Reaction Papers

22 APPLE

Toby Miller and Richard Maxwell1

The Company designs, manufactures, and markets mobile communication and media devices, personal computers, and portable digital music players, and sells a variety of related software, services, accessories, networking solutions, and third-party digital content and applications.

Apple’s Annual Report 20142

“Can anyone tell me what MobileMe is supposed to do?” Having received a satisfactory answer, [Steve Jobs] continued, “So why the fuck doesn’t it do that?”

For the next half-hour Jobs berated the group. “You’ve tarnished Apple’s reputation,” he told them. “You should hate each other for having let each other down.”3

Apple’s attitude is, “You have the privilege of working for the company that’s making the fucking coolest products in the world,” says one former product management executive. “Shut up and do your job, and you might get to stay.”

Andrew Borovsky, former Apple engineer4

This chapter outlines Apple Inc.’s past and present as a designer, manufacturer, promoter, and supplier of digital technology. We present this profile within a broad political economic view of the brand and its operations around the world. Our story mixes details of interest to industry studies with a structural analysis of power that is central to political-economic approaches.

Let’s start with a telling paradox: Apple sells gifts that keep on taking. Not only do their devices and services epitomize built-in obsolescence covered in designer beauty, but this company, like all market leaders of digital capitalism, is a precision instrument of consumer surveillance, a powerful merchant of needless upgrades, and a major exploiter of a global commodity chain with built-in mark-ups that pay the actual makers of their i-Things the equivalent of 0.5% of the retail price— that’s about three U.S. dollars in total labor costs for every $600 phone.5

Of course, Apple’s leadership sees this relation from a distinctly privileged point of view. Tim Cook, head of the firm since 2011, decreed, “we are in business to empower and enrich our customers’ lives.”6 And indeed, Apple’s improbable blend of the awesome and the aesthetic, the sublime and the beautiful, has made its commodities wildly successful over the past decade and a

half. The brand has transmogrified from appealing to geeks and artists to its current cozy location at the core of middlebrow wannabe hipness.

Built-in obsolescence is central to regularizing and governing that appeal. iPod batteries are made to last a year, iPhones can be recharged a finite number of times, and most established i- Thing sleeves and holders do not fit new versions because the company policy mandated for and implemented by Apple designers requires that customers keep buying replacement technology. It’s a business strategy with an ignoble pedigree of half-baked designs that exploit both consumers’ acquisitive individualism and the company’s lack of legal responsibility for its toxin-filled devices at the end of their lives.7

Time Line of Development: An Industry-Studies Perspective

Apple Inc. was founded on April Fool’s Day, 1976 by Stephen Wozniak, Steve Jobs, and Ronald Wayne. The company started producing computers the next year, although Wayne sold his shares and left the partnership.8 The duo’s second computer, the 1977 Apple II, was the first mass-market success among computers, in part because Apple sold the hardware as a complete kit rather than as individual items that required assembly by customers. Apple’s great pioneering software effort was the graphic-interface software of the Macintosh, released in 1984. Both these innovations actually derived from research done at Xerox Park, whose parent company never decided to exploit them, which Apple did after securing a prototype. Then it introduced the first affordable laser printer.9

As a consequence of these successes, Apple shifted from being a backyard-inventor’s world in the 1970s, so beloved of Silicon Valley and Alley fantasists and their mythology, to a publicly traded company in the 1980s. By the mid-1980s, desktop publishing had taken off, but so had low-cost personal computers (PCs) running on Intel chips and Microsoft Windows operating systems (so-called Wintel computers). Like many small companies seeking to grow, Apple enlisted corporate managers to counter this tendency and went onto the capital market to attract investment. The resultant board soon replaced Jobs, because of his unpleasantness and youth, with a Pepsi executive, who then forced Jobs out of the company. Jobs departed and failed in his own computing venture, NeXT. Wozniak had already gone, citing a lack of interest in managerial roles and the desire to be an engineer.10

The 1990s saw Apple’s luster dim as it lost market share to Wintel PCs and produced some notable failures (when the Apple discovered Newton, so to speak).11 Apple stumbled and was offered to both AT&T and IBM, who passed on the opportunity. Then the floundering firm bought Jobs’ NeXT software system and reinstalled him as an advisor in 1997, which allowed him to orchestrate his way back as interim CEO of the company he had started. Jobs quickly fired three thousand people and ended the firm’s philanthropic activities, which remained dormant until his death. These saintly moves transformed the company from losses to profits.12

With Jobs again dominant by the late 1990s, the company revived its love affair with designers, artists, editors, and publishers. By the early 2000s, Apple emerged as a mainstream electronics brand with its iPod music players and iTunes virtual music store. In the last 10 years, the company has secured its lead as a designer brand selling a range of electronic products and services—from music players to networked terminals of various sizes (phones, tablets, watches, and if rumors play out, TVs and cars), with plans to expand its supply of luxury goods and cheap streaming content. Today, the company is a giant among giants, worth more than any of the corporations examined in this volume—its capitalization puts it in the same position as IBM 30 years ago, at double the size of Exxon (IBM is also Apple’s current partner in a corporate application sales venture).13

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Political and Economic Contexts: A Power-Structure Perspective

Apple’s success is often attributed to the genius of Jobs—a common narrative device of the “great man” that repeats remorselessly in conventional histories about Silicon Valley and other centers of digital capitalism. But focusing solely on what happens when intelligent, creative people find themselves in the right place at the right time doesn’t explain the broader context in which Apple and other U.S.-based high-technology firms emerged. For that, we need to understand three interrelated political-economic contexts—conditions of possibility for Apple’s corporate power and mastery of consumer-electronics markets.

First, there is the context of strategic U.S. governmental investments in research and development (R&D). These investments began during World War II and grew quickly in the post-war period. Companies like Apple emerged from a nexus of capital devoted to electronic engineering and computer programming, which in turn flowed from federally funded initiatives in military-industrial-academic R&D. The geographical cluster of these initiatives around Stanford University saw advances in semi-conductor manufacturing, computers, electronics, wireless and wired telecommunications, digitization, local area networks, the Internet, and other innovations that derived from weaponry, command-and-control infrastructures, and enterprise systems.14

The Homebrew Computer Club, where Wozniak was inspired to build the first Apple computer, may have been a respite for counter-cultural types who were interested in non-military- industrial computer forms. But its members were also and equally beneficiaries of strategic state investment in Silicon Valley know-how aimed at electronic engineers and computer programmers, even if most of them were seeking to profit from that knowledge rather than operate in the public interest.

The second political-economic context concerns the company’s expanding supply chain and the movement of capital in search of ever-cheaper labor costs. When Apple first started, it built its products locally in California, but by the early 1980s it had also established plants in Texas, Ireland, and Singapore. It expanded to Colorado in 1991, but five years later, that factory was taken over by a contract manufacturer. Apple next moved most of its circuit-board production to Singapore (where it sold its plant a year later). By the end of the 1990s, not only had the company divested most of its own manufacturing plants, but domestic subcontracting had declined too, as offshore manufacturers began to take over electronics production (known today as electronics manufacturing services, or EMS).15

Third, the move to sub-contract production to offshore EMS, in particular East Asian manufacturing and assembly operations, was facilitated within a political-economic context of global trade and policy established after WWII. Production sites outside the U.S. were only viable because of East Asia’s statist policies of export-oriented industrialization (EOI), which bolstered production capacities in post-war Japan, Korea, Taiwan, Singapore, and Hong Kong by the 1970s, buttressed by U.S. government support for anti-socialist regimes in the region. This created a cohesive regional supply chain whose economies of scale Apple and other brands drew on to produce its devices at low cost, following a trend started by IBM and others in the 1960s when they began subcontracting production to Taiwan. As we discuss below, Apple now relies almost entirely on manufacturing undertaken in Chinese factories run by Taiwanese companies (Foxconn and Pegatron).16

These EOI strategies were important features of a New International Division of Labor (NIDL) that was forming in the 1970s and 1980s.17 The World Bank was already a big supporter of EOI and export-processing zones when a U.S.-led devaluation of the dollar relative to the yen, via the 1985 Plaza Accord, pushed Japanese capitalists to invest in East Asia. This further bolstered production capacities and deepened a reliance on productivity growth through low-wage labor. By the start of the new century, “China masters the model” by imposing low-wage EOI upon

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a vast reserve army of labor to become the factory of the world.18 Ever since, Apple’s fortunes have been intimately linked to China’s role in the East Asian commodity chain.

Political Profile: The Beneficiaries and the Power They Wield

Exploitation of the political-economic arrangements discussed above has benefited a small group of wealthy owners and a wide swath of shareholders and consumers. Apple conducts ongoing lobbying and exercises political pressure in order to protect its lucrative operations and market position.

Ownership

Apple is a publicly traded company, owned in part by over 26,000 shareholders.19 Its major institutional owners include The Vanguard Group, State Street, BlackRock Institutional Trust, Bank of New York, Northern Trust, BlackRock Fund, JP Morgan Chase, Invesco, and Wellington Management, while the big mutual funds represented are Vanguard in various iterations and TIAA- CREF. The more minor principal individual stockholders are Arthur D. Levinson, CEO Tim Cook, Federighi Craig, Angela J. Ahrendts, and Al Gore.20 Carl Icahn, a renowned quasi- institutional investor who likes to limit managerial autonomy, has increased his holdings and seeks a buyback of shares.21 Buybacks are attempts by firms to purchase shares and reduce those on the market to increase their value or ward off unfriendly takeover bids. Still, Icahn and his group foresee nothing but clear skies for Apple.22

Corporate Board Members and Links to Other Organizations

The board of directors that has responsibility for Apple stockholders’ interests has a typical profile, as Table 22.1 demonstrates.23 It is comprised of masters of politics, fund investment, and entertain - ment who form an elite set of interlocking directorships.

Ties to the State and Lobbying

For a company rhetorically dedicated to the banalities of laissez-faire ideology, Apple remains solidly committed to corporate welfare. The policy center Good Jobs First estimates that Apple was the beneficiary of $446,485,233 in state and local government funding between 2009 and 2015. The largest subsidies came from North Carolina ($336,485,233), Nevada ($89 million), and Texas ($21 million). Such subvention covers a multitude of handouts: grants, low-cost loans, and tax rebates and credits.24

Apple’s indulgence in government largesse seems to have run afoul of regulators in the European Union (EU). Apple has European headquarters in Knocknaheeny, a suburb of Cork in Ireland. Joaquín Almunia, an EU Vice-President and its former Commissioner of Competition, has accused Apple of cleansing profits in Ireland by avoiding taxation that would be due in EU countries where its manufacturing, sales, and stockholders reside. The company is allegedly doing this via a massive state subsidy, which a Competition Commission report suggests involves the illegal payment of millions from Irish taxpayers to bloat Apple’s already wondrous profits.25 And in 2014, Apple was fined $450 million for colluding with publishers to increase electronic book prices. Plus corporate plans to dominate music by adding a streaming service to iTunes drew the ire of the European Commission, but a putative conspiracy with record labels to undermine free services, such as Spotify, could not be proven.26

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Labor Relations: Employment Practices, Exploitation, and Spin

One of the hallmarks of political-economic analysis is its focus on labor, working conditions, and employment practices. In the context of Apple Inc., the reality of the NIDL must be juxtaposed to the political power structure outlined above to broaden our understanding of the corporation’s organization and culture. This section takes us around the world to all parts of the supply chain that researchers, activists, labor rights advocates, and others have been able to examine. There are still hidden areas, many of which are obscured by the company’s practices and influence with regulators.27

Let’s start in the U.S. Like all major U.S. corporations, Apple has long run an implicit personnel program of affirmative action for straight white men. Recognizing this industry-wide problem, the Congressional Black Caucus announced a TECH2020 initiative to encourage Silicon Valley to hire African-Americans.28 As we shall see below, Apple now seeks to emboss its image as a responsible firm that encourages minorities and women. But as of 2014, 70% of Apple employees were men. And while it is the most racially diverse of the major U.S. technology firms, over 60% of the firm’s senior managers are white, and most of the rest Asian.29

Needless to say, workers in the world periphery who actually make Apple devices do not even appear in these numbers—the technologies all seem to come from geniuses in California, rather than subcontracted employees in the Global South.30 No wonder this world leader in clandestine exploitation is described by Fortune magazine as “America’s most successful—and most secretive— company.”31 It petitioned the U.S. Federal Communications Commission to hide governmental review of the iPad, which would have disclosed to the public the way that it exploits multinational labor (see Apple’s letter to the Commission’s inquiry BCG-E2381A). Apple’s absurd desire for

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TABLE 22.1 Corporate Board Members and Links to Other Organizations

Arthur D. Levinson, Ph. D., Chairman of the Board, Apple; Former Chairman and CEO Genentech; Founder and Chief Executive Officer of Calico LLC (a biotech firm owned by Google); is connected to 19 board members in 3 organizations across seven industries.

Timothy D. Cook, CEO Apple; Independent Director at Nike, Inc.; is connected to 20 board members in 2 organizations across two industries.

Albert Gore Jr., Former Vice President of the United States; Director of Kleiner Perkins Caufield & Byers; Chairman of Generation Investment Management LLP; Senior Advisor to Google, Inc.; Chairman of the Board at Frito-Lay, Inc.; is connected to 58 board members in 10 different organizations across 9 industries.

Robert A. Iger, Chairman and CEO The Walt Disney Company; Former Board Member of the U.S.- China Business Council; Director of Hulu Japan LLC; Member of the Partnership for a New American Economy; Member of U.S. President’s Export Council; Director of ABC, Inc. and Infoseek Corp; is connected to 253 board members in 6 different organizations across 12 industries.

Andrea Jung, President and CEO Grameen America, Inc.; former CEO of Avon Products Inc.; Independent Director at General Electric; is connected to 204 board members in 5 organizations across 8 industries.

Ronald D. Sugar, Ph. D., Director at Chevron and Former Chairman and CEO Northrop Grumman; connected to 62 board members in 7 organizations across 8 industries.

Susan L. Wagner, Co-founder and Director BlackRock; Independent Director at Swiss Re*; is connected to 58 board members in 6 organizations across 7 industries.

* “Swiss Re” is the popular name for the Swiss Reinsurance Company, Ltd., which is one of the largest companies in the world and has been operating for more than 150 years. More information can be found at www.swissre.com.

Source: “Apple Inc.,” Bloomberg Business, April 17, 2015

security and secrecy is reflected in its insistence that its forthcoming spaceship campus in northern California, designed by Norman Foster, be built exclusively by workers without criminal records, mandating background checks basically unheard of in the contemporary era.32 This first-world precaution might be over-reaching, but it fits weirdly as a piece with Jobs’ delusional comparison of luxury resorts to conditions in the overseas factories where Apple products are made.33 Current CEO Tim Cook reassures consumers of the company’s avowed principles by claiming, “We strive to do business in a way that is just and fair.”34 That noble precept hasn’t seen the company withdraw from business in states dedicated to misogyny, racism, and heterosexism, such as Saudi Arabia and China.35

The reality in factories is that there are not only worker suicides, which have gained massive publicity over the past five years, but real class struggle that has led to reprisals, threats, and violence on the part of factory bosses.36 Undercover investigations of working conditions at Apple partners are harrowing.37 The stories do not seem to read the same way in Cupertino, Apple’s grand California headquarters, as they do in the outside world. Cupertino has seemed more exercised by the fact that workers have sought higher pay at Foxconn, so it is moving rapidly towards Pegatron. China Labor Watch reports that the average working week is over 60 hours, and more than half the employees work over 90 hours of overtime each month, while even Apple’s pet, the Fair Labor Association, uncovered illegal exploitation.38

Interestingly, shareholder equity in Apple has grown steadily while it has sought to improve its reputation as an exploiter of labor, and net income increased sixfold in the period from 2007, when it started auditing suppliers’ factories. In fact, income has more than quadrupled since 2009, when the firm said it goaded suppliers to shield workers from exposure to dangerous chemicals. And revenues nearly doubled when it augmented supplier audits after the Foxconn suicides.39

Until 2009, the company had no plans to protect iPod production workers (who work in at least four different countries) from mercury, lead, and flame-retardants.40 Since then, Apple’s supplier audits have been notoriously thin on facts about violations, including the n-hexane poisonings of 137 workers at the factories of Lian Jian Technology Group, a supplier of iPhone touch-screens. n-hexane poisoning damages the peripheral nervous system. It is extremely painful and leads to numb limbs, chronic weakness, fatigue, and hypersensitivity to heat and cold.41 Workers at Lian Jian wrote a letter to Jobs, asking “When you look down at the Apple phone you are using in your hand and you swipe it with your finger is it possible that you can feel as if it is no longer a beautiful screen to show off, but the life and the blood of us employees and victims?” He never responded.42 Workers were also poisoned while degreasing the Apple logo with n-hexane at the Yuhan Lab Technology Company and the Yun Heng Hardware & Electrical factory. These subcontractors are among dozens of “suspected Apple suppliers” poisoning workers and polluting communities in China, according to the Beijing-based Institute of Public and Environmental Affairs.43

Finally, there are financial rules guiding relationships between brands like Apple and the EMS in China and other parts of the NIDL where assembly and manufacturing take place. These parameters ensure mark-ups of 30% by the brands on top of the EMS selling price. This covers “costs of development, shipping, distribution, marketing”. A further mark-up of 30% gives brand owners a profit margin. Additional costs are added for the retailer’s cut, taxes and tariffs, and Internet provider contracts. We noted earlier that the direct labor costs for devices Apple sells amount to about 0.5% of the final retail price. This starts off as about 2% of the EMS selling price for the finished good, 95% of which “is determined by material content,” and the rest is the EMS profit, about 3%.44

The EMS can improve their margin through various means—working with suppliers to purchase materials at a price lower than the brand corporation determined in their original cost estimate;

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delaying payment to suppliers until after they get paid by the brand company; and by “ramping up” production to meet deadlines and design changes.45 The latter strategy is a form of labor exploitation that has come to characterize the production of iThings and other brands, where the tempo of work—and output—can reach an unbearable frenzy without adding significantly to labor costs. Anthony Harris, author of the study we are citing here, says “fast ramp-ups are critical to the financial success of Brand Names [who] expect total EMS commitment to ramp up production at almost any cost.”46 Harris adds:

Claims of astonishment, flapping of Brand Name corporate wings and stamping of feet at revelations of overtime, abuse and mistreatment of workers can only be explained as an extension of politically correct public media behavior that has become morally distasteful to a growing number of industry observers in recent years.47

Economic Profile

The political and economic conditions enumerated above have made Apple Inc. the wealthiest corporation in the U.S. The firm’s estimated value of $1 trillion exceeds the gross domestic product of Indonesia, which has the fourth-largest population in the world.48 It reported net sales of $11.9 billion in 2014, up 7% on the previous year.49

Financial Data and Market Share

Apple relies on the entire globe for revenue. In 2014, the Americas accounted for 36% of sales, Europe 22%, Greater China 16%, Japan 8%, and the remainder of the Asia-Pacific region 6%.50

Apple’s smartphones, which bring in most of its money, made up 15.4% of the global market in 2014.51 Revenue is increasing rapidly in China, to the point where the company has a third of the market52 as East Asia’s reserve army of labor is being supplemented by an emergent middle class that is providing a reserve army of consumption.

Although Apple’s share of the total PC market is around 7%, it is the third largest vendor of PCs in the U.S., where its 11–13% of the domestic market in 2014 represented a 9% increase over the previous year.53 And its tablet took about 27% of world sales in 2014. That was down from 60% in 2012, which analysts say reflects both the appearance of cheaper simulacra and an overall decline in the popularity of the form.54 Apple sold about one million of its watches in the U.S. on the first day of pre-orders in 2015, and perhaps four million worldwide. By comparison, about 750,000 of the watches running on Google’s Android software were sold in 2014.55

Properties

Following the lead of business-as-usual in the digital economy, Apple buys other companies in order to borrow younger firms’ ideas and applications or stifle innovations that might otherwise fall into the hands of wealthy others. It says this strategy is a rational effort to keep up with the competition.56 In the 15 months to March 2015, Apple purchased 26 firms, bringing its takeover total to 50 in less than three years. The identities of these mergers and acquisitions largely remain secret.57

Typical Strategies

We have outlined Apple’s primary business strategy in terms of its ability to take advantage of lucrative political-economic arrangements that allow it to operate in a highly exploitative global

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commodity chain and take advantage of significant political largesse at home and in the EU. This aspect of the company’s business model doesn’t reflect well upon its official “Business Strategy,” which highlights innovation, uniqueness, and customer-oriented design and services.58 From the company perspective, it’s all about vertical integration, albeit with subcontracted manufacturing. And like its rivals, Apple adores digital-rights management technology, though it diverges from them by resisting the easy transfer of texts across devices that is promoted by the International Digital Publishing Forum.59

New Developments

New developments include investment in data services (the cloud, iTunes, and applications), an emerging line of Internet-of-things products, with its watch the centerpiece, and a foray into financial services through Apple Pay. In 2015, Apple entered into discussions to establish U.S. and European virtual networks. Rather than laying down fiber-optic cable or paying for other forms of infrastructure, Apple would lease those elements from telecommunications firms and sell its customers a total package of hardware and software, including connectivity.60

The cloud has taken the company into alternative-energy production. Apple operates two twenty-megawatt plants with a third under development to power its huge data center in North Carolina (it is building another twenty-megawatt array in Reno, Nevada). And where it isn’t producing its own solar power, Apple is buying. The company closed a deal with a California solar power supplier to purchase sufficient electricity for its offices, stores, and a data center there.61

The Apple watch is probably the company’s most explicit declaration of its view that its consumers are things-in-themselves. At the center of the Internet-of-things are people—ur-things, if you like. Hectic, haptic puppet strings tie us to the cloud, through which brands like Apple bombard us with purchasable information, services, and money, as if the metaphorical contradiction of solar-powered clouds made the purchase still more satisfying.

Social Marketing

Apple broadcasts the fact that it uses renewable energy to power its facilities, including server farms, very loudly. But serious doubts have been raised about such claims.62 It has also adopted a charitable role. Apple has devoted over $100 million to the Global Fund’s campaign against HIV in Africa; $100 million on U.S. government programs to improve disadvantaged schools; $40 million to the Thurgood Marshall College Fund, which supports historically black colleges and universities across the nation; and $10 million to the National Center for Women and Information Technology.63 This is all part of the contemporary rhetoric of the triple bottom line or corporate social responsibility, whereby firms obtain social licenses to operate by avoiding claims of instrumental utilitarianism—and more importantly, the threat of democratic regulation. Imagine redirecting this charity to raise wages and provide benefits to workers at its contractors in China.

These social-justice efforts diverge from company attitudes under Jobs. Unlike Cook, Jobs had no interest in aligning Apple with such distractions from wealth and fame,64 and it’s significant that they have generated a backlash. A conservative think-tank called the National Center for Public Policy Research is opposed to “corporations who support the left.”65 The Center issued a shareholder resolution demanding information on Apple’s “associations and memberships and trade associations that work on [environmental] sustainability issues,” ostensibly to reveal that the company has come under the ideological spell of anti-market forces. The Center lost the vote, but claimed victory for its juvenile stunt.66

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Cultural Profile

The Apple-1 computer had cost just $666.66. Four decades later, it sold for $671,400 at auction in Germany—a crowning moment when personal computers became part of high culture, valued as rare artifacts in a famous brand’s folkloric history. What was once viewed as cheap and common had been transformed into a stylish collector’s item.67 Apple refers to today’s iMac as a “modern art installation.”68 That desire to combine outsider status with vast money-making is the paradox at the heart of the beast.

Thirty years ago, Apple cast itself as a feisty upstart in the most famous Super Bowl commercial of all time. Troping George Orwell’s 1984, the firm was presented as a champion of the people against IBM—Big Brother in search of total dominance. Jobs’ commentary juxtaposed IBM’s desire for control with Apple’s love of freedom.69 But equally tellingly, we should fast forward to 2010, when the company didn’t take kindly to Newsday’s amusing commercial for its new iPad application. The advertisement begins serenely enough: a white, heterosexual family is enjoying a meal. The patriarch reads his paper on an iPad and an off-screen narrator extols the virtue of this new means of subscription by contrast with the old. Then, a fly starts buzzing around the table. The father does what he would do with his old newspaper and tries to squash the fly with his new device, which shatters. The fly keeps buzzing. Apple reacted to this commercial satire by threatening to destroy the relevant application and make the newspaper unreadable on the iPad in the form advertised if the commercial wasn’t withdrawn. Newsday complied.70

Yet Apple persists in saying that “Our message, to people around the country and around the world, is this: Apple is open. Open to everyone, regardless of where they come from, what they look like, how they worship or who they love.”71 After you stop laughing, you’ll see Apple’s cultural text is not just irony; it is cruelly corporate irony.

The company certainly knows how to promote its style to a certain model of customer, notably elite cybertarians and techno-bohemians working in the culture industries, cleverly wooing them with the Cupertino publicity machine. But it can’t control what it means to everyone when, for instance, it makes prominent mistakes, such as the iPhone 5’s proprietary mapping software, and becomes the butt of jokes from Indonesia to Ireland because it sent people walking onto a farm when they anticipated boarding an airplane.72

More distressingly, when 许立志 (Xu Lizhi), a Foxconn employee, committed suicide in 2014 after four years working on the line to produce the gadgets that relax by your bed and in your pocketbook, his friends collected his poetry for publication. The alienation, disappointment, and boredom of the daily grind that he expressed making Apple’s treasures resonated with young workers across the country.73

The parent firm, too, has generated intense annoyance because of its secretive ways and commodified and governed hipster culture. 贾跃亭 (Jia Yueting), billionaire head of the Leshi TV online video site, tastelessly likens Apple to Hitler.74 And as the grumpy young(ish) columnist Charlie Brooker puts it:

I don’t care if Mac stuff is better. I don’t care if Mac stuff is cool. I don’t care if every Mac product comes equipped with a magic button on the side that causes it to piddle gold coins and resurrect the dead and make holographic unicorns dance inside your head. I’m not buying one, so shut up and go home. Go back to your house. I know, you’ve got an iHouse. The walls are brushed aluminum. There’s a glowing Apple logo on the roof. And you love it there. You absolute MONSTER.75

The culture of enchantment promoted by Apple helps to obscure its material connection to labor exploitation and ecological decline. Hong Kong-based Students & Scholars against Corporate

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Misbehaviour reminds us that as users of iThings, “we are consuming the blood and tears of workers, a fact hidden from us by fancy advertisements.”76 To counter such sentiment, Apple uses an age- old propaganda technique to unify its employees—the invented enemy: “in global economic warfare with Samsung. . . . Products must be brilliant, but be shippable in mass quantities in a global market.”77

Until 2015, Apple also tried to represent its treatment of artistic workers as standard operating procedure. The corporation’s successful music and podcast strategies replicate the methods used for generations by record companies, in that it has learned how to make money from musicians while the latter live from very little.78 The extraordinary success of iTunes is down to an efficient, reasonably cheap, and legal system for customers: Apple basically provides a post office populated by very few virtual mail haulers that pays very little if anything to very many cultural producers. Pop singer Taylor Swift brought this home with spectacular results following her Wall Street Journal op-ed in 2014 about Spotify, followed a year later by an open letter protesting Apple’s music streaming service contracts, which offered “zero percent compensation to rights holders.” This struck her and her friends as unfair. Apple cringed and caved in.79

Conclusion

Apple holds $178 billion in cash, most of it stockpiled outside the U.S. In March 2015, it entered the Dow Jones Industrial Average, replacing AT&T. And lest we forget, it sells watches for $17,000.80 This is not an edgy outsider. This is not the-little-company-that-could, viewed sym - pathetically in contrast to, for instance, Microsoft’s links to the state and commerce. This is a nasty, brutish, massive business entity.

Apple embodies the awesome power of technology and the beguiling beauty of consumption— a pragmatic aesthetics, where performance and design, utility and style, are blended. It promises a digital life that’s always in the present, always cool, always new. Like all digital merchants of upgrade, Apple promises transcendence in cyberspace in a minimalist package of wonder. Cybertarians fetishize each new “upgrade” as if it could reboot their hipster identity.

We can shake off the magic if we treat innovation skeptically, questioning the planned obsolescence that confuses an abundance of i-Things with well-being and creativity. Doing so would give something in return: a connection to the present that comprehends the deplorable working conditions that bring these high-tech wonders into the world.

Notes

1 Thanks to the editors for commissioning this chapter and for a helpful remark or two that stimulated improvements.

2 http://investor.apple.com/secfiling.cfm?filingid=1193125–14–383437&cik= 3 Adam Lashinsky, “How Apple Works: Inside the World’s Biggest Startup,” Fortune, August 25, 2011,

http://fortune.com/2011/08/25/how-apple-works-inside-the-worlds-biggest-startup-2/ 4 Ibid. 5 Anthony Harris, Dragging Out the Best Deal. How Billion Dollar Margins Are Played Out on the Backs of Electronics

Workers (Amsterdam: GoodElectronics, 2014), http://goodelectronics.org/publications-en/Publication_ 4109/at_download/fullfile

6 Tim Cook, “Pro-Discrimination ‘Religious Freedom’ Laws Are Dangerous,” Washington Post, March 29, 2015, www.washingtonpost.com/opinions/pro-discrimination-religious-freedom-laws-are-dangerous- to-america/2015/03/29/bdb4ce9e-d66d-11e4-ba28-f2a685dc7f89_story.html

7 Elizabeth Grossman, “Tackling the High Tech Trash: The e-Waste Explosion and What We Can Do,” New York: Dēmos, 2010, www.demos.org/publication/tackling-high-tech-trash-e-waste-explosion-what- we-can-do

8 Rhiannon Williams, “Apple Celebrates 39th Year on April 1,” Telegraph, April 1, 2015, www.telegraph. co.uk/technology/apple/11507451/Apple-celebrates-39th-year-on-April-1.html; http://core0.staticworld. net/downloads/idge/imported/article/nww/2011/04/0411-applecomputer2.pdf

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9 Timothy B. Lee, “How Apple Became the World’s Most Valuable Company,” Vox, May 14, 2015, www.vox.com/cards/apple/what-is-a-macintosh

10 Owen W. Linzmayer, “30 Pivotal Moments in Apple’s History,” Macworld, March 30, 2006, www.macworld.com/article/1050112/30moments.html

11 Matt Honan, “Remembering the Apple Newton’s Prophetic Failure and Lasting Impact,” Wired, August 5, 2013, www.wired.com/2013/08/remembering-the-apple-newtons-prophetic-failure-and-lasting- ideals/

12 Leander Kahney, “John Sculley on Steve Jobs, the Full Interview Transcript,” Cult of Mac, October 14, 2010, www.cultofmac.com/63295/john-sculley-on-steve-jobs-the-full-interview-transcript/; Timothy B. Lee, “How Apple Became the World’s Most Valuable Company,” Vox, May 14, 2015, www.vox.com/ cards/apple/who-was-steve-jobs; www.vox.com/cards/apple/how-did-steve-jobs-rescue-apple; www. vox.com/cards/apple/how-has-tim-cook-changed-apple-since-the-death-of-steve-jobs

13 Mikey Campbell, “Apple Closes in on $775B Market Cap, now Twice as Large as No. 2 Exxon Mobil,” Apple Insider, February 23, 2015, http://appleinsider.com/articles/15/02/23/apple-stock-closes-in-on- 775b-market-cap-now-two-times-larger-than-no-2-exxon-mobil; Sarah Perez and Ron Miller, “IBM and Apple Release Eight More Enterprise Apps for Healthcare, Airlines and More,” TechCrunch, April 1, 2015, http://techcrunch.com/2015/04/01/ibm-and-apple-release-eight-more-enterprise-apps-for- healthcare-airlines-and-more/

14 Richard Maxwell and Toby Miller, Greening the Media (New York: Oxford University Press, 2012, 76–79). 15 See Harris, op. cit.; Marcelo Prince and Willa Plank, “A Short History of Apple’s Manufacturing in the

US,” Wall Street Journal, December 6, 2012, http://blogs.wsj.com/digits/2012/12/06/a-short-history- of-apples-manufacturing-in-the-u-s/

16 Jenny Chan, Ngai Pun and Mark Selden, “The Politics of Global Production: Apple, Foxconn and China’s New Working Class,” The Asia-Pacific Journal, Vol. 11, Issue 32, No. 2, August 12, 2013. The authors note that “Foxconn’s parent corporation is Taipei-based Hon Hai Precision Industry Company. The trade name Foxconn alludes to the corporation’s ability to produce electronic connectors at nimble ‘fox-like’ speed.”

17 Friedrich Fröbel, Jürgen Heinrichs, and Otto Kreye, The New International Division of Labor: Structural Unemployment in Industrialised Countries and Industrialisation in Developing Countries, trans. Peter Burgess (Cambridge: Cambridge University Press; Paris: Éditions de la Maison des Sciences de l’Homme, 1980).

18 Walden Bello, “Asia: The Coming Fury,” Foreign Policy in Focus, February 9, 2009, http://fpif.org/ asia_the_coming_fury/; Richard Higgott and Richard Robison, eds., Southeast Asia: Essays in the Political Economy of Structural Change (London: Routledge & Kegan Paul, 1985).

19 http://investor.apple.com/secfiling.cfm?filingid=1193125–14–383437&cik= 20 https://finance.yahoo.com/q/mh?s=AAPL+Major+Holders 21 Icahn makes a fetish of publishing his semi-private dealings with private-sector bureaucrats, as per a

gentlemanly account of dinner with Tim: “We . . . could not be more supportive of you, the existing management team, the culture at Apple and the innovative spirit it engenders. The criticism we have as shareholders has nothing to do with your management leadership or operational strategy. Our criticism relates to one thing only: the size and timeframe of Apple’s buyback program. It is obvious to us that it should be much bigger and immediate.” Quoted in Arik Hesseldahl, “Carl Icahn Now Owns About $2.5 Billion Worth of Apple Shares,” All Things D, November 15, 2013, http://allthingsd.com/ 20131115/carl-icahn-now-owns-about-2–5-billion-worth-of-apple-shares/

22 As his open letter of 2015 explains: “despite severe foreign exchange headwinds and massive growth in investment (in both R&D and SG&A), the company will still grow earnings by 40% this year, according to our forecast. After reflecting upon Apple’s tremendous success, we now believe Apple shares are worth $240 today. Apple is poised to enter and in our view dominate two new categories (the television next year and the automobile by 2020) with a combined addressable market of $2.2 trillion, a view investors don’t appear to factor into their valuation at all. We believe this may lead to a de facto short squeeze, as underweight actively managed mutual funds and hedge funds correct their misguided positions. To arrive at the value of $240 per share, we forecast FY2016 EPS of $12.00 (excluding net interest income), apply a P/E multiple of 18x, and then add $24.44 of net cash per share. Considering our forecast for 30% EPS growth in FY 2017 and our belief Apple will soon enter two new markets (Television and the Automobile) with a combined addressable market size of $2.2 trillion, we think a multiple of 18x is a very conservative premium to that of the overall market. Considering the massive scope of its growth opportunities and track record of dominating new categories, we actually think 18x will ultimately prove to be too conservative, especially since we view the market in general as having much lower growth prospects,” www.shareholderssquaretable.com/carl-icahn-issues-open-letter-to-tim-cook/

23 “Apple Inc.,” Bloomberg Business, April 17, 2015, www.bloomberg.com/research/stocks/people/ board.asp?ticker=AAPL

Apple 379

24 The figures exclude the ways that governments further subsidize the company through employees who are educated at public expense, transportation or energy systems that rely on state investment, and guarantees of fair dealing, http://subsidytracker.goodjobsfirst.org/prog.php?parent=apple

25 Alaska Miller, “Apple Takes Over Cupertino,” Business Insider, December 10, 2009, www.businessinsider. com/apples-dominion-over-city-of-cupertino-2009–12?IR=T; European Commission, State Aid S.A.38373 (2014/C) (ex 2014/nn) (ex 2014/CP)—Ireland Alleged Aid to Apple, http://ec.europa. eu/competition/state_aid/cases/253200/253200_1582634_87_2.pdf

26 Dawn Chmielewksi, “EU Finds No Evidence of Apple and Music Labels Colluding to Kill Free Music,” Re/Code, August 7, 2015, http://recode.net/2015/08/07/eu-finds-no-evidence-of-apple-and-music- labels-colluding-to-kill-free-music/; Reuters, “Apple’s European Music Streaming Plans ‘Under Scrutiny from Regulator’,” Guardian, April 2, 2015, www.theguardian.com/media/2015/apr/02/apple-european- music-streaming-eu

27 Lashinsky, loc. cit. 28 “CBC Delegation Takes Tech 2020 Initiative to Silicon Valley,” July 30, 2015, https://cbc-butterfield.

house.gov/media-center/press-releases/cbc-delegation-takes-tech-2020-initiative-to-silicon-valley 29 J.P. Mangalindan, “How Tech Companies Compare in Employee Diversity,” Fortune, August 29, 2014,

http://fortune.com/2014/08/29/how-tech-companies-compare-in-employee-diversity/ 30 “I’m a Mac. And I’m Un-PC,” Mother Jones, March/April, 2010, p. 51. 31 Lashinsky, loc. cit. 32 Wendy Lee, “Felons Barred from Constructing Apple’s Campus,” SF Gate, April 4, 2015, www.sfgate.

com/business/article/Felons-barred-from-constructing-Apple-s-campus-6178429.php; Allison Arieff, “Apple,” California Sunday, April 5, 2015, https://stories.californiasunday.com/2015-04-05/miniseries- apple-campus

33 Claudine Beaumont, “Foxconn Suicide Rate is Lower Than in the US, Says Apple’s Steve Jobs,” Telegraph, June 2, 2010, www.telegraph.co.uk/technology/steve-jobs/7796546/Foxconn-suicide-rate-is-lower- than-in-the-US-says-Apples-Steve-Jobs.html

34 Cook, loc.cit. 35 Reid J. Epstein, “Carly Fiorina: Tim Cook Opposition to Indiana Religious Freedom Law Hypocritical,”

Wall Street Journal, April 3, 2015, http://blogs.wsj.com/washwire/2015/04/03/carly-fiorina-tim-cook- opposition-to-indiana-religious-freedom-law-hypocritical/?mg=blogs-wsj&url=http%253A%252F %252Fblogs.wsj.com%252Fwashwire%252F2015%252F04%252F03%252Fcarly-fiorina-tim-cook-opposition- to-indiana-religious-freedom-law-hypocritical

36 Bloomberg News, “Foxconn Factory in China Shows Scars of Clash among Workers,” Los Angeles Times, September 27, 2012, http://articles.latimes.com/2012/sep/27/business/la-fi-foxconn-workers-20120927

37 Eddie Wrenn, “ ‘Humiliating Punishments for Working Too Slow, Bars on the Windows and Squalid Dorms’: Inside the Factory That Makes the iPhone 5,” Daily Mail, September 12, 2012, www.dailymail. co.uk/sciencetech/article-2202170/iPhone-5-release-Inside-shocking-conditions-Foxconn-factory.html; Richard Bilton, “Apple ‘Failing to Protect Chinese Factory Workers’,” BBC News, December 18, 2014, www.bbc.co.uk/news/business-30532463; China Labor Watch, Apple’s Unkept Promises: Cheap iPhones Come at High Costs to Chinese Workers, July 29, 2013, www.chinalaborwatch.org/upfile/2013_7_29/ apple_s_unkept_promises.pdf; Students and Scholars against Corporate Misbehaviour, “Well-Polished Apple’s CSR Report is Just Another Fairytale for Workers,” March 1, 2014, http://sacom.hk/statement- well-polished-apple%E2%80%99s-csr-report-is-just-another-fairytale-for-workers/

38 China Labor Watch, Analyzing Labor Conditions of Pegatron and Foxconn, February, 2015, www.china laborwatch.org/upfile/2015_02_11/Analyzing%20Labor%20Conditions%20of%20Pegatron%20and%20 Foxconn_vF.pdf; Fair Labor Association, Independent External Assessment of Apple Supplier Factory Operated by Pegatron Corp, June, 2015, www.fairlabor.org/sites/default/files/documents/reports/june-2015-apple- pegatron-executive-summary.pdf

39 www.marketwatch.com/investing/stock/aapl/financials; “Apple Reports Fourth Quarter Results,” Apple Press Info, October 22, 2007, www.apple.com/pr/library/2007/10/22Apple-Reports-Fourth-Quarter- Results.html

40 Nardono Nimpuno, Alexandra McPherson, and Tanvir Sadique, Greening Consumer Electronics—Away from Chlorine and Bromine, ChemSec (the International Chemical Secretariat) and Clean Production Action, 2009, www.cleanproduction.org/static/ee_images/uploads/resources/Greening_Consumer_Electronics. pdf

41 Richard Maxwell and Toby Miller, op. cit., pp. 94–95. 42 Institute of Public and Environmental Affairs, The Other Side of Apple, 2011, www.ipe.org.cn/En/

about/report.aspx, p. 31. 43 Richard Maxwell and Toby Miller, op. cit., p. 95. 44 Harris, op. cit., pp. 4–5. 45 Ibid., pp. 5–6.

380 Toby Miller and Richard Maxwell

46 Ibid. p. 8. 47 Ibid. p. 9. 48 Rupert Neate, “Apple Soon to be Worth More Than $1tn, Financial Analysts Predict,” Guardian,

March 23, 2015, www.theguardian.com/technology/2015/mar/23/apple-company-worth-1tn-market- value

49 http://investor.apple.com/secfiling.cfm?filingid=1193125–14–383437&cik= 50 http://investor.apple.com/secfiling.cfm?filingid=1193125–14–383437&cik= 51 Timothy B. Lee, “How Apple Became the World’s Most Valuable Company,” Vox, May 14, 2015,

www.vox.com/cards/apple/where-does-apple-get-its-money; Gartner, “Gartner Says Smartphone Sales Surpassed One Billion Units in 2014,” March 3, 2015, www.gartner.com/newsroom/id/2996817

52 Neate, loc.cit; Rhiannon Williams, “Apple Reaches All-Time Sales High in China,” Telegraph, April 2, 2015, www.telegraph.co.uk/technology/apple/iphone/11512134/Apple-reaches-all-time-sales-high-in- China.html

53 Gartner, “Gartner Says Worldwide PC Shipments Declined 5.2 Per cent in First Quarter of 2015,” April 9, 2015, www.gartner.com/newsroom/id/2996817

54 Daniel Eran Dilger “Why Apple, Inc. isn’t Worried About iPad’s IDC Tablet Market Share,” January 12, 2015, http://appleinsider.com/articles/14/08/04/editorial-why-apple-inc-isnt-worried-about-ipads- idc-tablet-market-share-

55 Julie Bort, “Apple Watch will Become Apple’s ‘Most Profitable Product Ever’,” Business Insider, April 19, 2015, www.businessinsider.com/analyst-apple-watch-is-profitable-2015–4#ixzz3XnQ56C3W

56 http://investor.apple.com/secfiling.cfm?filingid=1193125–14–383437&cik= 57 Daniel Eran Dilger, “Apple Inc. Has Acquired 26 Firms in 15 Months While Pursuing Increased Diversity,

a Confident Tim Cook Tells Shareholders,” AppleInsider, March 11, 2015, http://appleinsider.com/ articles/15/03/11/apple-inc-has-acquired-26-firms-in-15-months-while-pursuing-increased-diversity-a- confident-tim-cook-tells-shareholders

58 http://investor.apple.com/secfiling.cfm?filingid=1193125–14–383437&cik= 59 Association of American University Presses Task Force on Economic Models for Scholarly Publishing,

Sustaining Scholarly Publishing: New Business Models for University Presses (New York: Association of American University Presses Task Force, 2011, 8).

60 James Cook, “Apple is in Talks to Launch its Own Virtual Network Service in the US and Europe,” Business Insider, August 3, 2015, www.businessinsider.com/apple-in-talks-to-launch-an-mvno-in-the-us- and-europe-2015–8

61 Tom Randall, “What Apple Just Did in Solar Is a Really Big Deal,” BloombergBusiness, February 11, 2015, www.bloomberg.com/news/articles/2015-02-11/what-apple-just-did-in-solar-is-a-really-big-deal

62 Institute of Public and Environmental Affairs, The Other Side of Apple: Investigative Report into Heavy Metal Pollution in the I.T. Industry (Phase IV), 2011, www.ipe.org.cn/en/about/report.aspx; Nicki Lisa Cole, “Why is Apple Lying About Powering its Data Centers with Renewable Energy?,” Truthout, August 5, 2015, www.truth-out.org/news/item/32208-why-is-apple-lying-about-powering-its-data-centers-with- renewable-energy

63 Dilger, loc.cit; Michal Lev-Ram, “Apple Commits More Than $50 Million to Diversity Efforts,” Fortune, March 10, 2015, http://fortune.com/2015/03/10/apple-50-million-diversity/

64 Cook, loc.cit.; Andy Meek, “Tim Cook’s Activism is Changing Apple—But His Future May Depend on a Watch,” Guardian, April 4, 2015, www.theguardian.com/technology/2015/apr/04/tim-cook-activism- steve-jobs-apple-watch

65 www.nationalcenter.org/fep.html 66 Joel Makower, “How GE and Apple Shareholders Became Tools for Climate Deniers,” GreenBiz, March

3, 2014, www.greenbiz.com/blog/2014/03/03/how-ge-and-apple-shareholders-became-tools-climate- deniers?mkt_tok=3RkMMJWWfF9wsRols6XOZKXonjHpfsX76e8vT%2Frn28M3109ad%2BrmPBy83 YUJWp8na%2BqWCgseOrQ8kl0JV86%2FRc0RrKA%3D

67 Harry McCracken, “This Apple-1 is the Most Expensive Apple Computer Ever,” Time, May 25, 2013, http://techland.time.com/2013/05/25/this-apple-1-is-the-most-expensive-apple-computer-ever/

68 Quoted in Schafer and Durham, op.cit., p. 44. 69 www.youtube.com/watch?v=lSiQA6KKyJo 70 Stefan Constantinescu, “Apple Bullies Newsday into Taking down the Commercial for Their iPad

Application,” IntoMobile, September 20, 2010, www.intomobile.com/2010/09/20/apple-bullies-newsday- into-taking-down-the-commercial-for-their-ipad-application/. One active venue is www.funnyordie. com/videos/8a3000125f/newsday-ipad-app-commercial

71 Cook, loc.cit. 72 Chris Foresman, “Early Adopters Experiencing Issues with Apple’s iPhone5,” Ars Technica, September

24, 2012, http://arstechnica.com/apple/2012/09/early-adopters-experiencing-issues-with-apples-latest- iphone-5/?utm_source=Ars+Technica+Newsletter&utm_campaign=a0bdec5fbd-September_02_ 2011_Newsletter&utm_medium=email

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73 Eva Dou, “After Suicide, Foxconn Worker’s Poems Strike a Chord,” Wall Street Journal, November 7, 2014, http://blogs.wsj.com/chinarealtime/2014/11/07/after-suicide-foxconn-workers-poems-strike-a- chord/; Nao, “The Poetry and Brief Life of a Foxconn Worker: Xu Lizhi (1990–2014),” LibCom, October 29, 2014, http://libcom.org/blog/xulizhi-foxconn-suicide-poetry; also see http://wb.sznews.com/page/ 1721/2014–10/10/A18/20141010A18_pdf.pdf

74 “Apple is Like Hitler, Says Chinese Billionaire,” The Register, March 30, 2015, www.theregister. co.uk/2015/03/30/apple_is_like_hitler_says_chinese_billionaire/

75 Charlie Brooker, “Microsoft’s Grinning Robots or the Brotherhood of the Mac. Which is Worse?,” Guardian, September 28, 2009, www.theguardian.com/commentisfree/2009/sep/28/charlie-brooker- microsoft-mac-windows

76 Students & Scholars against Corporate Misbehaviour, Workers as Machines: Military Management in Foxconn (Hong Kong: Students & Scholars Against Corporate Misbehaviour, 4).

77 John Martellaro, “What is’s REALLY Like to Work for Apple,” The Mac Observer, April 16, 2014, www.macobserver.com/tmo/article/what-its-really-like-to-work-for-apple/page2

78 www.informationisbeautiful.net/visualizations/how-much-do-music-artists-earn-online-2015-remix/ 79 Taylor Swift, “For Taylor Swift, the Future of Music is a Love Story,” Wall Street Journal, July 7, 2014,

www.wsj.com/articles/for-taylor-swift-the-future-of-music-is-a-love-story-1404763219; “Taylor Swift Reveals How She Stood Up to Apple,” Vanity Fair, September, 2015, www.vanityfair.com/style/ 2015/08/taylor-swift-cover-mario-testino-apple-music; John Jurgensen and Barbara Chai, “Apple to Pay Artists After Taylor Swift Protest,” Wall Street Journal, June 22, 2015, www.wsj.com/articles/taylor-swift- withholds-album-from-apple-music-1434916050

80 Kevin Kelleher, “Apple is Turning Itself Into a Fashion Company,” Time, March 16, 2015, http://time. com/3745853/apple-fashion-culture/

382 Toby Miller and Richard Maxwell