Tech Check

Published: Monday, 24 Aug 2009 | 4:39 PM ET

Text Size

First, there were allegations that Apple

AAPL loading...

Quote  |  Chart  |  News  |  Profile

[AAPL  Loading...      ()   ] and a host of other tech companies were colluding to prevent competitors from poaching each others workforce, so-called poaching of the payroll.  That spawned a Justice Department investigation.

Then, it was board of directors overlap, with Google

GOOG loading...

Quote  |  Chart  |  News  |  Profile

[GOOG  Loading...      ()   ] CEO Eric Schmidt sitting on both Apple's board and his own company's.  That spawned a Federal Trade Commission investigation.

Then, Apple's decision to delay -- or deny, depending upon whom you talk to -- the Google Voice app from its popular App Store spawned a Federal Communications Commission investigation.

Now, we get word that US Trade Office officials are involved in some kind of investigation connected to flash memory, Apple, Sony

SNE loading...

Quote  |  Chart  |  News  |  Profile

[SNE  Loading...      ()   ], Samsung, Dell

DELL loading...

Quote  |  Chart  |  News  |  Profile

[DELL  Loading...      ()   ] and others.

Lots of feds poking around is never a good thing for any company, but so many investigators looking at one company has to be unnerving for the folks in Cupertino.  Apple is no stranger to federal investigations.  Look no further than the exhaustive stock options backdating probe involving CEO Steve Jobs and others.  Of course, that investigation would end with the Securities & Exchange Commission finding no wrongdoing by Jobs and actually lauding him and the company for their extensive cooperation.

So what gives?  Why all this investigation now?  Last year, as Steve Jobs dealt with hour-to-hour rumors about his health, it seemed that Apple couldn't get its financial footing.  There was always some rumor, some headline, some nugget that always derailed the company's momentum on Wall Street.  Never mind that Apple continued to perform admirably, piling up massive amounts of cash, stifling foot-traffic in its retail stores, tremendous sales in each of its key product lines.  Any good news would be eclipsed by a rumor, as the market seemed far more interested in fanciful innuendo than fundamentals and facts.

But this time around, it's a little different:  Investigations and government interest have replaced those far flung rumors and some of these charges might indeed be worth looking into.  We learned last week that collusion among tech companies, a kind of unspoken modus operandi in the Silicon Valley, may be a rule rather than a guideline.  What appear to be damaging emails allegedly written by Steve Jobs to then Palm CEO Ed Colligan seem to suggest that Jobs was trying to stifle Palm's attempts at poaching Apple's braintrust.  True?  Maybe.  Hardly "rumor," and something interesting for Justice to take a look at.  Maybe there's a simple explanation?  But maybe not.

What about overlapping board seats?  Google's Schmidt would ultimately step down from Apple's board citing the new and direct competition between the two companies.  You'd think that would put an end to the FTC probe, but no such luck since former Genentech CEO Arthur Levinson still sits on both boards. 

The Google Voice app controversy seems only to be just beginning, even though, as I wrote Friday, Apple's statement seems to be more than reasonable as to why it is delaying, if not ultimately denying, the app's appearance on Apple's App Store.  The FCC investigation apparently continues.

So what's this about a flash memory probe by US Trade officials?  Details are precious few, and seems so strange since it seems the investigation might have something to do with flash customers rather than flash makers, which would be very unusual to say the least.  But it speaks to a trend of federal regulators taking an uncharacteristically microscopic look into a company that has by and large always been a marketplace underdog.

Recent Tech Check Posts

• Happy Birthday, Google IPO
• A Smartphone Revolution?
• Microsoft and Nokia's New Symbiotic Relationship
• AMAT Delivers; Now Can We Relax?

No more.  Apple's near total control of online digital media, movies, music, entertainment, the App Store's wild success, the enormous momentum surrounding iPhone, is grabbing headlines and grabbing the attention of regulators.  But just a healthy reminder:  "momentum" is not the same thing as "monopoly."  If it seems like Apple owns the App Store market it's quite simply because Apple owns the App Store market.  Literally and figuratively.  Same goes for the iTunes/iPod/iPhone ecosystem.  Apple created the market, the marketplace, the technology, and therefore gets to make the rules.  If consumers don't like it, they can go elsewhere and start their own services with their own technology.

Like Apple for its innovation and style, or hate it for its secrecy and reality distortion field.  But there is no denying that this company's financial fundamentals and momentum in the marketplace are second to none, not just today, but in the annals of American business history.  Investigate when necessary but don't pile on for the sake of piling on.  Some of the charges might hold merit.  But it just seems ironic and coincidental that so many investigations are ongoing simultaneously.  Why?  To reward this company with so many federal probes is a testament to the power this company has achieved in the marketplace.   The operative word there is "achieved."  It created a better mousetrap and along with customers, it seems the feds too are now beating a path to Steve Jobs' door.  And that's a real shame.

Questions?  Comments? 

Print

Email

Text Size