Apple beat Amazon and Google in the race to become the first trillion-dollar company in the U.S. on Thursday afternoon, when its stock hit $207.0425 a share. (It closed slightly higher.) It’s another milestone for what might be the most important company of the century thus far—one that’s even more impressive given that, 20 years ago, the company was being written off by nearly everyone and was on the verge of bankruptcy. But Apple survived both near-bankruptcy and the 2011 death of the company’s visionary founder, Steve Jobs. BusinessWeek marked the achievement with a bit of self-deprecation, tweeting its 1997 cover on “The Fall of An American Icon.”

The road to a trillion was paved with iPods, iPads, and iPhones—and, crucially, with the rollout of stores that NYU Stern School of Business professor Scott Galloway has described as “temples to the brand.” But Apple’s recent success on Wall Street isn’t due to its technological innovations or its sleek products. Instead, its stock has been juiced by a record-breaking number of buybacks, in which the company buys shares of its own stock, causing the supply to drop and the price to rise. In May, several months after Congress passed a massive corporate tax cut, Apple pledged $100 billion to stock buybacks in 2018—and is halfway to that goal. With $285 billion in cash on hand, it can afford to buy even more.

Viewed over a period of decades, a number of products and achievements played a role in getting Apple to where it is today. But as the company’s profit margins have shrunk, stock buybacks played a crucial role in getting Apple over the trillion-dollar finish line first. This asterisk should be something of a scandal. Apple is the poster child of the current spate of stock buybacks, which are starving investment and exacerbating inequality.



Though never banned outright, buybacks were largely curtailed in the wake of the Great Depression, thanks to rules that limited the ability of corporations to manipulate their own stock. As Vox explained earlier this week, even the threat of action largely kept buybacks from happening: “Companies knew that if they did a stock buyback, it could open them up to being accused by the Securities and Exchange Commission of having tried to manipulate their stock price, so most just didn’t.”

But as enforcement loosened, notably under the Reagan administration, buybacks began to increase. Now, they are omnipresent. A Roosevelt Institute study released on Tuesday found that corporations spent 60 percent of their net profits on stock buybacks between 2015-2017. Buybacks have continued to boom in the wake of the $1.5 trillion tax cut passed in December. J.P. Morgan estimates that $800 billion will be spent on buybacks in 2018, obliterating the previous record of $587 billion in 2007—a spree that ended when the economy collapsed.