Time for a Technology Apalachin?

We have seen it in the movie Godfather. We have seen it hilariously parodied by Billy Crystal in the movie Analyze This (see clip below).

It is a meeting where the Cosa Nostra – the major US Mafia families - come together especially during times where rivalries seem to be getting out of hand. One of the few publicly known meetings was at Apalachin, NY in November 1957, at the home of mobster Joseph "Joe the Barber" Barbara. The sheer number of expensive cars that showed up raised eyebrows of local authorities, and in a comic twist during the raid many of the crime bosses fled in to the woods. There were rumors of large currency notes being found months after the incident as the bosses fled and dumped incriminating evidence. More than 60 underworld bosses were detained and indicted. It supposedly also got the FBI to wake up to the fact that the Mafia was a reality.

It may be time for a Technology Apalachin. I cannot remember a time when there has been so many legal skirmishes.

Look at the 2010 Apple 10-K and other legal filings and you see disputes involving Motorola Mobility, Nokia, Samsung, Psystar, AT&T Mobility and many others. As far back as 2005, the Inquirer analyzed Microsoft’s legal track record “The surprising thing is not only the number of those lawsuits against Microsoft - at one time, it had more than 130 pending - but more importantly, the sheer amount of money it represents. The Redmond giant has been ordered to pay nearly $9 billion, a figure which is set to rise with some lawsuits still to be ruled on."

Just about everyone seems to have litigation against Google. In turn, the EU appears to have proceedings against every major US technology company and European telcos.

Verizon’s 2010 10-K says it and a number of other telecommunications companies, “have been the subject of multiple class action suits concerning its alleged participation in intelligence-gathering activities allegedly carried out by the federal government, at the direction of the President of the United States, as part of the government’s post-September 11 program to prevent terrorist attacks. Plaintiffs generally allege that Verizon has participated by permitting the government to gain access to the content of its subscribers’ telephone calls and/or records concerning those calls and that such action violates federal and/or state constitutional and statutory law.”

Verizon’s 2009 10-K showed even more diverse disputes

“Our business faces a substantial amount of litigation, including, from time to time, patent infringement lawsuits, antitrust class actions, wage and hour class actions, personal injury claims and lawsuits relating to our advertising, sales, billing and collection practices. In addition, our wireless business also faces personal injury and consumer class action lawsuits relating to alleged health effects of wireless phones or radio frequency transmitters, and class action lawsuits that challenge marketing practices and disclosures relating to alleged adverse health effects of handheld wireless phones.”

Six major trends are converging to cause this heated level of legal activity

a)      The high level of acquisition activity in legacy vendors over the last decade and their sense of entitlement that they need to squeeze every last drop from the assets they acquired

b)      Several new mobile, social and other markets where patents seem to infringe and cross-licensing agreements have not yet stabilized

c)      A bit of the jealousy factor about the “Johnny come latelies”. Let’s face it Apple was not a player in mobile markets a few years ago. Google was not a major analytics player. amazon was not an outsourcing vendor.  It is tempting for incumbents to challenge them

d)      Growing corporate discontent with poor payback and quality for the trillions they have spent on IT. It is a miracle we do not have hundreds more lawsuits around grossly over-budget ERP projects and poor data center outsourcing performance and pricing

e)      Consumer frustration with poor mobile and other broadband service, combined with outrageous and creative roaming, early termination, overage, underage and other charges. And their treatment when it comes to warranty service around most technology products, virus protection and other areas

f)        More technology savvy in regulators at every level, and growing pressure on them to defend consumer rights when it comes to privacy, net neutrality and price/performance benchmarks.  

Which is why we need a technology Apalachin. The industry leadership and regulators needs to agree to tone down the legal noise and agree that all this litigation expense should be going towards more R&D and innovation and towards better customer service and here's a novel idea - towards better pricing.

And nobody needs to run into the woods. Though it sure would be fun if one or two of the tech leaders slap each other like Ben does to Jelly in this clip:)