How Apple used its car project to drive broader innovation

Innovation on wheels

Did Apple really crash the car? The tech giant has halted its electric vehicle project as it focuses on artificial intelligence, prompting many observers to label the venture as a major failure for the company.

Here’s a counterintuitive thought: This criticism misses a broader point about the way Apple innovates, because the company has used the project to power an entire ecosystem of products and services that have been unmitigated successes.

Apple invested billions in building a self-driving car. Reports appeared about the secret effort, codenamed Project Titan, in 2014, and the company has never publicly acknowledged its existence. That said, staff said Tuesday that many of them would be redeployed.

There had been a broader internal debate about entering the automotive industry. An EV was seen by some as the ultimate data collection device and as a way to diversify from the iPhone.

But others wondered what kind of margins cars would bring, especially in a market embroiled in a price war. The answer: There’s nothing like the profit packed into an iPhone or Apple Watch, which has given Apple a valuation of nearly $3 trillion.

The car project was an R.&D. laboratory on wheels. The same year that Project Titan speculation began, Apple released CarPlay. That has changed to a software system that was installed from 2022 98 percent of new cars in the US, drawing more consumers to Apple’s universe. Years of testing self-driving cars has also helped improve that platform, providing data to inform Apple Maps and push further into augmented reality.

General Motors’ decision last year to… drop CarPlay has not been widely copied. And former Apple executives are responsible for software at GM and with Fordsuggesting that Apple’s Fingerprints will be everywhere on cars even if it doesn’t create one.

Apple investors seem happy. The share price subsequently rose Bloomberg first reported the decision. Investors are push for more transparency about what Apple is doing in AI, so they’ll likely welcome steps to improve those efforts.

And Elon Musk, who once thought about it Sell ​​Tesla to Applepublished one message on X with a greeting emoji and a lit cigarette.

HERE’S WHAT’S HAPPENING

Michigan voters are sending President Biden a warning. While Biden handily won the state’s Democratic primary, more than 100,000 “uncommitted” votes were cast to protest his support for Israel over the war in Gaza. That could jeopardize his re-election bid: He won the state in 2020 by just 150,000 votes.

New alarm signals are sounding for the American economy. The Conference Board’s Consumer Confidence Index rejected for the first time since November, with concerns about layoffs and the upcoming presidential election. Elsewhere, Goldman Sachs CEO David Solomon said warned investors that an economic ‘soft landing’ was not a certainty. (One bright spot: Congressional leaders appear increasingly optimistic that they can avoid a partial government shutdown on Saturday.)

Google’s CEO called the recent blunders in artificial intelligence “completely unacceptable.” Sundar Pichai told employees that mistakes were made by the tech giant’s AI image generation tool users had offended and that structural changes were needed. It’s a setback for Google as tech giants push AI products to market despite known issues including serving up inaccuracies.

A possible turnaround at Starbucks

Starbucks continues discussions with leaders about a growing push toward unionization within its company-owned stores in the U.S., a potentially massive shift in strategy and culture for the coffee giant.

More broadly, if even Starbucks – a poster child for resistance to union organizers in recent years – is willing to work with unions, could more companies from America follow suit?

It’s a kind of reversal of Howard Schultz’s efforts to prevent such organizations. For the former CEO who turned a Seattle coffee shop chain into a global giant, the unionization efforts that began in 2021 almost seemed like a personal affront, considering he had pioneered benefits like giving part-time employees health care benefits , stock options and free university education.

“What’s happening in America is much bigger than Starbucks,” Schultz said at the 2022 DealBook Summit. “When a company is as progressive as Starbucks, which has done so much and can be threatened at the 100th percentile by a third party , than anyone can.”

This sometimes led to bitter clashes, especially as organizers managed to unite workers in hundreds of stores. The Workers United union has accused Starbucks of repeated violations of labor law, including retaliation against organizers. (The National Labor Relations Council has done that has repeatedly spoken out in favor of the workers.)

A group of unions is also seeking three seats on Starbucks’ board, citing anti-organization efforts as damaging to the company’s business.

Schultz’s successor, Laxman Narasimhan, is more open to unions. In December, the company said it would resume talks with Workers United in an effort to “resume productive contract negotiations.”

Notably, Schultz remains a major shareholder in Starbucks, but he no longer holds an executive role.

There is still a long way to go. Starbucks and Workers United are working on a “foundational framework” for labor negotiations that could lead to new contracts. And while more and more employees are voting to organize — more than 20 locations filed petitions in one day last week — only a small portion of stores are unionized.

All this could increase pressure on other union opponents. including Amazon, Apple and the outdoor retailer REI. If Starbucks is willing to bend – in the middle growing support for unions among Americans – they may also feel pressured.

Bankman-Fried’s push for clemency

Sam Bankman-Fried’s legal team, his parents and some of their closest allies have been arguing for months that the former poster boy of the crypto world should not spend the rest of his life behind bars.

In a legal file published late on Tuesday, they set out the gist of their case: that creditors and customers can expect to be repaid and that he should serve no more than six and a half years in prison.

Bankman-Fried was convicted last year of one of the biggest financial crimes in history. Prosecutors say his actions cost investors and customers $8 billion and have called for up to 100 years in prison, according to the filing.

Such a sentence would be ‘flawed’ and ‘grotesque’. Bankman-Fried’s attorneys argue in the filing. The legal team insists that FTX customers will get every cent back, partly due to the sharp recovery in crypto asset prices. (DealBook asked this month what a turnaround in FTX’s finances would mean for the broader case.) They also point to the company’s sound interests, including:

• A $500 million investment in Anthropic, an AI start-up. That stake is now worth up to $1.4 billion, the filing said.

• A stake in Solana, a crypto token, which was worth $4 billion as of Monday.

It’s a long-term strategy. Ultimately, Bankman-Fried’s supporters want that overturn the conviction and initiate a public reappraisal of the FTX leadership team’s role in the collapse. But these types of criminal convictions are rarely overturned, and some legal experts say they believe Bankman-Fried will remain behind bars for decades. (His legal team plans to appeal after sentencing.)

The legal setback is part of a broader strategy led by Bankman-Fried’s parents. Joseph Bankman and Barbara Fried, professors at Stanford Law, have lined up former FTX employees to write letters of support on their son’s behalf. And two lawyers at Yale and Stanford, close friends of the family published an essay arguing that FTX had enough assets to keep its customers healthy ‘always’.

A media (non)merger

Warner Bros. Discovery has decided that buying Paramount Global doesn’t make sense after all. The media giant reports this has rejected a possible deal for Shari Redstone’s company, which reports fourth-quarter earnings on Wednesday, Edmund Lee of The Times writes for DealBook.

It probably didn’t have to look too difficult. DealBook has previously outlined the downsides of such a deal. Even if rising debt levels and a combination of two companies still dependent on declining TV assets weren’t enough to deter investors, there was always a strong chance that regulators would have intervened.

That doesn’t mean there won’t be more media deals this year. The threat of Big Tech kicked in from a dizzying array of media tie-ins following AT&T’s blockbuster purchase of Time Warner five years ago. (Reminder: the telecom giant bought the company and then sold it to Discovery, while Disney beat Comcast to acquire most of Rupert Murdoch’s Fox.)

Comcast, Disney, Paramount and Warner still face a fundamental threat from Alphabet, Amazon, Apple and Netflix. Think of it this way: Amazon generated more advertising dollars in the fourth quarter then Warner And Decisive did it all last year combined.

Silicon Valley is now focusing on sports programming, the lifeblood of pay TV. And Netflix is ​​dipping its toes into live coverage after airing the Screen Actors Guild Awards last Saturday.

That partly explains the motivation behind the recently proposed sports streaming alliance to combine ESPN, Fox and Warner into one consumer offering. But even that deal reportedly happened aroused the interest of the regulators.

Redstone will want to make a deal before things get even tougher. She has attracted interest from Skydance, the studio headed by David Ellison, son of Oracle billionaire Larry Ellison. But that transaction could only be for its controlling interest, which could displease Paramount shareholders unless a special dividend was included in the deal.

And then there’s Brian Roberts at Comcast. He is probably the only director to successfully land a major media deal recently when he bought NBC Universal in 2009. Fox’s loss doesn’t mean he’s done with mergers and acquisitions.

READING THE SPEED

Offers

• Klarna is reportedly planning an IPO in New York this fall, which would value the Swedish buy-now-pay-later company at approximately $20 billion. (Bloomberg)

• The cable network operator Cox Enterprises agreed to buy OpenGov, a maker of software for government agencies, with a valuation of $1.8 billion. (WSJ)

Policy

The best of the rest

We want your feedback! Send your ideas and suggestions by email to dealbook@nytimes.com.