Apple: it’s the world’s most valuable company. Its iPhones are hugely popular in China. But on December 23, Apple made a move in China that tarnished its international image.
Come on! First they remove the headphone jack. And now, freedom of speech. Not for everyone, of course. Just for the one-fifth of the world’s population. But this is a huge tragedy for people in China. How are they going to access important news, like this story about three New Yorkers co-parenting a goldendoodle? Or this one, about how your teenager can help you pick your next multimillion-dollar real estate property? Actually, with all of the rich Chinese trying to park their money in US real estate, that second article might actually be...useful.
Anyway, we could sit around making fun of the New York Times all day. And it would be so much fun. But while we’ve criticized the Times in the past for omitting certain sensitive stories from its China coverage—and even getting a few China stories wrong—it is one of the few major US media companies with reporters in China. And they even publish a Chinese version. Without it, Chinese people lose an important perspective on how the Western world views China.
The funny thing is, this isn’t even the first time the New York Times has been censored in China.Authorities started blocking the New York Times website back in 2012 after it published an exposé on the family of the Chinese prime minister. But Chinese censors were technologically unable to block citizens from directly accessing New York Times articles through its iPhone app. Eventually, though, the censors figured it out: Just make Apple to do the censoring!
An Apple spokesman told the New York Times that it removed their app because it was “in violation of local [Chinese] regulations.”
Now you might be a bit surprised that Apple would bend over backwards for the Chinese authorities like this—considering that, last year, Apple fought tooth and nail against US authorities to protect user data. That’s when the FBI wanted the company to create a backdoor so they could get into a suspect’s iPhone. Eventually, Apple won. In the sense that the Justice Department dropped the case. Because the FBI figured out how to unlock the phone themselves after being on hold with Apple Customer Service for 32 days.
But, in China, a fight with authorities wouldn’t just mean an expensive legal battle. It would put Apple’s entire, multibillion-dollar future in jeopardy because the Chinese Communist Party doesn’t play fair. For example, Apple is still fighting a ruling that initially banned iPhone 6 sales over a patent-infringement claim by a Chinese company so small, it doesn’t even have a website.
So in a country where the legal system is a joke, Apple probably decided it’s easier to give in than to fight its way out. And the part Apple didn’t tell the public is that it owes the Chinese regime a big favor. You see, Apple and its China manufacturing partner Foxconn took billions of dollars in government subsidies and perks. That’s according to this damning piece published in the New York Times—six days after their app was removed. Which is why you shouldn’t pick a fight with investigative reporters.
Anyway, this isn’t even the first time Apple has caved to the Chinese censors. In 2013, Apple removed an app from its Chinese App Store that let users get around the Great Firewall of China. They’ve also in the past removed other media apps from their app store that let Chinese people read uncensored information. The New York Times is just the most high-profile example so far.
So what’s Apple’s motivation for kowtowing to the Chinese Communist Party? This is hardly a surprise, but: Money. And it’s more about sales than just the cheap manufacturing. You see, China is the world’s biggest consumer of iPhones. As of a year ago, there were 131 million iPhone users in China, compared to just 110 million in the US. But Apple hopes it still has a ways to go, since that’s still only 17% of the Chinese smartphone market. Yeah, there’s a lot of people in China.
So it seems poor Apple has no choice but to do what the Chinese regime tells them, under the excuse of following “local regulations”—and to hope that keeps the door open for future sales in China. But if Apple thinks the Chinese regime intends to let them continue to be the biggest smartphone retailer in China, they’re kidding themselves. Like how eBay went to China in 2004 with big dreams, but left with its tail between its legs after Chinese website Taobao pushed it out of the market. Google had high hopes to be the primary search engine in China, and even agreed to the regime’s censorship requirements initially, only to be pushed out by Chinese search engine Baidu, whose co-founder is a member of the Chinese government’s top advisory body. Microsoft assumed it would keep expanding Windows in China forever, only to see the Chinese government take moves in 2014 to require that Windows 8 be replaced with a Chinese knockoff. And most recently, Uber got taken for a ride when it was suffocated by Chinese government regulation, and was forced to sell its China business to a local competitor.
And Apple itself has gotten in trouble in China. In addition to the iPhone 6 delay, Apple’s own iTunes Movies and iBooks stores were shut down by government regulators. And state-run media has targeted the company as well.
So Apple already knows that their road in China is going to be dangerous. And Apple’s not exactly bulletproof—unlike those Huawei phones.
But they’re still holding on to dreams of a larger market share. The thing is, the Chinese regime almost certainly intends to let homegrown Chinese smartphone makers like Huawei rule in the long-term. Which means that even if Apple tosses its reputation into the garbage today in exchange for a piece of the Chinese market, in the end, they’re going to get Shanghaied.
So what do you think? Leave your comments below.
