I wonder how you can challenge a fraudulent transaction when that information is missing

Read here to learn about credit card partners, and how it works:

https://www.doctorofcredit.com/everything-you-ever-wanted-to...

Essentially, in this case, the underlying bank (Goldman Sachs) handles all the finances and the partner (Apple) lends their name/brand and receives a small kickback on card activities.

Yeah, its basically an Apple co-branded card with some neat UI on top of it.

My understanding was that Goldman Sachs will have that information and they will be responsible for fraud prevention etc. -- they just won't share it with Apple.

Oh great, now I feel much better.

Goldman is a client of Apple's. It's possible that they do some shady shit, but it's also possible that they don't want to fuck up their relationship with the world's most valuable company or jeopardize their entry into the consumer space.

Their profit motive might save them. Or it could be a disaster, who knows. My guess is that Goldman would trade on the aggregate data

Wasn't there a lawsuit that an investment bank (can't recall if it was Goldman Sachs or not) can deceive its clients and not disclose that it has a competing or directly contrary interest?

And then there's this, and a dozen other stories about Goldman Sachs deceiving its clients in the past.

https://www.washingtonpost.com/opinions/goldman-sachss-long-...

FWIW, those rules are relatively nuanced. It's not like someone ruled that Goldman can deceive all clients at all times in all transactions.

Typically it comes up in places where there's a question of whether the bank is responsible getting their client the best possible price in a transaction or whether the bank is acting as an arms-length counterparty who happens to be taking the other side of the transaction. It also depends on the sophistication of the client and whether it's a transaction where the client should expect Goldman to be bullshitting them.

Goldman acting as a bank for the Apple credit card is completely different from Goldman acting as the counterparty in a large FX hedge or bond deal.

Not that I like defending GS

You're probably thinking about financial planners trying to avoid disclosure that they are not fiduciaries.

> Goldman is a client of Apple's. It's possible that they do some shady shit, but it's also possible that they don't want to fuck up their relationship with the world's most valuable company

It's hard to argue that Apple can keeps Goldman Sachs on a leash. GS can't get a worse reputation that it already has, shaming them is worthless.

Nit: world's most valuable publicly traded* company.

https://en.wikipedia.org/wiki/Saudi_Aramco

Non–state-owned enterprise, more like.

In particular considering how consumer centric Goldman Sachs operates...

I think they are trying to with the Marcus brand. Once Goldman became a bank holding company, it made it hard for them to operate a large prop trading unit and other more alternative areas. I think Goldman felt that since it had to operate more like a bank with a bank charter, why not become a bank? It would be interesting to see the financials behind the Apple & Goldman deal as Goldman probably needs Apple more than Apple needs Goldman given the CAC on banking is very high.

But will Goldman know who the consumer is? Or is it just an opaque identity that they use to handle the accounts for Apple?

They said that the information is on your device, not on Apple servers. So I presume that they/GS can extract this information from the device under a valid legal claim.

Apple can't extract information from your device, even under subpoena. They'd have to push an OS update that explicitly changes what they do to start sending that info to Apple, but the US legal system doesn't allow the government to compel them to make that kind of change.

That said, if the data is available in your iCloud backup in a form that can be read by other devices, Apple can presumably extract that data under subpoena. If it's in your iCloud backup but encrypted with a per-device key (like your non-iCloud keychain entries), Apple cannot extract that because decrypting the backup (which they can do) isn't sufficient to decrypt this per-device-encrypted data.

All that said, if the government wants to know your spending history, it would be simpler just to subpoena Goldman Sachs.

> They'd have to push an OS update that explicitly changes what they do to start sending that info to Apple, but the US legal system doesn't allow the government to compel them to make that kind of change

Australia's does now.

I'm not quite sure exactly what Australia's laws actually let them do regarding Apple, but what I am sure of is if Australia tried to compel Apple to add a backdoor to iOS, Apple would stop doing business in Australia rather than comply.

Their position in China doesn't reflect that.

Their position in China is not offering iCloud at all is no better than offering iCloud where the data is managed by a Chinese company. Importantly, this does not affect anyone outside of China. This compromise to follow the law sucks, but it doesn't fundamentally weaken protections for anyone else. And of course iCloud is optional and can be turned off by any Chinese citizen who doesn't want their data stored on Chinese servers.

Altering the OS to install a backdoor is a much different beast. It's non-optional, fundamentally weakens the security of the entire OS, and affects all customers everywhere, not just Australian citizens.

Also, if Apple did withdraw from Australia, any Australian citizen who wished to use an iPhone could still acquire one from overseas (though this is admittedly a fair amount of effort) and they'd continue to have a secure computing experience.

> but the US legal system doesn't allow the government to compel them to make that kind of change.

Source? I’m pretty sure the legal system does allow that.

The legal system lets them say "you already have the information? Great, give it to me". It doesn't let them say "you have to redesign your systems to collect information that you explicitly told your users you aren't collecting".

I don't have a direct citation for you, besides having seen this spoken about before, but a simple thought exercise should prove it: If the government could compel that sort of thing, then we wouldn't have end-to-end encrypted chat (including iMessage) and the government would have already compelled Apple to give the government a backdoor into iPhones.

I personally want the law to say that but:

The FBI took a different view in a recent court case referencing the All Writs act of 1789 https://en.wikipedia.org/wiki/FBI%E2%80%93Apple_encryption_d... but dropped it when they unlocked the device by other means., and the issue hasn't really made it through the court system, so it's unclear what the law requires.

Until a federal case gets to the appeals court level it basically won't establish any binding precedent in other cases under stare decisis.

Good news is the FBI doesn't write the law. My recollection is the general consensus was the FBI was severely overreaching and was going to lose their court case.

I mean that's what I think, but general consensus also doesn't write the law, unfortunately.

I think under the construct that computer code is a means of expression protected under the first amendment, the US government requiring Apple to implement a code change would be considered a form of compelled speech.

Still at the mercy of Goldman Sachs.

I don't quite understand that, since the linked article says Apple will "use machine learning and Apple Maps to label stores that you use in the app, and use that data to track purchases across categories like “food and drink” or “shopping.”"

They said it that all happens on the device itself, and won't be transmitted back to their servers.

So if your spouse is an authorized user of the card (or if you get a new phone), there's no display of your entire household's stats?

The ML aspect happens "on device".

What do they gain from offering the card if they are not harvesting transaction data? Is it possible that this is some legal gymnastics (i.e. Goldman-Sachs receives the 'Apple doesn't know' data and promptly send it over to them under an opaque 'we share information with our affiliates' clause)?

It does seem like a lot of work and potential risk if the sole purpose is to increase user dependency on the Apple ecosystem.

They get a percentage of every transaction (small, but it is about the aggregate for them). Mostly for Apple this is about pushing people who are using ApplePay to back it with a credit card that Apple gets a piece of, rather than the one you already have a piece of. So they get the small chunk from being in the loop with ApplePay, and now a small chunk from being the sponsor of the card.

Apple has been very focused on not being a big-data company. Any sort of back-end shenanigans would be so damaging to the brand of information safety that they have been building as to be unworth any potential profit.

Ah, that makes a lot of sense. Thanks for the succinct explanation.

It's a foot in in the global financing system. Billion people buy their products, and given their price, I'm ready to bet that the number of people who finance their purchase instead of buying with cash is not insignificant. That's lots of interest payments.

Once they have a foothold in the finance sector they can start financing their own devices and capture that revenue, instead of letting it slip to third parties.

This makes incredible sense. Lots of large companies have financing services that are very profitable. Finance is one place where it's much easier to enter than self driving cars.

Now I'm a bit sad I don't own any apple stocks.

With this game plan they can increase their leverage in the consumer market enormously.

Apple has/had a deal with Barclays for financing purchases from the Apple store. They still have to cut Goldman in on the new card, so not really sure how much better it is for them on financing Apple purchases.

I believe this whole thing is designed to promote adoption of Apple Pay. Apple already gets a kickback on all Apple Pay purchases, so they don't even need to get any kickback on physical card purchases when the higher rewards for Apple Pay means card owners will push for better Apple Pay support.

Previously with other cards, using Apple Pay is just a matter of convenience for the customer. With the Apple Card, it's a matter of getting more cash back, so consumers are now financially motivated to prefer vendors that support Apple Pay.

Apple likely save quite a lot from small transaction ( $0.99 ) if it was done on Apple Card.

Roughly $50B are spent on App Store, and even more with growing number of Subscription along with other Apple Credit Card usage. That is a potential of $100B+ transaction volume.

It will likely be another entry point for Apple Cash, sending and receiving money from friends.

There’s no way small transactions cost Apple that much. Square and Stripe charge their merchants something like 23 cents for small transactions.

Sorry wasn't clear enough the 0.99 was referring to the transaction value itself, not the fee.

which is 23% on $1.00.

They save merchant fees when the card is used on their products, and collect them when the card is used elsewhere. Same reason your bank issues a card, really. Though mastercard's still the payment processor here.

Some sort of financial benefit.

Usually a percentage of each transaction and/or flat fee per cardholder or signup and/or a percentage of fees and interest paid. The exact details on these agreements are rarely published.

See here:

https://www.doctorofcredit.com/everything-you-ever-wanted-to...

Credit Card issuers get a percentage of everything you spend, so Apple gains that.

Agree that health skepticism is warranted here but it might also be that they are trying to re-think the credit card experience to improve it for everybody.

Like de-listing vendors they do not like? CC processors can do that too, but they are nothing like the app store(s).

Because of the card, data must be in the cloud but it is most likely encrypted and keys are on your device that is why Apple can claim that they don't know anything about what you buy. This doesn't change the fact that GS and MC does know where are you shopping. The only good thing about this card are fees and cashback, everything else is either nothing new or special (not sure about Apple card, but where i am from most CCs come with travel insurance as well).

Fees, cashback, and the convenience, yeah.