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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."

[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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RE: This makes me sick
By ebakke on 5/30/2012 6:01:04 PM , Rating: 2
My point here is that the power is with the wrong people... the lawyers, the corporation's lobbyists, and the board of directors. The action should be on the people, the employees. It should be independent of corporate money and influence, which may or may not be form a domestic source.
I could not disagree more. The power to lobby on a corporation's behalf lies squarely where it should - in the hands of the shareholders. Individuals, whether shareholder or not, also have the power to donate their private funds, or their own time.
Yes, decrease the size and power of government, but you can also reduce/eliminate corporate lobbying. They are not mutually exclusive. I'd be happy to see both happen simultaneously.
True they aren't mutually exclusive, but one makes the other an exercise in futility. If you reduce the size/power of the government, it makes corporate lobbying irrelevant. Why would you or I care if Apple wants Congressman XYZ in his pocket, when XYZ doesn't actually have the power to do anything that would benefit Apple?
It really isn't. There is an army of full time, well funded lobbyists whispering in the ears of every politician they can find. Who is representing the people? Not the lobbyists and not the politicians once they've accepted all of their contributions.
The politicians are still elected by us. If their actions are undesired by their constituents, they will be voted out. It appalls me that more people are not outraged by the state of affairs in our government, but to claim that the people are being "held down" by lobbyists, or that they have no representation is bunk. We hold the power. We decide who's in office, and what authority they have. But collectively, we're content with the status quo. It sucks, I agree, but it isn't due to some corporate boogey man. It's our complacence.
A limit on political contributions is merely a limit on legalized bribery - unless you think bribery is a legitimate form of free speech (and unfortunately it seems the Supreme Court ruled it as such).
I reject the premise that campaign contributions are bribery. Giving an individual money (or some other benefit) for a vote on legislation, would be bribery. Giving his campaign money, is not. Campaign money doesn't get you elected. Votes do. And I still place the onus of responsibility on the voters.
People/corporations are free to spend their money on propaganda ladled TV, radio, and newspapers. If they can convince the people to fight for their cause, then good for them. That should be the extent of free speech that money can buy.
How is that any different than giving the money to a campaign or a PAC?
So by limiting contributions maybe some people lose their "freedom" to individually dictate government policy
No individual is dictating government policy! Come on now.
Sorry, I wasn't clear. I didn't mean that they should limit to $100, I mean they when you give a political donation, you get a tax credit on your income tax for that year.
Even so, it's still the wrong solution to the wrong problem for the reasons I listed above.

RE: This makes me sick
By 3DoubleD on 5/31/2012 9:51:11 AM , Rating: 2
The power to lobby on a corporation's behalf lies squarely where it should - in the hands of the shareholders.

Yes, this is who would want to lobby the government for favorable policy changes, but it is not necessarily the correct people. The shareholders could be anyone. It could be 49% one person, it could be 100% international ownership. Who are these people to influence federal policy? Are their intentions for the increased prosperity of the nation?

Citizens (eg real people, not corporations) have a shared desire to make their country a better place. Obviously, not everyone agrees on how. Corporations do not share the same motivations, all they care about is profit margins, which is great for capitalism and the market, but, IMO, terrible for government policy.

Shareholders, CEOs, board of directors, ect. while individually are people (who may or may not be citizens), are not acting with the same well-meaning, duty-fill, patriotic motivations that you or I would have when discussing politics. IMO, that is a dangerous influence to allow when making policy.

If you reduce the size/power of the government, it makes corporate lobbying irrelevant.

I'm sorry, but a government small enough such that corporate lobbying wouldn't exist sounds like a fantasy. You'd need to turn the country into a bunch of loosely bound (maybe affiliated is a better word) states. It is hard to believe the current Federal government could undergo such a rapid transition in our lifetimes.

To put this into a terrible analogy: I'm an engineer. When you solve a problem you look for a physically possible and accessible solution. For example, if I need to get into orbit, I build a rocket. I don't try to turn off gravity and float there. Maybe one day I'll build an anti-gravity lift, but the road there will be long and it isn't certain to be a success. I can work on the anti-gravity lift and the rocket at the same time and reach the end goal the same.

Anyway, back to reality, haha. I'm all in support for small government, but the limit of small government is just a bunch of completely independent states which would be untenable as a unified country. There has to be an intermediate state between big and no federal government. In that intermediate state, corporate lobbying will always exist, it will never go away. Yes, it's a symptom of the problem of political power, but it's akin to saying the requirement of oxygen is a symptom of our respiratory system. We need to breathe as much as we need some centralized federal power.

I say, tackle the issue from both sides. Re-taking and restoring faith in our political system is what we stand to gain.

How is that any different than giving the money to a campaign or a PAC?

Sorry, I was mistaken here. Not sure what I was thinking at the time, but I had these two topics of lobbying, campaign contributions, and PACs all mixed up when I wrote that, clearly needed more coffee.

No individual is dictating government policy! Come on now.

It is conceivable that with the current system, a wealthy individual or a small group of wealthy individuals could influence the system with enough lobbying force (eg. money). They could (and probably would) be sitting behind a corporate logo. The distinction would be hard to make, but it is certainly very possible.

I reject the premise that campaign contributions are bribery

If giving large sums of money to campaigns isn't bribery, then I propose all large sums are donated into a black box, of which, the money is randomly distributed to the recipient over time. The donation can be removed at anytime during the campaign by the donor. With this system, a donor could walk to the black box with the recipient, drop the money in, and the recipient would have no idea if the money was actually given or not since it could easily be removed.

Such a system was tried in Florida, I believe for the election of some judges/justices. NO contributions were given. Large political contributions are like white lies, they may seem innocent, but they are still lies.

It's been a great conversation, you've given me lots to think about. Don't let me opposition to all of your ideas fool you, you've got my mind thinking harder about this and have helped broaden my views. Change comes with time ;) . Cheers.

RE: This makes me sick
By ebakke on 5/31/2012 4:51:15 PM , Rating: 2
Until next time! :)

"There's no chance that the iPhone is going to get any significant market share. No chance." -- Microsoft CEO Steve Ballmer

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