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TL;DR: Jobs argues for permission dialog fatigue as a solution to privacy, audience applauds.
Funny, I thought this was a tongue-in-cheek comment, but it‘s literally what happens in the video.
This is a rather sinister interpretation. I think what Jobs means is that privacy is about asking for consent repeatedly. Whenever there is a new way to use user’s data, a permission should be requested.
Pessimistic or uncharitable, sure, but sinister? That doesn't even really make sense.
By today’s standards, apparently yes. Dialog fatigue (and dark patterns exploiting it) is an issue.

But thinking the other way: If we are constantly asked for privacy-related permission, then it’s probably because something is seriously wrong today.

Dialog fatigue is a symptom. Indiscriminate data hunger is the disease.

> make them tell you to stop asking

This is where it always takes goes wrong, hence the fatigue part.

> I'm an optimist, I believe that people are smart.

Well, this is where he was wrong.

Also, he was basically lying and saying what the audience wanted to hear.

He said multiple times during his lifetime on design and usability that you give the people what they need not what they want.