We begin with my thoughts on the WSJ’s and Bloomberg’s conflicting reports regarding Apple and Meta in discussions regarding AI integration. The discussion then turns to possible monetization paths for integrating third-party large language models with Apple Intelligence.

Hello everyone.

Before we jump into today's discussion, there is one quick follow-up to yesterday’s email involving Apple Retail.

When it comes to Apple’s retail store footprint strategy, growth is not so much centered on new country expansion but rather new city expansion. Said another way, Apple’s goal isn’t just to have Apple stores in more countries. If that was the singular goal, we would see more Apple stores being opened versus reality. Instead, Apple wants to establish brand embassies in the world’s leading cities.

Given economic trends, a city-focused retail store strategy does match an emerging markets focus. Many of the world’s greatest up and coming cities will be found in countries that fall under the emerging markets categorization. This doesn’t change anything about the stores themselves being Apple brand embassies and effective ways to improve the company's distribution and brand power. Instead, the takeaway is that Apple is being disciplined and deliberate in expanding its retail store footprint.

Apple Intelligence and Meta Integration Hoopla

In an article titled “Apple, Meta Have Discussed an AI Partnership,” here’s the WSJ:

“In its hustle to catch up on AI, Apple has been talking with a longtime rival: Meta.

Facebook’s parent has held discussions with Apple about integrating Meta Platforms’ generative AI model into Apple Intelligence, the recently announced AI system for iPhone and other devices, according to people familiar with the matter.

Meta and other companies developing generative AI are hoping to take advantage of Apple’s massive distribution through its iPhones—similar to what Apple offers with its App Store on the iPhone.

A latecomer to generative AI, Apple has developed its own smaller artificial-intelligence models but has announced it will turn to partners for more complex or specific tasks. When Apple Intelligence was unveiled earlier this month at the company’s Worldwide Developers Conference, OpenAI’s ChatGPT was announced as the company’s first partner.”

Given prior WSJ articles that were published about Apple, the publication’s credibility has taken a significant hit in recent years. All articles need to be approached with a heavy dose of skepticism given the high probability of bad actors (entities tied to Apple competitors) pushing certain stories to gullible WSJ writers and editors.

In this particular case, it is not difficult to see why Meta

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