China: Apple's iPhone is a Security Threat

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Published July 11, 2014

| Dow Jones Newswires

China's influential state broadcaster on Friday called a location-tracking function offered by Apple Inc.'s iPhone a "national security concern," in the latest sign of a backlash in the country against U.S. technology firms.

In its national noon broadcast, state-run China Central Television criticized the "frequent locations" function in Apple's iOS 7 mobile operating system, which tracks and records the time and location of the owner's movements. The report quoted researchers who said that those with access to that data could gain knowledge of the broader situation in China or "even state secrets."

Apple didn't respond to requests for comment.

The broadcast represents a potential challenge for the Cupertino, Calif., company in an increasingly competitive market. Apple holds a 6% share of China's smartphone market, according to research firm Analysys, while models made by Samsung Electronics Co. and others running Google Inc.'s Android mobile operating system hold a greater share.

Still, Apple dominates the higher end of the market. About 80% of smartphones priced at more than $500 in China are iPhones, research firm Umeng said. IPhone users include Chinese government officials and executives. Last year China's first lady, Peng Liyuan, was photographed using an iPhone, though she has since been seen sporting a smartphone made by China's ZTE Corp.

While CCTV's broadcasts don't necessarily reflect the views of China's top leaders, they are influential in China. Some companies have shifted policies or recalled products after critical CCTV reports.

It isn't clear whether the CCTV report will be followed by new rules or limits on Apple. But its reports have had an impact on the company in the past. Last year Chief Executive Tim Cook publicly apologized after the broadcaster accused the company of discriminating against Chinese consumers in its warranty policies.

U.S. technology companies have felt a chill in China since last year, when former U.S. contractor Edward Snowden alleged the National Security Agency was spying on Chinese leaders and that U.S. tech firms were providing data to the government. Apple has said it doesn't provide government agencies with direct access to its servers.

The broadcast on Friday cited the Snowden disclosures and called U.S. technology firms' databases a "gold mine." It also quoted officials who said that China needed stronger data protection laws, and that Apple would need to "take on any legal responsibilities" if any data leaks cause harm.

The cybersecurity debate between Beijing and Washington has heated up since May, after the U.S. charged five Chinese military officers with spying.

Chinese state television raised security questions about Microsoft Corp.'s Windows 8 operating system last month, after the government procurement center said in May that it wouldn't allow the purchase of new government computers if they ran Windows 8.

China, long Apple's manufacturing base, is an increasingly important consumer market. In the most recent quarter, 24.8% of Apple's global revenue came from greater China, which includes Hong Kong and Taiwan, and sales have grown 13% in the region during the past year.

China has long been uneasy about its heavy dependence on U.S. technology in crucial sectors and has poured billions of dollars into the development of its own technologies. Last year, the state-run China Economic Weekly magazine, with the English headline "He's Watching You," named eight U.S. companies--including Apple--that it said pose a danger to China's computing networks.

China's government has mentioned software, servers and high-end chips as areas where it is trying to develop homegrown alternatives. The China Academy of Sciences unveiled its own mobile operating system, the China Operating System, in January, but analysts say it stands little chance of becoming widely used in the competitive mobile market.
 

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http://www.foxbusiness.com/technology/2014/07/11/china-apple-iphone-is-security-threat/