China’s dream is Apple’s nightmare: U.S. tech firms face risks as they quietly bow to China’s censorship and technology demands

“In his 2005 book One Billion Customers, a how-to guide for navigating the China market, James McGregor offered this advice: ‘Never ‘tremble and obey’ if doing so will damage or destroy your business in China,'” Andrew Browne writes for The Wall Street Journal. “Tell that to today’s American CEOs.”

“When authorities ordered Apple Inc. to pull unauthorized apps that help internet users get around censorship controls, it agreed. Chief Executive Tim Cook defended the move by saying the company was merely following Chinese law,” Browne writes. “His compliance, though, illustrates a challenge that the Trump administration faces as it builds a case against unfair Chinese trading practices.”

“Washington has a CEO problem. U.S. corporate chiefs are focused on preserving their short-term profits in China by trying to stay on the right side of a hard-line — and increasingly antiforeign — regulatory regime,” Browne writes. “If, as expected, the White House goes after China’s rampant intellectual property abuses, the companies will be torn.”

“Just about everybody in the U.S. capital is complaining about how China forces foreign companies to give up technology in return for market access,” Browne writes. “Everybody, that is, except the immediate targets of the state-directed heist—the companies themselves.

“CEOs of U.S. high-tech companies have been notably silent. That’s the case even though their operations are highly vulnerable: China makes no secret of wanting their technology so it can replace them on its way to building itself into a manufacturing superpower. Yet, not only do they refrain from criticism, some actively cooperate,” Browne writes. “Call it the Stockholm syndrome, whereby hostages start to identify with their captors. ”

Read more in the full article here.

MacDailyNews Take: It’s quite the razor-thin tightrope that Tim Cook, Apple CEO, privacy proponent, and Robert F. Kennedy Human Rights’ Board of Directors Member, has to walk.

Again, we ask: Why does the Communist Party of China so fear free expression?

When government fears the people, there is liberty. When the people fear the government, there is tyranny. — Thomas Jefferson

Tim Cook’s comments regarding China’s latest censorship effort during Apple’s Q317 earnings conference call with analysts on Tuesday, August 1, 2017:

Turning to China, let me comment on what I assumed is at the root of your question about this VPN issue. Let me just address that head on. The central government in China back in 2015 started tightening the regulations associated with VPN apps, and we have a number of those on our store. Essentially, as a requirement for someone to operate a VPN, they have to have a license from the government there. Earlier this year, they began a renewed effort to enforce that policy, and we were required by the government to remove some of the VPN apps from the App Store that don’t meet these new regulations. We understand that those same requirements are on other app stores, and as we checked through that, that is the case.

Today there are actually still hundreds of VPN apps on the App Store, including hundreds by developers that are outside China, and so there continues to be VPN apps available. We would obviously rather not remove the apps, but like we do in other countries, we follow the law wherever we do business. And we strongly believe that participating in markets and bringing benefits to customers is in the best interest of the folks there and in other countries as well. And so we believe in engaging with governments even when we disagree.

And in this particular case, now back to commenting on this one, we’re hopeful that over time the restrictions that we’re seeing are loosened because innovation really requires freedom to collaborate and communicate, and I know that that is a major focus there. And so that’s what we’re seeing from that point of view.

Some folks have tried to link it to the U.S. situation last year, and they’re very different. In the case of the U.S., the law in the U.S. supported us, which was very clear. In the case of China, the law is also very clear there. And, like we would if the U.S. changed the law here, we’d have to abide by them in both cases; that doesn’t mean that we don’t state our point of view in the appropriate way. We always do that.

SEE ALSO:
As Apple’s services business grows in China, so does its censorship risk – August 3, 2017
Joining Apple, Amazon’s China cloud service bows to censors – August 1, 2017
There are two sides to Apple’s China story – July 31, 2017
Apple issues statement regarding removal of VPN apps from China App Store – July 31, 2017
Apple removes VPN apps from China App Store – July 29, 2017
Apple sets up China data center to meet new cybersecurity rules – July 12, 2017
Analyst: China iPhone sales are pivotal for Apple – June 26, 2017
In bid to improve censorship, China to summon Apple execs to discuss stricter App Store oversight – April 20, 2017
Will Apple CEO Tim Cook stand up to China over App Store censorship? – April 19, 2017
Beijing cyber regulators to summon Apple over live streaming apps – April 19, 2017
Apple goes on charm offensive in China with red iPhones and a visit by CEO Tim Cook – March 24, 2017
Apple CEO Tim Cook defends globalization, walks tightrope on privacy in rare public speech in China – March 18, 2017
Apple to spend $507 million to set up two more research centers, boost investment in in China – March 17, 2017
Apple removes New York Times apps from App Store in China at behest of Chinese government – January 4, 2017
China dethrones U.S. to become the largest market in the world for iOS App Store revenue – October 20, 2016
Apple to set up second R&D center in China – October 12, 2016
Apple’s first R&D Center in China will develop hardware, employ 500 – September 29, 2016
Apple CEO Cook ‘pretty confident’ of soon resuming movie and book sales in China – May 3, 2016
Apple’s biggest China problem: iPhone’s strong encryption – May 2, 2016
The New Yorker: What Apple has to fear from China – April 30, 2016
Carl Icahn out of Apple over worries about China’s ‘dictatorship’ government – April 29, 2016
China could slam door on Apple, says top global risk expert – April 25, 2016
China’s increasing censorship hits Apple, but Apple might punch back – April 22, 2016
China shutters Apple’s online book and movie services – April 22, 2016
Apple CEO Tim Cook joins Robert F. Kennedy Human Rights’ board of directors – April 6, 2016

38 Comments

  1. “Chief Executive Tim Cook defended the move by saying the company was merely following Chinese law”

    And that right there, may be the straw that breaks Apple’s back for all things privacy. All a country has to do is 1) be big enough to matter to Apple’s sales, and 2) pass a law requiring certain restrictions on things like encryption, etc.

    Australia and the UK are making noises that direction, but they aren’t big enough to sway Apple.

    The US is. And with last year’s failed attempts to force Apple to compromise security despite appealing to “national security”, you can bet there’s a bill being drafted that will require compliance in other, more long term ways.

  2. The question really is – are the Chinese better off without Apple? For me, that answer is no. When Apple fought the FBI in regard to providing backdoors in iOS, Apple knew that it was fighting a fight in a country where the citizenry is allowed to speak freely. In China, the government suppresses dissent. If Apple were to defy this law, how would it benefit the people of China? Better to stay in the conversation and perhaps exert influence rather than dropping out altogether.

  3. Maybe China fears free internet-based expression because they watched Trump win an election based insignificant part on fake news stories delivered to low-information voters who inhabit internet silos, and are unable to distinguish obvious falsehoods from reality. It is easy to imagine the Chinese watching that and saying, “no thanks.”

    1. Or (smart) voters wanted national sovereignty, immigration law enforced, lower taxes, jobs, the right to choose their own doctors, school choice, infrastructure investment, a Constitution-respecting U.S. Supreme Court, their second amendment rights upheld, gang members and drug dealers off the streets, the U.S. military rebuilt and strengthened, police respected, an end to mindless political correctness, Islamic terrorism dealt with instead of ignored to the point of not even saying it’s name aloud, a smaller government, better veteran care, defunding abortions with public money, making health insurance purchasable across state lines, immigration policy that works for, instead of against, American citizens, etc., etc., etc. None of which they would have had a chance of getting had they elected yet another status quo politician.

      Keep up the condescension. It worked so well for you the last time around.

      1. Screw off, botvinnik. Enjoy your brief period of apparent victory before the great fall. Humpty Trumpty will break the GOP into so many pieces that all the alt-right pundits and Faux News reports won’t be able to put it back together again.

            1. uh huh. Sheesh.

              Hey bottwipe… I see all the generals that the stump knows more about are all cringing because your clown car, shit show president is a laughing stock.

              I see he put a red line around NK. Made up of the stupid red hats he couldn’t sell now that he is being exposed for the clown he really is. And kim jun un just stepped up and pissed on that red line.

              How’s that golf going. At least he is doing that right… (cheating, I’m sure).

              I placed a new dried cat turd for you but I took it out. Didn’t want to distract you.

            2. Hey bottwipe.. this should pique your interest. Watching Halt and Catch Fire again and to find the shows I missed during a move. We might have hired Joe, but he would have been a laughing stock. I was at that 83 Comdex. Camerons chained boxes is how we at the Byte Shop introduced the Apple IIe.

            3. Hey. My granddaughter made me change my default cable box channel to the cartoon network so when I get home and turn it on, I am faced with “Teen Titans Go”.

              (whispers to all the thinking people… watch how long this dried cat turd gets played with)

  4. The Chinese government is one of the the most brutal on earth. Forced abortions, suppression of the Falun Gon, treatment of Tibetan and Ugars, the cluster of missiles across from Taiwan, persecution of Christians, kidnapping bookstore owners in Hong Kong, discarding the one government two paths in relation to Hong Kong.

    The Chinese government will go to any lengths to stay in power.

  5. I think Apple is well poised to deal with China, after all their home nation is one that has signed the Declaration of Human Rights yet tortures, denies justice and disregards the sovereignty of other nations. Censorship is small potatoes compared to that, and of course China never signed the Declaration of Human Rights so at least they have a clear idea of their self identity as opposed to Apple’s home nation, the Benedict Arnold country of humanity.

  6. Tim Cook has been criticized for having an inconsistent policy when speaking out about users rights and protections in the US versus other countries.

    As an American company Apple may feel empowered as well as duty bound to influence and shape US Government laws and regulations in a way that it does not overseas. They may not feel it is their place to openly criticize foreign laws and regulations.

    But Apple can still talk softly while carrying a big stick, which is the threat of moving production elsewhere.

  7. “Call it the Stockholm syndrome, whereby hostages start to identify with their captors. ”

    Hmm. Maybe. I tend to think of such businesses more as sell outs. It’s more Short Term Thinking = Long Term Disaster nonsense of our modern age. Give in to the totalitarian FAIL mode and you’ve made yourself part of the FAIL. But hey, you made some money while you lost your morals and self-respect and the respect of others and your future…

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