Within the next week people will be queuing at various locations around the world to hand over their hard earned money for the next iThing. Bigglybobblyboo wrote about the innovative battery that will have diminished power. Blackjack also wrote about their trend setting ‘Force Touch’ virtual keyboard – which seems to be copied directly from the BlackBerry Storm. But the purpose of this blog isn’t about lack of innovation, it’s about Corporate morals (or lack thereof).
You see, most global corporations feel they have a moral obligation to give back – they actually include this information in their financials (along with the tax benefits). Nothing unusual or earth-shattering so far. But within the last 4 months some very disturbing items have occurred in the news surrounding one company in particular. Any one item by itself may not seem bad, but taken together I would hope iPhonians would take this as a clarion call.
- On 30 April ThisisMoney.co.uk reported Apple warns it could face £1.5bn bill if found guilty of tax avoidance in EU.
The company uses legal arrangements that have been dubbed ‘immoral’ because they deprive governments across Europe, including Britain, of tax revenues. Under the scheme, it funnels revenues from European operations through Ireland and out into offshore tax havens.
Apple last night revealed for the first time the scale of the financial penalty it could face if penalised.
It told investors in the US that the sums it could pay out ‘could be material’ – a technical stock market term that means 5per cent of its average profits over the last three years. For Apple, this sum has been calculated at $2.5billion, or £1.6billion.
Of course for the most profitable corporation in history this is merely a drop in the bucket. If found guilty their bean-counters would gladly pay this penalty and call it the cost of doing business (and probably write it off too).
2. On 24 August Entrepreneur magazine wrote Apple’s Tim Cook Made a Rookie Mistake and Might Face SEC Sanctions. Earlier that week global markets were crashing due to uncertainty in the Chinese market. Apple stock was taking a hit. So what did Tim Cook do? He sent an email to a stock analyst (who happens to own Apple stock). This action could be in direct violation of Fair Disclosure rules (FD) since information was disclosed to one group of investors but not others.
Reg FD was designed to democratize the flow of information — and it did. For the most part, company executives know they have a duty under the law to distribute information evenly. That’s why the vast majority of companies issue all their news via press release, put their executives through careful media training and generally do not disclose anything to anyone that might be construed to be a financial projection. Boring, yes, but fair.
Cook clearly made a selective disclosure in his email to Cramer and gave valuable financial information. “(W)e have continued to experience strong growth in China through July and August. Growth in iPhone activations has actually accelerated over the past few weeks, and we have had the best performance of the year for the App Store in China during the last 2 weeks.” Investment decisions have been made on far less information than that.
One point that wasn’t mentioned- in reality the Chinese numbers were not as good as Apple had projected!
3. On 28 August the New York Post reported on Page 6 Drake sings for Katrina victims, Apple threatens $20M suit
Lawyers were called in because the event was being streamed live via Tidal — and Drake has an exclusive deal with Apple Music said to be worth up to $19 million. Sources say the tech giant threatened to sue for $20 million if Drake appeared, or if his music was streamed live, on Tidal.
A source told us, “Legal letters have been sent to Tidal warning that Drake cannot appear on the Tidal stream of the festival, either solo or part of a group, and if the warning was ignored, the liabilities could be up to $20 million.
This seems pretty straightforward, his contract is exclusively with Apple when it comes to streaming music. But here’s the rub-
“This event is for charity, Drake is doing two songs. Why does Apple think it can dictate to artists where and when they can perform?”
The most profitable corporation in history, one that is being investigated for tax avoidance, may be manipulating stock markets and makes overpriced phones that are hacked almost every month has the nerve to threaten legal action against an artist who wants to perform #2 songs for the benefit of children who were victims of Hurricane Katrina?
Just one more reason to come #BackToBlack