Apple CEO Tim Cook defends decision to remove VPN apps in China

Key Points
  • Apple CEO Tim Cook shed light on the company's decision to remove virtual private network apps from its App Store in China
  • Cook told investors Apple removed the VPN apps because they violate Chinese rules and regulations
  • He insisted it is important to engage with governments even when the company disagreed with their policies
Tim Cook, CEO, speaks during Apple's annual world wide developer conference (WWDC) in San Jose, California, U.S. June 5, 2017.
Stephen Lam | Reuters

Apple CEO Tim Cook defended the iPhone maker's decision last weekend to remove several virtual private network (VPN) services from the local App Store in China — a move that was slammed by multiple VPN service providers and observers online.

In Tuesday's earnings call, Cook reiterated that Apple removed the apps because they did not meet new regulations put in place by Beijing. He said the Chinese government began tightening rules associated with VPN apps back in 2015 and made a renewed effort earlier this year to enforce them. The new rules, Cook said, require service providers to have a license from the government in order to operate a VPN.

"We would obviously rather not remove the apps, but like we do in other countries, we follow the law wherever we do business," Cook said. "We strongly believe participating in markets and bringing benefits to customers is in the best interest of the folks there and in other countries as well."

He pointed out that there are still "hundreds of VPN apps on the App Store, including hundreds by developers outside China."

Why VPNs matter

VPNs let users in China bypass the country's famous "Great Firewall," which heavily restricts internet access to foreign sites. VPNs also allow privacy by hiding browsing activities from internet service providers. When using a VPN service, a person in China can access blocked sites like Facebook and Twitter.

Cook also addressed critics' comparisons between Apple's decision to conform to the law in China, versus its refusal last year to help the FBI access an iPhone belonging to one of the San Bernardino terrorists.

"Some folks have tried to link it to the U.S. situation last year. They're very different," Cook said. He added that in the U.S., the law supported Apple. "In the case of China, the law is very clear there. Like we would if the U.S. changed the law here, we have to abide by them in both cases," he said.

While Apple beat Wall Street expectations in its fiscal third-quarter earnings, the company's revenue in Greater China fell 10 percent year over year, amid like Huawei and Xiaomi.

Apple has recently stepped up efforts in China, including setting up its first data center and also creating a new leadership role to oversee coordination across the company's China-based team.

Cook said he is hopeful that over time, the restrictions in China will decrease.

"We believe in engaging with governments even when we disagree," he said. "This particular case, we're hopeful that over time the restrictions we're seeing are lessened, because innovation really requires freedom to collaborate and communicate."

Following Beijing's crackdown on the internet, Russia passed a law banning software that allows users to anonymously view sites barred in the country. That bill prohibits VPNs and other technologies that anonymize users. It goes into effect on November 1.

— CNBC's Ryan Browne contributed to this report.