Profits or principles? Google, Apple, and Samsung have made their choice

How can a company that famously claims “don’t be evil” as its motto and wants to battle death itself crawl into bed with a powerful group of democracy-flouting, climate-change-denying right-wingers? How could a leading tech firm whose amazing inventions sparked the mobile revolution gouge its fantastically loyal customer base by overcharging for components? Not to be outdone, how could its chief rival fake benchmark results?

Maybe even good companies think it’s OK to behave badly when profits are at stake. I understand that we wouldn’t have great technology if the shareholders of Google, Apple, and Samsung didn’t earn a solid return on their investment. That said, the hypocrisy of companies that claim to be saving the world makes me grind my teeth and want to toss a few eggs when the giant Google bus trundles through my San Francisco neighborhood.

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Silicon Valley’s thousands (literally) of millionaires and (a few) billionaires strut their stuff and act as if the technological and business prowess makes them so different from the industrialists of an earlier era. But they’re not.

Why Google partners with the Koch brothers

If you don’t follow the political world fairly closely, you may not have heard of the American Legislative Exchange Council (ALEC). Backed by the billionaire Koch brothers, ALEC lobbies for the most extreme climate-unfriendly legislation, as well as a host of other conservative causes. The group actually writes legislation that its puppets in state legislatures around the country introduce nearly verbatim.

Why would Google give money to these folks? On the record, Google won’t talk about this at all. But it does contribute money to the group, my sources have confirmed, for a clear reason that has nothing to do with climate. (Google, to its credit, has spent huge sums of money greening its data centers and headquarters.) ALEC, which opposes regulation of almost anything, has tried to stop state and federal regulators from, well, regulating almost anything that has to do with the Internet.

Last month I wrote about Verizon’s plan to turn the Web into pay-for-view. I could have said it’s also AT&T’s plan, and it has everything to do with the Google-ALEC link as explained to me by a senior staffer at the California Public Utilities Commission.

ALEC has helped pass legislation in 24 states prohibiting the regulation of VoIP and IP-enabled services, telling the tech guys that “the CPUC was trying to regulate the Internet.” Google, along with the other “geniuses,” bought that argument, apparently without realizing they were supporting AT&T’s longer-term move to extricate itself from any and all regulation. According to the regulator: “Once AT&T succeeds, and it will, Google and the geniuses will have little bargaining power against the reconstituted, and unregulated, AT&T monopoly.”

Google has every right to fight for legislation it believes in, whether or not we agree with it. But climbing into bed with those clowns is reprehensible and, in the long run, self-defeating. If you like, you can sign a petition urging Google and other tech companies to get out of ALEC.

Apple’s huge memory markup

If you plan to buy Apple’s new iPhone 5s, you’re faced with an important choice: Go with the 16GB model for $199, the roomier 32GB model for $299, or the 64GB version at $399. That’s a lot more money, but if you’ve been using a 16GB smartphone as I have, you’re aware of how annoying it is to constantly juggle music, photos, and apps as you run out of space.

Is the higher price fair? Not exactly. It turns out that the price you pay for extra storage is significantly higher than what the memory actually costs Apple — four times as much, to be exact, according to Bloomberg News. Of course, Apple isn’t going to sell components for the same price it pays, but the exorbitant markup is a major factor in Apple’s enormously profitable iPhone business. Notably, that markup is much higher than that of its competitors.

AT&T, for example, sells the 16GB Samsung Galaxy S 4 for $200 on contract. The same phone with 32GB of memory costs $250. Samsung may have a small cost advantage because it makes its own memory, but the savings can’t explain the huge price gap. The mobile memory markup accounted for 25 to 40 percent of Apple’s profits in the last quarter, according to Bloomberg.

Samsung’s sneaky test results

As technology and technology users have grown more sophisticated, few of us pay much attention to what we used to call “speeds and feeds.” But careful reviewers and some companies still take benchmarking seriously, and they spend a good deal of time and money to do it right. When a major company finds a way to game those results, it’s a serious breach of trust.

Samsung is falsely inflating the scores of its new Galaxy Note 3 smartphone, according to a carefully reported story by Ars Technica. The story says Samsung plays games with its products that have the effect of inflating the new smartphone’s performance scores by up to 20 percent when it specifically identifies popular benchmarking software is running, such as Quadrant, Geekbench, and Linpack.

Samsung has been caught gaming the system before, and while it has never, to my knowledge, admitted it, the evidence is clear; you’d think that at the very least it would stop doing so. Ironically, the products in question are quite good, and it’s not likely that more than a relative handful of the millions of people who buy them know or care anything about benchmark results. (According to the respected tech site Anandtech’s tests, the only mobile device makers who don’t game their results in benchmarks are Apple and Motorola Mobility. Kudos to those two, and shame on everyone else.)

Samsung has also come under scrutiny for violating court directives regarding secret Apple-Nokia licensing arrangements disclosed to its outside lawyers. It appears that Samsung is now stonewalling the court’s investigation after first being insouciant about its executives accessing the verboten information.

Am I picking on these three companies? I am. Google is not the only technology company that gives money to ALEC, and Apple isn’t alone in overcharging for components. But they, and Samsung to a lesser extent, are the leaders of the technological revolution sweeping the world. They claim to live by a higher standard than the rest of the industry — if only it were true.

I welcome your comments, tips, and suggestions. Post them here (Add a comment) so that all our readers can share them, or reach me at bill@billsnyder.biz. Follow me on Twitter at BSnyderSF.

This article, “Profit or principles? Google, Apple, and Samsung have made their choice,” was originally published by InfoWorld.com. Read more of Bill Snyder’s Tech’s Bottom Line blog and follow the latest technology business developments at InfoWorld.com. For the latest business technology news, follow InfoWorld.com on Twitter.