In a recent episode of the Joe Rogan podcast, Meta (META) CEO Mark Zuckerberg took a swipe at Apple (AAPL), criticizing their proprietary protocols that give an edge to their AirPods over competitors. He argued that Apple’s protective stance on these protocols, justified under the guise of privacy and security, limits competition in the market. Gene Munster, managing partner at Deepwater Asset Management and an Apple shareholder, responded to Zuckerberg’s comments during an appearance on CNBC’s ‘Squawk Box’.
Munster described the situation as indicative of ongoing tensions between the two tech giants, suggesting that Zuckerberg’s frustration primarily stems from Apple’s control over the App Store, which restricts Meta’s direct interaction with customers. He emphasized that while Apple has innovated in areas like the Apple Watch and AirPods, contributing significantly to their revenue, they have faced challenges with projects like the Vision Pro and their car initiatives.
On the topic of whether Apple’s practices amount to anti-competitive behavior warranting regulatory attention, Munster was skeptical. He noted that Apple’s arguments about maintaining a secure and clean app ecosystem have generally held up against regulatory scrutiny, predicting no substantial changes in the near future.
The discussion then shifted to broader market trends, particularly focusing on tech stocks. Munster highlighted the importance of the upcoming CPI (Consumer Price Index) numbers, explaining how they could influence interest rates and, consequently, investor behavior towards riskier assets like tech stocks. Higher interest rates could deter investment in stocks, especially if the CPI suggests continued inflation pressures. However, he also pointed out a counterbalance in the form of Taiwan Semiconductor Manufacturing Company (TSM) reporting, which could provide some reassurance to the AI sector given TSM’s role in producing advanced AI chips.
Regarding AI, Munster expressed confidence in its continued growth beyond mere hype. He noted that while daily active users of AI applications like ChatGPT are still a fraction (150 million) compared to giants like Google (2.5 billion), the underlying technology’s impact is expected to surpass current expectations. He anticipates that the AI sector will see significant development, possibly culminating in a bubble, but also sees potential for smaller, frontier tech companies to outperform the traditional tech leaders, known as the ‘Magnificent 7‘, in the coming year.
I think that this analysis reflects Munster’s view that while there are immediate market volatilities to navigate, the long-term trajectory for tech, particularly in AI, remains robust, with both established companies and newer entrants poised to benefit from ongoing technological advancements.
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