The hack does not require the product to be jailbroken or any user interaction which makes it even more insidious. To become infected all you have to do is plug in. So now in addition to not taking candy from strangers we have to remind our kids not to take phone chargers from them either. What makes this even more interesting is that the team that identified this new exploit said they are using Apple’s own techniques to hide the installation and location of their malware. The team, from the Georgia Institute of Technology will be showing off their work at Black Hat in Las Vegas.
Unfortunately to Apple a USB vulnerability is not all they have to worry about. It seems that they are not going to come through the DoJ suit on price fixing in the manner they thought. Apple has always maintained that it did nothing wrong by establishing a pricing agreement with publishers before launching their iBooks application. However, the emails and other documentation that has come out since would seem to show otherwise. We have talked about this before so we will not bore you with items we have already covered except to say that if you thought some of those emails were bad you haven’t seen anything yet.
During the exchange between Apple and the publishers it now seems that Apple was very aware that their actions were not exactly legal. There is even one email between publishers where the comment “I think it would be prudent to double delete this from your email files when you return to your office.”. Sadly that is not the worst thing in the slid presentation that the DoJ released. There is a quote from Steve Jobs saying that all eBook prices would “be the same” (you can see the full quote below). Taking a look through the whole side presentation it is hard not to conclude that Apple and the five publishers knew what they were doing and were acting to artificially set the price for all eBooks.
Apple appears to be insistent that it did nothing wrong, except to establish a new model for eBooks. They are trying to appear to be the underdog in the industry and were only trying to compete. The problem with that claim is that they knew what they were doing. Apple intentionally approached publishers knowing where they stood on their dealings with Amazon. They chose a price that would get them their 30% and still put more money in the pockets of the publishers than what they were getting with Amazon. The fact that they were not a major player in the market previous to this does not remove this. Apple worked with and coordinated the deals to establish the agency model. They did this in order to compete and still make money. They knew they would not be able to compete with Amazon’s price point and since Amazon had the Kindle app for the iPad very shortly after its launch they were looking at wasted money. This was excellent motivation to work with the publishers to set prices on eBooks ensuring their profitability for Apple.
Both the news that Apple iOS devices are susceptible to a hardware infection using their own charging system and the DoJ suit are sure to influence investors. Apple could end up having a very bad 2013 if something does not change. Their reputation as an innovative and forward thinking company has been shaken due to lack luster product refreshes and now the company image is on the verge of taking massive hit. We will be following this one very closely and will let you know how both of these issues turn out.
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