Is Apple the New Big Brother?

Do you remember Apple's (Nasdaq: AAPL  ) famous "1984" Super Bowl commercial? A young, fresh hero dares to stand up against the blank, gray oppression of a stylized IBM (NYSE: IBM  ) that smacks heavily of George Orwell's "Big Brother." When Steve Jobs introduced the spot, he said that "dealers initially welcoming IBM with open arms now fear an IBM-dominated and controlled future. They are increasingly and desperately turning back to Apple as the only force that can ensure their future freedom."

Oh my, how the tables have turned.

Meet the new boss -- same as the old boss!
Today, it's Apple that looks like the big, bad oppressor of independent thought. Limiting the discussion to just the last couple of weeks, Apple started by kicking the Palm (Nasdaq: PALM  ) Pre out of its iTunes music store. (Don't worry, Pre fans -- Palm quickly snuck back inside, just as we thought.)

And now, word is streaming in from the ramparts of the war on corporate stonewalls: Several iTunes App Store applications that integrate Google's (Nasdaq: GOOG  ) Google Voice service with the popular handset have been struck dead. The Guardian reports the rejection comes because Google Voice "duplicates features that come with the iPhone," as it can reroute incoming and outgoing calls through the phone's high-speed data connection rather than an additional voice service plan. Changing service providers is a cinch with Google Voice, as your central number can forward calls anywhere you choose. SMS messages are free to send and receive through Big G. Even the voicemail feature can do nifty tricks like full-text transcripts on the fly.

All of those features sound great for iPhone customers because they replace less impressive and often more expensive equivalents from the service provider, which would be AT&T (NYSE: T  ) here in the States. Great for customers but bad for AT&T, then. Google would play the sledgehammer-hurling young heroine in this remake of 1984, aiming right at Ma Bell's stone-cold visage. Take away voice plans and those lucrative SMS messages, and you'd hobble AT&T's money-making powers significantly. So it looks like the telecom giant called in Apple to do its dirty work and remove this threat. Looks like we’ve found the real Big Brother.

What's wrong with this picture?
That strategy might have worked if the iPhone was the only decent smartphone on the market. With all due respect, that's simply not the case anymore. Unhappy customers are free to choose very comparable alternatives like the Palm Pre, or current and upcoming Google Android phones, or their favorite BlackBerry from Research In Motion (Nasdaq: RIMM  ) .

Android and BlackBerry already support Google Voice with official apps, and I'd be surprised if the Pre had a long wait ahead for such a beast. These are the modern underdogs, itching to take the fight to Big Brother on their own terms. And let's face it: The prevailing system of monthly allotments of calling minutes plus surcharges for something as simple as SMS text messages is due for a revolution.

The technology is here to create a better, more advanced, and less expensive end-user experience, and the masses will soon demand to use it. Expect virtual clones of Google Voice to appear soon, backed by new upstarts as well as current stakeholders in the mobile communications markets. Maybe AT&T won't rest until the iPhone can sport an "AT&T Voice" application with many of Google's features?

Where do we go from here?
Apple may look like the oppressor here, but only on the surface. Jobs and his merry men are still underdogs against Microsoft (Nasdaq: MSFT  ) in the personal computer space, and they probably didn't really want to hamstring the iPhone if there was any choice. I see three possible outcomes of this ugly state of affairs, listed here in order of likelihood:

  • AT&T's iron will bends and Apple reinstates Google Voice as a full citizen of the App Store. Apple and consumers win; AT&T and rival smartphone designers lose. It's a wash for Google, which wins the software battle but loses a marketable advantage for Android.
  • Apple keeps the Voice app on the sidelines until the levee breaks and everybody wants discounted calls alongside free text messages. Apple should lose market share this way, while the competition gains. Google becomes the big winner and AT&T the biggest loser under this scenario.
  • The Apple App store remains blissfully Voice-free for all eternity and King iPhone continues to rule with a steel glove wrapped in velveteen. Apple and AT&T win, everybody else will lose. Also, Jimi Hendrix and the Beatles, riding flying unicorns, restage Woodstock to usher in a new era of peace, love, and understanding. Ain't gonna happen, folks.

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Fool contributor Anders Bylund owns shares in Google, but he holds no other position in any of the companies discussed here. You can check out Anders' holdings or a concise bio if you like, and The Motley Fool is investors writing for investors.


Read/Post Comments (4) | Recommend This Article (11)

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  • Report this Comment On July 28, 2009, at 4:48 PM, applemad wrote:

    Its actually worst than that.

    I bought a MacBook Air- dinged the corner- its very soft. Everthing worked fine though- just a scratch. 8 months later the sound card craps out and now the "genius" at the apple store tells me the warranty if void because it was damaged- Ok, fine, what will it cost to fix out of pocket? $750... They say if the warranty had just expired, it would be a few hundred, but because of the "damage" they will charge more then the model is worth- It made me wonder why I ever started to drink the "Apple koolaid in the first place. Time to short this stock. Jobs arrogent cycle it back in force just as it was when they gave away the entire PC market because they were too good to let anyone else use their OS. My bet, this time next year, the stock will be under $50- one thing for sure, I wont own a Mac.

  • Report this Comment On July 28, 2009, at 4:58 PM, jtsnyc47 wrote:

    Wow. Did I mistakenly clickthrough to thestreet.com?

    Apple benefits from having the smartphone market entered by a worthy competitor to siphon market share from RIM and WinMo. Apple does not benefit from companies that leech functionality from their software without it being properly licensed‚ the same way it won't be allowing/tacitly supporting this functionality for Blackberries and HTC Fuzes.

    Despite the inflammatory headline‚ you finally do point out the real cause of Google Voice being pulled: it was AT&T's decision. Plain and simple. Implying that this is AT&T having Apple act in its monopolistic interests is irresponsible to put in print. Their deal is based on a revenue model for calls and texts. Do you really think Apple has a vote‚ or even veto power in this regard? It wouldn't surprise me if your answer was "no"‚ given the level of knowledge that underlies this article in general.

    Maybe you should peruse some of your idol's greatest Apple foments if you desire to create the desired buzz. I'd rate your efforts at inflammatory journalism maybe 6th grade‚ tops.

  • Report this Comment On July 28, 2009, at 5:01 PM, isaaccs wrote:

    @ applemad: dude, you broke your computer. that's not apple's fault, so go whine somewhere else.

    but, i wish to comment on the broader concept:

    personally, i wish apple were a little more open, but the irony underpinning the notion of this story struck me.

    does apple have access to private information? yes. but, apple is a company that makes its money and pleases it's shareholders through the sales of computer hardware and software.

    on the other hand, google, does not make money through the sales of hardware and software. in fact, they *give* software away.

    now, you tell me how did google come to be more profitable than apple?

    all these fantastic "open"google apps that the evil managers at apple have nixed aren't actually open at all, in fact, it is there stated intention to acquire every bit of information about you, index it, compare it to others, and then use it to follow you around the internet and figure out how to get you to buy things.

    Now which company sounds more like big brother to you? The company that won't let you use this software, or the company that wants to *give* it to you?

  • Report this Comment On July 28, 2009, at 11:42 PM, colemanorgoldman wrote:

    It seems some misconceptions about Google Voice are influencing the debate.

    Google Voice is not a phone service provider.

    It is one phone number, that you may choose to forward to any phone you may be around, and an incredibly innovative answering machine, among other features.

    You must still pay AT&T for the service. You still use AT&T's phone number to make and receive your calls, it just looks to your recipient that it is coming from your Google number.

    Yes, it does sap the SMS fees from AT&T. But to charge a dollar per hundred text messages (or $20/month for unlimited) is ludicrous. You could send a hundred text messages for about the same bandwidth on AT&T as it would take to load this webpage, which would be free with the AT&T unlimited data plan.

    I use Google Voice as my primary business line, so that I can take calls in my office, home, or cell phone, but not confuse my clients, crowd my business card, or use annoying "Try my cell phone at 555-1234" on my voice mail message.

    I'm just glad I got my Google Voice App before it was yanked from the Store.

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