As we approach the U.S. presidential election, with President Barack Obama clearly fighting for his job, there is an opportunity to do backroom deals that otherwise wouldn’t be done. Once such deal supposedly in the work is for the president to step in and overturn a likely finding in Apple’s favor on its International Trade Commission action to block HTC’s Android phones. These are high stakes, and while it appears Google thinks Obama will dance to its tune, I doubt this outcome. Let me walk you through it.
Eric Schmidt: Obama’s cheerleader
This subject came up in discussions speculating on why Eric Schmidt had become Obama’s biggest cheerleader on the new jobs bill that is currently stuck in Congress. Currently, he is the only technology CEO who is lobbying heavily for the bill, and while previously his support seemed tied to his desire to succeed Gary Locke as the next Commerce Secretary, that job has gone to someone else in the interim.
What brought this to light initially was an Aug. 24 column by Holman Jenkins Jr. in The Wall Street Journal titled “Obama and the Smartphone Wars.” Jenkins calls out Verizon as working behind the scenes to get Obama to overturn the likely finding that HTC was in violation of the Apple patents, and that the phones should be blocked. However, this column failed to address the likelihood that Google was operating behind the scenes to get this same result. This is why Schmidt appears to be Obama’s biggest jobs bill cheerleader at the moment: It appears to be a quid pro quo (you scratch my back, I scratch yours) effort.
But, if true, I don’t think this will work.
The Steve Jobs/Larry Ellison wild card
It is widely held that Apple founder Steve Jobs himself believed that Google stole his ideas for the iPhone while he was mentoring the Google founders and had Google’s CEO on Apple’s board. This was reported by Brad Stone and Miguel Helft in the Technology section of The New York Times in a piece titled “Apple’s Spat With Google Is Getting Personal.”
Had Jobs not recently passed, and if Larry Ellison was not Jobs’ closest friend, Google might get away with such a strategy. In death, Jobs can’t now take a reasonable course; his position is locked in concrete, which is what makes it both more powerful and more dangerous politically.
Jobs’ passing has also raised him to near-saint status with one of the most powerful (and largest) user groups in terms of near-rabid support. President Obama is not only a member of this user group, but he also should be intimately aware of how powerful and vocal these people can be. Add to this that Ellison has taken the battle to Google personally in his own patent dispute with the company, the timing of that litigation appeared to be tied to his desire to help his friend Jobs out.
Ellison, who has a strong lobbying team himself, will undoubtedly make Obama aware that ruling against Apple would not be in his best interest, and Ellison has no problem creating massive publicity and outrage tied to the betrayal of Jobs.
Finally, Obama clearly appears to be making his decisions in the context of being re-elected, and he certainly doesn’t need another scandal. As a result, regardless of what Schmidt may think was promised, the political reality of the situation will override, and should the ITC rule against HTC and Google, Obama will not step in (though he could lobby behind the scenes for an alternative ruling if he believes he won’t get caught).
In the end, Google’s apparent strategy for a quid pro quo exchange with Obama could have worked had Jobs not died inconveniently, positioning powerful forces against this move. Still, it will be interesting to watch because, should the Obama jobs bill get passed, it will be as the result of no small effort by Schmidt, who likely will want something for his effort. If he doesn’t get the ITC decision, one wonders what he will get as a consolation prize. We might be looking at the new ambassador to China… oh wait, that’s Gary Locke’s new post.
Rob Enderle is a principal analyst at the Enderle Group.