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Report slams Apple’s business model

  • ‘Cash machine’ Apple creates poor societies

4 November, 2015As Apple announced its most successful year ever with record revenue of US$ 234 billion for the fiscal year 2015, GoodElectronics and the Centre for Research on Multinational Corporations (SOMO) released a critical report laying into the company for its business practices.

The report, “Rich corporations, poor societies: The financialisation of Apple” was released on 27 October, the same day that Apple published its results. It heavily criticizes the multinational for persistently seeking to maximize financial returns on its enormous profits without reinvesting in production.

The report notes that Apple minimizes costs through relentless offshoring of production into low wage countries and tax heavens. It also found that Apple increasingly operates as an institutional investor, putting a major part of its profits into financial markets.

Apple’s corporate strategy is not unique, according to the report. An increasing number of multinational companies are behaving according to the same model, which benefits hardly anyone except for a limited group of corporate managers and shareholders. This model reinforces the growth in unemployment, rising debts, inequality and fiscal austerity in Europe, while feeding precarious and badly paid jobs in the Global South.

“Whereas Apple has massively benefited from public investments, governments and tax-paying citizens and workers around the globe are seeing surprisingly poor returns in the form of public investments (financed by corporate income taxes) and wages from Apple’s riches,” says the report.

The report argues that a changed business model is possible if governments enact and enforce regulations that will ensure the multinational corporations:

  • pay their fair share in taxes
  • pay decent wages
  • invest their cash reserves in productive rather than financial assets

The report concludes that, these changes will also benefit multinational corporations, such as Apple, and their shareholders by contributing to a strong and sustainable society that will supply Apple with workers to build and consumers to buy its products for years to come.

The report is available on GoodElectronics website http://goodelectronics.org/publications-en/Publication_4246/

There is also a short introducing  video available on https://vimeo.com/143721806

SOMO is a Dutch non-profit research and advisory bureau specialized in investigation of the policies of multinational enterprises. GoodElectronics brings together networks, organizations and individuals concerned about human rights, including labour rights. Both are IndustriALL Global Union’s partner organizations.