Apple’s Political Risk

Apple may have strength in innovation, but its political foresight and handling of international — and, in some cases, domestic — relations have been less-than-stellar. Granted, the company is in a better position than its rival, Samsung, at this point, but could Apple get in any more hot water as far as anti-trust and lawsuits are concerned?

Apple’s approach to international and domestic relations could be described as heavy-handed with a level of disregard for political risk. Seeking Alpha reported today (Sept. 23) that regulators in Japan may take antitrust action against Apple.

The action is based on antitrust violations that Apple may have committed in Japan, one of the company’s most profitable markets. The accusation by Japan’s Fair Trade Commission is that some companies — namely, KDDI Corp, NTT Docomo and Softbank — refused to sell older surplus iPhone models to retailers because of supply agreements, effectively eliminating smaller competitors from the market.

But this is not the only antitrust or legal action that Apple is facing. Let’s take a look in other regions where Apple has dabbled.

On Aug. 30, the European Commission ordered Ireland to collect €13 billion ($14.5 billion) in unpaid taxes from Apple — which Apple CEO Tim Cook described as “total political crap.”

This was the highest sum ever demanded based on the EU’s rules forbidding companies from accepting government assistance for financial gain. Cook denied the allegations, and Irish Finance Minister Michael Noonan stated that his government would appeal the decision.

According to the commission, for over a decade, Apple avoided “taxation on almost all profits generated by sales of Apple products in the entire EU Single Market,” and Ireland was compliant in granting tax benefits to Apple.

Apple Chief Financial Officer Luca Maestri called the $14.5 billion “a completely made-up number,” and the company’s general counsel, Bruce Sewell, said that Apple “paid tax at the statutory rate of 12.5 percent tax on profits relating to our activities in Ireland. We don’t understand where the commission’s figures are coming from.”

Commenting on Apple’s lack of political foresight, Jeroen Dijsselbloem, president of the Eurogroup of finance ministers, said: “This is a very strong moral issue, and large companies, even if they’re this large, can’t say, ‘This is not about us; there’s no problem here.’”

Apple is also being sued by owners of iPhone 6 and iPhone 6 Plus smartphones who are disgruntled by unresponsive touchscreens. According to the class-action lawsuit filed in August, Apple was aware of the defect but has refused to fix it.

The Guardian reported that a businessman, Thomas Ross, has filed a $10 billion lawsuit against Apple claiming that he invented an electronic reading device (ERD) that the iPhone, iPad and iPod all resemble. The plaintiff’s design featured a back-lit screen that stored media on the device and on remote servers.

Ross filed a patent for his ERD four years before the Palm Pilot was launched and 15 years before the first iPhone.

This lawsuit might be a stretch, but according to Ross: “I am just one person going up against the resources and power of Apple, the biggest corporation in the world. But what’s right is right.”

But that statement is wrong at least; he’s not the only person going after Apple — there are plenty more.