Chinese App Store Developer Complaint Highlights Apple’s China Problem

2 minute read
| The Back Page

Apple has a China problem, and that problem is “China.” This was freshly emphasized this week when 28 Chinese app developers complained about “monopolistic” behavior by Apple and its App Store.

According to The Wall Street Journal, “The complaint accuses Apple of engaging in monopolistic behavior by removing apps from the App Store without detailed explanation and charging excessive fees for in-app purchases. The complaint also alleges Apple doesn’t give details on why apps are removed and puts local developers at a disadvantage by not responding to queries in Chinese.”

China and the rule of lawls

Dispensing with Irrelevant Reality

This complaint is symptomatic of Apple’s problem operating in China, starting with the reality that reality has no bearing on the problem.

1.) Apple has little market share everywhere in the world. Apple is no more of a monopoly in any market in which it competes than BMW in the auto industry. Developers who don’t like Apple’s App Store policies are free to play in the open sewer that is the much larger Android ecosystem. In China, there are other options, too.

2.) Apple enforces the same policies everywhere, and not telling developers exactly why you rejected their crappy app has nothing to do with being a monopoly in the first place.

3.) If one doesn’t like Apple’s cut for providing an ecosystem, an App Store, and a payment infrastructure, the above-mentioned open sewer still beckons.

The Rule of Lawls

None of this will matter in China, where the current authoritarian regime is hell bent on tamping down Western technology companies and propping up home-grown techs. Whether or not there is merit to the 28 whingers’ complaint will have nothing to do with how the two regulatory agencies rule because regulators are political entities first. The rule of law applies in China when it is convenient for the Communist Party.

Apple’s China Problem

When Apple first began expanding in China, there was a different regime in power. That regime was very interested in getting tech companies to invest in China to help the country advance and grow. It also made stealing IP easier, but that’s another story.

Since then, Apple has grown so big (thanks in part to China), the company has become a pawn in US.-China relations. And, as noted above, it’s become a force that China wants to tamp down in order to allow Chinese firms more room to grow and thrive.

China doesn’t care that millions of people work in Apple’s supply chain, and the fact that growing numbers of Chinese citizens want Apple devices is seen as a problem, rather than a reason to allow Apple free reign.

Until and if a change in Chinese leadership results in different policies, Apple will always be under threat in that country. From being conscripted into Chinese censorship efforts to being blocked from content markets to not having its trademarks or other IP respected to eventually being blocked from doing business, Apple literally can’t win in the country.

CEO Tim Cook knows all this, of course, and he’s been doing as good a job as anyone might in navigating Chinese waters. In the end, though, I personally don’t see a bright future for Apple in China. The better Apple does in the country, the larger the target on its corporate back, and when China decides to pull the trigger, Apple will have no defenses.

4 Comments Add a comment

  1. TitanTiger

    So what’s a possible solution for Apple? Gradually move manufacturing out of China to places like India or Brazil? Are there any cards Apple can play in this game if they start planning now?

  2. wab95

    Bryan:

    Brilliantly articulated article. You’ve hit all the key points, and summarised their context.

    Let’s play out two competing scenarios; one in which Apple stays in China, and the other in which Apple goes (Now I have that stupid song by the Clash playing in my head, and now you probably do too. You’re welcome).

    Scenario 1: Apple pulls up stakes, collects its marbles and goes home. What problem does that solve? Does it solve the problem of IP theft? No. Xaomi and other serial rip-off artists will continue to blatantly pilfer and ape all things Apple from which they can make a Yen, only worse. Apple will have no presence in China, and therefore even less leverage from which to protest and challenge such theft. That’s what the World Trade Organisation is for, did I hear you say? Actually, no, it’s not. And even if it were, according to one the WTO’s judges, that system is backlogged and only getting worse http://www.reuters.com/article/us-wto-disputes-idUSKBN18Z2K1. Rather that falls to WIPO http://www.leadersleague.com/en/news/ip-international-arbitration-gaining-traction-in-ip-disputes, which while it’s gaining traction, still leaves the nettlesome problem of enforcement http://www.wipo.int/edocs/pubdocs/en/intproperty/791/wipo_pub_791.pdf. NB: I am not a lawyer, nor do I pretend that this is an expert summary of options.

    Apple’s IP will still be stolen, copied, borrowed, pilfered – ad libitum. Apple’s presence in the country as a player in the Chinese economy provides at least the moral authority to appeal to the Chinese legal system for redress. Apple’s engagement in the economic growth of China is downright Maoist in its subversiveness (‘No participation, no right to observation’ – or in this case, ‘no right to a hearing’).

    Does it solve the problem of being blocked from emerging Chinese markets? No. Apple won’t even be in any of those markets – a gift to the nativist nationalists.

    Does it solve the problem of Chinese citizens wanting Apple products? No. They will still want them (Iran, anyone?), and they will bring them into the country, only without the supportive infrastructure and when, not if there are problems, (reports of burning devices or other harm), Apple can and likely will still be held accountable. Worse, Apple will gain none of the benefits of being an active agent in expanding their marketshare, which will not only affect Apple’s bottom line, but even its relative power to defend itself in the face of baseless accusation by virtue of its economic and social (don’t underestimate this latter) muscle.

    Does it solve the problem of Apple having to cater to the Chinese government’s censorship and monitoring restrictions. Yes. Because Apple won’t be there.

    So, for Scenario 1, Apple avoids kowtowing to Communist Party censorship and snooping rules for the small price of marketshare, growth, IP and legal protection, oh, and having any say in current ongoing social development – which in fact might alter the current environment in which they compete.

    Scenario 2: Apple stays. What problems does that solve? We can reverse engineer and simply say, all of the above problems that pulling out creates. Apple IP gets stolen, Apple gets taken to court for all infractions real and manufactured, Apple will be hampered if not blocked from certain markets, Apple gets held for ransom when China and the US have a tiff, Apple have to bow to Chinese censorship and monitoring rules, BUT Apple’s presence provides a moral and financial platform for redress. Again, I think we in the West do not appreciate the nature and extent of that authority. The Chinese people are playing the long game with their leadership, and the leadership is playing the long game with their people. Both know it, and each intends to outlast the other. By engaging in that dynamic, Apple not only plays that long game, but becomes a change agent that insidiously and openly challenges and changes the current status quo, simply by virtue of being there.

    That is why the leadership want them out, and the people want them in. And because they do, that is why Apple stay put.

    As well they should.

  3. wab95

    BTW:

    Autocorrect anticipated ‘yen’ when I was trying to write ‘yuan’. Yes, I know the yen is Japanese.

    I wish we could correct posts.

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