Apple (AAPL) shares slumped 4% on Wednesday on news that China has prohibited government workers from using the company's iPhones for business purposes, as part of Beijing's push to minimize reliance on foreign technology and boost cybersecurity.The Wall Street Journal broke the news of the ban after interviewing multiple persons familiar with the situation. The …
Apple (AAPL) shares slumped 4% on Wednesday on news that China has prohibited government workers from using the company’s iPhones for business purposes, as part of Beijing’s push to minimize reliance on foreign technology and boost cybersecurity.
The Wall Street Journal broke the news of the ban after interviewing multiple persons familiar with the situation. The restriction is part of Chinese President Xi Jinping’s drive to minimize China’s reliance on foreign technology and improve cybersecurity in the face of rising geopolitical tensions with the United States.
Apple and its products are widely popular in China, among both the private sector and government authorities. China is an important consumer market as well as a manufacturing hub for the tech giant.
Through its network of contract manufacturers and suppliers, Apple employs millions of people to manufacture iPhones (the vast majority of which are made in China) and other flagship goods. China accounts for slightly under one-fifth of the company’s business, with sales in the country totaling $15.76 billion for the quarter ending July 1, up 8% year on year.
The restriction is comparable to other moves taken by the US government against Chinese tech companies and apps, such as Huawei and TikTok.
Since last year, the federal government and 26 states have taken steps to limit or prohibit the use of TikTok in government buildings. According to the government entities, the Chinese government might use the software to spy on Americans and obtain critical personal information.
The Biden administration also contemplated shutting Huawei off from US suppliers, but a decision on the topic is still pending.
Apple is no stranger to government scrutiny, either domestically or internationally. Regulators in the United States and Europe have targeted the corporation, as well as other internet behemoths like as Amazon (AMZN), Google (GOOGL), Meta Platforms (META), and Microsoft (MSFT), for alleged anticompetitive business practices and monopoly status.
The European Union (EU) appointed Apple and five other technology giants today as ‘gatekeepers’ who must follow the bloc’s Digital Markets Act (DMA), a comprehensive effort to reign in big tech.
Apple shares dropped more than 4% on Wednesday, but are up 40% this year.
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