What you need to know
- A new report says Apple may be facing tougher restrictions in China.
- It has previously operated without government licenses.
- 'The Information' says this leaves it vulnerable to regulation as Trump attacks TikTok and WeChat.
A new report says that Apple may be facing tougher regulatory scrutiny in China as President Trump attacks WeChat and TikTok.
For years, Apple had negotiated extraordinary exemptions from Chinese regulators eager to curry favor with the American multinational in exchange for the millions of jobs it created, the billions of dollars in taxes it paid and the technology it transferred to a generation of Chinese suppliers. Those exemptions include the way it operated the Chinese version of its App Store—without a local partner—and how loosely it censored the store.
But now, Apple faces its toughest environment in China in years amid the dizzying decline of U.S.-China relations, which includes the forced sale of the U.S. operations of TikTok, the first Chinese-owned app to become a global hit.
The report notes President Trump's attacks on WeChat and TikTok present "a growing risk of a tit-for-tat action on U.S. business interests in China." The report notes a worry that the vast majority of apps on Apple's App Store may not be compliant with China's regulations. Apple is seeking to register an entity within the Shanghai Free Trade Zone as a means to continue operating in the country without a Chinese joint venture partner, but that this has met roadblocks:
According to people familiar with the matter, Chinese officials have said they won't grant it until Apple makes more concessions that allow regulators to approve what goes into the App Store. However, Apple executives are reluctant to change its current practices as it would give Beijing more power over what apps it publishes in China, they said.
Until the issue is resolved, there is a risk that Chinese regulators could shut down the China App Store, which contains nearly 1.5 million apps.
One such example of tightening restriction was a move that forced Apple to remove thousands of games from its China App Store over changes to licensing and regulations. The report says that this crackdown may be "just the beginning."