Because that is what Tim Cook Apple's marketing and PR suggest Apple does. The force of good. Social Responsibility and Justice. Standing up against the government. ( They didn't explicitly say this but the message is something fairly similar )
Instead of creating "insanely" great product for our customers, friends and family. It is now about product that "enrich" people's lives.
Like you said, Apple has to act on its own interest. Most of these wouldn't be problem for many had Apple not paint itself as so righteous.
Do corporations have so much better a record of living up to feel-good marketing & PR, that a experienced and competent adult would actually take them at their word?
Just like you and me, then, and the rest of humanity. But we also have good in us, don't we?
People should note that just because someone is aiming for an ethical ideal doesn’t mean that the way there is bound to be perfect—those who are quick to point out other people’s hypocrisies always rest on this fallacy. Apple isn’t perfect, but it seems to be the only big tech company making great strides towards being zero-carbon and pushing for user privacy in democratic countries, and when they were called out about parts of their supply chain using oppressed Uighur Muslim labor, they corrected it.
- pointed out China is confusing its politics with business
- thrown this out to a shareholder vote
- tried to see what customers outside of China thought
- threatened to pull all manufacturing out of China
- required China concede control elsewhere: Apple can operate in China without CP mucking around and could own 51% of more of everything it runs
Goodness gracious serious companies understand there's more going on in international business that top-line numbers.
1) 'Pointing out to China it's confusing politics with business' implies a total misunderstanding of their posture, their view of governance, and would probably be antagonistically insulting. It also assumes they are operating in 'good faith', which they are not.
'Politics is Business' to them, they know exactly what they are doing and they have most of the leverage so you risk only ire with that tact.
2) 'Thrown this to a shareholder vote' - so this is definitely not the type of things shareholders vote on, nor do they want to, moreover, the 'transparency' and news cycle this would create would be damaging. This is a 'secret agreement' for a good reason. Shareholders do not care about censorship, they generally just want to see performance.
3) What customers outside of China think is completely irrelevant to China.
4) Threatened to pull all manufacturing out. You definitely do not want to threaten your largest market with anything, but yes, you could hint that it might be best elsewhere. That said, it's a magnanimous threat for something relatively small.
5) There is absolutely no way the CCP is going to 'concede' on any of their red line issues. They are dictating the terms of leverage and oversight to Apple and everyone else. Apple has very little room to manoeuvre here.
The only choice cook had was to play friendly on a personal level, kiss ass, make sure that they felt Apple's interest were aligned with China, and to promise to do a bunch of things they were asking, and then hope they go away.
The issue with China's hyper nationalist economic strategy has to be dealt with at a higher level, i.e. US and European political leaders and industry leaders working together on one page.
You write like China has a lock on this ... like it's the perfect lobby. There's only one perfect lobby: and that's the NRA in Doonesbury cartoons.
> Goodness gracious serious companies understand there's more going on
That's what you get when your management is exclusively MBAs that never set foot outside of their bubbles and STEM-graduates that are naive in history/geopolitics/economy, etc
Directors must use their powers in “the best interests of the company.” but "business judgment rule gives directors nearly absolute protection from judicial second-guessing about how to best serve the company and its shareholders."
There should be laws that US companies can only cowtoe to the US government WRT free speech.
In this case - it appears to only be happening in China - which I guess is fair game.
But the line should be drawn at China being able to use its market to force US companies to censor people outside of China.
I'd say that depends on whether the subsidiary in China is financially independent from the mothership. If Apple in US profits from censorship in China or subsidizes it, it's not unreasonable for US to interfere with that.
I guess with tech companies - "operate in" is a little unclear. Someone in China can visit your website (assuming it's not blocked by TGF) - and it might be very difficult for you to know (they could be using some Proxy or VPN).
In Apple's case - they literally have stores selling phones in China. AFAIK, that's how most people get their iPhones in China.
In the US - you have to pass all kind of FTC obstacles to sell a device. In China & other countries - it's the same way.
It seems like an overstep for the US to say - "We get to say what devices are available in every country." It also seems like an overstep for the US to say China can't have a Great Firewall and Censorship even if that's extremely "un-American". Us having free speech is extremely "un-CCP" - but for the time being - we've still got it [=
More abstractly, corporations are artificial legal entities that are created by governments in the first place. So why can't governments restrict what those artificial entities can and cannot do?
China could give a s*t what American laws are.
They are pressuring Apple to take some actions, if Apple doesn't want to take those actions, for whatever reason including 'American law forbids them' - then they're out of the market.
Those are the terms presented to them, and the CCP is not bluffing.
As far as 'censoring people outside China' that is actually a line that Apple can probably actually hold.
If that starts happening - American companies need to be FORCED to exit the Chinese market and keep free speech. Otherwise, it's a simple P&L calculation - and China will win. Apple is not going to lose 20% of their global sales because they block some Wikipedia articles about Tiananmen Square. But if China cuts off their sales because they won't - they would lose 20% of their sales. If we allow companies to go down this path - the entire world will end up censored pretty quickly.
Just as China does not care about American law - US companies don't give a shit about human rights. They just give a shit about P&L.
So again, that 'feels right' - but this is not a 'moral' issue, it's a 'power' issue.
That it's 'unreasonable' that China should be able to censor outside of it's borders is kind of besides the point.
What matters is the materiality of their power.
In China, they can basically dictate terms and that's it.
China could feasibly threaten to block Apple in China unless some 'foreign censorship' is done on their behalf, the reason US companies should not concede, is because they don't have to.
For a couple of small things, they might get away with it but on the whole, it's something Apple can push back on ... because they can, not because they have some kind of moral high ground.
The social/moral posturing will be used as part of negotiation, but it's just superficial dressing on the underlying power.
US, Can, Aus, Europe need to get on the same page with respect to China.
I feel deja vu from the beginning of WWII - Germany growing and gaining power and becoming more aggressive while nearby countries (and further-away ones - US+CA+AU) are ignoring the threat, or trying to pacify them with small concessions and sacrifices...
Completely agree.
This is why it's important for the public in stronger democracies to know about these deals and terms.
Compare the NBA reaction to Daryl Morey tweet about HK protests, and the WTA reaction to Peng Shui situation. Tides are shifting.
But, the appeal of such a large consumerist market (funny, since it's supposedly "communist") like China is not going to become any easier to ignore going forward.
The weird thing about your viewpoint is that it gives the perception of capitalism without actually understanding anything about how businesses function. It is like the pro-capitalist government employee's understanding of capitalism. It accepts capitalism but also accepts that capitalism is evil...it is a very weird viewpoint (you also see this in the ESG departments of large fund managers...people who hate capitalism, view it as inherently unfair...but work at a fund manager, it is very 2020s).
But to spell it out: if you do not respect stakeholders other than shareholders, your business will die because no-one needs you. Your shareholders needing you is not why a business exists. A business exists because it creates value for other people. One of the biggest problems today is that corporate leaders do not understand this, and they end up losing shareholders massive amounts of money. But it is important to be very clear: Tim Cook is a wage worker, executives are wage workers, they are not business owners, they do not act like business owners, their aim is not to maximise shareholder value, their aim is to maximise their wealth. If there is ownership, it is a dual share class dictatorship, it isn't an alignment of interests.
The big problem with China is that, whether you sign deals with the govt or not, the govt needs to have direct control over businesses in order to maintain political control. We are talking about a country where large businesses have CCP officials inside the business, the red phone to the CCP in the CEO's office...business is politics, AAPL doing this deal means they are part of the CCP. The CCP don't care about your shareholders, they don't care about your employees or customers, their aim is to stay in govt and die at an old age in their bed, not violently hanging from a lamppost. That is why the govt heavily favours large businesses, that is why they have done deals with large US tech companies (MSFT is the other one, MSFT are neck deep in Chinese politics now) but it won't work.
I actually know people who are very familiar with the thinking on this at AAPL. They do not understand Chinese politics at all. They think China is just a better version of the US, more meritocratic (seriously), less political instability (again, seriously), and more accommodating to special interests (...seriously). I think the assumption people make is: AAPL understand what is going on...they do not, the reason they are doing things like this is because they don't understand (AAPL is one of the worst for this kind of thing, their executives are extremely aggressive in everything they do, they take home far more than they are worth, and they understand almost nothing outside of their business...if you look at GOOGL or AMZN, it is quite different).
https://nypost.com/2021/08/26/apples-tim-cook-gets-750m-payo...
He is purely out for his own wealth. He is one of the most absurdly overpaid execs in the US. How anyone can become a billionaire as an employee is utterly beyond me. Taking no risk, getting all the reward.
You are thinking of all employees as fungible replaceable units, but employees are capitalistic units that can get monopoly power or economic rents.
An employee can provide a function that can’t be replaced, and that employee can capture a lot of the business profits, well beyond their actual “value” to the business. For example, Tim Cook’s personal relationship with Chinese officials might be very hard to replace.
Alternatively there is a kind of blackmail value, where losing a prominent employee can have high costs to the business, and the employee can get paid more than they are “worth” due to that. For example, perhaps Tim Cook leaving would cause more than a few billion damage in profits or valuation due to perceptions.
Again, it is important to realise too...there are probably no other CEOs that have made as much as Tim Cook. Even amongst execs, he is wildly wildly wildly overpaid. Corporate governance at AAPL is basically non-existent.
The obvious relevant example of replacing a CEO with a ham sandwich is John Sculley, which the organisation probably still has some fear about. The other relevant example is Paul Allen, a lost decade for Microsoft.
As a publicly-traded, trillion dollar company, where profits are at stake, this would seem to make sense.
What does not seem to make sense is why anyone would believe Apple might ignore its own financial interests and those of its shareholders and deliberately sacrifice a major opportunity^1 in order to resist government pressure based on some political issue. Why would anyone hold such an assumption. There is nothing to support it^2 and it does not seem to make any sense.
1. That includes the opportunity for Chinese customers to purchase the Apple Watch, albeit with a disproportional size representation of some geographical aspect in the Maps application
2. NB. If resisting government pressure resulted in an increase or no change in profits then that is a different situation. In that case, resisting, or even appearing to resist governmental pressure, would seem to make sense.
To put it another way, no one should be surprised by decisions like this one, whereas some of us should be surprised if we ever learn that a publicly-traded company with the market cap of Apple deliberately sacrificed an opportunity like selling to the Chinese market^3 because of a political issue. It is doubtful we would ever learn about such a decision, for various reasons.
3. Or using Chinese manufacturing facilities
"But the Maps app had become a priority for Apple..."
Apple acts in its own interests. It seems strange that anyone would believe that it acts in someone else's. Unless it increases profits, that would not make any sense.
Generally, large companies do not protect citizens from abuses of government. It is supposed to the the other way around. Governments are supposed to protect citizens from abuses of large corporations.