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 rsassower@gmail.com See previous
articles at sassower.blogspot.com
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