Darel Rex Finley in 888

When Starting A Game of Chicken With Apple, Expect To Lose

2017.04.09   prev     next

ACCLIMATING to computing in the fifteen year period from about 1985 to 1999 has, I think, permanently affected many technologists’ perception of Apple. In their minds, Apple is forever the desperate also-ran that sells to an audience of benighted purists who can’t see that they’ve already lost. In this distorted vision, the 1990s never really ended.

When stuck-in-the-’90s tech­no­philes see Apple doing well, they naturally assume that such success can be easily taken away. And they feel that if faced with a game of chicken, Apple is sure to swerve. Those “kids” at Apple must be so delighted to have success at all, that when confronted with any kind of threat, they’ll surely choose the easiest, least risky, most immediate way out.

Many people who think this way have developed into disgruntled pundits who do their best to pepper their readers, ad nauseam, with year after year of Apple-failure mispredictions. But once in while, you get someone who’s actually in a position to try to deal with Apple in some way, and — acting on the false assumption that Apple is a company of weak losers who stumbled into fantastic fiscal fortune by accident — tries to win a staring contest with the company. And typically, such individuals make utter fools out of themselves, when Apple doesn’t blink.

Cupertino Clown

A couple years ago, Barry Chang, mayor of Apple’s hometown, decided he could cover his administration’s financial incompetence — the place is becoming “overcrowded and decrepit” — by getting Apple to pay gobs more money than it owes under existing tax laws. How would he accomplish that? By publicly shaming the company until it handed over the desired mountain of cash.

So he granted an interview to The Guardian — a publication that has no qualms about running blatantly anti-Apple smear pieces — in which he “assailed Apple for evading taxes and hiding profits in offshore accounts,” and said, “‘Apple is not willing to pay a dime. ... They’re making profit, and they should share the responsibility for our city, but they won’t ... They abuse us.’”

He tried to get the city council to approve a motion to arbitrarily increase Apple’s city taxes from tens of millions of dollars to $100 million. His motion was rejected. Then he showed up unannounced at Apple’s headquarters, apparently to start a conversation about his $100 million plan, but only managed to have a very brief talk with building security, who made him leave. He insisted that he’s “not going to back down” on this — but neither, apparently, is Apple, which has had virtually nothing to say about the episode, and just continues to pay the amount of taxes required by law. Meanwhile, Chang’s antics seem to have ab­rupt­ly ceased.

Why would the mayor of an affluent suburb of a major U.S. city make such a buffoon out of himself? The mostly likely answer is that he simply believed it would work. If Apple had panicked at the specter of any negative publicity, and said, “Oh, here! Here’s $100 million! Please, please take it,” then Chang would’ve come out smelling like a rose, looking like a genius. Believing that this outcome was highly likely, and mentally discounting the possibility that Apple would stand firm, Chang trashed his own reputation for rationality and professionalism.

Haunted Journalist

Yukari Iwatani Kane had a Wall Street Journal gig in the 2000s writing negatively about Apple. Then she came out with her own book about the company. A lot of people who for one reason or other can’t quite swallow Apple’s post-’90s success determined with unshakeable certainty that the untimely passing of Steve Jobs could mean only one thing: the swift decline, if not outright death, of his main creation. However, it’s fair to say that only Kane turned that thesis into an entire book. Haunted Empire: Apple After Steve Jobs, though also a grab-bag of random, time-dishonored (and not always compatible) Apple’s-in-trouble-now arguments, did manage to marshal the most persuasive no-Apple-without-Jobs postulates into a single, tiresome tome.

Apple’s only reaction to Kane’s screed was a brief, mildly heated, public statement by CEO Tim Cook in which he called the book “nonsense.” Cook’s emotion should surprise no one when he comments on the work of an author who refers to Apple as “a cult built around a dead man,” who claims the company “teeters at the edge of a reckoning,” and who calls Cook himself “delusional and painfully out of touch” for not somberly affirming her book’s concerns at his D11 interview, instead expressing excited optimism about his enterprise’s future.

No, if you really believe in your heart-of-hearts that Apple’s runaway success train just has to derail any day now, you can heap personal and substanceless abuse on the company and its leadership, and still expect, with a completely straight face, that they take you seriously:

For Tim Cook to have such strong feelings about the book, it must have touched a nerve. ... Even I was surprised by my conclusions, so I understand the sentiment. I’m happy to speak with him or anyone at Apple in public or private. My hope in writing this book was to be thought-provoking and to start a conversation which I’m glad it has.

Cook and company did not take up Kane on this generous offer. Her “conversation” began and ended with her own, “thought-provoking” tract.

If even some of Kane’s Haunted assessments were valid, Apple indeed would have been in serious trouble, but the three years since her fifteen minutes in the sun have clearly revealed that there must have been something seriously amiss with every single one of them. Kane still hawks the now-transparently-misguided volume from her self-named website, when she’s not teaching classes at Berkeley or finding some other way to pay the bills.

Flash Over

Besides Apple’s then-beleaguered condition, another feature of the ’90s was the prominence of Macromedia Flash, the web browser plugin that enabled interactive animations in a web pane. Even in its prime, Flash had a lot of deficiencies, including low frame rates, browser compatibility issues, general bugginess, and opaqueness to web search. But Adobe apparently thought it had a big future ahead of it when they bought it outright for $3.4 billion. A couple years later, iPhone debuted, and it didn’t run Flash at all. As Apple’s mobile revolution quickly took off, Adobe suddenly realized that they really wanted to get Flash running on iPhone. But Apple’s tightly controlled mobile platform offered no way to accomplish that.

So what did Adobe do? They created Flash for iOS anyway (running only on their own, developer-controlled iPhones), and put on de­mos, to create the impression in the tech industry that Flash would soon be available on iPhone. John Gruber best summed-up the sit­u­a­tion:

The Internet pipes are chock full of reaction to the news that Adobe is “working on” a Flash player for the iPhone, much of it based on the weird assumption that if Adobe can get it working well, Apple will publish it. Guess what? Apple isn’t going to publish it. ... Apple will not publish a Flash player for the iPhone unless and until there exists some other mobile phone that (a) does run Flash, and (b) starts taking sales away from the iPhone. Which, my guess is, means never. ... An excellent implementation of Flash for Android would give Adobe some amount of actual leverage. Until then, Adobe’s just embarrassing themselves every time they mention it.

Sure enough, Apple didn’t publish it. And it never ran well (or even ubiquitously) on Android, or any other mobile platform. But Adobe kept pushing it for the next several years. iPad came out, and it didn’t run Flash either, but still, Adobe wouldn’t quit hyping the idea that Flash would soon be available for Apple’s devices, apparently believing that Apple would just have to give in and let it happen.

So Steve Jobs put out his now-famous “Thoughts On Flash,” an open letter in which he plainly detailed six specific reasons Apple doesn’t want Flash running on its mobile devices. Despite being excoriated as “just smoke” by high-profile tech writers like Joe Wil­cox, and as “really a smokescreen” and “an extraordinary attack” by Adobe’s own CEO Shantanu Na­ra­yen, Jobs’s letter proved to be the first and last thing Apple had to say about it, and the idea that iOS users would ever see websites running Flash faded away over the next several years — followed by Flash itself, from which even most desktop/laptop web browsers are trying hard to escape for good.

FRANDship Is Magic

Your patent becomes “FRAND” (Fair, Reasonable, And Non-Discriminatory) when you allow it to be used in an impending, industry-wide standard — say, the 3G mobile phone protocol developed in the mid-’90s — in exchange for which you will receive a stipulated, uniform, per-phone payment from every phone maker (other than yourself) who manufactures phones that work on the 3G network. Your reason for agreeing to such a contract is obvious: once 3G goes into effect, no phone maker will be able to avoid paying you this royalty. Just as obvious is the reason the architects of 3G want you to sign such a contract before they finalize the standard: so you can’t wait for 3G ubiquity, then demand any amount you please in exchange for allowing the whole system to continue operating!

Many tech companies struck the FRAND agreement for various of their patents, and one of those companies was Motorola. Once a prominent brand of mobile phone, Motorola’s mobile division got their ass spanked out of that market by Apple within a few years of iPhone’s arrival. In deep financial doldrums, they apparently figured, what have we got to lose? Let’s try demanding many, many times higher royalties from Apple for our 3G FRAND patents, and sue them if they don’t pay. Worst case, our suit gets dismissed — but maybe it won’t be?

Motorola guessed right: the courts (in Germany for this particular action) seemed to think that the case should be allowed to proceed, at least for a while. A lot of courts worldwide have become accustomed to the idea that when tech companies sue each other, it’s all a prelude to an out-of-court settlement, and that’s how the case ends. In this mindset, the job of the judge is to impartially allow the companies to spar until they reach such settlement.

But Apple refused to settle, insisting that FRAND fees are all it should have to pay. So Motorola asked the court for an injunction against the sale of certain 3G iPhones and iPads. Again, the court apparently thought this was a legitimate pressure point for purposes of bringing the case to settlement, and granted the in­junc­tion.

Apple still didn’t settle, nor did it stall for time. Instead, it promptly complied with the injunction, yanking the offending products from the German market, and saying in-effect, OK, now what? Perhaps realizing that Apple wasn’t going to cave, and that the German people were going to be seriously inconvenienced by a case that ultimately would be thrown out on FRAND considerations, a higher court ab­rupt­ly intervened, lifting the injunction and effectively voiding the patent.

In the meantime, Motorola’s mobile division had been bought up (as “Motorola Mobility”) by Goo­gle for $12.5 billion, and soon thereafter was estimated to be bleeding about $1 billion per year from Google. A few years (and a few ill-fated products) later, it was sold off to Lenovo for $2.9 billion. Lenovo lately has seen most of its PC profits erased by continuing, ongoing losses at Motorola Mo­bil­i­ty.

• • •

Many telecom patents are encapsulated in one, very specific, electronic part: the baseband radio chip found in every mobile phone. For maybe a decade or more, Qualcomm has been the near-exclusive maker of that chip. Per FRAND rules, all FRAND patent royalties must be paid at the earliest point of manufacture, so Qualcomm pays per-chip royalties to several different companies; then those patents require no further payment, and Qualcomm is free to sell the chips to whomever will buy. The buyer (e.g. Apple) is not required to pay anything for FRAND patents used by that chip; the manufacturer (Qualcomm) has already taken care of it.

Qualcomm itself owns some of those patents, and as the maker of the chip, may choose to pay itself the royalties if it so desires (perhaps for accounting purposes). But then no further payment is required, and the buyer of the chips (e.g. Apple) just uses those chips in its products, and pays no royalties on that chip.

Some years ago, apparently, Qualcomm decided that its near-monopoly on this key component meant that it could stray outside of its FRAND agreements, and so started to charge Apple, and Apple’s contractors, for the use of Qualcomm’s own FRAND patents in Qualcomm’s own chips, to charge much higher rates than the FRAND agreements indicate these patents are worth, and to charge different amounts depending on the market value of the end-user product where the chip is finally used. Further, Qualcomm demanded (and received) secrecy from the companies that were overpaying for FRAND patents, in order to keep other involved parties (including government regulators) in the dark about how these patents were being misused. All of these practices were predicated on the implied threat that if Qualcomm cut off chip supply to any particular company (e.g. Apple), that company would be unable to sell its products, and would be ruined overnight.

Apple seems to have silently tolerated this exploitation, even as it got slowly worse with time, while making quiet plans to become far less dependent on Qualcomm. Once Apple got Intel supplying a substantial percentage of Apple’s baseband chip demand — and, of course, Intel can just pay the FRAND-stipulated royalties to Qualcomm, whether Qualcomm likes it nor not — then Apple came forward with a huge lawsuit a­gainst Qualcomm. The suit coincides with Qualcomm getting hit with an $865 million fine by Korea’s FTC for FRAND patent a­buse. Besides lots of damages associated with patent overpayment, Apple also seeks $1 billion that Qualcomm confiscated in retaliation for Apple talking to the KFTC at the KFTC’s request. From the suit:

If that [confiscation] were not enough, Qualcomm then attempted to extort Apple into changing its responses and providing false information to the KFTC in exchange for Qualcomm’s release of those payments to Apple. Apple refused.

It all looks very bad for Qualcomm — but however the case shakes out, it seems a pretty solid bet that Apple will be using its warm relations with chip-producing powerhouses such as Intel, TSMC, and perhaps even Samsung, as well as its own in-house and very successful chip-design abilities, to ensure that it will forevermore be able to produce working iPhones that don’t rely on Qualcomm’s cooperation or consent.

• • •

Nokia, like Motorola and Qualcomm, apparently thought that after losing out to iPhone, it could exploit its FRAND patents and make Apple cough up much greater sums than FRAND allows. Apple refused to pay, and fought Nokia’s suits. At some point, Nokia started to get into trouble over the fact that the patents are FRAND and it shouldn’t be doing this. So it invented a scheme whereby it could quietly sell some of these patents to “patent trolls” (companies with no products, that simply sue over patents) — since those trolls never signed a FRAND agreement, maybe they can win?

Filing suit against Apple for five of these bought-from-Nokia patents, the trolls managed to actually get a court victory on one of them. Then Apple filed an antitrust conspiracy suit against Nokia and the trolls, which is ongoing at the time of this writing. Clearly, Apple has no intention of settling for anything less than full compliance with FRAND agreements.

Privacy Schmivacy

When iPhone debuted, Apple and Google were friendly partners, and Google Maps was the data back-end used by iPhone’s Maps app. But then Google, assuming it could do a Windows-clobbers-Mac scenario in mobile, decided to repurpose its nascent Android platform into an iPhone killer, resulting in strong animosity between the two companies. The Google-Maps-on-iPhone relationship, however, continued for some years — Apple didn’t have an available Plan B, and Google had contractual obligations to Apple in this regard.

So instead of cutting Apple off, Google simply neglected to make its newest, best, mapping features available to iPhone. While Android phones got turn-by-turn directions, vector (as opposed to image-tile) maps, and 3D flyovers, i­Phone stagnated without those improvements. When Apple asked, when will we get access to those features, Google responded with a demand: provide us with detailed information about your iPhone users every time they do a Maps search. Apple said no, we don’t share our users’ private information. So Google refused to give Apple access to the advanced feature-set. What was Apple going to do?

What Apple did was to spend the next couple years developing its own maps back-end, so it could dump Google (and stop paying them a lot of money). Despite a rocky launch in 2012, Apple’s maps system today seems to be working just fine, and, of course, now has all the advanced features Google was withholding. Google scrambled to create its own, front-end, Google Maps app for iOS, which — though not disallowed by Apple — is largely ignored by the iPhone user base, which seems perfectly happy to use Apple’s default Maps app without knowing or caring from where the back-end data is served. The minority of iPhone users who do use Google Maps are now receiving its full feature-set. And Apple no longer pays Google a dime for anything to do with mapping; all the money Ap­ple pours into maps, from now on, is solely to the benefit of its own customers.

• • •

The FBI found a perfect test case in the San Bernardino suicidal shooting spree. The shooters had physically destroyed their own personal phones, but left their work phone (owned by the local city government) undamaged. That phone was an iPhone 5C, made before Apple’s Secure Enclave chip, and so was hypothetically vulnerable to an attack that could get into the phone without knowing the user’s unlock code. However, this theoretical hack would require considerable work by a team of developers, and would set an uncomfortable precedent about how far a private company can be required to go in the assistance of law en­force­ment.

So Apple — which had already provided the FBI everything about these accounts that it could readily access, including all of the attackers’ iCloud data — drew the line at this complex hack. The FBI pulled out all the stops in trying to shame Apple publicly as being on the wrong side of the fight against terrorism and crime, but Apple said no, short of a court order that survives the full appellate chain, we’re not doing that.

After the story used up its life in the press, the FBI suddenly found a third party hacker who could do it. They didn’t say exactly how it was broken, nor did they reveal what, if anything, they found on that iPhone. And no precedent was set that Apple, or any other company, need go to such a level of technical effort to break its own products’ security, in the service of legal investigation.

In the meantime, all iPhones made for the last few years feature the Secure Enclave chip, a security system against which there is not even a theoretical way for Apple itself to break. Apple appears to be throwing down the gauntlet: either pass (and court-test) a law requiring us to build-in a backdoor, or we’re going to keep making phones that no one — not even we — can get into without the end-user’s consent.

Cash Grab

Corporate raiders, such as Kirk Kerkorian, T. Boone Pickens, and Carl Icahn, traditionally go after formerly great companies that are now floundering around in such a state of failure/mismanagement that the total value of their stock (at current prices) dips below the resale value of their tangible assets. At that point, the raider steps in and makes the shareholders an offer to buy their shares at significantly more than the current trading price, which he will then pay out of the liquidation of the (ex) company’s assets.

Raiders do not normally target healthy corporations — not to mention the healthiest ever — but Icahn, perhaps emboldened by pundits’ never-ending chorus of “Apple’s run is up,” got the bright idea to go after Apple. Since Apple had a huge cash hoard of $150 billion, Icahn figured he might be able to get the shareholders to pass a referendum to expend the entire sum as one, huge share-buyback. Even losing more than a third of that money to the whopping, U.S. “repatriation tax,” it would still be a heck of a lot, and a giant windfall for holders of the stock — like Icahn.

Apple responded by starting dividend and share-buyback programs (actually its buybacks were already underway) — but nothing like what Icahn was hoping to get: Even with the biggest dividends in corporate history, and substantial stock buybacks over the past four years, Apple’s cash hoard, after subtracting outstanding debt, still today hovers around $150 billion. However, the new programs did serve the purpose of undermining Icahn’s plan, by helping the stock price (always bad for any raider’s ideas), and by removing shares from the least faithful shareholders — the ones most likely to vote for a raider’s proposal.

As soon as it became apparent that his scheme wasn’t going to work, Icahn made a face-saving statement about being satisfied with Apple’s buybacks, and withdrew his referendum attempt.

• • •

When a U.S. company earns money overseas, and pays corporate income tax in the country where the product was sold (which could be higher or lower than U.S. corporate income tax), the after-tax money is still subject to a tremendous 35% “repatriation” tax, if that money is ever brought back to the USA. But if it isn’t brought back, then it isn’t subject to repatriation tax. So if the company finds some way to spend that money on overseas projects, or just stores it in an overseas bank, then the repatriation tax doesn’t apply.

Eyeing Apple’s immense, overseas, cash hoard hungrily, a U.S. Senate subcommittee decided to “investigate” the issue of whether companies like Apple are paying the taxes they should. The apparent strategy was to stink up public discourse with the suggestion that Apple might be cheating the U.S. taxpayer out of billions of dollars by avoiding this 35% tax — a notion happily lapped up and regurgitated by Apple’s numerous detractors — and see if Apple capitulates under pressure, coughing up over $50 billion in extra money (plus much more ongoing) for the U.S. legislature to then go to town with.

As part of this pressure campaign, the committee invited Tim Cook himself to testify before it. He did. But he did not capitulate to anything; instead he gave a very confident, reasoned, straightforward speech about how much Apple pays in U.S. income taxes, how many U.S. jobs it creates, how it doesn’t hide its U.S. earnings behind foreign shell corporations like many U.S. tech companies have been doing for decades, and how its decision to keep overseas its non-U.S., after-tax earnings is perfectly legal. The hearing became a bit comical when many committee members — once they realized Cook wasn’t caving — started using their speaking time to shower Cook and Apple with effusive praise. Savvy politicians know when it’s time to support the winning side.

• • •

Not wanting to let the U.S. Senate have all the fun, the European Union came up with a great idea to hit up Apple for many billions of dollars of surprise payments: Simply claim that for the past several years Ireland’s tax laws haven’t been compatible with overarching EU rules, and presto: Apple, you now owe $14.5 billion more than you’ve already paid! What? You wouldn’t have put your money in Irish banks if you had been told it would be hit for fourteen B’s? Too bad — you put it there! That’s all that matters. Pay up.

This particular drama has yet to reach a conclusion, but Tim Cook responded with a direct, level-headed, open letter about the whole thing. Ireland’s finance committee, effectively ignoring Cook’s letter, publicly invited him to come discuss the matter in-person. He declined. So they smeared him as “disrespectful to the Irish people,” then a month later invited him again. He again declined.

Developers, Developers,

Sometime in the 2000s, Richard Ziade started a service called Readability. For a monthly fee, you could read news articles curated from major news sources’ web sites, but reformatted and stripped of all advertising, links, and other distractions. To head off copyright suits, he promised 70% of all revenue to be divided among the owners of the original content, with the other 30% to be kept by Readability.

While Ziade was developing his product — as a Windows app — a quiet revolution was going on in mobile, with Apple’s iOS devices strongly dominant among people who are actually willing to pay for apps/services such as Readability. When Ziade and his team abruptly realized that they really needed an iOS app, they discovered to their dismay that Apple keeps 30% of all App Store revenue, including from subscription fees. If 30% goes to Apple, and 70% goes to the article-originating news sites, how much does that leave for Ziade? Zero.

So he attempted to contact Apple, explain the problem, and ask them to take a lower percentage. Then he found out that Apple doesn’t negotiate this percentage with individual developers. Stupefied that they wouldn’t jump at the chance to get a Windows developer writing native apps for an Apple platform, Ziade penned an angry open letter (now removed, but you can read about it here).

Apple let him simmer for a year, then came up with a new policy for software-as-a-service apps that made it theoretically possible for Ziade to make some iOS money under his scheme. He created his iOS app, but in the end, his whole Readability business model didn’t turn out to be sustainable, and it shut down permanently last fall.

• • •

About five years ago, Microsoft decided that if they wanted their Microsoft Office gravy train to continue ad infinitum, they better get it up-and-running on iOS. But, like Ziade, they apparently thought that they had sufficient clout to negotiate away all or part of Apple’s 30%. It turned out they didn’t. They waited a year and a half for Apple to change its mind, then gave up and released Office for iOS — and yes, Apple keeps 30%.

A couple years after that, Apple came out with a new policy for all subscription-based apps (which includes Microsoft Office): when an individual subscriber has been paying for at least a year, Apple’s share drops to just 15% of that subscriber’s payments.

• • •

Apple has a pretty long list of reasons why iOS apps may be rejected by its App Store, but most developers don’t have any problem with it, and just develop great apps that Apple promptly publishes for its users to buy and enjoy. Some developers, however, read Apple’s app rules and decide that those rules can be bluffed or gamed until Apple gives in and lets the rules fall apart. For example, Jim Dovey of Kobo took maybe seven tries to discover that Apple’s app policies really are real, and Apple really is going to enforce them. Then he wrote a bitter blog article about it, which made no difference at all. Other disgruntled developers have sworn off of ever developing for Apple’s platforms again, and numerous pundits have insisted that Apple needs to open up iOS to any and all apps, with no restrictions. Apple has largely ignored these outcries, and continues to manually curate its App Store, which continues to break and re-break rec­ords of how much money third-party developers have been paid from an application platform.

• • •

The same year iPhone debuted, NBC decided to pull all its TV shows from Apple’s iTunes Store, due to Apple’s refusal to modify its TV show pricing scheme and its bundling policies, just for NBC. Forrester Research called Apple the “loser” of the fight, but Apple ignored such statements, stuck to its guns, and just continued selling non-NBC content. Nine months later, after various failed attempts to sell its content via other online venues, NBC changed its mind and returned all its content to the iTunes Store.

Monopoly Money

NFC (Near Field Communication), the wireless technology used by various contactless payment systems, arrived in many different smartphones years before any i­Phone had it, giving Apple’s critics yet another reason to poo-poo Apple’s product. Then Apple deployed NFC to all new models of iPhone, but not as a wide-open, API-supported, third-party feature, instead only in support of Apple Pay, its Secure-Element-protected, fingerprint enabled, contactless payment system.

Apple Pay has been widely adopted by banks and retailers throughout the U.S. and in many other countries. But the three big Australian banks balked. They had their own ideas of how a contactless payment system should work, and asked Apple to create an API to allow the banks to use iPhone’s NFC chip in whatever way they preferred. Apple said no, our product doesn’t do that.

So the banks took Apple to court, arguing that Apple’s control of NFC was some sort of anticompetitive, monopolistic thing. The courts didn’t buy it. Then the banks went to the Australian Competition and Consumer Commission, and asked for its blessing for them to negotiate with Apple as a united, collective front — i.e. the banks would agree with each other to refuse to adopt Apple Pay. Just this past month, the ACCC ruled: No, Australian banks may not collude against a company such as Apple. Each bank must decide what to do on its own.

• • •

Much has been written about the U.S. DOJ’s iBookstore price-fixing case against Apple. To keep it short: Apple was charged with committing no crime other than offering a better deal to the publishers than Amazon Kindle had been. All five big publishers jumped at that deal in unison (because they all found out about it at the same time, duh), and if that resulted in average e-book prices going up on Kindle, then that was all the prosecutor technically needed to charge Apple and the five publishers with conspiratorial price-fixing.

In 20/20 hindsight, it’s obvious the court was grossly biased in favor of the prosecution. The publishers all caved for relatively lenient sentences; only Apple insisted it did nothing wrong, and wanted its day in court. In the end, Apple was made to pay out a bunch of money (of course), and was harassed for two years by an obnoxious, court-appointed overseer, but nothing was actually done to change the way e-books are now sold. Everything that happened to that market as a result of Apple entering it is still in-effect.


After Apple’s arch-rival Microsoft ruled computing in the 1980s and ’90s, Apple is now pulling off the biggest upset in corporate/tech history. It’s only natural that some people with heavy-vested can-do in Microsoft’s systems are going to feel both threatened and incredulous at Apple’s spectacular resurgence. And since virtually everyone uses a computer now, these anti-Apple people are scattered throughout every profession, and they sense that they are not alone in disliking Apple’s rise, and doubting its durability. In such an environment, we shouldn’t be at all surprised to see many more individuals, companies, and governments make colossal fools of themselves when they act on the expectation that Apple will hastily jump out of their way.

Free advice for all such people: Before starting a game of chicken with Apple, ask yourself if any major corporation would be likely to give in to the pressure you’re about to apply. Would you expect this to work against GM? Exxon? Walmart? Boeing? Chase? Nike? Southwest Airlines? Starbucks? Microsoft, or Google, or Amazon? If not, then shitcan your plan to make Apple blink, and go find something else to do.


Update 2017.04.12, 05.12, 05.18, 05.24, 05.31, 06.15, 06.28 — small edits for clarity, including mention of Apple’s debt

Update 2017.05.23 — Apple and Nokia settle for undisclosed terms.

Update 2017.06.05 — At its WW­DC, Apple announces Core NFC, a way for third-party apps to use the NFC radio built into all recent i­Phones.

Update 2017.06.28 — Federal judge rules that an anti-competition suit against Qualcomm by the U.S. FTC can proceed.

Update 2017.07.06 — Qualcomm now asking ITC to ban the sale of iPhones and iPads that use non-Qualcomm (e.g. Intel) baseband chips.

Update 2017.07.14 — Australia working on law that would require government access to encrypted messages.

Update 2017.07.23 — Apple announced a $1 billion data center to be built in Ireland, then the project was held up for two-and-a-half years by the country’s approval process. In the same time period, a similar data center has been fully completed in Denmark, and now Apple is announcing plans for a second one there.

Update 2017.07.23 — Italian government proposing law that would require Apple (among others) to support unrestricted app sideloading.

Update 2017.07.25 — Adobe announces Flash’s end-of-life.

Update 2017.08.08 — The Indian government’s year-old “Do Not Disturb” Android app has full access to the user’s text messaging and call logs. But in iOS, such access is not available to any third-party app. So India’s Telecom Regulatory Authority chairman Ram Sewak Sharma granted an interview to the Times of India, in which he called Apple “anti-consumer,” and said, “Apple has just been discussing, discussing, and discussing. They have not done anything ... [they] are violating the right of the user to willingly share his/her own data ... why should it not be allowed? This is what we call data colonization.” — an apparent reference to British colonial rule of India.

Update 2017.08.22 — Epic Games founder and CEO Tim Sweeney, speaks about “app stores”:

“[They are] pocketing a huge amount of profit ...”

“The system is pretty unfair at the moment. These app stores take 30% of your revenue ... That’s strange because Mastercard, Visa and other companies that handle transactions take 2% or 3% of the revenue. ... these app stores ... aren’t really doing much to help us any more.”

“[The first step is] not accepting this as the status quo ... We should be angry about this, and we should constantly be on the lookout for other solutions, and new ways to reach gamers.”

“[App store share is a] parasitic loss.”

Update 2017.08.30 — Chinese law firm, representing about fifty app developers, files complaint with the State Administration for Industry and Commerce, arguing that Apple shouldn’t be allowed to decide when it is appropriate to disallow individual apps, and also shouldn’t be allowed to keep 30% of app revenue.

Update 2017.09.04 — Korean court order that Qualcomm negotiate in good faith with Apple upheld by higher court.

Update 2017.09.06 — Sharma now says that Apple’s position “is a ridiculous situation, no company can be allowed to be the guardian of a user’s data.”

Update 2017.09.08 — U.S. federal judge says Apple’s foreign suits against Qualcomm can proceed.

Update 2017.09.14 — Apple’s Safari web browser implements “intelligent tracking prevention”; advertising groups send open letter to Apple, objecting to it. The letter says, among other things, that they are “deeply concerned” about the feature, and that the “infrastructure of the modern Internet depends on consistent and generally applicable standards for cookies, so digital companies can innovate to build content, services, and advertising that are personalized for users and remember their visits.”

Update 2017.09.15 — Apple responds to ad groups’ open letter, asserting that Safari’s new, anti-tracking feature “does not block ads or interfere with legitimate tracking on the sites that people actually click on and visit.” I.e. it only prevents cross-site tracking by advertisers who plant their own cookies on your computer even though you may have never intentionally visited their sites.

Update 2017.09.28 — Referencing the plight of recent hurricane victims, FCC chairman Ajit Pai calls on Apple to activate FM radio chips in iPhone, and the South Florida Sun Sentinel says, “In other countries, including Cuba, manufacturers are required to flip the switch on. But in this country, Apple rules. And it prefers to sell the iPhone with the FM radio button switched off.” and, “Do the right thing, Mr. Cook. Flip the switch. Lives depend on it.” Apple responds with a statement patiently explaining that all recent-model iPhones lack any component with FM circuitry, nor do they have antennas capable of FM reception. John Gruber adds that in older-model iPhones that incidentally do have FM circuitry — as part of a commodity component included for its other, non-FM functions — the FM circuitry is not physically hooked up to anything in the iPhone that could use it, nor do those iPhones have an FM-capable antenna. So there’s no way for Apple, or anyone else, to just “switch it on.” If the U.S. passed a Cuba-style law requiring it, Apple would have to design new models of iPhone to be capable of it. No iPhones that exist today will ever support it, law or no law.

Update 2017.10.11 — Qualcomm hit by Taiwan’s FTC with $773 million fine for seven years of antitrust violations, and ordered to change its illegal licensing terms which included “requiring licensees to provide customer names, model names, shipment quantities, and pricing back to the chip supplier [Qualcomm].”

Update 2017.10.12 — Apple’s Ireland data center finally given the go-ahead to start construction.

Update 2017.10.13 — Qualcomm asks Chinese court for injunction against the sale or manufacture of iPhones.

Update 2017.10.18 — A month after it was made clear (09.28 update above) that FM radio is completely impossible in all iPhones that have ever been made, Sam Matheny of the NAB calls on Apple to enable it. Despite loading his article with lots of accurate, factual detail, he somehow manages to omit the fact that iPhone 7 & 8 do not have any FM circuitry, and to be ambiguous about whether he’s asking Apple to include FM reception in future iPhones, or (magically) turn it on in existing iPhones. One gets the feeling that the obscurity is intentional: without directly saying so, he hopes to give his readers the impression that Apple can just turn on FM right now.

Update 2017.10.31 — Apple reportedly to discontinue all use of Qualcomm components.

Update 2017.11.15 — Apple decides to help the Indian government create an iOS version of its Do Not Disturb app — “but only with limited capabilities” to read users’ private data, compared to the existing, Android version.

Update 2017.11.27 — EU considering enforcing Qualcomm’s system of charging different amounts for patents based on the value of the final product in which the patent is used. If they actually do this, it will be very interesting indeed to see how that harmonizes with a cellphone transmission system that’s already laid down all over the industrialized world and then some. If Qualcomm really thinks Apple is just going to lay down and take it forever, they’re in for a rude surprise. If anyone can figure out a way to make phones without Qualcomm getting any of the money, Apple’s the one to do it.

Update 2017.11.29 — Apple countersues Qualcomm for violating at least eight of Apple’s battery-life patents in the Snapdragon processors used by most high-end Android phones.

Update 2017.11.30 — Qualcomm asking ITC for import ban on multiple iPhones including the new iPhone X.

Update 2017.12.04 — Apple reportedly will start paying the EU’s $15 billion, retroactive, Ireland tax “early next year.” My personal advice to the EU: Make that loot last. It’s not a safe bet that Apple, or any other successful company, is going to be storing ka-billions in EU banks ever again. People aren’t dumb. You picked the right target (Apple, the richest company alive) to hit with this scam, the one and only time you get to do it.

(Note: Apple has not dropped its appeal.)

Update 2017.12.05 — Germany working on law to require backdoors in all modern tech devices.


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