Steve Jobs, a New Mogul With Old Methods

Tim Wu’s The Master Switch tells the story of how America’s information empires—from the AT&T monopoly to today’s Internet giants—have been shaped by disruptive inventions, federal intervention, and, above all, a will to power. This week, based in part on excerpts from The Master Switch, Wu will present the stories of five men who disproportionately influenced the shape of the American information industries in the 20th and 21st centuries.

Steve Jobs reveals the first iPhone in January 2007.

Steve Jobs stood facing an audience of thousands, many of whom had camped out overnight for this moment. In his black turtleneck and blue jeans, he was a man completely in his element, in perfect control of his script, the emotions of his audience, and the image he projected to the world. Behind him was an enormous screen flashing words and animations. The date was Jan. 9, 2007, and Jobs was about to announce his most important invention since the Apple Macintosh.

In the computer world, and particularly for those in the cult of the Mac, a Jobs keynote speech is part rock concert, part sacrament. As he speaks, he is repeatedly interrupted by cheers, an unusual thing in corporate speechmaking.

“Today,” said Jobs, “we’re introducing three revolutionary products.” (Scattered cheering.) “Three things: a widescreen iPod with touch controls, a revolutionary mobile phone, and a breakthrough Internet communications device.”

Jobs continued, egging his audience on: “An iPod, a phone … are you getting it?” (More enthusiastic cheering.)

“These are not three separate devices—this is one device … and we are calling it iPhone!” (Cheering madly, with some of the audience on its feet.) On the screen behind Jobs: “iPhone: Apple reinvents the phone.”

Steve Jobs and Google CEO Eric Schmidt.

The iPhone was beautiful. It was powerful. It was perfect. After demonstrating a few features, Jobs showed that the iPhone could access the Internet, remarkably, through a real browser. Jobs then introduced Google CEO Eric Schmidt, who walked on to the stage wearing an incongruously long orange tie. The two men shook hands warmly at center stage, like two world leaders.

Now it was Schmidt’s turn. A member of the Apple board, he began with a joke about just how close Apple and Google are. “I thought if we just sort of merged the companies we could call them AppleGoo. But I’m not a marketing guy.” His joke, unfortunately, met only scattered laughter. He continued: “What I like about this new device and the new architecture of the Internet is that you can actually merge without merging. … Internet architectures allow you now to take the enormous brain trust that is represented by the Apple development team and combine that with the open protocols and data service that companies like Google [provide].”

As these remarks suggested, in 2007 Google and Apple were about as close as two firms can be. Schmidt was on both boards, as were other men. The two companies spoke frequently and effusively about each other. While divided by a generation, Google and Apple were, to some, like father and son—both radical, idealistic corporations, started by young men determined to do things differently.

Apple was the original revolutionary, the countercultural firm that began personal computing and the first company to bring the idealism of open computing to the people. Google, meanwhile, had overcome skepticism at every turn, and was by the 2000s the primary living instrument of the Internet gospel. It had even hired Vint Cerf, one of the Internet’s greatest visionaries, and titled him “chief Internet evangelist.”

Apple and Google both came to success by ignoring settled wisdom. Google entered search when it was considered a commodity market, and launched a dot-com after the market had collapsed. Apple’s revolution was greater—in the 1970s it built a tiny, personal computer in an age of centralized machines. And of course they shared foes: Microsoft, mainstream corporations, and uptight people in general.

On the day of the iPhone announcement, a crucial idea lay buried in Schmidt’s explanation of why Apple and Google need not merge. The Google CEO was suggesting that, on a layered network, in an age of open protocols, all the advantages of integration could be realized without actually sharing offices. Call it Google’s theory of the firm: On the Internet, there was no need for merger and exclusive partnerships. Each company could focus just on what it did best. The age of Rockefeller and Carnegie, Zukor and Vail was over.

But was it? The warmth of Jobs’ greeting concealed the fact that Apple’s most important partner for the iPhone launch was one of Google’s greatest foes—the nemesis of everything the openness advocates of the Internet age stood for. At the end of his speech, Jobs dropped a bomb. The iPhone would partner exclusively in the United States with one mobile carrier: AT&T. “They are the best and most popular network in the country,” said Jobs. “58 million subscribers. They are number one.”

Ed Whitacre, then AT&T’s CEO, would have disagreed with Eric Schmidt that the age of grand mergers was over. Late in 2006, just one week before the iPhone speech, Whitacre obtained final federal approval for the acquisitions that brought most of the Bell system back under AT&T control. AT&T was hardly a believer in open protocols—or open anything, for that matter. The spirit of Vail was alive and well in AT&T territory, and Apple—once the leader of the computing counterculture—was now a part of it.

In the last decade, Steve Jobs has led Apple to unprecedented profitability. He has also put the company on the path followed by every dominant information empire of the 20th century. Despite his partnership with AT&T (and perhaps soon Verizon, the other half of the old AT&T empire), it is Hollywood as designed by Adolph Zukor, not the Bell system, that is the clearest model for Steve Jobs’ Apple. Like Zukor, who aspired to integrate every part of the film industry, Jobs looks to integrate wherever he can: retail, hardware, software, apps, and content are all either under Apple’s direct control or subject to its approval.

Steve Jobs holds the iPhone 4 in June 2010.

As Jobs explained in October during an Apple earnings call, “We think the open vs. closed argument is just a smokescreen to try and hide the real issue, which is: What’s best for the customer, fragmented or integrated? We think [Google’s] Android is very fragmented and becoming more fragmented by the day. We prefer integrated.”

Integrated is a word that captures the old AT&T empire, the Hollywood studios, and Apple’s vision of the future. It is a word that suits an apostle of perfectibility who believes there’s an ideal method to perform any task and present the results. It is ultimately a return to the ideal of the late 19th and early 20th centuries, Fredrick Taylor’s “one best way” to design any system.

Apple’s vision of the future is based on the marriage of 21st-century technology with the 20th century’s approach to integration. The best content from Hollywood and New York and the telephone and networking power of AT&T converge in Apple’s tools, which respond instantly to every human desire. It is a combination of undeniable power and attraction. Best of all, the worst of the Internet—the spam, the unreliable apps, the messy, amateur content—are eliminated.

It would be idiocy to deny the attractions of Apple’s vision and the brilliance of its products. The model that Apple is following has a long track record of success in the media industries. But if history is any guide, massive integration poses long-term dangers, particularly once the golden age ends.

We should remember that it wasn’t long after the integration of the American film industry in the late 1920s that it became subject to intense demands for censorship, most notably by the Catholic Church. Centralized media industries are much easier to censor, and an integrated or closed industry is inherently easier to censor than a fragmented or open one. While we don’t have these problems yet, we must never forget that an industry that’s been designed to control content from the get-go is an industry more easily used to control minds.

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