BackApple, China Met to Discuss Beijing’s Crackdown on Western Apps
Country’s push to register foreign apps threatens to remove Facebook, Instagram and X from iPhone App Store in China.
PremiumApple staff met with Chinese officials in recent months to discuss concerns over new rules that will restrict the tech giant from offering many foreign apps currently available on its iPhone app store in the country.
Officials told Apple that it must strictly implement rules banning unregistered foreign apps, people familiar with the discussions said. Apple employees expressed concern over how the rules would be implemented and affect its users.
China’s move to restrict the apps would close a loophole in the Great Firewall that allows Chinese iPhone users to download popular Western social-media apps such as Instagram, X (formerly called Twitter), Facebook, YouTube and WhatsApp.
While China has for years blocked web access to those sites, iPhone users who download the services’ apps can engage on the platforms if they log on through a virtual private network, or VPN, that connects them to an internet server outside the country. Many users, especially younger people, do this even though China bans the use of unauthorized VPNs.
Combined, those five social-media apps have been downloaded from Apple’s app store more than 170 million times in China over the past decade, according to estimates by Sensor Tower, a market insights company. Some apps such as X were used to spread information and videos of protests against Covid rules in China that erupted late last year.
By next July, Apple will no longer be able to offer such apps in its China app store unless the app operators are registered with the government, under new rules issued by China’s Ministry of Industry and Information Technology in July this year.
Analysts say those operators are unlikely to register with the Chinese government because they could then have to comply with data transfer and censorship requirements, leaving Apple no choice but to remove them or face legal punishment.
Apple declined to comment. Neither the Ministry of Industry and Information Technology nor the country’s internet regulator, the Cyberspace Administration of China, responded to requests for comment.
Apple’s Rising China Risks
The new rules affect both foreign and domestic app distributors and don’t specifically target Apple. The Cupertino, Calif.-based company is likely to be among those most affected given its app store has more than 1,000 unregistered foreign apps. Chinese companies including smartphone makers Huawei Technologies and Xiaomi have updated their app store rules recently, urging app developers to complete registration procedures.
Apple hasn’t said anything publicly on the new rules, which investors say pose a threat to its services business in China. The services segment, which includes app-store transactions, plays an important role in Apple’s profitability. Anything disrupting the Chinese app store could eat into profits for its business in the country.
Apple has been making concessions in China for years to comply with the country’s increasing censorship and tightening rules on data security.
Beijing has increasingly been giving priority to national security over economic interests and is clamping down on cross-border information flows.
Apple has previously removed apps from its China store based on Beijing’s edicts, including thousands of videogame apps booted in 2020 after Chinese officials cracked down on games software without a government license.
Some investors said they were concerned about how the new rules would be implemented and the symbolic weight of removing so many hugely popular Western software applications.
“China is my biggest worry for Apple," said David Wagner, portfolio manager at Aptus Capital Advisors, an Apple shareholder. “These are huge risks in China that keep piling on."
In Apple’s exchanges with officials, which haven’t been previously reported, the company was told the new rules are needed to crack down on online scams, pornography and the circulation of information that violates China’s tough censorship rules, people familiar with the discussions said.
Apple staff expressed concerns about issues the company could face in implementing the rules. For example, Apple and officials touched on the issue of whether users in China who access foreign apps through its overseas app stores would be able to continue to do so, the people said.
Using foreign app stores is another workaround of China’s closed internet used by iPhone owners with a VPN and foreign Apple ID.
Twitter, as it was then called, proved a critical platform for getting videos and images of nationwide protests against China’s Covid policies out to the rest of the world. People in the country used VPNs to disguise their locations and send material via the platform’s messaging system to a handful of widely followed Twitter users, who in turn broadcast it globally.
Apple will likely comply with the rules, said Rich Bishop, chief executive of software publisher AppInChina. “The Apple app store in China will increasingly purely be Chinese apps, with a smaller number of international apps," he said.
Fortifying the Great Firewall
China is an important market for Apple, with the region accounting for about a fifth of its sales, and serving as its main manufacturing base, producing most of its iPhones and many other products.
iPhones and other Apple devices remain popular among Chinese consumers. Earlier this week, an Apple store in central Beijing was bustling with consumers checking out the newly released iPhone 15 series.
Still, Apple hasn’t avoided national-security concerns, with China instructing officials at some central government agencies and state-owned companies not to use iPhones at work or use them for business purposes, The Wall Street Journal reported. China hasn’t released official regulations to stop the use of foreign electronic devices such as iPhones, a foreign ministry spokeswoman later said.
Sensor Tower estimates that Instagram has by far been the most downloaded Western social-media app in China on Apple’s iOS ecosystem, amassing nearly 54 million installs since 2012. That compares with 37 million for Facebook, 34 million for YouTube, 33 million for X and 13 million for WhatsApp.
Foreign app operators may be reluctant to register their information with the technology ministry because of concerns about having to commit to complying with local laws on cross-border data transfers or content management, said You Yunting, senior partner at Shanghai-based DeBund Law Offices.
China for years has been upgrading its internet filters, commonly referred to as the Great Firewall, blocking internet users from accessing many foreign websites and apps.
The latest app rules are seen by industry observers as an extension of a longtime registration system called Internet Content Provider, or ICP, required for websites to operate legally in China.
Last year, China’s top internet watchdog started requiring app stores to file their business details to it and to review apps and their developers before publishing them. The regulator this week said 26 app stores have passed through its registration process, including Samsung. Apple wasn’t one of them.
Some foreign companies are taking action after the latest app registration rules were released. In August, Amazon.com’s China business urged app operators who are using its network services in China to complete the registration. Apps could lose access to Amazon’s network services if they don’t follow the new government rules, Amazon China said in a statement posted online.
Newley Purnell contributed to this article.
Write to Yoko Kubota at yoko.kubota@wsj.com, Yang Jie at jie.yang@wsj.com and Aaron Tilley at aaron.tilley@wsj.com
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