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Without China, Apple would not be the company it is today. This is where Apple manufactures and sells almost all of its products.
But my colleagues have a disturbing new article on what Apple’s dependence on China is costing the business and citizens of China. As I read it, I wondered if Apple and other American companies are doing business in China if it means disregarding their principles.
Jack Nicas, one of the reporters for the article, spoke to me about her investigation into the compromises Apple is making to stay in the good hands of the Chinese government.
Shira: It’s long been clear that Apple obeys Chinese laws in ways that the company doesn’t love. What was new and remarkable about your reporting?
Jack: We knew the company had moved data from Chinese Apple device users within China’s borders. We knew that Apple had removed apps at the request of the Chinese government. What we didn’t know before was the extent to which Apple had complied with the Chinese government’s demands in both cases.
Why is it important where and how Apple stores data from iPhones and other devices of Chinese citizens?
Apple’s actions could, in a sense, make Chinese users’ information – such as email, digital address books, photos, and locations – a welcoming destination for the government.
Apple has agreed to move data that Chinese users store in iCloud to data centers owned and operated by a Chinese state-owned company. Government employees physically manage the computers. The digital keys to unlock the data are stored on these computers. And Apple uses a technology to encrypt this data that it doesn’t use anywhere else in the world because China wouldn’t approve its other technology.
Security experts and an Apple engineer who checked internal Apple documents for us said the company almost certainly couldn’t prevent the Chinese government from accessing potentially private and sensitive information held by Chinese users.
What about app censorship? We know that Apple, like all companies operating in China, blocks material that the government says is contrary to their laws and norms.
We found that Apple developed a system to proactively shut down apps – without direct orders from the Chinese government – that Apple has deemed taboo in China or that Apple believes will upset Chinese officials.
The system involves training app reviewers on a long list of topics it believes are not allowed in China and creating software that looks for those topics, including Tiananmen Square, independence for Tibet and Taiwan and the names of at least one critic of the Chinese Community Party. This shows that, in a sense, Apple is using its capabilities to reinforce the Chinese government’s restrictions on the internet.
Doesn’t the company have to comply with Chinese laws? Is it fair to expect Apple to protect the Chinese from the surveillance and censorship of their own government?
Apple makes morality a central element of its brand. The company promotes privacy, security, civil liberties and protecting people from government interference. This is what makes Apple’s actions in China so noticeable.
In defense of Apple, the company does not want to do any of this. And people close to Apple have said that if the company in China tries its best to protect people’s data and freedom of speech, the Chinese will be better off. If Apple leaves China, there will be no other company’s phones or computers to prevent surveillance or censorship by the Chinese government.
Describe a fist bargain: Apple makes billions of dollars in China, but at the expense of its principles?
Exactly. The company leaned its back against the wall. Apple became extremely profitable and valuable in part because it could use China as both a sales market and a manufacturing center.
However, that success comes with requirements that undermine the values that Apple executives advocate, and according to Tim Cook, Apple’s chief executive officer, Apple is about everything. Apple has reaped riches from China, but now has to grapple with enormous compromises.
Did Apple envision this in China?
I don’t think anyone at Apple had any idea how deeply anchored the company would be in China or what risks Apple would be exposed to. In the beginning, Apple built a few factories and had relatively low product sales in China. Now Apple is totally dependent on the country, and that gives the government a lot of power over Apple.
But it is also imprecise to say that Apple has no leverage. China wants iPhones to be available there, and it also appreciates the millions of jobs Apple’s supply chain creates.
Read more about this Apple investigation:
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Before we go …
The name is Bond. Amazon Bond. (I’m very sorry for that horrible joke.): My colleague Brooks Barnes reports that Amazon is negotiating the purchase of MGM, the film and television company that owns the rights to James Bond, the Pink Panther and other characters. Also, read about what a major media company reshuffle could mean for your favorite streaming video service.
“I would say that social media is the mass protest.” This is what the founder of MuslimGirl.com told my colleagues Vivian Yee and Mona El-Naggar through online posts and videos that made pro-Palestinian voices instantly accessible to a global audience.
Gaps in internet access harm the rural economy: My colleague Ben Casselman writes about a rural county outside Des Moines where local executives say spotty internet access is holding back plans to attract new businesses and a younger generation of workers.
This is art you won’t see in a museum. A 138 foot hot air balloon of a mouse character could soar in the sky of a city near you.
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