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Apple brings Chinese data back home: a sign of weakness or an olive Branch?

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New York City, New York – (StockNewsDesk) – 08/17/2014 — After all the drama that has taken place about Apple and its incompatibility with Chinese laws and regulations, it is hard to believe that something even more controversial can come from the technological and geographical behemoths. The company recently defended itself against claims by China’s state broadcaster CCTV that iPhone’s tracking of frequent locations posed a threat to national security. Hard to believe, but clearly not impossible to implement – the latest reports show that Apple has completed a plan that began 15 months ago to store Chinese iCloud data in China. Safe to say that the security agencies would not be pleased with the Cupertino giant’s latest move.

Owing to China’s legendary censorship and privacy regulations, technological companies have shied away from storing data in the country before. Google’s unsuccessful and negative publicity-led stunt is a prime example. However, this move by Apple is a new dawn compared to previous technological policies adopted in the region. Apple’s reason to go down this path is to make its iCloud service faster for Chinese consumers. There’s more to it – Apple wants to have increased reliability across the board and the best way to do that also happens to be the simplest way – remove Chinese data from the U.S. and have it stored in the country itself.

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It could be that the recent halting of assault on Apple from the Chinese front has been for this constructive reason. All of the data will be kept at China Telecom Corp., which is the country’s third largest wireless carrier, catering to around 300 million subscribers. Sources claim that the encryption key required to decrypt data of China Telecom’s facilities will not be handed over and will instead be kept offshore by Apple. This nullifies the threat of having the Chinese variant of the NSA spying on Chinese people. Furthermore, Apple also claims that the encryption methods cannot be unlocked by anyone, inclusive of itself.

China’s market potential is a big factor influencing Apple’s decision. Apple’s China data center move also suggests that the Chinese government’s pressure tactics were able to force the world’s largest technology company to house Chinese user data onshore. China is clearly a key market for Apple which has a massive growth potential there that is sorely lacking elsewhere. The country has turned out to be one of Apple’s most important markets. Apple can’t afford to be in a spat with the country’s government, as the company’s profits and fortunes depend on it. China is the main driver of Apple’s high quarterly revenues, as the market accounts for more than 16% of the company’s worldwide revenues.

It could very well be that Apple has found itself in the middle of a proxy economic war between China and the U.S. While this move will alert Apple users in China that their personal data is now being stored at a state controlled telecom company, it will also bring about lenient competitive practices from Chinese companies, giving the Cupertino giant some breathing space. Apple should have quite a few years of peace in China from the government after allowing Chinese consumer data to be stored outside of the U.S. However, things might change in the future, depending on how the Chinese government feels towards those sitting in the White House.

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