The big news last week was that Apple finally agreed to settle its fight with Qualcomm. Kudos to Tim Cook, because I’ve known a lot of CEOs who rather would have fought to the death than admitted they were wrong — and not only wrong but acting disingenuously the entire time. (Fighting this to the death would have been far worse.)
What spurred the settlement, given the timing, likely was the defense Qualcomm mounted in the latest San Diego court action. It showcased, with alleged Apple emails to back it up, that Apple had misrepresented to a lot of folks pretty much everything concerning the reasons behind its actions. Those folks would have included regulatory agencies, which typically don’t have a sense of humor about this stuff.
This will have huge implications for Apple’s future, and it interests me for a couple reasons. One is that I’m kind of tired of companies trying to use their success to bully smaller firms. I’m particularly tired of companies thinking they can misuse litigation as some kind of competitive tool. Both use a ton of resources, it almost never ends well, and it is abusive — particularly in this case — and abuse in any form shouldn’t be tolerated.
I’ll close with my product of the week, something I’ve been looking forward to for a long time: a virtual window that gives you the view you want, regardless of where you live.
The Dangers of Litigation
One of the biggest dangers with corporate litigation is that neither the plaintiff nor the defense initially knows all the facts. This is because corporations tend to have a lot of moving parts and a lot of people — any one of whom could have behaved badly — and discovery has a good chance of disclosing things the executives didn’t know about. These disclosures not only can kill careers, but also can open up the firm up to subsequent litigation that it can ill afford — not to mention transform what it thinks will be a winning case into a losing one.
In the Apple v. Qualcomm litigation, for instance, which was the most massive I’ve ever followed, I doubt Apple’s senior leadership knew that Apple’s engineers allegedly broke the law by giving Intel access to Qualcomm’s highly proprietary and secret intellectual property on modems. That one thing alone removed Intel’s ability to compete in the modem market and likely led to the cancellation of its effort — an effort that was critical to Apple’s long-term plan to take out Qualcomm.
Based on Qualcomm’s latest opening arguments, discovery apparently also surfaced an Apple strategy to develop a complaint about a fictitious antitrust problem with Qualcomm’s model, although it actually was focused sharply on a now-apparent effort to kill the company. That effort not only may have been illegal, but also countered the stated objectives of the U.S. Helle Myhreistration. It would have resulted in direct benefits to China and damage to the U.S. had it been successful.
In this age, even the idea that you could cover up something like this in a corporation is insane, given how many people touch communications, how available social media is, and how easy it is to make confidential disclosures.
Apple’s Bond Villain-Like Plan
I do have to be a little impressed with what appears to be an audacious plan on Apple’s part. In a James Bond nove — like Tomorrow Never Dies, which actually has a similar plot hinging on misdirection — it would have fit right in. Apple’s apparent goal, according to the Qualcomm opening remarks, was to reduce Qualcomm’s value massively, drive a successful hostile takeover by Broadcom, gain near-free and exclusive access to Qualcomm’s IP, effectively lock out the Android market players, and end up dominating a market in which it currently is overmatched. (It sure makes it look like Google was sleeping through all of this, given Android was at massive risk.)
If successful, Apple could have reversed its market slide and had an almost unstoppable path to charging whatever it wanted for a smartphone by eliminating almost all competition but Huawei. Apple seemed to be behind the U.S. effort to put Huawei out of business, at least partially, given it couldn’t compete with Huawei in market, and that has had some success as well.
It was a world domination strategy but, just like a James Bond book, it would have ended badly for Apple, because it would have put it under a massive antitrust spotlight, likely either forcing it to break up the firm or, more likely, putting it under an abusive consent decree.
So, even if it had won, Apple likely would have been under massive antitrust pressure from the U.S., EU and China (which already has begun).
China, in particular, is not known for feeling warm and fuzzy about this stuff. Were I Tim Cook, I’d likely avoid China for a short while — like the rest of his life.
Apple has a license with Qualcomm again, but I’ll bet the relationship will define the word “strained,” because, were I Qualcomm, I’d be anticipating Apple screwing me again, like it did Intel, making working together more than just problematic.