Who's Bugging Google and Apple? (Updatedx2)

Dr. Roy Schestowitz

2008-10-04 13:40:49 UTC
Modified: 2008-10-05 13:40:14 UTC

"Our friends up north spend over five billion dollars on research and development and all they seem to do is copy Google and Apple."

--Steve Jobs, 2006

GROKLAW HAS just presented two harassment-by-proxy candidates. The victims are too familiar (no, it's not about Linux and SCO this time around). It's particularly curious because Google and Apple may have already been sued via Microsoft proxies [1, 2, 3], of which they are several that are very relevant to this Web site.

All that a so-called 'proxy' requires is a common/mutual business interest, incentive, or inter-personal relationship. Companies are, after all, just sets of people. They are nor insular robots, so to speak.

It the case of Google, Microsoft's role was more transparent to see than in Apple's. One of the goals here is for Microsoft and its supporters to be able to say that Apple and Google are "just as evil as Microsoft," which therefore provides defensive 'ammunition'. Both stories are being covered extensively in the media at the moment, so let's take a quick look.

Apple

About a month ago, Bloomberg foolishly posted an obituary of Steve Jobs, having already had the chance to learn from unsubstantiated and very damaging rumours circulating about pancreatic cancer. Apple's rebirth under Jobs' wing [1, 2] makes his presence there considerably significant. Some people seem to be taking advantage if this.

A day or so ago, not only have more rumours been spread about Jobs' health; there were false claims of a heart attack too. The SEC, having said very recently that it would take spreading of erroneous rumours seriously by regulating the Internet press (Heh! Good luck with that), is already looking into this latest incident, from which short-sellers could reap a fortune.

SEC Examining False Report on Apple Chief Job

[...]

Concern about Jobs's health weighed on the shares this year, contributing to a 51 percent drop. The stock swing caused by today's erroneous report drew renewed calls for Apple, which has said only that Jobs's health is a ``private matter,'' to be more forthcoming, said Jeffrey Sonnenfeld, senior associate dean at Yale University's School of Management.

Decentralisation of the media has opened the door to a surrogate of pump-n-dump schemes, whereby disinformation is using used to over- or under-evaluate a stock, at least temporarily. However, there may be more to this story, opines PJ from Groklaw. She wrote: "Just an off the wall suggestion: look into how Psystar folks are paying their lawyers to harass Apple? No? Too simple? I only raise it because Jobs has said that Apple is being shorted; and if that's true, any negative news would be useful to anyone wanting the stock to go down, I would assume, and any litigation is negative news."

“The lawsuit above, while probably justified for Apple's ruthless control 'freakiness' with hardware, DRM, NDAs and so forth, does raise a lot of questions.”Whether you are an Apple supporter or not, false predictions of a person's death are nasty, if not outright illegal in this particular sort of circumstances. The lawsuit above, while probably justified for Apple's ruthless control 'freakiness' with hardware, DRM, NDAs and so forth, does raise a lot of questions.

Psystar seems to have begged for trouble, but more importantly, where does this company of almost-teenage boys find the money for litigation? Shades of SCO and those cash infusions truly return [1, 2, 3, 4, 5, 6, 7]; Groklaw now reports that Norris filed something in Florida, stating that he was inactive in 2007. Things just don't add up as more contradictions are being found and assembled.

Going back to Apple, Roughly Drafted recently wrote about the smear campaigns against this rapidly-rising Microsoft competitor.

An author who has devoted his career to deriding Steve Jobs’ Apple as being “irredeemably evil” and portraying its users as a “cult” has scribbled up a new missive for Wired that attempts to hijack the company’s upcoming iPod event and replace any discussion of new technology with a tasteless personal attack of the company’s CEO.

The same site also wrote about a particular "Apple scandal" some time ago. This relates to Microsoft's control of the media, and especially in its relation to Apple.

MediaNews did buy the Mercury News with a loan from Bill Gates' foundation, and is in the process of paying back that loan by publishing information without much journalistic or technical integrity.

Specifically, I wrote “One might think that the San Jose Mercury News, being located in Apple's backyard, would tend to trumpet the company's success. One would be wrong... Apple's corporate proximity to San Jose is trumped by the Mercury News’ need to publish low cost, highly sensational news to make enough money to pay back Bill Gates for the favor of his humanitarian loan.”

Google

As reiterated before, Microsoft's fight against Google is a lot more visible. There are some other possible proxy fights against Google and Yahoo that we mentioned in the past and even alluded to just days ago. IBM may be another good example, but it just happens to be less relevant to this one post which grows longer than it ought to be.

Anyway, here is a new report confirming that Microsoft has delayed the Google/Yahoo deal just as it previously did with DoubleClick. The company is obsessed with every small move that Google is making and this feeling is not reciprocal.

Google and Yahoo have agreed to a “brief” delay in the planned start of their search advertising partnership to give the Justice Department additional time to investigate the antitrust implications of the deal, the companies said Friday.

“The companies have agreed to a brief delay in implementing this agreement to continue our ongoing discussions with the Department of Justice,” Yahoo said in a statement. “We have had discussions with regulators and look forward to responding to their questions about this agreement.”

The Justice Department, as we showed before, is influenced a great deal by Microsoft, especially after possible 'stacking' in the late 90s. Now, watch the reasoning behind this very latest decision:

"Recognizing the nascent and fast-changing nature of this marketplace, we encourage the department to continue to monitor the state of competition in this industry, whatever the outcome of its current investigation," Kohl wrote in his letter. "If, over time, you determine that Google is gaining a dominant market position as a result of the Google-Yahoo agreement, then we would encourage the Justice Department to intervene to protect competition. Even should you conclude at present that this deal is not contrary to antitrust law, the department must be sure that this deal never in the future crosses the line into an unacceptable, anti-competitive collaboration among competitors which will harm consumers and advertisers."

In Groklaw, PJ writes: "Never in the future? What is the guy asking for, permanent government oversight of two private companies just in case someday the deal might not work out even though it isn't an antitrust problem currently? This is an extraordinary request. Is that how capitalism works normally? Anyone know who donates money to this individual? Man, Microsoft sure is a sore loser."

The main question to ask though is not necessarily who pays this man; it's also a matter of influence. Microsoft, for example, is repeating dirty tricks from one decade ago as it hires AstroTurfers to pressure politicians. It's using that against Google

Add this utterly appalling factor to Microsoft's political muscle and remember how US politics are run.

“Did you know that there are more than 34,750 registered lobbyists in Washington, D.C., for just 435 representatives and 100 senators? That's 64 lobbyists for each congressperson.”

--CIO.com

Let's find out about Hherb Kohl's history when it comes to Microsoft. Since he is the one pushing to intercept Yahoo/Google cooperation, it's worth stressing that he also handled the Microsoft antitrust case many years ago. He even wrote this letter.

As Chairman of the Subcommittee on Antitrust, Business Rights, and Competition of the Senate Committee on the Judiciary, I have studied the proposed settlement of the government's antitrust lawsuit against Microsoft very closely, and I write to express my concern about whether the settlement is in fact "in the public interest." 15 U.S.C. ÃÂ§ 16(e). Accordingly, I respectfully ask that you address the issues raised in this letter when you file with the district court your mandatory "response" to these comments. See 15 U.S.C. ÃÂ§ 16(d).

[...]

HERB KOHL

Here is another old article: Microsoft order leaves Kohl with `misgivings

Sen. Herb Kohl said Friday that he had "misgivings" about the ordered breakup of Microsoft Corp., but he said Congress shouldn't intervene.

He also blamed the software giant for failing to settle the case out of court.

"Their lawyer, in my opinion, should have recognized their vulnerabilities and got it settled," said Kohl, who is the ranking Democrat on the Senate Judiciary antitrust subcommittee.

In that role, Kohl chided Microsoft founder Bill Gates at a highly publicized Senate hearing two years ago

More recently, as it turns out, Kohl also opposed a Yahoo/Microsoft merger, so it might be too early to jump to any reasonable conclusion. Here are some articles that can be easily found:

1. Yahooglesoft Lawyers Speak!

Titled “The Google-Yahoo Agreement and the Future of Internet Advertising,” the hearings were called by the Judiciary Committee’s Subcommittee on Antitrust, Competition Policy and Consumer Rights and chaired by Sen. Herb Kohl (D., Wis.).

2. Murdoch may team up with Microsoft in bid for Yahoo

In Washington, Sen. Herb Kohl, D-Wis., the chairman of the Senate Judiciary Committee's Subcommittee on Antitrust, Competition Policy and Consumer Rights, also warned about the potential anti-competitive implications. "We will be following closely the results of the short-term test alliance between Yahoo and Google," he said in a statement. Kohl had previously raised concerns about a Microsoft-Yahoo combination.

3. Higher antitrust bar for Yahoo-Google than Microsoft

Sen. Herb Kohl, a Wisconsin Democrat and chair of a Senate antitrust panel, said he was watching the Google test.

"Should there be moves to make this agreement permanent, we will examine it closely in the antitrust subcommittee to ensure that it does not harm competition," Kohl said in a statement.

Kohl expressed concern about the rapid consolidation of formerly independent players in the Web advertising market.

What to make of it all? We leave it for readers to decide and we shall return to this in the future. ⬆

Update (05/10/2008): this report about Steve Ballmer echoing Psystar's accusations may suggest that a Microsoft-Pystar connection is possible. It comes just at the right time, but it could be a coincidence.

Update #2 (05/10/2008): we have just been informed that the writer who caused Apple (APPL) to collapse used to write for a Microsoft-owned site (Slate). Says our source: "The author in question used to write for Slate and was heavily involved in stock market inflation in the tech bubble."

Comments

aeshna23

2008-10-04 17:57:31

Let me answer the following question:

"In Groklaw, PJ writes: “Never in the future? What is the guy asking for, permanent government oversight of two private companies just in case someday the deal might not work out even though it isn’t an antitrust problem currently? This is an extraordinary request. Is that how capitalism works normally? Anyone know who donates money to this individual? Man, Microsoft sure is a sore loser.” "

Kohl is independently wealthy. It's not a money thing. I go so utterly sick of people trying to reduce political stances to money--when it's clearly ridiculous. For example, the anti-abortionist claiming that abortion doctors do abortion just for the money.
AlexH

2008-10-04 18:35:29

@aeshna23: I think you're partially right, although financial motivations are sometimes there (just not necessarily personal financial benefit).

I think the situation in the US is that politicians are extremely wary of interfering with corporate structures. The situation with Bell and the baby Bells is an obvious example; it has to become inescapably clear that restructuring is needed before they will act.

Previously, the idea has been to separate Microsoft into an operating system company and one (or more) applications company/ies. I don't think that would do any good; in fact, those mini-Microsofts would have free reign to throw their weight in the market around even more.

I think anyone looking at cutting it into pieces would have to be a lot more imaginative to encourage real competition in the market. For example, I would think strongly about splitting it simply in half, and having both halves maintain the same products. That would cause all the major products - Windows, Office, etc. - to fork. Over time, they would inevitably diverge and there would be real competition between the two sides. Without one single monopoly product, there would be much more room for the "smaller" guys to come in and compete as well (although it would still, obviously, be extremely difficult).
Roy Schestowitz

2008-10-04 19:41:07

For example, the anti-abortionist claiming that abortion doctors do abortion just for the money.

Similar accusations are being made against patent offices, with evidence suggesting that it's more profitable to just accept whatever rubbish 'invention' is properly filed among the heap of applications. Quality defeated by quantity...
Dan O'Brian

2008-10-04 20:35:20

Quality defeated by quantity.

Sort of like the articles on this site ;-)
Roy Schestowitz

2008-10-04 21:06:13

Dan, what's your site?
Roy Schestowitz

2008-10-05 01:35:44

Update;

http://www.groklaw.net/newsitems.php http://arstechnica.com/journals/apple.ars/2008/10/02/ballmer-recommends-separating-iphone-hardware-and-software

* Ballmer recommends separating iPhone hardware and software * 08:10PM October 10/04/08, 2008 * In a recent interview, Microsoft's Steve Ballmer offered Apple some friendly advice: be more like Microsoft. He said that Apple needs to stop tying its hardware and software together so closely and just distribute the iPhone's OS to a wide variety of manufacturers.

[PJ: What a coincidence... I believe that is Psystar's request as well in the litigation.] - ars technica
twitter

2008-10-05 01:46:57

Funny man, Dan. M$ is an infinite fount of corruption and ill will, no site, lawsuit or history will ever be able to contain all of it.
Jose_X

2008-10-05 03:05:53

>> Previously, the idea has been to separate Microsoft into an operating system company and one (or more) applications company/ies. I don't think that would do any good; in fact, those mini-Microsofts would have free reign to throw their weight in the market around even more.

Why do you not think this would do any good?

I also don't understand the part about the mini-Microsoft's.

I prefer solutions other than to break up Microsoft, but I don't think you can keep them from violating antitrust laws without either having them open source or else make sure no single company or partnership will both have a monopoly on one side of a software dialog and be involved in the other side as well. Otherwise, you'll get right back to the monopoly being used to help grow the market share of the software that is on the other side of the conversation and has inside access.

I haven't taken inventory of all the issues and possible solutions, but this above just came to mind since I hit on it frequently.

>> For example, I would think strongly about splitting it simply in half, and having both halves maintain the same products.

No. They can collude, but even without doing so, one of these would likely eventually come to dominate and once again establish itself in monopoly position.

As mentioned a moment ago, you can't have the two sides of the software dialog (a) being closed source, (b) having insider access to each other, and (c) having at least one of the two having monopoly position or supported by monopoly position.

..and there are probably other things to worry about as well.
Roy Schestowitz

2008-10-05 03:33:36

The EC thought about splitting Microsoft a couple of years ago (or less). It's not a radical idea.
Dan O'Brian

2008-10-05 03:39:05

I think AlexH's idea was to force the 2 halves of Microsoft to compete against each other (if they both had the same product sets). I think his point was that if you split Microsoft the traditional way (by product), then it wouldn't really solve the problem. It would in a way give them more power, because they'd be free of the pressures to behave (due to being a monopoly) which are sort of imposed on them now.

Whether his idea would work or not, I have no idea.
Roy Schestowitz

2008-10-05 09:01:30

Can you suggest something better?
AlexH

2008-10-05 10:08:19

@Jose:

Splitting Microsoft up along product lines wouldn't do much good, in my opinion, because for the most part everything is already separated like that already internally in Microsoft. There are very few instances of them making use of "secret" interfaces any more, and the main problems (having a single dominant product in a given market) wouldn't be fixed.

The idea of making them fork their products and compete is entirely because that would make it impossible for them to collude; it would be illegal. Each would have to develop their version of Microsoft Office (or whatever) and customers wouldn't have a single upgrade route: they would have two.

Even if that idea fails - e.g., Microsoft 1 do very well at Windows but suck at Office, but Microsoft 2 do very well at Office but suck at Windows, all that happens is that customers buy Microsoft 1 Windows and Microsoft 2 Office. So it degenerates to the case where they are split down product lines in any event.
RyanT

2008-10-05 10:30:51

I would wait for open source to disrupt Microsoft.

Desktop PC's are going to become more and more marginalised as time goes on. within 5 - 10 years most portable devices (if not sooner than that) will be able to handle most of the tasks that the majority use PC's for, and will far outnumber desktop PC's, with a far greater range of devices. Just as the PC market disrupted microcomputers, mobile devices will disrupt the PC market (Microsoft's core market).

Ubuntu already has a pretty good position with netbooks and (hopefully) it's MID edition, available pretty widely from most of the biggest vendors, if they're not using some customised version. Other Linux vendors are doing the same too.

http://www.microscope.co.uk/welcome/netbook-market-predicted-to-reach-50-million-units-by-2012/http://www.microscope.co.uk/welcome/netbook-market-predicted-to-reach-50-million-units-by-2012/

http://blog.wired.com/gadgets/2008/09/netbooks-evolvi.html

http://ostatic.com/173214-blog/netbooks-fuel-good-pc-market-news-says-idc

http://blogs.pcmag.com/miller/2008/03/intel_talks_netbooks_mobile_in.php

http://www.crunchgear.com/2008/07/21/netbook-margins-so-low-some-pc-makers-not-even-going-to-bother/

Microsoft has 2 major threats waiting to obliterate it - Internet services, from Google (GDocs and its ilk will eventually take over Word and potentially Office), and the diversification of devices, which its core money maker and operating systems, XP and Vista, cannot even dream of capturing.

1) Linux and similar, open source platforms are far more customisable - in mobile devices, you need all the power you can get. Using these allows you customisation on the software side that you wouldn't normally be able to get, without having to ask the gatekeeper.

2) As per the last link, margins are incredibly tight. Using free, open source software allows you to cut costs and rake in more profit.

3) Open source companies will be able to rake it in because of these 2 factors. Their money isn't in selling you the software, it's in selling services. Providing customisation services might be a good way of "outsourcing" to whichever company, and be a far better spend of money in comparison to a locked out, interdependent and not very configurable OS, where you depend entirely on the vendor to make changes you can't really see, or further adapt and change.

In competition to Office (referring to the likes of GDocs):

1) Once again, lower cost of software (being $0).

2) Other advantages being true collaborative word processing, which could give it value in certain markets (perhaps journalism in the long run, not sure about what else, don't have enough information).

3) It goes very well with the likes of netbooks - they're intended for mobile web use, and where disk space and processing power is limited, being able to write something up within one program (your browser), right beside your email and whatever else your looking at, and the advent of webapps where said things become more integrated into the desktop (look for the firefox plugin prism, and I know Ubuntu has prism made webapps in its repositories), it becomes a more viable alternative.

In regards to breaking MS up:

It would do a lot of good. Part of the problem with MS is that they have the foothold in 2 markets, which gives them a big 1-2 punch. A key part of their business relies on this. Separating Office and their OS would essentially half the desktop threat. Reducing company size and revenue. While internal departments may be kept seperate, they're still part of the same company, meaning any revenue and profit can go to either. Separating them forces each product line to survive on its own. The Xbox division would most likely collapse on its own, especially as the core product relies on Microsoft technology, which would have to licensed and paid for after they were separated (unless the breakup would involve keeping them all under a Microsoft umbrella, and each one just being spun out independently, which in that case probably would be to their advantage).

Part of what keeps Microsoft even remotely competitive is the amount of money it generates from its core business, that it then can pump into other areas, regardless of whether they truly make money or not.
Roy Schestowitz

2008-10-05 10:42:32

To split a company is one thing, but to ensure that they than do not collude is another. A split would be too symbolic.
standardize this

2008-10-05 11:45:44

I disagree here, a simple spit into systems and applications would have worked. As AlexH points out, things are internally segregated within Microsoft. However, it's executive oversight that binds these divisions, without that each would gradually break away from the whole.

To understand why splitting Microsoft would work, consider that we need only counter the lock-in mechanisms. When the mechanisms by which the monopoly is able to exert control are impeded, it must strategically align to compete in the extant market.
AlexH

2008-10-05 12:10:46

@Roy: If they were split into different companies, it would be extremely difficult for them to 'collude': the market regulators are pretty good at controlling that kind of thing. They're rubbish at regulating single monopolising companies.

@standardize this: the problem with splitting down dept. lines is that for the most part, there is no incentive for them to make life harder for the other side. The lock-in already exists, and I don't think that executive oversight makes much difference. Windows Inc. and Office Inc. would continue to be dominant in their respective spaces, and I very much doubt that Office Inc. would spend more time on making Office work well on Mac OSX (for example) - in fact, they would probably focus on that even less, because the legal pressure would have totally gone away and at the moment I suspect Microsoft invests more in that platform that it deserves based on market size.

Having separate Windows Inc. and Office Inc. would probably kill off the Mac in extremely short order. Free software would survive, but we would make very little progress against them (it would probably not harm us that much though).
AlexH

2008-10-05 12:12:06

@RyanT: people have predicted the demise of the desktop PC for years, though: see, e.g., Sun's "the network is the computer".

The basic issue is that a low-cost terminal isn't much cheaper than a fuller spec. PC. If network access was cheap and ubiquitous then maybe, but we're a long way from that - especially for mobile users.
Roy Schestowitz

2008-10-05 12:19:20

In Japan, desktops are already neglected because of mobile devices, suggested a study last year. Sun's vision was actually quite accurate, even if RMS dislikes the idea.
RyanT

2008-10-05 12:57:36

The difference Alex is that it is actually happening.

It doesn't matter that a netbook or laptop isn't such a huge drop under the PC - people are not paying the premium for the power, they're paying the premium for the mobility. Most people do not have a need for the extra power of a PC for the kind of applications they have and use. You do not need a full PC for i.m., e-mail, browsing, or even document editing and such. Laptops and netbooks are at a stage where they're good enough for most needs, and yes, ubuiquitous access isn't quite there yet, but it is certainly moving quickly. 3G based USB dongles are coming through with monthly data packages, and even mroe recently the white spaces campaign:

[quote]Potential users are likely to be first time buyers in emerging markets and experienced users in more mature markets looking for a lightweight surfing or email device as the second or third PC in the home.

The largest growth opportunity for the technology comes from consumers said Gartner, eventually accounting for 70 per cent of sales, but it does not foresee netbook shipments cannibalising mobile PCs for several years yet.

“There is a significant functionality and performance gap between notebooks and mini-notebooks,” said Gartner, but the gap could close from 2010 and if performance improves substantially by 2011, mini-notebooks could become a business tool.

Gartner recently said netbooks could drop in price to $100 (£50) in the next two years as component costs fall 10-15 per cent, although packaging, assembly costs and software prices would remain stable.

Analysts at iSuppli are far more bullish about the sales prospects for netbooks, forecasting 18.3 million unit shipments by 2012 with revenues standing at $291.2m. [/quote]

http://www.reghardware.co.uk/2008/09/25/abi_netbook_sales_2013/

http://arstechnica.com/news.ars/post/20080103-2008-could-be-the-year-laptop-sales-eclipse-desktops-in-us.html

http://arstechnica.com/news.ars/post/20080902-google-white-space-petition-13000-signatures-and-counting.html

http://arstechnica.com/articles/culture/white-spaces-battle.ars/4

I ask you the reverse:

Why pay the premium for a stationary desktop, when you can get a cheaper, more portable alternative that will better fit into your life?

It barely even needs to be netbooks - proliferation of smartphones also fits into the bill of mobile devices, and iPhone can also do many of the basic needs - e-mail, web browsing, messaging.

These are very much emerging markets, but over the next 5 - 10 years just about every barrier will come down. We already have devices with nearly ubiquitous wireless access that can do most of the basic access (like the iPhone) that have gained genuine consumer traction and as wireless hotspots and take up increases, and hopefully the white spaces campaign can be successful, there's little genuine reason to think they won't take off. Sun were right - they were just too early.

http://blogs.sun.com/jonathan/entry/the_network_is_the_computer

You should also take a look into data that shows how certain companies deliberately ended up increasing the requirements of hardware on the desktop, so as to stop the impending disruption that was going to happen with laptops (guess who). It's contained in the book "The Innovator's Dilemma", shall have to look around for it on the interwebs.
Roy Schestowitz

2008-10-05 13:36:36

I'm updating this post to add some new information.
standardize this

2008-10-05 16:55:54

@AlexH

Why would an antitrust remedy that involved splitting a monopolist into disparate concerns seek to incentivize each to "make life harder for the other side"? A legal sanction seeking to reduce barriers to competition carries no imperative that split companies should engage in further anti-competitive actions.

As for Office on the Mac, these are some of Microsoft's finest applications and with good reason. Neglecting OSX would create an opportunity for competing document formats to establish a foothold.
Roy Schestowitz

2008-10-05 17:05:19

In its old deal with Apple, Microsoft used a similar route to elbow Netscape out of the market and make IE more of the 'standard' on the Web.

I put the video here.
Jose_X

2008-10-06 00:46:08

>> Splitting Microsoft up along product lines wouldn’t do much good, in my opinion, because for the most part everything is already separated like that already internally in Microsoft.

Microsoft has segragation within their product lines? That is a joke, right?

That doesn't make any sense.

Bill Gates would even disagree. "Internet E is a part of Windows."

When AlexH says these kinds of things, I can't help but to feel he is purposefully working to deceive in Microsoft's/Novell's favor.

The technical Chinese Wall AlexH claims exists can be enforced much better when Microsoft components are separated. If the segregation is already there as he says, then it should not hurt to make the divisions formal.

Please.

Who's Bugging Google and Apple? (Updatedx2)

Apple

SEC Examining False Report on Apple Chief Job

Google

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