When the European Union accused Apple of owing $14.5 billion in taxes via its Irish subsidiary on Aug. 30, the company’s response was muscular and defiant.
CEO Tim Cook immediately fired off a letter, carefully explaining Apple’s history in Ireland, and calling the EU’s claim wrongheaded. “This claim has no basis in fact or in law,” he wrote, vowing to appeal. Similarly, when the FBI demanded Apple create software to unlock an iPhone in a terrorism investigation earlier this year, Cook also wrote a letter, calling it a dangerous precedent. “The implications of the government’s demands are chilling,” Cook wrote.
Apple’s response to those threats is markedly different from how it handles attacks to the integrity of its products. For example, when Apple Maps—unveiled in 2012—was quickly revealed to be a disaster, Cook issued a groveling letter to its customers. He even recommended downloading the mapping apps of competitors until Apple got its act together.
In 2010, when customers complained the antenna of the iPhone 4 wasn’t working properly, then-CEO Steve Jobs initially dismissed their concerns before conceding there was in, in fact a problem and offering customers free iPhone cases (paywall) to make it right.
Apple’s two approaches are straight out a public-relations playbook, which calls for different responses for different crises.
Threats or scandals that customers can easily understand, and that are core to the company’s business, need to be addressed head on, and in a way that shows maximum concern for the customer. The classic example of this is Johnson & Johnson’s recall of 31 million bottles of Tylenol in 1982, after cyanide was found in some pills. The decision cost the company $100 million, but bought it decades of consumer trust.
But when a scandal doesn’t touch the customer, or when the subject is either esoteric or unsurprising (or both), the company has more options, according to marketing professor Alice Tybout, in an article for the Harvard Business Review. A company can ignore it, down play it or, in the case of Apple and its taxes, try to take the moral high ground.
Multi-national tax issues are confusing, the accusations don’t impact Apple users, and it’s unlikely that many people are surprised that the company got tangled in the rules. Cook’s decision to come out guns blazing in the tax case, and against the FBI, may actually help burnish the company’s image as a rebel against conventional thinking.
But when customers start to doubt the quality of Apple’s devices, it’s an entirely different matter. Apple charges $600 for a phone and implicit in its cost is the promise of an innovative and high quality product. If they question the value of those products, Apple faces a real crisis.