GMS802

Ethics and Regulations of International Business

Apple Battery-Gate Scandal of 2017

Aaron Thomas-500781900
Coral Hall Oerton- 500833521
Dave Mit- 500903878
Steffan Borges-501061347
Table of Contents

Introduction
- Research topic 1
- Legal and Ethical Issues 1

Descriptions and Discussions

Ethical Analysis
- Principals and theories 13-16
o Utilitarian Theory 13-14
o Kantian Ethics 14-15
o Virtue Ethics 15
o Deception 15-16
- Social Impact to stakeholders 16-17
o Customers 16
o Employees 16
o Shareholders 17
o Government 17
- Impact to CSR 18-19
- Ethical Dilemma 19-20
- Suggestions and conclusions 20
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Introduction

Research topic

The topic our group chose is Apple’s battery-gate scandal back in 2016-2017. It shows how

Apple deceived their clients and customers by reducing the power and the value of old iPhones

and their batteries in order to sell the newer and more advanced iPhones.

Legal and Ethical Issues

The lawsuit that Apple has been facing began after the company admitted to slowing

down its older phones in December of 2017. The affected devices included  the iPhones 6 up to

the iPhone SE which all ran on the IOS10.2.1 update. The courts have stated that Apple must pay

between $310-$550 million, due to its release of an IOS update too advanced for these older

model iPhones’ processors and batteries. Over time, the new update caused the batteries of these

phones to become obsolete. This led to consumer complaints in regard to performance issues.

Apple did, however, try to argue against this by stating that it was not the update that caused the

malfunction but rather the older Lithium-ion batteries that would degrade with time and usage.

The significance behind what is now known as the Battery-Gate Scandal of Apple, is that one of

largest tech companies in Silicon Valley chose profit over customer satisfaction.

 
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Descriptions and Discussions 

History and Background 

Apple Inc was founded on April 1, 1976, by Steve Jobs and Steve Wozniak, whose vision was to

change the way the world viewed computers (Richardson, 2008). Together, their ultimate goal

was to build easy-to-use computers which were small enough for people to carry from their

workplace to their home (Richardson, 2008). Apple was launched in Steve Jobs’ garage located

in Los Altos California (Bellis, 2019). Out of that garage, Jobs and Wozniak were able to create

the Apple 1, a desktop computer that came with no monitor or keyboard, just a single

motherboard. A year later, Jobs and Wozniak were able to build on the Apple 1 computer and

subsequently created the Apple 2.  The Apple 2 was an upgrade over the Apple 1. The Apple 2

was the first computer with color graphics. It included slots for you to expand the memory with

floppy disks, a keyboard, and other components (Bellis, 2019). Apple's sales surged to $117

million in 1980 with the success of the Apple 2. This coincided with the year Apple first went

public (Richardson, 2008). Due to declining interest in the regular operation of Apple

Computers, Wozniak left Apple in 1983. This was detrimental to Apple and as a result, Steve

Jobs hired John Sculley to be president of the company.

In 1984, Apple released the Macintosh which became their most popular product thus far. This

computer came with a mouse and an integrated screen which was viewed as a revolution  in

computing (Bellis, 2019). A year after the success of the Macintosh, Steve Jobs left Apple due to

clashing with its current president, John Scully (Bellis, 2019). With the departure of Steve Jobs

and Steve Wozniak, Apple Computer Inc continued to flourish. This was proven by Apple

posting their highest profits to date in 1990. However, this was mainly due to the preparations
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Jobs had already put in place before he left. This had to do with an arrangement with Adobe. At

that time, Adobe was considered a small business. Together, Apple and Adobe were able to

create desktop publishing, which ultimately turned out to be a phenomenon (Richardson, 2008).

After peaking in 1990, Apple's market share began to deteriorate slowly over time and by 1996

critics thought Apple was ill-fated (Richardson, 2008). This was due to the fact that Apple CEO,

John Sculley, rejected an appeal from Microsoft to license its software. Microsoft became

Apple's strongest competitor for the next decade (Richardson, 2008).

In 1997, Apple was struggling to compete, for they were in dire need of an operating system.

They decided to purchase NeXT, a software company created by  none other than Steve Jobs.

Following the purchase of NeXT, Apple’s board of directors asked Steve Jobs if he would be

willing to help the company get out of the rut, they found themselves in. Steve Jobs agreed to

help Apple and became the interim CEO of Apple. A year later in 1998, Apple introduced the

iMac, a personal computer for consumers and the everyday person (Richardson, 2008). The

computer became iconic for its variety of different colors and the translucent plastic case (Bellis,

2019). The success of the iMac became the turning point for Apple Inc. Shortly after the release

of the iMac, Apple was hard at work creating a variety of digital tools for its customers,

including iMovie, iPhoto, and a music player called iTunes (Bellis, 2019). Fast forward to 2001,

Steve Jobs was hard at work, changing the way people perceived Apple. That year, Apple

introduced the iPod, a mobile music player which allowed the owner to carry hundreds of songs

on one device (Bellis, 2019).

 
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The iPod was a success as it had allowed Apple to move from the computer business into the

music business. As a result, Apple created other models such as the iPod Mini, iPod Touch, iPod

Shuffle, and the iPod Nano (Bellis, 2019). After success in both the computer and music market,

Apple released the iPhone, a smartphone which sold over 6 million units. This allowed Apple to

expand their scope into the consumer electronic industry (Bellis, 2019). The iPhone was

launched in 2007 and was viewed as revolutionary since it was the first cell phone to remove

physical buttons and be controlled using its screen-based interface. A variety of updates have

been added to the more recent models of the iPhone including Touch ID, GPS, facial recognition,

fast charging, and capture video and photos in 4k (Bellis, 2019). All of these features have

helped Apple revolutionize their devices and ultimately the company. In 2010, Apple came out

with its first iPad, a tablet that offered the experience of a computer but was significantly smaller

and portable (Nguyen, 2018). The iPad was light and thin and provided a battery that could last

for hours (Nguyen, 2018). With the iPad, Apple had created a whole new category with its

computer/laptop hybrid device. This device changed the way people would work and play. In

2011, a year after the first iPad was released, Steve Jobs had passed away and Tim Cook was

crowned the new CEO of Apple. With Tim Cook at the helm, Apple was able to bolster their

product offering by releasing new products like the Apple Watch, Home Pod, and Apple TV.

This was alongside the releasing of new versions of the iPad, iPod, iMacs, and iPhones every

year (Bellis, 2019). In 2018, Apple became the first company in the United States to be valued at

$1 trillion (Bellis, 2019).

 The corporate plan of Apple provides an exceptional opportunity to deliver new products and

solutions with superior ease-of-use, smooth integration and creative manufacturing design to its
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customers by creating and producing their own operating system, hardware and many software

applications and technologies (Reference for Business , n.d.). Apple is the 5th largest  company

in the world with a revenue of $273.9 billion, net income of $58.4 billion, and a market cap of $2

trillion (Reiff, 2020). As a result of Apple's success, Apple is the world’s most valuable brand

with a value of 241.2 billion dollars (Swant, 2020). The total number of Apple workers in 2020

was 147,000, up 7.3 percent from 2019 (Macrotrends, n.d.). Over the past fifteen years, Apple

has steadily increased its number of employees. When it comes to Apple's annual growth rate, it

has increased from 3.79% to 7.30 percent over the past year (Macrotrends, n.d.).

Case analysis 

Earlier this year, there was a report that came to light about Apple slowing down the

software that older iPhone models used in order to work. Each iPhone would cost a consumer

upwards of $700. Customers are willing to pay this sum of money for an iPhone because of the

brand name that comes with it. Owning an Apple is considered prestigious in the modern world,

so when consumers are paying upwards of $700 for an iPhone, they are expecting to have an

amazing experience and to be able to hold onto the phone for a while without having any

negative issues.

  In writing about this case in July, 2020,  Annalise Kudson a reporter and a journalist for

the Staten Island news, stated that the settlement and the lawsuit came shortly after consumers

noticed that Apple had allegedly slowed down the older iPhones with the installation of new

operating systems attempting to make room for the newer line of iPhones (Kudson, 2020).

According to Courthouse news service, the complaint was filed by the lead plaintiff, Terrence
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Zehrer, who resides in the northern district court of California. The complaint was filed after the

plaintiff found that his phone started to shut down unexpectedly in 2016(Lass,2019).

Apple Inc allows for their products’ batteries to be replaced for a small fee. This allows

the product’s life cycle to continue for a little while longer, until the product itself is stopped in

manufacturing and is replaced by a newer more optimum design. Thus, when the issue was

released to the public, it became known as “Battery Gate”, and many consumers were not happy

to learn that Apple was not staying true to their mission statement which is “Empowering man”

which was written in stone by Steve Jobs (Farfan, 2019).

The scam was confronted in a lengthy series of class action litigation which caused

Apple’s name to fall and at the same time, the release of their newer products was slowed down

due to the replacing battery program (Lass, 2019). Apple’s stock dropped by 10 percent or

$15.73 (Lass, 2019) which caused the company to lose nearly $74 billion in market

capitalization. Apple has since formed a program proving that they will not repeat something like

that ever again. This program replaces batteries in older-model phones so that consumers can

reuse their products more often.

Legal Violation 

  Since the time of Apple coming to light in the 21st century, they have prided themselves

on their brand and what it stands for. The logo shows a sign of prominence and the people who

own an Apple product know how valuable the logo is. The company strives to ensure that every

customer is happy and that their products meet the high standard that was created and set-in

stone by Steve Jobs. Apple’s action could be seen as a violation of consumer trust, as well as a

conflict of interest. 
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When a customer purchases an item from a seller, by law the seller is obligated to inform

the customer of any defects that the product may have. Otherwise, it can be seen as the seller

being negligent and uncaring. Under the strict liability theory, manufacturers and companies

must inform a customer of any defect that the product may have or may incur due to certain

updates (Control, N.d). Apple failed under the strict liability theory and did not inform their

customers of the problem this update would have on the older phones. 

A conflict of interest is an ethical problem that arises when a company or an

employee/employer is put into a situation where a personal interest conflicts with a professional

interest that is owed to the company or employer or even to a client. Apple Inc entered into a

conflict of interest of sorts when they decided to reduce the life cycle of older phones, so that

customers would be forced to buy the newer, more expensive models.

The Battery-Gate Scandal, as it is now named, reveals that Apple was attempting to push

their newer and more advanced models of phones. By releasing a new update, causing the older

iPhones to have shorter battery life, this also caused the older models to become obsolete after a

while and then obviously, be thrown away. The customers would have to go and buy a newer

model phone which would, in turn, have them spend more money to obtain the newer model.

The main reason behind why they were forced to pay out a large sum is because Apple

tapped into every country's market, and millions of people now use an Apple.  By violating the

trust of their consumers, they have violated a major component in selling their products. In order

to regain that trust, the company will need to pay out the large sum.
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Current Issues Apple is Facing 

Apple is one of the many companies that started in the 21st century and is still going

strong. As time passes, the advancement of technology does as well. This puts a lot of risk and

pressure on giant tech companies. Issues such as advanced technological features of artificial

intelligence, virtual reality, increased cybernetic software etc. are all elements that pose

challenges and issues to Apple. The company would have to be environmental, employee

friendly, beneficial to customers, all in order to not come under the same scandal that caused the

company to lose a lot in terms of shares and trust.

The introduction of 5G  is supposed to be the fastest internet available and it can be used

on cars, buses, or any gadget. This will force Apple to think outside the box (Evans, 2019). By

adding the 5G to Apple’s product line, it has the potential to control homes, factories and other

areas of living. As well,  it will allow Apple to gain easier access to personal and private

information.

Kate O’ Flaherty, a cybersecurity officer and a senior cybersecurity journalist, wrote

about researchers at Purdue University and Iowa University who fear that the software that

supports 5G would give companies such as Apple a way to look into confidential information

and at the same time access customers, clients and even other business’ data which is a breach of

privacy and an illegal collection of private information that is kept away from the public for

reasons that may not be disclosed (O’Flaherty, N.D). Data such as who the shareholders of a

company are, what new products will be made, what goes into making products, and more will

be at Apple’s finger tips (Evans, 2019). This is one of the reasons that 5G and artificial

intelligence is a current issue for Apple, because they would have to find a way around acquiring

unwanted information that could push them back into trouble.

Ethical Issues  

The first ethical issue that arises from this case is the lack of honesty Apple has

demonstrated. Apple was dishonest by failing to mention to customers that they were slowing

down older phones due to the aging battery. Apple publicly announced that the performance of

older iPhones was intentionally slowed down, verifying the skepticism held by users (Galeon,

2017). Apple broke the ethical principle of honesty by failing to tell customers that they were

slowing down their phones this entire time.

Only after a developer noticed the performance penalty introduced by Apple to fix peak

performance problems with older iPhones, did the tech giant come clean (Galeon, 2017). Apple

never planned on revealing the truth. It took a developer to find out and prove this battery

problem for Apple to eventually divulge the truth. It is still unknown how long Apple has been

implementing this performance penalty. This has proven to consumers that corporations are

seldomly reliable and truthful. Honesty is considered a duty, an obligation to make valid and

reliable statements. This duty is crucial in business as it is considered to be a fundamental ethical

principle. (John R. Boatright, 2016). Honesty is also an important factor in establishing the kind

of trust needed for success in business (John R. Boatright, 2016). Customers rely on the honesty

of a company to ensure they are making the right decisions. Apple failed to show care towards

their customers by forcing this slowdown on the iPhones.

  User experience is crucial when releasing a new product into the market. Apple’s new

update was meant to increase user satisfaction. However, they were unable to provide the best

user experience because they would slow down iPhone batteries, causing the iPhones to not

operate at full capacity. Every year when the new iPhone is released, they would purposely slow

the older phones down without considering how customers would react. It is Apple's duty as a
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company to be transparent with their customers. They could have allowed the consumer the

option to make an educated choice on whether or not to download the update. Apple chose to

focus more on profits than the wellbeing of the consumer (Cao, 2017). Many customers believe

that Apple slows down their phones to persuade you to buy the latest iPhone. Honesty is

essential to the image of an organization and Apple has many customers questioning if they care

about the consumer. Apple did not inform the consumer about the slowdown of their iPhones due

to the battery. These actions showcased their lack of honesty and failure to show care about the

customer.

The second ethical issue is that Apple falsely advertised their iPhones to drive sales and

keep people buying their products. With the new release of the iOS every year, Apple proclaims

a seamless and fast user experience (Cao, 2017). You cannot promise a smooth, fast experience

with new updates while deliberately slowing down older phones especially without people's

acknowledgement. Ultimately, the consumer is not getting the quality of product Apple is

promising on their website. 

For some time, iPhone users have found their older iPhones slowing down through use.

Users with the iPhone 6 and iPhone 7 reported that these phones would slow down any time a

new iOS upgrade was installed (Cao, 2017). Apple is a strong company that prides themself on

innovation and creating engaging experiences (Kabin, 2013). A company that claims to create a

pleasant and engaging experience for its customers while silently slowing down their phones, has

shown that Apple does not care about the customer's experience or their own integrity. Integrity

is a concept that can signify a person of character or virtue that has the right principles and has

the strength of their beliefs (John R. Boatright, 2016). The term is still commonly used not only
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to define an ideal guideline for workers but also to characterize the corporation themself (John R.

Boatright, 2016).

Apple has its famous ‘Think different’ slogan. A company that quietly slows down their

consumers' devices, shows that they are not ‘thinking different’ in a positive way.. Scandals like

this show the consumer that Apple is not thinking about their brand integrity, but focusing on

ways to earn a profit while making the customer an afterthought. Apple is falsely creating this

image about their products, lying to consumers just for profit and corporate greed. It is a

misrepresentation which has caused the customer to enter into an agreement with Apple. If

buyers were aware that purchasing an iPhone meant that the product would become outdated,

instead they may have purchased another competitor’s phone (Galeon, 2017). Apple was worried

about telling the truth because they knew it would cause them to lose customers and ultimately

reduce Apple's revenue, market share, and company value.

The third ethical issue is that Apple failed in their duty as a company to follow their

obligation to tell consumers about slowing their phones because the batteries were not as

expected. An obligation or duty is an ethical requirement to conduct in a particular manner,

something we should do (John R. Boatright, 2016). Such a condition should be enforced on all

people, such as the commitment to tell the truth or uphold promises (John R. Boatright, 2016).

Apple is a mega-corporation which has a duty to tell the truth and uphold promises to their

customers who purchase these products in the created belief that it is the best device out there.

These customers believe they have the fastest and most powerful phones. This is why they spend

thousands of dollars on Apple products. Apple is the biggest tech company, and the 5th largest

company in the world. They are aware that the right thing to do is be transparent with their
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customers at all times. An individual or corporation with a duty is required to serve without

prejudice to his or her own interest. This explains that one with a duty is expected to be

conscientious, to show caution and commitment, not to indulge in self-dealing, and to prevent

conflicts of interest that may interfere with the execution of a duty (John R. Boatright, 2016).

Apple's main interest as a company is profit and growth..

With Apple refusing to notify the public about the slowdown of phones, they were acting in only

their self-interest. Duties are particularly related to integrity when professionals believe such

duties that they have an obligation to perform (John R. Boatright, 2016). Apple did not act

professionally given their responsibility as one of the largest companies in the world. They had

the opportunity to notify their loyal customers but failed to do so. Companies must put their

customers first, regardless of the profession, as they are the people who shaped Apple into the

company it is today. Apple must put their customers first and give the experience they promised

to the consumer. Apple has a responsibility to the consumer to offer what is promised as it is

their duty. Their customers are now holding them accountable. When purchasing an iPhone,

thousands of dollars are spent while expecting the latest greatest product, not knowing they are

buying a phone being deliberately slowed down. Ultimately, Apple  failed in their obligation to

put their customers first.

  
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Ethical Analysis

Application of principles and theories 

Utilitarian Theory

Classical utilitarianism is seen that an action is only right if it produces the greatest

amount of pleasure over pain for everyone involved (John R. Boatright, 2016). With regards to

Apple, they failed to follow the utilitarianism approach in a multitude of ways. The iPhone 6, 6

Plus, 6s, 6s Plus, 7, 7 Plus, and SE devices were all affected by the slowdown. In the class action

settlement, Apple was forced to pay up to $500 million to those who were affected. In the

settlement, Apple must pay roughly $25 to each person who was affected by the slowdown of

these devices. Within three months of its release, the iPhone 6 generated 71.5-million-unit sales

while the iPhone 7 and 7 Plus generated 78.3-million-unit sales (Segal, 2020). This means that at

least 149.8 million people were affected by the iPhone battery life slowdown. As of 2019, Apple

Inc. employed 137,000 full time workers around the world (Forbes 2020). The number of people

who were affected by the slowdown is substantial compared to the number of employees who

earn an income from working at Apple and ultimately, the sale of Apple products. According to

the utilitarian approach, this means that the slowdown caused the greatest amount of pain over

pleasure for those who were involved. The result ,using the utilitarian approach, could have been

different if the settlement forced Apple into bankruptcy. This would mean hundreds of thousands

of employees would lose their jobs so that millions of people could receive a fraction of what

they paid for the iPhone. 

Another factor to take into consideration would be how happy one of the compromised

iPhones would make someone, versus one of the newer generation iPhones. Someone who loves

taking photos would prefer the iPhone 12 over the iPhone 6 because the pictures would come out
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with better quality, ultimately creating more happiness for that person. Someone who prefers a

faster network and connection would prefer the iPhone 12 as it supports 5G while the iPhone 6

only supports up to 4G (Apple, 2020). Those who purchase an iPhone every time a new

generation comes out, still receive pleasure with less pain. Even though they may have owned

one of the slower devices, they may not have experienced pain through the device's battery life

as they had already switched to the next generation before the software update even came out. As

it is difficult to measure pleasure over pain, a lot of people may have received pleasure from the

device's slowdown. 

Kantian Ethics

Kantian ethics works on the basis that you should only act/perform in a way that you

would expect everyone else to act. If you would not agree with someone doing something

unethical to you, you should not do it to them. Kantian ethics also expects that you should

respect the goals of a human being and not use them for your own purpose (John R. Boatright,

2016). As both of these principals are equivalent, Apple morally failed according to Kantian

ethics. 

When someone purchases a new device, especially an expensive one, they have the

expectation that the device's life will last long enough to justify the price tag. If Apple were to

purchase a new headquarters, they would not expect the building to start falling apart the

moment a new building was built across the street. No matter the item, when you purchase

something new, you have the expectation that the lifespan will be longer than the release of a

newer and more improved item to come on the market. 

In regard to the respect for persons and their goals, Apple used their consumers for 
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their own benefit to ultimately generate higher revenues. Everyone’s goal when purchasing a

new product is that it will perform as expected. Apple had a different plan. They chose profit

over performance which led to not following the basic principles of Kantian Ethics.

Virtue Ethics

Utilitarianism and Kantian ethics both focus on which is the best action to take. Virtue

ethics is different as it focuses on “what type of person should we be.” Honesty and compassion

are two virtues that are important in a person, as well as in a business. To apply virtue ethics to a

business, you must first determine the business’ end goal. In regard to Apple, the end goal is to

sell a lot of devices to ultimately make a profit. In this case, they were not honest nor

compassionate to reach this goal. They took advantage of the vulnerability of their consumers to

further their revenues. It is dishonest and uncompassionate to sell something if you are aware

that it will not perform as expected.

Deception

In the business environment, the ethical treatment for a company is to give the consumers

all relevant information in a truthful and non-misleading manner (John R. Boatright, 2016). In

the case of battery gate, Apple deceived their consumers and clients by choosing to conceal and

omit information that would have been relevant to the consumer before their purchase. As

explained previously in this paper, Apple misled the consumer by advertising an iPhone that was

built to last. This has proven to be awfully deceptive. Many people who solely bought Apple

products, switched to other companies to avoid being deceived once again. If Apple was willing

to be deceptive once, there is no proof they will not do it again. 

The deception that Apple has caused with battery gate, not only affects their stock price,

but also affects how consumers view the company and ultimately, the brand image. Prior to this
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incident, Apple had been a brand that people trusted in terms of technology. Following the

dishonest and deceitful actions on behalf of the company, their powerful brand image has

depreciated. Apple Inc. no longer has the consumer’s trust as they once did. In technology, brand

image is a company's most crucial intangible asset. By being deceptive to their consumers, Apple

is to blame for their own downfall. 

Social impact to different stakeholders 

Customers

Apple has already lied to their consumers about slowing their iPhones once. If they

continue to lie about something again, consumers will stop buying Apple products as they will

not be able to trust a company that is unable to be faithful to their target market. This will result

in the consumer choosing competitor products such as Samsung or Microsoft, as these

companies are more open minded to their audience. 

Employees

 If an Apple employee were to leave Apple to work for another company, it could affect

their ability to work for other large companies. While in the hiring process, a company may not

be willing to hire someone who has worked for a dishonest company. This can be a disadvantage

for those who have had nothing to do with the dishonest activities as their only intention was to

come to work and perform well daily. If they do not find work, they will not be able to afford the

basic food and shelter which will result in a lower standard of living.
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Shareholders

Shareholders have lost a significant proportion of their investment as Apple’s stock price

went down ten percent. This was the largest drop in a single day in six years (Deutsche, 2020).

Apple was the first public company to top 2 trillion dollars but not anymore since then, the

company has wiped out 325 billion dollars in value. This is because of the countless lawsuits

they have been facing for the last three years. Even people who have apple stocks in their mutual

funds have lost money.

Government

The US attorney generals from Arizona and Arkansas, who are leading the investigation

are suing the company $113 million regarding how Apple is not explicit about its iPhone battery

issues that led to unexpected device shutdowns. Instead of exposing the problem to consumers or

replacing the batteries, it pushed a software update in December 2016 that could affect the

performance of older iPhone models. At the time, the company made a rare apology, temporarily

lowering the price of replacement batteries from $79 to $29, and adding a feature that would

allow iPhone users to monitor battery health.

Concepts- sustainability, leadership etc.

One of the main CSR policies Apple has is sustainability which has been violated. Since

the lithium-ion batteries are bad for the environment, its impact is devastating. In Tibet, there

have been numerous problems at Ganzizhou Ronga lithium mine, where protestors were

gathering on the streets after a chemical leak occurred from the mine (Murray, 2020). This

disaster resulted in the death of many fish at Liqi River in 2016. Not only did it affect fish, but
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other living creatures such as ducks, crabs, and turtles consumed the polluted water and died. A

firm that oversees the mining operations in this area is the top leading supplier for lithium ion

batteries for technology and other smartphones. A similar situation is happening in Chile where

they are mining but also killing inhabitants from the polluted water (Murray, 2020).  In South

America, there are lithium operations in some countries which are damaging the soil that farmers

use to feed animals (Murray, 2020).

         Another issue that Apple has shown has been their lack of leadership. If a corporation is

okay with lying to their consumers, then they are ultimately spreading a message among their

employees that it is okay to lie, especially if you can get away with it. This is not acceptable

since Apple needs to set a proper example to its employees or else there will be huge

consequences such as non stop lawsuits, less demand for the products, maybe even going out of

business. In this case, Tim Cook could not perform his duties as a leader since he delayed this

issue to the point where it hurt his firm badly. He could have prevented that by finding the issue,

fixing it, and making a formal apology to the rest of the world before it escalated. This goes to

show that Tim Cook is not worthy of being CEO of Apple. He almost sunk this company once.

With him as leader, this might put the brand’s reputation at stake as he definitely cannot be

trusted again. 

When batteries are disposed of in groundwater, these heavy metals enter the surrounding

surface water and groundwater. It is necessary to separate them from the waste streams and

subsequent recycling. Therefore, the sheer scale of the problem has forced global law and the

development of alternative waste facilities to recover such organic matter from waste streams.

Also, it is difficult to separate small batteries if mixed waste enters the facility. This calls for the

removal of all batteries from the mixed waste stream so that advanced organisms can be diverted
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from the landscape to useful applications such as compost production. When batteries are

dumped on the ground, their envelope corrosion and harmful chemicals eventually contaminate

our water supply, which ends up in the oceans, further spreading environmental pollution.

Lithium is also known to be turbulent and can cause fires in landscapes. These burn together

underground for many years and are inevitably dangerous to humans as toxic chemicals are

released into the air. 

Possible ethical dilemmas 

By fixing one major ethical problem, often there are unfortunate repercussions directed

towards other problems within the company. Even a company with a large valuation can still

struggle with costs following a substantial settlement deal. When a corporation is faced with

having to pay out, often they will look to cutting costs elsewhere. This is where they may face

other possible ethical dilemmas. 

As mentioned previously in this report, Apple has taken action in many different

initiatives from supplier responsibility to innovative environmental practices. Apple is devoted to

funding many different CSR initiatives within their supply chain. They are funding $100 million

investment towards energy efficiency projects for their suppliers. For education initiatives, they

have a program called the Supplier Employee Education and Development (SEED) where they

send employees throughout the supply chain to higher education (Apple, 2020). They have many

policies in place to ensure the ethical responsibility of their suppliers. In 2019, Apple performed

1142 supplier assessments in 49 countries (Apple, 2020). This was all possible because of the

amount of money Apple has devoted towards these initiatives. 

Apple is not going to cut costs where it matters most to them - their profit. They are

going to cut costs that do not directly affect how they make money. They are not going to spend
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less money producing the next MacBook or iPhone, they are going to spend less money on their

initiative funding. By doing so, this creates even more ethical dilemmas for Apple. 

Suggestions and conclusions

There are many different approaches we would suggest to Apple to alleviate the tension

brought on by their dishonesty. Our first suggestion would be for Apple to always be honest with

their customers. As one of the largest companies in the world, they need to lead by example.

They have risked their brand reputation, their market share, and ultimately the company itself. If

they develop another device or software update, they must disclose all relevant information to

the public. If information may prevent a buyer from purchasing, they must be aware of the

information.

 Our second suggestion for Apple would be to provide more than the $25 forced by the

settlement. Our recommendation would be for Apple to provide the affected consumers with a

voucher towards a newer edition iPhone. Not only would they appreciate this more than the $25,

it would also almost guarantee the sale of an additional Apple product. Instead of giving them

$25, give the consumer an option to receive a higher-value voucher. Apple would not be putting

money into the pockets of their consumers, but instead be providing them an opportunity to

purchase another Apple device. 

Our final suggestion would be for Apple to no longer design their products with a shorter

lifespan. As previously stated, the lithium ion battery is a threat to the environment and

ecosystem where they are mined or disposed of. As Apple has many sustainability initiatives, we

would recommend for them to adopt this proposal. 

The batterygate scandal has been the largest scandal Apple has ever had to face. The

company lost a significant amount of market value as well as the trust of the loyal customers

who always bought the products that Apple produced. The lawsuits that had accompanied the

scandal, has forced Apple to pay $25 to every single customer who purchased a defective

iPhone. With the suggestions that we mentioned, Apple will be able to offer complete

transparency while continuing to build and reform the trust they once had with their customers.
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