Apple is sticking taxpayers with part of the bill for rollout of tech giant’s digital ID card

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  • According to the contracts signed by the four states, Apple is required to issue and maintain the required systems for service credentialing to the states at the expense of taxpayers.
  • The settlement, obtained through public records requests from Businesshala and other sources, mostly portrays Apple as having a high degree of control over the government agencies responsible for issuing identity cards.
  • Apple has “sole discretion” for key aspects of the program.

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Apple is making US states part of the bill and providing customer support for its plan to turn iPhones into digital ID cards, according to confidential documents obtained by Businesshala.

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According to the contracts signed by the four, the company was required to issue states and maintain the required systems for service credentialing, hire project managers to answer Apple inquiries, bring the new feature to market prominently, and work with other government agencies. At the same time, emphasis is needed to adopt it. states.

Apple announced in June that its users could soon store state-issued identification cards in the iPhone’s Wallet app, billing it as a more secure and convenient way for customers to provide credentials in various settings. can do. This feature can cut down on fraud when combined with Apple’s biometric security measures like Face ID.

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But the move has raised questions from industry observers about why local officials are passing control of citizens’ identities to a $2.46 trillion private corporation. In addition, the integration of Identity into powerful mobile devices is ready Worry From privacy experts about the risks of dystopian scenarios involving surveillance.

The contracts between Cupertino, California-based Apple and states including Georgia, Arizona, Kentucky and Oklahoma provide a rare glimpse into the mighty company’s dealings. Apple is known for its Passion with confidentiality. This typically forces potential partners to sign non-disclosure agreements to prevent their documents from spreading in public view.

‘sole discretion’

The 7-page memorandum of understanding, obtained through public records requests from Businesshala and other sources, mostly portrays Apple as having a high level of control over the government agencies responsible for issuing identity cards.

Georgia and Arizona will be the first states to offer driver’s licenses on the Wallet app, but have yet to launch their programs. While the contracts received were roughly the same across states, Businesshala did not review agreements for Connecticut, Iowa, Maryland and Utah, four other states. Signed up for Apple’s Digital ID program,

According to the documents, Apple has “sole discretion” for key aspects of the program, including what types of devices will be compatible with Digital ID, how states are required to report on the performance of the effort, and when the program will be launched. goes. , Apple also gets to review and approve the marketing that states are required to do.

Dynamic is the same way Apple typically deals with vendors, although rather than being paid for by Apple, states bear the financial burden of operating the programs, according to Jason Mikula, a fintech consultant and newsletter writer who received a few contracts.

Mikula said in an interview, “It’s like a vendor relationship, which doesn’t make sense to me because it’s the states that have a monopoly on what they’re giving to Apple, they might be negotiating a more equal contract.” can.” “I don’t know of any other instance where government-owned systems and identity certificates were made available in this way for commercial purposes.”

Apple declined to comment for this article. Representatives for Georgia, Arizona, Kentucky and Oklahoma did not immediately respond to requests for comment.

Along with the digitization of industries from finance to entertainment, the emphasis is on creating more modern digital ID systems around the world. But efforts in countries including Singapore, France, Germany and China are implemented at the national level rather than by private companies. Philip FanoProfessor at Johns Hopkins Carey Business School.

apple under control

Throughout the contract, it is clear who is in the driver’s seat.

Apple is asking states to comply with the security requirements set by the International Organization for Standardization describing mobile driver’s licenses. Apple said in September that it took an active role in the development of the standard.

According to the documents, states will have to agree to “definitely allocate sufficient personnel and resources (e.g., staff, project management and funding) to support the launch of the program on a time-frame set by Apple.”

“If requested by Apple, the agency will designate one or more project managers who will be responsible for responding to Apple’s questions and issues relating to the program,” the contract states.

States would have to agree to a broader effort designed to ensure the adoption of Apple’s digital ID, including the new feature “actively” and at no additional cost each time a citizen obtains a new or replacement ID. .

States will need to help adopt the new ID with “key stakeholders in the federal and state government” such as the Internal Revenue Service, state and local law enforcement, and businesses that restrict users based on age that “substantially Important to the program they achieve are the “level of acceptance.”

While state agencies “are to feature the program prominently in all public communications relating to digital identity certificates,” marketing efforts are “subject to Apple’s prior review and approval in all respects.”

All these efforts are paid for by the states. The contract states that “unless otherwise agreed between the parties, neither party shall pay any fee to the other party under this agreement.”

Asked if his state is in line for a payment from Apple, a communications official for the Arizona Department of Transportation confirmed that “no payment or economic considerations exist.”

no guard rail

The end result is that states bear the burden of maintaining the technology systems at taxpayers’ expense, a move that ultimately benefits Apple by making its devices more essential than ever.

“Apple’s interest is clear — sell more iPhones,” Phan said in an interview. “The interest of the state is to serve its citizens, but I am not sure why they think partnering with a specific technology company that owns a closed ecosystem. For the state to spend taxpayer money on a product Serving only half the citizens is doubtful.”

Apple’s Wallet app is not a major revenue source for the company, although it does generate fees from Apple Pay transactions, which are reported in the company’s services business. Instead, the Wallet app and other services are strategic features to make the iPhone more valuable to customers and discourage them from switching to competitors like Google’s Android.

Importantly, in its agreement, Apple shifts the responsibility for verifying the authenticity of user identities on the states: “Apple will not be liable for any verification results, and the Agency acknowledges that all verification results `AS IS'”. are provided and without warranties, express, implied or otherwise, with respect to its accuracy or performance.”

The agreements are also notable for what is missing, in terms of constraints or guard rails on how Apple can harness the powerful potential of identity verification, according to Mikula. This raises the question of whether the company can restrict access to the new capacity to competitors’ products.

“Apple has a history of leveraging its dominant position in phone hardware and software, to prioritize its own offerings and to exact toll from third parties using its platforms,” ​​he said.

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