Antitrust: ‘I’m afraid Apple corporate is taking its eye off the ball’

Friend-of-the-blog Tommo_UK, commenting on “Apple threatens European ‘digital sovereignty’,” sounds the alarm.

I think the importance of the underlying narrative is being missed in the arguments about how right or wrong they might be.

Rightly or wrongly, Apple is facing antitrust allegations and charges of abusing its position all over the world, involving labor conditions, monopolistic practices, and anti-consumer behavior in regions as large and developed as the UK, EU, India, and China. Its position in the US keeps coming under scrutiny too.

This shouldn’t be taken lightly. Especially India, where Apple has just hauled up its new manufacturing partners for poor labor conditions, the company is now being investigated for abusing its alleged dominant market position with the App Store. Don’t forget that India is the world’s software engineering sweatshop which represents a huge part of India’s growing economy, on which the world is utterly hooked and dependent.

Coincidence? I think not.

Apple is not playing this well and is mounting weak defenses akin to Microsoft when Windows dominated as the development platform many years ago. Look how that ended.

For those who don’t remember those days, Apple at the time was perceived the liberator. Now, from a regulatory point of view, Apple is the behemoth charging 30% fees for a walled garden, and constantly fighting fires to do with poor labor practices year on year seemingly powerless to stop them.

Now, unfairly in my view but reasonable depending on an uninformed perspective, the App Store is now a “rip off” for developers, hence all the antitrust actions and related charges.

Personally I am shocked at Tim Cook’s ineptitude in managing these mushroom cloud bad news stories, especially the situation in India, given the country’s key strategic role in reducing dependency on China long term. Apple’s loss of control of the narrative in the EU is alarming.

I’m watching with interest but wary of seeing a story like this spiral out of control. Regulators have a nasty habit of following one another, so with Apple now under such scrutiny by so many regulators, the risk is real and tangible. Given the contribution from services and the App Store to Apple’s earnings, this risk should not be dismissed in a typical “those stupid foreigners” manner.

No they don’t understand, they exist to protect their markets and Apple is a prime target. Optics are worsening and Apple need to get a grip.

I’m afraid Apple corporate is taking its eye off the ball.

Let’s look at the Indian situation for a moment. Step out of the US and see this from Indian app developers perspective. It may sound unreasonable to you but Indian IT and app development resources are vital to iOS app developers because of the expertise and cheapness of Indian app developers. The sector is also of strategic importance to the Indian Government and its financial supporters. They all have a huge stake in this market and have a valid point to investigate especially given Apple’s undeniable dominance of such a key area of the Indian economy.

The  fact that Apple  is hauling up Its Indian manufacturing partners for potentially highly impactful charges of atrocious labor conditions is undoubtedly part of the dynamics behind this too. India has a lot of … vested interests. Don’t forget Apple has invested huge resources and goodwill getting the Indian government to back its manufacturing base in India and benefits from considerable support and customs & duties exemptions, and you have the ingredients for a perfect storm with Apple on the back foot.

I am stunned how Apple has failed to deal with this with this looming conflict of interest and view with a degree of disbelief that Apple corporate would allow itself to be suckered into such a vulnerable position given the strategic significance of its investment in India and supply chain commitments. Anyone who has done business with Indian tech and IT companies and had to strike deals with the Indian government will understand what I’m talking about.

I am not impressed by Cook’s tactical and strategic mistakes given his otherwise incredible track record. From the US to the U.K. to the EU and now India, Apple is treading in a mess of its own creation and is unable to manage the message. Cook had better get moving quickly or this global movement to demonize Apple will escalate into what we saw Microsoft face with antimonopoly charges and abuse-20 years ago which paved the way for the rise of web app and iOS app developers to outflank Microsoft, Windows and the then-PC dominated ecosystem. The antitrust allegations — however misguided — have been allowed to build in the background and now form part of the narrative behind Apple’s success of its ecosystem and alleged abuse of it. To say this is anything other than a huge strategic corporate misstep is an understatement.

I hope Cook et al. catch up and deal with what I feel is the most egregious misstep in Apple’s supply chain and manufacturing plans I have seen in 20 years.

My take: I remember well the complaints against Microsoft back in the day. I don’t remember the company getting attacked on so many fronts and from so many places as Apple is today.

28 Comments

  1. Michael Goldfeder said:
    That’s one way to look at the situation. The other is that developers for example, like Epic, as well as these know nothing regulators, have chosen the position that the Apple App Store Platform ought to be free of charge. Much like the entitlement program that way too many have become accustom to from receiving a participation trophy earlier in life. The root problem with this argument is that the Apple “customers” are quite satisfied being part of the so called Apple “walled Garden” and paying through the App Store. Nothing sinister about that at all. Unless you’re a developer who wants the proverbial: “Free Lunch.” I just read that the App Store apparently set a record in 2021 with an aggregate payment of around $60 Billion to all developers. That’s not bus fare!

    What none of these various individuals, especially these assorted regulators, have come out and admitted about the 800 pound elephant in the room, is they all want the opportunity to tap into the well heeled and loyal Apple Customers. Even though this “Walled Garden” doesn’t constitute a monopoly as Android has far more users, but Apple has a much higher % of consumers with more financial resources than their counterparts at Android.

    Therein lies the rub. Frankly, I don’t like anyone in government, especially a political appointee, telling me what to buy and how to spend my money. My thought is most of the individuals who use Apple products are of the same mind set. Choice is important, but forced choice is no choice at all.

    Tim Cook has no control over who attacks Apple. His fiduciary responsibility is to the shareholders of Apple, followed closely by their loyal customers. If the rest of the world is of the opinion that the App Store should be free for everyone and anyone, then they are entitled to pursue that utopian dream. Unfortunately, reality is a stern taskmaster. Just ask Epic Games and Tim Sweeney who found out that their perception of freedom and liberation from using a very successful platform was not well received at an impartial tribunal.

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    January 10, 2022
    • Tommo_UK said:
      Michael, TC has every control of what gets said by Apple under his watch in response to these allegations and you don’t need to defend the company to agree it is behaving erratically and broadly unresponsive in any compelling way to a broad a deep global attack which is building monthly as well as broadening in nature and domains.

      Developers will champion anyone who can lower their App Store fees so I don’t expect Indian developers to come to Apple’s defence.

      Apple has been tripping up into its own elephant kaka for the last few years and now it’s impacting consumers too, as well as regulators.

      There is no argument from me about the fantastic and safe environment Apple created with iOS and the App Store. At its launch I called it the biggest software development opportunity in history – before Apple had even opened up iOS with a dev kit.

      Sadly Apple has become more corporate and less seen to be on the side of the little guy, with everything that implies, and regulators smell abuse the way they always do.

      Coupled with the absolutely unavoidable fact that “Apple Corporate” is watering down the juice with sugared water (cheers John Sculley – your ghost has come back to haunt Apple’s corridors) and absolutely cack handed handling of major PR mistakes which are now embedding themselves as a negative aspect rotting a part of Apple’s narrative and you’ve got the recipe for suspicion doubt and an erosion of trust and brand equity which is building momentum exponentially as the narrative grows, particularly in anti-free trade monolithic entities like the EU, India, China, and even the U.K. snow. This is serious.

      Apples made some serious strategic moves in the last few years, not least trying to lessen its dependence on China. It is in danger of screwing up the benefits of doing this in the short term especially with China becoming increasingly authoritarian and demanding, and allowing the App Store abuse and the horrendous own goal over planting child pornographers scanning software on your iPhone to create genuine concerns about the company’s commitment to privacy for the consumer, as opposed to appeasing big government and juice deals in the background.

      I’m haunted by the memory of Steve Jobs talking to Walt Mossberg about privacy and holding Mark Zuckerberg who was in the audience to account. TC seems to have allowed an element of Pepsi Corporate in through the back door.

      0
      January 10, 2022
  2. Daniel Epstein said:
    I think this issue is indicative of the idea that one bad Apple developer (Epic) can spoil a whole batch. It is much easier to complain and get others to complain than it is to create a system which everyone is happy with. I mean who really wants to pay their fair share of taxes, fees and all the services modern society has collectively contributed to. Apple has always had people complain about how Apple has cut them off from some activity which relied on Apple Hardware which had changed and no longer supported. Of course now that politicians and governments are starting to stick their nose into the minutiae of these deals and seem to think that Apple should not make any more money than it already has it is getting sticky.

    1
    January 10, 2022
    • Tommo_UK said:
      Daniel

      “ Of course now that politicians and governments are starting to stick their nose into the minutiae of these deals and seem to think that Apple should not make any more money than it already has it is getting sticky.”

      Yes that’s the point:, once regulators, government and vested interests get involved, you’re in trouble,. After the Irish tax debacle, Apple was no longer the EUs favourite fruit. The EU makes a point of punishing those who do not cower before it, and other regulators elsewhere have the research and possible case history and precedent to then launch their own actions from.

      This is what I see unfurling now, but it was all avoidable had a different approach been taken with being more proactive with the defence of the App Store and perhaps adaptation of its T&Cs.

      The combination of ongoing appalling working condition revelations which appear like clockwork, and own goals like suggesting embedded photo spying software on peoples iPhones and you really have to wonder whether Apple Corporate has been sat on the loo for so long while working from home that they’ve forgotten the meaning and purpose of the values the company exposes to represent.

      0
      January 10, 2022
  3. Rodney Avilla said:
    “Apple is not playing this well…
    mounting weak defenses…
    shocked at Tim Cook’s ineptitude…
    Apple corporate would allow itself to be suckered…
    Apple’s loss of control of the narrative in the EU is alarming…
    Cook’s tactical and strategic mistakes…
    Apple is treading in a mess of its own creation and is unable to manage …
    most egregious misstep in Apple’s supply chain”

    I assume that Tommo_UK has specific inside information that supports all these allegations. “Because I don’t know therefore it doesn’t exist” is a very narrow mindset to live by for me, therefore it would be premature for me to draw such conclusions, since I do not have access to such information. And I am NOT saying or implying that Tommo_UK does not have such information. And I, for one, would be very interested in becoming more informed.

    2
    January 10, 2022
    • Tommo_UK said:
      Rodney,

      It’s not inside information. It’s all on record. All I’ve done is accuse TC and Apple Corporate of becoming increasingly inept in the particular area of being on point and on side to maintain trust and brand equity which once eroded is very hard to regain.

      Apple has not actually done anything wrong. It has simple egregiously failed to respond to allegations with conviction though, which results in the same outcome: mistrust doubt and accusations. Apple looks weak, and given its dependence on regulatory freedom that’s a bad position to be in. That’s my opinion. The rest of it is just action and reaction on record.

      2
      January 10, 2022
      • Rodney Avilla said:
        thanks for the clarification

        0
        January 10, 2022
      • Jerry Doyle said:
        @Tommo_UK: says: “…. Apple looks weak, and given its dependence on regulatory freedom that’s a bad position to be in. That’s my opinion. The rest of it is just action and reaction on record.”

        I read closely all your comments Tommo. Your comments evolve around your perceptions that have devolved into your conviction that Apple looks weak and that Apple is making PR mistakes in the way the company is responding on many fronts to multiple legal attacks against it along with other allegations. As you say above, “That’s my opinion.” It is not the opinion of the vast majority of folk; not of Apple senior management, not of Apple shareholders, not of Apple consumers of its products and services and not even of the general public. It is the opinion of those who seek either more money from Apple or government regulators who leverage Apple for more greenbacks to fill their empty government coffers while exploiting the situation for political expediency. Where you see Apple as “weak,” I see Apple as well-grounded, logical, rational and reasonable. The courts seem to have similar views of Apple.

        I don’t agree with your opinion of Apple in this instance Tommo.

        3
        January 11, 2022
  4. Jerry Doyle said:
    @Tommo_UK: These complaints targeted at Apple do not come from the consumers who use Apple products and services. These complaints come from Apple contractors, Apple business partners and government freeloaders who are attempting to sponge Apple’s success and its deserved generated wealth. If government entities would work with Apple to establish appropriate community, state and national linkages with the company, then there is little doubt in my mind that Apple would return altruistically more largess via philanthropic causes. Developers and Apple contractors would derive more profits through a network of resources intrinsic in their working relationship with Apple for which to tap to inspire their respective businesses to higher levels of success. Look at what Epic has lost monetarily compared with what Epic would have gain from establishing appropriate working relationships with Apple for the purpose of having a network of resources integral and essential to Epic for generating increasing revenues. Epic was blinded because of greed. Developers are blinded because of avarice. Governments are blinded by the bright shining lights of political power. This is all about money and power; not right and wrong.

    7
    January 10, 2022
  5. Fred Stein said:
    Apple needs to focus their communication on one word, safety.

    Apple provide safety for their customers and for developers. Safety has costs and value to customers and 3rd parties, which has a fair value and a price.

    Governments made precisely the same argument.

    In contrast “free” is subsidized by ads and selling your data to people who abuse it. “Open” allows all manner of abusers access to the billions of ordinary people using all other new technology platforms. Meta is only one of many who don’t care about the safety of their users.

    I’ve never heard one regulator discuss how they would ‘open’ up Apple and provide the same safeties. Why? They never thought about it

    4
    January 10, 2022
  6. Bart Yee said:
    I didn’t want to get into this but here I go. I am also not a lawyer so I’m probably talking out my arse or other orifices anyway. I have no better information than what Tommo states and reading about the various investigations, inquiries, and comments from governments and their “vested interests” regulators trying to protect their own industries or markets.

    The current state of these potential threats is investigatory, trying to determine IF Apple has created chargeable conditions for which they can level charges of antitrust, noncompetitive actions, restraint of trade, overcharging, monopolistic practices, etc., etc.

    Apple has stated its cases in public many times and specifically in court in the Epic cases. Apple stuck to its narratives publicly and in most of its own internal correspondence. It had, developed, and used a defensible legal position to defend itself in the Epic case and won 5/6 counts, and is appealing the last count with a stay in implementing its actions until appeal is heard and adjudicated.

    My sense is Apple management and its legal minds have certainly studied their business methods and their implementations in all countries under existing laws and practices. Do they believe they can operate as they have legally? It would seem the answer is yes. Can they be at risk by regulatory attacks? Certainly, anyone could be attacked in public and in the courts.

    Now, will Apple “win” any case brought against it in the court of public opinion? IMO, no, that is not where legal decisions are made. If Apple believes they have a defensible position in light of the applicable laws of each country in question, they have the right to state in public why they think so and why they believe the law will bear that belief out. I have no problem if Tommo or others believes this public response is inadequate or a misstep in Apple approach to public relations, lobbying, or engaging with regulators. But this is not where the legal decisions will be made.

    If making some concessions such as reducing App Store fees for some classes of developers is seen as weak or spineless, then what is Apple to do? Everyone else says Apple charges too much – well, how much is too much, and how much is enough (or not at all)? Are regulators now to dictate just how much fees, commissions, and opportunity costs to partner, gain shelf space, be allowed on online stores should be? And if pointedly used with Apple, should it not apply to Google, then Microsoft XBox, Epic, Sony App stores? And then more generally to grocery stores, Best Buy, franchises like auto dealers, coffee shops, fast foods, etc.? IMO the only difference is scale, not the concept of fees and commissions?

    4
    January 10, 2022
    • Bart Yee said:
      IMO, Apple has stated their belief and cases that their business models, practices, and behavior have been legal under applicable laws in most countries and cited examples of existing areas where they follow the same existing practices. IMO, Zealous “regulators” are trying to conjour reasons as to why they do not believe this is true, encouraged and abetted by companies and individuals who would benefit by making Apple get less and they get more. It’s always about the money. But it also is always about what IS in the law and how that law is interpreted and used or enforced.

      Apple can only work with what laws exist and existing case law on how the law is to be applied. Apple can and certainly will defend itself in any case which is brought about or against it citing specific anti-trust, etc. laws. The case is not won by the public rhetoric although regulators by their political nature may feel they score points or gain influence. Fine.

      The regulators will file their cases for whatever reasons they choose (true regulation, political points, setting precedent, trying to get a favorable legal decision) and hope the courts decide if regulators are correct within the law or if Apple is correct within the law, or some gradation in between. What Apple will have difficulty defending itself from is newly but poorly conceived “laws” or regulations created to
      PENALIZE companies like Apple specifically or Apple’s business model, and the aftermath of them using said new laws to go after Apple and similar companies. Then Apple will try to get the laws examined to see if they pass muster.

      4
      January 10, 2022
      • Bart Yee said:
        If we are keeping score, Apple and Ireland 1 on appeal to the European General Court, EU Commision 0, now on appeal by EU to the European Court of Justice.

        And Apple 9, Epic 1, now on appeal by both parties to the Ninth Circuit for different provisions of the decisions.

        Yes, there are other smaller cases where Apple has lost decisions and grounds for some of their business practices or had laws change like in S. Korea to specifically go after Apple’s business model. Not that S. Korea has been a paragon of transparent and fair business practices within the chaebol framework of Korean business.

        4
        January 10, 2022
    • Tommo_UK said:
      Bart,

      To head off litigation and regulatory risk, to paraphrase a famous quote, you skate to where the puck is heading, not stand around waiting for it to come to you.

      Apple is standing around picking its nose doing nothing except waiting for an exponentially rising string of extremely high level and damaging accusations, with spillover into its consumers’ brand experience and understanding now.

      Good management would never allow this to happen.

      “Corporate” turns into “Cronyism” which leads to inaction and ineptitude quite easily especially during working from home times where the benefits of working in a matrix-style organisation reporting and working with multiple line managers and projects is diluted by the necessity to exist in a more 2 dimensional space thanks to Teams teams instead of collaborative in person work.

      Hybrid ways of working dilute meaning and purpose – and can threaten a company’s cohesion and efficaciousness. Apple seem to be making the same mistake again and again. Ergo, it is not learning, it is not behaving efficaciously, and it is not dealing with existential issues efficiently and with foresight, by waiting for the puck (regulators) to come to it instead of heading them off proactively.

      Right or wrong doesn’t matter. It’s about risk and reputation management now.

      0
      January 11, 2022
      • Bart Yee said:
        Thanks for the reply Tommo. Here is what I would like to believe.

        IMO/Belief, the regulators don’t exactly know where they are going to take the puck. They don’t know where the blue line is, the red line is, and have a blurry idea where the goal even is, let alone exactly how to score. They only know that the goal is supposed to be a very big one, with a wide open mouth and crease, and it has a very big target name. Because it is very big, it is to be feared and at the same time, exploited for all manner of reasons. That’s the right and wrong.

        Now, set off on this “mission”, the regulators and politicians send an army of lawyers and politicians (not always one in the same, worse if they are) to search for the blue and red lines, to devise a plan of attack, trying to find a weakness, a legal precedent, a way to conform their thinking / desires / populist creed / Apple’s opponents’ complaints to what the law MIGHT say is a problem. In some cases, it seems the regulators have chipped holes in the Ice and dropped multiple lines hoping to hook something, anything that will provide them with ammo, and maybe a curved stick. In addition, IMO, they are trying also to change the surface of the Ice, the dimensions of the rink, even the very currently accepted rules of the “game” and deliberately, arbitrarily, or concertedly bend, turn, and influence every aspect of the puck, ice, boards, gloves, sticks and even the personnel. In short, they are trying to create vast amounts uncertainty into some version of reality.

        Against this onslaught, IMO Apple has built a very large multinational legal team of experts in all areas of law affecting its operations and legal exposures. In every quarter 10Q and annual 10K, they discuss risks to Apple and its businesses. Please refer to pages 6 through 16 Risk Factors, and 17 General Risks of the most recent 2021 10K. Yes, it’s 10 pages long and covers 5 major risk factors, 14 Business Risks, 4 major legal risk, 5 Financial risks, and on page 17, describes the Legal Proceedings of the Epic Games trial and on page 49, describes 3 “minor” cases and the 2020 French Competition Authority decision to fine Apple €1.1B which Apple is appealing.

        In effect, Apple has been working heavily in the background and foreground, above ground, below ground, and probably even out and inner space to address and mitigate very single one of these risks. We can all agree each one is huge, and each requires veritable teams of experts and people and skills to navigate and succeed. So is also the legal risks which I’ll show in the next post.

        1
        January 11, 2022
        • Bart Yee said:
          BTW, if you’re going to take in the 10K and try to read 10-11 pages, use your iPad or Mac instead of your iPhone however large it’s display is.

          Nota bene: IMO each risk area Apple identifies in executive summary belies the hundreds of not thousands of people, hundreds of thousands of hours, and concomitant costs, plus creation and execution of the contingency plans to address, combat, and legally prevail, when and if possible, over the challenges and risks brought against Apple and its business models. It’s not just management talk or legalese, it the tip of the iceberg of Apple’s efforts in countering these risks.

          Risks per Apple:

          Legal and Regulatory Compliance Risks
          The Company’s business, results of operations and financial condition could be adversely impacted by unfavorable results of legal proceedings or government investigations.

          The Company is subject to various claims, legal proceedings and government investigations that have arisen in the ordinary course of business and have not yet been fully resolved, and new matters may arise in the future. In addition, agreements entered into by the Company sometimes include indemnification provisions which can subject the Company to costs and damages in the event of a claim against an indemnified third party. The number of claims, legal proceedings and government investigations involving the Company, and the alleged magnitude of such claims, proceedings and government investigations, has generally increased over time and may continue to increase.

          The Company has faced and continues to face a significant number of patent claims relating to its cellular-enabled products, and new claims may arise in the future. For example, technology and other patent-holding companies frequently assert their patents and seek royalties and often enter into litigation based on allegations of patent infringement or other violations of intellectual property rights. The Company is vigorously defending infringement actions in courts in several U.S. jurisdictions, as well as internationally in various countries. The plaintiffs in these actions frequently seek injunctions and substantial damages.

          Regardless of the merit of particular claims, defending against litigation or responding to government investigations can be expensive, time-consuming, disruptive to the Company’s operations and distracting to management. In recognition of these considerations, the Company may enter into agreements or other arrangements to settle litigation and resolve such challenges. There can be no assurance such agreements can be obtained on acceptable terms or that litigation will not occur. These agreements can also significantly increase the Company’s cost of sales and operating expenses and require the Company to change its business practices and limit the Company’s ability to offer certain products and services.

          1
          January 11, 2022
          • Bart Yee said:
            “The outcome of litigation or government investigations is inherently uncertain. If one or more legal matters were resolved against the Company or an indemnified third party in a reporting period for amounts above management’s expectations, the Company’s results of operations and financial condition for that reporting period could be materially adversely affected. Further, such an outcome can result in significant compensatory, punitive or trebled monetary damages, disgorgement of revenue or profits, remedial corporate measures or injunctive relief against the Company, and can require the Company to change its business practices and limit the Company’s ability to offer certain products and services, all of which could materially adversely affect the Company’s business, results of operations and financial condition.”

            The Company is subject to complex and changing laws and regulations worldwide, which exposes the Company to potential liabilities, increased costs and other adverse effects on the Company’s business.

            “The Company’s global operations are subject to complex and changing laws and regulations on subjects, including antitrust; privacy, data security and data localization; consumer protection; advertising, sales, billing and e-commerce; product liability; intellectual property ownership and infringement; digital platforms; Internet, telecommunications, and mobile communications; media, television, film and digital content; availability of third-party software applications and services; labor and employment; anticorruption; import, export and trade; foreign exchange controls and cash repatriation restrictions; anti–money laundering; foreign ownership and investment; tax; and environmental, health and safety, including electronic waste, recycling, and climate change”

            1
            January 11, 2022
            • Bart Yee said:
              The technology industry, including, in some instances, the Company, is subject to intense media, political and regulatory scrutiny, which exposes the Company to increasing regulation, government investigations, legal actions and penalties.

              From time to time, the Company has made changes to its App Store, including actions taken in response to competition, market and legal conditions. The Company may make further business changes in the future. New legislative initiatives, such as the proposed EU Digital Markets Act, could, if enacted, require further changes. These changes could include how and to what extent the Company charges developers for access to its platforms and manages distribution of apps outside of the App Store.

              The Company is also currently subject to antitrust investigations in various jurisdictions around the world, which can result in legal proceedings and claims against the Company that could, individually or in the aggregate, have a materially adverse impact on the Company’s business, results of operations and financial condition. For example, the Company is the subject of investigations in Europe and other jurisdictions relating to App Store terms and conditions. If such investigations result in adverse findings against the Company, the Company could be exposed to significant fines and may be required to make changes to its App Store business, all of which could materially adversely affect the Company’s business, results of operations and financial condition. The Company is also subject to litigation relating to the App Store, which has resulted in changes to the Company’s business practices, and may in the future result in further changes.

              1
              January 11, 2022
              • Bart Yee said:
                Lastly, under this legal risk heading is:
                The Company’s business is subject to a variety of U.S. and international laws, rules, policies and other obligations regarding data protection.

                OK TL:DR for most of you. The point is, Apple, like any well running organization is constantly reviewing opportunities and threats, and actively, proactively, and sometimes reactively trying to address these and more. Just like Apple’s R&D budget of $21B last year, I wouldn’t doubt Apple has spent $5-10B in analyzing and creating strong legal arguments to support their cases SHOULD cases ever be filed and go to court. The rub for Apple, as always, is trying to anticipate where the puck is going and be there with a glove, stick, pad, body, force field, and even whole teams and reams.

                As suggested, Apple (and others) are constantly having to shift and anticipate the game when others seemingly want to have the ability to not only alter the rules, but shift the playing surfaces, create completely new rules, and even declare the old rules as non-operable. You can see what Apple’s legal teams are up against, and yet, Apple will and must defend itself.

                We are not privy to Apple’s R&D yet we remain (somewhat) optimistic or pessimistic about what they are exploring, creating, iterating, and readying for when the time comes or is right. IMO, we have the same thing with Apple’s legal teams and their similar R&D (and budget) efforts to understand the potential charges and whatever reality is brought into the courtroom and regulatory sphere.

                Some clearly don’t believe Apple is doing enough. Some like me believe Apple is doing a lot, but neither of us knows the true extent of Apple efforts and legal arguments available or useful to it. In this sense, we will either fret and worry (nothing wrong with that BTW) about Apple’s responses, or we will have to trust the process.

                In many of the above risk areas, Apple states that many things may adversely affect the company, and the company may or may not suffer. IMO, we’ll have to see how Apple’s strategies play out.

                BTW, I suspect there will be many online shareholders who will broach this very topic of risks at the virtual shareholder’s meeting.

                2
                January 11, 2022
  7. David Drinkwater said:
    I’m of many minds on this:

    First and foremost, Apple did nothing wrong in its establishment of the App Store, or in trying to protect children from adult content beyond their maturity levels, or even in charging 30% for doing so.

    The 30% includes all the work Apple invests in its appis, developer kits, human legible training for its development kits (managers generally don’t speak binary or hexadecimal or whatever), marketing (the App Store itself), delivery (those server farms don’t light up for free), or any of that.

    I think the risk is that Apple has gotten big enough and profitable enough that two things happen:
    1) it is a target for lawyers/bureaucrats/miscreants/Lilliputians
    2) it becomes tone deaf to its own success

    Apple’s success is mighty!

    There wouldn’t be a Google Play store if Apple’s App Store had not come first to show the way. Amazon App Store, same thing. (I’ve got a friend who writes Skills for Amazon Alexa: more power to him!) God knows how may other stores wold not exist. Apple gets 0% from all of those. Developers who test out their product on the App Store and then sell to Google and Amazon do not remunerate Apple for the development costs that they successfully invested on the App Store after they convert their programs for other platforms.

    All those programmers in India, whether for Apple or for someone who sells to Apple, or who sells to a third party market that would not exist without Apple leading the way; all those iPhone builders in China: They all benefit from the 70% that is left over after Apple’s cut. And from the markets outside of the App Store.

    I think that Apple *might* have lost the ball in terms of continuing to let people forget about this. Apple have a lot of good publicists. Apple should get out in front of this. In that, I agree with Tommo.

    Where I disagree with the balance of Tommo’s slant is that I think Apple does way more good than harm, so, Apple should get really out in front of this.

    Apple’s customers, as a whole, are happy with this, as Jerry D suggests.

    I think Apple should be selling stories of small shops with good results: “Ten-man shop sells $1,000,000 on the app store, families go home with $85,000 each as earned income: Pratheek programs in Bangalore, hands off to Katalin in Budapest, who works late with Giles and Lisa in London. The next day, the team of four in Omaha, Nebraska, does their part, andforwards to work to Raven (Rong) and Lucy (Lan) in Beijing to work the promotional literature for sales in China. In Bangalore, properties sell for $135 per square foot (10,000 rupees), but Pratheek sends half of his money home to his parents in Hyderabad, 350 miles away …”

    Apple has all the resources and opportunities necessary to tell these sorts of stories. These are like the stories of individual investor successes that Robert Paul Leitao suggests in other PED 3.0 postings. They make good publicity.

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    January 11, 2022
  8. In 2017 Apple had a annual legal budget of $1 billion, keeping 350 lawyers employed, according to Attorney Bruce Sewell, who did lead their legal team for 8 years. I really doubt that budget has done anything but grow in the 4 years since. We can debate their strategies but I seldom argue with people holding a doctor juris as I am not a lawyer. I stick to typing up their documents & cashing the checks they hand me.
    Source link to follow.

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    January 11, 2022
  9. Bart Yee said:
    A number of wise and experienced people told me as a budding doctor dealing with legal matters:

    “In a deposition or trial, answer only the question presented and do not expand any more than necessary. If you don’t know what is necessary, don’t say anything more.”

    “You Have the Right to Remain Silent. Anything You Say can (and will) Be Used Against You in a Court of Law. You Have the Right to Have an Attorney Present”

    Epic wanted and wants to fight in public. He lost in court, but maybe his endgame is to create enough support to change the rules into his favor not by courts but by legislation. Similarly, Vestager created a huge media circus to show the EU and others they mean business and big bad American giant Apple can be brought to heel and cower before the EU’s might. And they won and lost on appeal to a higher court. And if the EU Commission lose their appeal to the highest court, no doubt they will declare the current law inadequate and change the rules and laws. Note they do not seem to go after smaller companies and I guess I haven’t seen them go after EU based companies.

    So Apple uses a measured and reasoned strategy of public engagement in these matters while responding to legal challenges when presented with legal arguments in legal proceedings. IMO, that is a strength, not a weakness but it is my opinion. Apple has established it business models on well entrenched legal norms of business which have been used successfully in the past. So Apple has a right to defend those models in the courts and at the legislative level whenever those times arise. If Apple loses, it is then compelled to change its models and change it does. In some cases it makes concessions as in S. Korea and India, perhaps to ward off further attack.

    I trust Apple’s legal strategy precisely because what other strategy is there? Apple will always be a target because it is phenomenally successful, original, and innovative, and has shared that success with others by opening up completely new industries while only asking for an appropriate commissions share for creating and maintaining those platforms they created. Apple users don’t mind paying, Apple shareholders don’t mind paying, Apple partners don’t mind paying and being paid. And curiously, Apple app developers, even with commissions, still make far and away much much more in Apple’s App Store than off of the 2.5x much larger Android user base and Play Store.

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