♪ >> he has unveiled the apple bought an apple music people's largest acquisition in history. he taken on issues like the environment, philanthropy, equality, and education. he stood up to president obama on user privacy and maintains and i want president trump despite the disagreement on climate change. now as iphone sales auto, questions remain about whether it the big innovation at apple is going to come from. we sat down at the annual development conference sec out new territory for the company's future from tv to cars and apples are's category in years, a smart speaker called home pod, a direct challenge to amazon and google. on this edition of liberty studio one point, apple ceo tim cook. tim, thank you for joining us. tim: it is great to see you again, and unbelievable to be here. emily: let's start with the new smart speaker, why should people by apple home? over its competitors at this price? tim: what we tried to do is we tried to develop a breakthrough speaker first. music is deep in our dna, dating back to itunes and ipod. and so, we wanted something that number one sounded unbelievable. of course it does other things, and those are important, but we wanted a high quality audio experience as well.

emily: you are excited about how these will sound in the home, will i be able to make a phone call, call a car, order groceries? tim: there are a lot of things you can do with it. you know, one of the advantage is there are a lot of things that siri knows how to do from the phone. and so, we will start with a patch of those, and then you can bet that there is a nice follow-on activity there as well. emily: let's talk about e-commerce, which is very important to these devices. i can order paper towels on my amazon echo, does this tell us about apple's aspirations in retail? tim: no, i wouldn't read into it in that regard, but apple is a company that deeply cares about music, and wants to deliver a great audio experience from the home. we feel like we reinvented it in the portable player area, and we think we can reinvent it in the home as well. and we know that people want a speaker to do more than that, and we want a speaker to do more than that, and so we are sort of combining what has been thought of as two distinctly different things until now.

emily: how long have you been working on this? tim: multiple years. so, the underlying technology here is something to behold and to get the experience that we wanted at the quality we wanted -- you know, like apple products in general take multiple years to do. starting from the core technology and then building up to the product. >> you have people out there, saying, finally, what took so long? tim: for us it has never been about being first in anything. if you think back, we didn't have the first mp3 player. we didn't have the first smart phone. we didn't have the first tablet. there was a tablet shipping a decade before, very few people used it. arguably, we shipped the first modern mp3 player, the first modern smartphone, the first modern tablet, but we were not first in any of those. and so, for us, it's not about being first, it's about being the best. emily: it is the 10th anniversary of the iphone. you have unveiled the new ios. ios 11. what does that tell us about what is next? tim: i can tell you ios 11 is unbelievable. and both for iphone and ipad, there are incredible things in it from peer-to-peer payments. it is the biggest ipad release

ever. and an area that i have great personal excitement, but i am really excited about ar. and as we get this developer release out in the hands of developers, we will have the largest augmented reality platform in the world. emily: you talk about ar and vr with regards to developers, but what about consumers? when will consumers see an apple product? tim: with core technology, and as a platform owner, the first thing, and arguably the most important, is to build a foundation. and then from the foundation, you can do many things. emily: peter thiel said that he believes that innovation in smartphones is over. are the days of quantum leaps in smartphone innovation over, or are there more quantum leaps to come? tim: you know, i don't agree with that view at all. the thing that drives quantum leaps is the core technology. and when i think about all of the things that are going to change from a core technology point of view in the future, i think we are just getting started. and so i am incredibly excited. and clearly, there is nothing that i think virtually anybody would say will replace smartphones anytime soon. and you know, as time has gone on, the smartphone has become more important to people's lives.

when it started, the phone call was still a dominant reason or -- for having it. now, if you look at what people are doing on smartphones, it is a minor piece of what a phone is now. when i look at that and the the -- the health kit and what that has done in terms of getting people's data, -- i am controlling all of my house with siri using my iphone. and so i think about all of these things, the usage of it, you just do not leave your home without your iphone. no, i think it is in the early stages, still. i don't see it in that light at all. emily: controlling your home with your device is still a fairly niche behavior. when do you see that becoming more main dream? -- mainstream? tim: i think this year, honestly. we built it into ios 10, after that, you saw more accessories coming to the market that are home kit enabled. and it is super easy to set up. we just made it easier for vendors to be compatible with home kit, because you now can use software encryption. you do not have to have hardware encryption to go. so, i think that also unleashes even more accessory guys to join. and i think people will going to want to automate different parts of their home. i wouldn't live without it at this point. it's one of those things at you go wow, how could i have ever done that in a different manner? emily: in the past you said, the ipad is the clearest expression

of our vision of computing. mac sales are holding steady, ipad sales continue to fall. why is that? jim: we make both and i am happy with whatever people choose to buy. some people will only by mac, and some people only by ipad. many of us want both honestly. so, what we have tried to do with the ipad is bring more productivity features to ipad. i think people buying pcs look at this and think they want to have an ipad pro, and that is great. i think people with an ipad will want to upgrade. but the mac remains very important to us. i see it as both of them are computing devices and we are going to keep investing in both, because we think both have a great future. one of the reasons that ipad on the surface -- just look at the numbers, the units are going

down, keep in mind the ipad mini came out at a point in time that smartphones were fairly small. people had 3.5 inch or maybe four inch screens on their smartphone, and so one of the things you are being is a natural move to a smartphone not taking all of the market, but taking a piece of it and obviously we are ok with that, too. the 7-plus has been phenomenal. we are seeing growth rates that have shocked us there. ♪ emily: you called president trump and urged him not to pull out of the paris accord. tim: i did, yes. emily: he didn't listen. what does that mean for your relationship with the president? ♪

emily: you have been engaged with this white house here and you called president trump and urged him not to pull out of the

paris accord. tim: i did. emily: he didn't listen. what does that mean for your relationship? tim: i would say it differently. he did listen to me. he didn't decide what i wanted him to decide. i think he decided wrong. i think it is not in the best interest of the united states what he decided. but in terms of -- you know, the way i look at this thing -- do you interact with politicians or not. my view is that first and foremost, things are about -- can you help your country? and if you can help your country and do that by interacting, then you do it. that country eclipses politics. and so, you know, if there is something that we can work together that helps people in the united states, then of course we would do it. emily: you have other people that are leaving the table though, like bob iger, like elon musk. is the president jeopardizing his relationship with one of his key constituencies? tim: i think there is a different between

joining a council and helping your country. i think the first one is a judgment call that people make. i didn't join a council, and so it is not a decision i had to make, but i understand both sides of that. but advising on something that you believe will help america, i think is a requirement as a ceo. you definitely do that. and you know, honestly, if i get the chance to go pitch the paris agreement again, i'm going to do it again. because i think it's very important that we engage to fight climate change on a global basis. unfortunately, he decided something different. i can't imagine a situation where i wouldn't do the latter. i don't find these councils in general and committees to be terribly productive. but it wasn't about not wanting to advise on something where i

thought that we could help or we had a point of view that should be heard. so i am doing the latter and i cannot imagine a situation where i would not do the latter because i think it is in the best interest of america to do it. and i am first and foremost an american.

>> on repatriation, something important to apple, how would you like a repatriation bill to be structured? tim: in our of view it should be a deemed repatriation. this means it should be a required pact. so you are not asking people who had earnings from international subsidiaries if they would like to bring back money. you are saying that you must pay the government x percent now or over some period of time. my own advice would be that the u.s. use that money for a

significant infrastructure spend in the u.s., because it creates jobs. i think there's few people that would argue we do not need investment in america. that is what i think should be done and it should have been done years ago, but it hasn't. so, tomorrow is good. emily: you have made it clear that the privacy of apple users is of utmost importance to you. even as terror attacks continue to happen around the world. does the new ios strengthen user security and privacy? tim: these terror attacks -- first of all, our heart goes out to everyone affected by them. they are horrendous, and the united kingdom for us, we have been in the u.k. pretty much the whole length of time for our

company. and it feels like they are our neighbor. we have thousands of employees there, and so our heart goes out. so, what do we do helping with this, we have done one thing since the beginning of the app store is we curate the app store. and so, we do not want hate speech on there. we do not want these recruiting kind of things on there. i am not saying we will never make a mistake, but i do not know of a case where anything has gotten through. we have also been cooperating with the u.k. government, not only in law enforcement matters, but on some of the attacks. i cannot speak in detail about that. but in cases where we have information and they have gone through the lawful process, we do not just give it, but we do

it very promptly. i think, i would hope, that they would say that we have been cooperating well. and i think, you know, that there is some valuable information. i think there is a misunderstanding about -- encryption doesn't mean there is no information, right? because likely metadata exists. and metadata, if you are putting together a profile, is very important. emily: can we assume that apple is always working to make encryption even stronger? tim: the reality is that the cyberattacks on people and government -- it is happening left and right everywhere -- these affect your safety, your security.

so it is not just privacy. it is not privacy versus security. it is privacy and security versus security. and so, we are always working to stay one step ahead of the hackers who, frankly speaking, have gone from the guy in the basement, that is a hobbyist, to a sophisticated enterprise. and it takes all that we can do to do it, and we do not think our users should have to think through all of this stuff. it is not practical for people, and so we try to stand up for users and stay one step ahead of these guys. emily: you said cars are an area ripe for disruption. how important is it that apple not miss out on cars? ♪

emily: let's talk about the world's second-biggest economy, china. how does apple navigate what seem to be uncertain economic and political waters there? tim: china, for us, we make all decisions for the long-term. we are not investing for next quarter or next year, we are thinking many years out. and as i stand back and look at china, i see mega-trends that make china an incredible market, and i don't mean just a market to sell in. i also mean for application developers. we have 1.5 million application developers in china now. probably closer to 2 million. it has been an incredible marketplace for talent, and in terms of the size of the marketplace. the short-term kinds of economic moves up and down, i do not get too excited about. emily: how realistic is it to expect double-digit growth to continue for apple?

to continue in china? tim: it didn't continue last year. >> are the days of double-digit growth over? tim: i think we will do better this quarter than the last several. that doesn't mean that we are growing double-digit or will grow, but i think it will be better year-over-year comp over than the previous ones. i feel pretty good about that. iphone seven is the most popular phone in china. iphone seven-plus is the third most popular smartphone in china. last year, the size of our business was almost $50 billion in greater china. so, we are going to stick at it, because i think china is a huge

opportunity over time. emily: how would you characterize tim cook's apple versus steve jobs' apple? tim: well, i don't think about it very much. what would i say? i guess i will point out that steve's dna will always be the dna of apple, or it will be as long as i am ceo. and i think as long as anyone is, honestly. i think it is deeply embedded in the company and we celebrate it. and it should be like that and should stay like that. obviously, things evolve over time in some other areas as they would have if he were sitting here interviewing with you today. that is probably a better question to ask somebody who worked for both of us. emily: you said cars are an area ripe for disruption. how important is it that apple not miss out on cars? tim: i think there is a major disruption looming there, not only for self driving cars, but also the electrification. if you have driven an all-electric car, it is actually a marvelous experience.

it is a marvelous experience not to stop at the gas station, or fillings nation or whatever you call it, and so -- plus, you -- gas station or filling station or whatever you want to call it. plus, you have ridesharing on top of this. you've got kind of three vectors of the change happening generally in the same timeframe. and so, as we looked at it -- what we have talked about focusing on publicly, is we are focusing on an autonomous system. clearly one aspect is self driving cars, there are others. and we sort of see it as the mother of all ai projects. it is probably one of the most difficult ai projects to work on. and so, autonomy is something that is incredibly exciting for us, but we will see where it

takes us. we are not really saying from a product point of view what we will do, but we are being straightforward that it is a core technology that we view as very important. emily: you are working across so many different platforms, whether it's tv, the watch, the iphone, mac, what you see -- what do you see now as your vision for the future of personal computing across all of these platforms? tim: the great thing is they are all built on the same core technology, right? but we have thought through how they are used and the experience needed to get the best experience for the user in each of the cases. and so, out of that came watch ios, tv os, and mac ios. we think that when you begin to merge, that the risk is the lowest common denominator kind

of approach and we are staying away from that. i know others have a different view on that, but that is our view and we are straightforward with it. and so, with tv, we wanted to give an update that amazon was joining the tv app and all apple tv's later in the year, and we will have more to say about that area later. so i will keep you in suspense a while there. emily: i think everyone will be speculating after that very comment. we will have to leave it there. apple ceo tim cook, thank you so much. tim: great to see you and spend time with you. ♪

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