Spyglass - The Art of the Old Deal

There's a certain type of art, it seems, when it comes to maneuvering as a major CEO during a Donald Trump administration. An art of the deal, you might say. But really, it's more like the art of the old deal. That is, figuring out a way to repackage a previously announced deal as a new deal. Or even better if the deal was already in place but never announced. Because the art is actually the announcement, not the deal.

I found my mind wandering in this direction when reading about the latest news out of Apple. The company announced it planned to spend $500 billion and hired 20,000 people in the US over the next four years. Great news, right? On the surface, sure! Of course, there's undoubtedly more going on here just underneath...

Now look, I'm not saying this particular deal isn't legitimate. All I'm saying is that it's a group of things clearly packaged together to be tied up in one big bow for the announcement. But the reality here is undoubtedly going to be far messier and more complicated. Further, I'm going to go ahead and guess that at least parts of this package are not entirely new, despite being framed that way. Call it a historical hunch. As Mark Gurman rightfully goes into, remarking on the news for Bloomberg, there's some history here – especially with Apple and Trump:

During Trump’s first administration, Cook was able to successfully sway him into sparing the iPhone from tariffs by arguing that the tax would serve to benefit competitors like South Korea-based Samsung Electronics Co. Apple also made multiple announcements during Trump’s first term about US investments and credited Trump with Mac Pro manufacturing in Texas despite its manufacturing computers there since 2013.

That deal, which was essentially the repackaging of an old deal, of course, helped Apple avoid tariffs and the goal is undoubtedly the same here. Oddly, Apple's PR doesn't mention tariffs even once. Funny that. Good thing we have a President to cut through the bullshit: "They don't want to be in the tariffs," said the President talking ahead of the announcement last week. Doesn't get more direct than that.

In that same meeting (with a group of US governors), Trump trumpeted the fact that Apple would be moving manufacturing from Mexico to the US. Tim Cook "stopped two plants in Mexico", President Trump told a group. Again, no one seemed to know any sort of details there – presumably he meant manufacturing plants and not, say, agave plants, but no one knows – but it really doesn't matter all that much because the reality of the situation is that Mexico is not a major manufacturer of Apple products nor was it going to be.

And today we got more vague but grandiose pronouncements about what Apple is willing to do to avoid those tariffs. If committing $500B over 4 years sounds familiar, it's because it is familiar. It's the exact same amount of money over the exact same time frame (the length of Trump's term, obviously) that was promised by the group that announced the 'Stargate Project' a few weeks ago.

What a strange coincidence! Such coincidences seem to keep happening when it comes to Big Tech and Trump. How did all of those CEOs arrive at the same exact $1M number to donate to Trump's inauguration? No one knows.

Anyway, that particular bending of the knee only bought about a month of goodwill, it seems. Want something else from Team Trump? The going rate is now $500B over four years. Get out that checkbook, Zuck.

Speaking of 'Stargate', one of the more curious aspects of that announcements was that it was, at least in part, old news. The project actually started as a joint venture between OpenAI and Microsoft before the latter figured out how to offload the cost to others – largely SoftBank and Oracle. And the Oracle aspect, the data center in Abilene, Texas, was already being built well before the announcement. At first, humorously, for Elon Musk and xAI. But then when he bailed on the project, OpenAI took over the capacity. Again, well ahead of the announcement at the White House. And even SoftBank's big money announcement as a part of that deal wasn't exactly new. Masa Son had been with the President well before he was even sworn in to announce his big spending ambitions.

But why announce something once when you can announce it twice and get twice the press coverage?

Masa Son is an old master at this, of course. Remember the announcement he made during Trump's first term? $50B and 50,000 jobs – itself the repackaging of an old announcement! And did this ever actually happen? Nobody knows.

And wait a minute, you know who else has run this exact playbook before? As Meaghan Tobin and Jason Karaian recall for The New York Times:

Four years ago, a few months after Mr. Biden’s inauguration, Apple announced an “acceleration” of its U.S. investments, pledging to spend $430 billion and add 20,000 jobs over five years. In January 2018, during Mr. Trump’s first term, the company said that its “direct contribution to the U.S. economy” would be $350 billion over five years and that it planned to create 20,000 jobs over that period.

It's almost as if Apple would be investing the US economy and adding jobs with or without a press release and big announcement about it. It's almost as if those are political maneuvers. Per above, the $500B over four years seem particularly tailored to Trump,¹ but actually, Apple plays the game no matter who is on the field.

And did Apple actually do what it said in those past announcements? "It hasn’t fulfilled all its previous promises," according to Tobin and Karaian.

Because it doesn't matter. Again, it's really the art of the announcement, not the deal. Deals can and often do go sideways. But an announcement, those can live forever wrapped in the comfort of hopes and dreams.

Anyway, my point is that, big numbers aside, I wouldn't read too much into this announcement other than it's Tim Apple trying to use an old trick to get something quite tangible with Trump (perhaps a few things). Undoubtedly some of these promises are legitimate, but it's also undoubtedly not some sort of massive policy shift. Apple will continue making most of their iPhones in China. And they're not going to match their Big Tech peers in AI build-out spend any time soon. But anyone can announce anything. Even multiple times, as it turns out.

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¹ The fact that both of Apple's previous announcements were over a more generic and standard time horizon of five years and this one changes it to four (again, exactly in line with the 'Stargate' deal) is quite an interesting tell...