Think Different

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From top: Steve Jobs in Ireland,1980; The sources of iPhone’s technology; Ciara Graham

Apple is no stranger to state aid and while its founder is often hailed as one of the world’s greatest tech innovators the reality tells a very different story.

Ciara Graham writes:

Italian-American economist Mariana Mazzucato explains how Apple exploits technologies that were developed AND crucially funded by the US State.

Many of the technologies found on the modern iPad or iPhone were developed by the Advanced Research Projects Agency (ARPA), founded in 1958, during the Eisenhower administration.

It is responsible for the early development of microprocessors and micro hard-drive technologies, and ultimately the internet itself.

Technologies such as Global Positioning Systems owe their origins to state funded military projects and Liquid Crystal Display technologies were funded by the National Science Foundation (NSF). Swiss-based CERN, the European Centre for Nuclear Research contributed the source of the hypertext languages, used in web browsing and also the basis for Apple’s famous ‘click-wheel’.

All those well-known Apple innovations turn out not to be Apple’s after all.

Mazzucato says:

 “Mission-oriented public investment put men on the moon, and later, lead to the invention and commercialization of the Internet, which in turn has stimulated growth in many sectors of the economy…the US government has been a leading player in funding not only the Internet but all the other technologies — GPS, touchscreen display, and the new Siri voice-activated personal assistant — that make the iPhone, for example, a miracle of American technology.

What Apple is especially good at – and we’re not taking it from them – is design.

They have done an excellent job of pulling together some very useful technologies and installing them on ergonomic and aesthetically pleasing devices; turning these technologies into something consumers really want to buy is their great talent. They are a wonder of marketing, certainly.

But let’s not fool ourselves that they invented the technologies that their products are famous for; and the idea that they should be entitled to any proprietary rights to the technologies that they exploit is very very questionable indeed.

Apple makes billions. They do this off the back of technologies that were developed using government funding.

Fabled for their secrecy, Apple operate a closed technology platform (where only pre-approved programs and applications can interact). Given the publicly funded origins of many of their technologies,

it is ironic that Apple should be so guarded about the proprietary rights protecting their product innovation.

Apple initiated litigation against its key partner and competitor, Samsung, for patent infringement – a saga which has become known as the ‘smartphone patent wars’(3) and has seen subsequent litigations against Motorola and HTC(4).

Apple was also incensed by the open source nature of Google’s Android platform – which gives free access to manufacturers and developers – deeming it an “existential threat” to the company’s existence.

The company’s founder and former CEO, Steve Jobs, was so incensed by the unrestricted accessibility of the platform that he believed Google had “ripped off the iPhone…grand theft!”

He swore to spend “every penny” within Apple’s coffers to “destroy Android”.. More than a little contradictory for a company that owes its successes to publicly funded technologies – share and share alike Steve!

In addition to this legal state aid from the US, Apple has also benefited from what we now know to be illegal state aid from Ireland.

Ireland doesn’t have the budgets (nor the impetus) that the NSF does, but, according to the European Commission it has helped Apple to avoid its tax obligation across the globe. It deemed that through two tax rulings, in 1991 and 2007, Apple had been granted selective treatment.

Essentially, Ireland’s reluctance to take tax from Apple amounts to “illegal state aid” which gave the company an “unfair advantage” over its competition.

Paradoxically, the Commission is not doing this for the public good, but because it amounts to unfair competition over other market-led corporations.

This makes it very difficult for the Irish government to defend as the EU position does not run contrary to the government’s market-liberal policies one bit. Essentially, the Irish government is being hoisted up by its own free-market ideals.

This reminds us of the controversy – or lack thereof – surrounding the early days of the bank bail-out, when only real opposition trotted out was that it might be unfair to European banks!

We’re all familiar with Benjamin Franklin’s oft-used saying about the certainty of ‘death and taxes’. Tax is the money the State ‘earns’ in order to pay for everything it needs to provide for its citizens, and for the continued functioning of industry and commerce – the roads, the energy networks, the educated workforce – it’s part of the social contract.

Yet, so beholden have successive Irish governments become to companies like Apple over the promise of jobs that the State it seems is willing to overlook any other obligations these Multi National Corporations (MNCs) might have to their adoptive homes.

In the early days of the post-war years during the New Deal and Marshall Plan, when governments were actively rebuilding economies on both sides of the Atlantic, governments had the reasonable assurance that the investments they made in developing industry would come back in taxes.

But the new reality of global business – of tax inversion and tax sheltering – is destroying that pact; and perhaps jeopardising the very social contract in the process.

Ciara Graham is Lecturer in Business at the Institute of Technology Tallaght..

References:

Mazzucato, M. (2015) ‘The Entrepreneurial State’: Debunking Public vs. Private Sector Myths. London: Anthem Books.
Mazzucato, M (2013) “The Entrepreneurial State: Apple Didn’t Build Your iPhone; Your Taxes Did” PBS Newshour, Available at: http://www.pbs.org/newshour/making-sense/the-entrepreneurial-state-appl/ Accessed: August 30th, 2016.
“Apple Inc. v. Samsung Electronics Co. Ltd. et al.”. United States District Court, Northern District of California. Retrieved August 11, 2012
Barrett, Steve (2012) “Apple’s War on Android”, Bloomberg. Available at:
http://www.bloomberg.com/news/articles/2012-03-29/apples-war-on-android Accessed: August 31st, 2016.
Patel, Nilay (April 19, 2011). “Apple sues Samsung: a complete lawsuit analysis”. The Verge. Vox Media. Retrieved August 11, 2012

Thanks Henry Silke

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44 thoughts on “Think Different

  1. Jimmee

    “But let’s not fool ourselves that they invented the technologies that their products are famous for; and the idea that they should be entitled to any proprietary rights to the technologies that they exploit is very very questionable indeed.”

    Then take a case against them and the patents office.

    Saying that their technology was developed much earlier and that they shouldn’t get credit for it is incorrect. Apple adapted and furthered these technologies to make them useable for consumers.

    This is an Apple bashing article. They’re a hugely successful company that make hugely successful products. Let’s see someone else emulate that if it’s simply a case of copying other people’s technology.

    1. Jaden

      +1 to this. It’s blatant Apple Bashing.

      Moaning at Apple for using HTML? Sad, clutching at straws stuff. Literally every technology listed (except Siri) is used by every PC/Laptop/Tablet/Phone/Cash register since the year dot com bust. Singling out one company is the sourest of grapes.

      1/10 Agenda driven journalism.

      Disclaimer: I dislike Apple Products generally. Overpriced, closed system life style choices. Don’t like them – don’t buy them.

  2. Vote Rep #1

    So Apple didn’t invent everything it uses and it had an owner who was a notorious dick. Well I am shocked. I never knew that at all.

    1. rotide

      +1

      next week – Netflix House of Cards owes it’s sucess to the BBC, I Could Hardly Believe My Eyes!!!!!!1111

    1. Anomanomanom

      In fairness to apple they are a very successful at what they do, but most of the products they make are inferior to cheaper brands.

      1. Vote Rep #1

        And yet people bizarrely queue up to spend loads of money on new versions of what they already have. That is god damn impressive stuff. Idiotic for the people who queue though.

        1. Dόn 'The Unstoppable Force' Pídgéόní

          As the poor mistress to any Apple product going, I agree. It’s very silly.

      2. Increasing Displacement

        Don’t make a statement without backing it up.
        How are MOST of the products they make inferior to cheaper brands?

        Don’t make a closed ecosystem claim, they are popular for that level of security, it’s not a problem for most.

        1. Constant Markievicz

          +1 Apple products are more reliable than Android. What about the Samsung exploding batteries.

        2. ethereal

          you are talking software there but the hardware is overpriced for what it is….even if it does look pretty

          1. Increasing Displacement

            The product is a package. The software and hardware together.

            Only priced slightly higher than say Samsung’s to models.
            But yes overpriced all the same.

            The software compensates for some of the hardware issues such as a lower MP camera still takes some of the best photos of any phone. Rarely do I blow my photos up to a scale where i need high MP anyway.

        3. Anomanomanom

          “Popular for that level of security” you’d make a great Td, sound smart but actually say nothing.

          1. Increasing Displacement

            Not actually answering the question asked, you’d make a great TD, sound smart but actually say nothing.

      3. Nialler

        When you say “inferior to cheaper brands” why do I have to change a dell/lenovo/ibm/toshiba laptop every couple of years when I still have 6-8 year old Macs running perfectly well? Go spec a Sony or whatever brand to the same as a Macbook Pro retina and see the cost difference, not as big as you may think.

        As for the apple bashing article above regarding iPhones, apple license the broadcomm chip for cellular/bluetooth/wireless, they designed the A9 chip based on a licence from ARM and it’s produced by samsung primarily. As with all manufacturers globally who make electronics they pay royalties on the chips/screens etc that go into our everyday devices. What they did first was to put it all into a neat package called the iPhone which many manufacturers and software houses (google) followed. They did it many years before with the Newton as did Psion I think.

        1. ethereal

          you really shouldn’t have to change your non apple harware that often. I have laptops by sony and dell that are 6 and 8 years old and are running just fine. Maintenance probably helped a lot such as making sure you have latest drivers etc

          1. Increasing Displacement

            8 year old Windows PC can run software up to maybe 4 years after. Unless you’re talking about Office or Chrome or something which isn’t in any way demanding.

            My 2010 Dell XPS can’t run any current 3D software fluidly or at workable level. It could for a few years but I had to buy a new HP workstation 2 years ago. The machine is in immaculate condition and sits at home gathering dust.

            Same happened with my 2011 PC. Had a AMD-3800 with 12Gb of 866mhz ram and a Radeon HD 6410D. Couldn’t run Creo2 well or Cinema 4D at a workable level.

            I’ve never owned a MAC so I don’t know how well they run. We have a 10k one in the office I use occasionally but really I’ve no idea about them.

      4. pedeyw

        They make very good quality, robustly designed products which are easy for the average user. You can buy better stuff for cheaper (at least in terms of specs) but it’s hard to make a direct comparison because iOS and OSX are designed directly for the small range of hardware they produce. I’m personally not a fan, though.

  3. Mayor Quimby

    whoever put that together is a techno-illiterate

    “signal compression” “microprocessor” these are very generic terms, to claim that they wouldn’t exist but the state is laughable

    1. rotide

      plenty of other companies did.

      Jobs’ particukar genius was putting them together in a format that people actually wanted

      1. Parky Mark

        So you’re validating my point. Who cares about inferior products that people didn’t want?
        Apple broke the mold with both the ipod and the iphone when they were released.
        Yes, they both had flaws, but they brought technologies together in a way no one had done before.
        They still do that with both the iphone and macbook.
        No other manufacturer has a trackpad as advanced or one that works as well as Apples. I’m sure they are making use of others technology, but they are the first to do so properly.

        1. nellyb

          You seem to conflate the notion of patent (a.k.a. invention, like rotide aptly pointed out) and usability of implementation. The difference matters to patent lawyers.
          Off topic: we all would have been better off without private patent ownership, it stagnates and skews retail technology market.

          1. Rob_G

            How would that work? Where would be the onus on companies to innovate if the could not profit from their innovation?

            (Not having a go, generally curious to know if some alternate system has been put forward).

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