CNBC Television Taxpayers will pay for part of Apple’s digital ID
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CNBC’s Hugh Son joins ’TechCheck’ to report on Apple’s decision to have taxpayers foot part of the bill in the company’s rollout of a digital ID. For access to live and exclusive video from CNBC subscribe to CNBC PRO:
Apple is making U.S. states foot part of the bill and provide customer support for its plan to turn iPhones into digital identification cards, according to confidential documents obtained by CNBC.
The company requires states to maintain the systems needed to issue and service credentials, hire project managers to respond to Apple inquiries, prominently market the new feature and push for its adoption with other government agencies, all at taxpayer expense, according to contracts signed by four 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 a variety of in-person and remote settings. The feature, when combined with Apple’s biometric security measures like Face ID, could cut down on fraud.
But the move has brought questions from industry observers about why local authorities are ceding control of citizens’ identities to a $ trillion private corporation. Beyond that, the integration of identity into powerful mobile devices has drawn concern from privacy experts about the risk 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 dealings of the powerful company. Apple is known for its obsession with secrecy. It typically forces potential partners to sign non-disclosure agreements to prevent its documents from spilling into public view.
`Sole discretion’
The 7-page memorandum of agreement, obtained through public record requests from CNBC and other sources, mostly portrays Apple as having a high degree of control over the government agencies responsible for issuing identification cards.
Georgia and Arizona will be the first states to offer driver licenses on the Wallet app, but have yet to launch their programs. While the contracts obtained were virtually identical across states, CNBC did not review agreements for Connecticut, Iowa, Maryland and Utah, the four other states that have signed up for Apple’s digital ID program.
Apple has “sole discretion” for key aspects of the program, including what types of devices will be compatible with the digital IDs, how states are required to report on the performance of the effort, and when the program is launched, according to the documents. Apple even gets to review and approve the marketing that states are required to do.
The dynamic is similar to the way Apple typically deals with vendors, although instead of getting paid by Apple, the states have to shoulder the financial burden of administering the programs, according to Jason Mikula, a fintech consultant and newsletter author who obtained some of the contracts.
“It’s like a vendor relationship, which makes no sense to me because it’s the states that have the monopoly on what they’re giving to Apple, they could presumably negotiate a much more equal contract,” Mikula said in an interview. “I don’t know of any other example where government-owned systems and identity credentials were made available for commercial purposes in this manner.”
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