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Apple-FBI dispute echoes Microsoft anti-trust case on key point

Jon Swartz
USA TODAY
Apple CEO Tim Cook discusses the new iPhone 6 and iPhone 6 plus on Tuesday, Sept. 9, 2014

SAN FRANCISCO — Long before Apple and the Justice Department squared off over the contents of an iPhone, there was another cataclysmic clash between the feds and a tech behemoth.

It was Microsoft, in the late 1990s and early 2000s, that rattled legal sabers with the Justice Department over anti-trust charges against the software giant.

The government won a trial victory calling for the break-up of Microsoft, which was upheld on appeal. An appellate court, however, overturned the decision and sent it back to the trial court. The administration of President George W. Bush settled the case.

The anti-trust case is vastly differed from the  hacking action sought in the FBI-Apple standoff. Back then, the government yearned to break up what it called a multibillion-dollar, multinational monopoly. Today, it is focused on a single iPhone, though Apple and privacy advocates are leery of the FBI's motives and, indirectly, its impact on their businesses.

What happens in Apple-FBI is anyone's guess. But given the parameters of the case — which pits the government's request for information on the iPhone used by San Bernardino shooter Syed Farook for national security reasons, versus Apple's hard stance on civil liberties — offers one crucial parallel with the Microsoft case, say legal experts.

"Microsoft's defense was the government cannot tell us how to design our products," says Harvey Anderson, chief legal officer for computer-security company AVG Technologies. "With Apple, this is also about the government telling a company how to design its products — in this case, a backdoor to allow the FBI to hack a shooters' iPhone."

The stakes are different, but nonetheless they run deep and wide economically and socially, Anderson and others say. In the anti-trust case, the government argued it was trying to help consumers with more choice, versus the Apple case, where Apple and its defenders contend the government, if successful, would jeopardize the personal information of iPhone customers worldwide.

While the Microsoft case was intended to aid start-ups reluctant to enter the same markets, the Apple-FBI case hangs over heavily data-driven start-ups, whose future funding and business plans may be altered by a government victory.

"The ramifications of the government winning this is fairly widespread," says Jeff Fagnan, general partner at venture capital firm Accomplice. Tech start-ups, he says, would re-evaluate how they pitch investors and develop products and services.

Two different eras

Anti-trust actions against Microsoft and telecoms reflected a different era, before social media and mobile devices spawned hundreds of start-ups in the post-Microsoft era and data became the "oil" of tech, says Crawford Del Prete, principal analyst at market researcher IDC. Until the 1990s, tech's power and market was concentrated in few companies, before the advent of the mobile and social media ages.

The mobile and social media era has begat Facebook, Google and thousands of other companies, where personal information is their lifeblood. In this landscape, the legal battlefield is over data, and who has access to it, which was underscored by Edward Snowden's bombshell disclosure of digital surveillance by the National Security Agency in 2013.

Indeed, Microsoft is squarely in Apple's corner against the federal government. Microsoft President Brad Smith told Capitol Hill lawmakers Thursday that his company would file an amicus brief on behalf of Apple. Google, Facebook and Twitter are part of a coalition that will file unsolicited amicus briefs for Apple.

Tech giants to file joint pro-Apple amicus briefs

Bill Gates 'disappointed' in reports he sides with FBI in Apple case

While Google, Facebook and Twitter have staunchly defended Apple and — indirectly — themselves, phone companies are, understandably, quiet on the matter.

Telcos, heavily regulated since the 1930s, “see themselves as an extension of the government” and complied with the NSA, according to Neil Richards, a law professor at Washington University. “Their thinking is: What’s good for America is good for business, and vice versa.”

Leslie Berlin, historian for Silicon Valley Archives at Stanford University, portrays a wary, “see-sawy” relationship between the valley and the Beltway. “Silicon Valley has seen itself under siege a number of times, but usually around international competition (the 1980s and intense competition from Japan),” she says. Apple’s case, she says, is an anomaly.

“So much about this case is new,” says Susan Freiwald, a professor at USF School of Law in San Francisco.

With so many legal twists and turns expected in Apple's feud with the FBI, the outcome of the case could go in a “million” directions over months — if not years, says Larry Downes, project director at the Georgetown Center for Business and Public Policy.

“This started secretly between the two sides, and may end up being resolved secretly,” Downes said. "Because the process is like making sausage, it can be ugly."

Nearly two decades ago, the federal government had a similar situation with Microsoft, then the king of the hill in tech. With Apple — the most valuable, profitable and admired company in tech now — it appears history is repeating itself.

Follow USA TODAY San Francisco Bureau Chief Jon Swartz @jswartz

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