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Apple Removes VPN Services from China App Store

It’s not the first time the company has acquiesced to government demands

August 1, 2017 | Retail & Ecommerce | Mobile

Apple is finding it increasingly difficult to hew to the demands of China’s communist government while also placating those opposed to online censorship in the country.

Over the weekend, virtual private network (VPN) service ExpressVPN published a blog post revealing that its app, along with several other popular VPN apps, had been removed from Apple’s App Store in China. ExpressVPN included a note from Apple explaining that its app was “removed from the China App Store because it includes content that is illegal in China.”

In a statement, Apple said, “We have been required to remove some VPN apps in China that do not meet the new regulations,” referring to a recent law requiring VPN developers operating in China to obtain a government license.

Apple finds itself trapped between the demands of a Chinese government in the midst of a crackdown on online content and the criticism of entities based outside the country agitating for a more open internet there.

In addition, China is just too big a market for Apple to simply ignore. eMarketer estimates smartphone users in the country will grow from 625.1 million this year to 814.3 million by 2021.

China’s government has long worked to censor online content within the country while also blocking foreign services available over the internet, like Facebook and Google’s suite of services. Internet users in China have often relied on VPNs to sidestep the government’s wide-ranging online censorship controls, often referred collectively as the Great Firewall.

The removal of VPN services from China’s App Store was harshly criticized by some affected by the move. “We view access to the internet in China as a human rights issue, and I would expect Apple to value human rights over profits,” Sunday Yokubaitis, president of Golden Frog, which had its VPN app removed, told The New York Times.

But Yokubaitis also laid bare Apple’s core problem: It still needs to worry about profits. The iPhone, once considered a smash hit in China, has seen its fortunes slide of late. According to recent data from Counterpoint Technology Market Research, shipments of iPhones in China fell 15% year over year in the first quarter of 2017.

Smartphone Shipment Growth in China, by Brand*, Q1 2017 (% change vs. same period of prior year)

The expected launch of the iPhone 8 this fall may revive the device’s fortunes in China. But it’s also plausible that consumers will instead turn to a host of high-end devices emerging from domestic manufacturers like Huawei, Oppo and Vivo that offer many of the same features as an iPhone.

There’s also evidence to suggest the rise of WeChat, which lets users do pretty much anything inside its ecosystem, has diminished the importance of the operating system among many consumers in China. That effectively negates Apple’s claimed advantage in providing a top-notch user experience on the iPhone through its marriage of hardware and its iOS operating system.

The decline of the iPhone in China makes Apple’s reliance on the 30% cut it takes from sales made via its App Store all the more important in the market. The company has already signaled its willingness to accede to government demands to keep the cash flowing in several times this year.

Earlier this month, Apple said it would open its first data center in China to comply with a new law requiring companies to store user data in the country. And in late December 2016, the company also acquiesced to a government demand to remove The New York Times news app from its China App Store, another instance where Apple may have acted as a proxy for government censors.

Rahul Chadha

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