As American companies try to figure out how to keep business afloatwithout angering the Chinese governmentamid the ongoingHong Kong protests,Resetfocused its latest episode onHK Map Live– an app that’s being used by pro-democracyprotesters in Hong Kong. It was designed to help protesters and residents to locate police and demonstrations.
Apple rejected itwhen it was initially submitted to the App Store, then later changed its mind and approved it. A few days after it became available, Apple turned around and banned it entirely. The decision worried US lawmakers on both sides of the aisle, who wrote CEO Tim Cook a letter expressing their concern.
Today, people in Hong Kong are still using HK Map Live, according to Quartz reporterMary Hui,who’s been reporting on the months-long protests there. She explains that instead of accessing it through an iPhone app, they’re finding it through a browser or downloading an Android phone app instead.
For reference,Apple also deleted the Quartz app from the App Store. And earlier this month,Google got in trouble with its own employees when it banned a protest video game app.
In the Chinese market, “why was that app illegal? Because they’re covering the protests in Hong Kong, ”The Verge editor-in-chief Nilay Patel says.
Resethost Arielle Duhaime-Ross believes Apple’s actions undermine the values offree speech and democracybut also wonders if Apple could actually have done things any differently.
We’ve been hearing a lot about how American businesses have been walking a fine line with China. The gaming companyActivision Blizzardgot caught up in this.And so did the NBA.Even LeBron James. But in the case of Apple, the decision it makes now could alter how every government views its role in dictating what companies can and should do.
On this episode, Hui details her experience on the ground covering the Hong Kong protests and shares her feelings about her organization’s app being removed. And Patel outlines the broad implications Apple’s bowing to Chinese pressure could have for democracy at large.
Listen to theirentire discussion here or below.We’ve also shared a lightly edited transcript of Patel’s conversation with Duhaime-Ross.
Arielle Duhaime-Rossspeaks withThe Vergeeditor-in-chiefNilay Patel, who has been covering Apple for years. Patel also hosts a podcast calledThe Vergecast.
Arielle Duhaime-Ross
What happened between Apple and China?
Nilay Patel
China is one of Apple’s biggest markets. It’s where Apple manufactures most of its products. And it’s where Apple has the biggest conflict between its ideals and its values and the reality of an authoritarian government.
So Apple taking out this app that protesters in Hong Kong were using to coordinate is obviously a concession to the government. The big problem is that Apple says it was its own decision. It didn’t blame the Chinese government for the pressure.
It said, “We’ve looked at the app, we’ve been told that it’s being used by protesters to target the police [and] commit acts of violence.” None of this is supported. There’s no proof. And they say, “Well, you know, the Hong Kong authorities have told us this is a problem. So we’re just going with it. ”
I think that it’s a mistake for Apple to enter that value judgment zone when everyone knows the real truth: The Chinese government is pressuring Apple to remove this app. They could have just passed that buck. But they didn’t. That is the center point of the conflict to me.
Arielle
Duhaime-Ross
Why would it have been more strategic for Apple to say, “You know what? We’re removing this app because China asked us. ”
(Nilay Patel
So Apple has an out. Every company has an out. You have to follow the law of the countries where you’re doing business. That’s true of the United States. Oftentimes, the United States wants to pass policies that Apple doesn’t like. In this case, they have to comply with what the Chinese government wants.
Arielle Duhaime-Ross
Why would Apple blame its own values, the app, and the way that it’s used, instead of blaming China?
Nilay Patel
I think Apple has a strong interest in not irritating the Chinese government, especially in the context of this larger trade war – which doesn’t seem to be reaching a conclusion – where the majority of its products might see increased tariffs.
I’d say it’s where the Chinese government does have the ability to shape the Chinese economy, where they can see their sales in China fall. That is a critical market for Apple, their financial performance every quarter is actually affected in meaningful ways. So the Chinese government has a lot of control over Apple’s business.
Not to mention they actually manufacture their products there. So that’s just a lot of exposure to the Chinese government. This is a small hit for Apple. If you look at their stock price, it’s unaffected by all of this.
Arielle Duhaime-Ross
Even despite all the news articles that have been written about it … people condemning Apple over and over again, the stock price shows no change. What is your judgment of how Apple is handling this?
Nilay Patel
If Apple does want to be a values-driven company, it’s going to have to come to a reckoning with China. And the fact that it has this massive exposure to China and the fact that in the Chinese market, it has capitulated to demands it would never capitulate to the American market.
So iCloud servers in China are run by a Chinese firm with Chinese state investment. And China is closed down. Apple closes the app store. They are in charge of what gets in and out of that store. So they remove the Quartz app from the app store because it was illegal.
Why was that app illegal? Because they’re covering the protests in Hong Kong. That is a huge problem for Apple, especially now as they’re extending their reach just from selling hardware, from selling an operating system to news and entertainment.
(Is Apple News going to be) ************************* (censored) if it decides to extend it to China? Well, that is a huge decision for them to make. There are reports thatApple TV showrunners were asked to make sure that their shows don’t offend China. That is a huge decision for Apple to make.
It is a decision that other Hollywood studios routinely make. But it’s a new set of decisions for Apple to make, especially with a CEO who says privacy is a fundamental human right, and who has Martin Luther King quoted in his Twitter bio.
[Tim Cook] holds himself up as a paragon of values against competitors like Mark Zuckerberg.
(Arielle Duhaime-Ross)
What would have been the alternative for Apple? What do you think the company should have done?
(Nilay Patel)
One answer is: Look, we have to follow the laws of the countries where we do business. People in China love Apple. We will continue to fight for China to open up. We will continue to fight for the values we hold dear. But we have no choice but to comply with the law.
(Arielle Duhaime-Ross)
Does it make sense that China would lose its mind over a random app like Hong Kong Map Live and the Quartz News app? These things seem kind of small. What does it tell you about China’s state of mind right now?
Nilay Patel
When the internet was first being established, there was a lot of sense that you couldn’t stop it. I thinkBill Clinton famously saidto a conference: The internet is going to come to China. They’re gonna try to stop it. It’s like nailing jello to a wall. And everyone laughed. They’ve run. Everyone just assumed that you couldn’t stop the internet. What is abundantly true is that you can stop the internet, that you can, in fact, filter what people see, that you can.
Arielle Duhaime-Ross
You can shut it down entirely if you want to.
Nilay Patel
You can shut it down entirely. You can. The internet is a tool of extraordinary state control if it is used in that way. The apps and services that we’re talking about here that might seem like small potatoes, but they are fundamentally just symptoms of that larger control. You either do it all the way, or you don’t do it at all in China’s chosen to do it all the way. And that means the Quartz app has to go. And just how much control are you willing to accept in that country? It appears the answer is all of it.
Arielle Duhaime-Ross
So why should people in the US care about these apps getting removed in China and Hong Kong?
Nilay Patel
The way I’ve been thinking about it is a little out there, but go with me. I think about emission standards. SoCalifornia has the strongest car emissions standardsin the country. So every carmaker comes and wants to play in the United States market builds to California standards their districts. It is the most efficient choice to pick. California has rules, right?
(Arielle Duhaime-Ross)
Because otherwise you end up with cars with different car emission standards are all over the country. That makes no sense. You just want to make one car so you make it to California standards.
Nilay Patel
So now in a globalized information economy, in a globalized market, the strictest speech standards for the largest market are Chinese.
So, of course,all the companiesare going to pick the most restrictive standard. It’s going to work everywhere if you meet the Chinese standards. Of course, you’re going to meet the United States standards. That makes sense for car emissions. Does it make sense for our companies to constrain their speech?
Does it make sense for tech companies in particular, which make tools for other people to constrain the range of activities that those tools can help other people achieve?
That is a huge question. It is a philosophical question. It is a question that strikes right at the heart of the globalization debate. Do you want to be in a position where the next move for China is to say, Hey, you American startup, the Chinese companies are invested in We don’t want you to distribute this news in America because they have that amount of leverage.
These first instances, they seem small. They are not small to the people in China. They’re not small to the protesters in Hong Kong. They carry huge consequences.
(Arielle Duhaime-Ross)
What do big tech companies like Apple have an ethical imperative to support pro-democracy efforts?
(Nilay Patel)
I don ‘t know if they do. They are businesses. You know, their foremost ethical imperative is to make returns for their shareholders. That this changing I think there’s a lot of conversation about that.181 CEOs, including Tim Cook, just signed a business roundtable resolution saying, Okay, maybe we have more than shareholders as our primary interest. Maybe, maybe there has to be different classes of stakeholders.
Arielle Duhaime-Ross
Yeah, maybe customers matter also.
Nilay Patel
Well, the theory is that if you do right by your customer, you’ll do right by the shareholder. There’s absolutely not always the case. But that is the theory.
There’s some conversation around there that is shifting how much ethical imperative and moral imperative you have to preach the ideals of democracy. As American companies consolidate and get bigger, that pressure is going to continue to mount.
We are in a moment of just intense consolidation. Our companies are getting bigger. Our markets are getting less competitive. You are not going to leave iMessage over Apple capitulating to China over an app that doesn’t affect you in Kansas. So that market insulation increases the pressure for them to actually extend and support the ideals of the country as they go out into the world.
Arielle Duhaime-Ross
Does Apple need China? Why pay attention to the Chinese government at all? It has – it’s making money all over the world, right?
Nilay Patel
Apple absolutely needs China. If you look at their financial performance and the growth of iPhone sales over the years, literally unlocking a new carrier in China with the spike in revenue as a spike in iPhone users year over year, they ran out of countries to go until they ran out of big Chinese mobile carriers and that growth plateaued.
It’s a lot of people for them to serve. Apple is there. They sell hardware. They sell the products. They sell the services. They can’t just walk away from that. It would meaningfully change their revenue and their product cycles.
And they really do build the products there so moving those supply chains, moving those factories, moving that engineering expertise anywhere else in the world right now appears to be impossible.
Arielle Duhaime-Ross
So tech companies like Apple, they need China. And that means that they often end up making decisions that seem anti-democracy. With Apple being so vulnerable when it comes to the Chinese market, where do you think this is all going?
Nilay Patel
I think right now for this incident, Apple rides it out. We are seeing that the Chinese-government-affecting-American-companies story is not going away. The big danger for Apple is that that story continues to grow. It feeds into nationalism in the United States and the nationalism in China. It feeds into the trade war narrative.
And you end up at a place where Attorney General William Barr says: Look, you’re making concessions to the Chinese government. There’s child porn in iMessage; why won’t you give me a backdoor to iMessage? That is a huge danger for Apple. They’re attacking that and saying the government needs access to these phones. Why won’t you unlock the phone for us when the government comes calling?
Apple has fought that fight. They’ve won that fight historically. They are correct to keep fighting that fight. That is a fight they could lose when the United States government gets to say, “You make concessions to China.”
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