MacRumors

Apple is already facing its first lawsuit over the FaceTime eavesdropping bug that was discovered just last night, reports Bloomberg.

Houston lawyer Larry Williams II today filed a lawsuit against Apple claiming that his iPhone allowed an unknown person to listen in on sworn testimony during a client deposition.

He is suing Apple for unspecified punitive damages for negligence, product liability, misrepresentation, and warranty breach. The bug, says Williams, violates the privacy of a person's "most intimate conversations without consent."

The FaceTime bug in question was widely publicized yesterday after making the rounds on social media. By exploiting a bug in Group ‌FaceTime‌, a person could force a FaceTime connection with another person, providing access to a user's audio and sometimes video even when the ‌FaceTime‌ call was not accepted.

There was no way to avoid malicious ‌FaceTime‌ calls forced to connect in this manner short of turning off ‌FaceTime‌, but after the issue received attention, Apple disabled Group ‌FaceTime‌ server side, and the feature remains unavailable. With Group ‌FaceTime‌ turned off, the exploit is not available and no one is in danger of being spied on via their Apple devices through the ‌FaceTime‌ bug.

Apple is planning to implement a fix via a software update later this week, but the company has not commented on how long this bug was available before it was widely shared. Group ‌FaceTime‌ has been available since iOS 12.1 was released in October.

A woman whose teenage son initially discovered the bug says that she contacted Apple multiple times starting on January 20, and even sent a video demonstrating the issue, but she received no response from the company.

Apple in August 2018 forced Facebook to remove its Onavo VPN app from the App Store, because Facebook was using it to track user activity and data across multiple apps, something that violate's Apple's ‌App Store‌ policies.

As it turns out, Facebook has found an underhanded way to skirt Apple's rules and get people to continue installing its VPN -- paying them.

TechCrunch this afternoon exposed Facebook's "Project Atlas" program, in which Facebook paid people -- adults and teenagers -- to install a "Facebook Research" VPN that is similar to the Onavo VPN app.

As of 2016, Facebook has been secretly offering people aged 13 to 35 up to $20 per month along with referral fees to sideload the Facebook Research app using an enterprise certificate on iPhone. Enterprise certificates like this are designed to allow companies to distribute internal corporate apps and give full root access to a device.

To hide its involvement, Facebook has been using beta testing services like Applause, BetaBound and uTest to recruit participants to install Facebook Research.

By getting people to sideload an app this way through an enterprise certificate, Facebook has access to data that includes private messages in social media apps, chats from instant messaging apps (including photos and videos), emails, web searches, web browsing activity, and ongoing location information. It's not clear if Facebook is accessing this data, but it could, according to security researcher Will Strafach, who TechCrunch consulted for this piece.

"The fairly technical sounding 'install our Root Certificate' step is appalling," Strafach tells us. "This hands Facebook continuous access to the most sensitive data about you, and most users are going to be unable to reasonably consent to this regardless of any agreement they sign, because there is no good way to articulate just how much power is handed to Facebook when you do this."

The terms of service for the Facebook Research app suggest Facebook was collecting information about the smartphone apps on a participant's phone and how and when those apps are used. Facebook also said it would collect data about activities and content within the apps, and information about internet browsing history. There's even a line suggesting Facebook collects data even when an app uses encryption or from within a secure browser session.

Facebook confirmed the program in a statement provided to TechCrunch and reportedly said that the Facebook Research app was "in line with Apple's Enterprise Certificate program," though that does not seem to be the case based on Apple's Enterprise Certificate policy.

"Like many companies, we invite people to participate in research that helps us identify things we can be doing better. Since this research is aimed at helping Facebook understand how people use their mobile devices, we've provided extensive information about the type of data we collect and how they can participate. We don't share this information with others and people can stop participating at any time."

Apple has been made aware of the issue, but declined to provide a comment to TechCrunch. It's not clear how the Cupertino company will handle the situation, but as TechCrunch points out, Apple CEO Tim Cook has been highly critical of Facebook and its privacy violations. Apple could potentially block the Facebook Research app or revoke Facebook's permission to distribute internal apps entirely.

Full details on Facebook's spying app can be found in TechCrunch's exposé.

Apple shipped an estimated 65.9 million iPhones during the first fiscal quarter of 2019 (aka the fourth calendar quarter of 2018) according to new data shared today by Strategy Analytics.

As of this quarter, Apple is no longer providing a breakdown of unit sales of the iPhone, iPad, and Mac, so we will not have concrete data on how well the ‌iPhone‌ is selling going forward.

Apple in Q1 2018 sold 77.3 million iPhones, which would mean Apple sold 11.4 million fewer iPhones in Q1 2019 if Strategy Analytics' estimates are correct, marking a 15 percent decline in sales year-over-year.

Global iPhone shipments fell sharply, due to high retail pricing, unfavorable foreign exchange rates, intense competition from rivals like Huawei, battery replacement programs driving longer ownership cycles, diminished carrier subsidies in some developed markets, and flagging demand in some emerging markets.

Apple's Q1 2019 ‌iPhone‌ revenue was $52 billion, down from $61 billion in the year-ago quarter, also a 15 percent decline. The drop in ‌iPhone‌ revenue led to total revenue of $84.31 billion, down from $88.3 billion in Q1 2018.

Despite the decline in ‌iPhone‌ sales, which Apple CEO Tim Cook has attributed to weakness in China and fewer upgrades, Q1 2019 was Apple's second-best in terms of both revenue and profit, coming in behind only the first fiscal quarter of 2018.

Apple CEO Tim Cook today commented on the opportunities Apple sees in the video market, though he declined to provide details on the company's specific plans.

Cook said that Apple sees "huge changes" taking place in customer behavior, which the company expects to "accelerate as the year goes by." Specifically, Cook said that Apple is expecting an acceleration of the breakdown of the cable bundle. "I think it'll likely take place at a much faster pace this year," he said.

Apple plans to "participate in that" in a number of ways, including the Apple TV, which offers support for apps so customers can watch television content on a per-app basis, and AirPlay 2, which will soon support third-party television sets. Cook said Apple is "excited" about the expansion of ‌AirPlay‌ 2 compatibility to third-party television companies because it will make the experience with people using Apple products in the living room "even better."

Cook said that third-party video subscriptions available on the App Store provide another opportunity for Apple that could "accelerate in the future" as customers are likely to buy multiple services, and finally, Cook pointed towards Apple's own work on original content.

Finally, original content, where we will participate. We've signed a multi-year partnership with Oprah. Today I'm not really ready to extend that conversation beyond that point. We've hired some people we have a super amount of confidence in, and they're working really hard. We'll have more to say on that later.

Rumors have suggested Apple is working on a full streaming television service to distribute both its original content and content from third-party providers such as HBO and STARZ. At least some of the content Apple is creating could be available for free, and Apple is said to be planning to integrate the service and the new TV shows into its TV app.

Apple has more than two dozen original television shows in the works, many of which are in the casting stages, with filming likely set to begin soon. Apple has also purchased movies and inked deals with well-known industry talent including Jason Katims and Justin Lin.

Apple is aiming to have its streaming television service ready for a mid-April launch, and has been telling its launch partners to prepare for that date. An actual release could come right around that target date.

During today's earnings call for the first fiscal quarter of 2019, Apple CEO Tim Cook was asked whether he thought that the pricing of the iPhone XR, XS, and ‌iPhone‌ XS Max was too high.

In response, Cook said that while he didn't feel that was as much of a factor in the United States, it was an issue in emerging markets.

The ‌iPhone‌ XS is priced the same as the ‌iPhone‌ X at $999, while the ‌iPhone‌ XS Max, a new device, was $100 more. The XR, at $749, was priced to be right in the middle of the entry level ‌iPhone‌ 8 and ‌iPhone‌ 8 Plus models. Cook said that's a "pretty small difference in the United States compared to last year."

In emerging markets, however, ‌iPhone‌ pricing was an issue due to the strength of the dollar. Foreign exchange rates amplified the pricing increases leading to weaker sales. Cook says that in January, in some locations, the company has absorbed all or part of the currency movements compared to a year ago, getting closer to local price compared to a year ago.

Cook in an interview with Reuters earlier today said that Apple is lowering iPhone prices in some emerging markets.

In developed markets, like Japan, a lack of subsidies has also become a major factor. Even in the U.S., where subsidies have been phased out for several years, Cook said that a person who last purchased an ‌iPhone‌ 6 or 6s for $199 when subsidies were still in place may be reluctant to upgrade to a device that costs upwards of $749 without subsidies.

Apple is working to address the subsidy issue with trade-ins and installment payments.

Cook in a separate statement said all of Apple's devices are designed to last. "We do design our products to last as long as possible," he said. Some customers choose to hold on to those products for as long as possible, while some trade them in. Apple's product cycle has indeed extended and upgrades were less than anticipated last quarter, but Cook says he doesn't know where that will go in the future.

"I'm convinced that making a great product that is high quality is the best thing for the customer. That's the way we look at it."

Apple saw lower than expected iPhone sales during its first fiscal quarter of 2019 (aka the 2018 holiday quarter) and one explanation provided by Apple was lower quarterly ‌iPhone‌ upgrades. During today's earnings call, Apple CEO Tim Cook delved into the reasons why Apple is seeing fewer upgrades.

First and foremost, he named foreign exchange rates. The strength of the U.S. dollar has made the ‌iPhone‌ much more expensive in many parts of the world, which is why Apple today said that it plans to lower prices in some emerging markets. In Turkey, for example, the ‌iPhone‌ became so expensive due to exchange rates that revenue fell $700 million from the previous year.

Cook also said that ‌iPhone‌ subsidies are becoming increasingly less common, which is impacting upgrade rates. In Japan, for example, it used to be common to have subsidies for smartphones, but local regulations have eliminated many of those. According to Cook, less than half of iPhones sold in Japan were subsidized compared to 3/4ths a year ago. The total value of subsidies has declined as well.

Cook's third reason for fewer ‌iPhone‌ upgrades was the battery replacement program that Apple offered across 2018, allowing customers to swap out the battery in their iPhones for $29. Cook said that this made it inexpensive and efficient to replace ‌iPhone‌ batteries and hold on to older iPhones for a longer period of time.

According to Cook, while analysts suggested Apple shouldn't do it, the company "strongly believes it was the right thing to do for [its] customers."

To combat fewer upgrades, Cook pointed towards Apple's trade-in program, which drives down the price of new devices when trading in older devices, and he highlighted the monthly payment options that Apple recently started promoting on its trade-in page. This page provides details on the monthly price of the ‌iPhone‌ XR and ‌iPhone‌ XS when trading in an older device.

The lower than anticipated ‌iPhone‌ upgrades along poor sales in China ultimately led to a 15 percent decline in ‌iPhone‌ revenue year over year.

Cook says that while ‌iPhone‌ upgrades were lower than anticipated, the company's business grew in the rest of the world, setting new records in the U.S., Canada, Mexico, Germany, Italy, Spain, and Korea.

According to Cook, investors should be aware of three factors long term: a loyal and satisfied customer base, a large and growing active installed base, and Apple's deeply ingrained culture of innovation.

Apple CEO Tim Cook today told Reuters that the company is "rethinking" iPhone prices outside of the United States. Setting prices in U.S. dollars has made phones more expensive in local currencies, so Apple is planning to lower prices.

Cook says that in some international markets, after assessing macroeconomic conditions, Apple will go back to pricing that's "more commensurate" with what local prices were last year to boost sales.

"When you look at foreign currencies and then particularly those markets that weakened over the last year those (iPhone price) increases were obviously more," Cook told Reuters. "And so as we've gotten into January and assessed the macroeconomic condition in some of those markets we've decided to go back to more commensurate with what our local prices were a year ago in hopes of helping the sales in those areas."

Apple has already started lowering the price of the ‌iPhone‌ for third-party distributors in China, and price cuts could also be introduced in other areas like India and Brazil, where the ‌iPhone‌ is prohibitively expensive and has seen stalled growth due to high pricing.

Cook may provide details on specific areas where price cuts will be implemented during the earnings call.

Apple today announced financial results for its first fiscal quarter of 2019, which corresponds to the fourth calendar quarter of 2018.

For the quarter, Apple posted revenue of $84.31 billion and net quarterly profit of $19.965 billion, or $4.18 per diluted share, compared to revenue of $88.3 billion and net quarterly profit of $20.1 billion, or $3.89 per diluted share, in the year-ago quarter.

The earnings report comes after Apple issued a rare warning on January 2 that revenue for the quarter would come in at least $5 billion below the company's original guidance, with Apple pointing to a number of factors including the later launch of the iPhone XR, general weakness in China, and fewer upgrades as customers took advantage of Apple's reduced pricing on battery replacements in 2018 to extend the lives of their current phones.

Even with the earnings warning, the quarter was the second-best in Apple's history in terms of revenue and profit, trailing only the first fiscal quarter of 2018.

Gross margin for the quarter was 38.0 percent, compared to 38.4 percent in the year-ago quarter, with international sales accounting for 62 percent of revenue. Apple also declared an upcoming dividend payment of $0.73 per share, payable February 14 to shareholders of record as of February 11.

This quarter also marks a change in the way Apple reports its results, as the company is no longer providing unit sales data for ‌iPhone‌, iPad, and Mac. Apple argues that quarterly unit sales are not an accurate indicator of the underlying strength of Apple's business, but critics have suggested the move is an attempt to make it less obvious that Apple is making up for sagging unit sales by selling more expensive devices.

“While it was disappointing to miss our revenue guidance, we manage Apple for the long term, and this quarter’s results demonstrate that the underlying strength of our business runs deep and wide,” said Tim Cook, Apple’s CEO. “Our active installed base of devices reached an all-time high of 1.4 billion in the first quarter, growing in each of our geographic segments. That’s a great testament to the satisfaction and loyalty of our customers, and it’s driving our Services business to new records thanks to our large and fast-growing ecosystem.”

Apple's guidance for the second quarter of fiscal 2019 includes expected revenue of $55-59 billion and gross margin between 37 and 38 percent. That revenue figure is near or slightly below analysts' expectation of around $59 billion. Apple's stock is currently up about 2.5 percent in after-hours trading following the release.

Apple will provide live streaming of its fiscal Q1 2019 financial results conference call at 2:00 PM Pacific, and MacRumors will update this story with coverage of the conference call highlights.

Conference call recap ahead…

➜ Click here to read rest of article...

Apple's upcoming refreshed iPad mini and next-generation iPad could feature support for the Apple Pencil and Smart Keyboard, according to details shared today by developer Steve Troughton-Smith.

Troughton-Smith has been digging into the latest iOS beta for details on the new ‌iPad‌ models, and he says that all of this information should be taken with a grain of salt because he's not 100 percent sure on the details.

From what he's found, though, ‌iPad‌ models codenamed J210, J211, J217, and J218 come in two sizes, likely corresponding to rumored ‌iPad mini‌ 5 models and a refreshed sixth-generation ‌iPad‌, which is said to be getting a larger 10-inch display, up from 9.7 inches.

Both ‌iPad‌ sizes appear to support a ‌Smart Keyboard‌ and Pencil, which makes sense as Apple proved its willingness to offer ‌Apple Pencil‌ support in its more affordable tablets with the launch of the sixth-generation ‌iPad‌.

The new iPads appear to support Touch ID, so it sounds like the form factors will be similar to the existing models. Apple's iPad Pro models use Face ID, but with both the ‌iPad‌ and the new ‌iPad mini‌ likely to be positioned as more affordable devices, we're expecting Apple to stick with Touch ID.

Rumors have suggested both a new ‌iPad mini‌ 5 and an updated ‌iPad‌ will launch in early 2019, and we've seen signs of them in iOS 12.2 and through registration with the Eurasian Economic Commission. Apple has held a March event for the last several years, so it's possible we'll be seeing updated tablets right around then.

Apple is set to report its earnings results for the first quarter of its 2019 fiscal year at 1:30 p.m. Pacific Time today.

The quarter began September 30, 2018 and ran through December 29, 2018, according to Apple's fiscal year accounting calendar.

Apple issued a rare earnings warning for the quarter on January 2, its first in over 16 years. The revised guidance is as follows:

• revenue of approximately $84 billion
  

• gross margin of approximately 38 percent
  

• op. ex. of approximately $8.7 billion
  

• other income/expense of approximately $550 million
  

• tax rate of approximately 16.5 percent before discrete items

Apple's initial guidance for the quarter on November 1:

• revenue between $89 billion and $93 billion
  

• gross margin between 38 percent and 38.5 percent
  

• op. ex. between $8.7 billion and $8.8 billion
  

• other income/expense of $300 million
  

• tax rate of approximately 16.5 percent before discrete items

Apple's guidance suggests it will report its second-best first quarter results ever, based on revenue, behind its 2018 record of $88.3 billion:

• 2015: $74.6 billion
  

• 2016: $75.9 billion
  

• 2017: $78.4 billion
  

• 2018: $88.3 billion
  

• 2019: $84 billion

What to Look For

• Apple's revised guidance suggests it will report its first holiday quarter sales decline since 2001, although it would still be the company's second-best quarter ever in terms of revenue.
  

• This is Apple's first earnings report in which it will not disclose iPhone, iPad, or Mac unit sales, a change it announced back on November 1. Apple's financial chief Luca Maestri said Apple may provide qualitative commentary about sales if necessary, so it will be interesting to see how the conference call and question-and-answer session play out.
  

• In a letter to shareholders on January 2, Apple CEO Tim Cook disclosed that Apple's revenue will be lower than its original guidance for the quarter, coming in at approximately $84 billion. Apple initially guided for revenue of $89 billion to $93 billion in the quarter on November 1. Look for any potential commentary surrounding the shortfall.
  

• Apple's guidance for its second quarter of fiscal 2019, which began December 30 and so far only encompasses the launch of new Smart Battery Cases for the iPhone XS, ‌iPhone‌ XS Max, and ‌iPhone‌ XR. It could eventually include new iPads, a new iPod touch, new AirPods, the AirPower, more. Analysts expect revenue of around $58.9 billion in the second quarter, compared to $61.1 billion in the year-ago quarter.
  

• Continued growth of Apple's Services category, including the App Store, Apple Music, iCloud, iTunes, Apple Pay, and AppleCare. Last quarter, Apple's services brought in a record $9.9 billion revenue. Apple has said it is still on target to double its fiscal 2016 services revenue by fiscal 2020. Analysts expect services revenue of around $11 billion in the quarter.
  

• Continued growth of Apple's Wearable, Home, and Accessories category, previously named Other Products, including the Apple Watch, Apple TV, HomePod, AirPods, Beats, iPod touch, and accessories—particularly as Apple diversifies revenue beyond the ‌iPhone‌.

Apple's CEO ‌Tim Cook‌ and CFO Luca Maestri will discuss the company's earnings results on a conference call at 2:00 p.m. Pacific Time today. MacRumors will loosely transcribe the one-hour call as it occurs live.

Apple Stores are getting a series of over 50 new Today at Apple sessions for 2019.

The new sessions, being added to the Today at Apple page alongside the announcement, relate to Skills, Walks, and Labs.

Skills are meant for those interested in learning new creative techniques to go further with our products, such as making a quick video with the Clips app or editing photos on iPhone. New Skills sessions include Notes and Chords with GarageBand, Sketching Ideas in Notes, Photo Editing Techniques and more.

Walks invite customers to venture outside of the store with a Creative Pro, where they will explore their surroundings, connect with their community and put new skills to use across passions like photography, music or health. New Walks include Capturing Cinematic Shots, Creating Soundscapes with GarageBand and a Health and Fitness Walk, Staying Motivated co-created with fitness expert Jeanette Jenkins.

Labs help customers experiment with creative techniques and complete the session with the beginning of a project. Many Labs have been co-created with world-renowned artists and makers. Building on the success of Labs with Florence Welch and photographer Chase Jarvis, skilled customers can find inspiration in new Labs like Beat Making with Swizz Beatz, Small Screen Magic with Zach King and Drawing Treehouses with Foster + Partners.

Today at Apple launched in May 2016 at Apple Union Square in San Francisco and expanded to Apple Stores worldwide a year later. The program offers free, hands-on creative and educational sessions related to topics such as photography, videography, music, coding, gaming, and art.

An example of an existing session is the Photo Walk, in which an Apple employee guides a group of people on a walk while providing iPhone photography tips. Another is the Kids Hour session Maze Challenge that tasks kids with programming Sphero robots to navigate a maze on the Apple Store floor.

Today at Apple also incorporates lessons from Apple's free Everyone Can Code and Everyone Can Create curriculums and tools such as Final Cut Pro X, Logic Pro X, and the Swift Playgrounds app for iPad.

Speaking at an October 2018 event in Brooklyn, Apple's retail chief Angela Ahrendts said Apple Stores have combined to host over 18,000 Today at Apple sessions per week, with the help of over 70,000 employees.

While it only made the news yesterday, it appears Apple was alerted to a major FaceTime privacy bug over a week ago.

Twitter user MGT7500 tagged the official Apple Support account in a January 20 tweet claiming that her 14-year-old son discovered a "major security flaw" that allowed him to "listen in to your iPhone/iPad without your approval." The user also tagged Tim Cook on the issue in a follow-up tweet on January 21.

Once the bug started making headlines on Monday, the Twitter user then shared additional tweets claiming that they had also emailed Apple's product security team over a week ago. A screenshot of the email was shared, and it appears the team did respond, but what they said is not visible in the screenshot.

The user acknowledges having wanted to receive a monetary reward under Apple's bug bounty program, but she claims she still proceeded to alert Apple to the bug by phone, fax, and with an official bug report nonetheless. She also wanted to keep the bug private, but she did tweet Fox News about it.

All in all, there is evidence that Apple Support was tagged about an eavesdropping bug eight days before it made headlines, and if the rest of the tweets are truthful, the company was also alerted about the bug via several other avenues.

Apple has temporarily disabled Group FaceTime, as adding your own phone number to a FaceTime call was the underlying cause of the bug, while it rushes to prepare a software update with a permanent fix. Apple said that update will arrive "later this week," but it wouldn't be surprising to see it today.

Apple did not immediately respond to our request for comment about when it discovered the bug and how long it existed.

Update: John Meyer reached out to the Twitter user and has shared a video about the ‌FaceTime‌ bug that he says was recorded and sent to Apple on January 23. Meyer has apparently confirmed the veracity of this info by phone.