What Really Happens When You Trade In an iPhone at the Apple Store
Apple touts its network of shredding robots and contractors as a greener way to reuse old gadgets. A lengthy court battle and a Businessweek investigation have cast some light on the recycling industry’s dirty secrets.
Few workers at the recycling plant had access to the secure room that some called the “Apple cage.” Behind its locked door, past a metal detector and under surveillance cameras, a small team of employees of GEEP Canada Inc., an electronic-waste processor north of Toronto, sifted through pallet-size boxes full of used iPhones. Prying each one open manually at a set of tables, they ripped out batteries and other parts and tossed the components into sorting bins. When enough material piled up in one of the bins, it was forklifted to a larger area of the warehouse, where its contents were dumped into big industrial shredders that loudly pulverized the gadgetry into tiny shards.
Even if the iPhones looked good enough for resale, Apple Inc.’s contract with GEEP (said with a hard “g”) explicitly required that every product it sent be destroyed. In Apple’s view, these devices, the kind usually disposed of at its stores or collected from trade-ins when customers upgraded to a new model, were better off scrapped for their precious metals than refurbished. And Apple was scrapping tons: In its first couple years working with GEEP, the company shipped it more than 530,000 iPhones, 25,000 iPads and 19,000 Watches.
But not all of them ended up in the shredders. Products were disappearing from the facility, though nobody at GEEP seemed to notice or talk about it. Apple was an extremely important client and as stringent about security as GEEP’s government customers, mandating procedures for how its detritus was stored and supervised. “They scrutinize you and do a deep dive and due diligence on your operations,” says a former top GEEP executive who, like most sources cited in this story, spoke on the condition of anonymity to avoid career reprisals and association with any wrongdoing. “They’re absolutely anal about their brand.”
A major part of Apple’s concern was theft, a challenge for any recycler dealing with valuable hardware. If these iPhones and iPads were being crushed anyhow, what was the harm in nabbing some before the slaughterhouse? But staffers were monitored to prevent such temptations. Apple’s contract also stipulated that it retained ownership of everything it dispatched to GEEP; stealing an item here would be no different than swiping the Watch off Chief Executive Officer Tim Cook’s wrist. Some GEEP managers seemed so anxious about violating the rules that when boxes of T-shirts with the Apple logo showed up, they made sure to shred every last thread.
Then came the surprise Apple audit. When corporate investigators arrived to search the space, an oversight right Apple included in its agreement, they discovered a series of alarming issues. Tons of gadgets had gone missing. There were data discrepancies in GEEP’s paperwork. And, tellingly, auditors found two bins of intact Watches in an off-camera section of the facility, something that’s contractually forbidden. Workers on the floor sensed their bosses were nervous but didn’t know why.
Apple soon accused GEEP of failing to recycle at least 99,975 items. Cellular and other device identifiers revealed iPhones that should have been crunched into croutons were instead reactivated by new users in China. In 2020, Apple sued GEEP in Ontario court for C$31 million ($22.6 million) for breach of contract, alleging a “carefully orchestrated scheme” wherein employees stole and diverted its products to third parties who fixed up and “resold them in the grey-market to unsuspecting consumers.” GEEP acknowledged Apple goods were misappropriated, but blamed the scheme on several “rogue employees,” whom the company separately sued; it denied violating the terms of its deal with Apple or that it was “vicariously liable.”
When the lawsuits came to light, first reported in late 2020 by the Logic, a Canadian news outlet, industry observers were stunned. It wasn’t just the shocking scale of the purported heist; the incident implied that Apple was forcing a recycling partner to shred tens of thousands of iPhones that were apparently in prime condition for refurbishment. The timing was awkward: That same year, Apple had publicly committed to reaching 100% carbon neutrality across its product life cycle by 2030 and specified in an environmental report that “reuse is our first choice.” The shredding, critics said, contradicted Apple’s green marketing and was likely a way to keep cheaper used hardware from interfering with sales of new products.
And then nothing happened for four years. Today the case remains a mystery. No new motions have been filed, and, without further actions, GEEP and Apple’s lawsuits could be automatically dismissed as soon as August and January, respectively. Why would Apple expose some of the inner workings of its recycling program in a suit only to let the matter rest there?
An Apple spokesperson says electronics recycling today has advanced by “leaps and bounds” since the GEEP lawsuit was filed, and that the company creates long-lasting products that often serve multiple owners. “Apple’s industry-leading recycling program offers customers easy ways to bring their devices back to be analyzed for refurbishment and reuse,” the spokesperson says. “When a device finally reaches the end of its life, we’re pioneering innovative new ways to recover the valuable materials inside.” John Longo, an attorney for GEEP, says he has “no comment while this matter is before the courts.”
Longtime e-waste leaders, who say theft is more rampant than people realize, suggest that Apple’s complaint alone was enough to make a vicious example of GEEP and send an aggressive message to its other partners that it may go after them, too, for iPhone pilfering. Citing a Chinese proverb, one industry exec puts it this way: “Kill the chicken to scare the monkey.”
GEEP isn’t the only recycling vendor Apple has grappled with. In the 2010s the company investigated theft issues at recyclers ranging from Li Tong Group in Asia to Stena Metall AB in Europe, says a former Apple executive familiar with its vendor audits. Redacted legal filings indicate that in 2015 the company uncovered an alleged plot at Tes-Amm in Singapore involving employees stealing Apple devices and parts, including large quantities of expensive circuit boards. To cover their tracks, the workers mixed boxes of Apple scrap with non-Apple scrap to match the facility’s incoming and outgoing weights, a metric Apple tracked closely. (A spokesperson for Tes-Amm says that it cannot confirm or comment on any client relationships but that security is paramount to its organization. Li Tong declined to comment. Stena says the former Apple exec “appears to be misinformed” but wouldn’t elaborate.)
To deter burglary, Apple has hired outside security consultants to escort trucks to its recyclers, witness the unloading and shredding and generally document the process. Given the volumes Apple facilitates, however, the lure for low-wage workers to skirt the supervision and swipe gadgets is obvious, especially with the iPhone. “It’s teeny, fits in a pocket and is worth a bundle,” says Renee St. Denis, Apple’s senior manager of global recycling until mid-2018. “Unfortunately, sometimes management gets involved, too.” A recycling engineer who’s worked with Apple in the US and China at several e-waste companies remembers an incident with a water cooler on a steel cart that would be rolled in during shifts. An employee was surreptitiously taping iPhones to the bottom of the cart and, when the cooler needed a refill, sneaking them through the metal detector. The guard assumed the cart caused the beeping.
There are a variety of reasons for electronics makers and retailers to pay to have their goods shredded. Some want to remove unsold inventory from shelves to make room for new product generations. Used items might contain personal data that needs to be destroyed. Shredding also mitigates the risk that sought-after pieces—camera modules, sensors, chipsets—could fall into the wrong hands and wind up in a so-called Frankenstein device. These are fixed up to look like the real thing and illegally resold or even fraudulently returned. (Last year one group of conspirators was sentenced to jail for attempting to exchange more than 10,000 counterfeit iPhones and iPads for genuine versions at hundreds of Apple Stores from 2011 to 2019.)
It may sound eco-friendly to smelt a device’s metals so they can reenter the supply chain, but recycling is far from the greenest option. The recovery value of an iPhone is low, and with 80% of its carbon footprint emitted during production, the most environmentally sound path is to keep the gadget alive as long as possible. “The goal really is to minimize the amount of material that has to go out to the recycler, whether that’s by making a device last longer or making sure parts and modules have a way to be reused,” says Nirav Patel, founder of Framework Computer Inc., a startup that builds laptops designed for easy repairs. “Recycling is the last resort.”
Of course, a lot of the products sent to the shredders are in fact kaput or too old to salvage. And the iPhone’s durable design can make it tougher to repair. But Apple’s business model of enticing users to regularly upgrade to the latest and greatest hasn’t exactly incentivized the company to fix every device it can. “Apple can’t sell a brand-new phone for $1,000 if they have a bunch of two-generation-old phones still on the market,” says the recycling engineer. “The more older phones they can get rid of, the more newer phones they can sell.”
Apple improved the efficiency (and security) of its recycling by bringing some of it in-house. Its environmental innovation team developed a robot called Liam, unveiled in 2016, that could dismantle an iPhone 6 into eight separate components. This comprehensive presorting enabled Apple to recover more metals, whereas traditional shredders typically chewed up intact or minimally disassembled devices. Magnets and other mechanisms that try to separate the mashed-together bits after shredding lose lots of material in the process.
Liam’s precision automation, however, proved a dead end. It could handle just one iPhone model, and not that well. If a device had corroded screws or sticky insides, the robot would glitch. A person familiar with the project estimates Liam could run for about 10 minutes without human intervention. Another person says Apple at times fed the robot still-functioning iPhones and, for media demos, cherry-picked cleaner units so it didn’t crash, suggesting Liam was geared more for promotion than scalability.
Apple introduced Daisy, Liam’s successor, a few years later. It took a promising destructive approach: Instead of delicately removing parts, Daisy’s robot arms and four stations of machinery ripped off screens, punched out screws, froze batteries for easier extraction and knocked modules onto conveyor belts. The discrete output led to better recovery rates for elements such as cobalt and tungsten. By 2019, when Apple opened the material recovery lab in Texas where Daisy currently resides, the robot could process and disassemble 15 iPhone models at a rate of up to 200 units per hour. Apple soon added a second Daisy to an associated DB Schenker logistics center in the Netherlands, for European recycling.
Still, while Apple recycling veterans and industry experts generally laud the innovation, some are surprised that Apple continues to hype a machine that’s now six years old and capable of processing only up to 1.2 million iPhones per year—about what the company sells every 48 hours. Apple envisions third-party recyclers licensing the technology and erecting their own automated systems, but that hasn’t happened, likely because of the robot’s cost and iPhone-limited architecture. Matthew Travers, a scientist at Carnegie Mellon University’s Robotics Institute who does work with Apple’s recycling engineers, says incremental automation is more likely to augment hand disassembly and existing shredding infrastructure in the near future. “In the next five years, I’d be very, very surprised if there was a fully automated robot solution that solves the e-waste problem,” he says.
The reality on the ground at traditional demanufacturing plants is much less high-tech. Around the time Apple was bringing Daisy online in the Netherlands, a person then employed at Re-Teck, another Apple recycling partner down the street, recalls witnessing the crushing of tons of AirPods, Macs and Watches, many of which appeared to be in good shape. (Re-Teck declined to comment.) In some cases, the employee says, workers would smash the devices with hammers.
GEEP’s 500,000-square-foot facility, in an industrial area of Barrie, Ontario, was a mess of open boxes packed with aged computers, TVs and bulky appliances. Line workers wore orange coveralls and respirators. A conveyor slanted up almost two stories to the primary “chain shredder.” When a huge office printer slid into its chamber of spinning grinders, the disintegration sounded like an earthquake.
All kinds of random stuff came through the warehouse, from Bose headphones and Microsoft Surface tablets to Shrek 2 DVDs and sex toys. Some workers felt weird destroying perfectly usable hardware such as new hard drives or flat-screen TVs with only superficial defects. “It was insane,” says former scale operator Zachary Jackson, who remembers thinking, “I really don’t want to break this. All this is totally fine.”
Winning the Apple contract in late 2014 was a big deal. Two former longtime employees say GEEP’s business, which then had operations in Vancouver and Montreal among other locations, had been struggling for years. Yes, Apple was exceptionally demanding. (When originally setting up the metal detector for the Apple cage, GEEP had a worker hide small electronics in their boots and underwear to test if it would set off the alarm. “If you tried to shove a microchip down your pants, that metal detector would pick it up,” says an ex-staffer.) But Apple was also the kind of banner customer that could attract other business. And it paid on time—not a given in the rough-and-tumble scrap world, where operators haggle over pennies per pound processed. From 2015 to 2017, thousands of Apple products arrived at GEEP’s docks in Barrie for unloading.
Attempting to keep the plant on track was Roger Micks, an unsmiling manager with a thick strip of hair running down his chin. Described as a taskmaster, Micks was constantly yelling at underlings about throughput or equipment failures or disappointing load prices, though some sensed it was an act. One victim of his temper recalls seeing him unabashedly sleeping in his office chair on multiple occasions after tirades. In his off time, he enjoyed wrangling fish on a boat named Ballz Deep.
There were rumors of theft happening at GEEP, though usually in small doses. Even after an employee was caught stealing Beats by Dre headphones to sell online, it wasn’t too difficult to sneak out video games or cameras slated for shredding. Some sensed shadier things were happening. A former commodities analyst once noticed Micks mislabeling recycled materials set to ship to an e-waste partner and reported it to compliance, but they never heard what came of the issue. Micks couldn’t be reached for comment.
GEEP was supposed to destroy every iPhone, iPad and Watch beyond reuse within 45 days of receipt. Apple representatives regularly showed up to monitor goods arriving, even escorting forklifts from the Apple cage to the shredders, says one person familiar with the process. Still, it wasn’t impossible to circumvent security. Nobody would think twice if Micks ordered a pallet moved to another location or transported to an outside vendor. “You’re looking at hundreds of thousands of pounds of material,” this person says. “If you’re skimming 100 pounds here and there, nobody is really going to know.”
Making off with millions of dollars of Apple product at GEEP, it turned out, didn’t require Ocean’s Eleven-style cunning—just accounting and logistics tricks. Someone began altering electronic records and reclassifying Apple shipments with codes for copper bearings and other materials. As GEEP later determined, these loads were then transported to Whitby Recycling Inc., a scrap brokerage 90 minutes away near Lake Ontario that GEEP did business with. David Rubin, an attorney for Whitby and its president, Fu Yuan Yang, says Yang denies any involvement in the conspiracy and was merely buying and selling scrap metal. “It had nothing to do with iPhones,” Rubin says. “If somebody substituted other stuff in there that wasn’t supposed to be there, he had no idea and no part of it.”
It’s unclear exactly when Apple began to notice questionable activity. Besides tracking the devices it sends to recyclers, the company analyzes data reports that often detail destruction weights and commodity yields. If the percentage mix of precious metals coming from a batch of iPhones looks off, that can raise red flags in Cupertino.
In August 2017, Apple conducted its surprise inspection of GEEP. Auditors, poring over corporate documents and interviewing employees, quickly realized way more gadgets had gone missing than could be stuffed in a worker’s underwear. Apple met with GEEP leaders to share the findings of its investigation in January 2018, ultimately killing the contract and concluding that at least 11,766 pounds of Apple hardware had vanished without being shredded.
The following year, GEEP sued Micks and two former colleagues, Ted Cooper and Steve White, accusing them of redirecting nearly 100,000 Apple devices to Yang’s company in exchange for kickbacks. These products were shipped overseas and resold. Cooper, who declined to comment through his lawyers, denied any involvement in a legal filing. White never filed a statement of defense and didn’t respond to requests for comment. Micks, who was fired during Apple’s investigation, did not file a defense statement. GEEP said in a court claim that he admitted to diverting iPhones when confronted with evidence of the scheme.
Apple filed its own lawsuit against GEEP in January 2020. “The business imploded when we had this Apple thing,” says the former top GEEP executive. “Imagine if you’re Hewlett-Packard and dealing with GEEP. You have to question: ‘If they do that to Apple, what are they going to do to us?’ ”
After an initial flurry of legal activity, there were no subsequent filings in either case in 2021 or since. It’s possible Apple gave up on litigation to avoid more public scrutiny of its recycling program, or because it settled the issue privately. At this point, GEEP Canada no longer exists. Through a merger, the Barrie plant is now part of Quantum Lifecycle Partners LP, which says it’s not party to Apple’s lawsuit. Unless the Apple case moves to trial soon, the matter will likely be terminated by default in January 2025, as per a notice in its initial complaint.
Without court proceedings, it’s much tougher to say who knew about the alleged thefts and when they knew it. Some wonder if the blame was unfairly pinned on Cooper, White and Micks, given the complexity of the plot. What’s undeniable is that the lawsuit was a lightning bolt for Apple’s other recycling partners to shore up their security and stay quiet about Apple’s operations. “It reverberated all across the industry: If you weren’t strict then, you [expletive] well are now,” says a recycling adviser who’s worked on the shredding of accessories like AirPods for Apple in recent years. (The compact design of AirPods is notorious for making repairs impossible, never mind the earwax they collect.) The lawsuit appears to have made recyclers even cagier about discussing the already-opaque practice of forced destruction, which is still common among electronics makers. “Apple does it more than the others,” says another consultant involved until 2023 with turning “perfectly reusable” iPhones and iPads into “metal muesli.”
Apple reports the number of devices it refurbishes each year—about 12 million—but it doesn’t disclose how many units it receives and opts to recycle rather than resell. A person familiar with the operation says secondary retailers could sell lots of the lower-quality iPhones that Apple shreds because they aren’t pristine enough for its official “certified refurbished” program. It has continued investing in recycling machines, including Taz, an advanced shredder introduced in 2022 that was designed to better recover metals from audio modules, and the company still publicly markets its flashy Daisy robot, which can now process 29 iPhone models. After years of resisting outside initiatives to make its devices easier to fix, Apple also recently announced support for a California right-to-repair law that goes into effect this July. It will require manufacturers to make repair manuals, parts and tools available at reasonable prices.
Nevertheless, Kyle Wiens, a right-to-repair advocate who co-founded the refurbishing business iFixit, says Apple must do more to live up to the green values it espouses. The company, he says, makes repairing iPhones difficult because of a feature called “parts pairing,” software that can mess up your phone if you try to swap in a new display or battery for the factory model. Apple says this is a necessary security measure, but Wiens has found it causes arbitrary glitches and warning messages in basic repairs. For example, swapping two screens or cameras on brand-new iPhones resulted in features such as auto-brightness or facial recognition malfunctioning. (On April 11, Apple announced enhanced functionality for certain replacement parts used in repairs of newer iPhone models.)
Wiens is especially adamant that Apple ought to cease contracts like the one it had with GEEP that require recyclers to shred devices. He believes the practice should be illegal, particularly because, even if the devices are not fixable, there are certainly parts inside that he and other repair specialists would love to buy to use in their own refurbishing efforts. “If consumers knew the volume of quality products that were being destroyed every day, they would be shocked,” Wiens says. As for the GEEP workers who stole and resold iPhones, he says, “I would argue that they were doing God’s work.”
6:48
When President Joe Biden returned to the White House after delivering his State of the Union address, 23-year-old TikTok influencer Awa Sanneh joined roaring cheers alongside administration staffers gathered on the mansion’s back porch.
Biden told the group “how important” social media content is to reach Gen-Z voters, recalled Sanneh, among dozens of creators invited for a watch party that night.
Just weeks later, Biden signed into law a bill that forces TikTok’s parent company, Beijing-based ByteDance Ltd., to sell its stake or face a ban in US app stores. That has rattled the social media creators his campaign has taken unprecedented steps to court.
“I’m pretty critical of him at this moment in time,” said Sanneh, who has attended multiple administration briefings and has more than 510,000 followers. “If you truly understood the impact, then you would want to keep TikTok.”
Biden’s embrace of the divest-or-ban bill exemplifies his efforts to contain what administration officials and lawmakers from both parties see as a growing national-security threat from China. Nonetheless, he continues to promote his political message on the platform.
None of the influencers who spoke to Bloomberg News said Biden had lost their vote. However, the new law is likely to turn off younger voters, who've propelled the app to mainstream relevance and are key to Democratic electoral wins. Many are already unenthusiastic about Biden’s reelection.
“Election after election, young people continue to show us they understand the stakes of this moment, and will vote like their futures depend on it – because they do,” said Seth Schuster, a spokesperson for Biden’s campaign.
Kenny Walden, who has 167,000 TikTok followers and has attended White House events, posted a video on the platform expressing confusion over Biden’s decision to back the bill over privacy and data security concerns.
“I’m against it, Joe,” said Walden, whose content focuses on encouraging people to vote for Biden. The president is silencing his “frontline of defense,” he added, referring to creators like him.
Opponents of the bill say it threatens freedom of speech and singles out the social-media platform over others collecting users’ data.
White House officials maintain their intention isn’t to prohibit TikTok from operating, but to force the app’s Chinese owner to divest. The 270-day deadline for ByteDance extends beyond November, allowing users to continue posting through the election.
“This is about our national security. This is not concerns about Americans using Tiktok,” said White House Press Secretary Karine Jean-Pierre. “There’s certainly time on the books to see how this plays out.”
ByteDance has made clear it has no intention of selling, and a protracted legal battle is likely. At the same time, Donald Trump is already using the prospect of a ban to court younger voters. In a social media post before the bill passed Congress, he blamed Biden for setting a ban in motion. That marked a reversal for Trump, who as president signed an order in 2020 banning the app that was later overturned in court.
Biden’s team says its presence on the app is a vital part of a strategy to reach voters in as many arenas as possible. The app’s reach is massive: More than 170 million Americans have accounts, the company says, and a third of adults under 30 get their news from it, according to the Pew Research Center.
In a first-of-its-kind push for a presidential administration, Biden’s aides are in touch daily with social media influencers or their managers. Meanwhile, campaign officials are considering bringing creators into their headquarters, said a person familiar with the deliberations.
The campaign’s partnerships with popular creators are all the more important since TikTok prohibits political advertising. Organizing multiple people to push positive content beats Biden’s presence alone on the app, according to a person with knowledge of the strategy.
Listen • 19m10
Big Take DC: TikTok Bill Takes On China’s Influence (Podcast)
Never miss an episode. Follow the Big Take DC podcast on iHeart, Apple Podcasts, Spotify or wherever you listen. Read the transcript.
The Biden campaign launched a TikTok account during the Super Bowl in February. It has more than 300,000 followers, which pales in comparison to those of the most popular influencers. The campaign is taking at least one known security precaution: Staffers post on the app from one separate device.
Biden officials were already facing a daunting landscape on TikTok, even before he signed the divest-or-ban bill. Negative posts about the 81-year-old president proliferate on the platform, driven by frustration over his handling of the war in Gaza, his age and climate policies.
“It’s very anti-Biden,” Kerry Robertson, a Minneapolis-based influencer who supports Biden, said of TikTok. “It always has been.”
“Even though the algorithm isn't showing me any kind of pro-Biden content or anything like that, whenever I do those videos, I get a lot of ‘Thank you for this,'" she added.
There is no clear evidence TikTok’s algorithm has a particular political bent, according to Neta Kligler-Vilenchik, a Hebrew University of Jerusalem associate communication professor. But since it’s notoriously opaque, it presents a “problem” for those seeking to understand its growing political influence, said Columbia University associate communications professor Ioana Literat.
“Look what's happening on TikTok,” Biden said recently at a fundraiser. “It’s so easy to just flat-out lie and not know what’s true, so we got a lot at stake here.”
It’s difficult to measure the volume of positive or negative sentiment about Biden on TikTok because the company restricts certain data. Users are often siloed in different content universes, where their feeds reflect topics they interact with the most, experts say.
Biden’s team is making the calculus that they can persuade disenchanted voters to consider supporting him, in part through online content.
Before Biden’s Radio City Music Hall fundraiser in March, which featured comedian Stephen Colbert and former Presidents Bill Clinton and Barack Obama, some TikTok creators joined a roundtable with campaign staffers about digital strategy, where Biden stopped by to speak with them, one influencer recapped in a video.
Finnegan Biden, Biden's granddaughter, also hosted a happy hour for creators at nearby Pebble Bar before the fundraiser.
Similar to the Radio City event, behind-the-scenes visits to the White House are great fodder for social media. "Look at this — this napkin has the seal of the president on it," Sanneh said in a video inside a White House bathroom that drew 2.1 million views.
If TikTok goes away, so does a source of influencers’ revenue. Harry Sisson, a 21-year-old who has joined both official and campaign gatherings, is encouraging his 850,000 TikTok followers to watch videos on his YouTube channel, where he has been posting more because of the potential ban.
“There are a lot of creators on TikTok who support them and have done a lot of work for the campaign and the president,” Sisson said in an interview. “I’m overall disappointed.”
— With assistance from Alex Barinka
(Updates with details about opposition to bill in ninth paragraph)
No comments:
Post a Comment