Silicon Insider: Apple Springs a Leak

Drop a dime on Apple Computer. Do it for James Madison.

Years ago, when I was just starting my career and working in public relations at Hewlett-Packard, we were bedeviled by a young reporter, just a few years older than me, who worked for an industry weekly tabloid called Electronic News.

EN was one of those trade publications that mostly reworked press releases and paid its young reporters peanuts while they rushed to add an item to their resume before moving on. In other words, it was a safe, predictable industry pub that would call for a quote or two, then run our stories pretty much the way we wrote them

Until Mark Simon came along. Simon, big and bluff as a rugby player, turned out to have a genius for the subtle and secretive art of digging out corporate insider information -- especially regarding upcoming company products. We'd work for weeks preparing an entire publicity campaign to roll out a new calculator or minicomputer or test and measurement instrument … and just days before the announcement, Simon would show up in our offices saying that he had already heard about the new model, would be going to print with it Monday morning (EN had the shortest lead time in the business) and would we care to make any comments?

Yeah, we wanted to make a few choice comments, but we bit our tongues. All that hard work out the window. Chaos would briefly reign. How much does Simon know? How do we minimize the damage? Damn him, where did he get his information?

Simon usually had all, or most of, the salient information on the story. We would try the old PR trick of spotting one factual error and then airily dismiss his entire story as inaccurate. "If you go to press with the information you have," we'd say, "you'll be made a fool of when the real story comes out."

But Simon usually just waved off our criticism. He knew he was close enough to make us squeal, to leave us sitting there with visions of division vice presidents shouting into the phone -- "How the hell did you let that story leak out? That's a $400 million product!" -- and our careers slipping away.

Getting the Scoop

Usually at that point Simon would offer a deal: he'd hold the story until the formal introduction date in exchange for an exclusive: at best a private interview with a key executive, at worst a full exclusive on the announcement itself. Sometimes, usually when the announcement wasn't particularly Earth-shattering, Simon would just go ahead and run the story, scooping the rest of the press. I think he did this partly for fun, and partly just to remind us of what he could do.

We hated Mark Simon at HP PR, yet at the same time we admired him. As far as we could prove, he always played fair, never stealing company documents or violating any non-discloser agreements (which he never would have signed, anyway).

Simon went on to become a distinguished political reporter at the San Francisco Chronicle, just about the same time I left PR forever and became a newspaperman at the San Jose Mercury. Working for rival newspapers, though not on the same beat, Simon and I did occasionally cross paths in the years that followed. It was during one of those encounters that he finally told me his secrets for scooping new product announcements.

What had seemed magical from the outside proved to be just good honest reporting. One of his techniques was to simply learn how to read upside down. He would be sitting in an interview with some executive, and while he appeared to be looking down at his notebook and taking notes, he was instead reading the memos the exec had carelessly left on his or her desk.

All Simon needed was one code word, either in print, or overheard in a hallway conversation, or most amusingly, painted on a big banner in the cafeteria. Then, he would simply drop the code word in every subsequent conversation -- "Tell me about 'Gringo' … is it as important as I hear it is?" -- and that would often be enough to get a stunned exec to either spill the beans or add just enough more information for Simon to slowly flesh out his story. Sometimes, he merely had to call an employee -- especially someone in the lab or a secretary, both types notoriously naïve about the press -- and simply keep pressing until they either talked or (we would have killed them if we'd known) sent him company secret product descriptions.

Leaks From 'Mr. X'

All of that surprised me, but what Mark said next left me stunned: "But my best source," he laughed, "was 'X'." X was the general manager of one of HP's biggest manufacturing groups, a man who seemed on a fast track to the very top -- and, one of the execs who complained most about company leaks.

"Why?" I asked in disbelief, "Why would he do that? He was always trying to get us to stop you."

Simon shrugged. Because X liked the risk, he told me. Because he wanted to control the news, instead of being controlled by it. I don't really know, he said.

Mr. X never made it to the top of Hewlett-Packard, but he did at another billion dollar corporation -- until his risk-taking finally caught up with him. And though I put Simon's lesson to good use by occasionally scooping some Silicon Valley companies' big announcements, as did a few other reporters at trade magazines, the fine art of beating companies at their own game pretty much died in the tech world … until the arrival of the Internet.

Bloggers Adept at Finding Leaks

The Blogosphere, with its pirate sites and anonymous posters, has proven to be an ideal vehicle for broadcasting leaks, pre-announcements, insider information and company gossip. In fact, a cottage industry has emerged that specializes in finding out inside details about upcoming products from popular companies, industries and institutions -- Apple, Hollywood and Congress, in particular -- long before those entities want that information made public.

These institutions, especially corporations, squeal when this happens, calling it everything from trade secret theft to invasion of privacy to obstruction of commerce. That's what I used to say, too; but 25 years of thinking about the matter has convinced me that these complaints are hogwash. The moment a company goes public it can no longer complain about invasion of privacy. If an employee violates his or her employment contract by passing a document to a reporter, that's the employee's problem. The First Amendment (thank you Mr. Madison) protects me from being forced to give up the name of that employee. And a good thing too, otherwise some of the most shameful acts in American business history would never have seen the light of day.

As for undermining competition, please note that the job of corporate PR (and supporting PR agencies) is to try to control the news by forcing all of the media to carry that announcement simultaneously. In other words, companies want to improve their advantage over their competitors by diminishing my advantage over mine.

Apple Files Suit

The latest example of this mind-set came last week when Apple Computer sued the popular Web site Think Secret for apparently leaking info on the company's new "headless" Mac and iOffice Suite products.

This news shouldn't be surprising. Belying, or perhaps in congruence with, its revolutionary image, Apple has always been the most totalitarian of computer companies -- far better epitomizing its legendary Mac Big Brother commercial than the IBM it targeted. It is the North Korea of the high tech world, forever willing to forgo even greater success to keep a tight grip on the throat of its market base. And like all totalitarian institutions, its true believers are as much in love with the idea of Apple as the messy reality of the actual company. As long as Apple keeps producing cool products -- and indeed, it makes very cool products -- the Macolytes will ignore (or worse, justify) the worst kind of behavior from the company and its Beloved Leader. And that's fine -- until it intrudes on the Constitution of the United States.

Apple's legal strategy in the Think Secret case seems straightforward. First, it will take advantage of a gray area in the law: the question of whether a blog site can actually represent itself as a true member of the press and thus be covered by the First Amendment (Of course it can; lately, the blogosphere has been more professional than the mainstream media). Given the current state of judicial activism, that may actually work.

Thinks Secret Could Get Crushed

But if it fails, Apple will likely just crush Think Secret with the sheer weight, and cost, of its legal attack. No little blog can survive the onslaught of a multi-billion dollar corporation, no matter how just its case, and the Think Secret folks will quickly find themselves with a Hobson's Choice: either get driven out of business, or cave and give up the names of its sources and lose its reputation forever. Either way, Apple wins.

Unless … Apple begins to spring leaks from every modem, telephone line and doorway. If the press was awash in Apple product leaks, then the company's case against Think Secret would be immaterial. The little guy -- the woman in the Big Brother commercial who shatters the image of Big Brother -- would win.

What I'm saying is that if you are an employee, supplier or distributor for Apple Computer, and you care more about the First Amendment than the Little People's Republic, you might think about dropping a dime on Apple, and help pre-announce everything the company's got in the works for the next five years. And if you are a business or tech reporter and you want to preserve the freedom that built your profession, you should take those calls and run with them. Turn Apple into an information sieve for a while. Teach the company a lesson in the Bill of Rights. Bury the legal department in cases -- and if they do ever get around to you, reply by sending along a nice engraved portrait of James Madison.

And to you, Apple's legal department: beware. As I learned to my chagrin at HP, the leakers you want to hunt down and fire may prove to be the people you least expect.

This work is the opinion of the columnist and in no way reflects the opinion of ABC News.

Michael S. Malone, once called “the Boswell of Silicon Valley,” most recently was editor-at-large of Forbes ASAP magazine. He has covered the Silicon Valley and high-tech for more than 20 years, beginning with the San Jose Mercury-News as the nation's first daily high-tech reporter. His articles and editorials have appeared in such publications as The Wall Street Journal, The Economist and Fortune, and for two years he was a columnist for The New York Times. He has hosted two national PBS shows: "Malone," a half-hour interview program that ran for nine years, and in 2001, a 16-part interview series called "Betting It All: The Entrepreneurs." Malone is best known as the author of a dozen books. His latest book, a collection of his best newspaper and magazine writings, is called "The Valley of Heart's Delight."