One product more than any other is responsible for the fortunes of device maker Apple Inc. (NASDAQ: AAPL) -- its flagship iPhone. In the company's fiscal fourth quarter (which ended September 30, 2017), Apple attributed more than $28 billion, a full 54% of its $52 billion in revenue, to the iPhone. The company has pocketed hundreds of billions of dollars from sales of this device alone.
Now, a pension fund, an activist investor, a prominent musician, and medical researchers have banded together in a coalition to examine the effects of digital devices on childhood development -- and the group is asking Apple to provide parents with tools to limit and help monitor children's use of its devices.
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The California State Teachers' Retirement System, or CalSTRS, is among the largest public pension funds in the country, and Jana Partners is an activist hedge fund. Combined, the entities own approximately $2 billion in Apple shares. The two penned a letter to the tech company saying, "There is a clear need for Apple to offer parents more choices and tools to help them ensure that young consumers are using your products in an optimal manner."
The letter provides a host of compelling medical evidence that highlights this mounting concern. Of more than 2,300 teachers surveyed, 75% said children's' ability to focus on schoolwork has declined as the result of "personal technologies," and a full 90% say that kids' emotional challenges have increased. Other studies found that the overuse of technology by kids causes them to sleep less and puts them at a higher risk of suicide.
Teachers aren't the only ones concerned. A survey of 3,500 parents reported that 58% worry about the influence of social media on their children's health and well-being. 58% say their child is too "attached" to their phone or tablet, while 48% describe a "constant battle" between parents and kids regarding the appropriate amount of screen time.
The group pushing for the changes includes a diverse group of investors, activists, and researchers. Dr. Michael Rich is an Associate Professor of Pediatrics at Harvard Medical School and founding director of the Center on Media and Child Health at Boston Children's Hospital. Professor Jean Twenge is a Professor of Psychology at San Diego State University and has authored more than 140 books and scientific publications.
Joining the team is award-winning musician Sting, a founding member of the band The Police and an activist who has supported such causes as Amnesty International, Live Aid, and the Rainforest Fund. Trudie Styler, Sting's wife, is an environmentalist, human rights activist, and UNICEF Ambassador. Patricia Daly is a Dominican Sister who works in the area of corporate responsibility and socially responsible investing. Professor Robert Eccles advises companies and investors on how to create sustainable strategies.
A history of past concessions
Apple has shown its willingness in the past to address the concerns of shareholders and the public. In an effort to curb the growing trend toward distracted driving, Apple introduced a feature that allows users to suspend notifications while driving. Apple already gives parents control over the apps, services, and content kids can use.
Suicides at a contract manufacturing plant belonging to Foxconn in China led Apple to hang nets at the facility and prompted a visit from Apple CEO Tim Cook, who was accompanied by specialists in suicide prevention. Apple also commissioned an independent review of the situation by a larger group of experts in the field.
Late last month, Apple even issued a rare "mea culpa" for failing to advise customers that its updates could potentially slow the performance of older iPhones, though the company said it was to prevent sudden shutdowns of older batteries.
Is Apple game?
There has been no official response from Apple as of this writing, so we don't yet know if it has any plans to address the concerns raised in the letter. The rise of smartphones and social media most certainly has had an impact on the youth of today. From a public relations perspective, responding to some of these concerns would paint the company in a better, more socially responsible light, and the cost to create some of the tools in question would likely be relatively inexpensive.
Apple alone can't bear the responsibility of the forward march of progress, but it can act as an example for other companies to follow.
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Danny Vena owns shares of Apple. The Motley Fool owns shares of and recommends Apple. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy.