Apple Shareholders Came Close to Supporting Privacy in China (at the Expense of Profits)

1 minute read
| Editorial

An interesting thing happened during this week’s Apple shareholder meeting in Cupertino—Apple shareholders came closer than I can recall to voting for a shareholder proposal opposed by Apple management. That shareholder proposal (proposal 6) called on Apple to uphold the same privacy protections in China it extolls elsewhere.

China and the rule of lawls

The measure ultimately failed, with a preliminary vote of 40.6% for and 59.4% against, but most shareholder proposals opposed by Apple go down to crushing defeats. What makes this one even more unusual is that it surely would have cost Apple money, meaning that 40.6% of shareholders were voting against their own financial interests in the name of privacy and freedom of expression.

In comparison, a shareholder proposal (proposal 5) that would have tied executive compensation to sustainability went down 12.1 for and 87.9% against, while proposal 4 that would give shareholders influence over more seats on Apple’s board, went down 31.1% for and 68.9% against.

Apple’s defense in urging shareholders not to vote for proposal 6 is that it must abide by local laws wherever it does business. It’s the rationale given every time Apple removes censored content from its online stores, blocks content, removes apps, and moved Chinese iCloud data to servers in China controlled by a joint venture with a Chines-owned local business.

On Friday’s TDO with Dave Hamilton and Charlotte Henry, I asked at what point Apple ceases being Apple when it makes so many compromises in China. In this same shareholder meeting, for instance, Apple CEO Tim Cook gave a wonderful and passionate statement on the importance of privacy being a human right. In China, though, not so much.

But that’s not really the issue here. What is the issue is that if Apple stopped kowtowing to China on issues of privacy, it would be in violation of local law. That would, at the very least, result in significant repercussions for Apple imposed by the government. In reality, it would probably result in Apple having to pull out of the Chinese market altogether.

And yet 40.6% of Apple shareholders voted in favor of this proposal. I’ve no doubt that made Apple’s management sit up and take notice. At least I hope it did. One company, two policies when it comes to privacy is not sustainable, as kowtowing in China will some day be leveraged by other authoritarian regimes and liberal democracies alike to exact their own concessions at the expense of privacy.

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John Kheit
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John Kheit

Great article Bryan, thanks!

wab95
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wab95

Bryan: Great discussion, and many thanks for highlighting this. I have a slightly different take. I have argued before, and do so now, that corporations, while they can be societal change agents, are not designed to be the moulders of legislation or the instruments of intentional social structural change. They can be, and have been, the objects of new legislation with wide ranging social repercussions, and through their products, have reshaped societal norms and culture, but they are limited in the extreme in coercing governments, particularly authoritarian and totalitarian regimes, to do what those governments do not wish to do,… Read more »

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shameermulji

“n this same shareholder meeting, for instance, Apple CEO Tim Cook gave a wonderful and passionate statement on the importance of privacy being a human right. In China, though, not so much.”

That’s called being a hypocrite.