How Apple’s ideals in China collapse

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SvD Näringsliv

This column was first published in SvD Näringsliv, in Swedish, on June 28th, 2021.

A new service from Apple is intended to protect privacy. But it also exposes one of the IT giant’s biggest challenges right now – choosing a path in China, where they are squeezed between the country’s exercise of power and its own ideals.

Happy and confident, Apple CEO Tim Cook stepped up to the podium in Washington DC. The year was 2015 and he was just about to give a speech to graduate students at George Washington University. Cook, who had previously been the chief operating officer in the shadow of Steve Jobs, was four years into the role of CEO of Apple and had now begun to find his stride.

In his speech to the students, he referred a lot to Jobs and the philosophy he had introduced at Apple. But in a nutshell, he also revealed his views on leadership, which would fundamentally change Apple.

I was trained to be pragmatic – a problem solver.

There is a lot to be said for Steve Jobs, but pragmatic he was not. Quite the opposite – stubborn, visionary and a little headstrong.

And nowhere has Apple’s new pragmatic view been more clearly felt than in their stance towards China, under Tim Cook’s rule.

The country has been an important production partner for Apple for the past 20 years. China was the country that got to produce Apple’s then major new product line, the iPhone. This would probably not have happened if China had not joined the WTO in 2001, which facilitated a larger establishment there. The success of the iPhone also cemented the importance of good relations between the two parties, and laid the foundation for more factories and data centers to be built.

Meanwhile, the country also began to grow as a market for Apple. The Chinese started buying iPhones, iPads and Macs like never before. In the most recent quarter, their Chinese revenue was $17.7 billion. This means that almost every fifth dollar that Apple earns comes from China. And the country’s importance is growing rapidly. Growth in the market was 87.5 percent compared with the previous year.

But lately, it has started to get a little rocky for Apple. Their ongoing war against Silicon Valley neighbors like Facebook and Google over ad data comes from a strategy to position themselves for the privacy and security of each individual. “Integrity is a fundamental human right,” Apple tends to say.

It is therefore a bit precarious when the company launches a new service, “Privacy relay”, which will reduce the tracking of individuals’ web data – but that does not work in China. And not in other countries such as Belarus and Saudi Arabia either. Due to their local laws.

This is where the view of the individual’s integrity is crossed with the importance of maintaining good relations with one of Apple’s most important markets and production partners. What will Apple’s values ​​end up costing them?

The attitude risks undermining Apple’s principled argumentation in data issues around the world. If the principles do not apply in all countries – then what is the real motive behind them?

That Tim Cook would prioritize China and its legislation at this stage, however, is no surprise. As early as 2017, he spoke at a conference on whether Apple should be in China or not, and how they related to developments in the country.

— My strong opinion is that you show up and participate. You are in the match, because nothing can change if you are off the field.

This is how it sounds when a pragmatist reasons. The question is how far he is willing to go to appease a country that does not share Apple’s fundamental view of integrity. Unlike its competitors in Silicon Valley, Apple has succeeded very well in China.

But that success has now come at a high price. The more Apple loosens up, the harder China can push. And soon Tim Cook could get so cornered that his pragmatic way of working may end up being forced out altogether.

This column was first published in SvD Näringsliv, in Swedish, on June 28th, 2021.

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