Cybersecurity law to stopper Apple cloud services

Cybersecurity law to stopper Apple cloud services, Photo: Shutterstock

As one of the economic consequences following the pandemic, US tech titan Apple has been forced to change its business orientation from accelerating device sales like iPhones and Macbooks to software services, especially cloud computing. A report from technology aggregator Protocol in late May stated that Apple has been recruiting software engineers specialised in cloud computing.

The global health emergency has put tech firms specialised in producing devices like Apple at large risk by interrupting supply chains, with many of their factories mainly based in China. On the other hand, the pandemic has benefited major software companies such as Google, Microsoft, Netflix, and Amazon because of the great demand for online services during the crisis.

According to an unofficial source, Apple pays about $30 million a month to the subsidiary of the US-based e-commerce giant Amazon to develop cloud computing-based services such as iCloud, Apple Music, and New Plus. As of now, the iPhone manufacturer is one of the biggest clients of Amazon Web Services (AWS).

Apple’s cloud computing will be directly responsible for services on its 1.5 billion devices across the world and in Vietnam. However, with the disruption from the Law on Cybersecurity that has been effective since January 2019, local Apple users may not be able to experience many of the company’s cloud services.

According to Article 26.3 of the law, any domestic or foreign enterprise providing services on telecom networks, the internet, and other value-added services in the cyberspace in Vietnam who collects, uses, analyses, or processes data on users’ personal information, their relationships, or data generated by service users in Vietnam must store this data in the country for a yet undetermined period of time.

As soon as the regulation was drafted, many global tech firms spoke out against it mainly due to significant costs for developing data systems in Vietnam. Companies with a prolonged presence in Vietnam, such as Google and Microsoft, may spend more to comply with the Vietnamese law and sustain their services. However, other firms that newly enter the market or smaller firms may have to review the costs before making decisions about whether it is worth building up data systems.

Thus, to maintain the usage of Apple’s cloud services for locals, the tech firm will have to spend a sizable expense to develop its data storage system in Vietnam. Notwithstanding, as Apple has never given high priority to the Vietnamese market, it seems unlikely that the company will drain its funds for data storage in the nation.

Specifically, Apple’s new products in Vietnam are usually launched at least a month after other Southeast Asian markets, such as Malaysia, Singapore, and Indonesia.

In case Apple decides to construct data centres in Vietnam, the company would have to compete with AWS and local companies, such as Viettel IDC, FPT Telecom, and CMC Telecom.

Meanwhile, AWS officially entered Vietnam in 2017 as it recognised the huge demand for cloud computing services of businesses in the country. The US firm currently provides more than 90 cloud services such as data storage, analysis, and AI services. Many large firms, like Masan, Vietjet, and VTV, are currently using AWS products. Especially, VTV has been utilising AWS cloud computing services to broadcast nine television channels on the internet through its web interface VTVGo.

According to Paul Chen, head of Solutions Architect in Southeast Asia, after many years of operating in the US, India, and China, Amazon’s subsidiary has been eyeing Southeast Asia, including Vietnam.

On the flip side, the strict regulations of the Law on Cybersecurity also facilitate the evolution of Vietnamese cloud computing suppliers. In a response to VIR, a representative of Viettel IDC said that major Vietnamese businesses do not like their data stored or processed on overseas servers. “They prefer using local services although they are not as big as Google or Amazon,” he said.

The representative also revealed Viettel IDC occupies more than 40 per cent of the local cloud computing market. With such high market share, the firm does not only lead Vietnam but also Southeast Asia. Accordingly, small cloud service suppliers mainly use Viettel IDC’s infrastructure to build up their own cloud computing products, resulting in an even higher market share of Viettel IDC.

Thus, Viettel IDC’s robust position could be a large obstacle for Apple for convincing thousands of local companies to store their data with them.