Unlike competitors feeling pressure to build proprietary AI foundation models, Apple can simply partner with providers like Google. This reveals Apple's true moat isn't the model itself but its massive hardware distribution network, giving it leverage to integrate best-in-class AI without the high cost of in-house development.

Incumbents are disincentivized from creating cheaper, superior products that would cannibalize existing high-margin revenue streams. Organizational silos also hinder the creation of blended solutions that cross traditional product lines, creating opportunities for startups to innovate in the gaps.

While adjacent, incremental innovation feels safer and is easier to get approved, Nubar Afeyan warns that everyone else is doing the same thing. This approach inevitably leads to commoditization and erodes sustainable advantage. Leaping to new possibilities is the only way to truly own a new space.

Apple isn't trying to build the next frontier AI model. Instead, their strategy is to become the primary distribution channel by compressing and running competitors' state-of-the-art models directly on devices. This play leverages their hardware ecosystem to offer superior privacy and performance.

OpenAI isn't just hiring talent; it's systematically poaching senior people from nearly every relevant Apple hardware department—camera, silicon, industrial design, manufacturing. This broad talent acquisition signals a serious, comprehensive strategy to build a fully integrated consumer device to rival Apple's own ecosystem.

A toll is a fixed fee for a specific service, like using a road. A tax is a percentage of the economic value created. Apple's 30% cut is framed as a tax because it scales with a developer's success, rather than reflecting Apple's actual, relatively fixed costs for facilitating the transaction.

By mandating its own WebKit engine and banning more capable alternatives on iOS, Apple prevents web applications from competing effectively with native apps, pushing developers toward its lucrative App Store ecosystem.

OpenAI's platform strategy, which centralizes app distribution through ChatGPT, mirrors Apple's iOS model. This creates a 'walled garden' that could follow Cory Doctorow's 'inshittification' pattern: initially benefiting users, then locking them in, and finally exploiting them once they cannot easily leave the ecosystem.

Apple's CFO Luca Mastri strategically reframed the company's story away from volatile device sales towards high-margin, recurring services revenue. This narrative shift was critical in convincing investors to value Apple like a SaaS company, dramatically increasing its price-to-earnings ratio.