FIRST AIRED: August 1, 2017

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Transcript

00:00:02
>> To win in China, Apple is dancing to the beat of Beijing's drum. A prime example, last week's blocking of major VPNs on its Chinese App Store making it tougher for users to skirt the great firewall. Getting on Beijing's good side could make things easier for Apple. Local rivals have taken a big bite out of iPhone sales and services like Apple Music that the company pins its future on are at risk of getting blocked.
00:00:26
As Reuters Adam Jordan explains, yanking apps off the store is only the latest gesture.>> This year, in fact in the last month or so, we've seen the crack down on VPNs as well as a new role created to head the sort of China operations. The first time that they've had this role which will report directly to CEO Cook.
00:00:44
They also have said they will open their first China data center. China in June brought in these new cybersecurity laws and one thing of that was its sort of very strict rules on data storage. And so, having a facility here in China means that Apple can comply with those new laws and it looks like it's following Beijing's bidding.
00:01:04
>> The new data center scores extra political points. It's getting built in Guizhou, a province Beijing wants to turn into a tech hub and it also happens to be the area that President Xi Jinping himself will be representing at the Communist Party Congress. But bowing to China like this could be a bad look back home.
00:01:21
>> It's interesting if you look at the difference how Apple is approaching this issue here in China now and how it dealt with a situation in 2016 where it was faced with a court order from the FBI to ask for its help breaking into an Apple iPhone. Now at that point, it pushed back very hard.
00:01:38
Tim Cook, the CEO, came out and said this would set a bad precedent and would be bad for America. Here obviously, they're taking a much softer approach and they are basically just following plans lead and therefore taking these VPNs down.>> The iPhone is now sitting fifth on the list of China's most popular handsets.
00:01:55
With the launch of its next model set for later this year, a boost from Beijing will be a key part of Apple's balance sheet for 2017.