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Technology
CHINA SOWS FRESH CONFUSION ABOUT APPLE WITH SECURITY REMARKS
* Beijing makes its first comments since reports of iPhone ban
* The government attaches ‘great importance’ to security
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China Cites Security Problems With Apple’s iPhone
China Cites Security Problems With Apple’s iPhone
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WATCH: China officials pointed to “security incidents” with iPhones. Aggi
Cantrill reports.Source: Bloomberg
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By Bloomberg News
September 13, 2023 at 9:58 AM GMT+2
Updated on
September 13, 2023 at 5:35 PM GMT+2
Listen
5:19
The Chinese government’s position on Apple Inc. only grew more muddled
Wednesday, with Beijing both pushing back on reports about iPhone restrictions
but also raising concerns about security problems with the device.
“China has not issued laws and regulations to ban the purchase of Apple or
foreign brands’ phones,” Foreign Ministry spokeswoman Mao Ning told a regular
press briefing in Beijing on Wednesday. It marked the government’s first
comments on reports that authorities are reining in employees’ use of Apple
products.
Mao also said that the government attaches “great importance” to security and
that all companies operating in China need to abide by its laws and regulations.
“We noticed that there have been many media reports about security incidents
concerning Apple phones,” Mao said.
The remarks left US investors unsure about Apple’s status in China — which is
both the company’s production base and its biggest international market — just
as a new iPhone is launching. The shares slipped as much as 1.3% in New York on
Wednesday before recovering some of the losses.
Mao’s comments about security incidents were slightly different in the official
English translation of the news briefing. That translation, delivered
simultaneously onsite by the ministry, omitted the reference to media “reports.”
Foreign affairs ministry briefings are typically rigorously controlled and
spokespeople’s responses are usually scripted ahead of time with consistent
translations.
The press conference came just hours after Apple unveiled the latest model of
its marquee device, the iPhone 15. The company introduced four new models,
keeping pace with the past few generations: the iPhone 15, 15 Plus, 15 Pro and
15 Pro Max. Preorders of the device begin on Friday.
A spokesperson for Apple didn’t immediately respond to a request for comment.
Bloomberg News reported this month that China plans to expand a ban on the use
of iPhones to a plethora of state-backed companies and agencies, a sign of
growing challenges for Apple in the country. Several agencies have begun
instructing staff not to bring their iPhones to work.
Read More: China Seeks to Broaden iPhone Ban to State Firms, Agencies
Apple also has faced a number of security issues in recent months. An iPhone
belonging to a staffer at a Washington-based civil society organization was
hacked remotely with spyware created by Israel’s NSO group. Apple confirmed the
attack and issued a patch last week to address the issue.
Russia’s Federal Security Service, known as the FSB, accused an unidentified US
intelligence agency in June of hacking several thousand iPhones. The attacks
were linked to SIM cards registered with Russia-based diplomats, including some
from China, it said.
Apple didn’t comment at the time on whether any Russian phones were breached,
but a spokesperson said the company didn’t help any government in the alleged
attack, as the FSB implied.
Read more about the new iPhones
Apple iPhone Price Bump Part of Subtle Revenue-Boosting Strategy
Apple May Struggle as China Risks Mount, JPMorgan Says
China Seeks to Broaden iPhone Ban to State Firms, Agencies
Huawei Teardown Shows Chip Breakthrough in Blow to US Sanctions
If Beijing goes ahead with an iPhone ban, the unprecedented blockade will be the
culmination of a yearslong effort to root out foreign technology use in
sensitive environments, coinciding with Beijing’s effort to reduce its reliance
on American software and circuitry. Just over a week ago, Huawei Technologies
Co. quietly unveiled a smartphone with a chip a few years behind the cutting
edge, which Chinese state media hailed as a triumph over US sanctions intended
to curb the country’s rise.
Beijing has established laws to severely restrict the flow of information beyond
China’s borders, and tighten its grip on the enormous amounts of data that will
be key to controlling the world’s No. 2 economy. While Apple has for years kept
data on Chinese users completely in-country through a partnership with a
state-backed data center operator, other foreign firms have struggled with new
regulations that they fear could hamper their ability to operate.
Read More: Chinese Officials Meet Foreign Firms to Ease Data Law Fears
Those rules give President Xi Jinping’s administration the power to shut down or
fine companies that leak or mishandle sensitive information. This year, Beijing
also enforced an anti-spying law that foreign multinationals fear could grant
authorities unprecedented powers to crack down on their operations.
In Apple’s case, a ban threatens to erode Apple’s position in a market that
yields about a fifth of its revenue, and from where it makes the majority of the
world’s iPhones through sprawling factories that employ millions of Chinese.
Several analysts have argued Huawei’s new phone will take market share from
Apple, along with domestic competitors.
> WHAT BLOOMBERG INTELLIGENCE SAYS
>
> China’s extended ban on the use of iPhones in government agencies is a wild
> card that could dampen our iPhone sales recovery scenario next year. The
> ruling prohibits the use of foreign-made equipment in sensitive departments,
> though we don’t believe Apple derives notable revenue from selling to this end
> market. However, the impact of this directive on the behavior of Chinese
> consumers is unclear. Though sales in China accelerated in fiscal 3Q, a rise
> in nationalist sentiment might hurt Apple’s prospects.
>
> - Anurag Rana and Andrew Girard, analysts
>
> Click hereBloomberg Terminal for the research.
For now, it’s unclear how many companies or agencies could eventually adopt
restrictions on personal devices, and there’s been no formal or written
injunction as yet, Bloomberg News reported. State firms or organizations will
likely vary in how strictly they enforce such bans, with some forbidding Apple
devices from the workplace while others could bar employees from using them
entirely.
— With assistance by Philip Glamann, Lulu Shen, and Sarah Zheng
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