When Smart People Can’t Reason
Normally Illuminati Ganga doesn’t publish these kinds of mundane articles but I ran it past Agent 81 and she gave it the go-ahead and Agent 86 said I could take a slot.
The reason why I’m writing this is that, as is often the case, I found something that amused me, something that made me cackle aloud at the stupidity on display, and exclaim dumbfounded “What the fuck” at the screen before me.
I’m speaking of course of the recent articles by Daring Fireball where they ponder if Apple might leave the EU, or even more likely, Meta might leave!
Now the reason that the tech giant’s might have for leaving the EU is because of some new laws that they don’t like, that in order to comply with they might have decreased profits, and if they don’t comply might face potentially heavy fines that would make remaining unprofitable.
The first what the fuck moment seems to be that John Gruber, who runs Daring Fireball, evidently hasn’t read the following article by Baldur Bjarnason
because he is going off on the weird fantasy that a lot of Americans seem to have when hurt about the EU’s approach to the big Tech companies, being that it is a form of protectionism and the EU is trying to steal the money their technologists don’t seem to earn — hence statements like the following:
They don’t want to eliminate all targeted advertising, just Meta’s (and Google’s), but that’s hard to put into written law while claiming not to be targeting very specific American companies.
Basically an argument that, after Bjarnason’s takedown above is unserious enough to put in the “not even wrong” category, drifting dangerously over into Tech-Qanon territory ( a term I just invented to mean any theory about how the world of tech works that is extremely detached from reality).
As you no doubt have figured out I think Mr. Gruber is the smart person lacking the ability to reason, at least where this issue is concerned.
Mr. Gruber has often been accused of being an Apple fanboy, and peddling a line that is like a soft form of Apple propaganda, and often that is unfair and people can see very pointed criticisms of Apple in his writings, but every now and then when something goes very wrong for Apple he will seemingly lose his mind a bit, and we end up being in situations like this.
The poets say this is what happens when a young man is in love.
Another potential reason for the impediment to reason, aside from the strain that affection may put on the brain, is that in a previous post Gruber said
the EU represents only 7 percent of Apple’s revenue.
Which he then had to backtrack in the current article
Listen to the published recording of the call, and it’s clear that what Maestri actually said was specifically in answer to the question: “Just to keep it in context, the changes apply to the EU market, which represents roughly 7% of our global App Store revenue.”
Having been wrong in the transcription Gruber then salvages the error with the statement
It’s certainly possible that EU citizens account for significantly more (or even less) than 7 percent of Apple’s overall global revenue, but it strikes me as very unlikely that the EU’s share of Apple’s overall revenue is significantly different from its share of App Store revenue. I struggle to come up with any explanation for why the EU might account for only 7 percent of App Store revenue but significantly more (or less) of Apple’s overall revenue. Why would overall revenue from any region differ significantly from the App Store revenue from the same region, on a percentage basis? But it is an open question.
Yeah, its an open question. But let’s think about it — if the global market was only 7% then I guess Maestri would have clarified that was the case. I agree that if you had a region of the world that only represented 7% of your revenue and was saying they could fine you 10% of your revenue you might start to wonder if it were worthwhile, and if you were considering leaving that market you might point out to investors hey it’s only 7% of our revenue. Because it would be to your benefit to point that out, but if instead you say it is only 7% of the revenue of a part of your product being affected by some of the regulation under discussion, it seems like maybe obfuscating the issue in your favor and letting the gullible think hey, if this ever seriously impacts things they can just drop the app store from the EU all together!
As to Gruber’s point that he can’t think of a reason why there might be significant differences between regions, I don’t know the answer but I can make some guesses.
First, almost every European I know has an Iphone, admittedly that is mainly people from Denmark, Sweden, and Italy, so maybe it is different in other countries. And almost every one of them that has an Iphone has it from their work. I know if my work provides me an Iphone I am not very interested in going and buying apps to put on it. If my experience is in fact common in the EU that would mean that probably the people who do not buy apps don’t do so because they don’t really own the Iphones they carry around. The same thing would apply to computers.
Since you don’t have to pay for updates of apps then it would imply that markets that get a lot of Iphones saturating the market early will have probably purchased most of the apps that they need at the beginning of that saturation. App store revenue must be greatest among the people who are only starting out with the Iphone.
But perhaps it is not necessary to speculate so much about this matter because there is a thing known as statistics
So one thing Gruber notes is that Europe also contains the Middle East in it according to Apple’s accounting, and that there are a number of non-EU lands in Europe, so of course when we see that Europe in the table has a much higher share of revenue than 7% the idea is that the EU has 7% and the rest of that revenue is split between the non-EU countries that Apple considers as Europe. Maybe so — but it seems strange to me that approximately 25% of the revenue would end up being only 7% coming from the EU.
Since the EU has three of the largest economies in the world in it — Germany ($4.1 trillion GDP), France ($2.8 trillion GDP), and Italy ($2 trillion GDP), and the rest of Europe has two of the world’s largest economies [UK ($3.1 trillion) and Russia($2.2 trillion GDP)], I would be surprised if the EU is only 7%, I realize that of course GDP is not a great predictor of the buying power of the citizens — for example the average annual salary in Russia is §14,771 (population approx.145 million] — so I don’t think those people are buying a lot of Iphones. But as EU countries are more evenly distributed in the country’s wealth (for example Germany’s annual salary is about $50,000 [population approx. 88 million]— depending on fluctuation of the Euro), and that phones are often provided as an employee perk it sure seems like it would be a safe assumption to assume the EU percentage of Global Apple revenue is between 13 and 15% at the minimal, and probably not higher than 20%. But it’s an open question.
This assumption would seem to follow the current position of the EU in the world economy:
The European Union’s GDP is estimated to be $19.35 trillion (nominal) in 2024 or $26.64 trillion (PPP), representing around one-sixth of the global economy. Germany has the biggest national GDP of all EU countries, followed by France and Italy. 448,753,823 (EU27, 1 January 2023 prov.
from Wikipedia on 3 Apr 2024
https://en.wikipedia.org/wiki/Economy_of_the_European_Union
One 6th being slightly over 16% makes between 10 and 15% seem a reasonable low-ball estimate, with assumption that it’s closer to 15%.
Aside from this there are of course a number of products, homepods, earpods, that do not have any app store as I understand it (J had to research it as I am not greatly invested in all things Apple, and so I may have made a mistake) but this as well would indicate. way that App Store revenue can be divorced from Apple Revenue in a region.
Unfortunately that data is not broken down by region, but I suppose a reasonable breakdown would be the same percentages of total revenue, although I think based on my personal observations Europeans like to use earpods, maybe you don’t buy apps for your employer supplied Iphone but you do buy some headphones or, as might also be the case, the employer might also provide the headphones (I haven’t considered this deeply as I don’t much care for earpods)
Following on that — if people don’t buy apps for their employer provided Iphones, it follows also that they would not buy apps for their employer provided ipads and macs.
Earlier I said that almost every European I know has an Iphone, but hey, we certainly don’t want to base things on what could be my personal opinions — otherwise we’d be thinking no better than Gruber. Let’s see if we can get some data on that
So, there are 459 million smartphone subscriptions in Western Europe, obviously the EU is more than Western Europe but let’s just go from that and check if it matches up with what I’ve been supposing.
The Mobile operating system share is 32.08% ios — that’s all Europe not just EU but this is just a rough estimation (and also a nice confirmation that hey, don’t just go with your bias but try to get some data, evidently I only know the Europeans with Iphones.)
So that gives us nearly 15 million ios devices in Western Europe (14,724,720 more precisely)
I’m going to just assume that mobile OS for IOS in this case is only Iphones, which if anything makes Gruber’s argument sound better. But how much do these devices cost
https://www.euronews.com/business/2023/12/19/why-are-europeans-paying-more-for-their-iphones
The price in European stores varies between countries, but it’s usually significantly higher than in the US. In France, the iPhone 15 Pro Max starts at €1,479, in Germany it’s €1,449, and in Italy, consumers pay €1,489.
more crude estimation — 1400 euros * number of ios devices in Western Europe equals 20,614,608,000 euros.
Apple Revenue in all Europe and Middle East is 25% of total revenue, Apple revenue in Western Europe (which contains EU countries Germany, France, Spain, Portugal, Netherlands, Belgium, and Austria) for just Iphones looks to be reasonably close to 5% of their total revenue. Again we can see this is very rough estimation and i have also done quite a bit to lower expectations to make this a conservative estimation.
It seems that the idea that Apple only has 7% of its revenue from EU just doesn’t make sense.
BUT WHAT IF IT WERE 7%
IF Apple Revenue in EU was somehow only 7% of their global revenue, that would mean that probably a lot of other markets were pretty maxed out as far as growth potential was concerned.
This would mean that the EU for Apple was extremely underdeveloped as a market.
To suggest that a major international brand selling luxury electronic goods would leave the 6th largest economy of the planet with a population where purchasing power is more evenly distributed than most rich areas in the world, whether or not that market is currently underdeveloped, is just ludicrous.
Maybe Twitter under Elon Musk would do it but that company is generally described as a dumpster fire by analysts. I’m sure Gruber and I would agree that Apple is not a dumpster fire.
But what about Meta
I don’t actually care about Meta but again I think Gruber, like a lot of American technologists, seems to have an emotional connection to getting the EU to stop picking on the American Tech companies and thus he would like to see a big important company declare No, we cannot deal with these idiots anymore! We are taking our ball and going home!!
This is based on that previous quote
They don’t want to eliminate all targeted advertising, just Meta’s (and Google’s), but that’s hard to put into written law while claiming not to be targeting very specific American companies.
If you think someone is being unfair you like to see that get a comeuppance and that’s what Gruber would like to see, most wishfully delivered by his favorite Apple, but perhaps that is unlikely so maybe by Meta, the company he imagines might be more able to say no to the 6th largest economy in the world because they don’t make their money selling physical goods.
Gruber argues that Meta will leave without the ability to get the money that targeted advertising provides:
Why exactly would Meta choose to remain in the EU if they’re forced to offer their services for pennies on the dollar (or in this case, cents on the euro)? Out of the goodness of Mark Zuckerberg’s heart?
To which I can only reply because, as everybody knows, pennies of profit are to be preferred over 0s of profit, and once you have recouped the cost of development for software almost every penny you receive is profit.
He also suggests that if this happens in the EU then
there’s nothing to stop regulators and legislators around the world from demanding the same.
Yeah, regulators around the world regularly enact the protections the EU does.
Also it seems unlikely that a company that makes it’s brand connecting everybody in the world suddenly won’t connect all the fancy people in the 6th largest economy of the world with the rest of that world.
The only thing that I think might make it happen is that Zuckerberg can decide to do whatever he wants, which when you have a single Billionaire in charge of a big company, able to steer it as he wills, sometimes in a fit of pique they might just decide to steer it into some jutting rocks that everybody knows you shouldn’t steer into. This is what makes Twitter a dumpster fire, so I guess in essence this is what Gruber is hoping for Meta.
I can relate to the hope, but I think Zuckerberg is too smart to let pique guide him.
Conclusion
The point of this article has just been to put in my spur of the moment thoughts about the analytical pipe-dream of big Tech leaves Europe, as such I have tried to keep away from the other things Gruber says in the article, many of which I agree with and some few I think this guy is experiencing an existential crisis.
This article was written by IG Agent 77, his previous articles are not very much like this one so I don’t know that it is at all worthwhile linking to those and saying “Previous Articles of Interest”
