2 big shareholders want Apple to investigate how bad iPhones are for children

Flickr/Paul Mayne

• Two big shareholders in Apple are pressuring the company to carry out research into whether iPhones are bad for children.
• Jana Partners and CalSTRS wrote an open letter to Apple citing a growing body of research that shows kids who use smartphones too much may become more depressed, and even suicidal.
• The two control around $2 billion in Apple shares between them.
• It's highly unusual for activist investors to pressure a firm about social responsibility rather than corporate issues.

Two major Apple investors are pressuring the firm to investigate just how addictive iPhones are for children, and the possible mental health impact of using the device too much. We first saw the news via The Wall Street Journal.

It's an unusual case of activist investors pressuring a firm over social responsibility, rather than corporate changes.

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Jana Partners LLC and the California State Teachers' Retirement System (CalSTRS) control about $2 billion (£1.47 billion) shares between them.

In an open letter to Apple, the two investors used scientific research to argue that lots of children in the US get distracted by their phones in the classroom, that higher phone usage might be a factor in teen suicide, and that children who use lots of social media may become more depressed.

The letter cited research showing that the average American teen has their first phone at the age of 10, and spends more than 4.5 hours a day using it, not including texts and calls.

The two investors wrote: "It would defy common sense to argue that this level of usage, by children whose brains are still developing, is not having at least some impact, or that the maker of such a powerful product has no role to play in helping parents to ensure it is being used optimally."

They called on Apple to:

• Create a committee of child development experts to study the impact of technology on children
• Add better, more sophisticated parental controls
• Assign a high-level Apple executive to take responsibility for this whole area

The two organisations argued that Apple shareholders would see long-term benefits in the firm taking responsibility for younger customers.

"We believe that addressing this issue now will enhance long-term value for all shareholders, by creating more choices and options for your customers today and helping to protect the next generation of leaders, innovators, and customers tomorrow," they wrote.

Jana Partners is a law firm that was founded by activist investor Barry Rosenstein. It has often taken large shareholdings in firms where it has then agitated for change, like pressuring energy firm El Paso to break in two. This is the first time the firm has taken a social responsibility position for an activist campaign, according to The Financial Times.

CalSTRS is one of the biggest public pension funds in the US.

Apple did not respond to a request for comment.