Down To Business: War On Business And Innovation

Apple finds itself under fire for excluding Flash from the iPad and iPhone. Flash's developer, Adobe, sees a "disturbing trend where Apple is starting to inhibit broad categories of innovation on their platforms." It maintains that Apple "wants 'closed' systems where developers pay an 'Apple Tax' to offer software for its devices through the company's online App Store." Meantime, some iPad and iPhone customers have taken to the online message boards to express their dismay with Apple's insularity, and the government is reportedly considering taking antitrust action.

Yet this "disturbing trend" is nothing more than Apple trying to maximize the profits from its mobile platforms, which is its right as a technology and business model innovator and its duty as a publicly traded company. If you as a competitor don't like that approach (Adobe, by the way, optimized Flash for Windows when doing so was in its commercial interests) -- tough. If you as a customer don't like that approach -- take your business to a competing mobile platform, like Android or BlackBerry or Windows. Apple won't stop flouting Flash as long as it's in its best interests to do so. Some characterize this posture as "unfair" or even "anti-competitive," despite the fact that the iPhone and iPad don't even resemble monopolies.

The recent griping about Apple is consistent with a deeper, more disturbing anti-business trend in this country following the financial industry bailouts and recent misdeeds and missteps at the likes of Goldman Sachs, Toyota, and BP. As in the Enron era before this one, the exceptions have become the presumed rule. "Big business" is now synonymous with fraud, greed, negligence, or incompetence, so pile on the regulations, tax those companies earning "excess" profits, and cap "excessive" executive compensation. The highest unemployment rate in many years has made the anti-business crowd even more rabid, as if slowing down growth will somehow lead to more hiring.

Jerry Kennelly, founder of WAN optimization market leader Riverbed, one of the most successful tech startups of the past decade, worries that certain political elements have "declared war on business" -- they flog the notion that companies and individuals who make it big are to be scorned for their privilege rather than admired for their hard work, and ingenuity. (Kennelly's a lifelong Democrat; he's not coming at this issue from a political ideology.)

Microsoft, Google, Cisco, Intel, and IBM have been the biggest tech industry targets, but few successful companies get a pass from the anti-business zealots. Apple once did, but evidently it's getting too big for its britches. If its App Store and SDK policies aren't under fire, its pricing or offshore labor or some other offending practice is sure to be.

Have we forgotten that business expansion is what raises standards of living? Yes, the capitalist system must be checked by third parties to ensure that laws aren't broken, customers and employees aren't abused, and markets aren't cornered, but ultimately it's a system that rewards success and dispenses with failure. The system is rarely benign; creative destruction turns careers and lives upside down. But Silicon Valley remains the epicenter of global tech innovation and a source of abundant job and wealth creation because the competition is so cutthroat, the potential rewards are so great, and the flow of ideas and talent is so open, not because everything is neat and orderly and guaranteed to deliver "fair" outcomes.

InformationWeek will be calling special attention to the building blocks and outcomes of true innovation under a forthcoming site called Innovation Mandate. There, we'll dig deep into the economic, political, cultural, and other issues that shape -- and threaten -- innovation in the U.S. and abroad. Among the subjects we'll be analyzing: the role of education, immigration and visa policy, intellectual property protection, R&D spending, and financial markets. They're subjects sure to stir up debate and emotion. Stay tuned.

Rob Preston,
VP and Editor in Chief, InformationWeek
[email protected]

To find out more about Rob Preston, please visit his page.