Weekly Walk of Shame: Apple

This Motley Fool series examines things that just aren't right in the world of finance and investing. Here's what's got us riled this week. If something's bugging you, too -- and we suspect it is -- go ahead and unload in the comments section below.

Today's subject: Last month, the humor site Cracked.com posted a semiserious article listing five reasons to be scared of Apple (Nasdaq: AAPL  ) . The top reason, entertainingly referred to as "The Masterplan," refers to an Oct. 22, 2009, patent in which Apple describes a method for forcing users to pay attention to ads.

You read that right; this is no joke. U.S. Patent Office application 20090265214, co-authored by Apple CEO Steve Jobs, refers to "an operating system [that] presents one or more advertisements to a user and disables one or more functions while the advertisement is being presented."

Sound bad? It gets worse when you dig into the details:

As another example, the system can provide constant or repeated monitoring of whether the system presents the advertisement(s) as scheduled. If non-presentation is detected, the system can invoke one or more enforcement routines to seek compliance with the advertisement presentation schedule. Such enforcement routines can include, but are not limited to, disabling the system in whole or in part, reporting the issue to a responsible party, invoking an alternative way of presenting the advertisement (such as by audio when visual presentation is impeded), or by registering the non-compliance in a log that can later be used in a follow-up process.

Anyone else reading that wonder if Apple TV is about to graduate from homey living room companion to 1950's "and now a word from our sponsor" pitchman? Perhaps we're witnessing the end of Apple TV as hobby and the beginning of the device as a serious, if creepy, rival to TiVo (Nasdaq: TIVO  ) and Cisco (Nasdaq: CSCO  ) and its set-top boxes.

The iPhone could also be a target for this technology, an enhancement designed to entice big-budget advertisers to its recently acquired Quattro Wireless ad network.

Why you should be indignant: When's the last time we saw Apple talking like this? Technology-induced mind control? It'd be like a really good Hulu ad if this weren't a serious patent filing. Alec Baldwin could reprise his role.

But of course we've never seen Apple act this Orwellian. That's why some Fools don't believe it's real.

"I think this is all a red herring, because we live in an interactive, socially networked world. Apple knows this," wrote our own David Gardner in response to the news. David has twice named Apple to his side of the Motley Fool Stock Advisor scorecard.

I'd love to be as optimistic as David, but recent history shows how seriously Apple takes its patent portfolio. I have a hard time believing Jobs would lend his name to a filing for a technology that he had no intention of developing.

And that has consequences. Already famous for imposing its will on the music industry and software developers, what happens when the company imposes its will on users? When do we reach the line in the sand, the one that consumers won't cross, the one that signals the end to this remarkable growth story?

Perhaps I'm overstating the problem. One of my favorite Fools, T. Allan Regas, known here as TMFBreakerTAllan, wrote this in response to the patent news:

I wouldn't be "scared." I think that the broadcast media model has worked very well for both content producers and consumers for the past 90 years, first with radio and then TV where consumers trade free content for time with ads. I know that because of that model, my choices in available media and content are exponentially increased where the costs are shifted to advertisers and not borne by consumers. 

He has a point. The difference is that Apple plans to compel behavior, and consumers rarely take kindly to being compelled to do anything. More often, they revolt. Ask eBay (Nasdaq: EBAY  ) about its experience with raising prices sometime.

What now?
If I'm being tough on Apple, it's because I love the company. I grew up with Apple. I wrote geeky little programs on an Apple IIe. I resisted pressure to "become a PC" at work in the early '90s, choosing instead to spend as much as was necessary to configure my PowerMac for remote access to my company's Windows network. I was a turtleneck-wearing member of the Cult of Mac, because that Apple was a lovable loser that loved its small band of loyal users in return.

This patent, this company, isn't the Apple I know. And that's good in one sense. Lovable losers are for baseball, not business. Apple should play to beat Microsoft (Nasdaq: MSFT  ) , Google (Nasdaq: GOOG  ) , and Dell (Nasdaq: DELL  ) . But I wonder if, in chasing victory, the Mac maker has lost its soul. This soul, in particular:

You know, we don't grow most of the food we eat. We wear clothes other people make. We speak a language that other people developed. We use a mathematics that other people evolved ... I mean, we're constantly taking things. It's a wonderful, ecstatic feeling to create something that puts it back in the pool of human experience and knowledge.

That's Jobs, quoted by writer Steven Levy in the book Insanely Great, a narrative recap of how the Mac came to be, and why Jobs and his team worked so hard to make it: to add to the human experience.

Bludgeoning advertising technology doesn't meet that standard.

Apple and eBay are Motley Fool Stock Advisor selections. Microsoft is a Motley Fool Inside Value pick. Google is a Motley Fool Rule Breakers recommendation. Motley Fool Options has recommended a bull call spread position on eBay and a diagonal call position on Microsoft. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Tim Beyers wrote this article on his aging MacBook Pro. He had stock and options positions in Apple and a stock position in Google at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool is also on Twitter as @TheMotleyFool. The Fool's disclosure policy was last seen walking in Memphis.


Read/Post Comments (28) | Recommend This Article (25)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 10, 2010, at 4:30 PM, jaredberg wrote:

    Honestly, suggesting that Apple is attempting to control users through programs that force users to pay attention to ads is ridiculous. Yes, they may have filed a patent for the program, but ultimately that is almost meaningless. Hundreds of thousands of patents are filed by technology companies such as Apple, and a small portion of those patents actually become a reality.

    Furthermore, Apple, like any publicly traded company, is ultimately responsible for increasing its shareholders' investments. If Apple were to introduce a program such as this in any number of its products, sales would undoubtedly fall. I'm not sure if you know this, but when sales fall, that's considered a bad thing. The markets would respond, and share prices would fall. So even if the technology were introduced into some products, after a negative response from the markets (which would definitely occur), the company would be forced to reconsider its actions. Most likely this would result in the program being discontinued or altered in a way that is less intrusive on users.

    So yes, the technology may exist, and Apple may have a patent on it, but that doesn't mean any action will be taken. It would be flat irresponsible, regardless of the revenues that would come from advertisement sales. If people stop buying the product, which they would if it was introduced, then stock price would fall, and Apple would respond appropriately.

    So quit ripping on Apple would you? I need my investment in the company to continue making me boatloads.

  • Report this Comment On March 10, 2010, at 4:31 PM, jaredberg wrote:

    Honestly, suggesting that Apple is attempting to control users through programs that force users to pay attention to ads is ridiculous. Yes, they may have filed a patent for the program, but ultimately that is almost meaningless. Hundreds of thousands of patents are filed by technology companies such as Apple, and a small portion of those patents actually become a reality.

    Furthermore, Apple, like any publicly traded company, is ultimately responsible for increasing its shareholders' investments. If Apple were to introduce a program such as this in any number of its products, sales would undoubtedly fall. I'm not sure if you know this, but when sales fall, that's considered a bad thing. The markets would respond, and share prices would fall. So even if the technology were introduced into some products, after a negative response from the markets (which would definitely occur), the company would be forced to reconsider its actions. Most likely this would result in the program being discontinued or altered in a way that is less intrusive on users.

    So yes, the technology may exist, and Apple may have a patent on it, but that doesn't mean any action will be taken. It would be flat irresponsible, regardless of the revenues that would come from advertisement sales. If people stop buying the product, which they would if it was introduced, then stock price would fall, and Apple would respond appropriately.

    So quit ripping on Apple would you? I need my investment in the company to continue making me boatloads.

  • Report this Comment On March 10, 2010, at 4:32 PM, babushnik wrote:

    probably a requirement from content providers.

    we are forced to watch ads all the time. when i watch a dvd and the buttons on my remote stop functioning because they are shoving a preview at me. or when i click on a video in many web pages i am forced to watch an ad before the video i am interested in begins.

    i am opposed to it, but it is out there already. in fact, this page we are on right now has several ads that we do not have the option to turn off.

  • Report this Comment On March 10, 2010, at 4:37 PM, jkiso wrote:

    I'm no fan of Apple, but one other possibility is that this is a defensive patent. If Apple owns it, it can control the licensing of implementations which, essentially, would prevent anyone from introducing such Orwellian gatekeepers on Apple products in the future.

    Or Apple might be evil.

    Time will tell.

  • Report this Comment On March 10, 2010, at 4:41 PM, marv08 wrote:

    Well, systems like the one described are what some content providers want and they will not deliver their content to a marketplace that does not guarantee restrictions. E.g. several hard-disk based high definition video recorders will have software switches that will make it impossible to skip ads (or cut them out). We will see more and more of this stuff and customers will get used to it. As long as there is a choice between paid, ad-free content and free content with enforced ads, I do not see a problem. If Apple has any intentions to add free streaming offers to e.g. the Apple TV, having such a system in place is a must. Having an own patent is certainly better than waiting for another party to sue, or, even worse, rely on a third party for such services and subsequently give away customer data.

    And then, Apple has hundreds of patents that have never been used in any product and they scrap most products to concentrate on a few... maybe paranoia can wait for an actual cause.

    I do not see what this patent says about a cultural change at Apple. This connection/reasoning is fabricated. Slow news day maybe?

  • Report this Comment On March 10, 2010, at 5:11 PM, markv wrote:

    "I have a hard time believing Jobs would lend his name"

    Jobs' name is on pretty much all Apple patents. Same with Jonathan Ive w.r.t. design patents. Apple also has many patents that they don't use in released products, maybe because they don't have a use for the technology, maybe because the patent is defensive.

    Apple tried this same thing once before with a program called Sherlock. It was one of the first "ad-ware" programs, and the ad part of it was not well received. Maybe Apple learned their lesson with that, or maybe back then people just weren't ready for ads on their computers. Now that web ads are ubiquitous they might want to get back in the game.

    And honestly, they are addressing a problem. It's a problem for advertisers, not for the masses. Who watches Tivo'd ads? Who doesn't click the "skip this ad" on firewalled web sites? Who doesn't complain about the marketing ploys on the for-public Fool.com articles? But if these types of advertising are ineffective, viewers/users/fools are going to feel the effects in some other way.

  • Report this Comment On March 10, 2010, at 5:19 PM, SKRMBA wrote:

    OK, I will be respectful:

    I will call you a hysterical moron, instead of a hysterical @%£^$$^%. Don't try to interpret patent applications if you don't know how.

    What, on earth, do you think standard — advertising supported — TV broadcasts are? Why do you think you can't program your TV recording device to pause during commercial breaks, so you don't have to fast forward through the pap? Why are there no advertisements on paid TV programming? Well, big duh.

    If you want to watch free TV, you gotta pay the freight, as obnoxious as it is.

    Love makes the world go round, but money greases the gears.

    All Apple, and Jobs, have done are to set the stage for free media broadcasts if you are willing to tolerate that someone else (other than you) is willing to indirectly pay you to watch the commercials, by not charging you for commercial-free TV. So, whilst the commercial is playing, you gotta watch it. So, don't like this? Then pay, MoFo.

    Good lord, ninnies, I can have free Google search on my website with ads, or my own branded search if I pay.

    Geeze, Louise, aren't there any economists writing these columns?

    Nothing new here, except that Apple is patenting the procedure for it's media devices, to cover their bases. Oh, yeah, they patent the process for any other competing devices, too. Can you say, "Hey, HTC! We got the patent for touch/gesture navigation." I'd say it's pretty smucking fart [that's respectful, ain't it?], and lop on a few more points to AAPL value.

    Personally, I pay for my SAT TV reception and other programming, so I don't have to watch commercials.

    And I got AAPL at 80. LONG. Hehe.

  • Report this Comment On March 10, 2010, at 5:30 PM, TMFMileHigh wrote:

    Hello SKRMBA,

    Thanks for writing.

    >>Nothing new here, except that Apple is patenting the procedure for it's media devices.

    I'd take your comments more seriously if my TV stopped functioning when I skipped an ad, but it never has. That's the equivalent to what Apple is proposing.

    Foolish best,

    Tim (TMFMileHigh and @milehighfool on Twitter)

  • Report this Comment On March 10, 2010, at 5:30 PM, TMFMileHigh wrote:

    Hello SKRMBA,

    Thanks for writing.

    >>Nothing new here, except that Apple is patenting the procedure for it's media devices.

    I'd take your comments more seriously if my TV stopped functioning when I skipped an ad, but it never has. That's the equivalent to what Apple is proposing.

    Foolish best,

    Tim (TMFMileHigh and @milehighfool on Twitter)

  • Report this Comment On March 10, 2010, at 5:52 PM, PeyDaFool wrote:

    I just want to point out that MF also displays ads that consume the entire screen and require you to click "no thanks" or cave in and just sign up for the newsletter.

    Maybe it would be prudent to comment about this in your article, since it appears fairly hypocritical to fail to do so.

  • Report this Comment On March 10, 2010, at 6:11 PM, JBG189 wrote:

    So this patent describes a system where an ad is playing, and the user is prevented from minimizing or otherwise obstructing the ad display (e.g., by checking your email while the ad is playing).

    And you ding Apple for conceiving of an arrangement where a user chooses to watch free content with unobstructable ads, because why?

  • Report this Comment On March 10, 2010, at 6:23 PM, TMFinept wrote:

    Perhaps of tangential interest to the specifics of this article, the EFF posted a legal analysis that takes issue with Apple's iPhone Developer Program License Agreement:

    http://www.eff.org/deeplinks/2010/03/iphone-developer-progra...

    It paints Apple as draconian in its agreement with developers and the extent to which it demands control and oversight of its walled gardens. Apple owns the IP, the platform, the physical hardware and even the persons using the hardware and/or developing for the platform as long as they are willing to agree to such legal terms.

  • Report this Comment On March 10, 2010, at 6:39 PM, demodave wrote:

    I'm with Marv08 and (sorta) SKRMBA on this. If there are going to be free services that are supported by advertising, then there has to be a way to make sure the ads are not just skipped over. Apple has patented a process for making sure that that happens.

    The process may also have other applications. By setting the "enforceable ads" up, Apple may even be able to liberate itself from certain wireless carriers or offer lower cost wireless subscriptions with enforced ads, etc.

    It's commercial, so it's about money, and well, you can't serve both God and Mammon, so maybe it is "evil", but Google's slogan notwithstanding, Apple certainly hasn't cornered the market on Evil.

  • Report this Comment On March 10, 2010, at 6:40 PM, demodave wrote:

    I'm with Marv08 and (sorta) SKRMBA on this. If there are going to be free services that are supported by advertising, then there has to be a way to make sure the ads are not just skipped over. Apple has patented a process for making sure that that happens.

    The process may also have other applications. By setting the "enforceable ads" up, Apple may even be able to liberate itself from certain wireless carriers or offer lower cost wireless subscriptions with enforced ads, etc.

    It's commercial, so it's about money, and well, you can't serve both God and Mammon, so maybe it is "evil", but Google's slogan notwithstanding, Apple certainly hasn't cornered the market on Evil.

  • Report this Comment On March 10, 2010, at 6:41 PM, DiegoFool wrote:

    I don't believe that Apple has a vast conspiracy to force user's behavior; the public is unlikely to put up with that.

    Meanwhile, Mr. Byers quotes Mr. Regas as saying,

    "...I know that because of that model, my choices in available media and content are exponentially increased where the costs are shifted to advertisers and not borne by consumers."

    I quite surprised by Mr. Regas' comment. Costs are not shifted to advertisers. The advertisers spend whatever it takes to pitch their product, and like lemmings to the cliff (yes, that's an urban legend but humor the cliché), it's the *consumers* buying that product that bear all of those costs.

    Show me an advertiser that doesn't transfer the cost of that ad to the consumer, and I'll show you a Congress foaming at the mouth to bloat the government and embrace universal health care.

  • Report this Comment On March 10, 2010, at 7:13 PM, stan8331 wrote:

    Apple makes great products and the stock is undoubtedly a great investment, but the level of control they forcibly exert over their users is not for me.

    It's conceivable that they could get away with this, but people have been fast-forwarding through commercials ever since the invention of the VCR. It's a LOT harder to take something away from folks than it is to never let them have it in the first place...

  • Report this Comment On March 10, 2010, at 11:00 PM, beetlebug62 wrote:

    99% of Apple's patents never see the light of day. Speculating about products based upon patent filings is a waste of time.

  • Report this Comment On March 11, 2010, at 8:14 AM, TMFBent wrote:

    Why would anyone not believe this? Because Jobs' name is on it? This is a guy who had no qualms about using his wealth and power to get around the inconvenient organ-donor line in Cali (after reportedly trying to cure his cancer with fresh fruits instead of following doctors' advice). If you don't think he'd force his commerce onto Apple device users, think again. Or just look at the App store, where Apple censors what's available.

    The bigger issue here is that there's no such thing as free, and the more users demand not to pay for services or bandwidth on mobile devices, the more those who control the mobile devices (like Apple) are going to have to figure out a way to make them pay by watching ads or through other means.

  • Report this Comment On March 11, 2010, at 10:47 AM, TMFMileHigh wrote:

    SJ,

    Thanks for the comment.

    >>The bigger issue here is that there's no such thing as free, and the more users demand not to pay for services or bandwidth on mobile devices, the more those who control the mobile devices (like Apple) are going to have to figure out a way to make them pay by watching ads or through other means.

    I don't buy your premise. Why is this Apple's problem, and why does Apple have to solve it? Let's call this what it is: Apple acting opportunistic. And a little creepy.

    No doubt consumer entitlement is an issue, but I think it's hairy when the seller of device has to go begging for more by placing restrictions on behalf of content and bandwidth owners. The effort is better spent on convincing those users who will pay up to do so, and then dropping the others.

    Meanwhile, if Apple or anyone else wants to sell ads through their devices, so be it. Work out an equation that also delivers value to the device owner. Location-based ads meet that standard -- in theory, at least.

    FWIW,

    Tim (TMFMileHigh and @milehighfool on Twitter)

  • Report this Comment On March 11, 2010, at 10:47 AM, TMFMileHigh wrote:

    SJ,

    Thanks for the comment.

    >>The bigger issue here is that there's no such thing as free, and the more users demand not to pay for services or bandwidth on mobile devices, the more those who control the mobile devices (like Apple) are going to have to figure out a way to make them pay by watching ads or through other means.

    I don't buy your premise. Why is this Apple's problem, and why does Apple have to solve it? Let's call this what it is: Apple acting opportunistic. And a little creepy.

    No doubt consumer entitlement is an issue, but I think it's hairy when the seller of device has to go begging for more by placing restrictions on behalf of content and bandwidth owners. The effort is better spent on convincing those users who will pay up to do so, and then dropping the others.

    Meanwhile, if Apple or anyone else wants to sell ads through their devices, so be it. Work out an equation that also delivers value to the device owner. Location-based ads meet that standard -- in theory, at least.

    FWIW,

    Tim (TMFMileHigh and @milehighfool on Twitter)

  • Report this Comment On March 11, 2010, at 1:17 PM, jrod87 wrote:
  • Report this Comment On March 11, 2010, at 1:17 PM, jrod87 wrote:
  • Report this Comment On March 11, 2010, at 1:40 PM, JBG189 wrote:

    Buy a LEAP (long-term) put.

  • Report this Comment On March 12, 2010, at 1:17 PM, Luke721 wrote:

    jaredberg says "I'm not sure if you know this, but when sales fall, that's considered a bad thing."

    Oh, really? It's about time this Motley Fool subscription started paying off with pearls of invaluable wisdom.

    I guess we can forever sit bemused by the arrogance of certain members of the Apple crowd, the "I get it and you don't" gang.

    By all accounts, Steve Jobs is a prick. A brilliant prick. Power and wealth seldom change people for the better. Relentless pursuit of greater amounts of power and wealth are characteristics that make for bad neighbors. If you are along for the ride to make money off these guys, there is nothing wrong with that, but let's not kid ourselves that any of these guys are good guys (Google #1 on the list). We have way too much history to believe that.

    "Power tends to corrupt, and absolute power corrupts absolutely. Great men are almost always bad men."

    - Lord Acton, 1887

  • Report this Comment On March 13, 2010, at 6:47 AM, none0such wrote:

    This patent will most likely never be used. If implemented as stated, it would introduce security problems and, as noted, disappoint users will not buy their next Apple. If some aspects of it are implemented then work-arounds and configuration will make it meaningless.

    @DiegoFool

    agreed

    @babushkin

    >>in fact, this page we are on right now has several ads that we do not have the option to turn off.

    Try using any number of browser extensions that can alter the webpages you view, e.g. Flashblock, Remove It Permanently. Oh, if you buy a future Apple computer with this patent, those won't work.

  • Report this Comment On March 13, 2010, at 12:30 PM, kuzumel wrote:

    You're worried about the wrong thing. At least you've discovered this factoid. And anything like this is in-your-face technology.

    How many are aware that your iPhone (not to mention any Internet capable mobile device) browsing is captured and profiled by the telephone companies? They sell this information to advertisers the same way Google profiles your searches to target adverts?

    And YOU pay them a substantial monthly subscription fee for this privilege!

  • Report this Comment On March 17, 2010, at 1:52 PM, ikkyu2 wrote:

    You know, it's interesting. I use an ad-blocking proxy, Privoxy (dot org), which pretty well disables online ads without affecting the rest of the page content. Browser plugins like Adblock and AdAware perform a similar function. I use this function on my favorite websites, like the NY Times and the Fool, even though I know that doing so explicity breaks those sites' business model. It's a classic cooperate-or-defect scenario; I'm a defector.

    For every 100 ads that get blocked, there's probably 1 ad that I would have enjoyed seeing, and maybe 1 in 1000 I would have clicked through and bought something.

    It's true, however, that when I want to buy something or price comps, I no longer walk down to the corner newsstand, buy a paper, and open to the classified section. I just use the Internet. The amount of time I spend pricing and seeking goods has decreased exponentially, and I can get more good stuff for less money. Everyone knows that this is what the Internet is good for.

    The holy grail of advertising these days is to use technology to deliver that 1-in-1000 ad to the correct person, the one who wants to buy it. Scattershot saturation of ads is the least efficient but most effective way to do it - show the ad to a million folks, and even if only 1 of them clicks through you may still win. But that encourages the development of ad blocking, making everyone lose.

    Apple is famous for giving people what they want before they even know they want it. If anyone can patent and deliver the relevant technology to make this work - to make ads another value-added proposition.

  • Report this Comment On April 10, 2010, at 6:52 PM, gpshead wrote:

    If consumers won't take kindly to being told what to do then why do they all own DVD players that won't allow you to skip advertisements and copyright notices?

    Consumers are too dumb to care. Apple will get their money regardless. Buy.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1133082, ~/Articles/ArticleHandler.aspx, 8/27/2014 5:13:53 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement