Venture Capitalist at Theory

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2 minute read / Jun 11, 2024 /

Apple's AI Challenger Sale

What stood out to me in yesterday’s Apple announcement wasn’t the headline, but the subtitle.


“Setting a new standard in privacy.”

For privacy to become one of the leading selling points of software, competitive dynamics & user preferences have evolved.

The mantra repeated over the last 20 years on the internet has been privacy is dead. Users simply don’t care. People are willing to trade their privacy for free & targeted experiences.

Since 2020, Apple has marketed their products as the private alternative poking fun at how public we all are about the minutia of our lives.

Apple is competing using the challenger sale : Apple is telling the market, to use AI, you should want private AI, you should want to control your own data because it’s valuable1. Apple’s massive distribution will affect consumer & enterprise preferences.

It’s already happening. Enterprises push for their data to be under their control in virtual private clouds, in open data formats like Iceberg, to run AI models in their own environments - the cloud-prem architecture. These models are their intellectual property & a key competitive advantage.

We’ve all learned Google’s core search business - arguably the best business model on the internet - is the commercialization of a machine learning algorithm from user & enterprise data. Fool me once…

The broader market has realized how valuable data can be - both users who provide it & businesses who leverage it.

These changing preferences will create demand for new architectures : software products that run in customer environments where the data remains in control of the user & buyer. This architectural shift creates a massive new opportunity for software startups to challenge the multi-tenant, centralized data incumbents with their own privacy-focused challenger sale.

1Many will debate whether the architecture is truly private. Is Apple using secure enclaves & SGXs, OpenAI promising not to log queries from Apple users, & users opting-in to sending their data to OpenAI private enough? Will Google rearchitect Gemini to do the same thing to power Apple products? T

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