Apple apparently has filed a criminal complaint possibly resulting in the break-in of Gizmodo editor Jason Chen’s home and seizing of his computers. The search was undertaken with a potentially invalid search warrant and has a lot of reporters freaking out because it bypassed the shield law. The problem with a criminal case, unlike a civil case, is the plaintiff (the entity bringing the action) is the state – and it is the state, not Apple, that now controls most everything that happens in this case as the process starts
Supposedly the iPhone 4G. Thanks to Engadget.
There is an irony in bringing an action that takes away control in response to a problem where someone took control away from you. Even Steve Wozniak (Woz) seemed to be speaking out against Apple. Giving up control here seems incredibly stupid and Steve Jobs generally doesn’t have much of a sense of humor when it comes to stupidity and he rarely accepts the blame for it himself.
The Lost iPhone
Unless you live under a rock, you know that Gizmodo acquired a fourth generation iPhone from someone who picked it up from a bar after a beer-drinking Apple developer left it behind. Whether Gizmodo bought the related story or the lost phone is unclear, but what is clear is the device belonged to Apple and there are certainly grounds to argue that, at some point in this process, it could be considered stolen.
Gizmodo published details on the phone and Apple was contacted. The phone was returned reasonably quickly. Apple is clearly upset and wants to make sure this doesn’t happen again and targets the people involved. You can understand why, especially since Apple apparently just lost two next generation iPod Touch products, which showed up on eBay.
Why Criminal Action is Dangerous
A few, well a lot actually, years ago I got a call from a friend of mine at around 3 AM in the morning. She needed me to bail her out of jail (my wife wasn’t pleased). It seems that her employer, because she had been thinking of leaving, wanted to make a point and had her arrested under a felony intellectual property theft charge. That employer realized they had over-reacted and then tried to stop the process. Once the state started, because in a felony the state is the plaintiff, the process was out of the employer’s control and the result was she did leave and began a series of action, including a successful civil suit, which put her old employer out of business.
They started wanting to teach her a lesson and ended up being schooled.
In addition, arrests (and I only did one felony arrest when I was a Sheriff) are pretty rough and can get out of hand. You are supposed to treat the alleged criminal as if they are dangerous and that means weapons get out and accidents do happen. For instance, a few months ago, a young adult appeared to be accidently shot by an officer who may have thought he was drawing his taser and not his handgun.
The Problem for Apple
For Apple, it is all about the control of information and the maintenance of Apple’s image. The armed break in of a reporter’s home is not sitting well with a lot of people at the moment and the drama will likely continue for some time. Perhaps, this could distract from any delay of the 3G iPad but it could easily drift over into a product launch like the new iPad version or 4G iPhone and reporters, seeing one of their own at risk, may prefer talking about that or simply not talking about the Apple products in protest.
Even if they don’t, and particularly if something went wrong during the arrest or criminal investigation, the result could badly tarnish Apple’s image as a friendly company. For instance, according to NBC TV this morning, evidently the DA here is Silicon Valley has suspended the investigation because it may have been done improperly. It now almost looks like the special police organization that did the break-in was working for Apple as some kind of public/private police force. During an election year, that would not be a good thing.
The issue isn’t what could happen, but that Apple has given up control over the sequence of events that come next and that, particularly for them, could be very dangerous. You can mostly control a civil action, and it is easier to win a civil action. Criminal actions are cheaper but you don’t have control over them. Apple is hardly broke and should have taken the path that gave them the most control. There is a high probability that the path they took will end badly.
Wrapping Up
Given they have now lost 3 prototype products over a short period of time, it is likely Apple should be focused more on the security of their unannounced products and less on punitively punishing those that acquired them. If the products don’t get out in the first place, they won’t have a problem and competitors that get these things probably won’t share them with Gizmodo.
By this last comment I mean that Apple may have been bleeding unannounced products for some time, the reason we know of this is because they made it to Gizmodo and eBay. Who says the others didn’t make it to competing OEMs and ODMs? In the end, giving up control of a process that could be very damaging to your company in reaction to an accidental loss of control that did less damage appears stupid. Kind of like cutting off your hand to stop your finger from bleeding.
What do you think? After this does Apple appear better or worse to you, smarter or more foolish, a company that you’d want to work with or one you’d like to avoid? Are they playing with a full deck or with a few bottles short of a six pack?
Rob Enderle is one of the last Inquiry Analysts. Inquiry Analysts are paid to stay up to date on current events and identify trends and either explain the trends or make suggestions, tactical and strategic, on how to best take advantage of them. Currently he provides his services to most of the major technology and media companies.
The opinions expressed in this commentary are solely those of the writer.
