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Apple Inc.'s Call to Veto Arizona's Anti-Gay Bill Warns of Its Economic Cost

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Couched as a protection of religious freedom, the new bill, critics argue, acts much like the Jim Crow laws of the pre-civil rights era.

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Apple Inc. (NASDAQ:AAPL) has become the most powerful voice yet to chime in to the chorus of opposition against Arizona's Senate Bill 1062.

The controversial legislation -- passed last week by the state legislature and now awaiting Republican Governor Jan Brewer's signature -- affords business owners with personal objections to homosexuality the legal right to deny gays and lesbians service. Couched as a protection of religious freedom, SB1062, critics argue, acts much like the Jim Crow laws by essentially sanctioning discrimination. Replace skin color with sexual orientation and you have the Woolworth's lunch counter pre-1960.

The distinction here is that LGBT persons won't just be kept from the counter; they won't be allowed in the door.

Although the bill was written to defend businesses, the business community, by and large, doesn't seem to need or want the help. In fact, some firms, like American Airlines (NASDAQ:AAL), Marriott (NASDAQ:MAR), and, most recently, Apple, are actively against the proposal and have made requests to Jan Brewer for its veto.

According to CNN Money, Apple has confirmed that an unidentified executive at Apple (not CEO Tim Cook) contacted Brewer over the weekend and urged a veto of the bill.

Cupertino's call alone could be worth over a half a billion to the governor as it comes at the cusp of the opening of a manufacturing plant in Mesa that will produce sapphire glass for iPhone and iPod products. Apple's $578 million investment with GT Advanced Technology (NASDAQ:GTAT) is expected to add more than 2,000 engineering, manufacturing, and construction jobs to Arizona's workforce. Since the plant will run on renewable energy, brand-new solar and geothermal power projects are also part of the deal.

The passage of SB1062 also has the potential to cost Arizona Super Bowl XLII, with Glendale's University of Phoenix Stadium currently slated to host the game. The National Football League says it is watching the status of the bill while reiterating its policies that "emphasize tolerance and inclusiveness, and prohibit discrimination based on age, gender, race, religion, sexual orientation, or any other improper standard."
The league already took one Super Bowl away from Arizona, lest the Grand Canyon State forgets. In 1993, Phoenix lost its bid to host the game because Arizona's voters rejected a bill to observe Martin Luther King, Jr. Day as a paid holiday. Super Bowl XXVIII, instead, was played at the Rose Bowl in Pasadena.

Businesses and organizations on the state level have offered their two cents as well. A letter to Brewer from the Greater Phoenix Economic Council stressed its legal consequences:

The legislation places businesses currently in Arizona, as well as those looking to locate here, in potentially damaging risk of litigation, and costly, needless legal disputes. The statutory changes within Senate Bill 1062 will upset the current balance between the right of business owners to manage their businesses, and the right of employees to refuse on religious grounds to follow company policy or management directions.

The notion that civil rights transgressions from Arizona's legislature are bad for business is not without historical precedent. In 2010, when the state passed SB1070 -- a restrictive immigration law that authorized police to demand citizenship or immigration papers from anyone they suspected to be here unlawfully -- it was Arizona's businesses that suffered the brunt of the backlash. Public outrage quickly ensued and retaliation took the form of nationally organized boycotts.

It has been estimated that Arizona's tourism industry took a $253 million hit in economic output, another $9.4 million in tax revenue, and 2,761 in lost jobs. And that was just within the first year of the law's implementation.
No positions in stocks mentioned.

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