Alleged Data Theft Tests Chinese Law -- WSJ
June 08 2017 - 3:02AM
Dow Jones News
BEIJING -- A week after China's first cybersecurity law took
effect, an investigation over the alleged theft and sale of iPhone
users' information looked set to test how well Apple Inc. and other
companies protect Chinese citizens' personal data.
Police in eastern China said they had detained 22 people,
including 20 from Apple "direct sales outlets" in China and
companies Apple outsources services to. Police said those detained
had used Apple's internal system to illegally obtain information
associated with iPhone products like phone numbers, names and Apple
IDs, and then sold the information.
A statement by police in Cangnan county in Zhejiang province
gave no further information on the Apple outlets involved, or
details on the two other people detained. Calls to the police's
news department went unanswered.
The statement said the 22, who were detained May 3, charged from
10 yuan ($1.50) to 180 yuan for each piece of information and that
the total amount of money involved was over 50 million yuan.
An Apple spokeswoman in China didn't respond to a request for
comment.
China has long struggled to rein in a robust black market in
personal information, prompting one political activist last year to
purchase and publish in a form of protest the private data of
several Chinese tech CEOs, including Alibaba Group Holding Ltd.
co-founder Jack Ma. The activist showed evidence of one vendor
offering to sell personal information ostensibly belonging to
Chinese President Xi Jinping for 1,000 yuan.
A core aim of the cybersecurity law is to better protect
individuals' private data, authorities have said.
iPhone users' information is highly prized on the black market
because of the belief they are more affluent. Obtaining data such
as a user's Apple ID could help hackers lock iPhones remotely and
then demand payment from the user to unlock it. The potential for
abuse widens further if hackers gain access to a user's cloud
storage.
Ahead of the June 1 implementation of the cybersecurity law,
foreign technology companies expressed concern, saying they were
uncertain how it would affect their operations. Specific measures
to comply with the law's mandates on protection of personal
information are still being worked out, according to the regulator,
China's Cyberspace Administration.
Under earlier laws, companies have largely escaped punishment
when employees used their access to internal computer systems to
steal users' personal data, according to Liu Chunquan, an
intellectual property lawyer with Shanghai-based Duan & Duan
Law Firm.
That has changed under the cybersecurity law, Mr. Liu said, with
companies now potentially facing fines and other punishment by
regulators unless they can prove their systems weren't to blame for
leaks.
"Now with this law, Apple as a company faces much greater legal
risk than it would have before," he said.
A company could face fines of as much as 10 times the illegal
revenue from a theft if it is found to have had inadequate
protections against a leak, according to the law. In serious
situations, regulators can temporarily close or revoke the business
licenses of companies found in violation of the new law.
Based on information police have released so far, government
authorities could now have grounds to look into potential holes in
Apple's internal data management in China, said You Yunting, a
partner with Shanghai-based DeBund Law Offices.
Cangnan police posted a series of photos of officers detaining
and interrogating the detainees on the popular WeChat messaging
app. In one image, several people are shown standing in front of a
police station in handcuffs. They are accompanied by what appears
to be plainclothes police, including one holding a bouquet of
flowers.
Yang Jie and Josh Chin contributed to this article
(END) Dow Jones Newswires
June 08, 2017 02:47 ET (06:47 GMT)
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