Bad news for Apple includes spying revelations, patent ruling, e-book trial

Documents describing U.S. intelligence analysts’ access to user data could potentially alienate customers for several major technology corporations, but among the companies apparently involved, Apple in particular has been confronting a large amount of negative publicity in recent weeks. On Tuesday, a U.S. trade agency ruled that several older iPhones and iPad models infringed on a patent held by Samsung:

If upheld, the ruling would show that at least some of Apple’s iconic technology duplicated that of its primary competitor in the mobile-device market, an embarrassment for a company that has held itself up as the source of Silicon Valley’s most groundbreaking innovations. Samsung, once a bit player in the cellphone market, now sells more smartphones than Apple around the world.

The order by the U.S. International Trade Commission (ITC) would block sales of several older devices that work on AT&T Wireless’s network, including the iPhone 4, the iPhone 3GS and the iPad 2 3G. Apple’s newest offerings, the iPhone 5 and the fourth-generation iPad, were not affected.

Cecilia Kang

Apple plans to appeal the agency’s ruling. The company has also denied involvement in the surveillance program.

Separately, an antitrust trial against the company began in New York this week. Prosecutors allege the company illegally raised the prices of e-books:

Apple’s late founder, Steve Jobs, was a key figure Monday in the Justice Department’s suit against the Silicon Valley giant for allegedly leading an illegal scheme to raise the prices of e-books.

But the focus on Jobs’s role in conversations and deals made three years ago creates an odd dilemma for the court and was protested by Apple’s attorneys. Justice painted the iconic tech leader as the “chief ringleader” of a joint scheme with publishers to raise prices of e-books by $3 to $5 to break Amazon’s dominance and fatten their profits.

But Jobs can’t be questioned to put his e-mails into context, Apple’s attorneys said. The court would be left to guess what Jobs was thinking in his comments to journalists and in e-mails to publishing executives, they argued. . .

Rarely does a federal antitrust suit go to trial, and Apple’s stubborn defense has drawn great interest, offering a rare glimpse into the inner workings of the nation’s tech giants whose innovations have roiled the media and entertainment landscape.

Cecilia Kang

Last month, a Senate committee released the results of an investigation into Apple’s finances. The committee found that the company had shielded at least $74 billion in profits from U.S. tax laws. Testifying before the committee, CEO Tim Cook defended his company, saying they pay what they owe.

During Cook’s tenure, shareholders have been concerned about the company’s ability to compete with other manufacturers such as Samsung without Jobs’s leadership, and the company’s most recent quarterly report was a disappointment for some. Share prices have recovered about 10 percent since their low in April, when they were trading below $400.

Max Ehrenfreund is a blogger on the Financial desk and writes for Know More and Wonkblog.
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