Steve Jobs, Google CEO plotted ‘gentlemen’s agreement’ to keep wages down

RT
Published time: January 25, 2014

Two of the most powerful people in the technology world secretly and perhaps illegally coordinated business strategies in which they agreed not to poach each other’s employees, thereby keeping salaries low, according to emails unveiled in federal court.

Apple founder Steve Jobs and Google CEO Eric Schmidt apparently kept a secret pact to institute a “no-hire” policy in which each executive promised not to recruit each other’s workers. Yet the tech superstars are just two of the business leaders to be implicated in the wink-wink agreement, which reportedly included Google, Apple, Intel, Adobe, Intuit, and Pixar.
According to Pando Daily journalist Mark Ames, the scheme began in early 2005, when the need for Silicon Valley engineers was at an all-time high. The deal’s consequences became so pervasive that the US Department of Justice launched an antitrust investigation in 2010, which laid the groundwork for a class action lawsuit filed on behalf of more than 100,000 Silicon Valley employees who allege they were deprived of over $9 billion since 2000.

The US 9th Circuit Court of Appeals refused to throw out the class action suit over the objections of executives at Apple, Google, Intel, and Adobe. The emails in question were unsealed Tuesday by Judge Lucy Koh, the same judge who presided over the Samsung-Apple patent lawsuit.

Jobs, who died in 2011, seems to be the principal architect behind the illegal conspiracy. Yet Schmidt, according to an email from Google senior advisor Bill Campbell dated February 27, 2005, “got directly involved and firmly stopped all efforts to recruit anyone from Apple.”

Schmidt is also said to have told his Senior Vice President for Business Operation Shona Brown to only mention the pact “verbally, since I don’t want to create a paper trail over which we can be sued later.”

Google founder Sergey Brin was also strong-armed when he approached members of Apple’s Safari team about working for Google. Jobs, in an emailed quoted by Pando Daily, cited the “gentlemen’s agreement” when threatening Brin, stating: “If you hire a single one of these people that means war.”

Testifying in court, former Palm CEO Edward Colligan said Jobs enforced the no-poaching policy by threatening to hire away Palm employees, or worse.

“Mr. Jobs also suggested that if Palm did not agree to such an arrangement, Palm could face lawsuits alleging infringement of Apple’s many patents,” Colligan said.

Colligan swore he told Jobs the scheme was “likely illegal” and that Palm Inc. – a computer hardware firm eventually obtained by HP – would not be “intimidated” by a patent battle.

“If you choose the litigation route, we can respond with our own claims based on patent assets, but I don’t think litigation is the answer,” Colligan testified to telling Jobs, as quoted by Reuters.

A jury trial has been set for May 27 in San Jose, California.

The Fed, Apple, and Trickle-Down Economics: A Story for May Day

by robert reich


The Fed’s policy of keeping interest rates near zero is another form of trickle-down economics.

For evidence, look no further than Apple’s decision to borrow a whopping $17 billion and turn it over to its investors in the form of dividends and stock buy-backs.

Apple is already sitting on $145 billion. But with interest rates so low, it’s cheaper to borrow. This also lets Apple avoid U.S. taxes on its cash horde socked away overseas where taxes are lower.

Other big companies are doing much the same on a smaller scale.

Who gains from all this? The richest 10 percent of Americans who own 90 percent of all shares of stock.

But little or nothing is trickling down. The average American can’t borrow at nearly the low rates Apple or any other big company can. Most Americans no longer have a credit rating that allows them to borrow much of anything.

It would be one thing if Apple and other giant companies were borrowing in order to expand operations and create new jobs. But that’s not what’s going on. Apple, remember, is still sitting on $145 billion.

The reason big companies aren’t creating more jobs is consumers aren’t buying enough to justify the expansion. And government is cutting back on spending.

Big corporations are borrowing simply in order to push stock prices up and reward their investors.

It’s a sump pump with the Fed on one end buying up bonds to keep interest rates low, and shareholders on the other end raking in the returns.

Get it? Easy money from the Fed can’t get the economy out of first gear when the rest of government is in reverse.

Trickle-down economics is the first cousin of austerity economics. Austerity is nuts when so many millions are out of work. And as we’ve learned before, trickle-down is a fraud. Nothing ever trickles down.

How Apple Rules America

No pictures at protests? Police may block mobile devices via Apple

Apple Moves One Step Closer Toward Location-Based Camera Disabling

In June of last year, we reported on an unsettling patent filed by Apple that would allow certain infrared signals to remotely disable the camera on iPhones. It showed the potential downsides of bringing cameras into the world of wireless connectivity, which appears to be the next big thing in the camera industry. Now, a newly published patent is rekindling the fears of those who don’t want “Big Brother” controlling their devices.

U.S. Patent No. 8,254,902, published on Tuesday, is titled, “Apparatus and methods for enforcement of policies upon a wireless device.”

Here’s the short description:

Apparatus and methods for changing one or more functional or operational aspects of a wireless device, such as upon the occurrence of a certain event. In one embodiment, the event comprises detecting that the wireless device is within range of one or more other devices. In another variant, the event comprises the wireless device associating with a certain access point. In this manner, various aspects of device functionality may be enabled or restricted (device “policies”). This policy enforcement capability is useful for a variety of reasons, including for example to disable noise and/or light emanating from wireless devices (such as at a movie theater), for preventing wireless devices from communicating with other wireless devices (such as in academic settings), and for forcing certain electronic devices to enter “sleep mode” when entering a sensitive area.

If this type of technology became widely adopted and baked into cameras, photography could be prevented by simply setting a “geofence” around a particular location, whether it’s a movie theater, celebrity hangout spot, protest site, or the top secret rooms at 1 Infinite Loop, Cupertino, California.

++++++++++++

Apple has patented a piece of technology which would allow government and police to block transmission of information, including video and photographs, from any public gathering or venue they deem “sensitive”, and “protected from externalities.”

In other words, these powers will have control over what can and cannot be documented on wireless devices during any public event.

And while the company says the affected sites are to be mostly cinemas, theaters, concert grounds and similar locations, Apple Inc. also says “covert police or government operations may require complete ‘blackout’ conditions.”

“Additionally,” Apple says,” the wireless transmission of sensitive information to a remote source is one example of a threat to security. This sensitive information could be anything from classified government information to questions or answers to an examination administered in an academic setting.”

The statement led many to believe that authorities and police could now use the patented feature during protests or rallies to block the transmission of video footage and photographs from the scene, including those of police brutality, which at times of major events immediately flood news networks and video websites.

Apple patented the means to transmit an encoded signal to all wireless devices, commanding them to disable recording functions.

Those policies would be activated by GPS, and WiFi or mobile base-stations, which would ring-fence (“geofence”) around a building or a “sensitive area” to prevent phone cameras from taking pictures or recording video.

Apple may implement the technology, but it would not be Apple’s decision to activate the “feature” – it would be down governments, businesses and network owners to set such policies, analyzes ZDNet technology website.

Having invented one of the most sophisticated mobile devices, Apple now appears to be looking for ways to restrict its use.

“As wireless devices such as cellular telephones, pagers, personal media devices and smartphones become ubiquitous, more and more people are carrying these devices in various social and professional settings,” it explains in the patent. “The result is that these wireless devices can often annoy, frustrate, and even threaten people in sensitive venues.”

The company’s listed “sensitive” venues so far include mostly meetings, the presentation of movies, religious ceremonies, weddings, funerals, academic lectures, and test-taking environments.  ~ Banoosh

******

I wasn't going to get a smart phone anyway for various reasons, but this cements me ever reconsidering in the future. I have an older "dumb" phone with a camera that should work no matter where I am...if my battery would only keep a charge in it.--jef

What’s Good for Apple is Not Good for the Country

Apple Economics: Maximizing Profit, Minimizing Employment

by MATT VIDAL

 

Apple Inc. is the largest technology company in the world, in terms of both revenue and profit. Yet, the California-based company has just 47,000 workers on its payroll in the United States.

Apple recently released a report in which it claimed responsibility for “indirectly” creating an additional 257,000 American jobs in industries that are part of its supply chain, a claim that was “disreputable,” in the words of MIT labor economist David Autor – as if Apple’s suppliers did not have any other customers. Or, as Wharton labor economist Peter Cappelli noted, as if the consumers spending their money on an iPad would not have purchased another product in its absence (see a New York Times article on debates over the report here, including comments from Autor and Cappelli).

While Apple’s claim to have created jobs for UPS and FedEx employees is questionable, however, there is some truth to the argument that Apple is responsible for the employment – and working conditions – at its key suppliers, particularly manufacturers for which Apple is the main customer. This may be the case for some Corning employees in the US (supplying glass for iPhones) and is very likely the case for, tens, perhaps hundreds of thousands of employees at Foxconn in China, which presumably has entire lines or buildings dedicated to Apple.

A recent report by political economist and accountant Karel Williams and his research team at the Centre for Research on Socio-Cultural Change at the University of Manchester looked at the Apple Business Model and its employment effects. They cite a study which found that Chinese workers add $6.50 in value to each iPhone 3, just 3.6% of the phone’s shipping price.

In a counter-factual exercise based on the average wage for electronics workers in the US ($21 per hour) and assuming 8 hours labor per phone, the CRESC team shows that Apple could assemble the phone in the US and still make a gross margin of $293 per phone, which is down from its current gross margin of $452, but still an impressive 46.5% margin.

Assembling the phone in the US would have added benefits for the US economy in terms of direct job creation and multiplier effects – in contrast to the current business model, which decreases US employment and increases the US trade deficit. But healthy profits are not enough, so Apple continues to make superprofits to the detriment of the US economy. What is good for Apple is not good for the US.

But what about Chinese workers? The CRESC team analyzes the financial aspects of the Apple supply chain and argues that, unlike in the Japanese and Korean cases, Chinese suppliers under the Apple model do not have good prospects of moving up the supply chain. Japanese and Korean producers originally had competitive advantage in the international market because their domestic supply chains had a low ratio of labor’s share of value-added. In the context of national supply chains, even suppliers were able to continually upgrade to higher-value added locations in the supply chain.

The story for China is different because it remains at the end of a global supply chain dominated by US firms like Apple, which are able to successfully subordinate their Chinese suppliers through contracts that leave little profit for the latter. As a result, funds for reinvestment are limited and corporate strategy may thus remain defensive.

There is a question, which the CRESC team does not consider, of whether the Chinese suppliers will be able to develop their own R&D capabilities from their own manufacturing operations. For now, most electronics R&D remains firmly embedded in the US, Japan and Korea. But there does remain an open question of whether R&D and manufacturing can remain geographically separate, with the former retaining vibrancy and the latter subordinated to the second- or third-tier via contract. Nonetheless, the CRESC report does crystallize some important questions and provide some provocative answers.

Finally, it must be noted that it is somewhat misleading to call this the Apple business model. The business model of maximizing profit and minimizing domestic employment though global subcontracting was pioneered by many corporations in the 1970s and even earlier, among them Nike, which has always been a brand without its own manufacturing capabilities.

But this model has become a normative business logic among manufacturers since then, and it does, as the CRESC team points out, present fundamental employment problems for home countries of corporations, like Apple, Nike and many others, who take it to its extreme. What was good for GM may have been good for the US, but that was another time, when vertical integration was a normative logic of business.

In contemporary globalized capitalism, maximizing profit is often equated with minimizing (domestic) employment. Is it time yet to get over our collective obsession with sanctifying profit?

Apple Has Destroyed 490,000 American Jobs

Eric Platt and Ben Duronio | May 1, 2012 - Business Insider

After taking heat for shipping jobs to China and contracting to employers with questionable labor conditions, Apple (rather publicly) took credit for creating more than half a million jobs in the U.S.

514,000 to be exact.


That figure included nearly 50,000 employees in its retail network and its corporate headquarters, where products are designed.

But it also included FedEx and UPS employees who deliver its products and employees at Corning who make glass for iPads and iPhones.

So Apple basically counts anyone vaguely associated with the company or its products as a job that Apple created.

But what about the competitors Apple has bumped off in its relentless move to the top? What about the once-profitable markets, products, and companies it has destroyed? What happened to those jobs?

Business Insider analyzed data on Bloomberg, went through dozens of 10-Ks, and read through layoff announcements to see how Apple's peers have done.

What we found:

Apple has destroyed nearly as many jobs as it helped create, eliminating some 490,570 positions.

Click here to see the jobs that Apple has destroyed >

So even if Apple had created all the jobs it takes credit for creating, its chest-thumping would be misplaced, to say the least.

The truth, of course, is it is not "companies" or "entrepreneurs" who create jobs--it is healthy economic ecosystems that create jobs. (If Apple's customers couldn't afford to buy Apple's products, Apple wouldn't create a single job, no matter how cool Apple's products were). Companies are an important element of those ecosystems, but to credit them for job-creation is to give them a lot more credit than they deserve.

But that's another story.

For now, let's take a detailed look at all the jobs Apple has destroyed or helped destroy.

Here's our methodology:

Business Insider identified some 50 companies that Apple's success has impacted, including big names like IBM and HP, and smaller ones like Barnes & Noble and Adobe.

Some companies and peers prospered. Most did not, announcing a combined 306,606 layoffs over the past several years.

In choosing the companies, Business Insider took a liberal approach to the businesses hit by Apple. Could you attribute all of Circuit City's problems to Apple? Probably not. BI used similar definitions as Apple to identify these companies.

Apple was unresponsive to repeated request for comment.

Those layoffs include direct competitors like Cisco's flip camera business, which the company shuttered after poor sales, and companies like AOL,  which lose out on lucrative search traffic because of Apple's choice to default to Google.

We also looked at Apple's decision to contract to private companies like UPS and FedEx instead of using public services like the U.S. Postal Service, as well as loopholes it uses in U.S. tax law to save billions of dollars a year.

The figure above does not include the jobs Apple could have created had it manufactured its products in America — instead of at Foxconn plants in China — because the corporate mantra to cut costs and build products overseas is not simply tied to the Cupertino, Calif., based company.

Business Insider also considered the ripple effect of layoffs in the U.S. When a company fires hundreds of employees, it curtails regional spending, causing restaurants and retailers to close their doors, decreases tax collection at the state, local, and federal level, and can trigger other rounds of layoffs elsewhere in the economy.

Using data from the Economic Policy Institute, coupled with average pay in industries that saw lay offs because of Apple's success, Business Insider estimated the additional loss to the employment picture at some 180,000 jobs.

Taking that into account with the 306,000 layoffs from competitors, Apple has destroyed some 490,570 positions in the U.S.

Circuit City Layoffs: 42,974 

At its peak, Circuit City employed more than 42,000 people in its stores and corporate offices, offering the only real competing electronics network to Best Buy. But as Apple took greater share of the PC market, and had sustainable margins, Circuit City had difficulty keeping up. Add in the collapse of LCD TV prices and by the holiday season in 2008, Circuit City filed for bankruptcy and laid off its staff.

Source: Bloomberg and Company Filings

Federal Government Layoffs: 42,105

One of the biggest revelations from the recent New York Times piece was the amount of money Apple saved by using tax loop-holes. Sullivan estimated that number at $2.4 billion in 2011 (Federal Taxes). Divide that by the average rate of pay for public employees in 2011 and you get to some 42,000 lost jobs.

Source: Economic Analysis by former Treasury economist Martin Sullivan 

Kodak Layoffs: 28,000

Kodak has had problems for a number of years - with total employment declining from more than 100,000 to just 17,100 today. The iPhone and other mobile devices have eliminated the demand for stand alone cameras, and Kodak was a company that suffered greatly from the link between cameras and phones. The 131-year-old company filed for bankruptcy in January. 

Source: Company Filings

Hewlett Packard Layoffs: 16,995

The iPad has made what was once a dominant PC builder an afterthought. HP attempted to enter the tablet game, but their touchpad was a disaster and they have laid off thousands of employees over the past few years (especially after costly purchases like Compaq).

Source: Bloomberg

Motorola Layoffs: 16,474

Motorola has had a painful decade after the success of its Razr - only recently regaining some strength in mobile. But after the Razr fizzled, Motorola hemorrhaged money, as well as headcount, as it tried to create a product that could compete with the iPhone.

Source: Company Filings

Borders Layoffs: 16,600
Apple hardware made a number of businesses obsolete: including the need to buy physical copies of books, movies and music. Borders went bankrupt after consumers moved to digital downloads and streaming online, all fueled by Apple.
Source: Company Filings

Sprint Layoffs: 14,600
Sprint struggled to gain post-paid subscribers for years because it did not offer a device comparable to the iPhone. After AT&T and Verizon exclusivity deals finally expired, it gained the iPhone and saw some growth in subscribers.
Source: Bloomberg

IBM Layoffs: 12,668
IBM conducted a number of layoffs over the past several years, including several thousand people in research in development roles and those in certain hardware businesses that it could not compete in - on the consumer side, that was fueled by gains at companies like Apple.
Source: Bloomberg

Musical Group Layoffs: 12,500
Performing art and spectator sport employment declined from a peak of 415,000 in 2007, to a preliminary estimate of 402,500 in March of 2012. The music industry has faced substantive difficulty since Napster hit (and continues with the lower share groups are paid on iTunes), making it harder for music groups to sign with a label and get backing.
Source: Bureau of Labor Statistics (ID: CES7071100001)

Ericsson Layoffs: 10,690
GlassdoorIn the 1990's Ericsson actually had abot 35 percent of the cell phone market. Needless to say, they did not keep up with the technology to compete with Apple and the rest.
Source: Bloomberg

U.S. Postal Service Layoffs: 10,615
Apple attributed part of its 514,000 job creation figure to shipping giants UPS and FedEx. But the truth is, it just moved the needle away from the U.S. Postal Service by using the private providers. According to Bloomberg estimates, Amazon accounts for 1.9 percent of big brown's revenue. Using that as a reference point, and the fact that Apple revenues are more than twice Amazon's, Business Insider constructed the number of jobs Apple could have sustained if it shipped its products through the USPS.
Source: Business Insider Estimate 

Barnes & Noble Layoffs: 9,000
The Nook has kept Barnes & Noble around as competitors like Borders failed, but its core business remains significantly challenged as Apple's products have moved consumers away from traditional physical units. BKS has closed a number of stores and employs 9,000 fewer people today than it did in 2007.
Source: Company Filings

Blockbuster Layoffs: 7,200
Streaming services have butchered the DVD and VHS business, and Blue Ray has not been the boon many industry analysts thought it would. Since 2007, Blockbuster has laid off more than 20,000 employees. BI attributed a third of those who lost their jobs to Apple.
Source: Company Filings

CompUSA Layoffs: 6,300
It's a repeat of Circuit City, just on a smaller scale. The computer superstore withered in the face of intense electronic retail competition and closed 126 stores, as Apple prospered and gained share.
Source: Business Insider Estimate

Sony Layoffs: 6,000
Sony once held a dominant market position in the portable music business with the Sony Walkman and other entertainment devices. The iPod made the Walkman the new 8-track player, and Apple has pressured Sony in the laptop market as well with the iPad and its Mac lineup. (These figures do not include mobile layoffs, attributed to Ericsson).
Source: Bloomberg

RadioShack Layoffs: 6,000
This retailer has faced significant challenges over the past few years as its main wireless offerings (Sprint, T-Mobile) did not sell the iPhone. RadioShack did have AT&T, and recently switched T-Mobile for Verizon Wireless. Still, its shelves are purgatory for HDMI cables and old electronics Apple seems to have made obsolete.
Source: Company Filings

Microsoft Layoffs: 5,827
Microsoft has struggled in the ancillary businesses Apple is prospering in, such as mobile, portable music, and the tablet industry. These struggles forced the software juggernaut to make cuts over the past few years.
Source: Bloomberg

Yahoo! Layoffs: 5,780
Yahoo! has struggled over the years as it has been outmoded by Google. So why is Apple to blame? The default search engine on all of Apple's products are Google, which gives the search giant a nice leg up.
Source: Bloomberg

Xerox Layoffs: 5,400
Xerox has laid off thousands of employees as its printer business steadily declined. Part of that has to do with difficulty within both the PC and inkjet sectors — industries you don't need when you use a Mac. The Xerox layoffs are based on total company announced firings, multiplied by the company's long-term asset base in the U.S. as a percent of global operations (to exclude impact to its international offices).
Source: Bloomberg

AMD Layoffs: 4,460
Apple uses intel chips in their Mac computers, which means AMD misses out on a huge potential market.
Source: Bloomberg

Best Buy Layoffs: 3,400
With Apple retail stores opening (and intense competition from Amazon) Best Buy has struggled to turn weak comparable store sales around. The company recently announced 400 layoffs in corporate as well as the closing of 50 stores.
Source: Company Filings, Business Insider Estimate

Tower Records Layoffs: 3,000
Apple's assault on the music industry hit retailers particularly hard, with stateside closings of Virgin, HMV and Sam Goody. The iPod greatly accelerated the losses of record stores as consumers switched to digital downloads (whether legal or through sites like Napster and LimeWire).
Source: New Reports

Trans World Entertainment (Sam Goody, F.Y.E.) Layoffs: 2,900
Tower Records part two. Trans World, the owner of chain stores including Coconuts, Sam Goody, and Record Town, has closed hundreds of stores and laid off thousands. Blame the iPod.
Source: Company Filings

Gateway (Acer) Layoffs: 2,500
Gateway once ran quite the successful retail chain, but a crowded environment made its PCs seem outmoded and overly expensive. Gateway ultimately closed its entire 188-store division, invested in eMachines and was then bought out by Acer during a period of consolidation. Apple did not have the same problem with its growing Mac business.
Source: News Reports

EMI Layoffs: 2,000
EMI is another record label drastically hurt by the world's move away from CDs. As the big five record companies became four, and now three, EMI had to layoff thousands and cut costs. Universal Music Group purchased EMI as greater consolidation became necessary to eek out some profits from online sales. Apple's role in the shift to digital (even as it offers a new revenue source) is pretty clear.
Source: News Reports

Lenovo Layoffs: 2,000
Lenovo was on the up when it purchased the ThinkPad unit from IBM with the goal to turn it into a dominant PC player. Unfortunately, PC sales were challenged during the recession, even as consumers scooped up Apple's Mac line up. Lenovo announced more than 2,000 layoffs to prop up margins (not included in figures for IBM).
Source: Bloomberg

Adobe Layoffs: 1,950
Adobe's issues with Apple are well documented. The company started a viral campaign to convince Apple to put Flash in its mobile devices. But Steve Jobs didn't warm to that approach, firing off a memo on his thoughts of Adobe (not too flattering). Adobe ultimately had to layoff some 1,950 as it focused on core operations and curtailed special projects.
Source: Bloomberg

T-Mobile Layoffs: 1,900
T-Mobile has lost share without having the iPhone in its device lineup, a sore point for the company that pinned its hopes on joining forces with the carrier that first offered it. But with the FCC blocking the AT&T merger, T-Mobile has had to pare back its operations to invest in 4G technology.
Source: Bloomberg

EMC Layoffs: 1,476
The very profitable cloud computing company has had to issue job cuts after competitors gained share in the market it helped create. Those competitors, like DropBox, have leveraged Apple's iOS platform and taken share through strong offerings on the iPad and iPhone.
Source: Company Filings

Palm Layoffs: 1,247
Palm hoped that the Pre and Pixi smartphones could compete with the iPhone and that it could offer some semblance of a comeback. After first sales looked promising, the products withered as Apple (and Android), continued to grow. Palm was then purchased by HP, before the company decided to shutter the whole unit. (Palm layoffs not included in HP figures).
Source: Company Filings

Virgin Megastores Layoffs: 1,060
Virgin Megastores had a surprisingly profitable run, with giant stores in Times Square generating healthy margins. But when digital sales decimated book, movie and music sales, Virgin decided to cut its losses and sell off its coveted real estate holdings which housed the Megastores.
Source: News Reports

Dell Layoffs: 905
Against Apple's strong gains with its Mac computers, Dell has seemed staid. The company has difficulty competing with Apple's premium offerings, and when demand for its PCs slumped, it saw margins substantively pressured. Dell has yet to find a way to successfully compete with any of Apple's other products — including mobile, mp3 players, and tablets.
Source: Bloomberg

AOL Layoffs: 800 
AOL was supposed to be the darling of the Internet age, until it wasn't. Torn up by larger competitors like Google, AOL has forged ahead with a push into content. But what the company used to bet on, search, is stymied by Apple's choice to default to Google on its iPad, iPhone and MacBook lines.
Source: Bloomberg 

Cisco Layoffs: 500
Networking giant Cisco has tried to push into the consumer sphere for sometime, and it thought it had a hit with the well priced flip camera business. But the camera never took off as consumers defaulted to their iPhones to take photos. Cisco ended up closing the business and laying off the employees in the division.
Source: Bloomberg

Warner Music Group Layoffs: 300
Warner Music Group is yet another music company hit by the move to digital and purchases on iTunes (you could argue that it performed better than most of the industry during the transition). Warner was forced to lay off 300 employees as revenues struggled.
Source: Company Filings

Hasbro Layoffs: 200
Who needs board games when you can use an iPad or iPhone to entertain yourself? Hasbro decided to close its board-game manufacturing plant in Massachusetts after demand dried up. You can blame that on the success of games like Words With Friends on your iPhone.
Source: Bloomberg

IAC (Ask.com) Layoffs: 170
Ask.com was once a powerhouse in search (depending on how you define powerhouse) but as the iPhone and iPad grew mobile search, Ask lost out. The company decided to axe some 170 employees over two different periods as it gave up on the product.
Source: Bloomberg

Universal Music Group Layoffs: 110
Universal, much like Warner, is one of the three main remaining music companies. The company has laid off some 110 employees as traditional CD sales tumbled. Recording companies have been upset with Apple's pricing strategy for some time, but that has lessened as Apple changed it's $0.99 per song requirement.
Source: News Reports

Apple Driving Workers to Threaten Mass Suicide?

The Pathologies of the Modern Corporation
By Robert Cruickshank, AlterNet
January 26, 2012

Here in my household, we are swimming in Apple products. We have four iPhones, although only three of them are currently in use. We have an iPod and an iPad. We have a MacBook and a MacBook Air (on which this post is currently being composed). We have two iBooks in storage, along with my iMac, which dates to the summer of 2000. It still boots up and works just fine.

I’m not an Apple fanboy. I just prefer products that work well, rarely ever crash, and help me create value. Apple products meet those needs perfectly, whereas most PCs I’ve used simply don't.

If those were the only things I cared about in life, I wouldn’t give those products a second thought. But there’s more to life than a functional piece of consumer electronics. Those items should exist to help me do the things in life that I want to do, to help me live a better life. They’re tools, not ends.

Even that’s not sufficient. One of my main goals in life is to build a better world, to ease suffering, end oppression, and provide equality – all in order that others may have the freedom to pursue their own dreams. A well-designed product can certainly help that process along. But what if the way that product is made actually undermines those broader goals? Suddenly, there’s a problem.

In the last year or two, it’s become increasingly clear that the way Apple makes its products is deeply flawed. Working conditions at the factory which makes most of their products – Foxconn in Shenzhen, China – are so appalling that workers engaged in a rash of suicides in 2010 to ameliorate their own suffering. Earlier this year workers threatened mass suicide over pay and working conditions. And of course, there’s the fact that Apple makes these products overseas rather than in the United States, where unemployment remains at some of the highest levels we’ve seen since the Great Depression.

Here in the 21st century, it should be clear to us that better technology is not sufficient to build the kind of better lives and society that we want. If it were, we wouldn’t be in a position of mass unemployment, widespread suffering, and a democracy in decay. Social institutions, including workplaces and corporations, have to be full partners in building a democratic, empowered, and equal society.

Most corporations, however, don’t see themselves that way – including Apple. Today’s New York Times took a look at Apple, America And A Squeezed Middle Class, curious to see why Apple no longer manufactures its products in the US and what the impact is on our prosperity. They found that Apple builds in China in large part because they have a narrow focus on their products and their profits, and disdain wider concerns for the good of society. When an unnamed Apple executive was asked about their role in addressing America’s economic problems, their response was revealing:

They say Apple’s success has benefited the economy by empowering entrepreneurs and creating jobs at companies like cellular providers and businesses shipping Apple products. And, ultimately, they say curing unemployment is not their job. 

“We sell iPhones in over a hundred countries,” a current Apple executive said. “We don’t have an obligation to solve America’s problems. Our only obligation is making the best product possible.”

That quote is perhaps the best encapsulation of the pathologies of the modern American corporation. In fact, Apple does have an obligation to solve America’s problems. Everyone who lives in this country has that obligation. And corporations have that obligation too. If they don’t want to help make things better, then they shouldn’t exist.

The notion that companies exist only to generate profit or build a specific few set of products is corrosive. Those profits and products serve the rest of society. And as a part of that society, companies and their executives exist to make that society a better place. If they are engaged in a set of practices that make society worse off, then those actions are indefensible and need to be changed.

For the last 30 years, American businesses have been devoted to a single-minded pursuit of maximizing short-term profits. Unsurprisingly, this has had profound ripple effects throughout the rest of society. The economy became focused on those profits, and so with it followed politics, culture, and our values as a civilization.

By now it should be clear to everybody that while this works well for the small elite that has hoarded all these profits – the so-called “1%” – it has utterly failed to provide a happy and fulfilled life for everyone else.

This is true not only of the American workers who have lost their jobs due to outsourcing, it’s true of the workers around the world who have those jobs now. Those workers aren’t villains – if anything they’re even worse off. Foxconn’s chairman not only compared his workforce to animals, he suggested he might learn good management techniques from a Taiwanese zoo.

The NYT article talks about one of the reasons Apple likes Foxconn is because the factory is willing to push its workers not just to the breaking point, but well beyond it, in service to Apple’s profits and product demands. The NYT article described Steve Jobs’ 2007 rant about the iPhone needing an unscratchable glass surface within six weeks, and how Foxconn went about fulfilling that need:

In mid-2007, after a month of experimentation, Apple’s engineers finally perfected a method for cutting strengthened glass so it could be used in the iPhone’s screen. The first truckloads of cut glass arrived at Foxconn City in the dead of night, according to the former Apple executive. That’s when managers woke thousands of workers, who crawled into their uniforms — white and black shirts for men, red for women — and quickly lined up to assemble, by hand, the phones. Within three months, Apple had sold one million iPhones. Since then, Foxconn has assembled over 200 million more.

Was that necessary? Certainly not. That might not sound as bad as other reported abuses, but the situation is likely much worse at Apple’s suppliers, with overwork and other forms of employment fraud being rampant. 

As William K. Black explains at Alternet, this is a good example of what may be a widespread tolerance for fraud in the global economy:

These frauds take place abroad, but they harm employees at home. Mitt Romney explains that Bain had to slash wages and pensions to save firms located in the U.S. who had to meet competition from foreign anti-employee control frauds. The damage from foreign anti-employee control frauds drives the domestic attack on U.S. manufacturing wages. Bad ethics increasingly drive good ethics out of the markets and manufacturing jobs out of the U.S. and into more fraud-friendly nations.

One only needs to look at the widespread fraud that underlay the housing bubble of the ’00s to see further evidence for these claims.

Apple likes to think of itself as a model corporation. But as we saw above, their attitude is the same as that of many other businesses – that only the product and the profits matter, with all other elements of human life and social good being unimportant. The NYT article implicitly endorses this view by framing Apple’s decisions as being driven by the marketplace:

It is hard to estimate how much more it would cost to build iPhones in the United States. However, various academics and manufacturing analysts estimate that because labor is such a small part of technology manufacturing, paying American wages would add up to $65 to each iPhone’s expense. Since Apple’s profits are often hundreds of dollars per phone, building domestically, in theory, would still give the company a healthy reward.

In fact, the article explains that Apple is the world’s most profitable company, so clearly there is room to give. I would personally pay $65 more per iPhone if I knew it was going to American workers. I’m an internationalist, and so I’m also willing to pay more if I knew it was going to create better pay and better working conditions for the Foxconn workers in Shenzhen.

The NYT suggests that it’s not just profit motive that drives Apple’s unwillingness to bring jobs back to the States, but the lack of a skilled workforce and existing factory capacity:

But such calculations are, in many respects, meaningless because building the iPhone in the United States would demand much more than hiring Americans — it would require transforming the national and global economies. Apple executives believe there simply aren’t enough American workers with the skills the company needs or factories with sufficient speed and flexibility. Other companies that work with Apple, like Corning, also say they must go abroad.

The NYT treats this as a kind of historic accident, a consequence of the marketplace. But it is in fact the product of 30 years of deliberate American government policy to deskill our workforce and send their jobs overseas so that the top 1% of our society can enjoy greater profits.

Nowhere in the article is the notion of an “industrial policy” described. China spends vast sums of money to develop, promote and protect its manufacturing sector. The United States has not only done no such thing, at least not since 1980, but has instead spent its money and used its laws and policies to encourage the deindustrialization of this country. This is not a market failure but a deliberate outcome of specific political choices.

There is nothing stopping the United States from shifting our current industrial policy away from “doing everything we can to help the 1% get richer” and toward “doing everything we can to promote the development of a manufacturing sector that employs a lot of people, paying good wages with good working conditions.” Well, nothing except the political power of the 1% – and the hegemony of neoliberal ideology, which holds that “the market” should decide who wins and who loses in life, rather than all of us collectively deciding that there’s no reason anyone should ever have to “lose” at all.

The United States could and should spend money to provide job training to help create a workforce that can build the products that make a 21st century society go. We can and should spend money to help make it easier to build sustainable, environmentally responsible factories. We can and should pass laws to ensure those factories are run by a democratic workforce, ideally by a cooperative, rather than by a large corporation focused on profits rather than the social good.

If companies are complaining about costs, we can help solve that problem without letting them fall back on the extremely damaging “solution” of simply cutting their workers’ pay, benefits, or even their jobs. Universal health care, funded through taxation, would mean a company like Apple would not have to include that cost in deciding when and where to hire. The same holds true of universal defined-benefit pensions – an augmented version of Social Security – as well as better schools and a freight and passenger transportation infrastructure that was not dependent on expensive oil.

Those things would not necessarily have to benefit just large corporations. They could provide the basis for people to innovate for themselves, for cooperatives to start setting up shop in the US and begin to design and build things like smartphones.

Changes to the way our companies operate, including eliminating the laws requiring them to maximize shareholder value and instead focus on operating in a way that makes society better, are also key pieces of building a better 21st century prosperity.

If all we want out of life is an iPhone, then we can just continue on the present path. But for those of us who know we can and should aspire to much more fulfilling things, it’s time we started figuring out how to change the global economy, rather than let it continue undermining our values and our lives. 

Apple's Pre-Emptive Strike Against Free Speech

Wednesday, June 22, 2011 by Save the Internet

by Tim Karr

 

So you think you control your smartphone? Think again.

Late last week reports uncovered a plan by Apple, manufacturer of the iPhone, to patent technology that can detect when people are using their phone cameras and shut them down.

Apple says this technology was intended to stop people from recording video at live concerts, which should worry the creative commons crowd. But a remote "kill switch" has far more sinister applications in the hands of repressive governments. And it further raises concerns about the power new media companies hold over our right to connect and communicate.

Imagine if Apple's device had been available to the Mubarak regime earlier this year, and Egyptian security forces had deployed it around Tahrir Square to disable cameras just before they sent in their thugs to disperse the crowd.

Would the global outcry that helped drive Mubarak from office have occurred if a blackout of protest videos had prevented us from viewing the crackdown?

This is more than speculation. Thousands of people across the Middle East and North Africa have used cellphone cameras to document human rights abuses and share them with millions via social media.

In a February speech, Secretary of State Hillary Clinton credited the viral spread of a cellphone video depicting the shooting death of a young Iranian woman named Neda for bringing world attention to the human rights abuses of the regime.

What would we know of Neda's shocking death had Iranian security forces disabled that camera?

Social Media's Wild West
But here's the rub. The First Amendment and Article 19 of the U.N.'s Declaration on Human Rights don't really apply to the corporations that build these cellphones and run these social networks. Free speech rules don't apply to Silicon Valley.

And while platforms such as YouTube, Twitter, Facebook and Flickr might enable individual expression more than governments do, many governments are at least accountable by law for protecting your right to speech and assembly.

The social networks are only beholden to their terms of service, which in most cases extend them the power to take down your communications "for any or no reason."

That's why Flickr got away with taking down the photographs and files of Egyptian security officers, which were posted by a local activist wanting to draw attention to their crimes. That's why Amazon.com could kick Wikileaks off its hosting platform after it released a series of diplomatic cables that exposed abuses of power by American agents. And that's why Facebook could shut down the pages of any anonymous political protester who decides to use the network to build a community of like-minded activists.

"Hosting your political movement on YouTube is a little like trying to hold a rally in a shopping mall. It looks like a public space, but it's not," writes Ethan Zuckerman of Harvard's Berkman Center.

"Even if YouTube's rulers take their function as a free speech platform seriously and work to ensure you've got rights to post content, they're a benevolent despot, not a representative government."

A Pre-emptive Strike
What Apple is proposing to develop is worse in many ways. Its cellphone camera kill switch can be used as a pre-emptive strike against free speech.

In its patent application, Apple describes the technology as making it impossible to capture video or pictures at events where cameras and video recorders are prohibited. Your phone determines whether an image includes an infrared beam with encoded data. This data is sent from an emitter that directs the cellphone or a similar device to shut down image capture.

Disabling emitters could be mounted on stages, throughout public squares or, conceivably, on police helmets.

While the technology might not be available now, the grave consequences of its use far outweigh any worry Apple and its entertainment industry allies have about video piracy.

More than ten thousand people have already signed a letter imploring Apple CEO Steve Jobs to pull the plug on this technology.

Smartphones like the iPhone and Droid are becoming extensions of ourselves. They are not simply tools to connect with friends and family, but a means to document the world around us, engage in political issues and organize with others. They literally put the power of the media in our own hands.

Apple's proposed technology would take that power away.

iHate Tax Dodgers Like Apple Computer

Wednesday, June 1, 2011 by CommonDreams.org

by Chuck Collins

 

I’m an Apple fan. I’m writing on my third Mac laptop in a decade. I’ve purchased over $100,000 of Apple products on behalf of a company I’ve worked for over the same period. Plus all those iTunes gift cards for my teenage daughter.

So I was disappointed to learn that Apple is a tax dodger.

Sure, Apple pays some U.S. corporate income taxes. It looks downright patriotic next to master tax dodgers like General Electric and Boeing that have paid zero U.S. taxes for years. But Apple pays far less than it should.

Here's how: Apple shifts patents and intellectual property, which are among their biggest assets, to subsidiaries in other countries that are low and no-tax havens. These include Ireland and the Netherlands, which have especially favorable tax rates on royalties from intellectual property.

When Apple sells an iPad or a MacBook, it allocates a portion of the profits to the offshore subsidiary that owns the patent. This tax dodge is sometimes referred to as the “Irish Two Step” or the “Dutch Sandwich.” But for Apple, we should call it the “Offshore Tax Haven Shuffle.”

Last year, Apple claimed that just 13.9 percent of its profits came from U.S. operations. This is a fantastic fib. Consider all those Americans walking around with iPhones, iPods, iPads, and MacBooks. Think of all those folks buying music on iTunes, sending a buck to Apple for each song. Think of customers lined up at those glitzy Apple stores, like the three-story iPlex down the street from me in Boston.

How is it possible that less than 14 percent of this company's profits come from the United States? Is it because Europeans and the expanding middle classes of India and China are snatching up Apple products by the boatload?

Nope. That low percentage is an accounting fiction that goes to the heart of the tax dodge. Apple methodically shifts its U.S. profits off shore.

Another clue that Apple is ethically rotten is that they are spearheading a national coalition to lobby Congress for a “tax holiday” for offshore profits.

Apple has teamed up with other technology companies like Google, Oracle, Cisco, Microsoft and Adobe, drug giant Pfizer, and utility leaders including Duke Energy to form “WinAmerica,” a slickly messaged campaign to press Congress for an $80 billion tax cut.

U.S. firms have stashed over $1.2 trillion in profits offshore. They want Congress to allow them to “repatriate” these profits at a 5 percent tax rate rather than the 35 percent rate that's legally due when foreign earnings are brought back stateside. If Congress approves this “tax holiday,” Apple alone will dodge an estimated $4 billion in taxes.

Given the budget cuts our communities are facing, it seems reckless for Congress to even consider another tax giveaway to companies playing offshore games. It’s unfair to individual taxpayers and small businesses that have to pick up the slack for tax shufflers like Apple.

In 2004, Congress passed a similar tax holiday — with Apple dodging $255 million at the time. These tax dodgers argue they will create jobs if they’re allowed to bring their profits home lightly taxed. But independent studies show that the 2004 tax holiday did little to create jobs. In fact, profits mostly went to boost stock prices and CEO pay, and enable companies to buy back stock.

Apple should disclose more information to its shareholders, customers and the public. At a time of huge public service cuts and fiscal austerity, why should we the taxpayers give Apple a $4 billion tax break?

Congress should reject the corporate tax holiday for the obvious reason that it encourages bad behavior. If these global companies know that every six years Congress will bail them out with a tax holiday, they’ll continue their off shore games.

Apple may be cool, but until it stops gaming the system and pays its fair share, the company is just another lowly tax dodger.

IPhones Track Everywhere You Go; Franken Presses Apple re. Privacy (2 articles)

By Tim F., Balloon Juice
Posted on April 20, 2011

Since the iOS4 update last June, iPhones track everywhere you go and store it in an easy-to-hack-or-subpoena format. It is practically invisible to most users and you can’t disable it or get rid of the data. Why? Apple won’t say.

Whatever. Me and my $15 cell phone will live happily on stale twinkies and soup cans with torn-off labels for years after your idevices calmly direct the rest of you to check out a nearby ‘reprocessing center’ for AWESOME EXCLUSIVE DEALS on the iPad3.

***Update***

Via commenter Joel, here is a more clear explanation of the problem from the people who discovered it.

What’s so bad about this?

The most immediate problem is that this data is stored in an easily-readable form on your machine. Any other program you run or user with access to your machine can look through it.

The more fundamental problem is that Apple are collecting this information at all. Cell-phone providers collect similar data almost inevitably as part of their operations, but it’s kept behind their firewall. It normally requires a court order to gain access to it, whereas this is available to anyone who can get their hands on your phone or computer.

By passively logging your location without your permission, Apple have made it possible for anyone from a jealous spouse to a private investigator to get a detailed picture of your movements.

+++++++++++++++++++++

Sen. Franken presses Apple on privacy

Posted at 4:59 PM on April 20, 2011 by Brett Neely

After security researchers revealed today that Apple's best-selling iPhone and iPad devices contain a hidden file that secretly records the location of its user, DFL Sen. Al Franken wrote a letter to Apple CEO Steve Jobs demanding an explanation.

Franken wrote:

"Anyone who gains access to this single file could likely determine the location of a user's home, the businesses he frequents, the doctors he visits, the schools his children attend, and the trips he has taken--over the past months or even a year."

He went on to ask that Apple provide information on how the location data is being collected and used and why consumers weren't told that their personal information was being collected.

As head of the newly-formed Senate Judiciary Subcommittee on Privacy, Technology and the Law, Franken is in a position to keep this issue alive, including calling public hearings, if he's not happy with Apple's response to the letter.

Coincidentally, Apple released its most recent quarterly results today. The company said it sold over 18 million iPhones and over four million iPads.

You can read the entire letter Franken wrote to Jobs here.

Microsoft buying Adobe would fix both companies' Apple problem

By Peter Bright | Ars Technica

The New York Times is reporting that Microsoft CEO Steve Ballmer has recently been at a secret meeting with Adobe CEO Shantanu Narayen to discuss topics including the two companies' mutual competitor, Apple.

The Times says that the companies were investigating ways to partner in order to do battle with Apple. One option was for Microsoft to acquire Adobe, a claim that has seen Adobe's stock price surge by more than 10 percent.

Microsoft is thought to have investigated buying Adobe some years ago, but abandoned the idea with the expectation of running into new antitrust problems. With Apple and Google now such strong competitors, such a purchase may now be a viable option. Regardless of the legal difficulties, a partnership—and, indeed, a Microsoft purchase—makes sense.

The common enemy

Apple's increasing importance in the mobile space with its trio of  iOS devices: the iPhone, iPod touch, and iPad, is a growing threat to both companies. Adobe and Apple butt heads in a number of markets. The two companies have competing software (Adobe's Lightroom and Premiere go up against Apple's Aperture and Final Cut Studio, for example), and more significantly, Apple is attacking a key Adobe product: Flash.

iOS devices have no Flash support in their browsers, so can't run Flash ads or any other Flash content on webpages. Apple has been advocating the use of HTML5, with its video and interactivity capabilities, as an alternative. Given the dominance of Flash in advertising, this is a big blow to Adobe. Apple then stepped up the pressure on Adobe with the launch earlier this year of iAds—rich, Flash-like ads built using HTML5.

Microsoft's difficulties in the mobile space—both phones and tablets—are well-known. The tablet problem is probably more serious; though Microsoft would like to have a piece of the smartphone market, it is tablets that threaten PC sales, and hence Windows. There is already some suggestion that iPad sales are denting netbook sales, and this is a trend that Microsoft could be badly hurt by. At the very least, it would substantially diminish home PC sales; ultimately, it could threaten corporate computer purchases too.

Apple's anti-Flash stance also indirectly threatens Microsoft. Redmond's relationship with HTML5 is a difficult one. On the one hand, the Internet Explorer team is making a considerable effort to make Internet Explorer 9 a modern browser with good support for new Web technology. That team, at least, is serious about HTML5.

On the other hand, Microsoft is also investing in its own Flash competitor, Silverlight, which it introduced in 2007 with great fanfare. Like Flash, Silverlight is a browser plugin that allows the creation of rich, interactive Web applications, and like Flash, it includes a range of media features not available to HTML5, such as DRM-protection of video streams. HTML5 threatens Silverlight in much the same way as it threatens Flash.

HTML5 also raises Microsoft's long-standing fear about the Web: that it would become a platform in its own right and displace the Windows PC. It is this fear that led to the development of Internet Explorer and the first browser war; Microsoft doesn't want the Web to be a platform, but if it must be one, it should be a Microsoft-powered Web accessed through a Microsoft browser on a Microsoft operating system.

Microsoft and Adobe do compete on a number of fronts. Silverlight and Flash, and ASP.NET and ColdFusion, are the two main areas of opposition. However, in practice, even in these competitive areas, the companies' respective products have carved out their own niches, and neither is threatening to completely demolish the other. Apple's stance towards Flash—get rid of it, use HTML5—is far more dangerous to Flash, and far more vigorously pursued, than Microsoft's stance—use this other browser plugin instead.

Collaboration and cooperation

Having a common enemy isn't enough to justify working together, of course. There needs to be some practical benefit to cooperation: something that strengthens both Microsoft and Adobe against the Apple threat.

The most obvious, immediate thing that the two companies can do is to get Flash ported to Windows Phone 7. Early signs are that Windows Phone 7's Web browser is surprisingly fast and capable, but one thing it isn't is HTML5-aware. If the phone operating system is successful, there will be a substantial growth in smartphones that are, at least for the time being, not HTML5-capable.

Such phones are crying out for Flash compatibility. There are certainly hurdles to achieving this—not least of which is the current requirement that all Windows Phone 7 software be written using .NET code—but they are by no means insurmountable. For example, Microsoft could simply bundle Flash with the phone operating system, and in so doing obviate the need for Flash to be written in C#.

The two companies could even go for something more exotic: make it possible to create Windows Phone 7 programs directly in Flash. The latest Flash version, CS 5, has the ability to produce iPhone applications. Apple originally planned to ban such applications, but has since relented. A similar capability could be readily built to produce Windows Phone 7 software.

Microsoft is already doing its best to court developers to attract them to its phone platform, with high-quality development tools that leverage the .NET technology that's already familiar to many. Flash development would similarly open the platform up to a large number of developers, letting them use technology they're already familiar and comfortable with.

There are technical things that the companies can work on, too, to improve the use of plugins in the desktop browsers. Google and Adobe are already cooperating to produce a better plugin interface to enable greater performance and stability for Flash in Chrome, and Chrome now bundles Flash. Taking a similar tack with Internet Explorer would further strengthen Flash's position on the desktop, again countering the forces of HTML5.

Or an outright purchase

Microsoft could afford Adobe, no doubt about that. Hell, Microsoft could afford to buy Adobe with petty cash; we're only talking $15 billion here. The relative size of the two companies means that the offer doesn't even have to appeal to Adobe, particularly: Microsoft can buy the company whether it likes it or not; as such, the question is not what Microsoft has to offer Adobe, only what Adobe has to offer Microsoft. Such a purchase would significantly strengthen Microsoft's software line-up. Redmond has virtually no creative/artistic software; though the company has dabbled in this area in the past, its only real creative software is the Expression Design vector graphics package.

The corporate cultures of the two companies are likely to be radically different, a product of their vastly different target audiences. As such, it's hard to see Adobe being anything other than a wholly-owned subsidiary, at least initially. Attempting to integrate it into the broader Microsoft organization would likely be no more successful than Microsoft's Danger purchase.

Software...

Apple has had a lot of success with its creative software, both at the high end (Final Cut Studio, Aperture, Logic Studio) and the low end (iMovie, iPhoto, GarageBand). An Adobe purchase would let Microsoft tackle these markets in the same way; Adobe's technology would provide a substantial upgrade to programs like Windows Live Photo Gallery and Windows Live Movie Maker, as well as opening up the possibility of upsells to the full products like Lightroom and Premiere. A hypothetical "Windows Live Photoshop Elements" would be a great addition to the line-up, too.

Bolstering the Windows Live line-up makes Windows a much nicer platform. The iLife suite is a tough act to follow, and though Windows Live Essentials is trying to compete in this area, the iLife applications are quite a bit more polished. Buying Adobe would let Microsoft simultaneously broaden the appeal of the Essentials with new programs, and raise the quality bar.

Software with more of an overlap with existing products may be a little more difficult to deal with. Adobe's Dreamweaver Web authoring software is on balance better than Expression Web, so it would seem natural to replace the latter with the former. ColdFusion would be tricky, and it's hard to see how it would survive such an acquisition; though it has its fans, and offers features that ASP.NET does not, it's probably too similar to justify continuing to develop and support both products; one can imagine it would be cut loose in such a purchase.

Though the same would in some senses be true of Flash (and related technologies, Flex and AIR)—it has massive overlap with Silverlight—it's too important to be let go in this way. Instead, consolidation—allowing the Flash software to produce applications that will run on Silverlight or Windows Phone 7—would be the way to go.

It would also be good to see Microsoft's secure coding practices applied to Adobe's software. If nothing else, the teams developing Reader and Flash need a bit of help.

... and Style

Beyond the software, Adobe would bring a very different kind of customer to Microsoft. Adobe has strong links with the creative and design communities, communities that have, frankly, reviled Microsoft for decades. I would argue that the current generation of Adobe software shows a stronger sense of aesthetics than is generally true of Microsoft's output, and that's in no small part down to the community that Adobe serves—giving designers a suite of ugly, clunky software is not a winning move. It would be nice for this sense of aesthetics to permeate Microsoft.

Microsoft traditionally has been very good at producing software for developers, but its efforts to appeal to designers have been less effective. It has started making moves in the right direction with Expression Blend, but it's still in many ways a developer-oriented company. The Expression range of software does have some interoperability with Adobe software (Expression Blend can open Adobe Photoshop mockups, for example), as an acknowledgement of the importance of Adobe's software in the design world.

By bringing this design-oriented, creative software in-house, Redmond would be able to offer an end-to-end solution for designing great-looking applications, from Illustrator and Photoshop mock-ups, to Expression Blend or Expression Web/Dreamweaver designs, to Visual Studio application development. If the company could make this kind of workflow work better—without alienating designers—it could prove to be extremely attractive to both Web and phone developers.

Microsoft hasn't cared too much about design in the past, but that's no longer the case with Windows Phone 7. Strong design is key to the new platform; it ties it together to make it feel like a coherent whole, in a way that simply doesn't happen on desktop Windows. Appealing to designers hasn't mattered in the past. These days, it does.

Stumbling blocks

An Adobe purchase does pose quite a few issues. Antitrust is the obvious biggest problem. Regulators might not like to give Microsoft control over Flash, and would be certainly be concerned about what such a takeover would mean for Adobe's Apple software. Microsoft does develop Office for Mac, but this is a bastard product that's not actually a version of Office for Mac OS X, but rather a completely separate set of software that happens to share the same file formats as the Windows software. It looks different, it works differently, it does different things, it is written by different people, and it is released on a different schedule.

This allows Microsoft to continue to "support" Apple's platform, while still keeping it at a disadvantage relative to Windows. The company gets the best of both worlds; Office for Mac is believed to be profitable in its own right, Microsoft gets to say to regulators "See? We do care about other platforms!" and yet, simultaneously, Microsoft manages to keep Mac OS X inferior to Windows in a manner that's important to corporations. It has Office, but it's not the real Office—so companies are going to stick with Windows.

This is not the case with Adobe's software; Photoshop for Mac OS X is a first-class citizen, on an equal footing with the Windows version. Any work done to improve Photoshop strengthens Microsoft's rival just as much as it does Windows. As such, killing the Mac OS X versions would plainly hold some appeal to Redmond. If Photoshop and related products were not so dominant on Mac OS X then it might not matter, but the fact is that it would kneecap Macs. Those creative sales are still important to Apple, and their loss would be quite a blow to the Mac platform, if not Apple as a whole. Until Apple comes out with its own Photoshop competitor, this is a situation unlikely to change.

The close work between Adobe and Google over Flash likely wouldn't withstand such a purchase, either. Adobe and Google don't compete, making it easy for the two to cooperate, but Google and Microsoft are not so friendly with one another.

Adobe's other major technology, PDF, would be another sticky issue. Microsoft has devised its own PDF alternative, XPS, and though this has not set the world on fire, it's sufficiently integrated into Windows now that the company is stuck with it. PDF, obviously, is enormously entrenched. There would be a concern that Microsoft might favor XPS over PDF, to the detriment of everyone not using XPS (which is to say, everyone). Countering that is the fact that various versions of PDF are ISO standards anyway; Adobe has ceded absolute control over the specification, so there may not be too much that Microsoft could do to hurt it.

Partnership, yes. Purchase, doubtful

Microsoft partnering with Adobe is something of a no-brainer. In spite of the differences between the two companies, working together, especially on Windows Phone 7, will be valuable to both. Bringing Flash to Windows Phone 7, both in the browser and as an application development tool, would be win-win, and I would be surprised if this did not happen eventually.

As for buying Adobe? I think a good case can be made. It rounds out Microsoft's software offerings, giving the company access to a market that it currently virtually ignores, and though it wouldn't happen overnight, gradual integration of the two companies' product lines would enhance Windows and Windows Phone in many ways. Microsoft is not the dominant monopoly it once was, but regulators might well be reluctant to let the company buy the dominant producer of painting, drawing, and desktop publishing software, especially when so many of its customers don't use Windows.

And it's these monopoly concerns that I think will be enough to prevent the companies from even trying to engineer a takeover. The purchase would make sense for Microsoft, but the chances of it ever being approved are slim to none.

Microsoft cofounder drops patent bomb on Apple, Google, Facebook

By Jacqui Cheng | Ars Technica | Aug 28, 2010

Paul Allen, entrepreneur and cofounder of Microsoft, has filed a lawsuit against 11 companies for infringements on his Web search patents. Announced on Friday afternoon, the suit names Apple, Google, Facebook, Netflix, YouTube, and Microsoft partner Yahoo as defendants for violating four Interval Licensing LLC patents, though the court will likely have to weigh whether the patents in question are "obvious" or not.

The patents revolve around three main concepts: browser use for navigating through information, managing a user's peripheral attention while using a device, and alerting users to items of current interest. They collectively address the general concept of presenting searched-for information to a user along with related news articles, media (such as music or videos), status updates from friends, or data (such as stock or weather info).

Needless to say, numerous Internet companies make use of such concepts, including, of course, Microsoft. However, Microsoft has managed to escape Allen's ire for the time being, while the 11 other companies seem to share the oddly coincidental characteristic of being wildly popular with the public. In its announcement, Interval has declared itself a "ground-breaking contributor to the development of the internet economy" and says all it wants to do is "protect [its] investment in innovation."

It's hard not to see the lawsuit as a patent troll—especially given the fact that Interval doesn't actually produce any products and the word "licensing" is right in the company's name. Still, Allen and his spokesperson David Postman clearly believe that they are defending a concept that is not practically universal among search engines and web browsers, but rather something that would not exist at all had Interval not come up with it.

"We are not asserting patents that other companies have filed, nor are we buying patents originally assigned to someone else," Postman said in a statement. "These are patents developed by and for Interval."

A Google spokesperson responded to the lawsuit by saying that it uses the patent system to work against innovation, not for it. "This lawsuit against some of America's most innovative companies reflects an unfortunate trend of people trying to compete in the courtroom instead of the marketplace," the spokesperson said. "Innovation—not litigation—is the way to bring to market the kinds of products and services that benefit millions of people around the world." (Apple did not respond to our request for comment by publication time.)

Some of the defendants, such as Apple and Google, have gone on record in support of serious patent reform in the US, though such reform is still a ways away. Courts have increasingly put patents through the "obviousness test" in recent years when deciding patent cases, too, which will undoubtedly come into play if this lawsuit doesn't end in a settlement.

How your Apple iPhone spies on you

Published on 07-10-2010

As the communications device grows in popularity, technology experts and US law enforcement agencies are devoting increasing efforts to understanding their potential for forensics investigators.

While police have tracked criminals by locating their position via conventional mobile phone towers, iPhones offer far more information, say experts.

"There are a lot of security issues in the design of the iPhone that lend themselves to retaining more personal information than any other device," said Jonathan Zdziarski, a former computer hacker who now teaches US law enforcers how to retrieve data from mobile phones.

"These devices organise people's lives and, if you're doing something criminal, something about it is going to go through that phone." Apple has sold more than 50 million iPhones since the product was launched in 2007.

Mr Zdziarski told The Daily Telegraph he suspected that security had been neglected on the iPhone as it had been intended as a consumer product rather than a business one like rivals such as the Blackberry.

An example was the iPhone's keyboard logging cache, which was designed to correct spelling but meant that an expert could retrieve anything typed on the keyboard over the past three to 12 months, he said.

In addition, every time an iPhone's internal mapping system is closed down, the device snaps a screenshot of the phone's last position and stores it.

Investigators could access "several hundred" such images from the iPhone and so establish its user's whereabouts at certain times, he said.

In a further design feature that can also help detectives, iPhone photos include so-called "geotags" so that, if posted online, they indicate precisely where a picture was taken and the serial number of the phone that took it.

"Very, very few people have any idea how to actually remove data from their phone," Sam Brothers, a mobile phone researcher for US Customs and Border Protection told the Detroit Free Press.

"It may look like everything's gone but for anybody who's got a clue, retrieving that information is easy."

Apple's Mobile Rules To Get FTC Scrutiny

JUNE 12, 2010
By THOMAS CATAN

WASHINGTON—The U.S. Federal Trade Commission will investigate whether Apple Inc.'s business practices harm competition in the market for software used on mobile devices, people familiar with the situation said.

For weeks, the FTC has been engaged in negotiations with the Department of Justice over which agency would review allegations by companies that say they're being shut-out of one of the most important emerging computing platforms.

Adobe Systems Inc. has been engaged in a public feud with Apple over its decision to ban Adobe's Flash video technology from Apple devices. This week, Google Inc. complained Apple's new rules on developers could bar Google and other rivals from selling ads inside iPhone and iPad applications, such as games.

Apple has also banned software developers from using other companies' tools to develop software for its devices.

Both Apple and the FTC declined to comment. The decision was reported earlier by Bloomberg News.

This may not be the only antitrust investigation Apple faces. Justice Department lawyers recently contacted companies about Apple's practices in the music business. The Justice Department could forge ahead with that inquiry independent of the FTC's investigation, said people familiar with the matter.

The Justice Department is already investigating whether Apple and a range of other tech companies improperly agreed not to poach each other's employees.

As it transforms from a niche player in the market for personal computers into a media and consumer electronics giant, Apple has drawn increasing scrutiny from antitrust enforcers. Apple recently surpassed Microsoft Corp.'s market value, a sign of its growing power in the technology industry.

Apple also has clout in the media world: It controls around 70% of online music sales and has more of the overall music market than Wal-Mart Stores Inc., according to market research NPD Group.

Some industry representatives are coming to Apple's defense.

"The iPhone was just introduced three years ago, and all of a sudden (Apple is) being accused of being a monopolist? To me, it's absurd," said Gary Shapiro, president of the Consumer Electronics Association, in an interview. "They don't even have a dominant position in smart phones—that's Blackberry."

However, some antitrust enforcers say that if they wait until a tech company has cornered a market it may be too late. The technology sector has powerful "network effects" that, some say grant outsize advantages to first movers and make it particularly difficult for competitors to break in.

The FTC will have a wealth of information to mine for its probe. It recently completed a six-month investigation of Google's $750 million acquisition of AdMob Inc., giving its lawyers knowledge of the mobile-ad market that Apple has also entered.

Despite initial reservations about the deal, the FTC cleared the acquisition last month, in large part because of Apple's entry into the mobile ad market in the latter stages of the probe. The move focused the FTC's attention on the ways in which Apple might give its own ad network advantages on its mobile devices. The concerns about Apple's potential market power helped sway the five commissioners against blocking Google's deal.

"The Commission has reason to believe that Apple quickly will become a strong mobile advertising network competitor," the FTC said last month. "Apple not only has extensive relationships with application developers and users, but also is able to offer targeted ads…by leveraging proprietary user data gleaned from users of Apple mobile devices."

It added that Apple's ownership of the iPhone software development tools, and its control over the developers' license agreement, "gives Apple the unique ability to define how competition among ad networks on the iPhone will occur and evolve."