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Apple Falls Victim To Rapidly Changing Public Mood

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This article is more than 7 years old.

The public mood towards all-powerful organisations has changed in the last decade after the financial crash. Companies like Apple  -- and its tax arrangements -- have become rightful targets in recent years.  

The discontent with legal tax avoidance, in the UK at least, is clear. A YouGov survey last year found that 59% of people think legally reducing your tax liability is wrong and make no distinction between evasion and avoidance. A HMRC poll earlier this also found that six out of 10 people think most big companies are at it. These results are hardly surprising. What might’ve been forgettable news pre-2007 (companies have been "avoiding" tax for decades) is now the most important development of the day. That’s thanks to the constant pressure applied by protest groups like UK Uncut, a steady stream of news about tax avoidance, and British MPs hauling CEOs into parliament and demanding answers.

There’s genuine, palpable, anger towards these avoidance schemes. Apple now joins Google , Starbucks and Amazon as a company that’ll likely be subjected to the next public flogging, or "tax shaming" as it was once dubbed.  The shaming works, too. After the ire of the public was squarely aimed at them, both Amazon and Starbucks changed agreed to pay more tax in the UK. Despite the appeal to the EU’s ruling, I’d bet that Apple eventually follows suit.

But the most important driver for "efficient" tax structures making the news is an angry public that has suffered the effects of post-crash austerity. Politicians have fed the anger by fixating on these conglomerates, blaming them for society's woes. The squeeze on public spending could be eased, they say, by making these companies pay tax in the countries they operate in. Instead of funneling profits to headquarters registered in tax havens. While that’s partially true, you have to wonder where this newfound interest in tax avoidance from our rulers was before the crash.

But now it has actually, finally, happened. No rhetoric, no strong words. Real action. The EU has ordered Apple to pay the Irish government $13 billion in back taxes. The Irish government may not see that money for years as an expensive appeals processes will probably tie up the escrow-held money for the time being. And, more astonishingly, the Irish government doesn’t actually want the money: the EU ruled it complicit in giving Apple special tax arrangements.

Presumably housing the HQ of Apple is more valuable than a one-off payment, and more strictly enforced tax rules. A legitimate fear as the UK has been making overtures to big companies promising lower corporation tax.  What does this mean for Apple and other large conglomerates? Well, according to its takings, not much. Despite disappointing Q3 results this year, Apple is still a phenomenally successful company. Consumers aren’t yet voting with their wallets and I doubt the dip in iPhone and Mac sales are down to consumers being turned off by Apple’s financial ethics.

However, the PR fallout of these suspect tax arrangements don’t do well for the brand. Ethical products and services (albeit slowly) are on the rise, so an ethical competitor could capitalise on this. Amazon and Starbucks thought as much, hence their change in attitude.

The spotlight is now firmly on companies like Apple and their tax arrangements, and given the shift in public mood, that’s unlikely to change.

Apple isn't the only tech giant to come under fire recently. Instagram's illegal advertising problem has been attracted the interest of the Federal Trade Commission. Check out my investigation here, and the video below for more. 

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