Apple’s Money Problem (& Why It Won’t Buy Netflix)


Every second, Apple makes $1,444 of profit. That’s more than any other company, and almost as much as Alphabet, Microsoft and Facebook combined. A bank account of $285 billion makes it more country, than company. Anyone else would kill for pockets so deep. But Apple is wary. And while most companies beg not to be taxed, countries beg not to tax Apple. The strange story about Apple’s finances explains how it got so wealthy, why this is a problem, and what they’ll buy next. Companies pay taxes to the country in which their money is made. A toy might be invented and manufactured in Antarctica but if it’s sold in Germany, that’s where it pays taxes. And because these taxes vary by country, so do the costs of products. The iPhone X is $1000 in America but $1368 in India and $1455 in Hungary. In fact, if it weren’t for import taxes, it’d be cheaper to fly to the US, buy an iPhone and fly back. But there’s an exception to every rule.
And that exception is always America. It’s the only country that taxes based on citizenship. That means a US citizen living and working abroad still owes taxes back to the US. You could renounce your citizenship, but you’d be taxed for that too. And for American companies this means paying the highest tax in the world on profit made everywhere. So this won’t fly. When Apple pays tax overseas, America subtracts that amount from its tax rate, and then reaches out its hand. This is where Apple, Google, almost every major company says, “Hmm…” “Actually, I think we’re gonna keep our money out here for now.” That money goes into a subsidiary: a company that is legally different, but really just a foreign bank account. These are located in countries like Ireland and Jersey. Not for the cows, but the very generous tax code. And Ireland’s economy runs not despite being a tax shelter but because of it. What they lose in taxes, they make back from the jobs these companies bring. So when the European Union stepped in and said, “Hey Apple, you’ve been getting far too fair a deal.” “Time to pay your dues,” Ireland rolled its eyes and shook its head, passing up on 5% of its entire GDP. But what about the 30% of revenue Apple makes in the US? Well, one way to pay less taxes is to make less money. At least on paper. All of Apple’s products depend on patents. And unlike people, places, and things, patents have no precise value, making them a handy way to move money. So they give their patents to the Irish subsidiary,
who then “rents” them back to Apple for a “fee.” When Apple makes money in the US, it can wink at the IRS and say “This isn’t profit, we owe it to the owner of the patent in Ireland.” “Sorry, America. It’s just not our money to give.” This is how profit escapes its country whether it’s made in Spain or Maine, and technically
Ireland taxes that money whether it stays in the country or moves offshore. But where there’s a will and $285 billion, there’s a way. If money is
transferred to the Netherlands, a handy loophole makes it nearly tax-free. So it
briefly flashes in a Dutch bank account owned by a non-existent company, with no employees to check a legal box. And then it returns back to Ireland, this time a
subsidiary located in the country but legally a resident of Jersey, where it
can finally retire to the cows and castles in peace. The richest meal for a
corporation isn’t gold covered chocolate or expensive caviar, but an Irish and
Dutch subsidiary sandwich. All of this is 100% legal and 100%
common. But because Apple makes so much more money, it’s in an unusual position.
No matter how big the pile grows, it’s all frozen just out of reach. It’s like
being given the world’s largest bank account with no ATMs to withdraw from. And the problem is actually much deeper than that. To pay American bills, Apple takes
American loans, money for which it already has, just not as far as the US
is concerned. But it can’t keep up with how fast the pile is growing. To you and
I this would be the opposite of a problem. Because it’s easy to imagine
Apple as a giant fat cat, swimming in money and worrying only about how to
spend it all. Giving away billions would be mere pocket change to someone that
wealthy. And maybe it should pay higher taxes. But there is no singular Apple. The
CEOs of the CEO are shareholders and when someone buys a portion of the
company, he does so in hopes of earning more money tomorrow than he paid today. Stocks can cost pennies or hundreds of thousands of dollars. But what matters is
how much that number changes. And that’s the problem.
To an individual, money in a bank account is money it can use. But to a shareholder
all that money means nothing, if it sits watching grass grow. That’s money not
being invested in making twice as much tomorrow.
The desire to minimize taxes kept money offshore. But that made it useless for
what they care about most: investing back in the business. But everything is about
to change. When the US lowers its corporate tax,
Apple can finally bring back its money. The question now is how to spend it all. It may research future products, acquire small companies, and buy back shares. But
why not acquire something big? Articles like this one suggest Apple buy Tesla,
Activision, and Netflix. And to an investor, this makes perfect sense.
Diversifying a business so dependent on just one product, and without making too
big a dent in its wallet. But implied in this argument is another. If Microsoft
and Google successfully acquire companies left and right, but Apple
rarely does, they must be sleeping on the job. Microsoft just bought LinkedIn for eight times more than Apple’s ever paid for a
single company, but never assumed the world’s most profitable company is bad
with money. Apple’s strategy is to shop for talent and
technologies, never trying to make a quick buck. When it needed Touch ID it
bought Authentec, when it needed a voice assistant it bought Siri, and when it
needed Steve Jobs, it bought NeXT. Suggesting they buy
Activision or Netflix is suggesting that Apple stop being Apple. Because
absorbing a company also means absorbing its culture. And forever changing its
most valuable asset: extreme focus. It’s the same reason they make so few
products and design them so minimally. Saying no to what every other
company would say yes to is exactly what makes Apple so successful. If you have thoughts
about Apple, how corporations should be taxed, or anything else you want to share
with the world, you might be interested in learning how to express those
thoughts with an animated video like this one. And the best way to do that is
with Skillshare, a community of online courses on everything from design to
business. For example, if you’re interested in animating your own videos,
you might take a course like this one. the best way to learn is by doing. And
with Skillshare, you can practice by following the course work of a
professional, as they teach you how to make graphics from scratch. I have
absolutely no background or special talent in design, but I got better by
following courses like these, and slowly adding in my own style. And I think you’d
be surprised by how affordable it is. A premium annual subscription costs less
than $10/month. But even better, the first 1,000 people to sign up at skl.sh/polymatter3 -link in the description- will get their first two
months for 99 cents. You could be well on your way to making videos like mine, for
99 cents. In fact, if you use Skillshare to start a channel, e-mail me a link and
I’d be happy to take a look. Thanks to Skillshare, and to everyone who gives it
a try. If you enjoyed this video you’d probably also like “The Grand Theory of
Apple”, where I explain Apple’s overarching philosophy, from why they removed the headphone
jack to how they prioritize their products. Captions By: joshuaktanki

100 comments on “Apple’s Money Problem (& Why It Won’t Buy Netflix)”

  1. PolyMatter says:

    If you have any interest in making videos like these, you might learn how on Skillshare. The first 1,000 people to signup with http://skl.sh/polymatter3 will get 2 months for 99 cents. And if you do so and start a channel, shoot me an email and I’ll take a look!

  2. Zane Carmichael says:

    Apple is gonna make the best cpu by far and force game designers to want to make games for Mac OS X, then Apple will rule the world

  3. Dorian Mcnab says:

    Apple city

  4. Dorian Mcnab says:

    Apple towns Apple clothes Apple the books

  5. Pixel says:

    Apple needs to stop money laundering and pay taxes

  6. Amir Hagit Einav says:

    I’m sad skillshare isn’t public, would totally buy stock in it

  7. lucas davey says:

    Apppe puts money in jersey

    Also apple won’t open apple store only premium resellers

  8. robizzlor says:

    But why does Apple then say that they own so much cash in their financials if they don't "own" it? Fucking stupid laws.

  9. TheDevilAndTheMan says:

    shareholders are destroying companies because they don't want a constant flow of money, they want a constant growth in profit which is stupid because it can't possibly continue to grow for eternity. This forces companies to sell cheaper products made with less R&D that looks almost like the last version of it at a higher price.

  10. Evan Silversun says:

    Great job bruh! Infoative and entertaining to watch 😉

  11. tristan and daddy show says:

    Apple still sucks. Earning so much by scamming stupid apple user. And the funny thing is. They know they are being scammed and still buys the next model of iphone phones and mac. So its not apple's fault if you think about it. It's those moronic consumers

  12. Jorge Wakfie says:

    Ok but why Venezuela flag

  13. Oxron206 says:

    Imagine Apple selling electric cars. Have to buy the charger separate for 2000$, AC / stereo system seperate for 3000$, rear view camera for 500$, car itself starts at only 89,999$

  14. Rashed Mahmud Olive says:

    I'm proud of Apple it's richer than my country Bangladesh

  15. Zizudarke says:

    0:08 alphabet for Google's G

  16. The iNsider says:

    The product itself is costly.

    That does not end there.

    You have to pay for iTunes too.

    You have to pay for iCloud (though this is optional, with storage capacity too meagre. This becomes a necessity).

    Unlike android apps, value for apps is high.

    Product overall is great. But too costly.

    If only they can cut their cost of every models by 30%.

    In my region, only 1 in 10000 can own an iPhone despite having fair share of economy. The price tag just looks absurd to most of the people around here.

  17. Invader Zim says:

    “The Government should create, issue, and circulate all the currency and credits needed to satisfy the spending power of the Government and the buying power of consumers. By the adoption of these principles, the taxpayers will be saved immense sums of interest. Money will cease to be master and become the servant of humanity.”

    -President Abraham Lincoln

  18. Rusu Rares says:

    "Never trying to make a quick buck."

    One year latter…

    Apple pro stand for 999$

  19. SevenDeMagnus says:

    Thanks. Very interesting.

  20. กรรณิกา ปะมา says:

    Osaka Kannikapama CNBC America Business 0852370116

  21. MANN[][][] says:

    stop funding a company that wants to f u.

  22. WinnerMatt11 says:

    I am confusion

  23. Nicolás Salazar says:

    I highly think it is inadequate and even immoral due to the circumstances to call this an Apple's "Problem". It then programs you to think "Oh well Apple is having things complicated" it is not complicated. They are filthy greedy tax evadors. That's it, is not a "problem" as if "oh poor them" it is a DILEMA. Period.

  24. Ol12 Gaming says:

    LOL apple is trash because they overprice their products.

  25. Ricardo de Jesus Kessler da Rosa says:

    You highest exemple is INDIA AND SOME RANDOM COUNTRY IN EUROPE THE HIGHEST PRICE IS IN BRAZIL BY ONE iPhone XS most Basic version you pay 1873 DOLLARS MOTHERFUCK WHY CAN'T TALK HOW EXPENSIVE THINGS ARE HERE ESPECIALLY EITH APPPE

  26. Terry Ambrogio says:

    this video is dumb as fuck don't waste your time watching it

  27. Bhanu Birani says:

    Good one..

  28. Mark Arnott says:

    👨‍💻🍺when Apples r Rotting 😳 they keep fermenting then they make more $ in alcohol 🍾💨👩‍⚕️ 👉😲OH now i see
    so u keep $ in a hiding place so latter on you make more $ avoiding taxes etc OH simple 🤷‍♂️👨‍🏫🤣😂😃😄😆😋

  29. K. Ganesan Ganesan says:

    Apple to extend public service.

  30. Max Heidcase says:

    It might sound clever but it's just disgusting greed

  31. noe cruz says:

    I have this amazing idea, So that apple spends more money, how about paying more money to you're employees
    PS. And start using better matirials for youre bending ipads

  32. Sean McDonald says:

    'Imperial system' burn .
    . . . . I like what you did there . . . .

  33. stone aussie says:

    USA has invaded so many countries which resulted into millinions people dead in IRAQ, syria, lybia, afganistan, Banama and so on. Why can America use the name of their national security to freely do what they think is right? It is unfair for the whole world! Btw, do not forget Japanese Toshiba, French AlSTOM, which were bullied by USA in the name of do called national security. Stop making more lies.

  34. Elias Papadimas says:

    Ah God bless apple remember taxation is theft

  35. Aaron says:

    Prove that Kapitalism doesn't work

  36. Gabriel Pdl says:

    Please tell me something PollyMatter, “Siri” is not even close to the “ok google” response, at least in Spanish and “Maps” are not by far, as good as “Google Maps”. Having all this money why apple can’t offer a better service on these primary services? We are talking about a “very focused” company aren’t we?

  37. Gabriel Pdl says:

    Please tell me something PollyMatter, “Siri” is not even close to the “ok google” response, at least in Spanish and “Maps” are not by far, as good as “Google Maps”. Having all this money why apple can’t offer a better service on these primary services? We are talking about a “very focused” company aren’t we?

  38. domboss says:

    fuck apple

  39. ohmyafy says:

    Please talk about Louise Rossman and the Right to Repair Movement

  40. Vankata BG GDV says:

    Apple should fail and bankrupt

  41. Silvia Perez Cruz says:

    Hi my name its Jessica Diaz I'm was suppose to be part of the new graduate student from Nasas expirement, lol what a bullshit but not on the last day NASA decided to exclude me for not having an Apple phone to protect my account from anothers Apple's users hacking my emails changing passwords not available to recover it.. THEY HAVE ME looking like a fucking cartoon or clown on this last project from powerful Industries using hologram but on different games on the internet ..rigth now NASA its backing up those industries lying to the people making them believe I'm crazy I don't what I'm talking about it is always been part of fucking experiment they said I should be happy because they choice me giving me an opportunity to be great in life better future when they never told me anything about what I was going trough Cuz since the beginning they been playing with victims like in poor neighborhoods to be exact Dallas county having apple users from Oakcliff TX controlling the new order here Dallas and surrender areas games on internet those u have interaction with others players on real time and like I said it the last project of the season NASA game..The system in USA its completely broken protecting Big wealthy corporations like APPLE helping them to save money and the poor people getting bigger taxes to pay, government it's working for the richest Americans not for the entire country and plus apple phone are very very smart phone practically helps a lot to do criminals acts against others phone like androids and mr apple CEO protect to many criminals using his company product… #nojusticeforapplecriminals

  42. pit duck says:

    apple advert bollocks…

  43. Vivek Kaushik says:

    Money laundering 101.

  44. Chunky duff Skills says:

    Wow ???

  45. a prod says:

    Monopoly alert

  46. Vurmonica says:

    Says no to fair prices

  47. Dissonance Paradiddle says:

    Man I'm sad to see my home country involved in this scummy process

  48. PegAsus says:

    Apple + Activision seems like my worst nightmare

  49. Anton Weigand says:

    Tax them!

  50. Oh yeah yesh says:

    Apple gay

  51. joshua jimenez says:

    If apple buys Activision you'll have to buy level up's separately

  52. BlakeBiundo says:

    Lots of smart people playing the system like a fiddle, and I love it for some reason

  53. MyDixieNormiss says:

    I feel like the animations pop up too fast on the screen? No I'm not retarded and I can keep up. But it just feels like if they slowed down the speed of the transitions and pop-up animations it would look a lot smoother all together. Just my 2 cents

  54. Karl von Bahnhof says:

    I have nothing against Apple, they make great products, but my problem is, they are fucking expensive and not compatible..I wasn't able to send a song from Android Bluetooth to Apple Bluetooth, how come? They removed the headphone jack?..ok it's obsolete, but still makes sense when your Bluetooth headset runs out of power or you just want to listen the old school FM radio, it's good cheaper phones still have it

  55. What am I? says:

    Apple: haha! We make 1444$ a second
    Jeff Bezos: I make 2600$ a second and im not even a company
    Apple: buys Amazon

  56. What am I? says:

    Fun fact:
    if i buy a 1$ thing on amazon from europe then the shipping is 24$
    If i buy a 10$ thing from gearbest the shipping is 1$

  57. Zain Mumtaz says:

    Didn’t understand a thing 😂

  58. Tossy Bros. says:

    Soo… The U.S. is doing what England did in the 1700's… Which is the reason why America separated from England…

  59. Harvey Mc Nevin says:

    I really hope apple doesnt buy netflix because they will ruin it

  60. LJ Gaming says:

    I don’t like apple…

  61. Imuselees says:

    Apple when they make the the price tag

    100+56=1560

  62. boeuf3000 says:

    Its the brand thats expensive, not the products. Just like nike, they just slap their logo on shit and call it gold and people buy it up

  63. LordLenni says:

    If apple bought netflix , you will have to load 1 pixel each for 1 cent every frame

  64. TheGamerBoy1192 says:

    0:15 Pakistan zindabad

  65. Sliced Cucumber says:

    This Video is Sponsored by Apple™

  66. GameFuMaster says:

    Ironic. America, which was created because of tax reasons, is the only country to tax its citizen even if they work abroad.

  67. Bumbita Sinculan says:

    THATS INSTANT KARMA

  68. LeaFY ModZ says:

    Where my hungary gang at we the most recognized countru in europe but our iphone x is 1455

  69. Pugsy Malone says:

    I'm no apple hater I like apple but I have too say this: "The only reason why apple makes money is cos it's considered 'cool' to have a iPhone. And if it isn't apple it isn't 'luxury'. Plus mindless teens spend all their money on them. And the iPhone is a great phone but most of the other brands have either caught up or over taken apple in terms of a better more powerful product. And the new iphone like xs or xs Max R sh*t cos some other brands accturlly use better face id. And last LOOK IT UP APPLE IS FAILING 2019 I THINK APPLE SHOULD STOP FOCUSSING ON STUFF LIKE " AIR PODS 2" AND DO WHAT STEAVE JOBS DOES. PLUS ALL THAT MONEY WAS FROM WHEN STEAVE JOBS OWNED IT AND APPLE NOW CONFIRMS IT.

  70. Gary The Snail says:

    Apple made over 50,000 by the time you finished this video.

  71. Ron C says:

    you are too much apple fan boy. The real reason apple wont buy tesla or netflix is they are not for sale. who is dumb enough to sell those? their owner has no shortage of money and they are keep earning.

  72. Mike Soup says:

    That has to be, a really good discount for the plane ticket.. 1:02

  73. João Matos Graça says:

    Dude. Going bluntly into tax without differentiating between income tax (for companies) and VAT is a bit misleading.
    Namely because the iPhone in the US is the said price+tax and everywhere else the VAT is included.
    Buut. Nice video with good production values.

  74. Brandon Stennett says:

    Can you explain why Sweden has no bail ? Would help us understand ASAP.

  75. Luigi Player 14 says:

    Why activision?

  76. Charlie Montero says:

    Excellent review

  77. Mike King says:

    Apples money problem is simple…..they charge too much for their shit and dont provide as much as the competition. Yea…. a thousand dollars for a monitor stand……BRILLIANT. Apple is going in the shitter. I havent bought Apple for a decade after they went FULL RETARD. In example….the time they removed the audio in jack on their flagship G5 back in the day. Or the time they removed the control buttons on the ipod. Or like the ipad of today with no mini sd expansion. Yea…….BRILLIANT MOVES !!!! Fuck Apple stupidity and stellar prices !

  78. lvl 5000 says:

    Yh buy man utd 🤣

  79. Cloud says:

    Ireland Is Sooo Experiences

  80. Abdnour Charbak says:

    Did they just say the IRS

  81. Markel Canales Ramos says:

    If Apple buys…:
    Netflix: You could only see movies on iPhone and iMac and you have to pay 1 $ per minute
    Tesla: the car costs 1000000 $ and it doesnt have windows.
    Microsoft: Windows would be dead and Nokia's would have iOS

  82. The Mazeシ says:

    Lots of Android users in the comment section.

  83. Akko Rivers says:

    If they make so much money why don’t they pay shareholders or lower prices or better their products

  84. HeavyIzThaCrown - says:

    You nerds are quick to make jokes, but the iPhone paired with iOS is UNMATCHED!

  85. coo1estdragon says:

    0:07 i want to know what alphabet is

  86. Oscar Moore says:

    Really good video!

  87. Justin Pilatasig says:

    Hi

  88. Fannar Páll Sigurðsson says:

    This is soooooooo complicated

  89. Charles Horton says:

    APPLE PRODUCTS ARE GARBAGE.

  90. Dai shinkan says:

    If apple would buy netflix movies will be divided to many parts

  91. Benploten Dula says:

    Are you an apple pocket to Jesus Christ you trying to sell something up here too

  92. Ben Toogood says:

    Thank you for regonising that Northern Ireland and Ireland are 2 different countries.

  93. 4w3 says:

    I had a stroke watching this

  94. Scott Katz says:

    Does this video not sound and look faster than the ones made today??? I put the speed to .75 and it sounded too slow

  95. Ori Mandel says:

    Your videos are amazing, you're thumbnails are beautiful. I adore your channel!

  96. Cyd Hieras says:

    in the Philippines, corporations and individuals are as well taxed on citizenship 🙂

  97. S4NoctiS says:

    Isn't this a huge problem somehow? All this money that can't really enter the economy and just keeps growing and growing. If that money doesn't circulate then how can we expect the banks to stop to have to print money in future?

  98. Satanen Perkele says:

    I have never bought a single apple product in my entire life. And I am not planning to.

  99. Strawberry Kiys says:

    So why doesn't the EU do something about this Irish scam.

  100. Andreas says:

    These videos. Always when it gets interesting, it ends.

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