Pixel Envy

Written by Nick Heer.

The Information: Tim Cook Engineered a $275 Billion Deal With China in 2016

Samuel Axon, Ars Technica:

Today, The Information published a lengthy report detailing Apple CEO Tim Cook’s efforts to establish strong relationships between Apple and Chinese government officials and agencies.

Citing both interviews and direct access to internal Apple documents about repeated visits by Cook to China in the mid-2010s, the report describes a $275 billion deal whereby Apple committed to investing heavily in technology infrastructure and training in the country.

The nonbinding, five-year deal was signed by Cook during a 2016 visit, and it was made partially to mitigate or prevent regulatory action by the Chinese government that would have had significant negative effects on Apple’s operations and business in the country.

Wayne Ma’s report is paywalled, of course, but I have a few choice observations. First, it confirms what analysts speculated in 2016 when Apple announced its uncharacteristic investment in ride hailing company Didi Chuxing — that it was basically a way to appease government officials in China. Cook wrote a glowing endorsement of Didi Chuxing CEO Jean Liu for Time’s “100 Most Influential People” feature in 2017.

Second, while this agreement may be officially non-binding, it is hard to imagine Apple could run afoul of its spirit given its dependency on suppliers and manufacturing in China. Ma reports that Apple acquiesced to many government demands, like building research and development centres in the country — including one with the university where Cook was later named chairman of the advisory board — assigning an executive specifically to business in China, and even changing the scale of disputed territories in Apple Maps.

However, it also seems that this deal has helped Apple avoid more stringent regulation in other areas, in ways that are beneficial to users’ rights. Even though Chinese users’ iCloud data is stored on servers located within the country and operated by a local partner — as required by law — it has been allowed to retain control over its encryption keys. The government has allowed it to retain control over its source code, too. But Ma has previously reported that many of Apple’s exemptions are being revoked, and now writes that key businesses, including the App Store, are in a sort of legal limbo.

It seems that Apple is relying more on Chinese suppliers due, in part, to an agreement that it deepens its investment in the country while agreeing to comply with increasingly nationalistic laws. Apple may have published its Commitment to Human Rights last year, but it is further entangling itself with a government that is committing genocide. This entire situation remains Apple’s biggest liability as it goes into 2022 when, according to Ma’s reporting, the agreement could be extended through May.