STARTUPS PULSE - Cluely helps you to cheat on anything, and Is It The End of Apple’s Walled Garden

Potato Secures $4.5M to Transform Scientific Research with AI-Driven Automation AI Startup Cluely Raises $5.3 Million Amid Ethical Controversy Is It The End of Apple's Walled Garden #startups, #AI, #Apple, #ethicalcontroversy, #automation, #investment, #technology

Episode Transcript

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Welcome to Innovation Pulse, your quick no nonsense update covering the latest in startups

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and entrepreneurship news. Seattle based startup Potato has raised $4.5 million for its AI
platform aiming to revolutionize scientific research while clearly secured $5.3 million
in funding for its contentious AI exam tool.
After this, we'll dive deep into a significant court ruling affecting Apple and the broader

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mobile app industry.
Seattle based startup Potato has secured $4.5 million in funding to revolutionize scientific
research with its AI-powered platform. This platform acts as a research assistant, aiding
scientists in hypothesis generation, protocol optimization, paper writing, and article critique.

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Potato's ultimate goal is to automate the entire experimental process, starting with
computational research and progressing to robotics for lab work. Led by co-founder and
CEO Nick Edwards, the company aims to make scientific discovery faster, cheaper, and
more reproducible by leveraging AI advances. Potato's technology utilizes chat-based generative

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AI enhanced with retrieval augmented generation to improve result accuracy by incorporating
scientific literature facilitated by a partnership with Wiley. The company collaborates with
Jinko Automation to develop automated experiments. Potato's platform is already in use at several
prestigious institutions including Stanford and MIT. With a focus on life sciences, Potato

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plans to expand into material sciences and chemistry. The company sees this as a trillion
dollar opportunity to accelerate the pace of discovery supported by investors like Draper
Associates and Dolby Family Ventures.
Cluelly, a startup founded by Chungin Roy Lee and Neil Shanmugam has raised $5,300,000

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seed funding from abstract ventures and SUSE ventures. Cluelly is a San Francisco-based
company that offers an innovative AI tool designed to assist users during exams, sales
calls, and job interviews through a hidden in-browser window that remains undisclosed
to examiners or interviewers. This AI tool, originally named Interview Coder, was developed

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by Lee and Shanmugam while they were students at Columbia University. Both founders have
since left the university following disciplinary actions related to their creation. Cluelly's
AI tool has been likened to the calculator and spell check, tools initially criticized
as forms of cheating. Despite its controversial nature, Cluelly has made significant strides,

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reaching over $3 million in annual recurring revenue. The startup's approach has sparked
debate, drawing comparisons to dystopian narratives and raising ethical questions about AI's role
in human interactions. The tool initially gained attention for helping developers with
lead code questions, which some industry insiders view as outdated.

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And now, pivot our discussion towards the main entrepreneurship topic.
Alright everybody, welcome to another deep dive on innovation pulse. I'm your host,
Donna, and today we're looking at a story that's sending shockwaves through the tech
world. It's a beautiful day to talk about corporate monopolies, am I right?

(03:51):
Absolutely, Donna. I'm Yacov Lasker, and today we're unpacking a bombshell ruling that could
fundamentally reshape how mobile app ecosystems work. Judge Yvonne Gonzalez Rogers just handed
down a decision that essentially says, Apple deliberately failed to comply with her previous
court order from 2021, and she is not happy about it. Not happy as putting it mildly,

(04:15):
Yacov. The judge's opinion was downright furious. Can you lay out what happened here?
Because this has been brewing for years. Right. So here's the backstory. Back in 2021,
Epic Games, you know, the company behind Fortnite took Apple to court over its app store practices.
Apple actually won most of that case, but the judge did order one significant change.

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Apple had to allow developers to include links and buttons in their apps that would direct
users to alternative payment methods outside the app store. The famous anti-steering injunction,
right? Because Apple was basically preventing developers from even telling users they could
pay for stuff elsewhere. Exactly. And this was a big deal because of Apple's notorious 30%

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commission on in-app purchases. But what's fascinating is how Apple responded. Instead of
complying in good faith, the court found that Apple basically did everything possible to undermine
the ruling while technically implementing it. It's like when your mom tells you to clean your
room and you just shove everything under the bed. That's laughs. Perfect analogy. Except Apple's

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version of shoving things under the bed involved high level executive meetings where they explicitly
discussed how to limit the ruling. The court documents show they knew which options would be
most attractive to developers and deliberately chose the most restrictive approach. Wait,
so they actually documented this? That seems not smart. I know, right? The court opinion

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details internal meeting notes, emails, and even Slack messages where Apple employees talked about
making warning screens scary to discourage users from clicking external payment links. One
employee even suggested ways to make the experience even worse. And that's a direct quote. And Tim
Cook was involved in this too, wasn't he? Absolutely. The judge specifically called him out,

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writing, and I love this line, Cook chose poorly. The court found that when presented with options
to comply with the order or maintain their revenue stream through unjustified fees, Cook went with
the money. You know, this reminds me of the early days of the app store back in 2008. When Apple
launched it alongside the iPhone 3G, it was revolutionary, a curated, secure place to get

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apps. But that 30% commission has been controversial from day one. Right. And that historical context
is important. For over 15 years, Apple has maintained this walled garden approach. They've
always argued it's about security, privacy, and user experience. And to be fair, there's some
truth to that. Sure. But the question has always been, at what point does protecting your ecosystem

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become anti competitive? Because Apple isn't just taking a small processing fee, they're taking
nearly a third of all revenue. And that's exactly what developers have been complaining about for
years. But what's really wild about this case is how Apple tried to maintain control, even when
told by a court to loosen up. They set a 27% commission on external web purchases, just slightly

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lower than their inapp rate. And knew that after credit card processing fees, this would make the
external option unworkable for most developers. Make sense. If I'm a developer, and I have to pay
27% to Apple, plus another 3% to a payment processor, I'm actually worse off than just using
Apple system. Precisely. And then Apple added all these design restrictions. Links had to be plain

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text only, not attractive buttons. They added these full screen warning messages when users
click the links. They even prevented certain developers from using the new rules at all.
It's like they were setting developers up to fail. What strikes me is how deliberate this all
was. The judge's opinion makes it sound like Apple executives were basically sitting around asking,

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how can we technically comply while making sure nothing actually changes?
That's exactly what happened. And what's fascinating is that this comes at a time when
Apple is facing similar pressure globally. The European Union's Digital Markets Act has forced
Apple to make changes to the app store in Europe, including allowing alternative app stores

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entirely. Right. And that's a much bigger change than what this US ruling required. So what does
the new ruling actually mandate? The judge is done giving Apple wiggle room. The new ruling
requires Apple to allow developers unrestricted use of links and buttons for sales purposes, and
explicitly prohibits Apple from charging any commission on purchases made over the web.

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That's huge. So if I'm a Spotify or a Netflix, I can now just put a button in my iOS app that
says, subscribe on our website and Apple gets nothing. That appears to be the case. And that's
why this ruling could be so transformative for the entire mobile app industry. We're talking
about potentially billions of dollars shifting from Apple back to developers. I'm curious how

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this might affect Google's Play Store too. They have similar policies, right? They do. And
they've been watching this case closely. Google is already facing its own antitrust scrutiny,
including a major lawsuit from Epic Games with similar complaints. This ruling creates a precedent
that could certainly impact how courts view Google's practices too. It's fascinating to think

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about how this might change the economics of app development. For years, developers have built
their entire business models around these platform fees. Some might actually lower their prices
now that they don't have to factor in that 30% cut. That's a great point. And it might also lead
to more innovation in payment processing and digital commerce generally. When you remove

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artificial constraints from a market, you often see new ideas flourish. So what happens next?
Apple has said they're going to appeal, right? Yes, Apple has already announced they'll appeal
the decision. But appeals take time. And meanwhile, they'll likely have to implement these changes.
It's worth noting that the last time they appealed this judge's ruling, they lost. The Supreme

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Court declined to hear the case, which is why we're here now with Apple having to face the
consequences of their non-compliance. It's remarkable to think how much the tech landscape has
changed since the app store launched. Back then, Apple was the underdog compared to Microsoft. Now
they're valued at over $3 trillion and facing antitrust scrutiny worldwide. That's the classic

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innovation cycle, isn't it? The revolutionaries become the establishment, the disruptors become
the disrupted. And now we're potentially seeing the beginning of a new phase where these tightly
controlled ecosystems start to open up. I wonder if we'll look back on this ruling as a pivotal
moment in tech history, like the Microsoft antitrust case in the 90s or the breakup of AT&T.

(11:22):
I think we might. What's particularly important about this case is that it's not just about
Apple. It's about the precedent it sets for how digital platforms can and cannot exercise
control. And the judge making it clear that technical compliance while undermining the spirit
of the ruling is not acceptable. The court basically saying, we see what you did there,

(11:44):
Apple, and we're not impressed. Exactly. And that message resonates beyond just this case. It's
a warning to other tech giants that the era of regulatory deference might be ending. Well, this
has been a fascinating discussion, Yakov. I think our listeners have a lot to chew on here.
Whether you're a developer, an Apple user, or just someone interested in how tech and regulation

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intersect, this ruling is definitely one to watch. Absolutely, Donna. And for app developers
listening, you might want to start thinking about how you could integrate external payment
options into your iOS apps. This could represent a real opportunity to improve your margins. Great
point. Well, that's all the time we have for today on Innovation Pulse. We'll be following this

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story as it develops. So make sure to subscribe wherever you get your podcasts. Until next time,
keep innovating. Thanks, everyone, and see you next time.
That wraps up today's podcast where we explored Potato's innovative approach to accelerating

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scientific discoveries with AI and the ethical stir caused by Cluley's exam assistance tool,
alongside Judge Rogers' landmark ruling against Apple's App Store payment practices. Don't
forget to like, subscribe, and share this episode with your friends and colleagues so they can
also stay updated on the latest news and gain powerful insights. Stay tuned for more updates.