To The Moon

Elon Musk and $Apple(AAPL)$ Apple both have a lot to lose if $Twitter(TWTR)$ Twitter gets removed from the App Store, but there are paths to avoiding that. Also: Apple’s Arizona chip plans become clearer, another pair of top executives depart, and the company’s xrOS-based headset approaches.

Elon Musk and Apple Inc. each have a lot to lose if Twitter gets booted from the App Store. But there’s a solution for both parties to avoid a fight, while giving Musk exactly what he wants.

First off, it’s clear that Twitter would struggle to survive an all-out war with Apple. The App Store provides access to more than 1.5 billion devices, and it’s a top way for people to get the Twitter app. Musk has said that he could build his own phone and operating system—letting him sidestep Apple and Google—but the complexity of that endeavor makes it highly unlikely.

Apple, too, would have a catastrophe on its hands. If the company blocks Twitter, its top executives could end up testifying on Capitol Hill for weeks. The Apple brand would be tarnished and seen as politically biased. And, of course, the platform would no longer have Twitter—an app that helps keep consumers glued to Apple devices.

It’s no accident that Musk called his skirmish with Apple a “battle for the future of civilization” and accused the company of censorship—despite his bigger gripe with Apple being about its fees. Musk is signaling to lawmakers and the court of public opinion that if Apple removes Twitter or stifles it in any way, the tech giant is doing so to limit free speech.

The reality is that Apple will give Twitter an unprecedented amount of leeway and only pull the app if it violates the App Store’s golden rule: You Must Give Apple 30%.

That commission is a serious problem for Musk. He recently spent $44 billion on Twitter, which he has acknowledged was too much. Musk has made it clear he hopes to fix up Twitter and resell it or take it public within three years. He’s also promised to make Twitter more subscription-centric and add new features and upgrades to improve the bottom line.

But turning Twitter into a full-on subscription business, with the goal of making back his money in three years, is probably next to impossible—especially when you factor in that Apple is going to take 30% of that money off the top before taxes. Making matters worse, Apple has cut back on its advertising spending on Twitter. (Musk said over the weekend that the ad spending has been restored.)

So it’s perhaps no surprise that Musk, a billionaire businessman, went off on Apple this past week. He understands that the iPhone maker is an impediment to his financial goals. And he’s using the idea of free speech to protect himself.

That’s why Tim Cook, Apple’s chief executive officer, needed to step in and calm tensions. The two men met at Apple’s headquarters last week, and Musk said he was told that Apple never contemplated removing the Twitter app—walking back an idea that, to be clear, was suggested by Musk himself.

But the standoff may not be over. If Musk tries to circumvent Apple’s App Store fees, Cook will indeed be in the position of having to decide whether to pull Twitter.

On the surface that sounds like a difficult decision, but there really isn’t a choice: If Twitter puts its own payment system within the app and bypasses Apple’s fees, Cook will need to follow his own rules and remove the app (probably after offering Musk a few days to change his mind).

There are probably plenty of people who might argue that society is better off if Musk’s Twitter is booted from the store given its more hands-off approach to content moderation and suspending accounts. But it’s clear that Cook doesn’t want it to come to this.

It’s not about the money that Apple would lose from Twitter fees, but the risk of a crisis within the larger ecosystem. If Musk publicly flouts Apple’s rules, that will set off a domino effect of other apps looking to do the same. The entire App Store business model could come crashing down.

So Cook needed to calm Musk. The question now is how long the truce may last. No matter what was discussed in their meeting at the Apple Park headquarters in Cupertino, California, it’s unlikely Musk will just quietly accept the 30% fee (a commission the Tesla Inc. magnate has criticized for years).

The good news is there’s a perfectly legal solution (if you consider Apple’s App Store guidelines the law) that will let both companies avoid a crisis—while still allowing Musk to get his full $8 for Twitter Blue subscriptions.

Twitter can build a website to take payments online for the Blue service and other subscriptions and then urge users to sign up for the social network on the web. When users then log in to Twitter on their iPhone or iPad, that subscription will be unlocked without the payment having to be processed through Apple.

That would save Musk the 30%, minus any credit card processing fees. This is legal because of section 3.1.3(b) of the App Store guidelines, known as the Multiplatform Services rule, which says that subscriptions can carry over from other platforms—including the web—so long as they are also available through in-app purchase.

Musk can charge his $8 on the web and then add 30% to that price (making it $10 to $11) for the version through the Twitter app on the iPhone. Then he gets his $8 either way, but it encourages users to use the web method.

The caveat is Musk can’t promote the web payment plan anywhere within the app, so the change may require a marketing push.

By carefully leveraging the App Store rules, Musk could essentially circumvent Apple’s 30% cut and keep his app on the App Store, avoiding a dilemma for both himself and Apple. And I think Cook and Apple would consider that a win too.

Apple’s plan to produce chips in Arizona gets clearer. I wrote weeks ago that Apple would be sourcing chips from a plant in Arizona, and now we have a bit more detail. The company will indeed be producing chips with Taiwan Semiconductor Manufacturing Co. at its partner’s facility set to open in 2024.

While the factory was initially only supposed to produce 5-nanometer processors at the outset, it’s now poised to have 4-nanometer capabilities when it goes online. (Generally speaking, the smaller the number of nanometers, the more advanced the chip.) That means the factory will be a whole lot more useful to Apple.

I will bet $Apple(AAPL)$ up 🚀🚀🚀

@MillionaireTiger 

@CaptainTiger 

@TigerStars