Pixel Envy

Written by Nick Heer.

The Transformation of Apple’s Deep Investment in China From Unique Advantage to Liability

Peter Kafka, Vox:

Plenty of US companies work in and with countries that require them to make moral compromises. Facebook, for instance, finds itself frequently pulling down videos and posts because they upset Turkey’s censors; Netflix took down an episode of comedian Hasan Minhaj’s Patriot Act in Saudi Arabia because it was critical of Crown Prince Mohammed bin Salman. The standard argument these companies all make is that those countries are better off when they have access to their products.

This is Apple’s argument, too. “We believe our presence in China helps promote greater openness and facilitates the free flow of ideas and information,” Cook told Sen. Ted Cruz (R-TX) and Sen. Patrick Leahy (D-VT) in a December 2017 letter. “We are convinced that Apple can best promote fundamental rights, including the right of free expression, by being engaged even where we may disagree with a particular country’s law.”

Left unsaid in Cook’s letter is that Apple has to do business in China.

Unlike tech companies that haven’t broken into the country or only do minor business in it, Apple is now so deep in China that leaving it could be catastrophic. Even if the company was willing to forgo the $44 billion a year in sales it makes in China, it can’t leave the deep network of suppliers and assemblers that build hundreds of millions of iPhones every year.

Just a few months ago, Tim Cook denied that the company was exploring other places to build their products. The depth and extent of the electronics supply chain in China beggars belief — and, in one of those decades-old twists of fate, Cook helped make it so. There are loads of American tech companies that build products in China; Apple’s particular investment, though, is notable.