China backs off legal push that would force foreign tech companies to hand over encryption keys

Posted:
in General Discussion edited March 2015
China's central government has reportedly halted the advance of proposed antiterror legislation that would have forced technology companies doing business in the country to install government-accessible backdoors in their products, provide keys for any encrypted communications services, and require data for Chinese users to remain in China.

The formal entrance to Zhongnanhai, the seat of China's central government.
The formal entrance to Zhongnanhai, the seat of China's central government.


"They have decided to suspend the third reading of that particular law, which has sort of put that on hiatus for the moment," White House Cybersecurity Coordinator Michael Daniel said earlier this week, as noted by Reuters. "We did see that as something that was bad not just for U.S. business but for the global economy as a whole, and it was something we felt was very important to communicate very clearly to them."

If China has pressed forward, it could have put Apple in an impossible position. China is one of the company's most important markets, but chief executive Tim Cook has staunchly opposed any attempts to violate the privacy of Apple's customers.

While there are "rumors of us keeping backdoors and providing data to third parties," Cook is said to have told top Chinese internet regulator Lu Wei during a meeting last year, the company has "never had any backdoors and never will."

Cook was even more emphatic during an appearance at the White House's Summit on Cybersecurity and Consumer Protection, held last month at Stanford University.

"If those of us in positions of responsibility fail to do everything in our power to protect the right of privacy, we risk something far more valuable than money," Cook said. "We risk our way of life."

Personal privacy is especially important "in a world in which that information can make the difference between life and death," he added.

A similar set of Chinese government regulations aimed at companies competing for large-scale infrastructure projects has not been affected. Those guidelines call not only for backdoors, but also for companies interested in selling software or hardware to turn over their source code to the government.
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Comments

  • Reply 1 of 37
    tallest skiltallest skil Posts: 43,399member

    Wonder what Apple said to get them to back down. It’d be useful to know in the prevention of tyranny elsewhere.

  • Reply 2 of 37
    paxmanpaxman Posts: 4,594member

    Cook was even more emphatic during an appearance at the White House's Summit on Cybersecurity and Consumer Protection, held last month at Stanford University.

    "If those of us in positions of responsibility fail to do everything in our power to protect the right of privacy, we risk something far more valuable than money," Cook said. "We risk our way of life."

    Some people here want Cook to vacate his post as Apple CEO and go into politics. A bad idea but if he did I'd sure as hell vote for him!

    Those guidelines call not only for backdoors, but also for companies interested in selling software or hardware to turn over their source code to the government.

    Will anybody do this? It is the most audacious demand I've ever heard.
  • Reply 3 of 37
    docno42docno42 Posts: 3,285member
    If China would have followed through I can only imagine the mental gymnastics the Android defenders would be coming up with to justify Google's no doubt continued capitulation...
  • Reply 4 of 37
    fallenjtfallenjt Posts: 3,976member
    Quote:
    Originally Posted by Tallest Skil View Post

     

    Wonder what Apple said to get them to back down. It’d be useful to know in the prevention of tyranny elsewhere.


    Apple said /s they would pull the fck out of China and put hundreds of thousands Employee out of works including those in Apple stores....lol. Also, put pressure on China customs to deal with smuggling iPhone...let's see: 100 millions units a year.

  • Reply 5 of 37
    carthusiacarthusia Posts: 561member
    Quote:

    Originally Posted by Tallest Skil View Post

     

    Wonder what Apple said to get them to back down. It’d be useful to know in the prevention of tyranny elsewhere.




    My guess is that it wasn't just Tim, although I'd bet he could get through to Xi Jinping directly. The White House, State Department, Homeland Security...all of them would have had strong words for Beijing. 

  • Reply 6 of 37
    tallest skiltallest skil Posts: 43,399member
    Originally Posted by Carthusia View Post

    The White House, State Department, Homeland Security...all of them would have had strong words for Beijing. 



    And Beijing would have laughed them out of the room, since that would be the most base hypocrisy.

     

    Tim Cook, on the other hand, holds sway over the employment of up to a million Chinese. Apple moving or downgrading their business would put a lot of the proletariat out on the streets, hungry, questioning why they no longer have a job.

     

    You can see why that would terrify them.

  • Reply 7 of 37
    sflocalsflocal Posts: 4,489member

    I wonder if Apple's impact in the Chinese economy had any bearing on the talks.  Through Foxconn and who knows how many other 3rd-party affiliation, employs a lot of Chinese workers.



    China: "We demand your source code, and back doors into all your products".

    Tim: "Uh huh..."

    China: "Uh..huh what?"

    Tim: "Hold on buddy... have to make a phone call..."

    China: "Wait.. what's that sound?"

    Tim: "That's the sound of walking feet from now-unemployed Chinese tech workers being shown the door... buh bye.."

    China: "..wait...wait... can we talk?"

     

    One can alway fantasize.

  • Reply 8 of 37
    carthusiacarthusia Posts: 561member
    Quote:

    Originally Posted by Tallest Skil View Post

     



    And Beijing would have laughed them out of the room, since that would be the most base hypocrisy.

     

    Tim Cook, on the other hand, holds sway over the employment of up to a million Chinese. Apple moving or downgrading their business would put a lot of the proletariat out on the streets, hungry, questioning why they no longer have a job.

     

    You can see why that would terrify them.




    Yes, it is absolutely hypocritical. But don't you think the State Council would have expected Apple to balk when it was first leaked? Chine still needs Americans to sell to. Import tariffs (or concessions to the Chinese) still go along way in diplomacy. Alternatively, perhaps there was something China wanted from the U.S., threatened this action, and we gave them what they wanted.

  • Reply 9 of 37
    splifsplif Posts: 592member
    Quote:

    Originally Posted by Tallest Skil View Post

     



    And Beijing would have laughed them out of the room, since that would be the most base hypocrisy.

     

    Tim Cook, on the other hand, holds sway over the employment of up to a million Chinese. Apple moving or downgrading their business would put a lot of the proletariat out on the streets, hungry, questioning why they no longer have a job.

     

    You can see why that would terrify them.


    From the Reuters article: "Although it would apply to both domestic and foreign companies, officials in Washington and Western business lobbies complained that the combination of that law, the banking rules and anti-trust investigations amounted to unfair regulatory pressure targeting foreign companies." Does Apple negotiate trade agreements?

  • Reply 10 of 37
    carthusiacarthusia Posts: 561member
    Quote:

    Originally Posted by sflocal View Post

     

    I wonder if Apple's impact in the Chinese economy had any bearing on the talks.  Through Foxconn and who knows how many other 3rd-party affiliation, employs a lot of Chinese workers.



    China: "We demand your source code, and back doors into all your products".

    Tim: "Uh huh..."

    China: "Uh..huh what?"

    Tim: "Hold on buddy... have to make a phone call..."

    China: "Wait.. what's that sound?"

    Tim: "That's the sound of walking feet from now-unemployed Chinese tech workers being shown the door... buh bye.."

    China: "..wait...wait... can we talk?"

     

    One can alway fantasize.




    Let's say Apple employs 500,000 Chinese factory workers (and there are very many more indirect employs from suppliers, etc., no doubt)-that only represents 1/2,714th of the population. The hurt would be in the lost revenue from Apple's operations more so than worker employment.

  • Reply 11 of 37
    chadbagchadbag Posts: 1,076member
    Quote:

    Originally Posted by Carthusia View Post

     



    Let's say Apple employs 500,000 Chinese factory workers (and there are very many more indirect employs from suppliers, etc., no doubt)-that only represents 1/2,714th of the population. The hurt would be in the lost revenue from Apple's operations more so than worker employment.




    (My opinion)

     

    Everything China does is done with the aim of keeping the Party in power.  That includes keeping the masses fed and employed, and amused with the trinkets of life so that they don't question.  (It also means that when too many people are out of work, we are at risk of war as that is a handy way to get rid of the excess).  Sp 500k or 1M or whatever people out of work WOULD be a big deal, no matter how small a percent it is of the total population, as it would put much more scrutiny on the Party and their success or failure.

  • Reply 12 of 37
    Apple doesn't have back doors. That's the Telco's responsibility. :0)
  • Reply 13 of 37
    Quote:

    Originally Posted by Carthusia View Post

     



    Yes, it is absolutely hypocritical. But don't you think the State Council would have expected Apple to balk when it was first leaked? Chine still needs Americans to sell to. Import tariffs (or concessions to the Chinese) still go along way in diplomacy. Alternatively, perhaps there was something China wanted from the U.S., threatened this action, and we gave them what they wanted.


     

    Five eyes membership!

     

    /s

  • Reply 14 of 37
    sflocalsflocal Posts: 4,489member
    Quote:

    Originally Posted by Carthusia View Post

     



    Let's say Apple employs 500,000 Chinese factory workers (and there are very many more indirect employs from suppliers, etc., no doubt)-that only represents 1/2,714th of the population. The hurt would be in the lost revenue from Apple's operations more so than worker employment.




    That's 500,000 higher-paying technology jobs.  It's different than $1/day Chinese farmers.  So yeah, it is a big deal.

    I would think that if China really wanted to play hardball like that, I would think it has been brought front-and-center to the point where Tim Cook may perhaps want to keep a keen eye on plan B locations outside of China.



    In the end, I think China should get booted out of the WTO.  It's obvious they believe they are beyond approach from the rules that members must adhere to.

  • Reply 15 of 37
    blastdoorblastdoor Posts: 1,893member

    This is a good reminder of the risks involved with operating in China. On the one hand it's a huge market which offers the potential for substantial profit growth. On the other hand, it's run by an authoritarian government lacking checks and balances, capable of quickly making capricious decisions that will pull the rug out from under any given company. 

     

    My guess is that Apple will capitulate if China ultimately moves forward with this kind of law. It's too hard to walk away from a market that big. 

  • Reply 16 of 37
    realisticrealistic Posts: 1,130member
    Quote:
    Originally Posted by Blastdoor View Post

     

    This is a good reminder of the risks involved with operating in China. On the one hand it's a huge market which offers the potential for substantial profit growth. On the other hand, it's run by an authoritarian government lacking checks and balances, capable of quickly making capricious decisions that will pull the rug out from under any given company. 

     

    My guess is that Apple will capitulate if China ultimately moves forward with this kind of law. It's too hard to walk away from a market that big. 




    I agree with the first paragraph but not the second for two reasons.

     

    First, I doubt Apple would capitulate as it would impact sales worldwide, not just in China, when it was discovered. I suspect that it would not take very long to discover and prove that it had occurred.

     

    Second, China supposedly has a 30% tax on most Apple goods and China would not want lose that money. China also would not want to chance losing the hundreds of thousands, if not millions, of jobs that Apple is responsible for supporting in China by forcing Apple to move contract manufacturing to different companies based and operating outside of China.

  • Reply 17 of 37
    mstonemstone Posts: 11,510member
    Quote:
    Originally Posted by Tallest Skil View Post

     

    Wonder what Apple said to get them to back down. It’d be useful to know in the prevention of tyranny elsewhere.


    I doubt Apple said anything to them. They just figured it out on their own that it would cause huge problems for them. It was probably one of those decrees made by some security manager but once the senior members of the government were advised of the impending economic catastrophe, it was quickly rescinded.

  • Reply 18 of 37
    mstonemstone Posts: 11,510member

    Even if the law was enforced, what I would do if I were running Apple (joking) is I would sell the iPhone with no operating system and let the end users figure out how to get iOS on their own, They are resourceful. Just load some generic bootstrap that can connect to the internet. They'll all get  iOS from their friends. 

  • Reply 19 of 37
    justbobfjustbobf Posts: 261member
    Encryption of The phone probably doesn't matter. The government can probably get all the information they need from the cloud services.
  • Reply 20 of 37
    gatorguygatorguy Posts: 20,261member
    docno42 wrote: »
    If China would have followed through I can only imagine the mental gymnastics the Android defenders would be coming up with to justify Google's no doubt continued capitulation...
    Capitulation like pulling out of China for all intents as they did a couple years ago rather than bending over for the Chinese government? That kind of capitulation? :rolleyes:
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