Apple to Build China Data Center to Meet New Cybersecurity Law -- Update
July 12 2017 - 12:33PM
Dow Jones News
By Alyssa Abkowitz and Eva Dou
BEIJING -- To comply with tough new cybersecurity rules, Apple
Inc. will begin storing all cloud data for its China customers with
a government-owned company -- a move that means relinquishing some
control over its Chinese data.
Apple will build its first Chinese data center in the southern
province of Guizhou to house data for customers of its iCloud
service. The data include photos, documents, messages, apps and
videos uploaded by Apple users throughout the mainland, the company
said Wednesday.
The center will be operated by a company owned by the Guizhou
provincial government, and whose chairman was a local government
official until last year.
Under the agreement, Apple will retain control over encryption
keys at the data center. It wasn't clear if it would have access to
any of the data itself, which would be overseen by its Guizhou
partner.
In addition, Apple wouldn't be able to transfer data from
Chinese customers to the U.S., in compliance with China's new
cross-border data guidelines that were also part of the latest
cybersecurity rules.
The announcement significantly expands a concession Apple made
to appease Chinese authorities in 2014, when it started storing
some data at facilities owned by state-owned China Telecom to
dispel security concerns. At the time, Apple said the move would
improve performance for Chinese customers.
Apple didn't clarify which data was being stored under that
previous agreement, but under the new arrangement all of the iCloud
data for its customers in China will be stored in the country.
Currently, Apple pulls some iCloud data for Chinese users from
servers in the U.S.
Apple said it made the latest change to comply with China's new
rules on data storage and cloud-services operation that went into
effect June 1 as part of sweeping new regulations aimed at
improving cybersecurity. It also said the new data center would
improve speed and reliability for customers in China.
The Silicon Valley company has been one of the technology
industry's strongest advocates for fending off government
incursions into user data. In a statement, Apple said it has
"strong data privacy and security protections in place and no
backdoors will be created into any of our systems."
The latest move comes as Apple has been facing increasing
regulatory headwinds in China. Last year, for example, its online
book and movie services was shut down by authorities, who didn't
give specific reasons for the closing.
China also has ramped up pressure broadly on foreign
cloud-service providers over the past year to comply with
longstanding rules that require them to partner with local firms.
Microsoft Corp. and Amazon.com Inc. already have local
partners.
"It's clear that this is now being enforced across the board,"
said Chris DeAngelis, Beijing-based general manager of consultancy
Alliance Development Group. "Any cloud-based company coming into
China has to have a local operating partner."
U.S. lawmakers sent a letter to China's ambassador in March,
protesting the growing restrictions on foreign cloud-service
providers.
Under the arrangement announced Wednesday, Apple's China users
will transition to a cloud-storage service that will carry the
brands of both Apple and its Chinese partner, whose full name is
Guizhou on the Cloud Big Data Industry Development Co.
It is the first time iCloud has been co-branded. The transition
will occur over the next several years while the $1 billion data
project is developed.
Apple has said its encryption can't be cracked, not even by
Apple itself, making the company one of the strongest defenders of
user privacy among major U.S. tech companies. Apple famously
refused the FBI's demand that it unlock an iPhone owned by a gunman
in the 2015 mass shooting in San Bernardino.
Guizhou is one of China's poorest provinces, and Beijing has
pushed economic development there to create more job opportunities.
Chinese President Xi Jinping plans to participate in the Communist
Party's leadership conclave this fall as a Guizhou delegate,
despite having few ties to the province.
With Beijing's backing, Guizhou is seeking to build a big-data
industry, and has attracted investments from other major tech
companies including Qualcomm Inc. and Foxconn Technology Group.
In a description of Guizhou on the Cloud, chairman Fu Yu wrote
that the company aims to "provide a platform for aggregation and
sharing of government data."
Mr. Fu, the former government official, couldn't be reached for
comment. An employee who answered the phone at the company said
Apple was its first international partner, but they hoped for
more.
Tripp Mickle in San Francisco contributed to this article.
Write to Alyssa Abkowitz at alyssa.abkowitz@wsj.com and Eva Dou
at eva.dou@wsj.com
(END) Dow Jones Newswires
July 12, 2017 12:18 ET (16:18 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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