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The Bank of Apple

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Good morning! Apple is reportedly building financial tools that would allow it to rely less on partners and bring all of the technology to power its products in-house. Sound familiar? That’s because Apple is nothing if not on brand. I’m Caitlin McGarry, and my dream is to “make it a true Daily Double” on “Jeopardy!”

Also, we want to know your favorite productivity tool. Do you swear by Google Docs, or do you live inside your planner? What’s a tool you love and think more people should use? Read the bottom for more, then respond to this email and let us know.

Apple’s payments play

Apple has been wading into financial services for years, first with the launch of Apple Pay alongside NFC-equipped iPhones in 2014, and then with an Apple-branded credit card in 2019. But the company is reportedly eyeing a larger-scale, multiyear effort that would make it a competitor to its current financial services partners.

The iPhone maker has an ambitious plan to develop financial products. “Project Breakout” is focused on building out a payment processing system, as well as developing tools for “calculating interest, rewards, approving transactions, contacting and reporting data to credit bureaus, accepting or rejecting applications based on its own risk assessments, determining and increasing credit limits, and handling transaction histories,” according to Bloomberg. That’s a laundry list of capabilities that would turn Apple into a legitimate financial powerhouse.

  • The first product that would reportedly use the new tools is a buy now, pay later offering tentatively called Apple Pay Later. Apple is expected to let people choose between a no-interest, four-installment payment plan powered by its in-house payment processor and a longer-term plan with interest in partnership with Goldman Sachs.
  • Apple would maintain its relationships with Goldman Sachs, payment processor CoreCard and Apple Pay bank infrastructure partner Green Dot. Project Breakout is reportedly designed to power future financial products rather than retrofit existing ones.
  • Bringing financial services in-house would allow Apple to collect revenue from interest, fees and other fees associated with credit cards and installment plans.

Apple needs to diversify beyond the iPhone. Services, including financial ones, are a key way for the company to tap steady revenue streams that have nothing to do with enticing customers to upgrade their iPhones each year. The iPhone is the company’s biggest moneymaker, and while that well shows no signs of running dry — Apple reported a record high $71.6 billion in iPhone revenue in its important holiday quarter — the company can’t rely on its defining product to be lucrative forever.

  • That doesn’t mean Apple can’t squeeze more revenue from its hardware lineup, though. The company is also reportedly planning to launch a subscription service that would essentially allow customers to lease iPhones, Macs and iPads, perhaps bundled with AppleCare+ and Apple services like iCloud storage and Apple News+, for one monthly fee.
  • The iPhone subscription service sounds similar to Apple’s iPhone Upgrade Program, which launched in 2015. Unlike what Apple is considering for its hardware subscription, the iPhone Upgrade Program is an installment plan that spreads device payments over 24 months with the option to upgrade every 12 months. But Apple has a financial partner, Citizens One, in that program. The company may be looking to bring that revenue in-house.

Apple has a history of prioritizing vertical integration. Just look at the company’s recent overhaul of the Mac: Apple relied on Intel chips for years before developing its own custom silicon and outfitting almost every Mac in its lineup with in-house chips.

The decision made the Mac more competitive. No longer tied to Intel’s technological capabilities or release schedule, Apple was free to optimize Mac performance and battery life due to the tight integration of software and hardware. The Mac is seeing a resurgence thanks to the move: Apple reported its highest Mac revenue in Q1 2022.

— Caitlin McGarry (email | twitter)

A MESSAGE FROM PLURALSIGHT

Today’s job landscape is challenging for organizations looking to recruit and retain top tech talent. Recent labor trends, many of which are fueling The Great Resignation, have shown leaders across industries that their employees are searching for more.

Learn more

People are talking

Brian Armstrong is pushing back on EU rules ahead of a vote today:

  • “This eviscerates all of the EU’s work to be a global leader in privacy law and policy. It also disproportionately punishes crypto holders.”

Author Justin E. H. Smith said no one can escape social media anymore, not even those who say they've unplugged:

  • "You're living in a society that is at this point largely structured by algorithmic forces that have their paradigmatic expression in social media."

Making moves

Tim Meyers is the new VP of Federal Cybersecurity at Maximus. Meyers was previously the director of cybersecurity for the SEC’s EDGAR project.

Jeremy Doig is the new CTO at Disney Streaming. He spent the last 18 years working on all things streaming at Google.

Wui Ngiap Foo is leaving Grab for a crypto gaming startup, sources told Bloomberg. Foo was the company’s head of tech.

Maria Hedden is the new COO of Comtech. Hedden last worked at Leidos as SVP of Operational Transformation.

Frank Deo joined 605 as EVP of Engineering. Deo’s held leadership roles at Comcast, MoleSafe and others.

Chris Bolte joined Yieldmo as SVP of Revenue Strategy and Business Development. Prior to that, Bolte co-founded Paysa and oversaw customer acquisition and retention at Walmart Labs.

In other news

Apple and Meta gave customer data to hackers who were pretending to be law enforcement, sources told Bloomberg. The companies handed over basic information like customer addresses and phone numbers.

The Silenced No More Act is now law in Washington. It’s the second state to implement rules that stop companies from using NDAs to prevent workers from talking about harassment and discrimination.

Lapsus$ is claiming responsibility for another hack. This time, the group said it took data from software development firm Globant, which works with Facebook and Apple.

Apple's new "reader app" rules are in effect. That means apps like Netflix and Spotify add a link to their websites in their app so users can manage and create accounts outside the App Store. Expect a lot of app updates pretty quickly.

Pat Gelsinger earned lots of money in 11 months. He pocketed $178.6 million in 2021, the bulk of it in stock awards, which is 1,711 times more than the average Intel employee. To compare, his predecessor earned 217 times more than the average employee in 2020.

Waymo’s driverless rides have begun in San Francisco. It’s also rolling out autonomous rides to workers in Phoenix.

Etsy sellers are going on strike next month to protest the company’s transaction fee increase, which goes into effect in the next couple weeks.

What’s your main productivity tool?

Every great productive day begins with a great productivity tool. We know you don’t keep those to-do lists in your head, so we want to know your secret sauce to productivity.

Do you dump everything in Evernote or a Google Doc? Do you swear by OmniFocus, or do you live inside a text document? Are you a Post-it hoarder, or do you carry around a planner like it's a bible? Respond to this email and let us know, and we’ll round up our favorites in the Sunday edition of Source Code.

A MESSAGE FROM PLURALSIGHT

Technology organizations need to look internally to find the talent they seek by upskilling and reskilling their existing tech workforce. For this vision to become a reality, organizations must focus on being creators, rather than consumers, of talent.

Learn more

Thoughts, questions, tips? Send them to sourcecode@protocol.com, or our tips line, tips@protocol.com. Enjoy your day, see you tomorrow.

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