Apple is one of the largest and most high-profile tech companies in the world and Cupertino's devices are obviously the subject of many rumors and leaks, and with all of that exposure, it can be hard to imagine that Apple has very many hidden secrets — even dark ones. But Apple does have secrets, ones that it probably would prefer to stay out of the spotlight. Here are five such secrets that Apple doesn't want you to know.
5 iPhone Profit Margin
The iPhone is certainly not a cheap device. Its price tags tend to err on the side of premium in the modern smartphone market and Apple is a frequent target of criticism that its devices are overpriced relative to the amount of tech that you get. But how much does it cost Apple to actually build an iPhone, and do the components and craftsmanship actually justify its higher price tag?
Well, according to a breakdown report by analytics firm IHS Markit, materials and components in the iPhone 7 cost about $219.80. As for assembly costs, they run the company about $5 a device (more on the assembly lines later). That’s about $225 to build a device that retailed for $649 at launch. Of course, that price doesn’t account for Apple's research & development, marketing and other costs. And there's evidence to suggest that Apple's margins are slimming a bit on newer devices. But still, the company pockets about $424 on each device, roughly. Whether or not that’s fair is certainly up for debate.
4 Worker Conditions
We’re all familiar with Apple’s devices. For many of us, we probably own or have owned quite a few of them. But many people in the U.S. and Europe are probably much less familiar with exactly how their beloved Apple products are made. Sure, the backplate of an iPhone says “Made in China,” but that’s a little vague as to the exact details of the process. And Apple has historically been a bit quiet on the subject.
But earlier this year, an NYU student spent six weeks working at a Pegatron facility near Shanghai — and he revealed the bitter truth of sub-habitable housing, 12-hour workdays and an average wage of a little over $2 per hour. And it’s not just Pegatron: Apple supplier Foxconn has been called out for poor working conditions, too, including a string of deaths at its plants last year. And in 2016, a China Labor Watch report indicated that conditions at Pegatron plants worsened since the previous year. Apple, of course, maintains strict supplier guidelines, but whether its partners follow them is another matter.
3 Past Environmental Issues
Apple has consistently been voted the most environmentally friendly tech company for the past few years. From clean-energy data centers to the high-tech Apple Park, Cupertino has become a beacon of green-friendly business practices. In recent years, Apple has even taken steps to clean up its supply chain. However, this hasn’t always been the case. In 2010, for example, environmental activist groups in China criticized Apple for allowing its suppliers to pollute the country.
According to an Institute of Public and Environmental Affairs report, over 27 suspected Apple suppliers had severe pollution issues ranging from heavy metal sludge to toxic gas. And the report pointed the finger directly at Apple, claiming that the company turned a blind eye and “took advantage of loopholes” in the policies of developing countries. Thankfully, Apple acknowledged this history of environmental misdeeds in a 2013 report and is taking steps to help mitigate supplier pollution in China. But while Apple is cleaning up its act, their past is still tarnished by environmental irresponsibility — a fact that the company probably wants consumers to forget.
2 Offshore Money
Apple is quickly on track to become the world’s first trillion dollar company. But beyond its reputation for business success and tech innovation, Apple has unfortunately become a poster child for U.S. corporations sheltering profits overseas in order to avoid being taxed on that profit by the Internal Revenue Service. Apple is hardly the only multinational corporation to do so, but it is undoubtedly one of the most high-profile.
Cupertino reportedly has more than $230 billion in parked cash sitting offshore. And in 2016, CEO Tim Cook went on record saying that the company won’t bring any of that money back to the U.S. economy until the country’s tax rates are “fair,” according to the Wall Street Journal. Worst still, a Bloomberg report from December revealed that American taxpayers are technically paying Apple millions to shelter their profits overseas. In recent years, Apple has been also slammed with a number of bills for unpaid back taxes, both by the Irish and Australian government.
1 New Product Security
While the name of this Apple department sounds innocent enough, it is essentially a shadowy task force dedicated to keeping Apple’s secret, well, secret. Staffed by ex-spies and security experts pulled from the ranks of the NSA, the U.S. military, and other groups in the intelligence and law enforcement communities, New Product Security sounds eerily like something you’d find in dystopian fiction. Ironically, the only reason we know of this leak-stopping division is because of a leak, probably much to the chagrin of Apple's security teams.
Apple’s secrecy culture is well-known: the company has a long history of punishing leakers, and New Product Security is part of a larger division at Apple called the Global Security Team, which itself is unknown in size and scope. There’s little information about how Apple’s security team tracks down and stops leaks, which makes the whole division that much more mysterious. It’s even been alleged that Cupertino helped organized a police raid on a Gizmodo editor’s house when the publication obtained a prototype iPhone. Sure, there are ethical and legal arguments to be made about Gizmodo's methods in that instance, and there's little evidence that Apple orchestrated the raid first-hand, but it's still pretty creepy.