Avoiding Apple's n-come tax

Apple says it's illegal to give upgrades away. Even at two dollars, that's a serious charge
Written by Leader , Contributor

As excuses go to soak the punter, Apple's latest wheeze deserves a big round of applause for ingenuity — and a large raspberry for bad timing. If you want to run some software that upgrades your Apple wireless kit to 802.11n, says the company, you'll have to pay — not because Apple wants the money, but because the accountants insist that it's the law.

Specifically, it's Sarbanes-Oxley — Sox, in the trade — the post-Enron law that imposes strict rules on companies about when and how they account for their income. In terms that humans can understand, the logic goes that if you upgrade a product for nothing after you've sold it, you've taken money in advance of coming up with the goods. Booking income before you provide the service — well, that's Enron territory.

Taken to its extreme this would seem to make any sort of free improvement illegal — including service packs, bug fixes, skins, content — while imposing a huge bureaucratic overhead for pointless compliance. That attitude isn't unknown in accountancy, but if it really applies to IT we're all in serious trouble. Even the idea that it's just a US law doesn't help us in the UK — the tendrils stretch into European subsidiaries.

There is a simple cure. State in the end-user licence agreement (EULA) that the features in the product at the time of sale are all that the user is buying, and that the company doesn't undertake to add any in the future. That way, any upgrade that does turn up can be a gift or a paid-for extra, as the company wishes, without any hint that the customer has knowingly paid in advance for stuff they didn't get at the time. It's about time the EULA got useful.

It could be that Apple wants to play it by the book as much as possible because of the ongoing Sox-based criminal investigation into the company's share options backdating scandal. The question is: what looks worst, defending million-dollar payouts to the guys at the top, shaking down the customers for two dollars a pop, or doing both simultaneously? Whatever, the decision by the company's bean-counters leaves a bad taste in the mouth. There's no accounting for taste.


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