Apple Steps up Lobbying Efforts in Washington
May 29, 2012 6:13 PM
Both Google and Apple are trying to sway members of Congress to give them preferential treatment
Apple, Inc. (
) iOS versus Google Inc.'s (
with similar mindsets
upsetting the status quo
of the mobile phone industry and becoming the world's most used smartphone platform. Both platforms have
achieved that goal
to a large extent, but as the company's each borrowed ideas from the other and changed their product to
mimic the other's successes
between the pair. This bitterness eventually exploded in
a worldwide patent war
, a war which consumes Apple, Google, and the companies that rely on Google's operating system.
I. Dividing the Enthusiast Community
The ongoing "
" between Apple and Android deeply divides the enthusiast community.
IPhone owners tend to defend Apple's right to litigate, arguing that Apple's iconic iPhone defined what a "smartphone" meant, a model closely followed by subsequent Android devices.
While only the most extreme truly wish for a complete ban on Android handsets, Apple fans are swift to point that Apple was not the first smartphone giant to start internation litigation (that was Finland's Nokia Oyj. (
, who ironically sued Apple) and that some smartphone makers followed the look and UI layout of Apple closer than others.
Steven P. Jobs' dying wish of "thermonuclear war" with Android is dividing the nation.
Android owners, meanwhile, balk at the idea of a ban on the world's best-selling smartphone platform, accusing Apple of malfeasance. They point out that Apple didn't "invent" much of its innovations (multi-touch, Gorilla Glass,
, etc.), it bought them.
They also point to Apple turning to copy some aspects of Android (
the notifications bar
, and soon -- potentially --
the larger screen size
). Lastly, they point to Apple's own history of
liberally "borrowing" operating system ideas
from others like Xerox Corp. (
) then later settling without caustic measures such as sales bans.
II. Tim Cook Goes to Washington
But for better or worse the hostility between the pair shows no signs of easing with the largest Android manufacturer Samsung Electronics Comp., Ltd. (
) reaching an impasse in
with Apple, leading both companies' CEOs to
walk out on negotiations
regarding a potential cross-licensing truce.
Apple CEO Timothy Cook
was in Washington this week, meeting with lawmakers in an effort to emphasize his company's importance to the American economy. While the patent strife was not directly discussed, it's clear such discussions could steer decisions on
potential product bans
on a federal level.
Apple CEO Tim Cook chats with Rep. Boehner(R) [Image Source: Rep. Boehner]
The visit was unusual as Apple spends only a small amount on government lobbying, despite enjoying some of the perks of typical heavy lobbiers, such as liberal tax exemptions. Despite claims of government favoritism, Apple only spent $500,000 USD on lobbying in Q1 2012, about a tenth of what Google spent.
Apple also does not have a political action committee (PAC) to funnel larger donations to candidates via fund-raising events. Google and others
maintain large PACs
If appearances are accurate, Apple did much with little in terms of lobbying. In modern U.S. federal politics where money (effectively, bribes) are necessary to purchase almost any sort of bipartisan action, Apple's contributions were small and selective. Apple also relied on its late CEO Steven P. Jobs fame and close relationships with top U.S. officials,
including President Barack Obama (D)
But Apple is wising up to the fact that in order to defeat lobbying giant Google, it may need to change to more of a standard corporate lobbying footprint. In Washington, D.C. Mr. Cook reportedly met with
House Speaker John Boehner
Senate Majority Leader Harry Reid
Senate Minority Leader Mitch McConnell
(R-Ky.), leaders on both sides of the aisle that control Congress.
The Apple leader emphasized points that hit close to home. For example he chatted with Minority Leader McConnell about how his iPad and iPhone
that's produced at a Corning Inc. (
) plant in Kentucky (of course, so are Android phones' screens).
The talk of domestic production reminds the federal government of the pressure to avoid a
U.S. International Trade Commission
ban on imports of the iPhone and iPad (Samsung,
new Google unit Motorola
, and HTC Corp. (
) all have pending ITC complaints against Apple, seeking injunctions). Wit that said, Mr. Cook reportedly avoided explicitly discussing the court battle or import battle at the ITC.
Of course, such visits also could
in terms of getting
further tax favors
, though the timing suggests possible ties to the Android patent dispute. (Google's efforts have also focused heavily on greasing the wheels to lower taxes.)
And then there's Apple's troubles with the
U.S. Department of Justice
alleged e-book price fixing
. The DOJ is
actively suing Apple
, claiming it sought an e-book monopoly. Apple has
vigorously denied these accusations
. Some friends on both sides of the aisle could encourage the DOJ to compromise and avoid punitive litigation.
III. Apple Follows in Google's Footsteps Becoming Begrudging Lobbyist
Reportedly Mr. Cook is interested in expanding Apple's lobbying efforts, something his predecessor Steve Jobs frowned upon. A source speaking to
, "They were quiet and focused. There was no public statement, no press conference, no hoopla, just like the company, which is focused on product design and end results. [Cook] has a strong personal interest in policy issues and recognizes the role an engaged CEO can play in making a difference on those policy priorities."
A Congressional aide added, "It was an act of opening up a line of communication, but it was a first step in what hopefully will be a growing relationship. They didn't become best buds in one meeting."
[Image Source: Business Ethics]
Google, like Apple, wasn't always so politically vociferous. Both companies dodged requests to testify before the U.S. Congress in 2010 privacy hearings, leading
Sen. Commerce Chairman Jay Rockefeller
(D-W.Va.) to snap, "When people don't show up when we asked them to… all it does is increase our interest in what they're doing and why they don't show up… It was a stupid mistake for them not to show up, and I say shame on them."
But with powerful industry rivals backing potentially catastrophically damaging legislation like the
), Google rapidly discovered that lobbying could not only lead to tax favors, but also help win it key allies in corporate battles (big media companies, for example paid
10 percent of active Senators' election costs
to get the SOPA build written and
moved to debate
IV. Are Product Bans on ANY Device Good for Americans?
The issue with both Apple and Google's lobbying is not only a question of tax policy fairness, or lack thereof, or fairness in terms of antitrust policy.
Given the company's outstanding legal war, it also becomes problematic in the sense of whether justice will truly be blind, particularly in federal organizations like the ITC who are directly run by appointees of officials in Congress or the U.S. President -- politicians who take
millions in lobbyist money
(hundreds of millions in President Obama's case) to get elected.
Banning any product limits consumer choice. Unfortunately, perhaps, the ITC and
U.S. Customs and Border Control
have a stranglehold on damaging product bans, given that all major manufacturers -- Motorola, Samsung, HTC, Apple, and others -- manufacture their smartphones in China.
Apple and Android are fighting in court and in Washingon, D.C. [Image Source: PhoneBuff]
Aside from the consumer impact, there's a secondary question of U.S. jobs. Apple clearly is emphasizing its importance to U.S. jobs and that importance is not to be neglected. But Motorola, one of Apple's targets is also a top U.S. tech firm employing thousands -- as is Google. While Apple did not start the fight with Motorola, versus Asian Android giants Samsung and HTC, today Motorola is facing the same prospect of import bans.
And while Apple's efforts against the Asian Android smartphone giants may not appear to affect American jobs, they likely will given that over half of Samsung's system-on-a-chip production is
sourced in Texas
. Likewise, all of the major Android manfuacturers use glass from Corning and chips from other companies like Intel Corp. (
) unit Infineon or Californian-based Qualcomm, Inc. (
) in their smartphone. Likewise, if handsets are banned American telecommunications companies like Verizon Communications Inc. (
) and Vodafone Group Plc. (
), and AT&T, Inc. (
) will be adversely impacted.
Thus while an Android ban would hit Taiwan (HTC's home country) and South Korea (Samsung's home) first, it would create a ripple effect harming many jobs.
Product bans of either Apple or Android devices could cost American jobs -- but are politicians concerned? [Image Source: NPR]
Ultimately U.S. courts, in a "best case" scenario, may opt for slaps on the wrists of Apple and its rivals, as
Netherlands and the other regions
have done in concluded patent spats. But given that the ITC has already doled out two product bans, hope of a tidy resolution may be misplaced.
This nuclear war may claim an unknown amount of casualties in the form of competition and American jobs. But Apple and Google both remain resolute, firm in their efforts to lobby Congress for preferential treatment and to try to end each other's market offerings in court.
"If you look at the last five years, if you look at what major innovations have occurred in computing technology, every single one of them came from AMD. Not a single innovation came from Intel." -- AMD CEO Hector Ruiz in 2007
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