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Why Apple Had to Hand Its iCloud Data to China

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iCloud is a part of Apple’s Services segment

Apple (AAPL) has begun shifting the iCloud data belonging to its customers in China to a data center located in mainland China. Apple’s data center in China will be operated by a Chinese company with close ties to the Chinese government.

The iCloud is Apple’s cloud storage service and is part of the company’s Services segment, which generated $8.5 billion in revenue in Apple’s fiscal 1Q18 and was one of Apple’s fastest-growing businesses in the quarter.

Apple decided to migrate the iCloud data belonging to its Chinese customers to a data center in China to comply with a Chinese law demanding that data collected from Chinese citizens be stored locally. 

The law also affected Amazon (AMZN), which partnered with a local Chinese company late last year to enable it to continue offering cloud services in China. Amazon is the world’s leading cloud-computing provider, and companies such as Apple and Snap (SNAP) run some of their workloads on its cloud.

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Apple set its iCloud data transfer date in early January

Last summer, Apple revealed its plans to transfer iCloud data belonging to its Chinese customers to a Chinese data center. In early January, Apple set February 28 as the date to begin the iCloud data transfer to China. Guizhou-Cloud Big Data Industry, a state-run company, will operate Apple’s Chinese data center.

Apple’s Chinese revenue jumped 11%

Failing to comply with China’s new data law could have exposed Apple to lawsuits or limited its participation in the Chinese market.

China, with Hong Kong included, is Apple’s third-largest market. The company generated $18 billion in revenue in China in its fiscal 1Q18. Apple’s Chinese revenue rose 11% YoY (year-over-year). Facebook (FB) and Alphabet (GOOGL) also generate a substantial portion of their revenues from the Asia-Pacific region, which includes China.

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