As of 4pm Tuesday, the U.S. Treasury had $273 billion of cash and marketable securities on hand. At the close of business on June 25, the most recent date for which we have figures, Apple had almost as much, $232 billion of cash and marketable securities on hand. Those figures are typical – there are days when Apple has more than the Treasury – and they’re one indication of a new era for the companies that dominate the digital economy, requiring new skills from their leaders. They’ve become world leaders, in some ways playing in the same league as nations.
The latest example is Apple’s tax dispute with the E.U., which threatens relations between the U.S. and the E.U., the world’s two largest economies, and may well influence their tax codes and even their economic growth. U.S. Treasury Secretary Jacob Lew has already attacked the E.U. for declaring that Apple owes $14.5 billion in back taxes to Ireland.
Apple CEO Tim Cook understands the game he’s in. He quickly released a letter disputing the E.U.’s declaration, pointing out its “wide-reaching implications.” He says the E.U. “is effectively proposing to replace Irish tax laws with a view of what the Commission thinks the law should have been. This would strike a devastating blow to the sovereignty of EU member states over their own tax matters, and to the principle of certainty of law in Europe.” Two entities plan to appeal the ruling: Apple and the government of Ireland.
This is just the latest example of what happens as a digital economy enables companies to attain the scale of nations on some dimensions. Apple’s recent market cap ($570 billion) is greater than the GDPs of about 165 of the world’s 190 countries – not strictly comparable measures, but they suggest the scale at issue. Facebook’s 1.7 billion active monthly users exceed the population of any country. Alphabet, through the data generated by Google users, has better real-time knowledge of what’s going on in the world than any government and can predict disease outbreaks and stock market movements with remarkable accuracy, for example. IBM, through its Weather Company business, has more weather data than any government. Bharti Airtel, an Indian telecom that most Americans have never heard of, has more customers than America has people.
Cook cited “the obvious targeting of Apple” in his letter, and he has a point. The E.U. is cracking down on the biggest U.S. technology companies – Alphabet, Amazon, and Facebook in addition to Apple. China, the biggest economy after the U.S. and E.U., has also targeted Apple. This is more than just business. It’s international relations, global politics at the highest level.
The leaders of the world’s largest economies will meet next week at the G20 Summit in Hangzhou, China. How much longer before Cook, Facebook’s Mark Zuckerberg, Amazon’s Jeff Bezos, Alphabet’s Larry Page, Alibaba’s Jack Ma, and their peers get invited?
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