Apple CEO Tim

AP Images / J. Scott

  • Apple didn’t know that two of its biggest investors,
    Jana Partners and the California State Teachers’
    Retirement System, wanted it to take a bigger role in
    children safety.
  • Apple was given a heads-up call shortly before the
    investors publicly released a letter calling for changes, but
    the letter wasn’t the result of previous talks or suggestions
    made privately to Apple. 
  • The letter received an immediate response from Apple
    promising to add features and upgrade its existing child safety
    features.  Apple also pointed out that it has offered
    child safety features since 2008.

Last week, Apple was the target of an interesting PR situation in
which everyone involved walked away winners.

Apple was somewhat blindsided by an open letter by activist
hedge fund JANA Partners and powerhouse institutional investor
the California State Teachers’ Retirement
System (CalSTRS) demanding that the iPhone maker do more to
protect kids from the dangers of too much screen
a person familiar with the situation tells
Business Insider.

The company received a “courtesy call,” shortly before this PR
campaign launched, as this person described it, but the investors
had not been in talks behind-the-scenes with Apple prior to the
letter being made public.

In the letter, investors that jointly owned $2 billion worth of
Apple stock, asked Apple to invest in research on the topic and
to create a committee that included academic researchers to help
it create new child safety features.

Apple promptly
responded with a statement,
 pointing out that it’s had
parental controls in its software since 2008 but promising to
update them. “Apple has always looked out for kids, and we work
hard to create powerful products that inspire, entertain, and
educate children while also helping parents protect them online.
We have new features and enhancements planned for the future to
add functionality and make these tools even more robust.”

As to why Jana chose Apple, “Apple was a logical place to start,”
this person said, because Apple is “socially responsible and they
are perfectly positioned because they are the gateway for teens
to get to these things. If you are trying to stop water from
coming out of a hose it’s more effective to grab the hose than
try and grab every drop of water coming out of the hose.”

We’re looking at you, Facebook

Interestingly, the motivation behind targeting Apple in this way
wasn’t Apple at all. It was Facebook.

Mark Zuckerberg
CEO Mark Zuckerberg

Sullivan/Getty Images

Last month,
Facebook said that using
Facebook helped improve feelings of
“depression and loneliness.” It cited as evidence, in part, a
study that Facebook itself conducted with Carnegie Mellon
University, along with a few other studies from other

Naturally, Facebook’s blog post didn’t mention
a large study published a few months earlier
by researchers
at Yale and UC San Diego that found the reverse: the more that
people used Facebook, the worse many of them felt.

The folks at Jana felt that Facebook was being somewhat
disingenuous about the research and didn’t want Apple to “take
the same kind of insular approach and say, ‘Don’t worry about it.
We’ll get our software engineers together and figure this out,”
this person said. “This needs to be a public discussion. You need
to involve experts.” 

“Shareholders care about this,” the person added.

On top of that, Apple was chosen because Jana
and CalSTRS thought that it would be easier for Apple
to move on this and it could influence others in Silicon

Jana spokesperson Charles Penner explained during a CNBC
interview, “It’s not part of Apple’s business model to encourage
over usage the same way it is, arguably, for a Facebook or a

Another reason for the PR campaign

But there was another reason at play for this whole letter being
done as a public relations campaign rather than a
behind-the-scenes discussion.

Barry Rosenstein
Jana founder Barry

Reuters/ Rick

The hedge fund Jana, founded by billionaire Barry Rosenstein, is
just about to launch a new socially responsible investment fund.
It is out seeking limited partners investors to be part of it,
it said.

Pushing Apple to help kids was a way to show its potential LPs it
could be influential in a new kind activism. Jana has been the
classic type of activist investor that bought stakes in
underperforming companies and pressured them into mergers,
acquisitions or management changes. It’s perhaps best known
for pushing
Whole Foods to sell itself
 but it has also targeted
Walgreens, ConAgra and many others over the years.

Recently, Jana has been on the wane, finishing December with $4.6
billion of assets under management, down more than half from the
$11 billion it had in 2015,
Bloomberg’s Suzy Waite and Scott Deveau reported.

While Apple could not have loved to be targeted like this – and
there’s no indication yet that Tim Cook is talking to Jana
and CalSTRS about its new child safety plans  – Apple
has walked away a winner too. 

It gets to show that it cares about kids and listens to investors
all with one swift PR statement.

Best of all, should Apple really come through with industry
leading child safety controls, the biggest winners of all will be
the kids. 

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