Do Not Put Apple in That Mouth... The Eccentric 'Secretism' That Never Hesitates to Abuse Power

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Seulgina Jo] "Don't put an apple in that mouth."

The reason behind the breakdown of the Apple Car development negotiations between Apple and Hyundai Motor Group lies in Apple's unique and peculiar 'secrecy' tradition that dates back to its founder Steve Jobs. Following Jobs' philosophy of emphasizing 'surprise' with every new product launch, Apple has demanded extremely strict Non-Disclosure Agreements (NDAs) from its partners and has imposed harsh penalties for any breaches. This level of secrecy is considered excessively strict to be dismissed as merely a corporate culture.

Some critics argue that Apple uses this secrecy to solidify its dominant market position and exploit its partners. Inside Hyundai Motor Group, concerns about cooperation have surfaced, with comments such as "It's hard to expect an ideal partnership" and "We could end up as Apple's subcontractor," reflecting worries about the collaboration.

◆Why Did the Hyundai Motor Group-Apple Negotiations Break Down?

On the 9th, a source familiar with Apple's situation said, "Apple enforces stricter compliance with NDAs when negotiating with certain companies," adding, "This is a strategy to leverage contract terms in their favor." Under this approach, no information can be disclosed before the termination of the agreement without Apple's permission.

Because of this, partners and collaborators avoid directly mentioning Apple's name, even internally or in official settings. Wendell Weeks, CEO of Corning, which supplies touch screen glass to Apple, once said, "You must not say Apple's name out loud," and that there is a 'code name' used within the company to refer to Apple. In some circles, Apple is even referred to as the 'Fruit Company.'

From Apple's perspective, the recent leaks during negotiations with Hyundai Motor Group?such as production cooperation rumors and reports of a formal contract in February?made it difficult to maintain the secrecy principle. However, it is not necessarily the case that all cooperation possibilities have vanished.

Professor Kim Pil-soo of Daelim University's Department of Automotive Studies commented, "It seems to be the result of Apple's secrecy and power struggles," but also noted, "Considering that there are few automakers like Hyundai Motor Group with dedicated electric vehicle platforms and mass production facilities, there remains a possibility for the two sides to resume negotiations." However, in such a case, Hyundai Motor Group's challenge will be to secure favorable terms despite already being hampered by secrecy compliance issues.

◆Apple's Notorious Secrecy... Frequent Abuse of Power

Apple's NDAs are notoriously strict. They have imposed huge penalties or immediately terminated contracts not only for leaking product or service details but even for acknowledging the existence of a partnership contract. Apple also contracts digital forensic companies to track down leakers to the end. An ICT industry insider hinted, "Apple has its own security principles that partners must follow."

This has sometimes led to controversies as partners and collaborators were forced into excessive contract terms. A representative case is GT Advanced Technologies, a former display partner, which sued Apple during its bankruptcy, citing Apple's excessive penalties. According to the lawsuit, Apple included a clause requiring a $50 million payment for each breach of confidentiality.

Additionally, Apple changed contracts with accessory suppliers to Apple Stores so that payments are settled only after 60 days of sales, effectively shifting inventory costs onto suppliers. The UK Telegraph pointed out, "It's based on the sales date, not the delivery date," criticizing Apple for squeezing accessory suppliers.

In South Korea, abusive practices have also been confirmed over several years. Recently, the Fair Trade Commission approved a consent decree regarding Apple's unfair trade practices that lasted for 12 years. Apple was found to have shifted advertising and repair costs onto Korean mobile carriers such as SK Telecom, KT, and LG Uplus. After the launch of the iPhone 3GS in 2009, carriers were made to bear advertising costs for TV and outdoor ads, in-store display and exhibition fees, and repair costs. When producing advertisements for iPhones and Apple Watches, Apple used 'advertising funds' collected from carriers. Apple also requires carriers to purchase all devices like iPhones displayed in stores through their distribution channels.

An industry insider pointed out, "Though it is called collaboration, Hyundai Motor Group likely found it difficult to simply accept contract terms that could reduce them to Apple's subcontractor."

This content was produced with the assistance of AI translation services.