Beware of the Apple, It’s Poisonous
As the latest debate over Apple’s stance on privacy and its refusal to help federal investigators access the iPhone of the San Bernardino attackers, we should recall an earlier stance that seemed principled at the time, but was not.
For those who may have forgotten, Apple appealed a 2014 settlement that found it guilty of antitrust violation in relation to e-books. The settlement amount was $450 million. Its appeal to the Supreme Court was just denied, so the original settlement is binding.
In that case, Apple’s CEO, Tim Cook, made a passionate argument on behalf of “free enterprise” and the right of Apple to conspire with publishers to artificially inflate the price of e-books. At the time, Amazon.com, which had its own disputes with publishers, was setting the benchmark price for e-books.
Apple may argue about its monopoly-like right to set prices in the marketplace as much as it wants; it even can try to present itself as a martyr for free enterprise; but the truth is that it was hurting consumers to enrich itself, called profiteering.
One wonders if today’s debate about privacy isn’t a similar case where the veneer of an ideal ends up being just that, a veneer. The real point is a marketing ploy to convince present and future customers of its protective corporate culture. Fighting “the government,” as many presidential candidates are finding out, is quite popular!
Apple’s hypocrisy need not be measured exclusively by the yardstick of its entanglements with the government, as these two cases illustrate. Instead, it seems that Apple is unabashedly pursuing maximal profits, pure and simple.
To begin with, let’s examine what has set Apple on its path to American iconography. It is outrageously successful, valued at more than $750 billion (biggest in the world), profits of over $53 billion (October 2015), and over $180 billion in cash. Its legendary leader, Steve Jobs, has been lionized as a design guru and creative genius (despite some less than flattering books and documentaries).
Apple came out of IBM’s and Microsoft’s shadows to capture our imagination and pocketbooks; we are so enamored by its products that we stand in line for hours to pay premium prices for the latest revision of its latest gadgets. But there is something dark about Apple, so dark that good publicity, as the one now enjoyed by Apple, is needed to distract our attention from its fundamentals.
First, Apple produces its gadgets overseas, primarily by Foxconn in China. This outsourcing has become ubiquitous, but it sheds light on the awful working conditions of Apple’s sub-contractors’ employees (nets have been set in workers’ dorms so they won’t jump to their death). As president Obama beseeched Steve Jobs to bring jobs back to America during the Great Recession, Jobs scoffed at him and said it’ll never happen.
Second, as Mariana Mazzucato argues in her The Entrepreneurial State (2011), Apple has licensed most if not all of its patents and intellectual property from government sources. Apple doesn’t “invent” as many new technologies or processes as one might believe, but uses others’ inventions for its own designs. It’s R&D budget in 2015 came close to $8 billion, pittance as percentage of its sales of $234 billion (just over 3%). By comparison, Microsoft spent over $12 billion on R&D out of $93 billion in sales (close to 13%).
Third, there are some who are wondering about Apple’s legal behavior both domestically and globally, as it continues to be embroiled in patent disputes with its rivals (Samsung), overseas antitrust allegations, and class-action suits at home. Some have speculated that Apple spends more money on legal fees and fines annually than on R&D. If true, how “entrepreneurial” is it?
Fourth, if you have missed it, Apple has been under scrutiny for its tax-evasion tactics, most of which are perfectly legal, yet fly in the face of it being a good corporate citizen. It’s not that Apple doesn’t pay taxes at all, as it does ($8 billion as Cook told Charlie Rose on “60 Minutes”). Yet, between channeling some sales through offshore distribution networks and keeping over $180 billion in offshore accounts it avoids paying much more. Shouldn’t it contribute to the infrastructure that guarantees its sales?
As we piece the narrative about Apple’s corporate behavior, what may seem a principled stand against government intrusion into citizens’ privacy turns out to be a smokescreen. Is there really no technological way to accommodate federal investigators? We see instead a legal machine with exuberant profits enjoying the American framework of markets without contributing its fare share to ensure its operation. Just like those who came for dinner and never quite contributed their fair share. Perhaps legal, but is it right?
Raphael Sassower is professor and chair of philosophy at UCCS. He can be reached at email@example.com See previous articles at sassower.blogspot.com