According to a new report by the Wall Street Journal (WSJ), China has prohibited the use of iPhones for central government officials. The move caused Apple shares to plummet by 3.6 percent, and is seen by experts as a significant move given Apple’s established presence in the Chinese market.
Key takeaways:
- The WSJ cites anonymous sources regarding the iPhone ban.
- Apple shares suffered their most considerable daily drop in a month, landing at $182.91 in New York
- The ban might be in retaliation for US restrictions on Chinese tech.
- China continues to show preference for domestic smartphone brands, particularly for homegrown tech giant Huawei.
Apple’s importance in China cannot be overstated, the report noted. Accounting for approximately 19 percent of the tech giant’s overall revenue, China stands as both a substantial market and a pivotal manufacturing hub. Apple’s CEO, Tim Cook, underscored this importance with a high-profile visit to the nation just six months prior to this announcement.
Shares react to the ban
On the heels of the news, Apple’s stock tumbled 3.6 percent on Sept. 6, closing at a value of $182.91 at the New York Stock Exchange. This marked the tech company’s most significant single-day decline in a month, especially after the company had enjoyed a 46 percent rise throughout the year.
While WSJ got wind of the ban from unnamed insiders, it seems this isn’t the first time such news has emerged. Officials within the central government were “discreetly informed” about this decision either through chat groups or in meetings, the report noted.
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Moreover, an anonymous source with regular interactions with Chinese central government agencies told CNN that there’s been an “unwritten rule” about avoiding iPhones even before this official declaration, and well before the COVID-19 pandemic hit.
“Chinese officials had already been following an unwritten rule of shunning iPhones since before the pandemic despite the apparent absence of a formal policy,” the source said. Due to safety concerns and the delicate nature of this topic, the source chose to remain anonymous.
Lean towards domestic brands
The same source also highlighted that government officials are now more inclined to use smartphones manufactured by domestic firms. Huawei, in particular, seems to be the brand of choice, they added.
This domestic preference isn’t entirely new. Back in June 2022, some Chinese government agencies had even barred Teslas from entering their compounds due to concerns over security.
The decision to ban iPhones for government officials, however, might not just be a stand-alone act. Speculation suggests it could be a tit-for-tat move in retaliation to the U.S. government’s stringent measures against Chinese tech companies.
MORE ON THIS: US Commerce Secretary Rejects China’s Request to Ease Controls on Technology Exports
Tit for that?
Over the years, China’s tech giants like Huawei and ZTE have faced restrictions from the U.S. and certain European Union (EU) countries. Adding fuel to the fire, the Biden administration halted approvals for any new telecommunication equipment from these two companies back in November 2022. The decision came on the heels of fears regarding “an unacceptable risk” they might pose to the U.S.’ national security.
Furthermore, global social media sensation, TikTok, has been blacklisted from devices under several U.S. institutions. This includes the House of Representatives and in several states such as Texas, New Jersey, and Ohio. The primary concern revolves around potential access the Chinese government might have to user data via its parent company, Bytedance.
In addition to concerns about the app’s handling of private user data, allegations have emerged over potential censorship of political terms like “Hong Kong,” “Taiwan,” and “Tibet.” Users have also reportedly been shadow-banned for criticizing the CCP, or for speaking out on any topics the Chinese government deems sensitive.
RELATED: TikTok CEO Denies It Ever Shared User Data With the Chinese Regime
During a March deposition where TikTok’s CEO Shou Zi Chew was called to testify before the U.S.’ House Committee on Energy and Commerce, lawmakers questioned the app’s recommendation system, suggesting that it may be intentionally promoting “divisive content” to sow discord among users, and fan pro-CCP material.
China’s decision to ban iPhones for its central government officials sends a clear message about its preferences and stand in the global tech scene. With tensions escalating between the U.S. and China in the tech sector, leading companies such as Apple with substantial stakes in the Chinese market might have to brace for more challenges ahead.
