Apple’s Headset Mindset Explained

Plus: Sotheby’s is accused of selling tax fraud to the highest bidder ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

April 24, 2023

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TOGETHER WITH

Good morning and happy Monday.

Add a fourth “B” to Bed Bath & Beyond: bankruptcy.

After months and months of increasingly desperate, occasionally inexplicable plans to avoid it, the New Jersey-based retailer filed for Chapter 11 protections on Sunday. Bed Bath’s leadership cited “substantial doubt” that it could keep the company operational, something the stock market seems to agree with considering BBBY is down beyond 98% in the last year. And while the way we think about wedding and baby registries may change forever after Bed Bath’s numerous failed attempts to sell enough new equity to pay off billions in debt, executives pledged Sunday that the liquidation of assets will be swift. They couldn’t sell investors but at least we get a sale.

Morning Brief

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Apple is scratching heads with its headset plans.

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NY’s AG wants fine art fraudsters.

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Unemployed techies should not Google Sundar Pichai’s 2022 comp.

Tech

Apple Is Still Sorting Out its Mixed-Reality Headset Strategy

(Photo credit: Marco Paköeningrat/Flickr)

Virtual reality has long been the apple of Tim Cook’s eye. But is it anyone else’s?

Apple’s long-rumored, oft-delayed virtual and augmented reality headset is finally set for public debut at this June’s World Wide Developers Conference. But a new report from Bloomberg says the company is still struggling to figure out what makes the device a must-have. In the meantime, they’re hoping shoppers will decide it’s the little things that count and fork over big money for the device.

iHope You Like It

Like desktops in the late 90s, MP3 players in the early aughts, smartphones in the late aughts, tablets in the early twenty-teens, and smartwatches in the late twenty-teens, the kings of Cupertino aim to sprinkle a little of that Apple magic yet again onto a hardware space still mostly populated by WIRED subscribers, Best Buy employees, and habitual early adopters with discretionary spending capabilities. Indeed, of any product class, VR headsets are perhaps the most primed for a sleek disruptor. Despite spending billions, Meta-née-Facebook has struggled to consistently move their headsets into homes. Meanwhile, the launch of Sony’s Playstation VR2, released in February, has been something close to an outright disaster.

Apple has an even bigger sell to make for its new device. Literally. The headset, internally dubbed the Reality Pro or Reality One, is rumored to retail for a whopping $3,000 (Meta recently slashed the price of its top-of-the-line Meta Quest Pro from $1,499 to $999). Instead of waiting for a killer app or tying their fates to a watered-down version of The Sims, Apple is hoping a more-is-more approach can propel its latest hardware venture into the mainstream. According to Bloomberg, marquee features for the Reality Pro/One include:

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VR/AR versions of existing first-party Apple apps like Message, FaceTime, Mail, Books, Maps, Weather, Music, Notes, Camera, Photos, and all the other ones you have shoved in a folder on the third page of your iPhone home screen; revamped Wellness and Fitness+ experiences; plus the ability to run hundreds of thousands of already existing third-party iPad apps.

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That’s in addition to virtual meeting rooms with realistic avatars (that hopefully have legs), the ability to use the headset as an extra Mac monitor, plus a new vertical for watching sports in virtual reality, among a litany of other features.

The wide-net strategy is not new for the company. As Bloomberg notes, it’s quite similar to what the company employed when initially pitching its Apple Watch, a device that started life with an equally nebulous case for essentiality.

Pocket Change: Everyone knows VR headsets are often clunky and uncomfortable. But the Reality Pro/One may avoid the fatal design flaw thanks to some classic Apple ingenuity. To reduce the load borne by users’ crania, Bloomberg reports that Apple is offloading the battery into a small pack that will be carried in a user’s pocket. Steve Jobs would actually be proud of this one.

– Brian Boyle

Wealth

New York Attorney General Accuses Sotheby’s of Helping Rich Collectors Avoid Sales Tax

Going once, going twice, and… the D.A.’s not buying it!

The world’s most famous auction house landed in hot water this past weekend when the New York attorney general charged Sotheby’s with helping some very rich art collectors avoid paying very large sales taxes on their purchases. Between the Sotheby’s investigation and the IRS’ crackdown on wealthy individuals this tax season, upper-crusters had better make sure to cross their t’s and dot their i’s. Or at least start looking for new ways to write them off.

Gone Fishin’ and Caught Something

The lawsuit, originally filed in 2020, accused Sotheby’s of aiding an affluent shipping executive in dodging taxes. The auction house allegedly identified the executive – who had purchased $27 million worth of fine art – as an art dealer, which qualifies them for exemption from city and state sales taxes. According to court documents filed by New York AG Letitia James, the buyer was merely a collector.

Going off that one instance, James requested Sotheby’s hand over more client information to suss out further cases of tax fraud. The auction house hit back at her, calling it a “fishing expedition” that would not “yield evidence of wrongdoing.”

But after an investigation, well…

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On Friday, James added seven more collectors and a handful of auction house employees, none of whom were named, to the lawsuit. In court documents, she called the shipping executive “only the tip of the iceberg.”

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The collectors allegedly worked with Sotheby’s to avoid paying taxes on gifts for family members, Tiffany lamps, and Jewish ceremonial art. Now, James is seeking court permission to conduct almost two dozen more depositions of people involved in the alleged practice, Bloomberg reported.

One For You, 19 For Me: James isn’t the only one on the hunt for wealthy tax frauds. Earlier this month, the IRS announced its 10-year plan to transform the agency by putting greater scrutiny on ultra-rich corporations and individuals who are hiding money from the government. The IRS’ overhaul comes with a whopping $80 billion injection of taxpayer funds via the Biden administration’s Inflation Reduction Act. It is the single largest investment in the agency’s history, according to The New York Times, and already the IRS plans to use the money to hire 20,000 new employees in the next two years. Yeah, I’m the taxman.

– Griffin Kelly

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Tech

Sundar Pichai Scores Massive 2022 Payday

Google’s top boss is no doubt searching for words.

Last year, Alphabet awarded CEO Sundar Pichai a total compensation package worth $226 million, according to recently released regulatory filings. It’s the end result of a once-every-three-years stock award program — though the timing is certainly awkward, to say the least.

Quarter-Billy the Kid

Start with the fact that the search titan rang in the New Year with the biggest round of layoffs in company history, handing the pink slip to some 12,000 employees or 6% of its workforce. And, sure, Pichai reportedly assured staff at the time that executives would subsequently suffer pay cuts. And, yes, Google is one of the largest and most well-capitalized companies in the world that has also since spent the first quarter of the year rushing its arguably half-baked large-language model chatbot Bard to the market in a desperate push to match upstart OpenAI’s incredibly popular ChatGPT.

But pandemic-era gains are superseding recent pains in the executive’s latest pay period. For Pichai, like any good hardworking techie just trying to build something new, it’s all about the stock options:

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In 2019, the last time Pichai’s triannual stock grant was paid out, the executive scored an even higher $281 million payday. This time, his equity grant came out to around $210 million, according to the filings, with payouts for both performance and time-based equity.

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The performance-based portion of the grant contains two tranches with a value of roughly $63 million each, in addition to another $84 million in restricted stock units. The pay package could climb even higher based on Google’s share price, which remains up some 55% since the end of 2019.

Suite Life: Most of Alphabet’s other top brass made out with roughly $22 million to $35 million in annual stock awards last year, the filings show, with the only direct impact on pay stemming from a special executive bonus tied to ESG goals that slashed salaries by around $775,000. In fairness, the C-suite pay packages were technically finalized in December, just before the mass layoffs. Still, as one of the few tech companies with a union, Google’s top earners might want to keep any jubilation to a bare minimum.

– Brian Boyle

Extra Upside

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Family businesses: Jersey quadruplets open a Jersey Mikes in Jersey.

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Low life: Champagne trade group forced the destruction of thousands of cans of Miller beer.

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