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China's Media Regulator is Suing Apple over Rights to an Obscure Patriotic Film

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It's being reported in China that Apple is being sued by China's media regulator over rights to an obscure patriotic film, a Beijing court said yesterday, in the latest legal battle for the US tech giant in one of its crucial overseas markets.


China's State Administration of Press, Publication, Radio, Film and Television claims that Apple has violated its exclusive online broadcast rights to the 1994 movie "Xuebo Dixiao" — whose title roughly translates to "Blood-Splatter our Strong Enemies" — by allowing viewers to access the film on the "Youku HD" app downloadable via the company's online store.


SAPPRFT has filed suits against both Apple and the Chinese video streaming platform Youku, according to a statement posted on the official website of the Beijing Haidian District People's Court, where the case has been received.


SAPPRFT believed the violation had cost the organization "huge economic losses," the court statement said.


The little-known movie in question tells the tale of a young patriotic Chinese doctor who fights against Japanese occupying forces in the 1930s to open a hospital.


SAPPRFT has demanded that the two defendants immediately stop streaming the film, and together pay 50,000 yuan (US$7,525) in damages, as well as approximately US$3,000 in accrued legal fees, according to the court statement.


When Carl Icahn sold his stake in Apple in May he was asked at what price point would he buy back into the stock. Icahn told the CNBC host that it wasn't about a price point, it was about China's crackdown on Apple's services and the dark cloud that it creates. Icahn added that "Beijing could come in and make it very difficult for Apple to sell there."


At the time it seemed a little draconian and an excuse, but then came one lawsuit in June and now this latest lawsuit. They appear to be a string of random coincidences on the surface until this week's Wall Street Journal report that points to China wanting to create a border in cyberspace that they alone own and control like a country's physical border and will be inflicting pain on those who dare stray from their every protectionist rule.


It was reported by the Wall Street Journal yesterday that the "colorful internet regulator who helped Chinese President Xi Jinping dramatically tighten controls online is stepping aside for a rising political star believed to be just as strict.


Lu Wei leaves the reins of the two-year-old Cyberspace Administration of China to Xu Lin, a former propaganda chief in Shanghai and the youngest of Mr. Lu's four deputies, according to a short report Wednesday by China's official Xinhua News Agency.


An aggressive former reporter and editor at Xinhua, the 56-year-old Mr. Lu has been a high-profile pitchman for President Xi's vision of the internet. In meetings with global tech CEOs and at press conferences, he has argued forcefully that national borders should extend into cyberspace and governments should be able to control the internet as they see fit. He has overseen a major expansion of censorship and pushed measures to better track individual internet users." This was reinforced just this week in a new report by Bloomberg titled "Apple to Face More Scrutiny as China Cracks Down on Apps."


The Wall Street Journal's report further added that "Under his watch [Mr. Lu] China blocked several foreign websites, including The Wall Street Journal's. Asked about the blocking and the desire of Facebook and others to be unblocked, he repeatedly said he has the power to choose 'who gets to be a guest in my house.'"


In the end it seems to be one hassle after another for Apple in China lately. Is it simply a crazy blip that will settle down or is it a sign of a new norm surfacing in China to harass foreign tech companies?


Did Carl Icahn actually foresee this dark cloud was on the way? I'm beginning to think his warning had more to it than most first thought. But in the big picture, Apple is keeping their eye on the prize in building out more flagship Apple Stores and getting ready to hit the Chinese market with their new iPhone 7 in September. As long as that goes smoothly, I think Apple will happily bear and grin the aggressive oversight and new restrictions being dreamed up by China's regulators and watchdogs.


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