Will Apple’s (NASDAQ:AAPL) greatest strength become its greatest weakness in the Chinese market? One of the reasons that Apple’s devices are so popular with users is related to the tight control that Apple exerts over its operating system and apps. This control enables Apple to protect its operating system from hackers and keeps its apps virus-free.
However, John Hempton at Business Insider speculates that Apple’s closed iOS could put it at a disadvantage in countries where governments may want to modify the operating system to “suit their whims.” For example, if the Chinese government requests that Apple track an iPhone user, Apple would be faced with a dilemma. Apple could either potentially reveal its trade secrets by allowing the Chinese government to modify the iOS itself in order to insert a tracking app, or Apple could fulfill the request by doing the “dirty work” for the government.
Of course, there is always the third option of disengaging from those markets altogether. Google (NASDAQ:GOOG) surrendered the Chinese search engine market after refusing to cave in to similar demands from the Chinese government regarding censorship. Apple may soon have to choose between surrendering some of its control or losing a potential market for growth as Google did…
Hempton notes that although open source can be “a force for good or evil,” it does allow savvy users to modify their phones to circumvent controls put in by oppressive regimes. Closed operating systems like Apple’s make it hard for governments and individuals to make their own modifications for good or evil. This puts the onus on Apple to make the tough decision about whether or not to capitulate to an oppressive government’s modification request.
Here’s how Apple traded throughout last week.
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