U.S. takes on Apple: what does it mean for Canadians? | Canada Tonight

Apple has gone from revolutionizing the smartphone market to stalling its advancement this shift has smothered an entire industry that is the US justice department speaking about the antitrust lawsuit launched against Apple they say the tech giant has Monopoly power in the smartphone market which boxes out competitors the lawsuit takes aim at the so called wal Garden Apple has built around their iPhone and other popular products Apple responded to the claim saying that it threatens the principles that set their products apart in competitive markets the tech giant says they will vigorously defend themselves against the allegations all right it's time now for the intersection and given all the tech news happening today meeting at the intersection a group of tech experts to help break things down we've got Cary Levy he's a technology analyst joining us from London Ontario Mark Hayes is a privacy and Technology lawyer and arbitrator in Toronto and Nicole Kent is a tech entrepreneur and angel investor thank you all so much for making time for us this evening um car me I want to start with you and talking about this apple ecosystem because Apple hasn't ever really been known as being particularly open about its technology or being able to manipulate it or personalize it from a user's perspective why do you think the scrutiny is on Apple now well I think when you're the biggest player in the playground you're going to get the attention and you know they call them walled Gardens for a reason the company that builds them gets to make the rules gets to determine how the various actors who participate in those environments behave gets to set limits on what they can and cannot do and gets to impose Financial structures on everyone who participates obviously that playing field tilted to the advantage of the company that builds it that's how Apple became the Behemoth fit is uh that's how companies like this ultimately grow uh they own the landscape and they tell everyone how they're going to behave the problem becomes at what point uh does it become kind of creating this Crucible for Innovation at what point do you go over that line toward drawing a line and preventing others from growing their businesses within that context within that landscape as well and that's the that's the $64,000 Question at the center of this massive lawsuit is that you know did Apple go too far did it build the landscape and then unfort and then start punishing those who chose to participate in thus harming not only their businesses but the sectors within which they operate Nicole I want to bring you in on this idea of of the wall Garden because you know as a tech entrepreneur also as an investor in tech companies how important is it for a company to have a separation between itself and its competitors of of some extent well it's absolutely everything and you know they say wal Garden as if it's a herbit in place you know buying an Apple product is a luxury product it's a choice I have chosen that product over Android um and and as an angel investor I would never touch invest in get involved in run operate a company that didn't have a very clear we call it moat it's the exact same thing something that protects some kind of Ip protection and so it is I believe it's a slippery slope to say that you cannot have a w guard because to me that's saying you cannot build an ecosystem and there's so many companies and platforms that are built with that mentality in mind building a two-sided Marketplace somewhere where there's a there's a culture and that you're you know feeding off other products that you've bought that's building more value um for the first product that you've bought so I do think we have to be very careful here and we can't say that there is no competition for Apple in the first 3 months of 2024 they lost 24% of their market share in China because the competitors so I think this is a little bit extreme and I think it's it's a slippery slope for tech companies yeah that was an interesting one I mean China did get involved there in terms of uh you know pushing away from from Apple products and that tended to make people turn more to the the Huawei products or alternatives to um Mark can you give us some historical context here I mean Apple's not the only one that has faced this kind of scrutiny Microsoft another Giant in the space has has faced something similar in the past too yeah I mean that that's what the uh Department of Justice actually started their Claim by outlining the rather interesting history here Apple was almost bankrupt in in 2001 and they uh because of an antitrust suit against Microsoft were able to get iTunes onto Microsoft computers and that allowed them to be able to have success with the iPod which was their their first really successful uh mobile uh device which led to it led to the success of the iPhone later so they benefited from the opening up of the Microsoft Market which also had a Walled Garden based on software rather than hardware for the most part but once that was opened up that gave Apple the chance to be able to grow that the way that they have so basically what the justice department is saying is that just as you had to let people into the Microsoft millu to get around their wall Garden uh that Apple was able to do and then grow the same thing happens in this case and that's what they're attacking what they're attacking is the the policies and procedures that are used the rules that are used by Apple to keep other innovators out or at least to maintain control uh in apple as opposed to allowing innovators and other companies to be able to move the market forward they're saying they're limiting the amount of the market and interesting this interestingly this isn't just speculation the Department of Justice has been investiga for a long time right and when you look at the claim there's lots of emails internal emails I've already got where apple is saying we are trying to control the market we are trying to prevent competition so it's going to be interesting to see how they get over those internal Communications Mark what do you make of Apple's arguments that it has created this ecos system in this way to protect users data and their privacy well that that's been the argument that Apple has made all along is that uh they have to control what the apps are they have to control how the data flows uh and have to control external software and external devices from being able to get into the Walled Garden or at least only being able to get in on their terms in order to protect user privacy and and security and there is a good argument for that clearly I think you've seen apple is one of the more secure uh mobile networks you don't see as much hacking on Apple as you do uh perhaps in Other M and and that is partly because of these things that they're doing but you can only hide behind that for so long because if you are trying to protect uh privacy if you're trying to protect security but you then use that to stifle competition uh they may be able to show that they've gone too far and Apple has not been known uh to be one of the best in the business in terms of protecting the privacy of their users they share information in a lot of context uh both in the software and the hardware side and so to some extent it's defense as opposed to a a real conern concern about security and privacy I feel like we could talk about Apple all day but there is one more topic that we want to touch on and that is Reddit it made its way to the stock market today it went public um this is a long time coming because it had initially intended to go public a couple of years ago but it took some time to get there here it is today um Nicole I wonder what you make of this because when you think about Reddit and what it is how it's built it's built on you know users using this this platform and contributing to this platform what kind of pressure does going public and having investors wanting profit from this company what kind of pressure does that put on Reddit well I think it's put a huge amount of pressure everyone in the tech sector is looking at it I know a lot of companies that were wanting to go public in the last couple of years but but didn't because of the macroeconomic environment um we saw instacart's IPO it had a big first day and then It ultimately wasn't very good and what I think people don't really see under the surface is that really affects funding rounds long before an IPO and so it even even affects the early preed stage companies if the IPO IPOs in the tech sector are not doing that well so I think there's a lot of pressure generally on the tech sector in terms of profitability it's kind of ironic I mean this platform has been around for 20 years I've kind of liked it not loved it never been addicted to it but their user base is extremely loyal but they also are very finicky about not wanting Reddit to necessarily make a lot of money and the way that they've traditionally made money is through ads um so what I think has caused this success today anyways has been the AI story tied to the data and um and so I think what it has proven is that any IPO in the tech sector that's got AI attached to it is uh is going to be much more successful yeah the AI component is interesting here and Mark I want get your take on this because when you uh when you hear what Reddit is doing it's licensing some of this uh some of its content so that user generated content in order to help sort of inform AI models including uh a deal with um alphabets Google so far what should users think about that in terms of their content being used in this way yeah I mean there there's two two quick points about this um there was an announcement by Reddit about a month ago uh saying that they had entered into a contract with a large II company they didn't name the company but funnily enough 5 days later Google came out and put out an announcement saying oh we're the big company uh and to to say there that probably had some impact on the IPO is probably an understatement um the second thing is in order to look at what they can do with the with the data uh is it's really important to understand that you have to look the terms and conditions of the site and the Reddit site gives Reddit the right to be able to use your content anything you file anything you post to use it in uh and provide it to their Partners to people they have contracts with in this case of of course we're talking about Google and others so so there's the this massive AI collection of data that's going on by all the AI companies and interestingly enough uh now of course the FTC is just in the United States has just announced that they're going to do an investigation a non-public investigation of Reddit and whether they actually had the right to be able to uh send all this information to Google and other AI producers and in Canada just yesterday uh the competition Bureau said they're going to do an investigation into into the use of uh information in uh in AI platforms uh including Reddit so there's a lot of moving Parts going on in the AI world and it impacts the financial world as well and I absolutely agree that's that's why there was a 50% pop in Reddit today is because people see it as at least partly an I play yeah it is interesting when you talk about the fine print though uh when you're using some of these sites a good reminder to read it but there's so much of it uh car me I want to get your take on this because I was checking out Reddit and the reaction today because with the SC with seeing the stock jump in such a way um I did see some people talking about how they were already selling uh because they wanted to make that initial Pro profit we know that some Reddit users got to get in on the IPO from the the the ground level um but we also know that Reddit is the uh birthplace of the meme stock so how much potential is there here for Reddit to to fall into that category itself do you think well it's interesting because that so-called friends and family discount that they made available I think for to about 8% of of uh shareholders uh who sort of qualified for it uh doesn't have a lockup requirement so they can sell at any time so they can you know cash in on day one's pop and then walk away with a nice profit uh of course it's it's unusual uh and I know Financial analysts were sort of questioning the why uh but I don't put a whole lot of credence into day one results it's let's look at the first first quarterly earnings let's look at their ongoing results and see if that one deal that they have with Google translates into a parade of deals if it's a sustainable model because they've essentially stake the entire IPO on the potential of these AI training deals uh to fuel their growth going forward that the value of Reddit really does lie in almost 20 years of of data of user generated content that's been saved and stored in 100,000 plus subreddits so that ultimately is the story I think it's high time that we have this conversation that the AI industry stops applying just sort of a broad you know giant vacuum cleaner to the internet approach to train their large language models and starts defining where they're pulling it from so the FTC will investigates certainly in Canada they'll look into it as they should but the fact that we're having these sort of more focused uh efforts to identify higher quality data and use that to train artificial intelligence models really does Bode better for the future of the artificial intelligence intelligence industry that they can't just simply grab data under the cover of night that there has to be a specific arrangement for it and the fact that they're leading with this as part of this IPO I think is a good sign the rest of the industry really ought to follow that model yeah really important uh uh aspects of both of these big stories today we have to leave it there you guys but thank you so much for your time great to get your perspective on this that was Cary Levy technology analyst joining us from London Ontario Mark Hayes is a privacy and technnology lawyer and arbitrator in Toronto and Nicole vent is a tech entrepreneur and angel investor thank you guys so much