China is a hugely important market for Apple; the country is seen as an engine for the future sales growth of iPhones and related services. One of those key services is iCloud storage, and the Chinese government informed Apple earlier this year that in order to sell the service in China the user content would have to be hosted by Chinese companies.
So Apple made a deal with the the Chinese government-controlled hosting company Guizhou-Cloud Big Data to provide the data center space. Apple said it built in safeguards that would ensure the security and privacy of the data.
Today China Telecom, a state controlled utility, put out a press release saying it is providing hosting space for the iCloud data while the Guizhou-Cloud data centers are being built. This has some on Chinese social media worrying aloud that China Telecom might snoop into their content.
An Apple spokesperson assured Fast Company that the China Telecom hosting arrangement is only temporary.
Apple fought the Chinese government’s hosting requirement but ultimately failed. Here’s the company’s statement from February:
“Our choice was to offer iCloud under the new laws or discontinue offering the service. We elected to continue offering iCloud as we felt that discontinuing the service would result in a bad user experience and less data security and privacy for our Chinese customers.”
Also in February, Amnesty International released this statement about the forfeiture of the iCloud data to Guizhou-Cloud: “By handing over its China iCloud service to a local company without sufficient safeguards, the Chinese authorities now have potentially unfettered access to all Apple’s Chinese customers’ iCloud data.”
The press release from China Telecom, in some ways, couldn’t come at a worse time. The U.S. trade war with China has heated up. Steep tariffs are in place, and more could be coming. One of the key arguments for tariffs on Chinese goods by the Trump administration is a belief that the Chinese government is actively working through Chinese companies to steal intellectual property from U.S. companies.
Correction: An earlier version of this story implied that China Telecom was the permanent host of the iCloud data, and that Apple is no longer holds encryption keys for the effected content. Apple expects says China Telecom’s hosting service is being used only as a stop-gap measure, and that Apple still holds the encryption keys.