Sherlocking continues: Apple's interest is a 'kiss of death' to small technology firms

Software developers have long known of what's become called Sherlocking. Named after one prominent example of the process, it's used to describe the situation where Apple releases something that effectively kills off a smaller company's business.

That can often be that a third-party developer has produced something that is actually a natural extension of what Apple is already doing. It can be that Apple was always going to do whatever it is, but allegedly it can also be that Apple has deliberately set out to copy another firm.

Specifically, Apple has been accused many times of using a developer as "market research." It allegedly opens talks with the firm, then when it learns all it needs, Apple then ghosts that company and instead goes ahead making its own version of whatever it is.

For instance, the developer of BlueMail sued Apple for allegedly infringing on its intellectual property in order to create Sign in with Apple, although that case was later dismissed.

Now the Wall Street Journal has collated what it describes as more than two dozen situations where Apple has allegedly done this with hardware companies.

"When Apple takes an interest in a company, it's the kiss of death," Joe Kiani, founder of a blood-oxygen measurement device company Masimo, told the publication. "First, you get all excited. Then you realize that the long-term plan is to do it themselves and take it all."

Backing up that accusation, the Wall Street Journal has been shown an email to Masimo from Adrian Perica, at that time head of mergers and Acquisitions at Apple. It said Apple wanted to "dig deep" into Masimo's technology and added, "[let's] discuss any ideas you have about how Apple could or should integrate some [of] these technologies in our products."

Reportedly then within a few months, Masimo's chief medical officer Michael O'Reilly was hired by Apple for twice his previous salary, plus millions in Apple shares. Masimo's Kiani says that Apple reassured him about hiring O'Reilly, then continued talks with the firm, until some point after it had hired a total of 30 of its engineers.

Suing Apple is an expensive business

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

With Masimo, AliveCor, and other firms that are not all named in the Wall Street Journal article, Apple is accused of following a specific sequence that begins with initiating contact with the smaller company.

"Apple will talk to everybody and then try to steal the best people who are developing the technology," AliveCor board chairman and investor Vinod Khosla, told the publication. Now a venture capitalist, he further said that he actively steers companies away from having any talks with Apple.

According to the publication, Apple disputes all such allegations.

"The truth, is these companies are blatantly copying our products or stifling competition by using invalid patents," an Apple spokeswoman said. "We will continue to fight these baseless claims in court and to advance technologies on behalf of our customers and public health."

Masimo's Kiani says that his company has spent $55 million so far in its legal cases, and estimates that will increase to over $100 million. Those legal cases include the filing with the ITC which led to that regulator supporting Masimo's request for a ban on sales of the Apple Watch in the US.

Such a ban will not be implemented until all appeals have concluded. Significantly, President Biden upheld the ITC's ruling backing AliveCor's case in February 2023.