Smartphone addiction: bad for kids, great for profits

smartphone addiction
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ITEM: Apple investors have become somewhat divided on the issue of smartphone addiction – some say it could cause developmental problems for children, while others say, “So as long as it’s profitable, who cares?”

That’s the upshot of this Reuters article, which says that over the weekend, two Apple investors – Hedge fund JANA Partners and the California State Teachers’ Retirement System (CalSTRS) pension fund – raised concerns that iPhone addiction could hurt children’s developing brains.

According to the Wall Street Journal, they sent a letter to Apple asking it to consider developing better parental controls that would limit how long kids can use iPhones, and also conduct research into the potential impact of excessive smartphone usage on mental health.

Other Apple shareholders aren’t having it. Apple shareholder Ross Gerber, chief executive of Gerber Kawasaki Wealth and Investment Management, responded: “Addictive things are very profitable.”

Oh. So that’s okay, then.

(Note: Gerber also owns stock in Starbucks, casino operator MGM Resorts International and alcohol maker Constellation Brands. So he should know.)

To be fair, JANA and CalSTRS aren’t just concerned about the kids – they’re also concerned about the impact on Apple’s share price in the longer term if they don’t address this issue now.

Meanwhile, other investors point out that it’s unreasonable to expect Apple to take responsibility for smartphone addiction since it’s the apps and content, not iPhones or iPads themselves, that are addictive, Reuters reports:

Kim Forrest, senior portfolio manager and vice president at Fort Pitt Capital Group, agreed that companies like Facebook, Twitter Inc and Snap Inc might be more at risk than Apple if investors and regulators push back on how much time people spend on mobile devices.

“Apple is just the delivery device,” said Forrest, who said Fort Pitt has limited Apple holdings. “It’s only compelling with software. Software is the dopamine releaser that keeps you coming back.”

Of course, Apple also provides the software and entertainment via the App Store and iTunes, and keeps very tight controls over the apps it allows onto the platform. So I’m not sure Apple could successfully argue that addiction to the software it vets and provides access to is not its problem. Then again, should pubs and liquor stores be held responsible for alcoholism or drunk drivers?

Apple isn’t arguing anything at the moment – its sole response to the letter thus far is to state that it already provides plenty of parental control features for its devices, and plans to roll out additional features at some point:

“We are constantly looking for ways to make our experiences better,” Apple said. “We have new features and enhancements planned for the future, to add functionality and make these tools even more robust.”

Either way, smartphone addiction is already a social problem – not just in the US, and not just recently. In Asia, smartphone addiction has been a growing concern for several years. There’s even a psychological term for it – nomophobia (the fear of being without your smartphone, or of being out of range of a wireless connection). And it’s going to be an even bigger problem as we head into the so-called ‘digital economy’ of ubiquitous 5G cloud connectivity where most of our daily life has some form of digital mediation to the point that opting out will be difficult.

Inevitably, regulators are already looking at what actions they can take to fight the problem. This year, France will ban mobile phones in primary, junior and middle schools, while legislation has been drafted that would require anyone under 16 to get parental permission to open a social media account.

Personally, I would agree that the smartphone addiction problem lies more in social media (to include OTT messaging services like WhatsApp), games and other content, not the devices themselves. I can see potential problems with banning devices from schools, namely safety issues (say if the school catches fire or – in the US – some dingbat with an AR-15 starts shooting people).

That said, I’m not convinced that legislation will solve the problem either – getting parental permission to open a Facebook account is a nice idea, but how do you enforce that? Sure, social media platforms could add some sort of safeguard, but kids are notoriously famous for finding ways around such things. And often it’s as easy as ticking a box saying “Yes of course I’m over 18, would I lie to you?” I’m reasonably sure today’s (and tomorrow’s) digital natives are up to the challenge.

One thing that may help is if everyone in the value chain – device makers, apps developers, social media platforms, and even operators – take the problem seriously and look for ways they can educate parents and kids alike of the potential risks of addiction, signs to watch for, and how to help addicts. It won’t stop smartphone addiction – let’s face it, addiction is a perennial human problem and takes many forms – but it could help mitigate the problem.

It’s also possible that, as futurists like Gerd Leonhard have predicted, in the near future digital apps will become so ingrained into daily life that many people will voluntarily seek refuge from the digital economy – possibly to the point of paying for the privilege of being offline.

Here’s one thing I am sure of – if you want to keep the regulators off your back, probably the last thing you want to do is say something stupid like, “Addictive things are very profitable.” That’s really just asking for it.

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