Beijing's latest Apple cut worries Silicon Valley

Apr 22, 2016, 3:53 PM EDT
(Source: David Woo/flickr)
(Source: David Woo/flickr)

China did somewhat of an about-face this week when it shut down Apple's iBooks Store and iTunes Movies — a surprising blow to a company that China has traditionally welcomed to its markets, which will likely cause a huge upset in the massive numbers of Apple users in China. 

A New York Times source anonymously reported that Beijing’s State Administration of Press, Publication, Radio, Film and Television "asserted its authority” and demanded the shutdown of the services just months after they debuted in China.

The move will do little to reassure Silicon Valley. The relationship with Beijing has been rocky since its inception, but at times has had successful moments. And Apple’s relationship with China has historically been rosier than most. (Google and Facebook have long dealt with Beijing’s ban on their services, despite users heavily gravitating toward using virtual private networks to access them.) Until now, that is. 

Beijing’s decisions never seem to be in line with what the markets have to say. Reports this week detailed how China now sits in second place in iOS revenue, behind the U.S., having jumped past Japan. There's no doubt the release of iBooks and iTunes Movies in the country six months ago had something to do with that. Now, a blanket shut-down of two highly popular services leaves other U.S. tech companies wondering, "If Apple can’t stake a foothold in China, how can we?”

Ironically, Beijing’s shut-down of these services probably won’t have too much of an effect on Apple sales in China. Apple is a favorite, and as mentioned, Chinese users find ways to access services whether or not Beijing sanctions them within the country’s borders. While Apple’s hardware has taken off in China, its software will clearly have a harder time entrenching itself if Beijing arbitrarily decides to cut services. Apple experienced a bit of a dip in iPhone sales recently, but still counts China as its second-largest market after the U.S.

Regardless of Apple’s continued work in China, this latest move from Beijing shows that no U.S. tech company’s presence is safe there.

See expertise on China's markets and relationship with the U.S. here from the 2015 Blouin Creative Leadership Summit's "Regional Focus: China" panel.