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Both Google and Apple are trying to sway members of Congress to give them preferential treatment

Apple, Inc. (AAPL) iOS versus Google Inc.'s (GOOG) Android launched 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, bitterness grew 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 "nuclear war" 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. (OMX:NOK1V) in 2009, who ironically sued Apple) and that some smartphone makers followed the look and UI layout of Apple closer than others.

Steve Jobs
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, Retina displays, 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. (XRX) 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. (KSC:005930) reaching an impasse in settlement talks 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.

Tim Cook
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 (R-Ohio), Senate Majority Leader Harry Reid (D-Nev.), and 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 use glass that's produced at a Corning Inc. (GLW) 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. (TPE:2498) 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 behoove Apple 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 over 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 Fortune comments, "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."

Bribes
[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 Orwellian "Stop Online Piracy Act" (SOPA) (H.R. 3261), 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 vs Samsung
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. (INTC) unit Infineon or Californian-based Qualcomm, Inc. (QCOM) in their smartphone.  Likewise, if handsets are banned American telecommunications companies like Verizon Communications Inc. (VZ) and Vodafone Group Plc. (LON:VOD), and AT&T, Inc. (T) 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.

Jobs needed shirt
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.

Source: Fortune



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This article is over a month old, voting and posting comments is disabled

RE: This makes me sick
By Reclaimer77 on 5/29/2012 11:28:16 PM , Rating: 3
quote:
Every fascist state in history to my knowledge has been formed by some combination of corporate and/or union interference in government, combined with rampant nationalism.


Pretty sure you just described shades of EVERY government ever wrought by man there Jason.

Anyway I'm not getting into this with you again. You have done nothing but blame Corporations and "rich people" for every single problem we have.

quote:
What? Why can't they figure out on their own what benefits the majority of CITIZENS who they supposedly are representing??


LOL and you don't think this is totalitarianism? How many times have Governments acted in peoples "best interests" arbitrarily and without discussion with disastrous results?

You are this trusting of our "representatives" in Washington huh? That they are going to just arrive at the proper conclusion while weighing in all the facts on their own, and we're all just better for it.

Majority of citizens? Oh I get it, so if my Corporation of only a few thousand people might be adversely impacted by some legislation, I shouldn't have the right to lobby for someone to hear me out?

quote:
Free speech is not a large organization giving money to a candidate or telling their employees how to vote. Again, that is a large organization -- be it a trade union or corporation -- EMPLOYING a politician. Employment is not free speech, as you are often forced to do many things that go against your feelings of what is best or right.


Now who's being the extremist here Jason? You can't just make stuff up like this. Employment? You state that in the literal sense.

And forcing someone to do something? Again, you say anything to characterize the corporation in an evil light. Does the politician have NO obligation to be ethical, if he's truly trying to be "bribed" as you state it?

quote:
Okay, but if this is in the nation's best interests, what's stopping the politicians from consulting these industry officials WITHOUT lobbyist money?


Really? Jason do you honestly see a Government out there that's working in our nations best interests? Oh I know they THINK they are, but that's not what I'm seeing.

They set this up, not the Corporations. You're hating the player, but not the game. If you want to end or limit lobbying, we MUST return to the limited small Government as envisioned in the Constitution.

To end lobbying while we still have an 800 pound gorilla in Washington, would absolutely lead to fascism/totalitarianism. And I'll stand by that.


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