Kudlow added just a bit of insight to his assessment on Friday, saying that “there are some indications from China that they’re looking at that, but we don’t know that yet. There’s no enforcement. there’s nothing concrete.”
Apple didn’t provide a comment for this story.
But it’s not just the alleged, illegal “theft” of IP that companies are worried about. China has plenty of tools to legally gain access to intellectual property.
In 2016, the government enacted a new cybersecurity law that provided a clearer view into the IP-for-access transactional nature of doing business on the mainland. In the first version of that law, companies were required to provide the government with source code or other valuable encryption information supposedly to ensure that the code is secure, according to the statute. Source code is the computer code that makes up the backbone of a company’s operating system, its applications or other programs.
While there have been some changes to the 2016 law, experts routinely warn companies that Chinese regulators have a significant degree of control over what type of private information they can demand, even beyond source code or encryption.
Apple, Microsoft and Google all expressed significant concerns with the law at the time, but they have little recourse. China began implementing it in 2017, and companies have for the most part shown they’re willingness to comply.
One aspect of the law requires companies with data in the cloud to partner with Chinese-owned service providers to store that information. That’s raised concern that cloud services provide another way for China to ensure easy access to both the data of its citizens and the IP of foreign companies. Nevertheless, in July 2017, Apple said it was transferring its data in China to a company called Guizhou-Cloud Big Data.