Why Trump’s tariffs are not the biggest problem facing Apple

While Apple’s latest innovations have failed to catch on and others, such as building a car, haven't arrived at all, there is an even bigger challenge looming at its upcoming worldwide developers conference. It is one which requires a whole new approach, Andrew Griffin reports.

Last summer, Apple faced one of its biggest challenges ever: to show that it could keep up with the rest of the technology industry as it hurtled towards the peak of artificial intelligence hype. When it held the 2024 edition of its Worldwide Developers Conference – the annual event where it shows off its software updates – investors, analysts and others were asking searching questions about whether the company had lost its way, and fallen behind.

This year, Apple faces a challenge that is ostensibly more straightforward, but might be even more challenging. This time around, it has to keep up with itself.

The company will be hosting this year's WWDC in an even more hostile environment than last year, which was already fairly tough. Its response to that challenge could decide the future direction of the company for decades to come.

On the face of it, Apple is far from struggling. It continues to make so much money that the most efficient thing to do with it is buy back its shares. Its hardware, especially its Macs, continue to push the edges of what is possible both in terms of technology and sales, receiving rave reviews from critics and users. People want its products, and when they get them they want its services – only this week it announced that the App Store was responsible for $1.3 trillion in billings and sales.

But threats and questions are lurking, perhaps more than they have since Tim Cook took over the company. Regulators and developers are asking more questions about how much of those App Store billings Apple should get to keep: at the moment, it takes 30 per cent of every digital purchase made on the iPhone, a huge business that many have suggested is unfair.

Last year's WWDC event allowed it to show off its AI work under the banner of Apple Intelligence. It was initially impressive, but many of the most exciting features, such as a completely overhauled and much more useful Siri, have been delayed with no specific endpoint. The company's most recent new product category, its Vision Pro headset, has failed to catch on with the public; other rumoured projects, such as the expensive work looking at building a car, haven't arrived at all.

Even those habitually positive Apple commentators have taken to asking searching questions about the future of the company, and some have begun to ask whether Tim Cook's control of the company – which took it to be the most valuable firm in the world, made the iPhone the most successful consumer product ever, and established a global machinery to produce them – might be at an end, and whether someone fresh should take over.

Amid all that excitement, Apple's greatest challenge is not to show off something new. (Though it is planning to, with rumours suggesting a total visual overhaul of its operating systems, though little by way of new AI features.) Instead, it is to do something perhaps more challenging: to bring the existing parts of the company and its community together.

Apple has always had an unusual relationship with its customers. There are few companies that could hold product reveal events that are on the scale of global Hollywood productions, and which until relatively recently included customers clapping and crying as they were welcomed into their stores on launch day. In many ways, it is treated more like a sports team or a celebrity artist.

But in recent times that link has appeared a little severed. John Gruber, who runs the blog Daring Fireball and is among those positive critics of the company, wrote in March that there was "something rotten in Cupertino", which Apple calls home. His argument was that Apple had fundamentally severed a relationship of trust with the press and the public, when it showed off those AI features with a suggestion they would arrive soon but which time had shown were not actually anywhere near ready.

Similarly, Apple's intense approach to its cut from developers appears to have led to frustration on both sides, with Apple publicly fighting with Fortnite developer Epic over how much money it should take from purchases. Those public fallouts have led to attention from regulators and courts, who may force Apple to relent on some of its more aggressive policies, which might mean both losing money and not even winning back any goodwill.

Even its products could do with a little more consolidation, a little less innovation. Apple does have big changes coming: a new, transparent look across all of its software, among others. But little bugs and reliability issues have spread across many of those same operating systems. It may benefit from taking a year to tighten and tweak, as it did in 2009, when it launched MacOS Snow Leopard and promoted it as having “zero new features”.

At the same time, the company is facing difficulties that are not entirely its own fault. Initially, Tim Cook – who, whatever other reputation he might have accrued, has been a master of the operations side of the business – appeared to have dealt with Donald Trump's tariffs impeccably, getting a good deal for the company despite its reliance on Chinese manufacturing. Then, Mr Trump threatened vast levies on the companies, which could lead to substantial price increases for the new iPhone that will arrive in September.

Apple has faced these kinds of questions before. iPhone sales began to slow in 2016; it hit back with the innovative iPhone X. In the latter half of the 2010s, questions started to be asked about whether Apple really supported the Mac line-up, which was itself being hit by slowing sales and problems such as keyboards that regularly broke; its response was to listen to customers and then launch a whole new kind of in-house chip for the computers, which has brought back its sales and reputation in astonishing form.

This time around, however, the questions are not about products but policy, and the response must not be about innovation but about consolidation. It could be among its biggest ever challenges, and the company's response will decide its future. On Monday, when it hosts the keynote that will begin its Worldwide Developers Conference, it gets a chance to show the world how it will respond.