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One year down, many to go- 5 things Apple has done since Tim Cook took over

One year down, many to go- 5 things Apple has done since Tim Cook took over

Tim Cook wasted no time in making some changes at Apple.

by Jacqui Cheng

One year ago, I was sitting on the floor in my living room with my laptop after work when the news came in: Steve Jobs had resigned as CEO of Apple. Apple's then-Chief Operating Officer Tim Cook was named by the board of directors as Jobs' successor as CEO, "effective immediately." It had already been an unexpectedly high-paced August in the tech world, but the news was still enough to surprise even the most cynical of Apple watchers.

Apple kept on trucking as Cook confidently took control of the company that Jobs had cofounded and helped steer it through another successful-sometimes wildly successful-four quarters. But Cook didn't run the company like a Steve Jobs clone; after all, Cook said that Jobs taught him to "never ask what he would do." Instead, Cook ran it the way he would like to run Apple, for better or for worse. Below are five of the biggest things we think Apple has done since Tim Cook took over one year ago.

Charity contribution matching

Jobs wasn't big on public philanthropy. Rumor has it that he was happy to give to charity in private, and even Apple itself donated to charity under his reign-remember PRODUCT(RED)?-but the company wasn't known for its donations. One of the first things Cook did after being named CEO was launch a charitable matching program for Apple's employees. In mid-September 2011, Apple began matching employee contributions to nonprofit organizations up to $10,000 per employee annually, dollar-for-dollar.

"Thank you all for working so hard to make a difference, both here at Apple and in the lives of others," Cook wrote in an e-mail to employees. "I am incredibly proud to be part of this team."

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Dividends

Remember when the idea that Apple might pay dividends to investors was an old, overused joke? That was the case until March of 2012 when Apple made a surprise announcement that it would indeed begin paying dividends on its stock-starting at $2.65 per share "sometime in the fourth quarter of its fiscal 2012." The company also announced that it would begin a stock repurchase program by spending $10 billion in fiscal 2013 and continuing for three years in order to neutralize the "impact of dilution from future employee equity grants and employee stock purchase programs."

Before the announcement, many expected Apple to announce a stock split instead of dividends, but Cook argued that there's little evidence that splits help a stock.

"We have used some of our cash to make great investments in our business through increased research and development, acquisitions, new retail store openings, strategic prepayments and capital expenditures in our supply chain, and building out our infrastructure. You'll see more of all of these in the future," Cook said in an issued statement. "Even with these investments, we can maintain a war chest for strategic opportunities and have plenty of cash to run our business. So we are going to initiate a dividend and share repurchase program."

Indeed, many jaded Apple watchers never thought we'd see the day when a modern Apple, Inc. would pay dividends to investors, but as Anders Bylund wrote in March, there are certainly upsides from an investor's perspective. Some were hoping for an even more exciting announcement-"Apple acquires NASA!"-but the move was a smart one. After all, what use is a $100 billion cash pile if it's just sitting in the bank?

Left (and rejoined) EPEAT

When Apple first announced that it would be pulling its entire product lineup from the green electronics registry EPEAT, it probably didn't expect such a backlash in the press and with some local governments. The company didn't make much of a hubbub about leaving EPEAT at the start, but later found itself defending the decision by stating publicly that it believes its own approach to the environment went above and beyond what's included in EPEAT's ratings.

That didn't stop the city of San Francisco, as well as a handful of other municipalities, to begin reexamining their Apple product purchasing plans-many local governments and educational institutions have guidelines that require them to only purchase computers and electronics that are on EPEAT's list. But the list of cities turning their back on Apple didn't have a chance to grow much longer, because Apple decided to back out on the decision just one week later.

"We've recently heard from many loyal Apple customers who were disappointed to learn that we had removed our products from the EPEAT rating system. I recognize that this was a mistake. Starting today, all eligible Apple products are back on EPEAT," Senior VP of Product Engineering Bob Mansfield said in a statement in July.

Apple pointed out that Apple's entire product line meets or exceeds the current EnergyStar 5.2 standards set by the US government, and said it wants to work with EPEAT to incorporate EnergyStar 5.2 into its current guidelines. But one of the main reasons observers thought Apple had left EPEAT was due to the physical design of the Retina MacBook Pro, which has received criticism for being unfriendly to end user repairs. Apple tried to quash that theory by giving itself an EPEAT "gold rating" for the notebook, which includes "easy disassembly of external enclosure"-a sticking point in iFixit's own teardown of the device.

Because of this discrepancy, we're sure to see more on EPEAT and Apple. But what Apple-and undoubtedly Tim Cook-learned during this ordeal is that many customers do care about the environment to some degree. Or at least they want to be able to claim that they use green devices, and Apple leaving EPEAT was a step in the wrong direction when it comes to public perception.

Fighting the DoJ on e-books

It could be argued that the US Department of Justice's case against Apple and a number of publishers over e-book pricing has been in the works since 2010, when the iPad was first released and Apple began its assault on Amazon. But regardless of when the DoJ began looking into Apple, things came to a head early this year when the DoJ formally filed its antitrust complaint. And Apple, unlike some of its publishing industry partners, decided not to settle-instead, it fought back.

Apple not only stood its ground when it came to its use of the so-called "agency model," the company talked back. In the months since the suit was first filed, Apple argued that the DoJ "sides with monopoly, rather than competition," and that Apple itself broke "Amazon's monopolistic grip" on the e-book industry.

In fact, although several publishers immediately agreed to settle with the DoJ, Apple now argues that the settlement itself is illegal because it requires those companies to sever their contracts with Apple without a fair trial. One could argue that Apple's actions in this case are some of the most "Jobs-like" since the CEO transition, but the ferocity in which the company is defending itself against the government shows Cook's interest in avoiding looking like a pushover. And it's working-it's pretty clear that Apple has zero plans to back down, so we may end up seeing a trial on this one that puts the recent Apple v. Samsung trial to shame when it comes to inter-company drama.

New ad campaigns

The latest round of Apple ads were truly cringe-worthy, even to many of the most "loyal" of Apple fans. The Mac Genius character just seems to grate on people, but what's worse is that the ads themselves are dry and don't seem to appeal to many users. Those who disagree argue that Apple is targeting a different set of users than usual: older, less experienced users who aren't on the up-and-up with what's cool with the kids these days. But these ads aren't the only ones that have left observers groaning: the celebrity Siri ads weren't exactly huge hits either, and left many Apple-watchers wondering what's up with the company's ad vision lately.

As I wrote recently in a staff blog post, Apple has always run ads that were controversial among certain segments of its demographic. In that sense, the latest few rounds of ads aren't anything to be truly alarmed about. But there's something different about some of the commercials that have run over the last year or so-they're not controversial because they're provocative or debate-inducing, they're controversial because they're a bit flat.

In the end, there's no way of knowing how much of a hand Cook had in the decision-making on these commercials, and there's also no way of knowing whether Jobs would have chosen differently. As Ken Segall, former creative director who worked with Jobs and Apple, wrote on the topic, "None of us can possibly know what Steve would do. Steve was a master marketer, but he was also perfectly capable of a lapse in judgment. Every one of us, Steve Jobs included, has experienced failure. It may sound trite, but it's how one responds to failure and what one learns from the experience that defines character, whether you're an individual or a corporation."

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DOJ compares Apple and publishers to big oil in ebooks case

BY Laura Hazard Owen

In its response to recent filings from Apple, publishers and booksellers on its proposed ebook settlement with three publishers, the Department of Justice addresses few specific complaints (PDF; full filing embedded below). Rather, citing the "unmistakable consumer harm that has resulted from the conspiracy in this case," the DOJ calls on Judge Denise Cote to approve the settlement without a hearing.

Last week, attorney Bob Kohn and the Authors Guild sought permission to act as "friends of the court" in the proposed settlement and filed amicus briefs. We have not yet seen a filing from Judge Cote granting their requests, but both parties are listed as "amicus" on the docket report, along with Barnes & Noble and the American Booksellers Association. However, the DOJ does not respond to Kohn or the Authors Guild in its response.

The DOJ shoots down the argument that ebooks are different from print books but doesn't elaborate on why they are the same (and doesn't respond to the criticism that it has failed to take interrelated markets, like those for e-readers, into account). Rather, it says, "Railroads, publishers, lawyers, construction engineers, health care providers, and oil companies are just some of the voices that have raised cries against 'ruinous competition' over the decades," and publishers should not be granted special treatment.

Response to Apple

Last week, Apple argued that the DOJ's proposed settlement, which it has not joined, affects its interests by forcing it to tear up existing contracts. As such, Apple says it's entitled to a trial before the settlement is approved. The DOJ says Apple "is not entitled to preclude the United States and Apple's co-defendants from obtaining the immediate benefits of their settlements, as it is well established that the United States 'need not prove its underlying allegations in a Tunney Act proceeding.'" (The Tunney Act relates to anti-trust proceedings).

The DOJ claims that "in reality, what troubles Apple is that the decree returns pricing discretion not just to Apple, but also to its retail competitors."

Response to Penguin

Last week, Penguin argued that the DOJ has not proven that ebook prices across the board rose under agency pricing. Penguin, which along with Macmillan is holding out against the settlement, also provided evidence showing that even prior to agency, Amazon priced many of its new titles above $9.99.

The DOJ does not respond to this specific point, but rather presents charts (chart 1-PDF, chart 2-PDF) showing that "Penguin did indeed raise its prices as soon as it gained power to do so. "In four weeks spanning the time when Penguin took retail pricing power from Amazon, the average price for a Penguin e-book sold through Amazon increased 17 percent, and the average price for a Penguin 'new release' e-book sold through Amazon increased 21 percent." Here are the DOJ's charts (1, 2) and accompanying methodology.

Penguin had argued that the DOJ should turn over all of its research on ebook pricing, since that research is apparently the basis for its conclusion that ebook prices rose across the board under agency pricing. The DOJ refuses, citing case law: "There is simply no basis for Penguin's assertion that the United States must produce internal economic analyses to support its settlement."

Response to Macmillan

Macmillan echoed Penguin's demand for the DOJ's research on ebook pricing and also asked the DOJ to show, as required by antitrust law, that the settlement would not result in Amazon gaining a monopoly. The DOJ responds by saying that there is no evidence that the settlement would result in Amazon gaining a monopoly because of "competition from established companies such as B&N, Google, Apple, and Sony."

The DOJ says "the recently announced investment by Microsoft in B&N's e-book business, and Sony's release of a new e-reader, do not reflect any reluctance on the part of sophisticated companies to expand their sales of e-books."

Response to the ABA and Barnes & Noble

In their amicus brief, the booksellers argued that the number of public comments against the proposed settlement vastly outweighed the number of comments in favor of the settlement. The DOJ responds that "it is not unprecedented for parties to oppose a settlement because they have a stake in an anticompetitive status quo," and claims "the majority of the comments received opposing the decree did not come from those seeking to represent the public interest, but rather from those that benefited from the conspiracy and that have a vested interest in maintaining the status quo."

Who Inherits Your iTunes Library?

By Quentin Fottrell

Many of us will accumulate vast libraries of digital books and music over the course of our lifetimes, but when we die, our collections of words and music may expire with us.

Someone who owned 10,000 hardcover books and the same number of vinyl records could bequeath them to descendants, but legal experts say passing on iTunes and Kindle libraries would be much more complicated. And one's heirs stand to lose huge sums of money. "I find it hard to imagine a situation where a family would be okay with losing a collection of 10,000 books and songs," says Evan Carroll, co-author of "Your Digital Afterlife." "Legally dividing one account among several heirs would also be extremely difficult."

Part of the problem is that with digital content, one doesn't have the same rights as with print books and CDs. Customers own a license to use the digital files – but they don't actually own them. Apple and Amazon grant "nontransferable" rights to use content, so if you buy the complete works of the Beatles on iTunes, you cannot give the White Album to your son and Abbey Road to your daughter. Amazon's states: "You do not acquire any ownership rights in the software or music content." Apple limits the use of digital files to Apple devices used by the account holder. "That account is an asset and something of value," says Deirdre R. Wheatley-Liss, an estate planning attorney at Fein, Such, Kahn & Shepard in Parsippany, N.J. But can it be passed on to one's heirs?

Most digital content exists in a legal black hole. "The law is light years away from catching up with the types of assets we have in the 21st Century," says Wheatley-Liss. In recent years, Rhode Island, Indiana, Oklahoma and Idaho passed laws to allow executors and relatives access to email and social networking accounts of those who've passed away - but they don't cover digital files purchased. (Apple and Amazon did not respond to requests for comment.)

There are still few legal and practical ways to inherit e-books and digital music, experts say. And at least one lawyer has a plan to capitalize on what may become be a burgeoning market. David Goldman, a lawyer in Jacksonville, says he will next month launch software, DapTrust, to help estate planners create a legal trust for their clients' online accounts that hold music, e-books and movies. "With traditional estate planning and wills, there's no way to give the right to someone to access this kind of information after you're gone," he says.

Here's how it works: Goldman will sell his software for $150 directly to estate planners to store and manage digital accounts and passwords. And, while there are other online safe-deposit boxes like AssetLock and ExecutorSource that already do that, Goldman says his software contains instructions to create a legal trust for accounts. "Having access to digital content and having the legal right to use it are two totally different things," he says.

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The simpler alternative is to just use your loved one's devices and accounts after they're gone - as long as you have the right passwords. Chester Jankowski, a New York-based technology consultant, says he'd look for a way to get around the licensing code written into his 15,000 digital files. "Anyone who was tech-savvy could probably find a way to transfer those files onto their computer – without ending up in Guantanamo," he says. But experts say there should be an easier solution, and a way such content can be transferred to another's account or divided between several people."We need to reform and update intellectual-property law," says Dazza Greenwood, lecturer and researcher at Massachusetts Institute of Technology's Media Lab.

Technology pros say the need for such reform is only going to become more pressing. U.S. consumers spend nearly $30 on e-books and MP3 files every month, or $360 a year, according to e-commerce company Bango. And experts expect this to surge. "A significant portion of our assets is now digital," Carroll says. Apple alone has sold 300 million iPods and 84 million iPads since their launches. Amazon doesn't release sales figures for the Kindle Fire, but analysts estimate it has nearly a quarter of the U.S. tablet market.