At the bottom of the same page was a profile of a Chengdu plant manager called Brother Ping, which praised his hard work and his love for his coworkers. The article noted how he used his own money to buy the workers helmets before the plant was fully up and running and how he personally escorted sick workers to the hospital. Brother Ping made time to organize leisure activities for the workers such as karaoke and hiking, the profile said, even though he worked so hard that he sometimes forgot to eat his lunch of instant noodles.
Another section of the newsletter included a story about a member of Foxconn’s “Concern and Love for Workers Team,” who performed magic tricks to relieve workers’ stress, and columns that offered advice. For a Father’s Day gift, the newsletter suggested a cell phone, watch, laptop computer, or camera. To avoid shoe odor in the summer, it recommended crushing a camphor ball and sprinkling the powder evenly inside the shoes.
One of the most popular features was a half-page matchmaking section where single workers submitted blurbs and photos in the hopes of finding a partner. “Sometimes I’m lively and sometimes I’m gentle and quiet. I believe in fate and I hope to make friends from all over the country,” wrote one twenty-year-old girl nicknamed Hulala, whose ideal match was someone who was “mature, steady, filial, and ambitious.” A thirty-year-old man, who called himself “Cat eats fish,” described his personality as mature, steady, ambitious, and caring. “I look forward to starting a sweet home,” he said. He was looking for a potential wife who was kindhearted and filial.
But no matter how hard Foxconn’s newsletter tried to reinforce the happy image of its facilities, it didn’t take long for workers to understand that it was just a façade. Ai had looked forward to reading the paper every week when she first started at Foxconn, but she didn’t read it anymore.
“They always write about how perfect Foxconn is, how obedient the workers are, and how good the treatment is,” she said. “They never talk about the real labor conditions.” A small article on one of the inside pages proved her point. It praised Foxconn’s Workers Association for doing a good job. Anyone who had been at Foxconn for a while knew the real truth: Its personnel were appointed by the company and were puppets.
After spending years at Foxconn, Ai had grown despondent about her prospects. In her darkest moments in mid-2010, she had even considered suicide. “I felt like I had no hope,” Ai said, looking back. She had asked herself, “Must I live like this for my whole life?’ ”
Around that time, both Apple and Foxconn were enjoying some of their strongest growth. Hon Hai, the official company name of Foxconn, consistently ranked at the top of Fortune’s annual ranking of Taiwan’s largest companies. In 2011, it reported revenues of $117.5 billion. That was more than many of its own customers, including Apple, Sony, and Microsoft. Around the same period, Apple reported a yearly profit of $26 billion as revenues grew 66 percent to $108 billion.
The China market was booming as a solidifying middle class hungered for Apple’s products. The company’s revenues there quadrupled to $13 billion.
When Morgan Stanley analyst Katy Huberty asked about Apple’s business in China in the quarterly earnings conference call, Cook was eager to provide details.
“The China progress has been amazing,” he enthused. “Certainly in my lifetime, I’ve never seen a country with as many people rising into the middle class that aspire to buy products that Apple makes. I think it’s an area of enormous opportunity, and it has quickly become number two on our list of top revenue countries . . . the sky is the limit there.”
The Chinese perspective was far less rosy. In 2010, China had passed Japan to become the world’s second-largest economy after the United States as its gross domestic product increased 9.8 percent to $5.88 trillion. But there was a huge gap between the wealthy and the poor. The average per capita income in 2011 was 23,979 yuan ($3,780) for urban Chinese and 6,977 ($1,095) for rural Chinese, according to the Chinese government. About 150 million Chinese lived on less than a dollar a day. With the iPhone starting at about 5,000 yuan and the iPad starting at about 3,000 yuan, they were big purchases even for the urban middle class. Some young people received them from their parents as a reward for performing well in school, though many had to cut their daily expenses and save up for them. In extreme cases that were widely reported, two high school students were so desperate to buy an iPhone and iPad that they sold their kidneys.
For factory workers, these luxuries were completely out of reach. Ai and the others could only watch as the products they made passed through their fingers into shipping containers that were sent around the world to consumers whose lives they could only dream of.
What saved Ai from giving up on her life was not any improvement Foxconn made, but her music. She had found special solace in the songs of Beyond. From a small speaker on her desk in her apartment, Ai often listened to the soft voice of Wong Ka-kui singing “Boundless Oceans, Vast Skies,” the song she sometimes sang on her way to work.
Not long after writing and recording Ai’s favorite song, Wong had fallen from a stage and died. In the decades since, his death had invested his songs with an unshakable power. For Ai, Wong’s early end was a reminder that none of us knows how much time we’ve been allotted. On her days off from the factory, she blasted “Boundless Oceans, Vast Skies” while she cleaned her apartment. At night, she listened through headphones so she could envelop herself in the lyrics.
Still I am free, still I am independent
Always loudly singing my song, traveling thousands of miles
Forgive me this life of uninhibited love and indulgence of freedom
Although I’m still afraid that one day I might fall
Abandon your hopes and ideals, anyone can do
I’m not afraid if someday there’s only you and me
Ai loved the spirit of the song. On her wall, she had hung another poster emblazoned with another line written by Wong.
It doesn’t matter even if the future road is long and unknown.
Ai had regained her belief that she would somehow find a way forward. She began saving money again. She was making about 4,000 yuan per month, or about $630, excluding overtime. Her annual salary of about $7,800 was the equivalent of what an average hardware engineer in the United States made in a single month. But had she been an ordinary line worker rather than a mold maker, she would have been making 3,000 yuan at the most, including overtime. With her new savings, she could now afford braces to straighten her teeth, and she learned not to worry about people making fun of them, too. It was during this time that she had also bought her precious computer and acquired an acoustic guitar.
Now, when she got home from work, the first thing she usually did was boot up her computer. After taking a shower to cleanse away the grime from her work, she would check her messages and read the news even before she ate. It was her one link to the outside world. Ai spent her days off practicing her guitar. The song she was currently learning was called “Has Anyone Told You?” by the musician Chen Chusheng, about young people who were struggling to pursue their dreams in the city. Ai hadn’t completely given up on her hopes to go back to school, but her immediate goal now was to leave Foxconn and start an organic farming business that would provide jobs for other young workers who felt the same despair she had. She chose organic farming because she thought there might be healthy demand from China’s wealthy elite, who were worried about feeding their children tainted produce.
She also began educating herself on workers’ rights. When colleagues got injured at work, she encouraged them to seek compensation, though many of them didn’t because they were afraid of retribution from their managers. One of her heroes was Pun Ngai, a sociology professor at the Hong Kong University of Science & Technology and the founder of Students and Scholars Against Corporate Misbehaviour. After spending eight months working on a factory line in 1995 and 1996, Pun had written about how global capitalism, state socialism, and familial patriarchy conspired to exploit young ru
ral women who were put to work in factories for a few years before being recalled home to marry. While writing passionately about the oppression that these young women faced, she also foretold the coming of a silent social revolution, in which the workers would rise above their lowly status.
Ai’s experience mirrored that of the girls that Pun had described in her book. But Ai was determined to map her own destiny. To preserve her independence, she avoided going home for Chinese New Year.
“I think if I give up my dream, get married, and have children like traditional women, my life will become meaningless,” Ai said on a warm evening in May on her day off, as she relaxed in a pretty black and white polka-dot blouse, sipping an orange drink at Pepsi Smile. Though she complained about the sad state of her hands, one couldn’t tell from looking at them. Like many young Chinese women, she wore no makeup, but her fingers had been carefully manicured. A small vanity ring adorned her pinkie.
Later, as she walked through town, she passed by a large group of young men gathered around a television playing in the window of a small electronics shop. They stared at the screen, their eyes empty with boredom.
“They have no goal in life,” Ai said, glancing their way, “and they spend their money on silly things.”
She understood their aimlessness because she had fallen into that trap as well. Pitying them, she walked on.
13
Fight Club
The trial between Apple and Samsung was scheduled to open in San Jose on July 30, 2012. In the weeks leading up to then, the courts kept encouraging the two sides to settle.
“Can’t we all just get along here?” asked Koh at a June hearing, suggesting they work with a mediator. “I will send you with a box of chocolates, whatever.”
Surely they both stood to lose too much if they gambled and put their fate in the hands of a jury. But as the opening day drew closer, there were inevitable signs that war was coming. Just as countries amass their troops in preparation for conflict, Apple and Samsung mobilized battalions of lawyers. As the trial neared, almost eighty lawyers filed notices of appearance. Some represented other technology companies, including Motorola, Qualcomm, and Intel. Between the two companies the lawsuit encompassed sixteen patents, six trademarks, five claims about the design and appearance of products, and antitrust allegations spread across thirty-seven products.
The heart of the case, however, was a very simple question—did Samsung copy the iPhone and iPad?
Though the dispute was just one of a multitude of lawsuits between Apple and Android device makers around the world, this was the first major case to go to trial. Together, Apple and Samsung accounted for 55 percent of global smartphone shipments and more than 90 percent of the market’s profits, according to ABI Research. The jury’s verdict could have profound ramifications for the competitive landscape in the industry, especially since courts in other countries and jurisdictions would be following the proceedings closely to help inform their decisions. In a high-stakes battle like this one where the final outcome was likely to be some kind of all-encompassing settlement, a definitive win for either side would give it immense advantage in any ongoing negotiations.
In addition to journalists, people following the case included patent experts, regulators, antitrust litigators, policy makers, and standards-setting organizations as well as other companies with patent interests. Even legal historians were following what they considered an epic battle that could be as significant as Thomas Edison’s patent claims over the transformative invention of the incandescent lightbulb. Similar to Apple, Edison had not invented the first lightbulb. He was the developer of one of the first commercially successful bulbs, but the race was too close to declare a clear winner. Still, after a decade of legal challenges among the many patent holders, Edison had emerged victorious in the United States, giving him control over the entire market.
“Innovation has a broad-based impact on the economy,” said Lea Shaver, a law professor at Indiana University. “Smartphones have become the technological terrain that companies are fighting to grab a piece of through their patents.” She pointed out that Edison’s win slowed down the competition, making the lightbulb less affordable to the average American for a long time.
In Germany, a patent litigation consultant named Florian Mueller kept one of the most comprehensive accounts of patent cases involving Apple and the Android camp in a globally read blog called FOSS Patents. FOSS stood for Free and Open Source Software. Mueller had spent much of his career advising in licensing deals and partnerships between German and American companies before focusing on intellectual property and competition issues. He filed lengthy articles that parsed the latest developments in trials around the world and laid out the broader implications.
Mueller saw the Apple-Samsung battle as an important test of the patent system. Samsung could argue details about how other devices before the iPhone were also rectangular with rounded corners, but in Mueller’s mind, the iPhone had unquestionably redefined the way the user interacted with devices.
“If the patent system fails to protect Apple, it would not just be a failure for Apple as a litigant, but I think it would also be a big-time failure for the patent system as a whole,” he said from his home in Munich. “If it cannot protect an undisputed innovator, game changer, revolutionizer, and disrupter like Apple, who is it ever going to protect?”
The public war raged on television, where Samsung ads painted Apple’s devices as inferior to its own. In one, presumptive Apple fans camped out in front of a store in Austin, Texas, waiting for the latest iPhone—presumably the iPhone 4S—to go on sale. As they watch a video of someone in London unboxing his new model, one of them groans, “Aw, that looks like last year’s phone!” When one of their hipster friends shows up with a Samsung Galaxy SII, boasting about the free turn-by-turn navigation feature in his phone, the Apple customers can’t help but express envy.
“We just got Samsunged!” says one. The ad ended with the slogan “The next big thing is already here.”
The snarky ads, first aired during the Super Bowl, were notable for their outright animosity toward Apple. If there had been any doubt whether Samsung was ready to open fire on one of its biggest component customers, none existed now. Samsung’s attempt to seize some of Apple’s cachet was obvious, but viewers loved the bold attacks on Apple’s arrogance. The audacious commercials chipped away at the iPhone’s cool image.
Still, ahead of the trial, Apple appeared to be winning on the public relations front, so much so that when Samsung unveiled its Galaxy SIII model, some critics charged that it was designed by its lawyers, just different enough to avoid Apple’s ire.
“Our change in smartphone design is part of a five-year plan,” protested a Samsung executive at the time, “not a sudden turnaround.”
Samsung’s lead design executive, Lee Min-hyuk, known as “Midas” for his success with the Galaxy series, took personal affront when Reuters asked him to respond to Apple’s accusation that Samsung’s devices were a blatant steal.
“I’ve made thousands of sketches and hundreds of prototype products. Does that mean I was putting on a mock show for so long, pretending to be designing?” he asked. “As a designer, there’s an issue of dignity . . . I’m the one who made it.”
Tensions between the two competitors crackled as both sides sought the upper hand in a series of last-minute legal maneuvers. Apple was seeking $2.5 billion in damages and an injunction to prevent Samsung from selling any devices that infringed on its patents. The company asserted that Samsung should have considered more ways to differentiate their products such as by exploring a non-rectangular shape or choosing a more “cluttered appearance.”
Samsung was not only questioning the validity of patents that Apple accused it of violating; it was also asserting that Apple was stealing Samsung’s mobile communications technology to make the iPhone and iPad work. Samsung was willing to license its technology, but it wanted 2.4 percent of the full price of the iPhone ra
ther than the half penny per unit that Apple was offering.
Unlike in many other countries where judges well versed in patent law handed down the decision, a jury of ten ordinary citizens would decide the U.S. trial. In a complex case swirling in arcane and often dreary technicalities, the ability to tell a coherent, persuasive story was crucial. To lay out their competing narratives as clearly as possible, both sides needed to get the building blocks of their cases admitted into evidence.
Both parties filed mountains of motions and countermotions. Samsung requested that both companies be referred to by the neutral term, “claimants,” even though Samsung was technically the defendant and Apple the plaintiff in the primary claim. It also wanted to switch its seats to the plaintiff’s table while it was arguing its counterclaims against Apple.
“Equal treatment of the parties with respect to where they sit while presenting their affirmative case . . . ,” the motion went on and on, “will mitigate any prejudice to Samsung that may result from Apple being in closer proximity to the jury throughout the trial.”
Table location was a big deal to lawyers because it sometimes made a difference. In courts with no rules about seating, trial teams would arrive as early as possible to claim the side closest to the jury.
U.S. District Judge Lucy Koh approved Samsung’s request to be called a claimant but rejected the notion that the lawyers should play musical chairs.
Haunted Empire: Apple After Steve Jobs Page 24
