Rajrishi Singhal: What markets demand needn't be what society wants

Mint

15-06-2025

Apple's highly anticipated developer conference this year has not only disappointed reviewers and equity markets, but also raised many disturbing questions. One, it has raised anxieties over the future viability of the iPhone manufacturer. More importantly, it highlights the divergence between what is good for society versus what is good for the stock market, belying the benign and popular perception of the role that equity markets play in society.
Apple's developer conferences, called WWDC25 this year, are usually a marquee event in the tech world, providing independent developers and tech analysts an inkling of the company's progress with hardware and software. At WWDC25 on 9 June, Apple executives were able to share only a limited future path for the company, especially on its progress with artificial intelligence (AI).
Apple's senior executives told the gathering that the promise made last year about upgrading Apple Intelligence, with voice assistant Siri as its centrepiece, would take some more time to accomplish.
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This left many analysts and developers cold. Even the stock market expressed its displeasure: Apple's common stock has tanked almost 25% from its 52-week high.
The market's disapproval, interestingly, is not limited to Apple's slow progress in integrating AI, but also centres around the company's data privacy policies. The market's unhappiness seems to stem from the company's reluctance to use a customer's individual usage data or information as an input for training personalized AI models. Apple instead prefers to use insights based on aggregate consumer preferences, unlike competitors like Microsoft and Google.
It would then appear that the market is rewarding companies that will profit from scraping individual data, rather than businesses which have red lines on using personal data.
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The market's simple logic is that companies using personal data for their AI engines can unlock new revenue sources by offering consumers hyper-personalized offerings.
Plus, there is the subscription angle. For example, individual subscription rates for Microsoft's Copilot Pro are expected to be around $20 every month, its key selling point being its ability to unlock AI features in all Microsoft 365 products, such as Word or PowerPoint, allowing customers to generate drafts, summarize content or analyse data at a faster rate. Google AI Pro will also be available to customers at the same rate, but a turbo-charged version called Google AI Ultra will be available for $250 per month.
When this columnist asked Google's Gemini how Apple's future AI plans can make money for the company, one part of the AI engine's reply stood out: 'Apple's strong stance on privacy ('intelligence without surveillance') is a powerful differentiator in an era of increasing data concerns. This can foster greater trust and loyalty among its user base, leading to continued purchases of Apple products and services over competitors. While not a direct revenue stream, it's a critical factor in sustaining its high-margin business model."
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Yet, the stock market did not seem impressed. Clearly, for market operators, short-term corporate profits have greater primacy over privacy concerns. Even if we were to disregard the normative issues of morality or ethics for a moment, the stock market's responses are visibly out of sync with society's needs or concerns.
There is a reason for this: the stock market is focused on the limited constituency it serves. Its behaviour aligns almost perfectly with the objectives set out by institutional investors or companies looking to raise money.
In the not-too-distant past, the market was bestowing the Apple stock with a premium too because the company had plugs and ports that differed from other manufacturers, guaranteeing the company exclusive, high-margin revenues, even if that meant consumer discomfort or the exercise of near-monopolistic power.
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The statement that the market's singular focus on corporate bottom-lines and their impact on share prices does not necessarily align with what could be good for broader society might seem like belabouring a truism; but the need to reiterate this has arisen in the face of a growing tendency to conflate a stock market's signals with the desires or ambitions of society on the whole.
One good example of the market-versus-society divergence is the premium that US equity markets placed on companies setting up manufacturing bases in China.
This was happening at a time when the US political class and civil society were bemoaning the absence of democracy and human rights in the North Asian country, even while hoping that closer integration with the global economy would discipline its regime. Reality has turned out otherwise, but stock markets continued to glorify companies that moved production to China.
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The linking of stock market performance with broader social well-being in India found fresh oxygen during the covid pandemic when benchmark indices, after initially dipping sharply, spiked with help from technology and pharma stocks. This was used by many politicians as well as Indian fund managers aligned with the ruling party's political ideology to indicate the economy's recovery and society's triumph over the virus.
Planners and policymakers must realize that a healthy society's needs, desires and ambitions extend far beyond quarterly earnings and the oscillation of benchmark indices.
The author is a senior journalist and author of 'Slip, Stitch and Stumble: The Untold Story of India's Financial Sector Reforms' @rajrishisinghal