January 27, 2023

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Tim Cook’s charm unleashes Twitter spat, yet China crisis rumbles on

Tim Cook was already grappling with one of the biggest disruptions to Apple’s key supply chains in China since the global pandemic erupted when the tweet tirade began.

In a flurry of more than a dozen tweets on Monday, Elon Musk launched a broadside against the world’s most valuable tech company, questioning the Apple CEO’s commitment to free speech. Musk, who bought Twitter for $44 billion in October, rallied his 120 million followers to support a “revolution against online censorship in America.”

Cook was able to placate the unpredictable billionaire within two days. Musk soon tweeted again, calling it a “misunderstanding” and thanking Cook for a personal tour of Apple HQ, known as Apple Park.

A former Apple veteran of more than 10 years wasn’t surprised by Cook’s diplomatic skills.

“I’m sure Tim charmed him,” the person said. “He wanted to hear [Musk] out. And I’m sure Tim has given his perspective. That’s what Tim does: He rolls up his sleeves and fixes problems. He doesn’t go into big public disputes, whether it’s a PR fight or something more contentious. That’s not his MO. He’s not like Elon.”

Cook’s cautious behind-the-scenes maneuvering since taking over Steve Jobs in 2011 has been instrumental in cementing Apple’s position as the world’s largest company.

His role as Big Tech’s quiet elder statesman was tested last month amid massive disruptions at the world’s largest iPhone factory in Zhengzhou, China, which has been riddled with violent protests against tough Covid policies.

The chaos at the Foxconn-owned facility known as “iPhone City” forced a rare warning from Apple in November that high-end iPhone shipments would be “substantially reduced” ahead of the holiday season.

It’s perhaps Cook’s biggest test yet. The iPhone may account for less than a fifth of global smartphone sales, but it accounts for 80 percent of profits. Apple grew about $2 trillion under Cook.

“The first trillion dollars came from Jobs and [Jony] Ive, the next trillion came from what Tim Cook did,” Apple CEO John Sculley said before Jobs returned in the late ’90s. “He does it in a calm way and doesn’t stand out, but he’s doing a remarkable job.”

Over the past five years, Alabama-born Cook’s pragmatism has allowed Apple to avoid damaging tariffs under President Trump; his arguments about protecting consumer data won him allies in Brussels amid widespread anti-tech sentiment; and Apple’s investments in China have allowed production to largely keep running during the pandemic.

A week into Joe Biden’s tenure, Cook penned a letter praising the president’s actions to protect immigrants brought to the United States as children. It’s the sort of move that earned him an invitation to the White House dinner Thursday honoring French President Emmanuel Macron.

“His best skill is understanding the need to care for everyone — to be multidisciplinary and not have a favorite,” said Steve Wozniak, Apple co-founder.

Cook’s role as a diplomat is something of a third act. His first triumph was setting up Apple’s manufacturing facilities in China after Jobs lured him to Cupertino in 1998 from PC maker Compaq. Cook has also built a $74 billion business in the country — far more lucrative than any of its big-tech competitors.

Within Apple, Cook’s contribution to the success of the iPod, iPhone and iPad is considered as important as that of his famous designer, Ive.

“When you hold an iPhone in your hands, the names Steve Jobs and Jony Ive spring to mind, but the contributions made by Tim Cook are just as relevant,” Sculley said.

His second major achievement was cementing the iPhone as the emerging brand of choice around the world. Cook has expanded Apple’s reach into new media and services, laying the foundation for expanding its presence in the financial, automotive and healthcare industries.

Cook’s steady hand, attractive dividend policy, and massive buyback program have earned the trust of Warren Buffett, who described Cook as “Apple’s brilliant CEO” in his letter to shareholders.

Never an investor under Jobs, Buffett is now Apple’s largest single shareholder with a stake worth about $140 billion, which accounts for more than 40 percent of Berkshire Hathaway’s investments.

None of this success was predicted. The first major book about Cook’s early tenure, Haunted Empire, published in 2014, described him as “painfully out of touch” and Apple as “more limited in his capabilities than ever.”

The idea that Apple would be outdone by the likes of Samsung became such hype that satirical news site The Onion once featured a profusely sweating chef on stage in Cupertino under the headline, “Apple reveals panicked man with no ideas.”

While Cook’s success has been clear, part of his legacy is currently in jeopardy as the wisdom of concentrating Apple’s assembly operations in China comes under scrutiny in the wake of the Covid revolt in Zhengzhou.

Apple’s smooth manufacturing operations have underpinned its growth over the past two decades, but with China accounting for 95 percent of iPhone production, investors are now wondering what its Plan B is.

The optics of Apple’s diplomacy with Beijing has also come into focus as broader protests have rocked the country in recent weeks.

When Apple recently imposed restrictions on the use of AirDrop in China – an iPhone feature used to share information from protesters – Florida Gov. Ron DeSantis accused Apple of siding with Chinese leader Xi’s crackdown Jinping, while Missouri Senator Josh Hawley wrote directly to Cook: “Under your leadership, Apple has consistently assisted the Chinese Communist Party in policing and suppressing the basic human rights of the Chinese people.”

Cook had an opportunity to make that clear on Thursday when a journalist in Washington confronted him and asked if he supported the right of Chinese citizens to protest. His response indicated that his diplomatic skills were reaching a limit: he ignored them.