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Apple just significantly deepened its bet on services

As expected Tuesday, Apple debuted new iPads and Apple Watch models featuring new colors and modest hardware advances. But the really significant long-term move for Apple was the further expansion of its services business.

Why it matters: With the slowing down of the smartphone market, Apple has turned to services to become its key growth engine.


Apple made two big announcements on the services front:

  1. Apple Fitness+. The service. It costs $9.95 a month (or $79.95 a year), with three months included with the purchase of a new Apple Watch
  2. Apple One is actually a set of new bundles. The basic service, at $14.95 per month, includes Apple Music, Apple Arcade, Apple TV+ and extra iCloud storage. A $19.95 family bundle provides household access to the same services, while a $29.95 per month service includes Apple Fitness+ and Apple News+.

The big picture: Both moves extend Apple's services push and, with Apple Fitness+, the company is expanding into a new area. That's important because consumers' tech budgets won't necessarily scale up to match Apple's ambitions.

  • At a certain point it's simply easier for Apple to supplant others than to try to create whole new markets.
  • With fitness, for example, Apple can take money that has been going to digital fitness companies like Peloton and ClassPass, as well as traditional gym memberships.

Yes, but: With each move, Apple risks not only frustrating its new competitors, but also raising the ire of regulators. One company none too happy with the Apple One announcement was Spotify, which has already lodged complaints that Apple isn't playing fair when it comes to digital music.

What they're saying:

  • Spotify, in a statement to The Verge: "Once again, Apple is using its dominant position and unfair practices to disadvantage competitors and deprive consumers by favoring its own services. We call on competition authorities to act urgently to restrict Apple’s anti-competitive behavior."
  • Apple, in a statement: "Customers can discover and enjoy alternatives to every one of Apple’s services. We’re introducing Apple One because it is a great value for customers and a simple way to access the full range of Apple’s subscription services."

Our thought bubble: Apple One puts Spotify in an even tougher position than it was already in on Apple devices.

  • Music subscriptions are fairly low margin businesses, meaning Spotify doesn't have a lot of room to lower its price.
  • Apple, though, can bundle other services with more margin room, as it has done with Apple One, which includes cloud storage as well as the Apple-run video and video game services, where Apple has more pricing flexibility. (Spotify has done bundles with video services, including Hulu and Showtime, but, even there, it doesn't have much room to maneuver on price without losing money.)

Supreme Court backs religious groups on New York coronavirus restrictions

The U.S. Supreme Court ruled late Wednesday that restrictions imposed on New York places of worship by Gov. Andrew Cuomo (D) during the coronavirus pandemic violated the First Amendment, per Bloomberg.

Why it matters: The decision in a 5-4 vote heralds one of the first significant actions by the new President Trump-appointed conservative Justice Amy Coney Barrett, who cast the deciding vote in favor of the Catholic Church and Orthodox Jewish synagogues.

Editor's note: This a breaking news story. Please check back for updates.

Trump agency head who often skips mask tests positive for coronavirus

The acting administrator of the United States Agency for International Development informed senior staff Wednesday he has tested positive for coronavirus, two sources familiar with the call tell Axios.

Why it matters: John Barsa, who staffers say rarely wears a mask in their office, is the latest in a series of top administration officials to contract the virus. His positive diagnosis comes amid broader turmoil at the agency following the election.

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COVID-19 shows a bright future for vaccines

Promising results from COVID-19 vaccine trials offer hope not just that the pandemic could be ended sooner than expected, but that medicine itself may have a powerful new weapon.

Why it matters: Vaccines are, in the words of one expert, "the single most life-saving innovation ever," but progress had slowed in recent years. New gene-based technology that sped the arrival of the COVID vaccine will boost the overall field, and could even extend to mass killers like cancer.

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Beware a Thanksgiving mirage

Don't be surprised if COVID metrics plunge over the next few days, only to spike next week.

Why it matters: The COVID Tracking Project warns of a "double-weekend pattern" on Thanksgiving — where the usual weekend backlog of data is tacked on to a holiday.

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Trump pardons Michael Flynn

President Trump on Wednesday pardoned his former national security adviser Michael Flynn, who pleaded guilty in December 2017 to lying to the FBI about his Russian contacts.

Why it matters: It is the first of multiple pardons expected in the coming weeks, as Axios scooped last night.

This is a breaking story and will be updated with more details.

The emerging cybersecurity headaches awaiting Biden

The incoming administration will face a slew of cybersecurity-related challenges, as Joe Biden takes office under a very different environment than existed when he was last in the White House as vice president.

The big picture: President-elect Biden's top cybersecurity and national security advisers will have to wrestle with the ascendancy of new adversaries and cyberpowers, as well as figure out whether to continue the more aggressive stance the Trump administration has taken in cyberspace.

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Past friction between Biden and Erdoğan foreshadows future tensions

Ankara — The incoming Biden administration's foreign policy priorities and worldview will collide with those of the Turkish government on several issues.

Why it matters: The U.S. needs its NATO ally Turkey for its efforts to contain Russia, counter Iran and deal with other crises in the Middle East. But relations between Biden and Turkish President Recep Tayyip Erdoğan are expected to be strained.

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Tesla's wild rise and European plan

Data: FactSet; Chart: Axios Visuals

Tesla's market capitalization blew past $500 billion for the first time Tuesday.

Why it matters: It's just a number, but kind of a wild one. Consider, via CNN: "Tesla is now worth more than the combined market value of most of the world's major automakers: Toyota, Volkswagen, GM, Ford, Fiat Chrysler and its merger partner PSA Group."

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