46 Comments

Summary:

The reasons for the recent screwups by Apple, Sony and Amazon were different, but their reaction was remarkably similar: a conspicuous lack of timely response. Like many others, these tech giants don’t seem to have realized that crisis response has to become real-time now too.

We’ve seen a trifecta of failures and/or screwups over the past couple of weeks, from three of the world’s technology giants: Apple was shown to be keeping a log of the location of millions of iPhone users, Sony’s PlayStation platform was hacked and millions of customer accounts were compromised, and Amazon’s (a amzn) cloud-hosting service EC2 went down for hundreds of companies. The reasons for these screwups were different, but the reaction from the companies involved was remarkably similar: a conspicuous lack of timely response. Like many others, these tech giants don’t seem to have realized that crisis response is real-time now too.

Apple, of course, is notoriously close-mouthed about this kind of thing, as was seen in the “Antennagate” affair last year, when Apple stonewalled on the issue of its new iPhone 4 antennas and flaws in the unit’s design. And the initial response from Apple co-founder and CEO Steve Jobs in that case was also classic: he reportedly said “Don’t hold it that way.” In this case, there was virtually no response from the company whatsoever to the location-data issue for days, until — again, in classic Jobs style — a statement was made to a single news outlet effectively saying the issue was overblown and/or the result of a few bugs, and that everyone should just calm down (my colleague Bobbie Johnson disagrees). Oh, and a response took so long because it’s really complicated stuff.

Given its past behavior, it’s possible that Apple is beyond help in this area. The company’s approach seems to be that people will unfailingly line up to buy its products regardless of how it handles such PR gaffes, so it may be a lost cause. But Amazon and Sony arguably have a lot more to lose.

Sony in particular — a former technology leader — has not been doing well on a number of fronts for years now, as Apple has taken over virtually every market segment that the technology company used to own. Not only that, but the company is already infamous in computer security circles for its last major fiasco in 2005, the “Sony rootkit” affair, in which users had a virus-like software program installed on their computers without their knowledge if they played a CD. So you might think that the company would try hard to get out in front of the most recent issue — which venture investor and technology analyst Paul Kedrosky described as “among the worst such debacles in modern financial/technical history” — as quickly as possible. Oh, but it’s really complicated too.

Amazon CEO Jeff Bezos

Amazon is not nearly as desperate as Sony, but the company has still pinned a lot of its hopes for the future on the success of its cloud-hosting and cloud-based services business, and seeing hundreds of major companies and websites fail — and lose critical data — is a huge issue. And yet, while Amazon eventually did release something that was much closer to an actual apology than anything Sony or Apple came out with, the company still avoided discussing the issue for what seemed like an eternity in Internet time. One Internet analyst said that Amazon’s “anemic public response” was a major flaw, and that arguably wasn’t the only one.

This isn’t an issue just for Apple, Sony and Amazon — it’s something that companies of all kinds are still struggling to deal with. The reality is that social media such as Twitter and Facebook have increased the ability of customers and users to speak out about such issues, and decreased the amount of time that companies have to deal with them. And that means the old approach of taking days to hold “war room” meetings and come up with elaborate PR plans just doesn’t work any more.

Those things still have to be done, but they have to be done a lot faster, and while they are being done someone has to respond, even just to say “We are sorry, we are looking into the problem” (and if you don’t know when to respond, try this flowchart the U.S. Army came up with for responding to blogs). You don’t just get to reap the benefits of real-time when you are a technology company: you also get to see the other side of that double-edged sword when you screw up. And it cuts just as deep.

Thumbnail photo courtesy of Flickr user Hans Gerwitz

  1. Oh come on Mathew, a company can’t respond to every Blog, Dick, and Mary. Neither Apple nor Amazon will suffer from taking their time, never will. Sony, maybe because it was credit card data, but not because they took their time.
    I can understand why the media wants instant, real-time crises management, it feeds their system. Doesn’t buy a company much unless it’s a real crisis like tainted Tylenol.

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    1. Totally disagree. Maybe it will hurt Amazon over the longer term, who knows — and Apple, as I mentioned, seems to be immune to any damage from this kind of thing. That doesn’t make it right. And they don’t have to respond to every blog or tweet — but no response when something of that magnitude is happening is just dumb.

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      1. Andrew Macdonald Saturday, April 30, 2011

        I actually agree with Matthew.

        I think what he is trying to say here is not that companies need to come out and explain exactly what the problem is within 10 minutes of the problem occurring, but instead to atleast ADMIT there IS a problem, and that it’s being worked on.

        Instead, companies such as Apple say absolutely nothing for weeks, sometimes months, making it look like they couldn’t give a damn about their customers or the problems at hand.

        At least come out and say “Hey, we’re experiencing some problems which we are working on. We will update you when we have more”.

        Something as simple as that will go a very long way in the eyes of a consumer, because it shows the company DOES care, and is doing all it can to find a fix ASAP.

        That was my take on this story anyways.

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      2. Magnitude only describes the piling on by blogs/media, it doesn’t describe anything about the Apple non-issue. It might describe the Amazon situation somewhat and certainly the Sony mess.

        I actually fine the fact that they don’t knee-jerk every time some issue comes up. We get enough of that with the link-bait headlines.

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      3. Sony lost my credit card data, and took a week to tell me. Sure it takes time to verify.. But..
        Apple wrote software that stores personal data to a personal device . If I want to lock the device I add a pin, if I feel as though my machine and user are not secure enough , I have the ability to encrypt backup of said personal information. Frankly, I am pissed that a great resource will be diminished , because some people say “it’s complicated stuff” with a touch of sarcasm and want me to explain How vunerable EVERY machine is when it’s in someones hands.

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  2. coolrepublica Saturday, April 30, 2011

    Apple and Sony did wait a while to say anything, but Amazon was different and they did everything the way it was supposed to be done in my opinion.

    When the Amazon servers went crazy in N. Virginia they gave updates as to what was happening to the best of their abilities. No one can expect these engineers to be tweeting 140 characters every minutes about the problem since they are needed to put out the fire. When a fireman is trying to put out a fire in my house I could care less about what went wrong, I want him to put out the fire and tell me later. Amazon did just that. All hands on deck. They put out the fire and then they gave you a small novel detailing what went wrong and an apology. Perfect!

    Apple on the hand gave you nothing, and when it did come out with something it was in the line of “hey everybody else does it.”

    Crisis response does not need to be real time. It’s ludicrous. That’s how mistake are made. Companies should not jump into giving information that may not be accurate just to keep attention deficit reporters and bloggers happy. they need to keep people up to date but it doesn’t have to be or either should it be real time. Nobody can accurately report problems with good perspective in real time.

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    1. And you know what? It won’t make any difference. You can feign outrage if you must cool republica, as you do elsewhere, but in truth it ain’t going to stop Apple’s momentum one tiny little bit.

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    2. I like the “putting out the fire first” analogy and agree with what you say. Besides, if they were giving info real-time, there’s all the possbility that the media would pounce on them that instead of acting on the problem, they were wasting time tweeting!

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  3. Yeah, more 20-20 hindsight armchair quarterbacking from a journalist.

    I’ve been watching Sony most closely and here’s the timeline I see:

    First, the systems were compromised. Sony discovers it and immediately shuts everything down to prevent further damage. They announce that they’ve had an intrusion virtually immediately and get to work assessing the damage.

    As soon as they find out that personal data was taken, they report it and begin the onerous process of sending out 77,000,0000 emails to members of its service.

    And since they there have been regular follow-ups. Tomorrow Kaz Hirai is holding a press conference to talk about the situation.

    Now looking back it’s easy to say “Wow, they waited too long to tell us data was stolen!” and that’s an easy claim to make now that we know it was stolen, isn’t it? But what if they’d said “Your data was stolen” right away, and it wasn’t. Suddenly a rash of people are canceling credit cards…then Sony says “Oh, great news, your data wasn’t stolen after all.” and you journalists would be trying to crucify them for being alarmists and causing people unnecessary headaches.

    It’s unfortunate it took them as long as it took them to identify the scope of the problem; they’re certainly not perfect and it would’ve been nice if they’d been able to point that out immediately…

    But in the long run, what real difference would it have made if you’d know your personal data was lost 4 days earlier than you learned it? The info has been stolen, there’s nothing we can do to ‘get it back.’

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  4. Crap whining will not improve security or impress technologists designing software. Deliberately casting tech designers in the NSA mold may get more links from conspiracy cretins. About all this adds.

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  5. I would not put Apple’s current PR issue in the same boat as Amazon or Sony. Amazon and Sony’s issue caused major issues, data lose and release of personal information. Outside the Tech world no one really cared about the Apple’s location tracking issue or even Antenna gate. You definitely can’t say the same with Amazon and Sony’s problems.

    I think Amazon is going to hurt the most, they LOST data on a service that succeeds on the reputation of reliability.

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    1. I don’t think that’s true about Apple — I have had a number of people ask me about the location tracking, and none of them are tech types. Thanks for the comment though.

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      1. Of course people would care if Apple was tracking them.

        Your ignoring the fact that that claim was made up.

        If they respond quickly to every made up claim who will it help?

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      2. And yet well after the fact you STILL get it wrong about Apple:

        “Apple was shown to be keeping a log of the location of millions of iPhone users”

        No, no it wasn’t. There was a log of cell towers and WiFi hot spots, some dozens of miles away from the actual users. Apple doesn’t have a problem; “real time” reporting caused a so-called crisis where there wasn’t one.

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  6. This article would be a lot more meaningful if you actually explain *why* the companies concerned should respond in real-time every time there is a media panic.

    In Apple’s recent case, the allegations were false, and the explanation was already in the public domain, and the panic was the result of journalists failing to check facts.

    The response they gave was measured and forthright, and given that they undertook to change their software, must surely have required some actual consideration.

    News is now ‘real-time’ partly because journalists don’t take the time to check facts anymore. You seem to be claiming that we’d be better off if companies didn’t bother either.

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    1. “the panic was the result of journalists failing to check facts”
      B I N G O

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    2. With all due respect, “in the public domain” doesn’t mean anyone knew about it — and their response was not measured and forthright, it was late and mealy-mouthed. Thanks for the comment.

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      1. Isn’t it the responsibility of journalists to discover facts?

        The reason why people didn’t know about the information is that instead of looking for facts (that incidentally didn’t take much work to find), the media instead spent their time repeating false claims without understanding that they weren’t supported by the supposed research.

        Apple did the right thing by not responding to the people crying wolf until they were ready.

        Imagine what would happen if they rewarded every false accusation with a hasty response?

        If you want to critize someone’s handling of this affair, it should be the journalists.

        Quite frankly the only reason the media is griping about Apple’s response time is that they are bitter that they didn’t take the bait.

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      2. Nobody knew because the researchers and media didn’t do their due diligence.

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  7. Of course all these “statements” take a while to come out, spin isn’t easy… need to consult psychologists, and marketing, and the bean counters and… Of course, the truth is always instant, but “that’s ridiculous, our users can’t handle truth, they want a pleasant lie”. Did they learn it from Government, or did government learn it from them? Oh, I forgot they’re all the same now

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  8. Gerald Buckley Saturday, April 30, 2011

    So long as Wall Street doesn’t pummel them for answering a day slower than you might like, they’ll answer when they’re good and ready.

    Point in case – Jobs’ health prospects and Apple’s CEO succession plan. We don’t know because shareholder value doesn’t seem to care (much… or enough… Take your pick).

    I think in all the cases you cited… It was clearly stated, the companies were trying to ascertain what the problem was and get it resolved. To expect a minute by minute tweet of… Well, we just check all the memcaches and blah, blah is (frankly) more signal than we need. Amazon did a SPLENDID job of detailing the problem. They OWNED it from the opening.

    How has Apple been punished for being deliberate in their response to crises? Seems to me ALL critical measures that matter seem a-ok with how they’ve handled antennagate, white-iPhone-gate, Jobs’-health-gate, successor-gate, etc. Maybe I’m not seeing the other sharp edge you are though…

    My whole point boils down to – a crisis warrants deliberate attention and more than 140 characters. Real time crisis disclosures mean someone is wasting valuable time NOT solving the problem.

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    1. To be honest, I don’t think “they’ll tell us when they’re good and ready” is a great approach, and certainly with Jobs’ health issues (as I have written before) they waited far too long and even then didn’t provide the full information necessary until they were effectively forced to. That’s hardly a gold standard for shareholder communication. Thanks for the comment.

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  9. Who is simple-minded enough to be placated by “Sorry, we’re working on it”? Without such a statement, do you think these companies are doing nothing?

    I’m perfectly happy to give companies time to respond if the response is appropriate. If the response doesn’t solve or abate the problem, then I have a problem. Not when it takes 2 days or 30.

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  10. The real story here is that the tech media crossed a new line with the Apple controversy.

    Antennagate was exaggerated, but it was based on truth – calls really are dropped if you hold the iPhone in a certain way. It doesn’t happen often enough in practice to matter, but that takes data gathering and statistics to find out.

    LocationGate wasn’t just an exaggeration. Many of the reported statements and even headlines were completely false. Just checking the original research blog was enough to discover this, and a few questions to any developer who’d watched Apple’s videos on the subject would have revealed this.

    Don’t you think manufacturing a fake scandal is more harmful than Apple taking a few days to respond to a non-issue?

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    1. “manufacturing a fake scandal”
      Oh, they’d never do that – Oh wait, they do need a steady flow of link-bait and page views.
      Don’t get me wrong Mathew, I love Giga stuff and you guys are less prone to this.

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      1. I don’t think it was manufactured at all, frankly — I think it was a fairly complicated technical issue that was not communicated well by Apple. Responding more quickly would have kept some of the more hysterical coverage to a minimum, which is part of my point.

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      2. In Apple’s case it wasn’t the story that was manufactured, it was the portrayal as “scandal”. The reality is it is somewhat a none issue and if the researchers/media had looked, it would have been even less.

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      3. “would have kept some of the more hysterical coverage to a minimum”
        I’m betting it’s more like the birther thing – Will continue on even though a birth certificate has been produced.

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