Apple is storing user data in China using state-controlled China Telecom’s cloud storage services. Fuzhou city government’s website had a statement confirming the arrangement, but the page was removed it after the story broke.
iCloud is the Apple's cloud storage service used for backing up all of its devices including iPhones and iPads. The company is most likely using China Telecom instead of its own data centers because Chinese regulations make it very difficult for a foreign company to build there.
Apple's data centers are in Prineville, Oregon, Maiden, North Carolina, Newark, California, and in Reno, Nevada (a new site currently running at low capacity). It also uses colocation providers sparingly but says that most of its workload is served out of its own facilities.
Strategically, outsourcing to a local service provider in a foreign country is a typical approach to expanding geographic reach of a company's IT infrastructure. Outsourcing to a third party means smaller upfront expenditure and faster time to market, both keys in growing a local user base. Locating within China's borders means a better user experience for Chinese customers.
There are some concerns, however, regarding data privacy, since China is known to be filtering and controlling content within its borders. However, Apple told the Wall Street Journal that all data it stores is encrypted, meaning China Telecom cannot see the content.
State-run China Central Television recently made claims that the iPhone poses a national-security concern due to its location-based services. The service must be turned on by the users themselves, however, and Apple says it does not keep track of locations.
Other companies, such as Microsoft, have chosen to go the third-party route to build a local presence in the country. Microsoft launched Azure in China via local partner 21Vianet Group. Chinese investigators raided Microsoft offices last month as part of an anti-monopoly investigation.
Amazon Web Services partnered with Chinese company ChinaNetCenter for data center space for the China region of its cloud services and signed with local company Sinnet as the service provider.
Google, however, chose to build out its own data centers to serve the region, which meant it could not build in mainland China. The company has built data centers in Hong Kong, Taiwan and Singapore.
A statement from a China Telecom business unit said Apple tested and evaluated their service for 15 months before choosing the company as its first and only cloud provider in the country. Data Center Knowledge reached out to Apple for comment, and we will update the post if we hear back.
China is a massive growth market for cloud services, and U.S. providers are still at early stages of establishing themselves there, local companies landing most of the business.
Other cloud service providers with locations in China include managed services and cloud provider Datapipe, which opened operations in Hong Kong in 2007. Another provider that was quick to enter the market was cloud storage provider Carbonite, which opened a data center in Beijing back in 2008. U.S. giant IBM has been doing business in China for years, which includes building data centers for cloud services.