NEW YORK TIMES – SUNDAY BUSINESS
By BRAD STONE and MIGUEL HELFT
IT looked like the beginning of a beautiful friendship.
*Weekend Business: Jeff Sommer with Tim O’Brien, Miguel Helft and Brad Stone on the Apple-Google brawl.
Three years ago, Eric E. Schmidt, the chief executive of Google, jogged onto a San Francisco stage to shake hands with Steven P. Jobs, Apple’s co-founder, to help him unveil a transformational wonder gadget — the iPhone — before throngs of journalists and adoring fans at the annual MacWorld Expo.
Google and Apple had worked together to bring Google’s search and mapping services to the iPhone, the executives told the audience, and Mr. Schmidt joked that the collaboration was so close that the two men should simply merge their companies and call them “AppleGoo.”
“Steve, my congratulations to you,” Mr. Schmidt told his corporate ally. “This product is going to be hot.” Mr. Jobs acknowledged the compliment with an ear-to-ear smile.
Today, such warmth is in short supply. Mr. Jobs, Mr. Schmidt and their companies are now engaged in a gritty battle royale over the future and shape of mobile computing and cellphones, with implications that are reverberating across the digital landscape.
In the last six months, Apple and Google have jousted over acquisitions, patents, directors, advisers and iPhone applications. Mr. Jobs and Mr. Schmidt have taken shots at each other’s companies in the media and in private exchanges with employees.
This month, Apple sued HTC, the Taiwanese maker of mobile phones that run Google’s Android operating system, contending that HTC had violated iPhone patents. The move was widely seen as the beginning of a legal assault by Apple on Google itself, as well as an attempt to slow Google’s plans to extend its dominion to mobile devices.
Apple believes that devices like smartphones and tablets should have tightly controlled, proprietary standards and that customers should take advantage of services on those gadgets with applications downloaded from Apple’s own App Store.
Google, on the other hand, wants smartphones to have open, nonproprietary platforms so users can freely roam the Web for apps that work on many devices. Google has long feared that rivals like Microsoft or Apple or wireless carriers like Verizon could block access to its services on devices like smartphones, which could soon eclipse computers as the primary gateway to the Web. Google’s promotion of Android is, essentially, an effort to control its destiny in the mobile world.
While the discord between Apple and Google is in part philosophical and involves enormous financial stakes, the battle also has deeply personal overtones and echoes the ego-fueled fisticuffs that have long characterized technology industry feuds. (Think Intel vs. A.M.D., Microsoft vs. everybody, and so on.)
Yet according to interviews with two dozen industry watchers, Silicon Valley investors and current and former employees at both companies — most of whom requested anonymity to protect their jobs or business relationships — the clash between Mr. Schmidt and Mr. Jobs offers an unusually vivid display of enmity and ambition.
At the heart of their dispute is a sense of betrayal: Mr. Jobs believes that Google violated the alliance between the companies by producing cellphones that physically, technologically and spiritually resembled the iPhone. In short, he feels that his former friends at Google picked his pocket.
“We did not enter the search business. They entered the phone business,” Mr. Jobs told Apple employees during an all-hands meeting shortly after the public introduction of the iPad in January, according to two employees who were there and heard the presentation. “Make no mistake: Google wants to kill the iPhone. We won’t let them.”
One of these employees said Mr. Jobs returned to the topic of Google several times in the session and even disparaged its slogan “Don’t be evil” with an expletive, which drew thunderous applause from his underlings.
Apple declined to comment for this article. Larry Page and Sergey Brin, Google’s co-founders, have openly expressed admiration for Mr. Jobs, and Google says it isn’t at war with its former ally. “Apple is a valued partner, and we have great respect for everything they have done for technology for more than 30 years,” says Jill Hazelbaker, a Google spokeswoman.
In a statement, Mr. Schmidt concurred. “I continue to believe, as many do, that Steve Jobs is the best C.E.O. in the world today, and I admire Apple and Steve enormously,” he wrote.
Despite such sentiments, the tech world at large is watching the battle between Apple and Google with shock and awe.
“I’m sure it is going to get uglier,” says David B. Yoffie, a professor at Harvard Business School who has studied the tech industry for decades. “To beat Apple, Google is going to have to be very aggressive. If they are successful, it will put price pressure on Apple and the iPhone.”
One well-connected Silicon Valley investor, who did not want to be identified talking about the Google-Apple feud, says he is stunned by the level of rancor he’s witnessed.