On January 10th Patently Apple posted a report titled "Apple Disturbingly Announces that their Chinese Partner for iCloud Services will have equal access to Chinese Customer data." The report noted that Apple was setting up its first data center in China, in partnership with a local internet services company, to comply with tougher cyber-security laws. Specifically Apple noted that "They include a clause that both Apple and a Chinese firm will have access to all data stored on iCloud."

Reuters is now reporting that "When Apple Inc begins hosting Chinese users' iCloud accounts in a new Chinese data center at the end of this month to comply with new laws there, Chinese authorities will have far easier access to text messages, email and other data stored in the cloud.

According to Apple, for the first time the company will store the keys for Chinese iCloud accounts in China itself. That means Chinese authorities will no longer have to use the U.S. courts to seek information on iCloud users and can instead use their own legal system to ask Apple to hand over iCloud data for Chinese users, legal experts said.

Human rights activists say they fear the authorities could use that power to track down dissidents, citing cases from more than a decade ago in which Yahoo Inc handed over user data that led to arrests and prison sentences for two democracy advocates. Jing Zhao, a human rights activist and Apple shareholder, said he could envisage worse human rights issues arising from Apple handing over iCloud data than occurred in the Yahoo case.

In a statement, Apple said it had to comply with recently introduced Chinese laws that require cloud services offered to Chinese citizens be operated by Chinese companies and that the data be stored in China. It said that while the company's values don't change in different parts of the world, it is subject to each country's laws.

"While we advocated against iCloud being subject to these laws, we were ultimately unsuccessful," it said. Apple said it decided it was better to offer iCloud under the new system because discontinuing it would lead to a bad user experience and actually lead to less data privacy and security for its Chinese customers.

The Apple decision highlights a difficult reality for many U.S. technology companies operating in China. If they don't accept demands to partner with Chinese companies and store data in China then they risk losing access to the lucrative Chinese market, despite fears about trade secret theft and the rights of Chinese customers. For more on this, read the full Reuters report here.

Our January report was titled correctly. It's a little disturbing that Apple will give up customer information to the Chinese Government on demand. Some in China must be in shock that Apple has betrayed their trust. But at the end of the day Apple is a business and pretending to stand on principles about protecting your data is simply a marketing exercise and no more. Don't be fooled.

It's now clear that this is the route that any foreign government could take in the future in order to break Apple's holier than thou stance on handing private data. China has shown them all the way. Pandora's Box has now been opened and other foreign governments with any clout are likely to adopt China's policy on privacy over time and that's the sad reality of the day.

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