Apple has admitted storing users’ personal data on Chinese servers for the first time as part of a deal with China Telecom that underlines the tenuous balance foreign tech companies have to strike between commitment to customer rights and the realities of the Chinese market.
Apple denied the move compromised the safety or privacy of its Chinese users, saying the data were encrypted and were stored locally only to improve the performance of its online services.
Other US tech companies, notably Google, have avoided storing user data in China because of concerns about privacy and the need to comply with Chinese censorship laws. Access to many Google services is periodically blocked by the Chinese authorities, while Facebook and Twitter are inaccessible without using tools for evading local web filters.
Technology companies seek to position data centres as close to their customers as possible because shorter distances mean faster service speeds. But data stored in China are subject to Chinese law and in practice that has landed companies in awkward situations.
In 2004, US internet company Yahoo gave identifying information about a journalist’s emails to Chinese authorities. The journalist was later arrestedand spent eight years in prison.
By storing data in China, Apple too could be faced with having to hand over customer information to the Chinese authorities, if required. Last month, Chinese state media criticised Apple's handling of iPhone users' personal information, saying it tracked customers' locations and presented a security risk.
Apple denied any infringement of customer privacy and insisted it had “never allowed” any government access to its servers.
Apple was not specific about what data were stored on China Telecom's servers but a statement on a local service provider's website indicated that it related to Apple’s iCloud product, which could include emails, photos and iPhone backups.
The statement on the Fujian site, which has since been removed, said China Telecom had become Apple’s “only cloud service provider in China” after more than a year of testing.
Apple said the decision to store data on servers owned by China Telecom had been taken to increase the speed and reliability of its service, and denied there was a privacy problem. It said it took user security and privacy very seriously.
“We have added China Telecom to our list of data centre providers to increase bandwidth and improve performance for our customers … All data stored with our providers is encrypted. China Telecom does not have access to the content.”
Apple did not discuss what commitments it would have under Chinese law regarding disposal of the data of its customers.
According to one person with knowledge of the arrangements, the cryptographic keys needed to decode the data are stored outside China. This adds an extra layer of complexity for anyone trying to obtain customers’ personal information and would mean that even local Apple employees would have no way of seeing the data.
Apple has been expanding its content delivery network around the world to improve its iTunes, App Store and iCloud online services, which have faced criticism for lagging rivals' performance.
The decision to store customer data in China reflects the importance of the region to Apple's future growth. Demand for its iPhone took off earlier this year after it introduced a 4G version in partnership with China Mobile, the country’s largest mobile telecoms operator.
The anticipated launch of larger-screened iPhones next month is also forecast by analysts to boost the smartphone's appeal in Asia.
Last month, slowing demand for the iPhone in the US and other more saturated mobile markets was offset by growth in China that chief executive Tim Cook said was “off the charts”.
Microsoft, one of the few US tech companies to run internet services for Chinese consumers, said: “Today, the company stores consumer content for people in China outside the country.” Its commercial cloud services aimed at Chinese companies give customers the choice of keeping data in China or elsewhere.