News of the Facebook bid emerged earlier this month via reports in the Israeli media, which said that the social network had offered up to $1 billion to acquire Waze, which adds a real-time social element to traffic maps and claims to have close to 50 million active users. More recently, however, the Facebook talks have apparently bogged down over issues involving whether Waze will have transfer most of its staff from Israel to Facebook’s home base in California.

As with many such reports, the Bloomberg news is couched in all sorts of qualified terms, quoting anonymous sources “familiar with the matter” who say the company “may be considering” an offer, and it’s not uncommon for companies to float such rumors when they are looking for more money — or when they want to convince their acquirer to drop certain conditions, such as the requirement that Waze move its operations to San Francisco.

Some Israeli news outlets have also reported that Facebook has locked down its offer with a clause that prevents Waze from negotiating with other companies. And Google may have decided that making a bid for Waze simply isn’t worth the hassle that it might generate from antitrust authorities, who are already said to be looking at the company on other matters.

Google needs Waze more than Facebook does

All that said, however, there are some compelling reasons for Google to make a bid for Waze, as I tried to outline in a recent post. While it would make sense for Facebook to acquire the company — if only because it would help cement the social network’s move into mobile, and broaden the range of behavior and location data it could use to target users — it makes far more sense for Google.

Google Maps is one of the core offerings the company has when it comes to mobile, arguably almost as important as search and email. And it’s clear that Google cares about evolving the service, since it continues to pour resources into redesigns and added features like the ones that Om wrote about recently. There’s also no question that the social data provided by users is a crucial element of maps — and that is what Waze specializes in, and has managed to build right under Google’s nose.

I would argue that Google can’t afford to let Facebook (or Apple, although it reportedly isn’t part of the current negotiations) get its hands on Waze — in much the same way that Facebook CEO Mark Zuckerberg came to the swift conclusion that he couldn’t afford to let Twitter acquire Instagram, and made a surprise $1-billion offer without even consulting his board of directors. If Google hasn’t already made a bid for Waze, I think it needs to get busy working on one.

Post and thumbnail photos courtesy of Flickr user Dunechaser and Eva Blue

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9to5Mac, which earlier reported that iOS 7 would get a new look with “very, very flat design” and see some default iOS apps get a refresh, has a report with far more detail about the coming changes. The sources are anonymous and obviously final decisions are still yet to be made. Still, the report is a good indication that we’re not going to get the same old iOS this year.

It’s a long piece filled with many details, but a few of the more interesting slated changes include:

• User interface functions, like the slide-to-unlock bar, the textured background of the drop-down Notifications menu, and the tappable app icons will all be subtly upgraded visually.
• Basic Apple apps, like Calendar, Notes, GameCenter, Mail will get a unified black and white look and be differentiated mostly by a third color.
• The Weather app is getting an upgrade with more features.
• Over-the-top real-world animations, like the shredder that animates when a Passbook ticket is deleted, will go away.

In all, it’s about what we’ve been expecting. Nothing too drastic, but a thorough refresh that will be the first major visual upgrade to the operating system in its six years of existence.

It’s also been reported that in order to do this, the iOS team has been scrambling to finish the project and has pulled members of the OS X software team over to help it meet its deadline. It’s not clear what effect that may have on the timely release of the desktop OS, which is expected to be released later this summer or fall.

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The purpose of the hearing was to set schedules, review witness lists and go over last-minute evidence objections ahead of the trial. Cote proposed that each side should be given 22 hours over a four day period plus a final day for closing arguments; the federal government said it would need at least 30 hours to make its case, and Apple requested the same, meaning the total trial would last 12 days. Cote said she will decide in the near future.

The parties also reviewed the witness list, which includes prominent publishing CEOs like Macmillan’s John Sargent as well as Apple executive Eddy Cue. Today’s hearing also raised the possibility that News Corp executive James Murdoch, who exchanged a series of emails with Apple’s Steve Jobs, could take the stand for cross-examination; the federal government will decide in coming days, on the basis of an evidence issue, whether this will be necessary.

Much of the trial, however, is unlikely to feature dramatic CEO testimony. Instead, the core of the trial is likely to slog through recondite economic arguments and civil evidence issues; part of today’s hearing focused on expert witness opinion about the competitive effects of agency pricing and whether it coincided with Apple’s economic self-interest.

Today’s hearing also focused on an ongoing dispute in which Apple is attempting to force its competitors, especially Amazon, to unseal evidence they have submitted as part of the proceedings.

At the outset of the hearing, in a courtroom that rises 15 stories above lower Manhattan with a view of the Brooklyn Bridge, Cote stressed that the case represented an enormous amount or work, and told the parties to call her “day or night” if they decided to settle.

Update: Reuters reports that Cote indicated that she was “leaning towards” the Justice Department’s view of the case, and cited the following comment by the judge:

“I believe that the government will be able to show at trial direct evidence that Apple knowingly participated in and facilitated a conspiracy to raise prices of e-books, and that the circumstantial evidence in this case, including the terms of the agreements, will confirm that”

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Apple may spend almost $4 million on lobbying this year as in 2012, reports Reuters. That’s low of course, but for Apple it’s a pretty hefty increase:

The company spent about $2 million on lobbying last year, up from $180,000 in 1999, records show. This year it is on pace to nearly double last year’s figure.

As the report notes, what Apple is spending on policy efforts is tiny compared to its peers Google and Microsoft, which spent $16.5 million and $8.1 million, respectively, on lobbying efforts last year.

But having a larger presence in the nation’s capital and making friends with the policymakers that can wield great power over its reputation and fortunes may just be something Apple has to do. (One political reporter described Apple’s tax hearing as simply a “shakedown” by politicians angered by Apple’s proud D.C. outsider stance.)

CEO Tim Cook fared very well under questioning from senators on Tuesday, deflecting questions patiently about his company’s legal tax practices. He said he wanted people to hear Apple’s story directly from him, which is why he appeared before a Senate subcommittee this week. But it’s probably not something he wants to do on a regular basis. And making suggestions about corporate tax policy changes, as he did, may not be enough. What money Apple decides to spend on lobbying in the future will probably need to support his policy proposals if he wants to see any of them taken seriously — and keep Apple out of the spotlight.

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The claims are set out, in part, in a letter last week from Apple’s law firm that urges US District Judge Denise Cote to reveal information about its pricing as well as “internal discussions about the inferiority” of its Kindle e-reader compared to the iPad. Apple also says the redacted information will help expose the “fiction” that Amazon was “forced” to adopt a new pricing system as a result of a 2010 arrangement between Apple and five big publishers.

This arrangement — known as “agency pricing” — resulted in publishers requiring retailers to sell ebooks on a commission basis, in which publishers could set the price. This led the Department of Justice, state governments and class action lawyers to sue Apple and the publishers; the latter settled the cases and agreed to pay out millions but Apple is holding its ground.

Apple argues that the Department of Justice is wrong to portray Amazon as a victim, along with consumers, of a conspiracy to raise prices. Instead, the company claims that Amazon was contemplating agency pricing too and was pleasantly surprised when the publishers took it up on their own. Apple is also using colorful emails obtained from Amazon executives to make its point:

 ”I guess what we never figured in was the idea that five publishers would band together and insist on receiving worse terms,” the email said. “And then Amzn would be ‘cornered’ into accepting them.”

“Hysterical, isn’t it?” the Amazon executive replied. “Jedi Mind Tricks here in Seattle.”

The email exchange was reported by Reuters legal reporter, Alison Frankel, whose recent analysis portrayed Amazon as the “elephant in the (court)room.” Her report adds that Judge Cote stated that she doesn’t want the trial “distorted by a larger battle between two commercial giants.”

What do others think? Apple’s view is likely to find support in at least some quarters. The publishing community continues to fume about Amazon’s enormous clout in the book business. Meanwhile, some copyright lawyers have joked to me in the past that Amazon should send US Attorney General Eric Holder a holiday card for suing Apple and the publishers.

Amazon will get to offers it own views directly; its executives, along with publishing executives, will be among the witnesses testifying on behalf of the Department of Justice.

For now, Judge Cote has decided that the evidence Apple is seeking will remain redacted. But the issue will not doubt arise again if the trial, scheduled to begin on June 3, goes ahead as planned. There is a pre-trial conference planned for later this Thursday — we’ll let you know if any new twists emerge.

Here’s the letter from Apple’s law firm:

Amazon to Disclose (Request)

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An article out Wednesday from Data Center Knowledge envisions the next few steps for automating operations inside the data centers. Robots can move literally higher up the stack than humans and still be safe, which means data center builders can build vertically instead of horizontally. That could bring better use of data center floor space.

If robots do all the work on the floor, lights might become unnecessary, and poof: just like that, a line item can be nixed from the budget. Deploying robots could also lead to less downtime, as they could act with more certainty than people when it comes to replacing a server or another hardware component.

Using robots to grab equipment is “becoming quite feasible,” and Google does it to get backup storage tapes, according to the article. Most gear isn’t really made for machines to handle, though, so this area might be in need of tinkering before it can get widely adopted.

The article also makes mention of unmanned data centers, including one operated by AOL. Apple revealed plans last year to build one of these facilities in Prineville, Ore., before saying it would expand the site to add data centers where some people would work. As more companies move in that direction, prices will drop, leading to further market penetration.

Despite this, the article suggests that data centers will still need administrators, so not everyone working inside data centers will lose their jobs as this wave of automation carries through — for now.

Meanwhile, data center admins can also optimize their facilities by changing out hardware and software to match use cases. Pat Gelsinger, CEO of VMware, will talk about his vision for the software-defined data center, and Andrew Feldman, general manager and corporate vice president of AMD, will talk about how companies can do these things at GigaOM’s Structure Conference in San Francisco on June 19.

With these sorts of upgrades, while the initial capital expenditures might be high, they could bring operating expenses down for public, private and hybrid cloud providers, resulting in price drops for customers in time.

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But Cook, for his first time offering public testimony before Congress, acquitted himself quite well despite the scolding his company faced, which makes sense if you think about it: Sen. Levin is probably nowhere near as scary as Steve Jobs. Apple CFO Peter Oppenheimer and its head of tax operations Phil Bullock were tasked with explaining the details of Apple’s accounting, while Cook extolled Apple’s virtues, the jobs it creates and its values as an American company.

Apple normally gets to choose how it’s shown in the spotlight. So it was an unusually defensive position for the company and its chief executive, known for its preference for privacy, to be in and have the nitty gritty of its corporate accounting practices exposed for all to see.

But Cook did indeed choose to go to Washington. He probably could have sent a senior vice president, but he showed up to speak for his company. And in doing so, he continued to rewrite our expectations of an Apple CEO. While his predecessor met privately with public officials, Apple was not in the spotlight in years past the way it has been recently. As profits have soared and some of its corporate practices both abroad and at home have come to light, Cook has had to face increased public scrutiny in a way Apple didn’t see quite as much during Jobs’ tenure as CEO. (With the exception of the stock-options backdating controversy, though the penalties for that were minimal.)

In the same manner he smoothly handled outrage at the practices at Apple’s Chinese manufacturing partners and offered solutions, Cook used his particular experience at Apple to talk about taxes. As the company’s former operations officer, he ably explained pricing transfer and other complex accounting practices his company uses, and laid out suggestions for how to reform the U.S. tax code to encourage more companies like his to bring more of their foreign earnings home.

Grilling Apple

Two experts on tax law testified earlier in the morning how Apple allocates some income to a holding company and subsidiaries in Ireland that don’t file corporate tax returns in the U.S. or anywhere else. But as was oft-repeated, what Apple has been doing doesn’t break any U.S. laws. (Sen. Rand Paul twice decried Apple being “harangued and bullied” by the committee and repeatedly made the point that if Apple weren’t minimizing its tax burden, it would be irresponsible to its shareholders.)

Cook defused some of the more pointed insinuations made by the committee diplomatically, using the same brand of charm and salesmanship we see from him during keynote speeches at Apple events. “We pay all the taxes we owe, every single dollar,” Cook said during his testimony. “We comply with the laws but also the spirit of the laws.”

Many of the senators present Tuesday admitted to being big fans and users of Apple products. But the reason the company they all admire was being grilled wasn’t completely explained. It did appear Apple was being used as an example of common corporate accounting practices because it is the largest corporate tax payer in the U.S. — and, as Sen. Tom Carper noted, because of the current political climate surrounding the national deficit. Apple and many other U.S. companies have been operating in this manner for years, but in the shadow of the “sequester,” several members present acknowledged that Congress is looking for tax revenue that it’s not getting.

In the end, Apple’s presence seemed to serve as an intermediary for the senators to argue amongst themselves about how out-of-control the U.S. tax code is. The hearing itself seemed mostly a pointless exercise, as these hearings tend to be, with little promise of any real change. Apple will likely go home to Cupertino and keep doing what its doing, and Congress will continue to disagree over how to appropriately tax businesses.

Meanwhile, Cook gets to continue to raise his public profile as an elite American businessman and cement his company’s stature as critical to the American economy and the overall tech industry.

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Cook will call for a revenue-neutral reform of the corporate tax code that does away with all tax expenditures, lowers tax rates and establishes a “reasonable” tax on companies’ earnings from overseas. It’s not in the planned testimony, but in an interview last week, Cook made it clear that he does not believe that a tax rate of zero is a reasonable number. In his testimony before the U.S. Senate’s Subcommittee on Investigations, he will say that Apple supports this simplification of the tax code despite the likelihood that it will mean Apple’s overall corporate taxes will go up. The current corporate tax system “applies industrial era concepts to a digital economy” and “undermines U.S. competitiveness,” Apple believes.

Before Cook gets into his specific suggestions for fixing how U.S. businesses are taxed on foreign earnings, he’s going to spend most of his time going over why he’s being called to testify in the first place: Apple’s accounting methods. Apple keeps at least $100 billion in foreign earnings outside of the IRS’s grasp because it doesn’t wish to pay the 35 percent tax it would incur by bringing that money home. Many other businesses follow similar practices.

According to the published testimony, Cook will going into detail about how the company accounts for profits earned in the U.S., how investment in its foreign assets is taxed, how it shares R&D costs with an Irish subsidiary and more. (It’ll probably be a snoozefest for everyone except those who get a thrill out of spreadsheets.) Most of it is Cook on the defensive, explaining how what Apple does is within legal limits. Cook plans to assure the committee it’s not cheating on its taxes with any special tricks and “does not have a bank account in the Cayman Islands.”

He will underscore his point about Apple being on the up and up by laying out how much the company pays in taxes. Last year it paid $6 billion in taxes to the U.S. and this year, Cook has said it will pay $7 billion.

Tuesday’s testimony will be Cook’s first appearance before Congress. The company’s tax practices came to light a year ago when the New York Times highlighted some of the methods Apple has used to keep its overall taxes at a minimum.

Update 2:43 p.m. PT: Later on Monday the Senate released the results of its own investigation into the Apple’s tax-paying practices. It found that Apple’s convoluted system of subsidiaries has allowed it to avoid paying $44 billion in U.S. taxes over the last four years. However, it also noted that Apple did not break any U.S. law in doing so, according to a report in the Los Angeles Times. Expect many questions during Tuesday’s hearings about how the company uses its subsidiaries in Ireland to do this.

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Apple has started introducing trade-in offers that are particularly favorable to students. ZDNet reports:

Students who trade-in their old smartphones while upgrading to an iPhone will get 7,777 rupees (US$144). Non-students will be paid 7,000 rupees (US$130).

That’s in addition to an incentive for customers who use an American Express credit card to buy a new iPhone on a payment plan. Those customers will get 10 percent of their purchase back. Apple doesn’t have its own retail stores in India, but sells through a network of local, authorized retailers, many of whom only sell Apple products.

It’s a bit unusual for Apple to wheel and deal. But the iPhone maker has been tweaking its pricing strategy and incentive offerings in markets where smartphone ownership has only recently begun to take hold. Earlier this year, Apple introduced low and no-interest payment plans for iPhone buyers in India; similar to what it is offering in China. India is a country bearing huge potential — it is an example of what CEO Tim Cook means when he notes the potential of billions of people who have yet to own a smartphone. And as Om noted recently, there are 900 million mobile connections, and so far there are just 2.5 million iPhones in use.

As the iPhone matures especially in established markets, Apple is turning to fast-growing regions whose people are just now joining the smartphone revolution. It knows it can’t sell $600 smartphones to everyone. And so little by little we’re seeing Apple customize its approach to different markets, including selling older model iPhones through carriers, allowing brand-conscious young people to pay for the cachet of the iPhone brand in installments, or reaching customers through deals with local institutions.

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