Tag Archives: Infinite Loop

Senate report shows Apple avoided billions in taxes on foreign income

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A new Senate report (PDF from The New York Times) shows that Apple has been employing potentially sketchy business methods to avoid heavier tax burdens. According to the investigation, the company dodged billions in potential taxes on $44 billion in foreign income during the past four years.

Some of the interesting bits from the Senate’s report: three Apple subsidiaries in Ireland claim no responsibility to pay income taxes to any country. Apple Operations International, one of the Ireland three, reported $30 billion in income during 2009 to 2012 despite having no employees and not filing income taxes anywhere within the last five years. Apple did not violate any laws during this time according to the Senate investigation.

As The Chicago Tribune notes, many of the tactics Apple employed are common for multinational corporations (see cost-sharing arrangements). Google and Amazon were slammed by British parliament last year for their own tax-tiptoeing practices abroad. Nevertheless, the information released today cannot be welcomed by Cupertino with its CEO set to speak in front of Congress tomorrow. The Tribune quoted written testimony for that hearing which addresses this new tax spotlight. According to those statements, Apple does not utilize “tax gimmicks” and “has substantial foreign cash because it sells the majority of its products outside the US.” The company also reiterates that it pays plenty of US taxes, a defense it used in the face of tax accusations last year.

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MacBook Air supplies dwindle ahead of WWDC, Intel CPU refresh

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The 2013 MacBook Airs may soon be upon us.
Jacqui Cheng

Apple hasn’t announced a significant update to any of its hardware since October of 2012, but if you’re itching to get your hands on something new the wait may soon be over. AppleInsider reports that supplies of Apple’s MacBook Air are beginning to shrink ahead of next month’s Worldwide Developer Conference, with multiple major retailers listing the high-end 13-inch model in particular as “out of stock.” The MacBook Air was last refreshed at WWDC in June of 2012.

Apple’s strict command of its supply chain means that it tends not to have a lot of excess inventory sitting around in warehouses—according to a Gartner report from about a year ago Apple can turn over its entire inventory of product in about five days. Reduced inventory for current products tends to indicate that new ones are around the corner.

If that by itself isn’t enough evidence for you, consider that Mac hardware refreshes generally tend to be tied to Intel’s hardware cycles and that Intel’s next-generation Haswell architecture (with its enhanced integrated GPUs) is all-but-guaranteed to be announced at Computex at the beginning of next month. When it launched Ivy Bridge last year, low-voltage CPUs intended for thin-and-light laptops were among the first to be released, meaning that by the time WWDC rolls around, Apple will likely have the CPUs it needs to make next-generation MacBook Airs happen.

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Mac malware signed with Apple ID infects activist’s laptop

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F-Secure

Stealthy Mac OS X spyware that was digitally signed with a valid Apple Developer ID has been detected on the laptop of an Angolan activist attending a human rights conference, researchers said.

The backdoor, which is programmed to take screenshots and send them to remote servers under the control of the attackers, was spread using a spear phishing e-mail, according to privacy activist Jacob Appelbaum. Spear phishing is a term for highly targeted e-mails that address the receiver by name and usually appear to come from someone the receiver knows. The e-mails typically discuss topics the two people have talked about before. According to AV provider F-Secure, the malware was discovered during a workshop showing freedom of speech activists how to secure their devices against government monitoring.

The malware was signed with a valid Apple Developer ID allowing it to more easily bypass the Gatekeeper feature Apple introduced in the Mountain Lion version of OS X. If it’s not the first time Mac malware has carried such a digital assurance, it’s certainly among the first. Both F-Secure and Appelbaum said the backdoor, identified as OSX/KitM.A, is new and previously unknown. For its part, AV provider Intego said the malware is a variant of a previously seen trojan known as OSX/FileSteal. Intego continued:

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Apple CEO: “We’re going very deep” with US manufacturing

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Apple CEO Tim Cook gave a lengthy interview with Politico which was published yesterday, shedding some light on what he plans to say in his upcoming congressional appearance on Apple’s tax practices. There’s a hidden gem at the end of the piece, however:

And Cook is also promoting a $100 million investment in domestic manufacturing, where the company will begin producing a new version of a current Mac product later this year.

“We’re going very deep in this project,” Cook said, noting that not only will the final product be manufactured in the US, but so will many of its components. Arizona, Texas, Illinois, Florida and Kentucky are among the states he mentioned as having parts and assembly located.

Apple has made noise for some time now about moving part of its manufacturing back to the United States. Indeed, when our newly minted Senior Product Specialist Andrew Cunningham reviewed the latest 21.5″ iMac back in December, the computer sported an “Assembled in USA” badge on its foot. However, the 27″ iMac I purchased and reviewed the same month still claimed to be “Assembled in China.”

This late-December 21.5″ iMac was assembled in the United States…
Andrew Cunningham
…but this late-December 27″ iMac was built overseas.
Lee Hutchinson

We first formally heard about Apple’s domestic Mac manufacturing at the end of 2012 when Cook talked about the endeavor with NBC News and Bloomberg. As Apple Editor Emeritus Jacqui Cheng noted at the time, built-to-order iMacs have occasionally been assembled in the USA, but the “Assembled in USA” iMacs marked the first time that “US-assembled, standard-configuration machines have begun appearing in people’s homes.”

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Apple CEO to testify to Congress on $100 billion cash stash, taxes, jobs

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Apple CEO Tim Cook.
lemagit

Unlike his predecessor, Apple CEO Tim Cook doesn’t appear reluctant to face down a Senate subcommittee. He’s due to appear in Washington DC next week to testify at a Senate hearing on offshore profit shifting and he plans to directly address the concerns Congress is raising:

The Subcommittee will continue its examination of the structures and methods employed by multinational corporations to shift profits offshore and how such activities are affected by the Internal Revenue Code and related regulations. Witnesses will include representatives from the Department of the Treasury, the Internal Revenue Service, representatives of a multinational corporation, and tax experts.

The roles of “representatives of a multinational corporation” will be filled by Cook along with Apple CFO Peter Oppenheimer and Apple Head of Tax Operations Phillip Bullock.

The Senate subcommittee will be grilling Apple on exactly why the company keeps more than $100 billion of its infamous cash hoard in non-US banks. The accusatory undertone is that Apple is engaging in what the subcommittee will almost certainly characterize as tax avoidance (and Apple’s issuing of bonds last month to generate additional cash certainly isn’t going to help). But in a string of preemptive interviews with publications various and sundry, including the Washington Post and Politico, Cook appears unconcerned. Instead it sounds like he is viewing the congressional summons as a teaching opportunity.

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“SpecialisRevelio!” Macs use Harry Potter spell to unlock secret “backdoor”

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Aurich Lawson / Warner Bros. Entertainment

The Mac on your desk or on the cafe table next to you has a chip with secret functions that can be unlocked only by inputting a spell from the Harry Potter series. The SMC, or system management controller, is a chip used to regulate a Mac’s current and voltage, manage its light sensor, and temporarily store FileVault keys. Turns out that the SMC contains undocumented code that is invoked by entering the word “SpecialisRevelio,” the same magic words used to reveal hidden charms, hexes, or properties used by wizards in the Harry Potter series written by author J. K. Rowling.

That fun fact was presented Wednesday at the NoSuchCon security conference by veteran reverse engineer Alex Ionescu. While most details are far too technical for this article, the gist of the research is that the SMC is a chip that very few people can read but just about anyone with rudimentary technical skills can “flash” update. Besides displaying the Apple engineers’ affinity for Harry Potter, Ionescu’s tinkerings also open the door to new types of hacks. But don’t worry because they’re mostly the fodder for a hacking scene in a James Bond or Mission Impossible screenplay.

“The attacks discussed in my presentation are attacks that likely only a nation-state adversary would have the sufficient technical knowledge to implement, and they require precise knowledge of the machine that is being targeted,” Ionescu, who is chief architect at security firm CrowdStrike, wrote in an e-mail to Ars. “They are perfect, for example, at a border crossing where a rogue country may need to ‘take a quick look at your laptop’ to ‘help prevent terrorism.’ I don’t suspect most Mac users (and certainly not those that read Ars or other similar publications) would be at a high-profile enough level to warrant such level of interest from another state.”

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Report: AppleCare extended warranty could become subscription-based

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It’s been a big week for subscriptions: Adobe announced that its Creative Suite software would be entirely replaced by the subscription-only Creative Cloud service, and now a report from AppleInsider claims that Apple will be replacing or augmenting its AppleCare and AppleCare+ extended warranty plans this fall with a new subscription plan referred to as “One Apple.” The new plan would support all of the Apple devices a subscriber owns rather than individual devices paired with individual plans.

Tara Bunch, an Apple vice president formerly of HP, reportedly broke the news during one of Apple’s internal town hall-style meetings. AppleCare and AppleCare+ plans are currently sold on a per-device basis, and extend free telephone tech support and hardware repair coverage from 90 days and one year (respectively) to two years (for iOS devices) or three years (for Macs). Under the new plan, the complimentary phone support period would also be increased from the current 90 days to one year.

The exact terms, pricing, and length of coverage available under the alleged subscription plan are unknown at this point. The report suggests that the plan’s perks include in-store training similar to Apple’s current One to One offering, as well as possible 24/7 phone support.

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Tablets can interfere with implanted defibrillators, stop hearts

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Bloomberg is reporting on a 14-year-old student in Colorado who found herself presenting data to the Heart Rhythm Society meeting in Denver this week. Gianna Chien’s study of the effects of an iPad 2 on implanted cardioverter-defibrillators (ICDs) is making some waves among the medical community because it appears to demonstrate that in a statistically significant number of cases, close proximity to an iPad 2 can disable someone’s ICD and potentially lead to their death.

A typical implanted defibrillator device.
WikiMedia Commons

An ICD is a small device that can be surgically implanted into the abdominal cavity of someone suffering from certain types of cardiac arrhythmias, or irregular heartbeats. If the upper or lower part of the person’s heart begins to flutter or beat irregularly, the ICD can deliver one or more electric shocks to the heart to restore normal rhythm. Atrial or ventricular arrhythmias can cause sudden death, so ICDs are potentially life-saving little things.

However, much like their pacemaker brethren, ICDs can be started and stopped by magnets near the skin. Chien’s study, which originated as a science fair project conducted with the aid of her physician father, shows that the magnets in the edge of an iPad 2 can also switch off ICDs.

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