What's Next: Apple at $1 trillion: Apple is leading Amazon, Microsoft and Alphabet in the race to become the world's first trillion-dollar company, a distinction that has become an obsession for Wall Street and the financial press, if not for Silicon Valley.
Apple leads at $923 billion, but there are challenges ahead and behind: iPhone sales, which account for 60% of revenue, are extremely volatile. Meanwhile, Amazon, at $786 billion, is growing so fast that it is currently on track to eke out Apple later this year.
Apple will hold its annual Worldwide Developers Conference next week in San Jose. The new slate of software and hardware will likely determine whether or not Apple is first to cross the $1 trillion threshold. We expect a heavy emphasis on artificial intelligence and augmented reality, wearable technology and new apps and services.
In today's FT, Tim Bradshaw notes that Apple's Services division -- iCloud, App Store, Apple Music, etc. -- "has been a model of consistency when placed next to the feast-or-famine performance of the iPhone." But Services growth is contingent on people using Apple hardware, and the latest iPhone and Home Pod sales have disappointed.
The Big Picture: Apple and Amazon are headed for a photo finish at the $1 trillion line. The innovations Apple rolls out next week will be instrumental to its ability to maintain first place and etch its name in the history books as the first trillion-dollar company.
See you in San Jose ... | | | PACIFIC
The Agenda Welcome to PACIFIC. We're en route to Kara Swisher and Peter Kafka's Code Media Conference in Palos Verdes, which is consistently one of the newsiest -- and most enjoyable -- conferences of the year.
This year's speakers include Brad Smith, Sheryl Sandberg, James Murdoch, Dara Khosrowshahi, Ev Spiegel, Daniel Ek, Brian Chesky, Joe Tsai, Mary Meeker, Randall Stephenson and Senator Mark Warner, among others.
Follow along here. | | Beijing Rising
China tariffs return
Last week, Steve Bannon told me that Steven Mnuchin and "the Wall Street clique" had screwed up President Trump's plan to impose steep tariffs on China. Today, it looks like Trump has reversed course.
"The China tariffs are back on" by CNNMoney's Donna Borak and Nathaniel Meyersohn:
• The White House says it will "proceed with its proposal to impose 25% tariffs on $50 billion worth of goods from China, and place new limits on Chinese investments in US high-tech industries."
• "The White House said the president plans to take 'multiple steps' to protect domestic technology and intellectual property from certain 'discriminatory and burdensome trade practices by China.'"
• "Treasury Secretary Steven Mnuchin said a trade war with China was 'on hold' less than 10 days ago. ... Commerce Secretary Wilbur Ross is expected in Beijing on Saturday to help ease trade tensions."
The X Factor: Peter Navarro. President Trump's nationalist trade adviser now appears to have the edge over Mnuchin, sources close to the administration tell me. The two men got into an expletive-laden shouting match at the Beijing talks earlier this month after Navarro grew frustrated with Mnuchin for ceding so much ground to the Chinese.
The Big Picture: The Trump administration's inability to come up with a consistent approach to China is prolonging talks and negotiations, which works to China's advantage as it works to become the world's dominant technological superpower by 2025. | | | WHAT XI JINPING IS READING "Two of the world's biggest brands are now Chinese" by CNNMoney's Alanna Petroff: "A new list of the world's most valuable brands is out, and China has claimed two of the top spots for the first time."
Tencent is #5, Alibaba is #9. | | | Zuck Watch
Papua New Guinea bans Facebook
Sign of the times, via The Guardian's Eleanor Ainge Roy:
• "The Papua New Guinean government will ban Facebook for a month in a bid to crack down on 'fake users' and study the effects the website is having on the population."
• "The communication minister, Sam Basil, said the shutdown would allow his department's analysts to carry out research and analysis on who was using the platform, and how they were using it, amidst rising concerns about social well-being, security and productivity."
• Basil said the government is also looking "at the possibility of creating a new social network site for PNG citizens to use," indicating that the country may permanently ban Facebook and create its own network.
The Big Picture: The thrill is gone. From privacy abuse and election meddling to fake users and fake news, Facebook has become a burden for governments around the world. | | Crisis Management
The Starbucks test
Starbucks is closing 8,000 locations this afternoon for four hours of mandatory anti-bias training for 175,000 employees, a move that comes after two black men were arrested last month at a Philadelphia Starbucks.
Dealbook's Andrew Ross Sorkin explains why it matters:
• "Having spoken with senior executives at many large American companies, I found it hard to find one that has taken on the issue of race so directly, with so many employees."
• "Critics say it's laughable to think that racial bias will end after a four-hour afternoon training session. They're right. But that's not the way to measure it."
• "The training program, if it is effective, will start a dialogue among some 175,000 employees. The hope is that they will continue the conversation in stores, at home and among their family and friends for days, weeks and months, multiplying the impact."
Bloomberg's Joe Nocera agrees:
"I understand how easy it is to be cynical ... If the Philadelphia incident shows anything, it illustrates how hard it is to eradicate racial bias in a company the size of Starbucks. ... To me, though, what matters most is that Starbucks and Schultz keep trying. You can call that naïve if you want. I call it a beacon of hope in a cynical world."
The Big Picture: In the social media age, crisis management is paramount. Every major company in the world is seconds away from a national controversy because one employee at one location made the wrong move. | | Talk of Tinseltown
ABC cancels 'Roseanne'
Speaking of crisis management ... ABC has just canceled its hit "Roseanne" reboot after the show's star went on a racist Twitter rant.
"Roseanne's Twitter statement is abhorrent, repugnant and inconsistent with our values, and we have decided to cancel her show," ABC said in a statement. Barr had earlier apologized and said she was "leaving Twitter."
Disney's Bob Iger tweets:
• "There was only one thing to do here, and that was the right thing."
The whole affair is meta: ABC bet on a show that featured a pro-Trump Roseanne taking shots at progressives and political correctness. (The bet paid off, initially: The show averaged 18 million viewers this season.) Then the real Roseanne Barr went on Twitter and wrote racist tweets about a liberal -- in this case, Obama administration alum Valerie Jarrett -- and her show was cancelled.
But ... ABC should have seen this coming. Roseanne was promoting conspiracy theories on Twitter long before the reboot launched.
The Big Picture: Don't bet on talent or content that you can't defend. | | Dub Shot
Warriors vs. LeBron, Part 4
What the Silicon Valley C-Suite is reading: The Golden State Warriors will face LeBron James and the Cleveland Cavaliers in the NBA Finals for the fourth consecutive year, a reminder that the NBA Playoffs tend to reward the most talented and battle-tested teams.
"Three Immediate Questions Ahead of Cavs-Warriors IV," by The Ringer's Paolo Uggetti:
• How Much Does LeBron James Have Left?
• Can the Cavs Learn Anything From the Rockets?
• Do the Warriors Have a Worse Bench? Does It Matter?
Game One is this Thursday in Oakland. 6 p.m. PT on ABC. | | What Next: "The hottest ticket in sports? Think hockey, not basketball" by CNNMoney's Ahiza Garcia. See you tomorrow. | | | | | |
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