Morning Brew Daily
Apple’s App Store Reign Ending? & Eyeball-Scanning Crypto's US Launch
Fri, 02 May 2025
Episode 574: Neal and Toby chat about Apple’s Q1 earnings which admitted tariffs may make a huge impact to its sales, and the L it took after a judge ruled it could no longer take commissions from sales outside its app store. Then, Sam Altman’s eyeball-scanning crypto makes landfall in the US, promising to be at the forefront of crypto innovation. Meanwhile, a double-Dog of the Week special from Amazon and McDonald’s. Subscribe to Morning Brew Daily for more of the news you need to start your day. Share the show with a friend, and leave us a review on your favorite podcast app. Visit https://planetoat.com/ to learn more! Listen to Morning Brew Daily Here: https://www.swap.fm/l/mbd-note Watch Morning Brew Daily Here: https://www.youtube.com/@MorningBrewDailyShow All investing involves the risk of loss, including loss of principal. Brokerage services for US-listed, registered securities, options and bonds in a self-directed account are offered by Public Investing, Inc., member FINRA & SIPC. Public Investing offers a High-Yield Cash Account where funds from this account are automatically deposited into partner banks where they earn interest and are eligible for FDIC insurance; Public Investing is not a bank. Cryptocurrency trading services are offered by Bakkt Crypto Solutions (NMLS ID 1890144), which is licensed to engage in virtual currency business activity by the NYSDFS. Cryptocurrency is highly speculative and involves a high degree of risk. Cryptocurrency holdings are not protected by the FDIC or SIPC. APY as of 3/18/25, subject to change. *Terms and Conditions apply. 00:00 - Canned Hard Lemonade 03:20 - Apple Revenue and App Store Woes 09:40 - World Crypto Token 13:15 - Dog of the Week: Amazon 18:10 - Dog of the Week: McDonald’s 21:00 - Headlines Learn more about your ad choices. Visit megaphone.fm/adchoices
Chapter 1: What is the latest trend in canned hard lemonade and vodka drinks?
You've all been in this situation. You get invited to a party, maybe a roof hang, which means you have to stop at the store on your way to pick up a six pack of something. What do you choose? White Claw, High Noon? Well, this year, the beverage industry thinks more people will buy canned vodka lemonade, which has already been dubbed the drink of the summer. Yes, vodka spiked lemonade.
The brand Surfside popularized this drink back in 2022. and it's exploded in growth since. Now everyone from Anheuser-Busch to Boston Beer Company to Dave Portnoy has hopped on the trend, releasing vodka, lemonades, and teas of their own in just the past few weeks. Toby, are you in or out on lemonade?
Every time I think we've invented every possible canned cocktail imaginable, the alcohol industry turns out a new one. But by new, I also mean old because they haven't created anything that a frat party in America hasn't already seen and drank a thousand times over. But yeah, this category is... kind of an old thing. Surfside really did bring it to the forefront in 2022.
In their first year on the shelves, they saw 563% growth and then can sales grew or case sales grew from 1.2 million in 2023 to 4.9 million last year. So maybe we're even a little late to this drink of the summer because it's clearly been growing for a few years now. But yeah, honestly, I'm just happy that we have X of the summer starting to drop because it's been a long winter.
And speaking of drinks, a word from our sponsor, Planet Oat. Neil, let's play a game of finish each other's sentences. Are you ready?
Oh man, I didn't know this was the direction we were going to go in. All right, hit it. You are the Neil to my... Toby.
Yes, exactly. All right, let's keep going. You are the Planet Oat extra creamy oat milk to my... Iced coffee. You are the Planet Oat barista lovers oat milk to my... Latte. You are the Planet Oat French vanilla oat milk creamer to my... French roast hot coffee.
Wow, Planet Oat really does pair well with everything.
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Chapter 2: How did Apple's Q1 earnings and tariffs affect its sales?
and its fast-growing service division think subscriptions like iCloud and Apple Music didn't grow as fast as expected last quarter. Toby, this Apple doesn't quite have that loud crunch when you bite into it. It's a bit more mealy.
Yeah, Tim Cook hadn't really spoken about tariffs since January of this year, and even then he said Apple was just monitoring the situation, but now he said that Apple could see a $900 million cost related to tariffs in the next quarter. It was interesting, though, what he said about Apple retail stores being flooded by new people trying to beat the tariffs and buy new iPhones.
He actually says that those sales wouldn't show up in the March quarter, even though a lot of analysts were like, no, they definitely showed up in March quarter. You saw this boost in iPhone sales. And he said that it's mostly going to be in the next quarter coming up. So he's unsure of the impact on the current period.
So who knows if that was just CEO speak or if it really was that, hey, we didn't actually see as much demand pulled forward as we maybe analysts are expecting. The other thing that they did touch on too is the company's AI strategy, which has been much maligned because Apple intelligence really hasn't been what a lot of people expected it to be.
And an analyst straight up asked Cook, he's like, hey, do you think you're doing well? Like what's going on with Siri? Why did we delay that? And Cook kind of sidestepped the question again, saying that we just want the features to meet Apple's high quality bar. So that's another question mark down the line of if Apple can figure out its AI strategy,
And that's really hurting it in China, where consumers do expect AI integrations with their phones. Maybe here in America, we're fine just having a normal smartphone. But over there, they really do care about having the latest whiz-bang technology in their phones. And China is a super critical market for Apple.
And that's why shares fell more than 2% after hours was because of this miss, this fall in growth in In China, it's lost ground to those local phone brands like Huawei and Xiaomi. It doesn't have, you know, it's not matching those companies when it comes to technology. And this is just such a critical market for Apple.
Get rid, like, don't even think about the tariffs, but they make phones there, but they also sell phones there. 19% of their revenue comes from China. 43%, 57% of the revenue comes from outside China. the Americas. So it's these foreign markets that are faltering for Apple. It did well in North America, 8% sales growth.
But outside of America is where these warning signs are really popping up, and it doesn't even have anything to do with tariffs.
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Chapter 3: What was the impact of the judge's ruling on Apple's App Store commissions?
Other companies were sitting and waiting on this moment because they're like, hey, we don't want to pay the piper 30%. Every time you buy something within our app, we should be able to handle that payment ourselves. So it wasn't just an Epic versus Apple thing. It was really an Epic versus Apple versus the entire app store sort of thing.
Take off your glasses and clear the sleep from your eyes because Sam Altman's Iris Scanning Crypto Project World is coming to the United States. After spending years dutifully scanning eyeballs outside US borders, the regulatory environment under Trump's crypto-friendly administration made it possible for Altman & Co to unveil both its physical orbs and its crypto token inside US borders.
The stated goal of World is to make WorldID the primary method for verifying humans online. If that sounds like the arsonist putting out the fire, it kind of is. Altman's role in advancing artificial intelligence at OpenAI is part of the reason why Altman feels like there needs to be a system for distinguishing real humans from computers.
World thinks that the way to do this is to gather biometric data on millions of people via scans of their eyeballs, then assign each one a digital ID that lives on the blockchain. To incentivize this more than slightly black mirror-y concept, volunteers receive 16 world coins, the crypto aspect of the project, that Altman thinks can act as a universal basic income for millions.
If that all sounds like something you want to try, you can hit up a world space location around Atlanta, LA, Miami, Nashville, or San Francisco, to get your ID into the system. And if that sounds like something you don't want to try, just close your eyes, Neil.
I mean, this company has kind of trotted all around the world for the past couple of years, trying to scan people's eyeballs in various countries. They say they've got 12 million people signed up across 100 countries, but pretty much everywhere they've went, they've received pushback. Brazil and Hong Kong have banned WorldCoin. Kenya, Portugal, and Spain all instituted temporary restrictions.
after world hopped into town. And that's because they are worried about this one particular company collecting reams of biometric data and all of the security and privacy concerns that come with it. So we'll see what happens.
Certainly, the regulatory environment has changed in the United States from the Biden's more crackdown on crypto to the Trump administration's more laissez-faire approach to crypto. So they decided now is time to come to the United States and see how many eyeballs they can scan. But
Truly this, you know, when you take a step back and think about the implications of why this company exists is to verify humans versus bots. And that's because Sam Altman, you know, has been labeled as the person who popularized AI. And there's going to be so much spam and bots out there that eventually we won't be able to distinguish between humans and bots. So we need our irises scanned.
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Chapter 4: What is Sam Altman's eyeball-scanning crypto project 'World' and its US launch details?
One final e-commerce headwind that we have to mention is that this major loophole that let you get all those cheap fast fashion items directly from China. actually closed one minute past midnight last night. That is the day-minimus exemption, which allows shipments of goods worth under $800 to come into the U.S. duty-free. This is what led to the rise of Timu, what led to the rise of Xi'an.
So there was just this huge volume of packages coming into the country, but now that loophole is officially closed. So if you haven't felt the bite and the sting of tariff rises in prices, you might start feeling it now because Xi'an and Timu definitely have to raise prices is closed, which it just was as of midnight. Up next, we got Neil's Dog of the Week.
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Chapter 5: What are the privacy and regulatory concerns around WorldCoin's biometric data collection?
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My dog of the week is McDonald's because when you're feeling a bit nauseous, the last thing you want to guzzle down is a double quarter pounder with cheese. McDonald's reported yesterday that economic uncertainty and a more cautious consumer caused same store sales to drop 3.6% in the United States last quarter. That's its steepest fall since the spring of 2020 when no one was leaving their house.
Globally, same store sales fell for the second straight quarter and shares dropped nearly 2%. On the earnings call, execs said in most of our major markets, we're seeing a similar story in regards to the challenging industry environment and softening consumer sentiment. Let's deal with those one by one. A challenging industry environment.
McDonald's is the face of the fast food industry that's seeing traffic dry up right now. Just this week, Domino's, Starbucks, Pizza Hut and KFC all warned that business was slowing down in the United States. Now softening consumer sentiment. McDonald's CEO blamed this one on geopolitical tensions, a.k.a.
the trade war, that added to uncertainty and dampened consumer sentiment more than we expected. Toby, the drive-thru lane is not exactly a party right now, but McDonald's may have a few cards up its sleeve that it thinks will bring it back to growth.
Yeah, in Q1, they had this revamped value menu that was supposed to drive traffic. But actually what ended up driving a lot of traffic was this meal promotion with a Minecraft movie. It was probably the most successful aspect of getting people back into McDonald's. So one, they're going to lean further into that partnership and partnerships like that in the future.
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Chapter 6: How is WorldCoin partnering with companies like Match Group for real-world applications?
But also, the shift in focus is to next week's release of the new chicken strips coming out of McDonald's because fans have been clamoring for this item to return. Obviously, chicken is the hottest new thing in fast food. There's the chicken Big Mac that it rolled out. There's the chicken sandwich wars. Everyone loves chicken, so chicken.
It's really leaning on chicken to try to get it out of its slump. And then also the beloved snack wrap is rumored to return. We don't know exactly when it will return, but I personally am very excited for that. And then the final thing outside of chicken, because I can't say chicken anymore, is that the chain is testing out these new customizable drinks with some franchisee later this year.
And that comes from learning from Cosmix, which is it's Dutch Bros-esque drive-through coffee and drink purveyor that it's been testing out over the last few years. So it's got a few things that it's cooking up to try to bring those people back, say we're still the McDonald's you know and love. And a lot of them have to do with chicken.
Well, at some point, they're just going to have Grimace throw out the first pitch at a Mets game, and everyone's going to go crazy, and we'll see same-store sales rise 10%. So if none of this chicken stuff works, they'll just toss them out at Citi Field. Okay, let's sprint to the finish with some final headlines and a crossover episode of Corporate America Meets Bravo.
Chapter 7: What are the implications of biometric verification versus bot detection in crypto?
Kohl's has fired its CEO Ashley Buchanan after they found he directed the department store to strike a quote highly unusual multi-million dollar business deal involving a woman he was having a romantic relationship with. A board investigation found two instances in which Buchanan violated the company's code of conduct, though they did not name the individual he had a relationship with.
The Wall Street Journal, citing internal sources, said the woman Buchanan was funneling business to was Chandra Holt, the former CEO of Bed Bath & Beyond, who met Buchanan while they were both working at Walmart.
As if Kohl's didn't have enough problems while it tries to turn around a struggling business with a revolving door of CEOs, Buchanan was on the job for just about 100 days, and now they must look for their fifth chief executive in the last three years.
Chapter 8: What are the 'Dogs of the Week' and why were Amazon and McDonald's selected?
And the worst part is that Kohl's shares kind of soared yesterday on this news. They were up as much as 8% at one point, which just shows how much that maybe he wasn't doing that great of a job.
So even though that the market said, okay, let's get a new CEO in here because Buchanan wasn't the guy, it does kind of, analysts were saying that this does show that it gives the impression that Kohl's is in this perpetual state of chaos because you have so many people coming through who are trying to lead the company. So-
It just raises a lot of questions about the due diligence of the process and why the stock jumped 8% after it just wasn't a good hire in the first place. So tough because you're right, they have been dealing with competition from online e-commerce, high inflation, this pullback in consumer spending, this economic uncertainty, and now uncertainty around the CEO position as well.
Microsoft is once again the biggest company in the world after an earnings beat, and they didn't get there by making things cheaper. Yesterday, the tech giant raised prices across its Xbox lineup from soup to nuts, jacking up the price of consoles, controllers, and some new games. The reason for the price hikes, according to Microsoft, is market conditions and rising development costs.
And while it did not explicitly mention tariffs, it did acknowledge that its reliance on overseas manufacturing has led to some uncertainty. It all adds up to an Xbox X series that now costs $599, while a base controller will set you back nearly $70. It ain't cheap being a gamer these days, Neil.
It's not, and everyone's looking forward to, not looking forward to, maybe bracing for the holiday season because, you know, the Xbox and controllers and gaming...
hardware is a very popular item to have we'll see how this competes with the price hikes against the new switch 2 that is coming out that is 450 nintendo opted to not raise the price there but you know i think this bodes a little ominously for how expensive it's going to be to buy gifts all the way in November.
I mean, even earlier this week, President Trump kind of acknowledged that toy shortages and price hikes were going to be possible. He said, well, maybe the children will have $2 instead of $30, and maybe the $2 will cost a couple of bucks more.
That's a comment that raised a little bit of eyebrows, but you're already seeing price hikes from Xbox, and it's probably not going to be the last toy or gaming company that's jacking up prices because of, quote unquote, market conditions, aka tariffs.
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