Recent Court Decisions Should Sober Apple

| Editorial

One of the enduring themes in American business culture is the proper use of power. Unfettered power is a Holy Grail in American business, but it has within it the seeds of its own destruction. Recent court decisions have driven that point home to Apple.

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One of the constant concerns in my writing about Apple has been the proper use of corporate and personal power. Back in September 2008, I wrote "Apple Power Corrupts, Absolute Apple Power Corrupts Absolutely." There, I expressed a view about Apple

While it's nice to see our favorite company doing well, there are dangers that can and will befall any company consisting of human beings. It's natural. Recognizing that, some companies put explicit barriers in place to make sure that those tendencies remain in check.

When we don't see self-discipline and restraint in a company that can do as it pleases, then we start to worry.

Later, in March of 2010, I posted a Flashback File, a column that looked at some of my previous writings before I came to The Mac Observer. In this column from Macopinion.com in October 1999, I talked about "The Limits of Power" and recounted:

Apple, having blundered in not registering the desired domain names for the iMac soon enough, tries to recover by accusing a Canadian teenager, Abdul Traya, of infringing on their trademark. The domain name appleimac.com was lawfully registered by the Canadian teenager, but Apple wanted it, so they took it by force, that is, without a court judgment.

My concern About Apple's power was early and has been ongoing.

Flash Forward

Typically, power goes unchecked until some dramatic event happens. In the case of Apple, what has happend is, I think, Martellaro's Third Law, which I mentioned in "Apple, Microsoft and the War Mentality."

No one changes his/her personal beliefs based on input from a peer or subordinate or social inferior.

Often it takes a clergyman, a judge, or a senior military officer to get some people to fundamentally alter their beliefs. Advice and counsel from perceived social inferiors never quite does the job.

The Big Bang

In the case of Apple, the dramatic event has been a series of court decisions. Here are some references to the more recent, notable cases.

1. Apple Signs Consent Decree with FTC over In-App Purchases

2. Judge Cote Denies Apple’s Request to Recall Her Watchdog

3. Appeals Court Greenlights Apple Anti-poaching Lawsuit

In these cases, there exists people and judges, who have disagreed with Apple's behavior and have set out to either set limits (#1, #2) or begin to explore limits (#3) on what Apple can do.

By and by, this is a good thing. As I've written before, more power doesn't make for better decisions, and when people of good faith have the means to call into question the behavior of corporations, it leads to introspection and developing wisdom by their executives.

Of course, the consensus is that the U.S. Government's antitrust lawsuit against Microsoft in the late 1990s forever crippled Microsoft, made the company too timid and took the wind out of the sails of its future. Apple is not nearly there, but the company has finally had a taste, with Judge Cote, of the sobering impact of a measured restraint on power -- irrespective of the merits of Apple's case. And it was a noble one, as Bryan Chaffin explains in "The Danger in Quashing Apple’s Anticompetitive Publishing Deal."

The point, in my perspective, is not whether Apple was right or wrong in the eBook antitrust case. Rather, it's that there is danger in believing so firmly in one's own entitlement to power that perspective is not gained on why a judge may wish to place limits on that unfettered power. It's a bellwether.

I'll finish with one of my favorite principles of authority quoted in the Flashback article above. It's something that modern executives, in a quest for power and riches, both young and old, often forget as the "business is war" metaphor is carried to undue extremes.

Authority is granted solely for the good of those tendered to, not the one granted the authority.

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Teaser graphic via Shutterstock.

Comments

geoduck

I wonder what will happen to Apple’s attitude if, as is quite possible, higher courts side with them and set aside Judge Cote’s ruling. I wonder if Apple will see it for what it was, a a warning to be more careful, or will it just reinforce arrogance?

ibuck

It’s interesting to go back and read the comments about Bryan’s article “The Danger in Quashing…”. Some seemed so sure of themselves in their remarks, but turned out to be wrong.

ibuck

I’m a longtime Apple buyer and shareholder, yet I can easily see how some Apple decisions seem arrogant. I’d like to see Apple soften their stance on some things (like they did with the iPad mini) that Jobs insisted on.  And not feel they are dissing Jobs by easing up. To me, his legacy is a successful company that creates products people use and love, rather than specific beliefs and attitudes, from which he wouldn’t budge, that sometimes impede Apple or its customers.

skipaq

The anti-poaching collusion Apple was involved in is a good example of power misused. I still don’t see the merit in the DOJ’s eBook case; but can understand there is something for Apple to learn from it. The foul up in parental consent for in app purchases was a matter that Apple addressed in before the FTC got involved; but once again Apple should at least learn to be more careful in such matters.

Thanks for the good article, John.

Gene Grush

I couldn’t disagree more with your article.  Apples bends over backward to maintain there reputation.  The respond to every critic on work place issues.  They continually respond to consumer complaints.  This is what keeps them in check. 

The FTC is money grab for their on pockets when a class action suit had already settled the matter.  Look at the dissenting opinion by one of the FTC officials.

As for the monitor, Apple having no history of antitrust abuses should have had no monitor.  Especially a court appointed monitor for such a narrow part of Apple’s business.  Even so why should the monitor be asking for anything other than e-books from Apple which was the supposed violation.  He is trying to investigate all aspects of Apple’s business and meet with all of Apple’s executives.  Why?

I don’t know enough about your third claim and will not comment on that.

However, 2 of your 3 claims are totally with out merit.  You need to talk about government’s abuse of power which are many in both the FTC and e-book case.

Frank Lowney 1

I respectfully disagree with the general tenor of this op ed piece.  Apple has been legally chided over such problems as the fact that some (younger) people have gotten clipped via inApp purchasing.  Apple knew it was wrong, admitted it to all and is now in the process of making amends.
The eBook case is a different kettle of fish. Apple contends that it is innocent and will appeal.
It is important, I think, to realize that the punishment meted out by this judge is not recoverable on appeal. That may mean that she knew that Apple would appeal and that Apple had a good chance of reversing her judgement.  Solution? Assign a attorney to “monitor ” Apple, an attorney who is not averse to piling it on both with respect to fees and onerous demands. The court-appointed monitor could even write a top selling book on how he parted the Apple kimono. So, even if Apple wins on appeal, the damage done will be irreversible.
Clearly, Apple knew that this motion would be denied. They are simply building the case for an appeal. They are trying to show that Judge Cote and her minion are biased against Apple. It’s just a legal maneuver but I’d say that is has succeeded.

Lee Dronick

  Clearly, Apple knew that this motion would be denied. They are simply building the case for an appeal. They are trying to show that Judge Cote and her minion are biased against Apple. It’s just a legal maneuver but I’d say that is has succeeded.

Good point Frank.

adamC

“Rather, it’s that there is danger in believing so firmly in one’s own entitlement to power that perspective is not gained on why a judge may wish to place limits on that unfettered power. It’s a bellwether.”

Trying hard to understand what you had written here.

I am not sure what you meant and to me it meant that they believed they are beyond the law is that what you are trying to say?

And a failed to understand that a judge had to control their unfettered power.

Well I don’t believe Apple is trying to prove to their world they have unfettered power and in the ebook case they are trying to prove their case but shot down by a judge who refused to believe the words of a key witness and yet he was charge for perjury.

As for the FTC case perhaps this will put a new perspective to what you believed and definitely beyond what the FTC promoted.

http://tech.fortune.cnn.com/2014/01/15/apple-ftc-kid-apps/

As for the anti poaching lawsuits it is not a case of power but an understanding of not trying to poach each other employees. Different parties to see it differently so let the court decide and believe me it is not a case of power.

As Bryan Chaffin referred to the report in Salon which throw a different perspective into Apple’s ebook trial.

You can read it here - http://www.salon.com/2014/01/12/amazons_bogus_anti_apple_crusade/

And to say that Apple have unfettered power and like to throw it around is definitely in the realm of fantasy.

Dorkus Maximus

Apple’s rise during the decade prior to Jobs’s death, combined with the near universal amazement over its string of products like the evolving iMac designs, the Macbook Air, iPod, iPad, and of course iPhone, set Apple up for some pretty nasty backlash. Courts, tech reporters, and even many in the public came to believe that since Apple could apparently do no wrong in its product design, any misstep in any other way had to be deliberate. In other words, the maker of the iPhone was not going to get the benefit of the doubt in anything, whether worker conditions at contracted factories or business deals with publishers. Further, because of its golden reputation there has been a segment just itching to knock Apple down a peg.

The recent FTC agreement is a good case in point. Apple gives customers a 15 minute window for downloading apps without having to re-enter a password with each one, and the FTC treats it as a malicious action from Apple to somehow encourage children to purchase expensive apps behind their parents’ backs. Apple on its own tries to un-do the damage by refunding money and the FTC steps in to make an unnecessary show around it. And lastly, the FTC uses the settlement to promote its own Twitter account when it reports on the issue on its website.

I’ve seen nothing about Apple to suggest that it is pushing the legal envelope or the bounds of ethics any more than any other company. What I do see is a lot of tech writers trying to hold Apple to a standard to which no other company is being held.

aardman

I have a contrary opinion about Microsoft.  The antitrust case did not make the company timid.  It was getting away with murder, figuratively speaking, that crippled them.  They knew that their sweetheart deal with the Bush DoJ allowed them to dodge a bullet that they richly deserved, and so they were only too happy to come out of it whole but forever gun shy for fear that next time they wouldn’t be so lucky.

On the other hand, if they went along with Penfield Jackson’s break up order, the daughter OS and Office Suite companies would have been lean and nimble, and (this is very important), the OS business would not be passing up opportunities that might hurt the Office Suite business, and the latter likewise not having to do the same for the former.  Without the burden of these co-dependent twin monopolies, I would venture the successor companies would be in much better shape today than Microsoft.

CudaBoy

The shine is off. And with the recent breach of Apple’s customer base to hackers and the copyright infringement loss, (blue LED-gate) it’s just not good.

MuppetGate

@CudaBoy

The reason the hacking story didn’t get much traction is because the hacking group involved is more famous for its hoaxes than its technical expertise.

They lied about hacking Dropbox, so folk are taking this ‘Apple breach’ story with a large spoon of salt.

And I’ve never even heard of the blue LED-gate.

MuppetGate

“Rather, it’s that there is danger in believing so firmly in one’s own entitlement to power that perspective is not gained on why a judge may wish to place limits on that unfettered power. It’s a bellwether.”

I could be reading it wrong, but the author seems to be saying that the government should clip the wings of any company that it deems is too big.

The chairperson of the FTC used to work for the company that represents Samsung; the same company that illegally handed over documents to Samsung so they could use them in their dealings with Nokia.

In the other corner, we have a judge who seems to have appointed a close friend to oversee Apple’s dealings in the eBook market. Illegal? No. Suspicious? Well, it raised my eyebrow.

I agree that this should be a sobering time for Apple, but unlike the author, I don’t believe that Apple should shut up and take its medicine if it believes it has done nothing wrong. (Bear in mind that Apple had already remedied the In-App purchases situation before the FTC got involved).

The only thing Apple is failing to do is play the game, and that is a serious failing on Tim Cook’s part.

Cook should start spreading a little of that $100billion around Washington, and then watch how quickly all this nonsense disappears.

ibuck

MuppetGate:  Cook should start spreading a little of that $100billion around Washington, and then watch how quickly all this nonsense disappears.

While this is widely accepted in the US, and has allowed MS during the Bush admin and Amazon during Obama’s admin to get away with things that aren’t proper (or even lawful), this is CORRUPTION we’re talking about. Even if our judges and legislators say it’s legal. It’s just like bribing a policeman to make a ticket go away.

barryotoole

Et tu, Brutus Martellaro!

But seriously, I both agree and disagree with John.

I agree that ‘power corrupts, and absolute power corrupts absolutely’. There have to be checks/balances, or it’s human nature to push the envelope. SJ, in particular, thought he was above the law. He parked in handicapped spaces, drove without a license plate, and took the name ‘iPhone’ without even having the decency to ask Cisco who had this name registered - and the trademark was later transferred with monetary reimbursement.

Fortunately, there are a lot of Apple bashers, including ones in authority, who keep Apple on it’s toes, as does competition.

I disagree that rulings against Apple by the FTC and in the eBook case are valid, and would help Apple mind its manners. Other commentators have already noted why these don’t hold water.

A Danish proverb, ‘Tall trees catch more wind’, applies to Apple. Every Tom, Dick and Harry wants a piece of action - i.e. money, and there are enough hungry/ignorant souls in the media - including the blogosphere, who’d like to make a mountain out of a molehill. A recent report on the NYT about the failure of the iPhone 5s/5C to create massive lines when introduced at China Mobile is a case in point. I also wonder why didn’t the NYT a series like ‘iEconomy’ about Google, Microsoft or Amazon?

As someone has already stated, MS didn’t get ‘timid’ because of court actions, but failed to innovate because it didn’t seperate its Windows and Office divisions. MS has a multi-tiered management, and there are turf battles all around. For the Office division to refuse to create a separate version for the Tablet OS is a good example. Who knows if MS would have ruled the Tablet market as well were its management structure as simple as Apple’s - for it doesn’t have a dearth of talented engineers or an insignificant R&D budget.

wab95

John:

Congratulations on another thoughtful and thought-provoking piece.

It appears, however, in danger of misapprehension as to key point, given the range of commentary above. In my opinion, the confusion, to the extent that it exists, is due to the interplay between the point you set out to make and the merits of the specific examples of recent challenges to Apple that you cite, with some commenters stumbling over their perception of the merits of these specific cases and your point about the purgative power of being held to account by a higher authority.

I don’t think that you intended to write a piece that is intentionally ambiguous as to message, so permit to state what I think is your message, as I think it is an important one. Correct me, if I misunderstand.

Your key point appears to be a reminder that the adage ‘power corrupts…’ applies to Apple as much as it does to any entity. Apple are no exception. Further, reproach, criticism and advice from those of equal or lower rank to an entity are ineffective in causing that entity, be it an organised group or an individual, to modify their behaviour or adopt corrective measures against the corrosive influence of power. Rather, only a higher authority, meaning one of higher societal rank in the matter in question, that can bring punitive measures to bear if necessary, alone can provide sufficient motivation and impetus to compel change and adopt corrective measures.

Being held to account, then, knowing that one can be penalised for failure to show how one is addressing the matter in question, has a salubrious effect on the character of an entity (person or corporation), whether or not what they have done or are currently doing is, in fact, wrong. The mere act of being called to account, or being challenged on the specifics, keeps an honest person honest and an ethical company committed to its high ethical aspirations. Indeed, the earlier in the course of its assumption of authority, whether that authority and power is formal or informal, the better in the long run for that entity, in the spirit that prevention is always less costly than correction, or to cite that other adage, ‘an ounce of prevention is worth a pound of cure’.

This principle, you appear to be arguing, exists independently of the actual merits of any challenge to an entity’s authority. The specifics of any case need to be sorted independently. In fact, it can be argued, the mere fact that Apple are being challenged is tacit acknowledgement of Apple having arrived at a position of authority and power. Indeed, following that principle, one could argue, it is preferable to have such challenges early and often, if a body is to be kept free of the corrosion of power - power which should serve, in any case, those who are the recipients of whatever service that individual or entity provides - rather than the entity itself, self-service being the sign of power intoxication and corruption.

The specific cases you cite are simply illustrative of that principle in play with Apple and those higher authorities, irrespective of whether or not those cases are meritorious (i.e. Apple was behaving wrongfully), and a reminder to Apple to remain principled and make their actions subservient to client and industrial good.

If that is your point, then I whole-heartedly agree. It is for this very reason that in many societal strata and professions, oversight committees and regulatory bodies exist to insure that all concerned adhere to a minimum and common standard of excellence that protects clients and the public, and when outcomes or the methods used to achieve them are questionable, responsible parties are not simply brought to account, whether innocent or guilty of wrongdoing, but the findings of that review are shared with both the wider professional membership or industry and the public, for the protection and betterment of all concerned.

One only need visit those parts of the world, or periods in history, when such accountability was lacking to appreciate the baneful influence of unfettered authority.

John Martellaro

wab95:

This principle, you appear to be arguing, exists independently of the actual merits of any challenge to an entity’s authority. The specifics of any case need to be sorted independently.

Your entire comment sums up my essay nicely. You are my most brilliant student, and I love seeing your continuing exegesis of my work.

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