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Why it matters: The US-China trade war took a new height when the Trump administration placed a ban on TikTok and WeChat. At the same time, American companies like Apple depend greatly on Chinese suppliers and consumer demand in the region, which is why they’re trying to appease Chinese regulators like never before.
Earlier this month, President Trump issued a pair of executive orders that will soon prohibit any US transactions with TikTok and WeChat, the latter of which is owned by Tencent, one of China’s largest tech companies.
The move is supposed to stop the spread of Chinese apps, which are believed to be parasitic in nature and prone to become spyware platforms for the Chinese government. At the same time, Chinese officials have reportedly been pondering about the idea of responding in kind ever since Huawei was deprived of the most important links in its global supply chain.
One of the first targets could be Apple, whose Chinese operations include manufacturing, selling devices, and operating the App Store. Until now, the Cupertino company has been able to get away with more loose censorship of the App Store by virtue of the jobs it created in the region, the taxes it paid, and the technology transferred to Chinese suppliers. According to a report from The Information, that may be about to change. This month, Apple removed more than 47,000 games from the Chinese App Store to comply with new regulations that require paid games with in-app purchases to get approval from Chinese officials before their release.
That said, this wouldn’t be an unprecedented move — back in 2016, Apple was forced to shut down the Chinese versions of iTunes Movies and the iBook Store. It’s also something that Apple has happily done before with apps like Quartz and the Hong Kong protest app, both of which were removed to appease Chinese government officials, even if it wasn’t the sole reason.
A survey of more than 1.2 million Chinese iPhone owners has revealed that they would rather switch to Android than give up WeChat
The App Store in China has been operating using a loophole, which seems to suggest that Apple negotiated a deal with the Chinese government to make it possible. Normally, it would have had to operate it under a joint venture with a local partner — the same way it does with iCloud, whose Chinese operation was taken over by a state-owned company with privileged access to source code and user data.
This means that Apple is likely to face a tough environment in China in the near future. The country is Apple’s second biggest market after the US in terms of device sales, and the Chinese App Store generated revenues of $11.5 billion in 2019.
The WeChat ban is expected to cause a significant drop in iPhone shipments in the region, and a survey of more than 1.2 million Chinese iPhone owners has revealed that they would rather switch to Android than give up WeChat, which is seen as a necessity for their daily lives.
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