Posts Tagged ‘iPhone’

Apple Expects to Pay $38 Billion Tax on Repatriated Cash

January 17, 2018

Bloomberg

By Alex Webb

 Updated on 
  • Company also plans $30 billion in U.S. capital expenditures
  • Apple has largest offshore cash holdings of any U.S. company
Bloomberg’s Mark Gurman reports on Apple’s plan to repatriate overseas cash.

Apple Inc. said it will bring hundreds of billions of overseas dollars back to the U.S., pay about $38 billion in taxes on the money and invest tens of billions on domestic jobs, manufacturing and data centers in the coming years.

The iPhone maker plans capital expenditures of $30 billion in the U.S. over five years and will create 20,000 new jobs at existing sites and a new campus it intends to open, the Cupertino, California-based company said Wednesday in a statement. Apple’s shares gained less than 1 percent to $177.27 at 1:26 p.m. in New York.

“We are focusing our investments in areas where we can have a direct impact on job creation and job preparedness,” Chief Executive Officer Tim Cook said in the statement, which alluded to unspecified plans by the company to accelerate education programs.

In its December approval of the most extensive tax-code revisions since 1986, Congress scrapped the previous international tax system for corporations — an unusual arrangement that allowed companies to defer U.S. income taxes on foreign earnings until they returned the income to the U.S. That “deferral” provision led companies to stockpile an estimated $3.1 trillion offshore.

By switching to a new system that’s designed to focus on domestic economic activity, congressional tax writers also imposed a two-tiered levy on that accumulated foreign income: Cash will be taxed at 15.5 percent, less liquid assets at 8 percent. Companies can pay over eight years.

Apple has the largest offshore cash reserves of any U.S. company, with about $252 billion in at the end of September, the most recently reported fiscal quarter.

The company, which opened a new headquarters in Cupertino last year, said it also plans to open another site in the U.S. focused initially on employees who provide technical support to Apple product users. Apple said it will announce the location of the new campus at a later date. The company already has a sprawling campus in Austin, Texas, for supply chain and technical support employees.

“These are probably many capital expenditure initiatives and new site build-outs that Apple was already planning on doing regardless of repatriation,” said Michael Olson, an analyst at Piper Jaffray, who has the equivalent of a buy rating on the stock. “What’s not said in this release is that there is more potential for increased buybacks for shareholders and acquisitions that might not have taken place if it were not for the cash influx from overseas.”

— With assistance by Mark Gurman, and Alexis Leondis

https://www.bloomberg.com/news/articles/2018-01-17/apple-expects-38-billion-tax-bill-on-overseas-repatriated-cash

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Social Media Is Making Us Dumber. Here’s Exhibit A. (Tribal allegiances are replacing shared empirical understandings of the world.) — Facebook and Google threaten public health – and democracy

January 12, 2018

By JESSE SINGAL

The New York Times
JAN. 11, 2018

Harvard University Professor Steven Pinker Credit Victor J. Blue/Bloomberg, via Getty Images

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This week, a video surfaced of a Harvard professor, Steven Pinker, which appeared to show him lauding members of a racist movement. The clip, which was pulled from a November event at Harvard put on by Spiked magazine, showed Mr. Pinker referring to “the often highly literate, highly intelligent people who gravitate to the alt-right” and calling them “internet savvy” and “media savvy.”

The clip went viral. The right celebrated; the left fumed. The neo-Nazi Daily Stormer website ran an article headlined, in part, “Harvard Jew Professor Admits the Alt-Right Is Right About Everything.” A tweet of the video published by the self-described “Right-Wing Rabble-Rouser” Alex Witoslawski got hundreds of retweets, including one from the white-nationalist leader Richard Spencer.

“Steven Pinker has long been a darling of the white supremacist ‘alt-right,’” noted the lefty journalist Ben Norton. “And he returns the favor.” Others reacted to the rumor with simple exasperation: “Christ on a crutch,” said the liberal commentator and biologist PZ Myers, who also wrote a blog post denouncing Mr. Pinker for this supposed alliance.

The idea that Mr. Pinker, a liberal, Jewish psychology professor, is a fan of a racist, anti-Semitic online movement is absurd on its face, so it might be tempting to roll your eyes and dismiss this blowup as just another instance of social media doing what it does best: generating outrage.

But it’s actually a worthwhile episode to unpack, because it highlights a disturbing, worsening tendency in social media in which tribal allegiances are replacing shared empirical understandings of the world. Or maybe “subtribal” is the more precise, fitting term to use here. It’s one thing to say that left and right disagree on simple facts about the world — this sort of informational Balkanization has been going on for a while and long predates Twitter. What social media is doing is slicing the salami thinner and thinner, as it were, making it harder even for people who are otherwise in general ideological agreement to agree on basic facts about news events.

That’s because the pernicious social dynamics of these online spaces hammer home the idea that anyone who disagrees with you on any controversial subject, even a little bit, is incorrigibly dumb or evil or suspect. On a wide and expanding range of issues, there’s no such thing as good-faith disagreement.

The online anger aimed at Mr. Pinker provides a perfect case study.

The clip was deeply misleading. If you watch the whole eight-minute video from which it was culled, it’s clear that Mr. Pinker’s entire point is that the alt-right’s beliefs are false and illogical — but that the left needs to do a better job fighting against them.

The clip begins with Mr. Pinker saying he agrees with the other panelists (two journalists and a lawyer) that “political correctness has done an enormous amount of harm in the sliver of the population that might be — I wouldn’t want to say ‘persuadable,’ but certainly whose affiliation might be up for grabs.” This problem presents itself when it comes to “the often highly literate, highly intelligent people who gravitate to the alt-right: internet savvy, media savvy, who often are radicalized in that way, who ‘swallow the red pill,’ as the saying goes, the allusion from ‘The Matrix.’”

Mr. Pinker goes on to argue that when members of this group encounter, for the first time, ideas that he believes to be frowned upon or suppressed in liberal circles — that most suicide bombers are Muslim or that members of different racial groups commit crimes at different rates — they are “immediately infected with both the feeling of outrage that these truths are unsayable” and are provided with “no defense against taking them to what we might consider to be rather repellent conclusions.”

That’s unfortunate, Mr. Pinker argues, because while someone might use these facts to support bigoted views, that needn’t be the case, because “for each one of these facts, there are very powerful counterarguments for why they don’t license racism and sexism and anarcho-capitalism and so on.”

He then goes on to carefully explain those counterarguments: For example, while at the moment it’s true that, according to the Bureau of Justice Statistics, the homicide rate is higher for blacks than for whites, that doesn’t really tell us anything about a group of people since at different times in history, different groups have had elevated crime rates — at one point Irish-Americans did. By that same token, he says, “the majority of domestic terrorism is committed by right-wing extremist groups,” not Muslims.

It would be impossible for a reasonable person to watch the eight-minute video and come away thinking Mr. Pinker’s point is to praise the alt-right rather than to make a psychological argument about political correctness, alt-right recruitment and how to better fight that movement’s bigoted ideas

Now, maybe you disagree with certain parts of this argument — I do, in that I think Mr. Pinker overstates the intensity of campus political correctness — but it’s hard to have that debate in the first place when such a wildly skewed version of Mr. Pinker’s point is spreading like wildfire on the internet.

Steven Pinker will be O.K. A fleeting Twitter blowup isn’t going to bruise his long and successful career as a public intellectual. But this is happening more and more — and in many cases to people who don’t have the standing and reputation he does.

It’s getting harder and harder to talk about anything controversial online without every single utterance of an opinion immediately being caricatured by opportunistic outrage-mongers, at which point everyone, afraid to be caught exposed in the skirmish that’s about to break out, rushes for the safety of their ideological battlements, where they can safely scream out their righteousness in unison. In this case: “Steven Pinker said the alt-right is good! But the alt-right is bad! We must defend this principle!”

This is making us dumber.

Jesse Singal (@jessesingal) is a contributing writer for New York magazine and is working on a book about why social-science ideas go viral.

Related:

How Facebook and Google threaten public health – and democracy

https://www.theguardian.com/commentisfree/2017/nov/11/facebook-google-public-health-democracy

Silicon Valley Reconsiders the iPhone Era It Created

January 9, 2018

Debate over iPhone use by young people reflects the misgivings some in the industry feel toward smartphones’ ubiquity

A tussle this week between prominent investors and Apple Inc. over iPhone use by young people comes amid a nascent re-evaluation of the smartphone’s social consequences within the industry that spawned it.

The smartphone has fueled much of Silicon Valley’s soaring profits over the past decade, enriching companies in sectors from social media to gaming to payments. But over the past year or so, a number of prominent industry figures have voiced concerns about the downsides of the technology’s ubiquity.

They include Apple executives who helped create the iPhone and now express misgivings about how smartphones monopolize attention, as well as early investors and executives in Facebook Inc. who worry about social media’s tendency to consume ever more user time, in part by pushing controversial content.

Those are the kinds of concerns spotlighted in a letter to Apple on Saturday from Jana Partners LLC and the California State Teachers’ Retirement System, or Calstrs, which control about $2 billion of Apple shares. The letter urged the tech giant to develop new software tools that would help parents control and limit phone use more easily, and to study the impact of overuse on mental health.

On Monday, Tony Fadell, a former senior Apple hardware executive involved in the iPhone’s creation, also called on Apple to do more, saying on Twitter that adults are struggling just as much as children with smartphone overuse. Mr. Fadell, who started publicly voicing concerns about smartphones last spring, said Apple and Alphabet Inc.’s Google should add features to their mobile-phone operating systems to allow people to track device usage.

“Just like we need a scale for our weight we need a scale for our digital lives,” Mr. Fadell said in an interview. He said he became concerned about the issue in recent years as he saw families at resorts spending time with devices rather than each other, or couples taking selfies on ski slopes rather than enjoying the views.

Apple late Monday issued a statement defending its parental controls and other protections for children who use its iPhones, noting that it started offering some of them as early as 2008. It said many of those tools can be found in the settings section of its devices.

Mr. Fadell’s comments echoed similar remarks last year by venture capitalists affiliated with Facebook, including Chamath Palihapitiya and Roger McNamee. Mr. Palihapitiya, a former Facebook executive, and Mr. McNamee, an early investor and adviser, have raised concerns about social media’s tendency to encourage users through emails and notifications to open an app, causing people to live in front of their screens.

Facebook last year acknowledged for the first time the negative consequences of time spent on its service, noting that passively consuming information on Facebook leads many users to report “feeling worse.” And Chief Executive Mark Zuckerberg pledged to spend this year working to address misuse of its products in part by “making sure time spent on Facebook is time well spent.”

“There’s a dawning realization of the effects these companies have had on us and a sense that we should no longer just go along with it,” said Roger Kay, an analyst with Endpoint Technologies Associates.

The smartphone has transformed society unlike any previous device. Its ability to substitute for the radio, TV, computer and gaming console has made it so powerful that U.S. consumers now spend more than three hours a day on average on their mobile devices, according to research firm eMarketer. That is an increase of more than a one hour from 2013.

A handful of developers have responded to rising smartphone use by introducing apps designed to help curtail time on devices, including Checky, which tracks how often users unlock a device, and Menthal, which provides a scorecard for device usage. Alex Markowetz, who co-founded Menthal, said Apple should already offer a similar time-spent measurement on the iPhone because customers increasingly want to protect their most important assets—time and intellect.

“That’s the one resource you should be willing to pay for to look after,” Mr. Markowetz said.

Mr. Fadell, who helped develop the iPhone’s hardware, said he has broken “out sometimes in cold sweats” thinking about the device’s social impact. Speaking at the Computer History Museum last May, Mr. Fadell compared creating the device to Steve Martin’s movie “The Jerk.” In the movie, Mr. Martin portrays an inventor who creates a bridge to hold glasses on people’s nose. The bridge sells well until people go cross-eyed and sue Mr. Martin’s company.

“I think about that and when the kids are looking at the digital screen and different pictures are coming up and there’s grandpa, me—am I going to be hated by them for what we created? Or are we going to be like Alexander Graham Bell?” Mr. Fadell said.

Write to Tripp Mickle at Tripp.Mickle@wsj.com

https://www.wsj.com/articles/silicon-valley-reconsiders-the-iphone-era-it-created-1515493801

Related:

Have Smartphones Destroyed a Generation? — Curtailed attention spans, more isolation, depression and suicide among young iPhone users is alarming researchers

January 8, 2018

More comfortable online than out partying, post-Millennials are safer, physically, than adolescents have ever been. But they’re on the brink of a mental-health crisis.

One day last summer, around noon, I called Athena, a 13-year-old who lives in Houston, Texas. She answered her phone—she’s had an iPhone since she was 11—sounding as if she’d just woken up. We chatted about her favorite songs and TV shows, and I asked her what she likes to do with her friends. “We go to the mall,” she said. “Do your parents drop you off?,” I asked, recalling my own middle-school days, in the 1980s, when I’d enjoy a few parent-free hours shopping with my friends. “No—I go with my family,” she replied. “We’ll go with my mom and brothers and walk a little behind them. I just have to tell my mom where we’re going. I have to check in every hour or every 30 minutes.”

Image may contain: 5 people, people sitting

Those mall trips are infrequent—about once a month. More often, Athena and her friends spend time together on their phones, unchaperoned. Unlike the teens of my generation, who might have spent an evening tying up the family landline with gossip, they talk on Snapchat, the smartphone app that allows users to send pictures and videos that quickly disappear. They make sure to keep up their Snapstreaks, which show how many days in a row they have Snapchatted with each other. Sometimes they save screenshots of particularly ridiculous pictures of friends. “It’s good blackmail,” Athena said. (Because she’s a minor, I’m not using her real name.) She told me she’d spent most of the summer hanging out alone in her room with her phone. That’s just the way her generation is, she said. “We didn’t have a choice to know any life without iPads or iPhones. I think we like our phones more than we like actual people.”

I’ve been researching generational differences for 25 years, starting when I was a 22-year-old doctoral student in psychology. Typically, the characteristics that come to define a generation appear gradually, and along a continuum. Beliefs and behaviors that were already rising simply continue to do so. Millennials, for instance, are a highly individualistic generation, but individualism had been increasing since the Baby Boomers turned on, tuned in, and dropped out. I had grown accustomed to line graphs of trends that looked like modest hills and valleys. Then I began studying Athena’s generation.

Around 2012, I noticed abrupt shifts in teen behaviors and emotional states. The gentle slopes of the line graphs became steep mountains and sheer cliffs, and many of the distinctive characteristics of the Millennial generation began to disappear. In all my analyses of generational data—some reaching back to the 1930s—I had never seen anything like it.

At first I presumed these might be blips, but the trends persisted, across several years and a series of national surveys. The changes weren’t just in degree, but in kind. The biggest difference between the Millennials and their predecessors was in how they viewed the world; teens today differ from the Millennials not just in their views but in how they spend their time. The experiences they have every day are radically different from those of the generation that came of age just a few years before them.

What happened in 2012 to cause such dramatic shifts in behavior? It was after the Great Recession, which officially lasted from 2007 to 2009 and had a starker effect on Millennials trying to find a place in a sputtering economy. But it was exactly the moment when the proportion of Americans who owned a smartphone surpassed 50 percent.

The more I pored over yearly surveys of teen attitudes and behaviors, and the more I talked with young people like Athena, the clearer it became that theirs is a generation shaped by the smartphone and by the concomitant rise of social media. I call them iGen. Born between 1995 and 2012, members of this generation are growing up with smartphones, have an Instagram account before they start high school, and do not remember a time before the internet. The Millennials grew up with the web as well, but it wasn’t ever-present in their lives, at hand at all times, day and night. iGen’s oldest members were early adolescents when the iPhone was introduced, in 2007, and high-school students when the iPad entered the scene, in 2010. A 2017 survey of more than 5,000 American teens found that three out of four owned an iPhone.

The advent of the smartphone and its cousin the tablet was followed quickly by hand-wringing about the deleterious effects of “screen time.” But the impact of these devices has not been fully appreciated, and goes far beyond the usual concerns about curtailed attention spans. The arrival of the smartphone has radically changed every aspect of teenagers’ lives, from the nature of their social interactions to their mental health. These changes have affected young people in every corner of the nation and in every type of household. The trends appear among teens poor and rich; of every ethnic background; in cities, suburbs, and small towns. Where there are cell towers, there are teens living their lives on their smartphone.

To those of us who fondly recall a more analog adolescence, this may seem foreign and troubling. The aim of generational study, however, is not to succumb to nostalgia for the way things used to be; it’s to understand how they are now. Some generational changes are positive, some are negative, and many are both. More comfortable in their bedrooms than in a car or at a party, today’s teens are physically safer than teens have ever been. They’re markedly less likely to get into a car accident and, having less of a taste for alcohol than their predecessors, are less susceptible to drinking’s attendant ills.Psychologically, however, they are more vulnerable than Millennials were: Rates of teen depression and suicide have skyrocketed since 2011. It’s not an exaggeration to describe iGen as being on the brink of the worst mental-health crisis in decades. Much of this deterioration can be traced to their phones.Even when a seismic event—a war, a technological leap, a free concert in the mud—plays an outsize role in shaping a group of young people, no single factor ever defines a generation. Parenting styles continue to change, as do school curricula and culture, and these things matter. But the twin rise of the smartphone and social media has caused an earthquake of a magnitude we’ve not seen in a very long time, if ever. There is compelling evidence that the devices we’ve placed in young people’s hands are having profound effects on their lives—and making them seriously unhappy.

In the early 1970s, the photographer Bill Yates shot a series of portraits at the Sweetheart Roller Skating Rink in Tampa, Florida. In one, a shirtless teen stands with a large bottle of peppermint schnapps stuck in the waistband of his jeans. In another, a boy who looks no older than 12 poses with a cigarette in his mouth. The rink was a place where kids could get away from their parents and inhabit a world of their own, a world where they could drink, smoke, and make out in the backs of their cars. In stark black-and-white, the adolescent Boomers gaze at Yates’s camera with the self-confidence born of making your own choices—even if, perhaps especially if, your parents wouldn’t think they were the right ones.

Fifteen years later, during my own teenage years as a member of Generation X, smoking had lost some of its romance, but independence was definitely still in. My friends and I plotted to get our driver’s license as soon as we could, making DMV appointments for the day we turned 16 and using our newfound freedom to escape the confines of our suburban neighborhood. Asked by our parents, “When will you be home?,” we replied, “When do I have to be?”

But the allure of independence, so powerful to previous generations, holds less sway over today’s teens, who are less likely to leave the house without their parents. The shift is stunning: 12th-graders in 2015 were going out less often than eighth-graders did as recently as 2009.

Today’s teens are also less likely to date. The initial stage of courtship, which Gen Xers called “liking” (as in “Ooh, he likes you!”), kids now call “talking”—an ironic choice for a generation that prefers texting to actual conversation. After two teens have “talked” for a while, they might start dating. But only about 56 percent of high-school seniors in 2015 went out on dates; for Boomers and Gen Xers, the number was about 85 percent.The decline in dating tracks with a decline in sexual activity. The drop is the sharpest for ninth-graders, among whom the number of sexually active teens has been cut by almost 40 percent since 1991. The average teen now has had sex for the first time by the spring of 11th grade, a full year later than the average Gen Xer. Fewer teens having sex has contributed to what many see as one of the most positive youth trends in recent years: The teen birth rate hit an all-time low in 2016, down 67 percent since its modern peak, in 1991.Even driving, a symbol of adolescent freedom inscribed in American popular culture, from Rebel Without a Cause to Ferris Bueller’s Day Off, has lost its appeal for today’s teens. Nearly all Boomer high-school students had their driver’s license by the spring of their senior year; more than one in four teens today still lack one at the end of high school. For some, Mom and Dad are such good chauffeurs that there’s no urgent need to drive. “My parents drove me everywhere and never complained, so I always had rides,” a 21-year-old student in San Diego told me. “I didn’t get my license until my mom told me I had to because she could not keep driving me to school.” She finally got her license six months after her 18th birthday. In conversation after conversation, teens described getting their license as something to be nagged into by their parents—a notion that would have been unthinkable to previous generations.

Independence isn’t free—you need some money in your pocket to pay for gas, or for that bottle of schnapps. In earlier eras, kids worked in great numbers, eager to finance their freedom or prodded by their parents to learn the value of a dollar. But iGen teens aren’t working (or managing their own money) as much. In the late 1970s, 77 percent of high-school seniors worked for pay during the school year; by the mid-2010s, only 55 percent did. The number of eighth-graders who work for pay has been cut in half. These declines accelerated during the Great Recession, but teen employment has not bounced back, even though job availability has.Of course, putting off the responsibilities of adulthood is not an iGen innovation. Gen Xers, in the 1990s, were the first to postpone the traditional markers of adulthood. Young Gen Xers were just about as likely to drive, drink alcohol, and date as young Boomers had been, and more likely to have sex and get pregnant as teens. But as they left their teenage years behind, Gen Xers married and started careers later than their Boomer predecessors had.Gen X managed to stretch adolescence beyond all previous limits: Its members started becoming adults earlier and finished becoming adults later. Beginning with Millennials and continuing with iGen, adolescence is contracting again—but only because its onset is being delayed. Across a range of behaviors—drinking, dating, spending time unsupervised— 18-year-olds now act more like 15-year-olds used to, and 15-year-olds more like 13-year-olds. Childhood now stretches well into high school.

Why are today’s teens waiting longer to take on both the responsibilities and the pleasures of adulthood? Shifts in the economy, and parenting, certainly play a role. In an information economy that rewards higher education more than early work history, parents may be inclined to encourage their kids to stay home and study rather than to get a part-time job. Teens, in turn, seem to be content with this homebody arrangement—not because they’re so studious, but because their social life is lived on their phone. They don’t need to leave home to spend time with their friends.If today’s teens were a generation of grinds, we’d see that in the data. But eighth-, 10th-, and 12th-graders in the 2010s actually spend less time on homework than Gen X teens did in the early 1990s. (High-school seniors headed for four-year colleges spend about the same amount of time on homework as their predecessors did.) The time that seniors spend on activities such as student clubs and sports and exercise has changed little in recent years. Combined with the decline in working for pay, this means iGen teens have more leisure time than Gen X teens did, not less.So what are they doing with all that time? They are on their phone, in their room, alone and often distressed.

One of the ironies of iGen life is that despite spending far more time under the same roof as their parents, today’s teens can hardly be said to be closer to their mothers and fathers than their predecessors were. “I’ve seen my friends with their families—they don’t talk to them,” Athena told me. “They just say ‘Okay, okay, whatever’ while they’re on their phones. They don’t pay attention to their family.” Like her peers, Athena is an expert at tuning out her parents so she can focus on her phone. She spent much of her summer keeping up with friends, but nearly all of it was over text or Snapchat. “I’ve been on my phone more than I’ve been with actual people,” she said. “My bed has, like, an imprint of my body.”

In this, too, she is typical. The number of teens who get together with their friends nearly every day dropped by more than 40 percent from 2000 to 2015; the decline has been especially steep recently. It’s not only a matter of fewer kids partying; fewer kids are spending time simply hanging out. That’s something most teens used to do: nerds and jocks, poor kids and rich kids, C students and A students. The roller rink, the basketball court, the town pool, the local necking spot—they’ve all been replaced by virtual spaces accessed through apps and the web.You might expect that teens spend so much time in these new spaces because it makes them happy, but most data suggest that it does not. The Monitoring the Future survey, funded by the National Institute on Drug Abuse and designed to be nationally representative, has asked 12th-graders more than 1,000 questions every year since 1975 and queried eighth- and 10th-graders since 1991. The survey asks teens how happy they are and also how much of their leisure time they spend on various activities, including nonscreen activities such as in-person social interaction and exercise, and, in recent years, screen activities such as using social media, texting, and browsing the web. The results could not be clearer: Teens who spend more time than average on screen activities are more likely to be unhappy, and those who spend more time than average on nonscreen activities are more likely to be happy.
There’s not a single exception. All screen activities are linked to less happiness, and all nonscreen activities are linked to more happiness. Eighth-graders who spend 10 or more hours a week on social media are 56 percent more likely to say they’re unhappy than those who devote less time to social media. Admittedly, 10 hours a week is a lot. But those who spend six to nine hours a week on social media are still 47 percent more likely to say they are unhappy than those who use social media even less. The opposite is true of in-person interactions. Those who spend an above-average amount of time with their friends in person are 20 percent less likely to say they’re unhappy than those who hang out for a below-average amount of time.

If you were going to give advice for a happy adolescence based on this survey, it would be straightforward: Put down the phone, turn off the laptop, and do something—anything—that does not involve a screen. Of course, these analyses don’t unequivocally prove that screen time causes unhappiness; it’s possible that unhappy teens spend more time online. But recent research suggests that screen time, in particular social-media use, does indeed cause unhappiness. One study asked college students with a Facebook page to complete short surveys on their phone over the course of two weeks. They’d get a text message with a link five times a day, and report on their mood and how much they’d used Facebook. The more they’d used Facebook, the unhappier they felt, but feeling unhappy did not subsequently lead to more Facebook use.

Social-networking sites like Facebook promise to connect us to friends. But the portrait of iGen teens emerging from the data is one of a lonely, dislocated generation. Teens who visit social-networking sites every day but see their friends in person less frequently are the most likely to agree with the statements “A lot of times I feel lonely,” “I often feel left out of things,” and “I often wish I had more good friends.” Teens’ feelings of loneliness spiked in 2013 and have remained high since.This doesn’t always mean that, on an individual level, kids who spend more time online are lonelier than kids who spend less time online. Teens who spend more time on social media also spend more time with their friends in person, on average—highly social teens are more social in both venues, and less social teens are less so. But at the generational level, when teens spend more time on smartphones and less time on in-person social interactions, loneliness is more common.So is depression. Once again, the effect of screen activities is unmistakable: The more time teens spend looking at screens, the more likely they are to report symptoms of depression. Eighth-graders who are heavy users of social media increase their risk of depression by 27 percent, while those who play sports, go to religious services, or even do homework more than the average teen cut their risk significantly.

Teens who spend three hours a day or more on electronic devices are 35 percent more likely to have a risk factor for suicide, such as making a suicide plan. (That’s much more than the risk related to, say, watching TV.) One piece of data that indirectly but stunningly captures kids’ growing isolation, for good and for bad: Since 2007, the homicide rate among teens has declined, but the suicide rate has increased. As teens have started spending less time together, they have become less likely to kill one another, and more likely to kill themselves. In 2011, for the first time in 24 years, the teen suicide rate was higher than the teen homicide rate.

Depression and suicide have many causes; too much technology is clearly not the only one. And the teen suicide rate was even higher in the 1990s, long before smartphones existed. Then again, about four times as many Americans now take antidepressants, which are often effective in treating severe depression, the type most strongly linked to suicide.

What’s the connection between smartphones and the apparent psychological distress this generation is experiencing? For all their power to link kids day and night, social media also exacerbate the age-old teen concern about being left out. Today’s teens may go to fewer parties and spend less time together in person, but when they do congregate, they document their hangouts relentlessly—on Snapchat, Instagram, Facebook. Those not invited to come along are keenly aware of it. Accordingly, the number of teens who feel left out has reached all-time highs across age groups. Like the increase in loneliness, the upswing in feeling left out has been swift and significant.

This trend has been especially steep among girls. Forty-eight percent more girls said they often felt left out in 2015 than in 2010, compared with 27 percent more boys. Girls use social media more often, giving them additional opportunities to feel excluded and lonely when they see their friends or classmates getting together without them. Social media levy a psychic tax on the teen doing the posting as well, as she anxiously awaits the affirmation of comments and likes. When Athena posts pictures to Instagram, she told me, “I’m nervous about what people think and are going to say. It sometimes bugs me when I don’t get a certain amount of likes on a picture.”

Girls have also borne the brunt of the rise in depressive symptoms among today’s teens. Boys’ depressive symptoms increased by 21 percent from 2012 to 2015, while girls’ increased by 50 percent—more than twice as much. The rise in suicide, too, is more pronounced among girls. Although the rate increased for both sexes, three times as many 12-to-14-year-old girls killed themselves in 2015 as in 2007, compared with twice as many boys. The suicide rate is still higher for boys, in part because they use more-lethal methods, but girls are beginning to close the gap.These more dire consequences for teenage girls could also be rooted in the fact that they’re more likely to experience cyberbullying. Boys tend to bully one another physically, while girls are more likely to do so by undermining a victim’s social status or relationships. Social media give middle- and high-school girls a platform on which to carry out the style of aggression they favor, ostracizing and excluding other girls around the clock.Social-media companies are of course aware of these problems, and to one degree or another have endeavored to prevent cyberbullying. But their various motivations are, to say the least, complex. A recently leaked Facebook document indicated that the company had been touting to advertisers its ability to determine teens’ emotional state based on their on-site behavior, and even to pinpoint “moments when young people need a confidence boost.” Facebook acknowledged that the document was real, but denied that it offers “tools to target people based on their emotional state.”

In July 2014, a 13-year-old girl in North Texas woke to the smell of something burning. Her phone had overheated and melted into the sheets. National news outlets picked up the story, stoking readers’ fears that their cellphone might spontaneously combust. To me, however, the flaming cellphone wasn’t the only surprising aspect of the story. Why, I wondered, would anyone sleep with her phone beside her in bed? It’s not as though you can surf the web while you’re sleeping. And who could slumber deeply inches from a buzzing phone?

Curious, I asked my undergraduate students at San Diego State University what they do with their phone while they sleep. Their answers were a profile in obsession. Nearly all slept with their phone, putting it under their pillow, on the mattress, or at the very least within arm’s reach of the bed. They checked social media right before they went to sleep, and reached for their phone as soon as they woke up in the morning (they had to—all of them used it as their alarm clock). Their phone was the last thing they saw before they went to sleep and the first thing they saw when they woke up. If they woke in the middle of the night, they often ended up looking at their phone. Some used the language of addiction. “I know I shouldn’t, but I just can’t help it,” one said about looking at her phone while in bed. Others saw their phone as an extension of their body—or even like a lover: “Having my phone closer to me while I’m sleeping is a comfort.”
It may be a comfort, but the smartphone is cutting into teens’ sleep: Many now sleep less than seven hours most nights. Sleep experts say that teens should get about nine hours of sleep a night; a teen who is getting less than seven hours a night is significantly sleep deprived. Fifty-seven percent more teens were sleep deprived in 2015 than in 1991. In just the four years from 2012 to 2015, 22 percent more teens failed to get seven hours of sleep.The increase is suspiciously timed, once again starting around when most teens got a smartphone. Two national surveys show that teens who spend three or more hours a day on electronic devices are 28 percent more likely to get less than seven hours of sleep than those who spend fewer than three hours, and teens who visit social-media sites every day are 19 percent more likely to be sleep deprived. A meta-analysis of studies on electronic-device use among children found similar results: Children who use a media device right before bed are more likely to sleep less than they should, more likely to sleep poorly, and more than twice as likely to be sleepy during the day.

Electronic devices and social media seem to have an especially strong ability to disrupt sleep. Teens who read books and magazines more often than the average are actually slightly less likely to be sleep deprived—either reading lulls them to sleep, or they can put the book down at bedtime. Watching TV for several hours a day is only weakly linked to sleeping less. But the allure of the smartphone is often too much to resist.
Sleep deprivation is linked to myriad issues, including compromised thinking and reasoning, susceptibility to illness, weight gain, and high blood pressure. It also affects mood: People who don’t sleep enough are prone to depression and anxiety. Again, it’s difficult to trace the precise paths of causation. Smartphones could be causing lack of sleep, which leads to depression, or the phones could be causing depression, which leads to lack of sleep. Or some other factor could be causing both depression and sleep deprivation to rise. But the smartphone, its blue light glowing in the dark, is likely playing a nefarious role.

The correlations between depression and smartphone use are strong enough to suggest that more parents should be telling their kids to put down their phone. As the technology writer Nick Bilton has reported, it’s a policy some Silicon Valley executives follow. Even Steve Jobs limited his kids’ use of the devices he brought into the world.

What’s at stake isn’t just how kids experience adolescence. The constant presence of smartphones is likely to affect them well into adulthood. Among people who suffer an episode of depression, at least half become depressed again later in life. Adolescence is a key time for developing social skills; as teens spend less time with their friends face-to-face, they have fewer opportunities to practice them. In the next decade, we may see more adults who know just the right emoji for a situation, but not the right facial expression.

I realize that restricting technology might be an unrealistic demand to impose on a generation of kids so accustomed to being wired at all times. My three daughters were born in 2006, 2009, and 2012. They’re not yet old enough to display the traits of iGen teens, but I have already witnessed firsthand just how ingrained new media are in their young lives. I’ve observed my toddler, barely old enough to walk, confidently swiping her way through an iPad. I’ve experienced my 6-year-old asking for her own cellphone. I’ve overheard my 9-year-old discussing the latest app to sweep the fourth grade. Prying the phone out of our kids’ hands will be difficult, even more so than the quixotic efforts of my parents’ generation to get their kids to turn off MTV and get some fresh air. But more seems to be at stake in urging teens to use their phone responsibly, and there are benefits to be gained even if all we instill in our children is the importance of moderation. Significant effects on both mental health and sleep time appear after two or more hours a day on electronic devices. The average teen spends about two and a half hours a day on electronic devices. Some mild boundary-setting could keep kids from falling into harmful habits.

In my conversations with teens, I saw hopeful signs that kids themselves are beginning to link some of their troubles to their ever-present phone. Athena told me that when she does spend time with her friends in person, they are often looking at their device instead of at her. “I’m trying to talk to them about something, and they don’t actually look at my face,” she said. “They’re looking at their phone, or they’re looking at their Apple Watch.” “What does that feel like, when you’re trying to talk to somebody face-to-face and they’re not looking at you?,” I asked. “It kind of hurts,” she said. “It hurts. I know my parents’ generation didn’t do that. I could be talking about something super important to me, and they wouldn’t even be listening.”

Once, she told me, she was hanging out with a friend who was texting her boyfriend. “I was trying to talk to her about my family, and what was going on, and she was like, ‘Uh-huh, yeah, whatever.’ So I took her phone out of her hands and I threw it at my wall.”

I couldn’t help laughing. “You play volleyball,” I said. “Do you have a pretty good arm?” “Yep,” she replied.

This article has been adapted from Jean M. Twenge’s forthcoming book, iGen: Why Today’s Super-Connected Kids Are Growing Up Less Rebellious, More Tolerant, Less Happy—and Completely Unprepared for Adulthood—and What That Means for the Rest of Us.

 https://www.theatlantic.com/magazine/archive/2017/09/has-the-smartphone-destroyed-a-generation/534198/
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iPhones and Children Are a Toxic Pair, Say Two Big Apple Investors

January 8, 2018

Two activist shareholders want Apple to develop tools and research effects on young people of smartphone overuse and addiction

Teens took a group selfie with a smartphone in New York’s Times Square on Dec. 1.
Teens took a group selfie with a smartphone in New York’s Times Square on Dec. 1. PHOTO: DREW ANGERER/GETTY IMAGES

The iPhone has made Apple Inc. and Wall Street hundreds of billions of dollars. Now some big shareholders are asking at what cost, in an unusual campaign to make the company more socially responsible.

A leading activist investor and a pension fund are saying the smartphone maker needs to respond to what some see as a growing public-health crisis of youth phone addiction.

Jana Partners LLC and the California State Teachers’ Retirement System, or Calstrs, which control about $2 billion of Apple shares, sent a letter to Apple on Saturday urging it to develop new software tools that would help parents control and limit phone use more easily and to study the impact of overuse on mental health.

The Apple push is a preamble to a new several-billion-dollar fund Jana is seeking to raise this year to target companies it believes can be better corporate citizens. It is the first instance of a big Wall Street activist seeking to profit from the kind of social-responsibility campaign typically associated with a small fringe of investors.

Adding splash, rock star Sting and his wife, Trudie Styler, will be on an advisory board along with Sister Patricia A. Daly, a nun who successfully fought Exxon Mobil Corp. over environmental disclosures, and Robert Eccles, an expert on sustainable investing.

The Apple campaign would be unusual for an activist like Jana, which normally urges companies to make financial changes. But the investors believe that Apple’s highflying stock could be hurt in coming decades if it faces a backlash and that proactive moves could generate goodwill and keep consumers loyal to Apple brands.

“Apple can play a defining role in signaling to the industry that paying special attention to the health and development of the next generation is both good business and the right thing to do,” the shareholders wrote in the letter, a copy of which was reviewed by The Wall Street Journal. “There is a developing consensus around the world including Silicon Valley that the potential long-term consequences of new technologies need to be factored in at the outset, and no company can outsource that responsibility.”

Obsessive teenage smartphone usage has sparked a debate among academics, parents and even the people who helped create the iPhone.

Two teenage boys use smartphones in Vail, Colo., in June 2017.
Two teenage boys use smartphones in Vail, Colo., in June 2017. PHOTO: ROBERT ALEXANDER/GETTY IMAGES

Some have raised concerns about increased rates in teen depression and suicide and worry that phones are replacing old-fashioned human interaction. It is part of a broader re-evaluation of the effects on society of technology companies such as Google and Amazon.com Inc. and social-media companies like Facebook Inc. and Snap chat owner Snap Inc., which are facing questions about their reach into everyday life.

Apple hasn’t offered any public guidance to parents on how to manage children’s smartphone use or taken a position on at what age they should begin using iPhones.

Apple and its rivals point to features that give parents some measure of control. Apple, for instance, gives parents the ability to choose which apps, content and services their children can access.

The basic idea behind socially responsible investing is that good corporate citizenship can also be good business. Big investors and banks, including TPG, UBS Group AG and Goldman Sachs Group Inc. are making bets on socially responsible companies, boosting what they see as good actors and avoiding bad ones.

Big-name activists increasingly view bad environmental, social or governance policies as red flags. Jana plans to go further, putting its typical tools to work to drive change that may not immediately pay off.

Apple is an ambitious first target: The combined Jana-Calstrs stake is relatively small given Apple’s nearly $900 billion market value. Still, in recent years Apple has twice faced activists demanding it pare its cash holdings, and both times the company ceded some ground.

Chief Executive Tim Cook has led Apple’s efforts to be a more socially responsible company, for instance on environmental and immigration issues, and said in an interview with the New York Times last year that Apple has a “moral responsibility” to help the U.S. economy.

Apple has shown willingness to use software to address potentially negative consequences of phone usage. Amid rising concerns about distracted driving, the company last year updated its software with a “do not disturb while driving” feature, which enables the iPhone to detect when someone is behind the wheel and automatically silence notifications.

The iPhone is the backbone of a business that generated $48.35 billion in profit in fiscal 2017. It helped turn Apple into the world’s largest publicly listed company by market value, and anticipation of strong sales of its latest model, the iPhone X, helped its stock rise 50% in the past year. Apple phones made up 43% of U.S. smartphones in use in 2016, according to comScore , and an estimated 86 million Americans over age 13 own an iPhone.

Jana and Calstrs are working with Jean M. Twenge of San Diego State University, who chronicled the problem of what she has dubbed the “iGen” in a book that was previewed in a widely discussed article in the Atlantic magazine last fall, and with Michael Rich of Harvard Medical School and Boston Children’s Hospital, known as “the mediatrician” for his work on the impact of media on children.

The investors believe both the content and the amount of time spent on phones need to be tailored to youths, and they are raising concern about the public-health effects of failing to act. They point to research from Ms. Twenge and others about a “growing body of evidence” of “unintentional negative side effects,” including studies showing concerns from teachers. That is one reason Calstrs was eager to support the campaign, according to the letter.

The group wants Apple to help find solutions to questions like what is optimal usage and to be at the forefront of the industry’s response—before regulators or consumers potentially force it to act.

The investors say Apple should make it easier and more intuitive for parents to set up usage limits, which could head off any future moves to proscribe smartphones.

The question is “How can we apply the same kind of public-health science to this that we do to, say, nutrition?” Dr. Rich said in an interview. “We aren’t going to tell you never go to Mickey D’s, but we are going to tell you what a Big Mac will do and what broccoli will do.”

Write to David Benoit at david.benoit@wsj.com

Appeared in the January 8, 2018, print edition as ‘Investors Prod Apple On Child iPhone Use.’

https://www.wsj.com/articles/iphones-and-children-are-a-toxic-pair-say-two-big-apple-investors-1515358834

Despite hacking charges, U.S. tech industry fought to keep ties to Russia spy service

June 30, 2017
Reuters
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By Joel SchectmanDustin Volz and Jack Stubbs | WASHINGTON/MOSCOW

(Editors note: Attention to language in paragraph 22 that may be offensive to some readers.)

As U.S. officials investigated in January the FSB’s alleged role in election cyber attacks, U.S. technology firms were quietly lobbying the government to soften a ban on dealing with the Russian spy agency, people with direct knowledge of the effort told Reuters.

New U.S. sanctions put in place by former President Barack Obama last December – part of a broad suite of actions taken in response to Russia’s alleged meddling in the 2016 presidential election – had made it a crime for American companies to have any business relationship with the FSB, or Federal Security Service.

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Previous Reuters Cyber coverage:

Under pressure, Western tech firms bow to Russian demands to share cyber secrets
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U.S. authorities had accused the FSB, along with the GRU, Russia’s military intelligence agency, of orchestrating cyber attacks on the campaign of Democratic presidential candidate Hillary Clinton, a charge Moscow denies.

But the sanctions also threatened to imperil the Russian sales operations of Western tech companies. Under a little-understood arrangement, the FSB doubles as a regulator charged with approving the import to Russia of almost all technology that contains encryption, which is used in both sophisticated hardware as well as products like cellphones and laptops.

Worried about the sales impact, business industry groups, including the U.S.-Russia Business Council and the American Chamber of Commerce in Russia, contacted U.S. officials at the American embassy in Moscow and the Treasury, State and Commerce departments, according to five people with direct knowledge of the lobbying effort.

The campaign, which began in January and proved successful in a matter of weeks, has not been previously reported.

In recent years, Western technology companies have acceded to increasing demands by Moscow for access to closely guarded product security secrets, including source code, Reuters reported last week.

Russia’s information technology market is expected to reach $18.4 billion this year, according to market researcher International Data Corporation.

The sanctions would have meant the Russian market was “dead for U.S. electronics” said Alexis Rodzianko, president of the American Chamber of Commerce in Russia, who argued against the new restrictions. “Every second Russian has an iPhone, iPad, so they would all switch to Samsungs,” he said.

A spokesman for the U.S. Commerce Department Bureau of Industry and Security declined to comment. A State Department official said Washington considered a range of factors before amending the FSB sanction and regularly works with U.S. companies to assess the impact of such policies.

The lobbyists argued the sanction could have stopped the sale of cars, medical devices and heavy equipment, all of which also often contain encrypted software, according to a person involved in the lobbying effort. The goal of the sanctions was to sever U.S. business dealings with the FSB – not end American technology exports to Russia entirely, the industry groups argued.

“The sanction was against a government agency that has many functions, only one of them being hacking the U.S. elections,” said Rodzianko.

The lobbyists assembled representatives from the tech, automotive and manufacturing sectors to make the case to the U.S. Treasury Department, said the person involved in the lobbying effort.

The industry groups did not argue against the intent of the sanction but asked for a narrow exception that would allow them to continue to seek regulatory approvals from the FSB while still keeping in place the broader ban on doing business with the spy agency.

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“PUNISHMENT FOR VERY BAD ACTS”

The industry groups represent a number of technology firms with a large presence in Russia, including Cisco and Microsoft.

Reuters was unable to determine which companies were directly involved in the lobbying. Microsoft said it did not ask for changes to the sanctions. In a statement, Cisco said it also did not seek any changes to the sanction but had asked the Treasury Department for clarification on how it applied.

In order to get encrypted technology into Russia, companies need to obtain the blessing of the FSB, a process that can sometimes take months or even years of negotiation. Before granting that approval, the agency can demand sensitive security data about the product, including source code – instructions that control the basic operations of computer equipment.

The United States has accused Russia of a growing number of cyber attacks against the West. U.S. officials say they are concerned that Moscow’s reviews of product secrets could be used to find vulnerabilities to hack into the products.

Some U.S. government officials rejected the industry groups’ arguments. They openly embraced the prospect of any ripple effect that cut further trade with Russia.

Kevin Wolf was assistant secretary at the Commerce Department and oversaw export control policy when the FSB sanction was put in place. Wolf said within days of the sanction taking effect, Commerce received numerous calls from industry groups and companies warning of the unintended consequences.

But for Wolf, who was “furious” with Moscow over the alleged cyber attacks, any additional curbs on trade with Russia was a bonus rather than an unintended downside.

“I said, ‘Great, terrific, fuck ’em … The whole point is to interfere with trade’,” recounted Wolf. “The sanction was meant to impose pain (on Russia) and send a signal as punishment for very bad acts.”

Wolf left the Commerce Department when President Donald Trump took office on Jan. 20.

Other officials felt that the impact on legitimate trade was too great. “The intention of the sanction was not to cut off tech trade with Russia,” said a U.S. official with direct knowledge of the process.

The lobbyists had also argued that since the sanctions only applied to U.S. technology makers, it would put them at a disadvantage to European and Asian companies who would still be able to interact with the FSB and sell products in Russia.

“We were asking for a narrow technical fix that would give a fair deal for American companies,” Dan Russell, CEO of the U.S.-Russia Business Council, said in an interview.

The advocacy worked. State and Treasury officials began working to tweak the sanction in January before Obama left office, according to people involved in the process.

On Feb. 2, the Treasury Department created an exception to the sanction, about two weeks after Trump took office, to allow tech companies to continue to obtain approvals from the FSB.

 

(Reporting by Joel Schectman and Dustin Volz in Washington and Jack Stubbs in Moscow; Editing by Ross Colvin)

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Ten Years of Russian Cyber Attacks on Other Nations

http://www.nbcnews.com/storyline/hacking-in-america/timeline-ten-years-russian-cyber-attacks-other-nations-n697111

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John Emerson, Washington's man in Berlin, to meet with Guido Westerwelle, German foreign minister, over claims Angela Merkel's phone was tapped by US

Chancellor Merkel called President Obama demanding answers after reports emerged that the US may have been monitoring her phone Photo: YVES HERMAN/REUTERS
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U.S. Ambassador to the United Nations Samantha Power speaks at the Center for American Progress’ 2014 Making Progress Policy Conference in Washington November 19, 2014.  Credit: Reuters/Gary Cameron

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Chinese President Xi Jinping and U.S. President Barack Obama at a joint news conference in Washington, D.C. on Sept. 25.
Chinese President Xi Jinping and U.S. President Barack Obama at a joint news conference in Washington, D.C. on Sept. 25. Photo: Pete Marovich/Bloomberg News
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Apple’s mounting problems in China: Apple Customer Data in China Was Sold Illegally, Police Say

June 10, 2017

To Apple’s mounting problems in China, add official scrutiny over privacy.

The Chinese police said this week that they had arrested 22 people suspected of selling the personal data of an unspecified number of Apple customers. The police, in Cangnan County in the eastern province of Zhejiang, said the thieves had reaped 50 million renminbi, or about $7.3 million, over an unspecified period.

Many of the details were unclear, including the identities of those involved and the severity of the breach.

In a statement on Wednesday, the Cangnan police said they found that Apple employees had illegally acquired personal data, then later in the same statement said 20 of the 22 people worked for companies that sell Apple products or are Apple contractors. The police did not disclose information about the other two people. In China, Apple’s products are sold broadly, in electronics chain stores and small booths in shopping malls in addition to the company’s official Apple Stores.

The Cangnan police also said the data included the names, Apple identification numbers and phone numbers of Apple users. They did not say whether passwords or financial information like credit card numbers were involved, which would suggest the thieves had access to internal Apple data and would make the breach more serious.

The arrests are part of a set of broader difficulties in China for Apple, which is based in Cupertino, Calif. Sales of iPhones, still a sign of middle-class aspiration in China, have slowed, according to analysts, as the public waits for new models and as Chinese manufacturers of cheaper phones step up their quality and marketing.

Apple has also faced new scrutiny from the government on other fronts. Last year its movie and book services were shut down in China.

Still, Apple may simply be caught up in a wider rising of concern over privacy in China.

Few people in China expect the country’s authoritarian central government to stay out of their business. But outside of that, a growing number of Chinese people fear cybercrime and identity theft, particularly as millions of them turn to online shopping and using money electronically.

Between widespread malware campaigns and a large number of new internet users, China has become a playground for internet fraudsters. Last year, China tried 361 criminal cases involving violation of personal data, up from 176 in 2015, said Xie Yongjiang, associate director for the Institute of Internet Governance and Law at the Beijing University of Posts and Telecommunications.

“It is very common. Every one of us can feel it,” Mr. Xie said. “For example, after your child is born at a hospital, someone will phone you and ask if you need baby products. When your child turns 3, someone will phone you and ask if your child would go to their nursery school. When your child reaches primary school age, someone will phone you to ask if you need training services.”

“You have no idea who exposed your personal data,” he added.

The problem is not new. In one incident reported in the Chinese news media just this week, an employee of a Shanghai delivery company was recently arrested on suspicion of selling clients’ personal data.

Other examples abound. An apparent trove of login information leaked onto the Chinese internet was used to hack more than 20 million accounts on Alibaba’s e-commerce site Taobao, according to news reports. Alibaba said that its security systems had not been breached and that it had worked with the police to quickly catch the perpetrators.

In another example, China News Service, a state-run news agency, reported late last year that login information and other personal data from accounts associated with the Chinese e-commerce site JD.com were exposed in 2013 as part of a security problem. JD.com said it had quickly fixed the issue.

The problem is not even new to Apple. Last year, 10 employees of an Apple contractor in China were also found with data from more than 80,000 users.

Related:

Chinese Apple staff suspected of selling private data

June 8, 2017

AFP

© AFP | Chinese authorities say they have uncovered a massive underground operation run by Apple employees selling computer and phone users’ personal data.

BEIJING (AFP) – 

Chinese authorities say they have uncovered a massive underground operation run by Apple employees selling computer and phone users’ personal data.

Twenty-two people have been detained on suspicion of infringing individuals’ privacy and illegally obtaining their digital personal information, according to a statement Wednesday from local police in southern Zhejiang province.

Of the 22 suspects, 20 were Apple employees who allegedly used the company’s internal computer system to gather users’ names, phone numbers, Apple IDs, and other data, which they sold as part of a scam worth more than 50 million yuan ($7.36 million).

The statement did not specify whether the data belonged to Chinese or foreign Apple customers.

Following months of investigation, the statement said, police across more than four provinces — Guangdong, Jiangsu, Zhejiang, and Fujian — apprehended the suspects over the weekend, seizing their “criminal tools” and dismantling their online network.

The suspects, who worked in direct marketing and outsourcing for Apple in China, allegedly charged between 10 yuan ($1.50) and 180 yuan ($26.50) for pieces of the illegally extracted data.

The sale of personal information is common in China, which implemented on June 1 a controversial new cybersecurity law aimed at protecting the country’s networks and private user information.

In December, an investigation by the Southern Metropolis Daily newspaper exposed a black market for private data gathered from police and government databases.

Reporters successfully obtained a trove of material on one colleague — including flight history, hotel checkouts and property holdings — in exchange for a payment of 700 yuan ($100).

Related:

China’s New Cybersecurity Law Tested by iPhone Information Theft

June 7, 2017

Foreign technology companies said they were uncertain how the new law would affect their operations

Image result for apple store in China, photos

The Wall Street Journal
June 7, 2017 9:38 a.m. ET

BEIJING—A week after China’s first cybersecurity law took effect, an investigation over the alleged theft and sale of iPhone users’ information looked set to test how well Apple Inc. and other foreign companies protect Chinese citizens’ personal data.

Police in eastern China said they had detained 22 people, including 20 from Apple “direct sales outlets” in China and companies Apple outsources services to. Police said those detained had used Apple’s internal system to illegally obtain information associated with iPhone products like phone numbers, names and Apple IDs, and then sold the information.

A statement by police in Cangnan county in Zhejiang province gave no further information on the Apple outlets involved, or details on the two other people detained. Calls to the police’s news department went unanswered.

The statement said the 22, who were detained May 3, charged from 10 yuan ($1.50) to 180 yuan for each piece of information and that the total amount of money involved was over 50 million yuan.

An Apple spokeswoman in China didn’t respond to a request for comment.

China has long struggled to rein in a robust black market in personal information, prompting one political activist last year to purchase and publish in a form of protest the private data of several Chinese tech CEOs, including Alibaba Group Holding Ltd. co-founder Jack Ma. The activist showed evidence of one vendor offering to sell personal information ostensibly belonging to Chinese President Xi Jinping for 1,000 yuan.

A core aim of the cybersecurity law is to better protect individuals’ private data, authorities have said.

iPhone users’ information is highly prized on the black market because of the belief they are more affluent. Obtaining data such as a user’s Apple ID could help hackers lock iPhones remotely and then demand payment from the user to unlock it. The potential for abuse widens further if hackers gain access to a user’s cloud storage.

Ahead of the June 1 implementation of the cybersecurity law, foreign technology companies expressed concern, saying they were uncertain how it would affect their operations. Specific measures to comply with the law’s mandates on protection of personal information are still being worked out, according to the regulator, China’s Cyberspace Administration.

Under earlier laws, companies have largely escaped punishment when employees used their access to internal computer systems to steal users’ personal data, according to Liu Chunquan, an intellectual property lawyer with Shanghai-based Duan & Duan Law Firm.

That has changed under the cybersecurity law, Mr. Liu said, with companies now potentially facing fines and other punishment by regulators unless they can prove their systems weren’t to blame for leaks.

“Now with this law, Apple as a company faces much greater legal risk than it would have before,” he said.

A company could face fines of as much as 10 times the illegal revenue from a theft if it is found to have had inadequate protections against a leak, according to the law. In serious situations, regulators can temporarily close or revoke the business licenses of companies found in violation of the new law.

Based on information police have released so far, government authorities could now have grounds to look into potential holes in Apple’s internal data management in China, said You Yunting, a partner with Shanghai-based DeBund Law Offices.

Cangnan police posted a series of photos of officers detaining and interrogating the detainees on the popular WeChat messaging app. In one image, several people are shown standing in front of a police station in handcuffs. They are accompanied by what appears to be plainclothes police, including one holding a bouquet of flowers.

Yang Jie and Josh Chin contributed to this article

(END) Dow Jones Newswires

June 07, 2017 09:53 ET (13:53 GMT)

https://www.wsj.com/articles/chinas-new-cybersecurity-law-tested-by-iphone-information-theft-1496842716

Apple Pay Promised to Make Plastic Obsolete. Then Came Wary Shoppers, Confused Clerks

April 5, 2017

Just 13% of iPhone users have tried the mobile-payment service, by one estimate; Apple works to recruit, train merchants

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Eddy Cue, Apple Senior Vice President of Internet Software and Services, demonstrates the new Apple Pay mobile payment system at a Whole Foods store in Cupertino, Calif. (AP Photo/Eric Risberg)

To pay, Apple Pay users hold the phone above a payment terminal that uses a technology known as near-field communication to transmit credit- and debit-card information. PHOTO: CHARLES SYKES/ASSOCIATED PRESS
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Nancy Schrum watched curiously as a colleague from her law firm waved an iPhone above a credit-card reader to buy a Subway sandwich with Apple Pay earlier this year.

“I have that, but I’m afraid to use it,” said Ms. Schrum, who feared the technology wouldn’t work.

When Apple Inc. AAPL 0.74% launched its mobile-payment service more than two years ago, it hoped to speed up the checkout process and, ultimately, to replace physical wallets for U.S. consumers.

Apple Pay has made significant headway, but Ms. Schrum’s wariness reflects a range of factors that analysts say have caused growth to undershoot their expectations, including security concerns about the service, retailers that don’t accept it, and Apple’s relatively paltry marketing.

The pace of Apple Pay adoption has been “disappointing even to conservative expectations,” said Gene Munster, managing partner at Loup Ventures, a venture-capital firm specializing in tech research. Just 13% of the estimated 680 million iPhone users have used Apple Pay, according to the research firm.

Eddy Cue, Apple senior vice president in charge of internet software and services, said the service has been adopted faster than other payment systems and he believes it will eventually replace cash, debit and credit cards as the primary payment system.

“Does it matter if we get there in two years, three years [or] five years?” Mr. Cue said in an interview. “Ultimately, no.”

The service requires users to upload their credit or debit card to their iPhone wallet by scanning an image of it. To pay at the checkout line, they hold the phone—or Apple Watch—above a contactless payment terminal that uses a technology known as near-field communication to transmit the card’s information. Fingerprint verification is required for security. The service can also be used to pay in apps and online.

Many U.S. consumers remain wary of such a service, according to technology research firm Creative Strategies: 40% are concerned about the security risks of adding a credit or debit card to their phone, and more than 60% aren’t familiar with contactless payments.

Compounding Apple Pay’s challenges, only a third of U.S. stores accept it as a form of payment, according to the Nilson Report. The payment-industry trade publication notes, however, that the service’s rate of acceptance has more than doubled since 2015.

“If you can’t use it everywhere, why are you going to switch?” said Braden More, Wells Fargo & Co.’s head of partnerships and industry relations, who is surprised more retailers haven’t embraced mobile payments. He expects acceptance and usage to grow.

Big names including Wal-Mart Stores Inc. and Kroger Co. haven’t yet enabled Apple Pay, due in part to technical hurdles, and even at stores that do use the service, users say cashiers often aren’t familiar with it.

Paul Davis said he recently had to inform a McDonald’s cashier in Cincinnati that the burger chain accepted Apple Pay and show her how. “It happens all the time,” he said.

Vice President of Apple Pay Jennifer Bailey said Apple has a team working with merchants to instruct cashiers and add instructions to check-out manuals. She said more than half of the biggest 100 merchants in the U.S. have adopted Apple Pay, including Best Buy Co. , Kohl’s Corp. and Starbucks Corp.

Loup Ventures’ Mr. Munster, a longtime Apple analyst previously with brokerage Piper Jaffray Co., estimates Apple Pay last year handled $36 billion in transactions, far less than the $207 billion he had predicted by 2016 after Apple started the service.

Apple doesn’t disclose the number or value of Apple Pay transactions, but Chief Executive Tim Cook recently said the number of users has tripled over the past year and transaction volume increased more than sixfold last year.

Apple Pay brought in $30 million in revenue last year, according to Sanford C. Bernstein—a fraction of the $24.35 billion generated last fiscal year by Apple’s services unit, which also comprises Apple’s App store and iTunes. The company announced in January it aimed to double its services revenue by 2021. Apple Pay generates revenue from charging banks a slice of each transaction, often 0.15% per credit-card transaction and a half cent per debit-card purchase.

Shortly after Apple Pay was introduced, rivals Samsung Electronics Co. and Alphabet Inc.introduced similar payment services. Samsung Pay is more broadly accepted than Apple Pay because of proprietary technology it uses, while Android Pay is accepted by roughly the same number of retailers as Apple Pay, according to the Nilson Report.

Still, U.S. consumers are about twice as likely to have used Apple Pay as rivals, according to First Annapolis Consulting, Inc., a payment adviser.

Nilson Report publisher David Robertson said that with about a third of U.S. retailers adopting it, Apple Pay is on the cusp of broad acceptance. “It’s going to become so ubiquitous that we will all do it,” he said.

Apple expected consumers to embrace Apple Pay as energetically as they did iTunes—an instant hit when it launched in 2003—because executives felt it was faster and safer than existing payment systems, a former employee on the project said. When retailers didn’t support it initially, the person said, Apple executives were reluctant to promote it and invest in retail terminals that would spur adoption.

Apple developed two commercials touting Apple Pay, which aired in 2015, though banks also have advertised the service. It has invested in other promotions like free shipping for Apple Pay purchases online and processing-fee discounts for smaller merchants. It also added the service to devices like its newest laptop, integrated it into the Safari browser for online shopping, and the service is now available in more than a dozen countries, including Japan and Spain.

Accelerating Apple Pay’s reach is important for Apple as it negotiates extensions of three-year agreements with banks and credit-card issuers this year, said James Wester, a research director at IDC Financial Insights. Apple Pay’s fees cut into issuers’ roughly 2% share of transactions, he said.

Mr. Cue said he was confident banks would renew because they “can see the growth.”

Write to Tripp Mickle at Tripp.Mickle@wsj.com

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https://www.wsj.com/articles/apple-pay-promised-to-make-plastic-obsolete-then-came-wary-shoppers-confused-clerks-1491384606