Sherlock continues: Apple's interest is the 'kiss of death' for small tech firms


Apple is pushing to develop or acquire all of its own technologies, but a new report is just now noting that the company courted several companies and then saw their work is duplicated. .

Software developers have long known about what has come to be called Sherlock. Named after one famous example of the process, it is used to describe the situation where Apple releases something that effectively kills a small company's business.

It often happens that a third-party developer has created something that is actually a natural extension of what Apple is already doing. It could be that Apple has always intended to do what it is, but ostensibly it could also be that Apple intentionally intended to copy another firm.

In particular, Apple has been repeatedly accused of using a developer for “market research”. Allegedly, he starts negotiations with the firm, and then when he knows everything he needs, Apple then shuts down this company and instead continues to create its own version of what it is.

For example, the developer of BlueMail sued Apple for allegedly violating its intellectual property to create Sign in with Apple, although the case was later dropped.

The Wall Street Journal has now collated what it describes as more than two dozen situations where Apple allegedly did this with hardware manufacturers.

“When Apple shows interest in the company, it's the kiss of death,” Joe Kiani, founder of Masimo, a company that makes devices for measuring blood oxygen, told the publication. “First of all, you are all excited. Then you realize that the long-term plan is to do it yourself and take everything.”

In support of this allegation, the Wall Street Journal was shown an email to Masimo from Adrian Periki, then head of M&A at Apple. It stated that Apple wanted to “deeper” into Masimo's technology and added, “[let's] discuss any ideas you have about how Apple can or should integrate some [of] these technologies into our products.”

Within months, Apple reportedly hired Masimo chief medical officer Michael O'Reilly for double his previous salary, plus millions of Apple stock. Masimo's Kiani says Apple calmed him down about hiring O'Reilly, then continued negotiations with the firm until at one point it hired a total of 30 of its engineers.

Sueing Apple Is Expensive

Masimo is currently suing Apple and his position has been upheld by the International Trade Commission (ITC). The case is about to go to trial by jury.

As for Masimo, AliveCor and other firms, not all of which are mentioned in the Wall Street Journal article, Apple is accused of following a certain sequence that starts with making contact with a smaller company.

“Apple will talk to everyone and then try to steal the best people developing technology,” AliveCor chairman and investor Vinod Khosla told the publication. Since becoming a venture capitalist, he has also said that he actively keeps companies out of any negotiations with Apple.

According to the publication, Apple disputes all such claims.

“The truth is that these companies are outright copying our products or stifling competition using invalid patents,” an Apple spokesperson said. “We will continue to fight these unfounded claims in court and advance technology on behalf of our customers and public health.”

Masimo's Kiani says his company has already spent $55 million on its litigation, and it is estimated that this amount will increase to more than $100 million. The lawsuits include a filing with the ITC that resulted in that regulator upholding Masimo's request to ban Apple Watch sales in the US.

Such a ban will not be implemented until all appeals have been heard, but it is important to note that President Biden supported the ITC decision in February 2023.

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