Apple’s iPhone 16 launch on Monday generated plenty of attention, but it didn’t quite blunt the edge of the $14.4 billion European Commission (EC) tax hammer that finally fell against the company and can no longer be appealed.

This concerns an EC decision in 2016 when the courts found Ireland had unlawfully provided Apple with state aid in the form of tax breaks. Apple has fought the decision — CEO Tim Cook once called it “total political crap” — but finally lost that battle Sept. 10. 

Apple’s Irish twist

The case relates to the way Apple was taxed in Ireland between 1991 to 2014.  Basically, Ireland enabled Apple to sell products across Europe, record those profits in Ireland, and then send those profits to head offices that existed only on paper, leaving almost no taxable profit in Ireland.

In a statement, the Court of Justice said: “Ireland granted Apple unlawful aid, which Ireland is required to recover.” During that time, the court decided Apple benefited from state aid as a result of those tax arrangements to the tune of $14 billion, which the company must now pay back. 

An Apple representative offered some pushback: “This case has never been about how much tax we pay, but which government we are required to pay it to. We always pay all the taxes we owe wherever we operate and there has never been a special deal.”

“As a result of the allocation method endorsed in the tax rulings, Apple only paid an effective corporate tax rate that declined from 1% in 2003 to 0.005% in 2014 on the profits of Apple Sales International,” the European Commission explained when the case first hit court eight years ago.

It’s important to note that while Apple and Ireland agreed to the arrangement, Europe argued the deal did not match economic reality and constituted unlawful state aid. 

A complex web of tax arrangements

One way to understand the complicated arrangement is like this:

• Apple had two entities incorporated but not tax resident in Ireland — Apple Sales International and Apple Operations Europe.
• These two companies held the rights to use Apple’s intellectual property to sell and manufacture Apple products outside the US under a “cost-sharing” agreement with Apple Inc.
• Ireland agreed that the two firms were required to make annual payments to Apple towards R&D, which meant (figuratively) that boat loads of cash went to the head offices of the two companies — offices that existed only on paper. 
• To put some perspective around this, Apple Sales International recorded profits of $22 billion in 2011, but under the terms of the tax arrangements it had been given in Ireland only €50 million was subject to tax. 

That quantity of cash constituted around half of Apple’s R&D spending during that time and meant the vast majority of Apple’s European profits were effectively untaxed, or — as Apple prefers to put it — were taxed in the wrong jurisdiction. 

$3,000 each

Apple isn’t happy about the outcome of the case. “We are disappointed with today’s decision,” the company said. “There has never been a special deal.”

Apple was required to hand the cash over to an independent third-party-administered escrow account in 2016. That account now holds around €14 billion. With a population of 5.2 million, the cash hoard is the equivalent of €2,692 (about $3,000) for every man, woman, and child in Ireland. 

According to local reports, Ireland’s Tánaiste Micheál Martin says the money cannot be used for day-to-day spending and that his government will now consider “how to use these funds in the best interests of the Irish people.”

Apple isn’t the only big tech firm in the crosshairs. At a cost of $2.7 billion, Google also lost its final appeal against a European Union penalty for giving its own shopping recommendations an illegal advantage over rivals in search results.

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Not surprisingly, Apple Intelligence was everywhere during Apple’s big iPhone event on Monday. There were, of course, new phones (better, faster, AI-ready and arriving Sept. 20). But what was more interesting were the multitude of different ways the company has found where it can make a difference with various breeds of artificial intelligence (AI).

The variety of implementations — from sleep apnea detection in the Apple Watch to the use of AirPods Pro as a full-fledged hearing aid to a multitude of new camera features (including the new Cinematic Slow Motion tool) — all served to underline the message Apple has been giving: there’s more to AI than GenAI, and AI really doesn’t matter at all unless it’s making a difference in people’s lives.

Sweet 16 (and 16 Pro)

As always in early September, the business of the day was new iPhones, the 16 and 16 Pro, about which there were few major surprises. For those more concerned about form over function, this year’s new Pro color is a tawny, brassy, bronzy “Desert Titanium.” The iPhone 16 comes in five colors (if you count black and white as colors), including “Ultramarine”; the Pro and Pro Max come in four: white, black, natural titanium and that aforementioned Desert Titanium.

For those more focused on function and technology, the line-up will look familiar, though the Pro Max does get a slightly larger 6.9-in. display. Storage capacities range from 128GB to 1Tb, depending on model and size. Camera upgrades abound (as does a new Camera Control button on all models). And there are, of course, new processors — the A18 and A18 Pro. In addition to the more efficient and powerful chips, Apple also promises better battery life.

The phones will be available for pre-order on Friday, and will arrive on Sept. 20.

Unleash the upgrade deals?

With that date in mind, an estimated 300 million iPhone users might well be in the frame for a smartphone upgrade this year. And it looks as if the wireless carriers in Apple’s biggest US market are ready to help.

Apple claims some carriers will offer up to $1,000 off on an upgrade, and while we’ve run into some turbulence between carrier launch promises and the reality in the past, those kinds of deals may spur strong upgrades.

Those rebates should also put a little spark into second user sales, which could be good for any enterprise users out there hoping to add Apple Intelligence to their existing fleet. I suspect (but don’t know) one second line beneficiary from all this will be that upgraders of more modest means could see better-than-anticipated second user prices for older iPhone 13s and 14s as upgraders embrace Apple Intelligence.

Speaking of Apple Intelligence…

…AI don’t mean a thing if it ain’t got that swing 

No one is likely to buy anything (even a new iPhone) just because it supports some form of AI. In some cases, buyers might even actively avoid such a purchase. But they will acquire AI devices that actually help them with their lives. (An Apple Watch that translates between languages, for instance, is a good example.)

Looking to show the many benefits of Apple Intelligence while also unveiling its new iPhone line-up was precisely the dance Apple made during the Glowtime product introductions. Put simply: the benefits needed to be explained.

And while Apple Intelligence was certainly a part of the discussion, the company resolutely repeated an additional message — “This is just the beginning.” Anyone who has ever bet against Apple knows what that means: a line in the sand has been drawn, and the company has no intention of staying behind it. 

The fact that the company also mentioned that Apple Intelligence features are to be provided “free” with future software updates also hints that some day not every feature will be gratis.

Core message: Watch this space.

Apple Silicon: A platform development opportunity

Apple Silicon remains strategically critical to Apple’s future. Three bits of news particularly stood out: the inclusion of a 4-core neural engine on Apple Watch, and the new 3-nanometer A18 and 18 Pro chips inside iPhones. 

Other than the expected big benefits in performance and battery life across all three products as a result of the new chips, what matters most is that all three have now been transformed into AI platforms.

The Apple Watch could turn out to be even more interesting, as the challenge for developer and enterprise users (and Apple) will be to find what kinds of useful AI experiences can now be built for it. The introduction of the neural engines means AI will be extended to the Watch — even as Apple explores the extent to which the world’s most powerful smartphone processor can support cutting-edge use cases for mobile AI. 

(For most knowledge workers, the most interesting use case for Apple Intelligence will be sending more professional emails when responding later than you should, and summarizing lengthy messages so understanding them doesn’t make your brain hurt.)

Health: The new frontier?

Health was certainly a major topic during the announcement. Apple CEO Tim Cook has always resolutely spoken up for the benefits his company can bring to health, and that stance did not change this year. The link between Apple, its deep investments in health-related research, and the application of machine intelligence and other forms of AI was made crystal clear. 

New health-related features in both the Apple Watch and across the AirPods range will make a big difference to many people, and Apple is determined to use these platforms to augment health outcomes in quite significant ways. The big challenge to office managers and human resource types might be the need to learn that just because someone is wearing AirPods at work doesn’t mean they are shirking – they might just need help hearing. 

Efficiency for all (but no new iPads or Macs, yet)

If there’s one more thing this year, it’s this: Apple made no explicit mention about iPads or Macs during its iPhone launch (no surprise there). But if it had done so, it might well have pointed to the huge performance and battery life improvements in the new A18/A18 Pro chips. No doubt, company execs will soon be able to point to similar boosts to computational efficiency and battery life/energy consumption in Apple’s other products, too.

Of course, improvements like those are nice if you upgrade your own Mac. But for offices with a few hundred machines in use, a 20% power reduction means a much lower energy bill. Plus, you don’t need to use Crowdstrike and you get to use Apple Intelligence across tablet, smartphone, and PC.

Apple’s AI platform is becoming a reality, and it’s being sold for the real-world benefits it brings, not thrown out as a random buzzword. Then again, extolling the benefits of its platforms has always been how Apple shows its Apple intelligence.

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When Microsoft Office 2024 launches in October, ActiveX will be turned off by default, according to Bleeping Computer. The change affects desktop versions of Word, Excel, Powerpoint, and Visio, and will apply to Microsoft 365 beginning in April 2025.

The reason behind the move: hackers in recent years have used various vulnerabilities in ActiveX to install malicious code on computers.

Launched in 1996, ActiveX is a framework used to embed interactive elements into Office documents.

Microsoft has recently taken other steps to improve security in Office. For example, macros and extensions have been blocked, and support for VBScript will be phased out this fall.

Qualcomm is reportedly exploring the possibility of acquiring parts of Intel’s chip design business to enhance its product portfolio. This potential move comes as Intel faces financial difficulties, prompting the company to consider divesting certain business units and assets, according to a Reuters report.

Qualcomm has been evaluating various parts of Intel’s design operations, with a particular interest in Intel’s client PC design business. However, other segments, such as Intel’s server division, are seen as less relevant to Qualcomm’s strategic goals, the report said citing sources.

While Qualcomm has not yet approached Intel regarding a deal, the discussions have been ongoing for months, and the plans could still change, insiders noted.

Queries to Qualcomm and Intel remained unanswered.

Acquiring Intel’s chip design business could offer Qualcomm a strategic opportunity to diversify its product offerings and expand beyond its mobile chip dominance. With AI becoming increasingly important, Intel’s expertise in PC chips could complement Qualcomm’s push into AI-driven computing.

“Qualcomm’s increasing interest in the PC chip business is no surprise,” said Sanchit Vir Gogia, chief analyst and CEO at Greyhound Research. “This addition will strengthen the Qualcomm-Microsoft relationship and build on the Surface Laptop and Pro tablet series.”

He further added, “The convergence of mobile and personal computing devices offers Qualcomm a significant opportunity to create optimized experiences across device types.”

It will be great news for Qualcomm who can now enter the PC segment, especially in the AI world, said Titus M, practice director at Everest Group. “However, the exact forms and shape remain unknown and are now down to pure speculations.”

This move comes as Qualcomm aims to strengthen its Snapdragon X series, which as Gogia notes would “sit very well” with Intel’s design capabilities, enhancing Qualcomm’s position in the AI PC space. Gogia also highlights Qualcomm’s potential to disrupt the market with aggressive pricing, posing a significant challenge to competitors like AMD and Apple.

Intel’s financial struggles and ongoing restructuring

Intel, facing mounting financial challenges, posted disappointing results in its second quarter, leading to a 15% staff reduction and a suspension of dividend payments. The company’s PC client business, a cornerstone of its operations, saw an 8% drop in revenue last year as the overall PC market weakened. Executives are now banking on the introduction of AI features in PCs to spur consumer upgrades.

Titus weighed in on Intel’s position, noting that the PC segment remains vital for the company. “Even with the increased internal pressure, it does not make sense for Intel to lose its most dominant sector in the form of PCs,” Titus explained. He emphasized the importance of innovation in the semiconductor industry, especially as AI markets are poised for significant growth.

“I highly doubt Intel will be ready to sell its AI-focused designs right when the market is about to boom,” Titus added.

This week, Intel launched its Lunar Lake chip, designed to power AI applications, as part of its push to regain a competitive edge. However, Intel outsourced significant portions of the chip’s fabrication to TSMC, a shift from its historical reliance on in-house production.

Qualcomm’s expansion strategy

With the potential acquisition, Qualcomm could significantly expand its footprint in the PC chip market, which is becoming increasingly intertwined with AI-driven computing. Gogia adds that such a deal would “allow Qualcomm to carve out a niche for supporting devices that allow AI tasks to be run without an internet connection.” This could further strengthen Qualcomm’s relationship with Microsoft, especially as both companies continue to explore opportunities in AI PCs.

Qualcomm may also be interested in Intel’s server and HPC segments, opined Neil Shah, VP for Research at Counterpoint Research. “This is a key market where Qualcomm is not yet playing, but where Intel is struggling against NVIDIA and AMD,” he said adding that Intel’s Altera (FPGA) and Movidius (Visual Processing Units) would help fill gaps in Qualcomm’s portfolio.

However, the speculation surrounding this potential acquisition highlights that Intel may still be considering other strategies to cut costs while maintaining its market presence.

“Intel will have to decide which business is long-term lucrative and which is not, especially in a highly competitive environment with both AMD and Arm-based servers gaining ground,” Shah said.

Broader implications

The acquisition, if realized, could also alter competitive dynamics in the semiconductor market. Faisal Kawoosa, Founder and Lead Analyst at Techarc, noted that Qualcomm is well-positioned to capitalize on growth opportunities in the PC sector.

“With Intel’s design capabilities under the belt, Qualcomm can be aggressive about this market and become a strategic partner to Microsoft,” Kawoosa said. He also pointed out that Intel’s core competencies in high-performance processors may be better suited for the server market, where the company could refocus its efforts against the rising dominance of Nvidia in AI and server segments.

Kawoosa added that the acquisition would serve Qualcomm well in a market where “laptops still have huge potential to grow even in markets like India, where penetration is very low.” He said this move could help Qualcomm become a stronger player in the PC and AI sectors.

An AI usage treaty, negotiated by representatives of 57 countries, was unveiled Thursday, but its language is so overarching that it’s unclear if enterprise CIOs will need to do anything differently to comply.

This mostly European effort adds to a lengthy list of AI global compliance efforts on top of many new legal attempts to govern AI in the United States. The initial signatories were Andorra, Georgia, Iceland, Norway, the Republic of Moldova, San Marino, and the United Kingdom, as well as Israel, the United States of America, and the European Union.

In its announcement, the Council of Europe said, “there are serious risks and perils arising from certain activities within the lifecycle of artificial intelligence such as discrimination in a variety of contexts, gender inequality, the undermining of democratic processes, impairing human dignity or individual autonomy, or the misuses of artificial intelligence systems by some States for repressive purposes, in violation of international human rights law.”

What the treaty says

The treaty, dubbed Framework Convention on artificial intelligence and human rights, democracy, and the rule of law, did emphasize that companies must make it clear to users whether or not they are communicating with a human or an AI.

Companies under the treaty must give “notice that one is interacting with an artificial intelligence system and not with a human being” as well as “carry out risk and impact assessments in respect of actual and potential impacts on human rights, democracy and the rule of law.”

Entities must also document everything they can about AI usage and be ready to make it available to anyone who asks about it. The agreement says that entities must “document the relevant information regarding AI systems and their usage and to make it available to affected persons. The information must be sufficient to enable people concerned to challenge the decision(s) made through the use of the system or based substantially on it, and to challenge the use of the system itself” and to be able to “lodge a complaint to competent authorities.”

Double standard

One observer in the treaty negotiation process, Francesca Fanucci, a legal specialist at ECNL (European Center for Not-for-Profit Law Stichting), described the effort as having been “watered down”, mostly in dealing with private companies and national security. 

“The formulation of principles and obligations in this convention is so overbroad and fraught with caveats that it raises serious questions about their legal certainty and effective enforceability,” she told Reuters.

The final document does explicitly exclude national securities matters: “Matters relating to national defence do not fall within the scope of this Convention.”

In an interview with Computerworld, Fanucci said that the final version of the treaty treats businesses very differently than governments.

The treaty “establishes obligations for State Parties, not for private actors directly. This treaty imposes on the State Parties to apply its rules to the public sector, but to choose if and how to apply them in their national legislation to the private sector. This is a compromise reached with the countries who specifically asked to have the private sector excluded, among these were the US, Canada, Israel and the UK,” Fanucci said. “They are practically allowed to place a reservation to the treaty.”

“This double standard is disappointing,” she added.

Lack of specifics

Tim Peters, an officer of compliance firm Enghouse Systems in Canada, was one of many who applauded the idea and intent of the treaty while questioning its specifics.

“The Council of Europe’s AI treaty is a well-intentioned but fundamentally flawed attempt to regulate a rapidly evolving space with yesterday’s tools. Although the treaty touts itself as technology-neutral, this neutrality may be its Achilles’ heel,” Peters said. “AI is not a one-size-fits-all solution, and attempting to apply blanket rules that govern everything from customer service bots to autonomous weapons could stifle innovation and push Europe into a regulatory straitjacket.”

Peters added that this could ultimately undermine enterprise AI efforts. 

“Enterprise IT executives should be concerned about the unintended consequences: stifling their ability to adapt, slowing down AI development, and driving talent and investment to more AI-friendly regions,” Peters said. “Ultimately, this treaty could create a competitive divide between companies playing it safe in Europe and those pushing boundaries elsewhere. Enterprises that want to thrive need to think critically about the long-term impact of this treaty, not just on AI ethics, but on their ability to innovate.”

Another industry executive, Trustible CTO Andrew Gamino-Cheong, also questioned the agreement’s lack of specifics.

“The actual contents of the treaty aren’t particularly strong and are mostly high level statements of principles. But I think it’s mostly an effort for countries to unify in asserting their rights as sovereign entities over the digital world. For some context on what I mean, I see what’s happening with Elon Musk and Brazil as a good example of the challenges governments face with tech,” Gamino-Cheong said. “It is technologically difficult to block Starlink in Brazil, which can in turn allow access to X, which is able to set its own content rules and dodge what Brazil wants them to do. Similarly, even though Clearview AI doesn’t legally operate in the EU, their having EU citizens’ data is enough for GDPR lawsuits against them there.”

Ernst & Young managing director Brian Levine addressed questions about the enforceability of this treaty, especially with companies in the United States, even though the US was one of the signatories. It is not uncommon for American companies to ignore European fines and penalties. 

“One step at a time. You can’t enforce shared rules and norms until you first reach agreement on what the rules and norms are,” Levine said. “We are rapidly exiting the ‘Wild West’ phase of AI. Get ready for the shift from too little regulation and guidance to too much.”

The treaty will enter into force “on the first day of the month following the expiration of a period of three months after the date on which five signatories, including at least three Council of Europe member states, have ratified it,” the announcement said. 

Generative AI (genAI) features added to an existing Apple Watch health app may light the path toward personalized and data-led healthcare for patients with Parkinson’s disease. The StrivePD app is made by Rune Labs, a California-based entity focused on delivering next-generation care for people with neurological disorders.

StrivePD has been enhanced with new genAI-created clinical reporting tools that provide in-depth data on a patient and the progression of their disease, and it delivers personalized educational content to patients, caregivers, and clinicians to improve outcomes.

What is StrivePD and how does it help?

The reports, allegedly HIPAA-compliant and shared with patients via email, are structured so patients get good insight into where they are with the disease, including summaries of their medication compliance, exercise, and symptom fluctuations. The app also delivers coaching in the form of exercise suggestions and tips around sleep patterns, and draws on data gathered by the Apple Watch (along with information shared by the patient).

In theory, the combined solution should help patients while also equipping medical professionals with deeper information they can use to guide treatment. 

It could even enable Parkinson’s patients to access care in the first place “The unfortunate reality is there is a structural shortage of specialists who can treat Parkinson’s, and the problem is getting worse,” said Rune Labs CEO Brian Pepin. “Most Parkinson’s patients struggle to get adequate access to care.”

Changing lives, one focused LLM at a time

It should be noted that the Rune Labs solution was in 2022 given the go ahead by the US Food and Drug Administration (FDA) to collect patient symptom data through measurements made by Apple Watch.

This makes it a recognized solution that could in the future become a poster child for the potential of genAI to deliver life-changing health benefits when deployed in such focused domains. (Turns out there’s a lot more to genAI than automating job applications and creating amusing images — data analysis at this level could yield profound benefits in terms of healthcare results and patient autonomy.)

Apple should be looking at this

I’d be very, very surprised if Apple’s health teams were not themselves already exploring ways in which to combine the data gathered by their own sensors and services with focused large language models (LLMs) to provide similar benefits. It’s a natural progression from the accurate exercise tracking tools the company has already deployed, including but not limited to swimming and wheelchair activity sensors.

The existence of that kind of highly personalized data and the also existing connection between Apple’s devices and patient medical data opens up interesting possibilities for LLM-augmented health and services that extend beyond Apple Fitness.

In that sense, the Rune Labs announcement could prophesize future health-related services that combine genAI with the vast quantity of personal data Apple’s ecosystem already gathers.

What’s happening in Apple R&D?

Apple CEO Tim Cook has frequently claimed that Apple will in the end be remembered for the work it is doing in health. Given the entire company is now shoulders to the wheel in the push to put AI in everything, it is unlikely its health teams aren’t at least trying to book some internal R&D time to explore how it can be applied in that sector.

If the Rune Labs solution actually delivers on its promises, Apple’s health teams will at least have an argument to justify that investment. But Apple aside, tools like these that empower better patient care and encourage personal autonomy are among the bright spots for a technology so many people fear may be a dystopian fin de siècle. 

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