Apple to Open First Data Center in China — Under Chinese Oversight

With China being one of the largest markets in the world, especially for smartphones, Apple is willing to do anything necessary to maintain its foothold there. And that’s on full display as Apple has agreed to open its first data center in China. And while that would generally be seen as a good thing, there’s one big reason Apple fans could be a bit worried…

How Will Apple Operate in China?

In 2014, Apple started making concessions in China to ensure that the tech company wouldn’t be booted out of the market. Apple started storing data at facilities owned by China Telecom so that the Chinese wouldn’t be worried about data security. Now, Apple is taking those concessions one step further and building a data center in southern China to house all Chinese cloud data.

So what’s the big deal?

Well, the new data center will be controlled by a Chinese company owned by the Chinese government. Unfortunately for Apple, that means they have no access to the data itself, which is priceless for any tech company.

Does that make this a good or a bad thing?

While Apple gives up some control, overall the move is great for Apple. China has upped regulations on foreign cloud providers to improve cybersecurity. Microsoft and Amazon already have local partners in China, and Apple would actually have an advantage by having its own data center, even with Chinese oversight.

Under the new agreement, all cloud storage for Chinese customers will stay in China. That includes data, photos, documents, messages, apps, and videos. The reason it’s so important for Apple to comply is so that service for Apple users in China isn’t shut down, which would result in Apple losing those customers to a competitor.

Watch a video from Financial Times about Apple's data center launch in China:

Last year, the Chinese government shut down Apple’s online book and movie service for no specific reason. By going above and beyond for China, Apple is currying favor with the government. The iPhone maker is creating jobs and producing revenue for China in one of the country’s poorest regions, which means the government has an interest in seeing Apple succeed within its borders. As a result, traders can expect shares of Apple, inc. (APPL) to continue UP.

Upcoming financial earnings reports signal chaos on the horizon. Find out the whole story here.

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