Apple CEO Tim Cook’s Playbook to Working With Donald Trump

Summary

WSJ Tech News Briefing: Detailed Summary

Podcast Information:

• Title: WSJ Tech News Briefing
• Host/Author: The Wall Street Journal
• Episode: Apple CEO Tim Cook’s Playbook to Working With Donald Trump
• Release Date: November 26, 2024

---

Introduction

In the November 26, 2024 episode of WSJ Tech News Briefing, host Julie Chang explores two significant topics shaping the tech landscape: the potential of Artificial Intelligence (AI) to reduce the cost of higher education and healthcare, and Apple CEO Tim Cook's strategic approach to building a personal relationship with President Elect Donald Trump. The episode delves into expert insights, real-world examples, and the implications of these developments for businesses and policymakers.

---

Artificial Intelligence: Lowering Costs in Education and Healthcare

AI’s Role in Reducing Expenses

The episode kicks off with a discussion on how AI can mitigate soaring costs in critical sectors like education and healthcare. Kartik Hosanagar, a professor of technology and digital business at the Wharton School of the University of Pennsylvania and a faculty co-lead of AI for Business, provides a comprehensive analysis of AI's potential benefits.

Key Insights:

• Historical Perspective: Hosanagar draws parallels between AI advancements and the industrialization of textile mills, which historically boosted productivity and reduced consumer prices. "With industrialization of the textile mills a century or two ago, we saw a pretty significant increase in worker productivity... which helped bring down the cost of textiles," he explains [01:51].

• Current Applications in Education: He highlights how AI can streamline administrative functions in universities, thereby lowering tuition fees. "AI can significantly improve the efficiency and effectiveness of services like career counseling by automating data analysis and matching processes," Hosanagar notes [04:33].

• Economic Metrics: Hosanagar raises an essential caveat regarding the measurement of AI’s economic impact. "If an AI system can deliver products and services to consumers at lower costs, our spending might go down, even though our welfare, consumer welfare is going up," he states [05:01]. He suggests that traditional metrics like GDP may not accurately reflect the true economic benefits of AI-driven efficiencies.

Real-World Example: Career Counseling Automation

Hosanagar provides a concrete example of AI in academia: automating career counseling for students. By analyzing course data, grades, and job market trends, AI systems can recommend suitable career paths and necessary courses. This automation reduces the need for a large administrative workforce, allowing universities to reallocate resources to other critical areas.

“Where humans will still be needed will be in the highly nuanced, highly personalized kinds of services,” Hosanagar emphasizes [04:18].

---

Tim Cook’s Strategic Engagement with President Elect Donald Trump

Building Personal Relationships

Shifting focus, the episode examines how Tim Cook, CEO of Apple, successfully forged a personal relationship with President Elect Donald Trump—a feat that many corporate leaders have struggled to replicate. WSJ reporter Chip Cutter provides an in-depth look into Cook's methodologies and their effectiveness.

Key Strategies:

• Direct Communication: Unlike typical corporate lobbying efforts, Cook chose to engage Trump directly through personal phone calls and meals instead of relying solely on government relations teams or lobbyists. "He would appeal to Trump directly through either phone calls or meals," Cutter explains [08:09].

• Focused Discussions: Cook developed a strategy to concentrate discussions around a single, pivotal issue to maintain clear and productive dialogues. "He would bring one data point to really focus on in a meeting," Cutter adds [08:09]. This approach prevented meetings from veering off-track and ensured actionable outcomes.

Significant Achievements

One of Cook's notable successes was his intervention in 2019 regarding potential tariffs on Apple’s imports from China. Facing a prospective 10% tariff that would have significantly increased iPhone prices and advantaged competitors like Samsung, Cook personally lobbied Trump. "Within days, the Trump administration actually announced it would scale back its tariff plan and give exceptions to a number of electronics, including the iPhone," Cutter reports [08:44].

Challenges for Other Executives

While Cook's approach yielded tangible benefits, replicating his success poses challenges for other executives:

• Brand Influence: Not all companies possess Apple's level of recognition and influence, making it harder to gain direct access to the President Elect.

• Relationship Risks: Building a close relationship with Trump’s inner circle can lead to unforeseen obligations. "If you have dinner with the President elect, you can also count on your phone ringing at some point," Cutter cautions [10:10]. Executives must weigh the benefits of direct engagement against the potential for ongoing demands and requests.

Broader Implications for Corporate Strategy

Cook’s playbook underscores the importance of establishing direct lines of communication with incoming administrations. Companies are now strategizing various methods to engage with the Trump administration, including proposing efficiency initiatives to the anticipated Department of Government Efficiency and reevaluating their lobbying efforts. However, uncertainty remains as Trump’s cabinet appointments and senior advisors are still being finalized, adding complexity to corporate engagement strategies [10:59].

---

Conclusion

The episode of WSJ Tech News Briefing provides valuable insights into how AI can drive cost efficiencies in high-expense sectors like education and healthcare, while also illustrating the nuanced strategies corporate leaders like Tim Cook employ to influence political landscapes. As AI continues to evolve and political dynamics shift, businesses must navigate these changes thoughtfully to harness opportunities and mitigate risks effectively.

“It shows that executives want to make sure that they have some sort of relationship with the new administration. But it can oftentimes be challenging to figure out how exactly to do that,” concludes Chip Cutter [10:59].

---

Notable Quotes:

• "If an AI system can deliver products and services to consumers at lower costs, our spending might go down, even though our welfare, consumer welfare is going up," — Kartik Hosanagar [05:01]

• "He would bring one data point to really focus on in a meeting," — Chip Cutter on Tim Cook’s strategy [08:09]

• "Within days, the Trump administration actually announced it would scale back its tariff plan and give exceptions to a number of electronics, including the iPhone," — Chip Cutter [08:44]

• "If you have dinner with the President elect, you can also count on your phone ringing at some point," — Chip Cutter on relationship risks [10:10]

---

This comprehensive summary encapsulates the core discussions and insights from the WSJ Tech News Briefing episode, providing readers with an informed understanding of AI’s economic impact and strategic corporate-political engagements without needing to listen to the original podcast.

Transcript

[Julie Chang]

This podcast is brought to you by Eaton Vance ETFs. Does your ETF simply track an index? Get to know actively managed EVLN, the symbol of senior loan [e-mail] Symbols before.

[Chip Cutter]

Investing, respective investors should carefully consider the investment objectives, risks, charges and expenses. The current prospectus contains this and other information, and it's [e-mail] Read the prospectus carefully before investing. Not FDIC insured offer no bank guarantee May lose value not insured by any federal government agency Not a deposit Investments involve risk Principal loss is possible Distributed by Foresight Fund Services, LLC.

[Julie Chang]

Welcome to Tech News briefing. It's Tuesday, November 26th. I'm Julie Chang for the Wall Street Journal. Artificial Intelligence could help bring down the Cost of college How? We'll explain. Plus, one tech CEO has cracked the code on working with President Elect Donald Trump. What's his playbook and will others follow suit? Our reporter Chip Cutter takes a look at how some corporate executives could work with a new administration Administration up first A lot of the discussion around AI involves its potential to replace millions of jobs. But Kartik Hosannegar, a professor of technology and digital business at the Wharton School of the University of Pennsylvania, says that there are potential upsides to AI, especially when it comes to cutting costs for big expenses like college and even healthcare. He says that AI has the ability to bring down prices for more complex and expensive services by boosting worker productivity and automating tasks. Kartik Hosanagar wrote about this for the Wall Street Journal, and he's with me now. Kartik, let's take a step back for a minute. Can you give an example of a time when automation drove down prices?

[Kartik Hosanagar]

So, for example, with industrialization of the textile mills a century or two ago, we saw a pretty significant increase in worker productivity as a result of that, which helped actually bring down the cost of textiles and help change what was really a small cottage industry into a massive global industry where bringing down the costs increased demand for these products and helped create ultimately large scale employment for a lot of people, but also just massive reduction in the cost of textiles for consumers.

[Julie Chang]

You also said that this was illustrated by your job in academia. How so?

[Kartik Hosanagar]

If you look today at in the Consumer price index, what are the kinds of goods and services where prices have come down and which ones have gone up? Obviously in certain areas like consumer electronics, like television is a great example where prices have come down quite dramatically. In contrast, the ones that have gone up a lot tend to be healthcare and education. And if you look at what's been driving up the cost of tuition in new colleges in the U.S. one of the big factors has been the increase in administrative costs at universities. So lots of new administrative folks, non teaching folks. But really what it comes down to is it's not just bureaucracy, but it is a lot of new services that universities have been adding. And those services range from career counseling to wellness checks to special needs students and providing them support and so on. AI is one of those technologies where it can significantly improve the efficiency and effectiveness of these kinds of services. So for example, you look at career counseling, NEI system can go through a student's list of courses, their grades, recommend types of careers to them based on the kinds of skills they've acquired. An AI system can go through student preferences on the kinds of carriers they want, and go through which companies are coming to campus and recruiting and where's the match, and suggest to them the kinds of companies that they might be interested and even suggest to them the kinds of courses they might want to enroll in to be prepared for those kinds of jobs. So all of that kind of work can be automated. It's basically data analysis, data crunching, matching and so on. Where humans will still be needed will be in the highly nuanced, highly personalized kinds of services. And suddenly where you needed a few dozen people providing career counseling and services to students, it can be done with a smaller team that is AI enhanced. And now you can start deploying these additional staff into other areas. Arguably there are teaching efficiencies as well to be gained from, you know, having to set exams and grade exams and all of those kinds of things that AI can assist with, which allows maybe faculty to teach a few more courses.

[Julie Chang]

And you wrote that there's a caveat in all of this, namely in how we measure the value of AI. Tell us more about that.

[Kartik Hosanagar]

Today we measure economic progress in society primarily through this measure, gdp, gross domestic product, which is actually ultimately looking at spending and looking at how much money is being moved around in the economy. And the assessment of economic growth comes from increased economic spending. However, if an AI system can deliver products and services to consumers at lower costs, our spending might go down, even though our welfare, consumer welfare is going up. Even though we are happier, we're seeing spending go down. So this measure that's been around for a really long time, which has been a good measure where generally spending was a good way to track things in the digital economy, it's not ultimately a measure that works as well. If software and in particular AI can bring down the costs of a lot of services that we consume, then if spending goes down, does that mean the economy is worse off or does that mean our measure or metric is wrong? And that's the point I was trying to make, that the metric is wrong and we might need new measures to measure the value of technologies that are ultimately disinflationary in some nature.

[Julie Chang]

That was Kartik Hosannegar, a professor of technology and digital business at the Wharton School of the University of Pennsylvania. He's also a faculty co lead of AI for Business there. Coming up, personal phone calls and one topic, meals how one big tech CEO has managed to develop a personal relationship with President elect Donald Trump and what it tells us about lobbying under the incoming administration. That's after the break.

[Chip Cutter]

Exchanges, the Goldman Sachs podcast featuring exchanges on rates, inflation and US Recession risk exchanges on the market impact of AI. For the sharpest analysis on forces driving the markets and the economy, count on exchanges between the leading minds at Goldman Sachs. New episodes every week. Listen. Now.

[Julie Chang]

For years, Apple CEO Tim Cook has done something that has eluded many other corporate leaders. That is, he's managed to develop a personal relationship with President elect Donald Trump. He's done it in part by zeroing in on areas of mutual interest between Apple and Trump's agenda. Now with Trump's cabinet taking shape, executives are working to get in the good graces of the new administration. And plenty hope to follow the Apple CEO's playbook. WSJ reporter Chip Cutter has been following the story. Chip, you write that Tim Cook pioneered a template for how business leaders should engage with Trump. Tell us more about this. What was his approach?

[Chip Cutter]

Yeah. So what Tim Cook did was that he would often instead of sending government relations executives or lobbyists to Washington, he would appeal to Trump directly through either phone calls or meals. And he developed a strategy with Trump where he would bring one data point to really focus on in a meeting. So sticking to one single issue to help keep the meetings from spiraling in too many directions, this approach really seems to have worked for him and for the company. And that's according to conversations with people familiar with the matter.

[Julie Chang]

Can you give us an example of a big win by Tim Cook from taking this approach?

[Chip Cutter]

Yeah. So Tim Cook engaged with the Trump administration the first time around on everything from sort of, you know, related to a tax cut plan to tariffs. But his biggest win was in 2019. Apple was facing a potential 10% tariff on all imports from China, where Apple still produces the overwhelming majority of its devices. And so Tim Cook personally lobbied Trump. He explained how the tariffs would increase iPhone prices and help foreign rivals like Samsung. And so within days, the Trump administration actually announced it would scale back its tariff plan and give exceptions to a number of electronics, including the iPhone. So that really helped Apple there. And there were other moves, too. But all of this showed that when Tim Cook would have a one on one conversation with Trump, it could get results.

[Julie Chang]

How easy do you think it'll be for other company execs to follow Cook's playbook?

[Chip Cutter]

So that's the thing. It's actually really hard to do exactly what Tim Cook has done here. For one, not every executive has the name recognition of Apple and Tim Cook. And we've already talked to some lobbyists and corporate advisors who have told us that if Trump doesn't have an existing relationship with an executive, getting on his schedule now is actually pretty difficult.

[Julie Chang]

And this approach is also not risk free. You write that Cook has developed a relationship with Trump's inner circle, but it carries with it both benefits and risks. Why do you say that?

[Chip Cutter]

Well, some notable Washington observers and former executives have told us that anytime you build a relationship with someone, that can be helpful. But if you have dinner with the President elect, you can also count on your phone ringing at some point. And that may or may not be what you want. Some executives don't want to have this ongoing dialogue or concerned that they could sort of get a request that they don't want. And so it's one reason why executives are really trying to figure out what their strategy should be to engage with this next administration.

[Julie Chang]

And what have the Trump transition team and Apple said about this?

[Chip Cutter]

So we reached out to both the Trump transition team and Apple, and neither responded to our request for comment.

[Julie Chang]

Okay, so zooming out, what does this tell us about how companies will work with the incoming administration?

[Chip Cutter]

It shows that executives want to make sure that they have some sort of relationship with the new administration. But it can oftentimes be challenging to figure out how exactly to do that. A lot of people right now are strategizing about the best approach, and there are all sorts of ideas and varying approaches floating around out there. Some companies, for example, are considering whether to suggest efficiency ideas to this new Department of Government efficiency that will be led by Elon Musk and Vivek Ramaswamy. So that's one idea. Do we have areas where we think the government can be more efficient? So we suggest that to these folks to get in their good graces and to sort of have a relationship with the new administration. There's other ways, too, that companies are thinking about, you know, engaging with Washington, whether that's hiring new lobbyists or just trying to think about what existing relationships they have and who they can lean on. Lots of strategizing right now. But it's all complicated, too, because we don't exactly know who will all be around President Trump. That cabinet is still being filled out. He's still hiring senior advisors and policy officials. And so some companies are still waiting to see how they're going to do all this.

[Julie Chang]

That was our reporter, Chip Cutter. And that's it for Tech News Briefing. Today's show was produced by me, Julie Chang, with supervising producer Catherine Milsop. We'll be back this afternoon with TNB Tech Minute. Thanks for listening.