The company dropped the Google-powered maps that had come pre-installed on every iPhone since 2007. In its place, Apple introduced its own mapping app. Apple Maps looked stunning, with 3-D graphics and neat features like Flyover and turn-by-turn directions. All it was missing was transit directions and accuracy -- the maps were riddled with mistaken locations and outdated information.
The resulting criticism inspired an apology from CEO Tim Cook and led to an executive shakeup at Apple. Customers turned to third-party map apps until Google finally released an iOS version of its popular maps in December.
Apple vs. Samsung
It was the biggest tech trial of the year. Two of the top phone and tablet manufacturers went to war when Apple accused Samsung of infringing on its iPad and iPhone patents for a variety of tablets and smartphones. The drama culminated in a federal jury trial over the summer that offered a rare peek into how notoriously secretive Apple operates.
The story became huge because of the large amount of money at stake and the implications that its verdict would have on Samsung's business and the Android platform.
The jury decided in Apple's favor, awarding the company just over $1 billion in damages. But the case is far from over. Lawyers for both sides will continue bickering over potential appeals for months and possibly years to come.
Facebook's botched IPO
It was the most anticipated IPO of the year, and one of the largest ever for a tech company. Social-media darling Facebook looked primed for a big public opening: The company was valued at $104 billion, snapped up popular photo-sharing app Instagram and was still growing.
But then an array of problems and misjudgments led to a botched IPO in May, and the company's stock plummeted. The initial offer price of $38 was too high, too many shares were issued, its opening day was marred by Nasdaq's technical glitches, and underwriter Morgan Stanley was fined for improperly influencing share sales.
The stock price dropped significantly, hitting a low of $17.55 on September 4. Facebook is still struggling to recover some of its early-2012 luster.
The Instagram boom
Instagram started out scrappy two years ago as a fun little app for sharing sepia-shaded photos with friends. But when its user base skyrocketed, Facebook bought it for $1 billion in cash and shares of Facebook stock. That amount later dropped to $735 million as the value of Facebook shares plummeted.
By September, Instagram had more than 100 million users. The app capped off its big year with a rite of passage for social networks: a bungled update to its terms of service that sparked user outrage and led to a hasty backtrack by founder Kevin Systrom.
Instagram's challenge for 2013 is to figure out how to grow its free service into a business that makes money so that Facebook can begin to get its money's worth.
Megaupload and Kim Dotcom
The Megaupload case would have been mildly interesting on its own. A popular file-sharing company and its various sites were shut down by the F.B.I for piracy. But when Megaupload founder Kim Dotcom was arrested in January at his lavish New Zealand estate, he went from unknown entrepreneur to a flamboyantly rich cult hero.
Dotcom (he legally changed his last name from Schmitz in 2005) did what any self-respecting boy video-game nerd would do with millions of dollars. He bought a yacht, helicopter, luxury cars and motorcycles. He lived with his model wife in a $24 million rented mansion in New Zealand where he spent hours playing "Call of Duty: Modern Warfare 3," earning a spot as the top-ranked player in the world.
But after Dotcom was jailed and his assets were seized, he slowly emerged as a leader for Internet freedom activists who thought he was unfairly targeted. He's still fighting the charges and using his newfound fame to launch new projects. His current plans include a new file-sharing site that encrypts all its files, and a streaming music service called Megabox.
Mid-sized tablets take off
It was the rare case of Apple following a trend instead of setting it. Apple introduced its 7.9-inch iPad Mini in October to take on its new rivals in the tablet market: cheaper 7-inch devices from Google and Amazon. While the Kindle Fire and Nexus 7 were only selling modestly compared to the iPad, Apple quickly recognized the growing demand for a smaller, more portable device.