Monday, July 21, 2014

iPhone Could Reveal “State Secrets”

Chinese state media broadcaster CCTV has warned that the iPhone’s location-finding technology could be used to track customers’ whereabouts and movements. Quoting Ma Ding, head of the department of network security at China People’s Public Security University Information, the broadcaster reported that information such as the user’s home address and location can still be recorded even if the location services feature is turned off. The CCTV report further stated that mass collection of such “sensitive” data could possibly reveal “state secrets.” Citing the revelations of former U.S. security contractor Edward Snowden, the Chinese report said that Apple passed users’ personal data to U.S. spy agencies.

It is somewhat ironic that now that the three major Chinese operators are offering the iPhone (China Mobile, the largest, having struck a deal with Apple in December 2013), the Chinese government has chosen to make a statement that will cause uncertainty in the marketplace as to future viability of the device in China. While we cannot offer any opinion as to whether or not the smartphones actually compromise Chinese state secrets, the CCTV statement was likely motivated at least in part by the U.S. government’s charge last week that five Chinese military officers hacked into its computer networks. Whatever the case may be, the situation is bad for Apple, which with the China Mobile deal gained potential access to a subscriber base of 760 million. The company has posted a statement on its Chinese-language website saying that it has never “worked with any government agency from any country to create a backdoor in any of our products or services.”
“By awarding 4G licenses to the country’s three operators, the Chinese government has clearly indicated that it wants the high-speed networks to succeed. However, two of its recent actions seem to work against that goal. Restricting subsidies on 4G-compatible mobile devices could very well diminish the number of potential customers who will be able to afford them and thereby reduce demand for 4G. The anti-iPhone statement could hurt sales of a very prominent 4G device, and if it were to lead to any restriction or elimination of iPhone distribution in China, the effect on the 4G sector could be even worse.”
John Dorfman,
The Tarifica Alert

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