for a second about all of the manufacturers of devices that run the Android OS. There are a lot of them, from Samsung to OPPO and Huawei. With Apple, on the other hand, there’s just one: Apple. And that means the company has complete control over development, distribution, and security. At the centre of this walled garden is the iPhone. Everything in the garden is beautiful and attractive and all their products work like magic. Take for example Airdrop which allows people with Apple devices to send files to other Apple devices securely with just a tap it is seamless, or continuity that allows a user to copy a website page, paragraph, or even a photo from one of their Apple devices and paste it on another device that is connected to the same Wifi. The seamlessness and ease is by design, to have the most minimal onboarding process with a new device and a seamless transition between devices. According to Apple, it’s to ensure that the user spends the least amount of time setting up and integrating the product and to maximise the amount of time using the product itself. The truth is to encourage the customer to purchase more Apple products, i.e. if you get an iPhone, you are more likely to buy a set of AirPods, and because they work so well with it, which in turn means that when it comes time to get a new smartphone, you’re less likely to switch to Android. Apple’s products all work better with one another than they do with competing devices… which you’d probably expect, except not to this extent. Nobody else runs a walled garden that traps customers anywhere near as effectively as Apple.

However, this seamlessness by design stops at the use of non-Apple devices, which means any pairing of Apple devices with non-Apple devices would lead to at least a halving of usable features. For example, pairing the Apple Watch with the iPhone involves using the phone’s camera to scan the QR code on the watch’s screen and it’s paired but trying to pair it with an Android phone has been shown to take over 30 minutes just to set it up and pair. The same thing with pairing the iPhone with Airpods and the fact that the setup process takes about 30 seconds or less, in contrast with the fact that the setup process is not only considerably longer but the Android user loses sound quality, the head tracking feature and a bunch of other features just because they are not within the same ecosystem. At the centre of the walled garden is the iPhone and the beautiful fountain in that centre is iMessage, because its stickiness affects other people in a sort of contagious spread. If your friends have iPhones and spend their time talking over iMessage, you’ll want to be able to join in; an Android user can join a group chat with iPhone users but won’t get the full set of features (videos get compressed, for example, while reactions don’t work properly) and, famously, will appear as an out-group-signalling green bubble rather than a blue bubble. iMessage peer pressure is a large part of the reason why, in the US, an astonishing 87% of teenagers own iPhones, way beyond the device’s global market share. The thing about the walled garden that is most concerning is its contagion, that is, if you have an iPhone you are more likely to have another Apple device like Airpods or an Apple Watch which in turn makes you purchase more Apple devices like a MacBook or an Apple TV, furthermore, it then makes you influence/pressure your friends and family members into purchasing an iPhone and other Apple products too. In an infamous interview where Tim Cook, Apple’s CEO in a panel interview at the 2022 Code Conference and was asked by LiQuan Hunt about messaging across platforms and he rebutted “Buy your mom an iPhone” which ironically is included on page 39 of the 88-page claim that the DoJ has brought against Apple.

This is certainly not the first time Apple has been sued for monopolistic practices, in March of this year, the European Commission, the executive branch of the EU, said Apple committed antitrust violations over 10 years in which it prevented music streaming companies that use the App Store from informing customers about better-priced alternatives or linking to the products. The tech giant, which offers its own music streaming service, prevented rival companies from promoting alternative and cheaper products that could be found outside of Apple's App Store. The fine, which amounts to 1.8 billion euros or $1.95 billion, marks the end of a five-year investigation initiated by Spotify, a top music streaming firm based in Sweden.

Apple has also been sued by Epic Games, the creator of Fortnite, accusing the company of acting as an illegal monopoly by requiring consumers to get apps through its App Store and buy digital content inside an app using its own system, especially since Apple charges a 30% commission for all in-app purchases, the company further prevents developers from helping customers circumvent that charge. Although Epic Games mostly lost that case, however, the iPhone maker did lose one claim and had to allow developers to place links inside their apps so users could make purchases outside the App Store, which the Supreme Court did not overturn.

The Justice Department, joined by 16 other state and district attorneys general, filed a civil antitrust lawsuit against Apple for monopolization or attempted monopolization of smartphone markets in violation of Section 2 of the Sherman Act. The Complaint alleges that Apple illegally maintains a monopoly over smartphones by selectively imposing contractual restrictions on, and withholding critical access points from, developers. Apple undermines apps, products, and services that would otherwise make users less reliant on the iPhone, promote interoperability, and lower costs for consumers and developers. Apple exercises its monopoly power to extract more money from consumers, developers, content creators, artists, publishers, small businesses, and merchants, among others. This anti-competitive behaviour is designed to maintain Apple’s monopoly power while extracting as much revenue as possible. The complaint alleges that Apple’s anticompetitive course of conduct has taken several forms, many of which continue to evolve today, including:

• Blocking Innovative Super Apps. Apple has disrupted the growth of apps with broad functionality that would make it easier for consumers to switch between competing smartphone platforms.

• Suppressing Mobile Cloud Streaming Services. Apple has blocked the development of cloud-streaming apps and services that would allow consumers to enjoy high-quality video games and other cloud-based applications without having to pay for expensive smartphone hardware.

• Excluding Cross-Platform Messaging Apps. Apple has made the quality of cross-platform messaging worse, less innovative, and less secure for users so that its customers have to keep buying iPhones.

• Diminishing the Functionality of Non-Apple Smartwatches. Apple has limited the functionality of third-party smartwatches so that users who purchase the Apple Watch face substantial out-of-pocket costs if they do not keep buying iPhones.

• Limiting Third-Party Digital Wallets. Apple has prevented third-party apps from offering tap-to-pay functionality, inhibiting the creation of cross-platform third-party digital wallets.

What this means for Apple is business will be fundamentally changed by this lawsuit. Because of the detail and depth of the complaint, there may ultimately be many fixes put in place to remedy Apple’s behaviour. Some will likely be more impactful to Apple’s bottom line than others, but ultimately if Apple is as strong a company as its investors believe, it will find other ways to grow and innovate beyond its current structure. After all, Microsoft has successfully rebounded from its own tumultuous years with regulators and has become the most valuable company in the world, ironically by becoming more open and embracing open source rather than shunning it. It also means that there would be a slowdown in the number of its acquisitions, not just for Apple but for Big Tech as a whole, The Wall Street Journal reported that Big Tech has a Big Cash problem which means that they are unable to make big-ticket price acquisitions which are usually integrated into research and development costs (R&D) costs, because they would face extreme regulatory antitrust scrutiny. They, Apple, Amazon, Microsoft, Alphabet and Meta are sitting on a combined $750 Billion in cash which I would proffer should be distributed to employees in terms of bonuses and raises in order to boost morale after an incredibly brutal season of consistent layoffs, but it’s extremely unlikely that would be the case.

You can read the 88-page complaint filed here. [Forbes]

Gen-Z Word Of The Day

Wigga

The term "wigga" is a combination of the word white and the racial slur “nigg*r." Which has evolved to "nigga" with the common reference from African-American to African-American. The word refers to Caucasian males who have a psychological mindset, which makes them think that they are of African Descent. They typically dress in hip-hop clothing (2 to 3 times their size), which they refer to as "urban wear". These people are typically wealthy Caucasian males, who live in the suburbs and do not have any affiliation or any idea of what the ghetto is like.

White (Caucasian) + Nigga (Nigg*r)= WIGGA