Apple. Picture: REUTERS
Apple. Picture: REUTERS

Beijing — Most people old enough to have watched the 1984 Super Bowl will not remember the two American football teams that played in it. They will probably remember "The Commercial". In the annals of the NFL playoffs, it is almost as famous as "The Catch" — an improbable end-zone grab by the San Francisco 49ers’ Dwight Clark in the 1982 NFC Championship game.

During a break in the third quarter of Super Bowl XVIII, as the Los Angeles Raiders were running up the score on the Washington Redskins, CBS broadcast an Apple advertisement for its new Macintosh computer. Directed by Ridley Scott, the 60-second spot featured an athlete hurling a sledgehammer into a giant screen on which Big Brother was hypnotising the masses. The screen explodes, symbolising Apple’s assault on what it regarded as the bland conformity of the emerging personal computer industry.

Titled 1984 in honour of George Orwell’s novel of the same name, it is today regarded as one of the best television commercials of all time. It is also sadly ironic in light of recent events in China, where Apple has decided to aid and abet Big Brother.

Last week Apple confirmed it had pulled the New York Times app from its online store in China, where the newspaper’s website has been blocked by censors since 2012. The app was the only way China-based readers could access New York Times content, including articles translated into Mandarin, without having to use special software that is expensive for the average Chinese internet user and often unreliable.

At first glance, Apple had no choice but to comply with the Chinese government’s directive. China’s smartphone market, the world’s largest, accounted for 20% of its sales — or $8.8bn — in the third quarter of last year.

The California group’s supply chain is also deeply rooted in China. When running at full tilt, an iPhone manufacturing facility operated by Foxconn in Zhengzhou, Henan province, can produce 1m handsets every two days. The Chinese government’s leverage over Apple is enormous.

But so is Apple’s leverage over the Chinese government, should it be brave — and wise — enough to use it. At a time when Beijing is simultaneously attempting to spur slowing economic growth and halt capital outflows, it badly needs foreign investment and the jobs it creates.

The iPhone manufacturing facility in Zhengzhou is a high-tech jewel in a relatively poor, inland province, otherwise blighted by twilight heavy industries and chronic pollution. Foxconn also recently announced it would spend $8.8bn on a flat-panel display factory in the southern city of Guangzhou.

The question is how a foreign company such as Apple can exercise its leverage. In China, throwing sledgehammers in public is not a great tactic. The ruling Communist party tends to react badly when openly challenged, making it difficult to achieve a positive outcome or even a reasonable compromise. Quiet behind-the-scenes lobbying efforts are far more effective, allowing time for problems to flow up the bureaucracy where cooler heads — mindful of the party’s larger interests — are more likely to prevail.

Two years ago, just such an approach by overseas information technology companies stalled national security-inspired regulations that would have made it difficult for Chinese financial institutions to buy foreign networking equipment. Forcing local banks to use lesser quality domestic equipment would have threatened the reliability of their networks. Beijing quickly realised that functioning automatic teller machines were more important to stability than an ill-conceived set of protectionist regulations.

It may well be that Apple quietly fought the good fight before yielding to the authorities’ demand to pull an app that was allegedly "in violation of local regulations". But in confirming the decision, Apple could have at least specified what regulations the New York Times app had supposedly violated.

It did not, and the lack of transparency surrounding the affair has only added to the Orwellian nature of Apple’s surrender. It is a disappointing outcome for a company whose remarkable run, from 1980s iconoclastic outsider to the world’s most valuable company 30 years later, began with such a bold statement.

© The Financial Times Limited 2017

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